HC denies Emaar MGF's plea on DDA guarantee.
" I see no merit in the petitioner's submission that it would cause irretrievable injustice to them if the bank guarantees are permitted to be encashed in their entirety, as the petitioner would then be obliged to provide fresh guarantees for the equivalent amount of ` 183 crore, or to face termination of the contract," said Justice Vipin Sanghi while dismissing the plea without imposing any cost on the real estate company.
Sanghi, however, ordered a status quo on the process of encashment of the bank guarantee by DDA till Friday after the company pleaded that it would approach a larger bench against the order.
" The issue as to who is in breach of the contract, and other related issues are matters which would need determination by the arbitral tribunal.
Prima facie, it cannot be said that the petitioner is not in breach of the agreement," added Sanghi in his detailed order.
Citing a few apex court judgments, the court said that it can only restrain the encashment of the bank guarantee if it finds either the defendant party or the bank committing a fraud of an egregious nature.
" The first exception which has been carved out by the courts is that the fraud perpetrated must be of egregious nature meaning that the said fraud would lead to gross injustice which shakes the conscience of the court and the said fraud should be known to the parties and the concerned bank. If the said fraud is manifest or evident, the court can restrain the encashment of the bank guarantee," the court noted.
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