Delhi High Court Issues Practice Directions for Commercial Disputes that require Bank Guarantees

Greeva Garg–

Delhi High Court has issued practice directions for settlement of disputes of commercial matter which required Bank Guarantees to be conferred.

The practice directions were issued by the Court pursuant to the matter of Ircon International v. Hindustan Construction Co. Ltd.

Directions issued by the division bench headed by Justice Vipin Sanghi and Justice Jasmeet Singh stated that, “We think it appropriate to issue certain Practice Directions to plug any loophole in the matter of renewal of Bank Guarantees furnished by the parties as a condition for the release of the amount in their favour. It may be deposited by the opposite party during the pendency of the proceedings in the Court.”

The Order passed by the Court attested by Registrar General, Manoj Jain directed that the practice directions shall come into force with immediate effect.

As per the directions, it is a mandatory requirement to incorporate ‘a clause of the term’ in the bank guarantees conferred by a party. 

Further, it is directed to renew the bank guarantee at least 10 days prior to its expiry. Otherwise, the failure will be the cause for the bank to withdraw the guarantee without any reference to the involved party.

Provisions for video conferencing mode has been introduced for verification of the bank guarantees.

See full Order and Directions here: PRACTICE DIRECTIONS

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