Re: Opinion regarding closing of the file of Bank Guarantee No. ………….. dated 03.01.2001 for US $ 705,698, counter Guaranteed by Bank 1.
We refer to your letter vide No…………….. dated February 06, 2008 on the above subject.
From the facts it appears that a Performance Bank Guarantee being No. ……………… dated 03.01.2001 for US $ 705,698.00 (the “Bank Guarantee”) was issued by Bank 1in favour of Company 1 (“Company 1”) guaranteeing the performance supply contract by Company 2 Limited (“Company 2”). The Bank Guarantee was issued against Counter Guarantee No. 0179 FOG 04 2000 dated 23.12.2000. Subsequently Company 1 invoked the Bank Guarantee and lodged claim with Bank 2. Company 2 (“Company 2”) filed a Suit in the High Court of Delhi with an injunction application whereupon the Delhi High Court passed an ad-interim injunction order restraining Company 1from encashing the Bank Guarantee and the Bank 1from making payment under the Bank Guarantee. Thereafter, The Delhi High Court passed an exparte Decree and Judgement and granting permanent injunction in favour of the Company 2 and against Company 1restraining it from seeking the remittance of the amount of the Bank Guarantee. Being persistently pressurised by Company 1 to make the payment under the Bank Guarantee, BANK 1 being added as a party to the above Suit took steps in the Delhi High Court to vacate the injunction. Bank 2 appointed Company 3, a reputed law firm from Delhi as their counsel. Company 3 filed an application on behalf of BANK 1for setting aside the said exparte Decree and Judgement. Later on, Company 1vide their letter dated 07.09.2005 informed BANK 1 that they took a conscious decision to release the Bank Guarantee and requested BANK 1 to instruct their counsel Company 3to move an application for withdrawing the application for setting aside the exparte Decre and Judgement. BANK 1 claimed the legal costs of taka US $ 24,000.00 with up-to-date interest from Company 1 vide letter 18.09.2005. Thereafter, BANK 1 served a legal notice dated 30.04.2006 upon Company 1and a Reminder Legal Notice dated 10.07.2007 for the legal costs. Finally, Company 1vide letter dated 27.09.2007 sent a cheque of taka 7,93,048.00 to BANK 1being 50% of the total cost as full and final settlement of the subject matter. BANK 1accepted the cheque as full and final settlement of the subject matter.
In these circumstances, you require our legal opinion regarding whether you can close the file on the matter since you haven’t yet received the original guarantee.
From the facts we understand that there have been amicable settlement between BANK 1and Company 1in that Company 1already paid taka 7,93,048.00 being 50% of the total legal costs incurred by BANK 1for appointing Company 3, a reputed law firm from Delhi for pursuing the legal steps in the Delhi High Court, regarded as full and final settlement of the subject matter. But since the Bank Guarantee is still in possession of the Company 1, it is likely that Company 1 may raise the claim of the amount mentioned in Bank Guarantee. In the circumstances, our suggestion to BANK 1would be to make a claim to Company 1to return the original Bank Guarantee and to forward a certified copy of the Board Resolution passed by Company 1in terms of which it had taken a conscious decision to release the Bank Guarantee. After having the original Bank Guarantee and the certified copy of the said Board Resolution, BANK 1 may close the file on above subject-matter.
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