In relief to Leighton India, HC asks DLF to deposit invoked bank guarantees1 min read . Updated: 14 May 2020, 09:59 AM IST
- DLF will be required to deposit ₹143.9 crore of the amount invoked as per the court directions
- Leighton India had approached the court to secure its bank guarantees from being encashed by DLF
NEW DELHI: The Delhi high court has directed DLF Limited to deposit invoked bank guarantees issued by Leighton India Contractors, as part of a business agreement between the two, in a fixed deposit under the name of registrar general of the court.
DLF will be required to deposit ₹143.9 crore of the amount invoked as per court directions.
Leighton India had approached the court to secure its bank guarantees from being encashed by DLF during the pendency of arbitration proceedings arising out of a dispute between the two. The dispute pertains to completion of a residential project The Camellias at DLF City, Phase V, Gurugram.
The two companies had signed a contract of approximately ₹1,438 crores as part of the deal to develop the residential project. Leighton, as part of the agreement, had also furnished six bank guarantees, two in lieu of retention money and four performance bank guarantees.
DLF had encashed the performance bank guarantees during the covid-19 lockdown period on grounds that the contract had not been completed as per the dates mentioned in the contract.
Leighton had argued that invocation of the bank guarantees of more than ₹200 crores was totally unjustified.
The court held that the manner in which the bank guarantees, especially the performance bank guarantees, had been invoked during the lockdown was "not completely bona fide."
"The original fixed deposit receipt shall be filed in the court along with an undertaking by the bank issuing the fixed deposit that the said deposit shall not be permitted to be encashed until further orders of the court. The interest etc that accrues on the said Fixed Deposit shall also be retained by the bank issuing the Fixed Deposit which shall be initially for a period of six months" the order said.
The court has ordered an reply to be filed within four weeks and rejoinder within four weeks thereafter. The fixed deposit receipt has also been directed to be placed on record on or before 20 May.
The case will be next heard on 17 August.