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ARTICLE · 20 SEPTEMBER 2021

Dispute Resolution & Arbitration Monthly Newsletter I September 2021

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Based on an erroneous interpretation of Section 28 of the Indian Contract Act, 1872 (Contract Act), Punjab National Bank (PNB/Respondent No. 1) forced a mandatory and unalterable claim period...

IndiaLitigation, Mediation & Arbitration
Faranaaz Karbhari
Faranaaz Karbhari
Pragya Ohri
Pragya Ohri
Kshitiz Khera
Kshitiz Khera
Rahul Jain
Rahul Jain
Kanika Kumar
Kanika Kumar
Khushboo Rupani
Khushboo Rupani
Mahafrin Mehta
Mahafrin Mehta
Aasiya Khan
Aasiya Khan
Aditi Soni
Aditi Soni
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L&T Ltd & Anr v. PNB & Anr

W.P. (C) 7677/2019

Background facts

  • Based on an erroneous interpretation of Section 28 of the Indian Contract Act, 1872 (Contract Act), Punjab National Bank (PNB/Respondent No. 1) forced a mandatory and unalterable claim period of a minimum of 12 months pertaining to bank guarantees. It defined that claim period is a time-period contractually agreed between the creditor and principal debtor which provides a grace period beyond the validity period of the guarantee to make a demand on the bank for a default which occurred during the validity period. The claim period is meant to provide grace time beyond the validity of the guarantee which may or may even exist in a bank guarantee.

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