Delhi HC Directs: Encashment of Bank Guarantee for USD 6.75 millionis sued by DBS Bank

Delhi HC Directs: Encashment of Bank Guarantee for USD 6.75 millionis sued by DBS Bank 

Delhi High Court consisting of single Judge, Hon'ble Prathiba M. Singhdirected the Union of India (Respondent No. 1), through the Ministry of External Affairs in view of urgency expressed that a bank guarantee, for a sum of USD 6.75 millionis sued by DBS Bank Ltd., Singapore shall accordingly be encashed and the entire amount i.e., the guaranteed sum, shall be credited by the DBS Bank Ltd., Singapore to the account of the High Commission of India, immediately.

The brief facts of the case were that, a contract was entered into between the High Commission of India, Singapore and the Petitioner, through the channelising company HLL Lifecare Ltd., Thiruvananthapuram, for the procurement and supply of masks.

As per the contract, the Petitioner was to supply 10 million KN-95 Respiratory Masks, for a value of USD 22.5 million. 30 percent of the total value of the invoice was to be secured through a bank guarantee by the Petitioner, which was the subject matter of this present writ petition.

Mr. Kirtiman Singh, ld. counsel appearing on behalf of Respondent No. 2 under instructions from Mr. Rajiv Wadhawan, Director, MoHFW submits that the Government does not wish to take the supply of the remaining 3.2 million masks as the Petitioner has been in breach of several deadlines.

The contract was originally entered into in April 2020 and the initial supplies were to be made in May 2020. The final extension was granted only till 15th September 2020. Post the deadline, supply of 6.8 million masks have been made but the remaining is yet to be made.

The Petitioner was directed to get the Bank guarantee extended and place a copy of the same on record. An email from the DBS Bank Ltd. was been placed on record from which it appears that the extension of the bank guarantee would not be processed by the Bank until and unless the High Commission of India rejects/withdraws its claims on the bank guarantee.

There were various issues being raised as to the maintainability of the petition, breaches etc.

The court issued following the direction that firstly the Bank Guarantee for USD 6,750,000 (US Dollars Six million seven hundred fifty thousand), issued by DBS Bank Ltd., Singapore shall accordingly be encashed and the entire amount i.e., the guaranteed sum, shall be credited by the DBS Bank Ltd., Singapore to the account of the High Commission of India immediately.

Secondly, the said amount shall be kept by the High Commission of India in an identified account. Lastly, the amount so credited to the High Commission of India shall not be utilised for any other purpose and shall abide by the further orders of this Court.

The matter was then listed on 10th November 2020.