Delhi HC seeks DDA response on Emmar-MGF petition

Justice Vipin Sanghi asked DDA to file its response in five days and fixed the matter for further hearing on November 29.The company had furnished two bank guarantees of Rs 150 crore from the State Bank of India and Rs 33 crore from the State Bank of Patiala.
Appearing for DDA, Additional Solicitor General (ASG) Indira Jaisingh and counsel Ajay Verma contended that out of the bank guarentee of Rs 150 crore only one pay order of Rs 90 crore, issued by the SBI, was credited to DDA's account on October 23 but the other pay order of Rs 60 crore has not been credited, which could be interpreted as a collusion between the bank and the company.

Justice Sanghi sought an affidavit from the concerned branch of the SBI explaining the reasons for issuance of two separate pay orders for one bank guarantee.

Earlier, in an interim order, Justice Vipin Sanghi had allowed DDA to encash the pay order for Rs 90 crore and asked the agency not to encash the rest Rs 93 crores (including the bank guarantee of Rs 33 crore from SBP) in its account.

Acting tough, the Urban Development Ministry had ordered confiscation of Rs 183 crore furnished by Emaar-MGF as bank guarantee and initiation of legal action against it 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 submitted 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 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.

The company also argued that the DDA proceedings to seize the entire bank guarantee of Rs 183 crore was illegal as it had issued a notice to the firm to deposit only Rs 83.70 crore.