KOCHI: The Kerala High Court on Tuesday ordered that status quo be maintained with respect to the encashment of the performance guarantee given by RDS Projects Ltd to Roads and Bridges Development Corporation of Kerala (RBDCK) Ltd for the construction of the Palarivattom flyover.
Justice P B Suresh Kumar issued the order on a petition filed by Shashank Goyal, Director, RDS Projects, seeking to declare illegal the encashment of the performance guarantee. According to the petitioner, the steps taken by RBDCK to encash the Performance Bank Guarantee were illegal and in violation of the terms and conditions of the contract.
As per Clause 10.3 (Claims under Performance Security), prior to making a claim under the performance security, the employer shall, in every case, notify the contractor stating the nature of the default in respect of which the claim should be made. However, the RBDCK neither issued any notice to the RDS nor heard the petitioner before taking steps to encash the guarantee.
The petitioner pointed out that the Kerala Industrial and Technical Consultancy Organisation (KITCO) Ltd had opined that development of minor cracks on the bridge was not at all alarming and it was only a usual phenomenon. The opinion thus gave an inference that the structure behaviour was proper. Thus, in the absence of any default, the encashment of the Performance Bank Guarantee was illegal.