Arbitral Counter Claim for Bank Guarantee Amount
Arbitral Counter Claim for Bank Guarantee Amount
The petitioner was the successful bidder for the plot of hotel project and furnished performance bank guarantee. However, the dispute of delay in completion of the hotel was referred to arbitration.
The petitioner claimed damages of Rs.7 crores.
The respondent filed five counter claims including for bank guarantee amount.
On section 17 application, the Arbitrator permitted encashment of bank guarantee and the amount to be kept in fixed deposit subject to the outcome of arbitral proceedings.
The claims of the petitioner including for refund of BG amount and four counter claims of the respondent were rejected.
However, the counter claim for bank guarantee amount was allowed.
Therefore, the only pin-pointed issue was whether the counter-claim of the respondent that the petitioner was liable to pay the amount of the PBG for breach of terms of the tender document could have been allowed solely on the basis of the rejection of claims of the petitioner for damages towards business loss and for refund of the PBG.
The counter-claim awarded without determining the breach of contract and the actual loss or damage suffered, is contrary to Sections 73 and 74 of the Contract Act, is against public policy and the law laid down by the Supreme Court in Kailash Nath Associates v. DDA, (2015) 4 SCC 136
The grant of counter-claim of the respondent by a non-reasoned award is severable, not dependent or intricately connected to other claims. 14. For the reasons recorded above, the impugned award being unreasoned is against public policy and is set aside qua the counter-claim no.1.
Judgment dated 12.5.2026 of the High Court of Delhi in O.M.P. (COMM) 448/2023 of M/s Indogreen International Vs. Delhi Development Authority
