The Delhi High Court has issued practice directions for matters in which bank guarantees are required to be furnished..The directions were issued pursuant to the High Court order passed on June 2, 2021 in the case of Ircon International v. Hindustan Construction Co. Ltd.The order attested by Registrar General, Manoj Jain stated that these practice guidelines shall come into force with immediate effect..The directions contained important details like the mandatory requirement of a 'clause of term' to be incorporated in bank guarantees furnished by a party.It is also specified that failure to renew the bank guarantee at least 10 days prior to its expiry will be a cause for the bank to encash the guarantee, without any further demand or reference to any party at whose instance the bank guarantee has been furnished..Provisions for verification of bank guarantees through video-conferencing have also been introduced through the directions..The Delhi High Court had on June 2 issued practice directions to counter any lacunae in the matters concerning renewal of bank guarantees furnished by the parties. To this end, the Court had stated in its order in Ircon International,"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 release of the amount in their favour, which may be deposited by the opposite party during the proceedings pendency in the Court." The Ircon International order had had also listed important guidelines and details relating to encashment of bank guarantees, ranging from renewal guidelines to modus operandi in appeals to details of registration and expiry..The notification issued in respect of bank guarantees furnished reads as follows:i) That henceforth, a clause of term shall be necessarily incorporated in every Bank Guarantee furnished by a party in this Court for release of the amounts deposited in the Court. Such term shall be to the effect, that in case the Bank Guarantee is not renewed, at least ten days before the expiry of the Bank Guarantee, by the party at whose instance the Bank Guarantee has been furnished, the Bank shall, without any further demand by the beneficiary or reference to the party at whose instance the Bank Guarantee has been furnished, proceed to encash the Bank Guarantee and remit the amount thereunder to the beneficiary under the Bank Guarantee.ii). In order to save time, inconvenience and cost to the parties and the bank, the Bank Guarantees, both at the time when they are initially furnished and even at the time of their renewal, be verified through video conferencing, unless one, or the other party- for good valid reasons, insists on production of authorized officer from the bank before the Court for the purpose of verification, which that party has to satisfy the Hon'ble Court /Registrar, by giving reasonable reasons for permitting the physical production of authorized/competent officer..See full directions and order here:
The Delhi High Court has issued practice directions for matters in which bank guarantees are required to be furnished..The directions were issued pursuant to the High Court order passed on June 2, 2021 in the case of Ircon International v. Hindustan Construction Co. Ltd.The order attested by Registrar General, Manoj Jain stated that these practice guidelines shall come into force with immediate effect..The directions contained important details like the mandatory requirement of a 'clause of term' to be incorporated in bank guarantees furnished by a party.It is also specified that failure to renew the bank guarantee at least 10 days prior to its expiry will be a cause for the bank to encash the guarantee, without any further demand or reference to any party at whose instance the bank guarantee has been furnished..Provisions for verification of bank guarantees through video-conferencing have also been introduced through the directions..The Delhi High Court had on June 2 issued practice directions to counter any lacunae in the matters concerning renewal of bank guarantees furnished by the parties. To this end, the Court had stated in its order in Ircon International,"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 release of the amount in their favour, which may be deposited by the opposite party during the proceedings pendency in the Court." The Ircon International order had had also listed important guidelines and details relating to encashment of bank guarantees, ranging from renewal guidelines to modus operandi in appeals to details of registration and expiry..The notification issued in respect of bank guarantees furnished reads as follows:i) That henceforth, a clause of term shall be necessarily incorporated in every Bank Guarantee furnished by a party in this Court for release of the amounts deposited in the Court. Such term shall be to the effect, that in case the Bank Guarantee is not renewed, at least ten days before the expiry of the Bank Guarantee, by the party at whose instance the Bank Guarantee has been furnished, the Bank shall, without any further demand by the beneficiary or reference to the party at whose instance the Bank Guarantee has been furnished, proceed to encash the Bank Guarantee and remit the amount thereunder to the beneficiary under the Bank Guarantee.ii). In order to save time, inconvenience and cost to the parties and the bank, the Bank Guarantees, both at the time when they are initially furnished and even at the time of their renewal, be verified through video conferencing, unless one, or the other party- for good valid reasons, insists on production of authorized officer from the bank before the Court for the purpose of verification, which that party has to satisfy the Hon'ble Court /Registrar, by giving reasonable reasons for permitting the physical production of authorized/competent officer..See full directions and order here:
