M/S Videsh Sanchar Nigam Limited vs Axis Bank Limited & Anr. on 23 May, 2018

63. On this submission being made, learned counsel for the respondent
Bank of India was asked by the court to specifically take instructions as to the
normal banking practice in such situations. Learned counsel for the State
Bank of India has stated that a bank guarantee, unless there is a limitation
contained in its terms that it could be invoked only once, could be invoked
repeatedly during its currency, partially, so that the aggregate amount invoked
by the beneficiary does not exceed the maximum amount payable under the
bank guarantee.
64. A perusal of the bank guarantees in question dated 12.6.2008 (issued
by State Bank of Patiala), the validity whereof was extended vide extension
dated 27.9.2010; and the bank guarantee dated 11.6.2008 (issued by State
Bank of India), the validity whereof was extended vide extension dated
27.9.2010 upto 31.12.2010, does not support the submission made by Ms.
Jaisingh. The said bank guarantees, inter alia, state that the said banks “do
hereby unconditionally and irrevocably undertake to pay to DDA an amount
not exceeding ………. without any demur or merely on a demand in writing
from DDA, received by the bank on or before……….. stating that he amount
claimed is due and payable by project developer. Any such demand received
by the bank on or before ……… shall be conclusive as regards the amount due
and payable by the bank under this guarantee. However, the banks liability to
this guarantee shall be restricted to an amount not exceeding……..”. The bank
guarantees further recite “our liability under this agreement shall not exceed
………” It further states” we shall be liable to pay guaranteed amount or any
part thereof only and only if you serve upon us a written claim or demanded
on or before………”.

Source: Indian Kanoon

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