The Calcutta High Court has directed the Reserve Bank of India to consider appropriate steps against Bank of Baroda (BoB), including revoking its licence or authority to carry on with banking business, if necessary, for failing to honour a bank guarantee given by a third party to Indian Oil Corporation (IOCL).
In a matter relating to an appeal by BoB against IOCL, a division bench comprising justices Sanjib Banerjee and Kaushik Chanda took up a cross-objection by respondent IOCL on February 10, immediately after dismissing the appeal by BoB for default, since the appellants could not proceed with the matter.
The oil company told the court that it had entered into an agreement with Simplex Projects Limited in 2017 for undertaking certain work at the Bongaigaon facility of IOCL in Assam.
In terms of such agreement, IOCL was obliged to make a mobilisation advance against a bank guarantee, while Simplex was also required to furnish a bank guarantee on account of security deposit, the court noted.
Source: Business Standard