HC dismisses Emaar MGF plea against bank guarantee encashment

The Delhi High Court today dismissed real estate giant Emaar MGF’s plea for restraining Delhi Development Authority (DDA) from encashing its bank guarantee worth Rs 183 crore due to delay in completion of the Commonwealth Games village.

While dismissing Emaar MGF’s plea, Justice Vipin Sanghi, however, ordered status quo on the process of encashment of the bank guarantee by DDA till Friday, as the company pleaded it would approach a larger bench against the order.

Justice Sanghi dismissed the petition, saying, “There is no merit in the case and I dismiss the petition with no cost.”

The high court earlier on October 25, while approving partial encashment of the bank guarantee to the tune of Rs 93 crore by DDA, had asked the housing body not to encash the entire amount totalling Rs 183 crore.

The high court had given the approval when DDA informed it that it had already encashed Rs 90 crore and the rest of the amount was yet to encashed.

Emaar MGF had approached the court for restraining DDA from seizing its bank guarantee, as damages for not completing the project on time. DDA had proceeded to seize the bank guarantee on the urban development ministry’s order.

It had also asked DDA to initiate legal action against the real estate giant for recovery of other expenditure for “deficiencies” and “delays” in construction of the Games Village.

The direction by the government to DDA had come a day after the civic authority gave an interim report in which it said “immediate action” is required to be taken against the builder for the “non-execution of the project as per the agreement”.

In the petition, Emaar MGF had countered the allegations and said the “threat” issued by DDA to encash the whole amount of the bank guarantee was illegal, as the liquidated damage amount demanded from it was only Rs 83.70 crore.