Banks asked to deposit Emaar MGF's guarantee money with court

Last Updated 10 January 2011, 14:20 IST

A division bench of Justice Vikramajit Sen and Justice G.P. Mittal asked the banks to cancel two pay orders - Rs.60 crore by the State Bank of India (SBI) and Rs.33 crore by the State Bank of Patiala (SBP) - to be issued to Delhi Development Authority (DDA) for encashment, and deposit the amount with the high court registrar general.

"We direct SBI and SBP to cancel the pay orders and simultaneously deposit the amounts with the registrar general of this court. The disbursement of this sum shall then await till further orders of this court," the bench said.

The court had Oct 25, 2010, while approving the Rs.90 crore partial encashment of the bank guarantee by DDA, had asked the housing body not to encash the entire amount totaling Rs.183 crore.

The court had given the approval after DDA informed it that it had already encashed Rs.90 crore.

Emaar MGF has filed an appeal challenging the order of a single judge bench dismissing its plea 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 a directive of the union urban development ministry. The ministry 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 submitted an interim report in which it said “immediate action” was required against the builder for “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 entire bank guarantee was illegal as the liquidated damage amount demanded from it was only Rs 83.70 crore.

The company pleaded that DDA had issued a notice to the firm to deposit only Rs 83.70 crore.

(Published 10 January 2011, 13:21 IST)

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