Bank guarantee
sushil bhatt
(Querist) 01 September 2010
This query is : Resolved
We are the beneficiary of a performance bank guarantee (BG) given by a bank on behalf of our sub-contractor as performance guarantee, which was extended 5-6 times on same terms & conditions.
During last time, when we requested the bank/sub-contractor to again extend the BG for a further period of 6 months or in case of failure to release the funds, the bank extended the BG for further 6 months but fradulently added a condition in the extended BG without our knowledge /consent, which was not acceptable to us and even we wrote various letter to the bank and their higher officials to delete such condition and issue fresh BG or otherwise release the money.
Now since our sub-contractor has failed to perform their obligations under the contract, we have initiated to invoke the BG but the bank is refusing to release the money under the BG on the ground of such fresh clause/ condition.
What right / legal course of action we may adopt to come out of this situation, pls advise.
Any caselaws /judgements would be appreciated, pls
s.subramanian
(Expert) 01 September 2010
file a civil suit to enforce the bank guarantee.
masood ausaf
(Expert) 02 September 2010
you have not mentioned the condition which was added by the Bank - However, the best course is to invoke the Bank Guarantee and in case of failure of the Bank to make payment file civil suit for recovery of the guaranteed amount against the Bank in the appropriate court.
sushil bhatt
(Querist) 04 September 2010
But can the bank add a fresh conditional clause in the BG without information /consent of the beneficiary?
sushil bhatt
(Querist) 18 December 2010
Is there any guidelines of RBI with regard to amendements of the terms and conditions of the BG?
Parthasarathi Loganathan
(Expert) 18 December 2010
Please check up this link in LCI and download detailed RBI guidelines in respect of Letter of Guarantee:
http://www.lawyersclubindia.com/share_files/bank-guarantee-guidelines-by-rbi-2601.asp
sushil bhatt
(Querist) 18 December 2010
Thax Mr. Parthasarathi, sir are there any other guidelines of RBI which stictly directs the banks not to amend the BGs unilateraly without consent of the beneficiery?
Parthasarathi Loganathan
(Expert) 18 December 2010
Since Bank Guarantee is a Contract, it is governed by the Indian Contracts Act. Hence, there is no question of unilateral amendment of one party without the consent of the other party.
