Bank of Baroda falls 4% as Calcutta HC asks RBI to take action against it

IOCL told the court it had entered into an agreement with Simplex Projects Limited in 2017 for undertaking certain work at the Bongaigaon facility of IOCL in Assam.

Shares of public sector lender Bank of Baroda (BoB) declined over 4 per cent on Monday after the Calcutta High Court directed the Reserve Bank of India (RBI) to consider appropriate steps against it, including revoking its licence or authority to carry on with banking business, if necessary, for failing to honour a bank guarantee given by a third party to Indian Oil Corporation (IOCL).

In a matter relating to an appeal by BoB against IOCL, a division bench comprising justices Sanjib Banerjee and Kaushik Chanda took up a cross-objection by respondent IOCL on February 10, immediately after dismissing the appeal by BoB for default, since the appellants could not proceed with the matter, said a report by news agency PTI. 

The oil marketing company told the court that it had entered into an agreement with Simplex Projects Limited in 2017 for undertaking certain work at the Bongaigaon facility of IOCL in Assam.

In terms of such agreement, IOCL was obliged to make a mobilisation advance against a bank guarantee, while Simplex was also required to furnish a bank guarantee on account of security deposit, the court noted.

At 01:55 pm, the stock was trading nearly 4 per cent lower at Rs 83 apiece on the BSE. In comparison, the benchmark S&P BSE Sensex was trading 0.3 per cent lower at 41,127 levels.