Bank of Baroda has suffered a major setback due to a directive from the Calcutta High Court. The Calcutta High Court has asked the Reserve Bank of India to consider “appropriate steps” against the Bank of Baroda, including the cancellation of the banking license, for delay in granting bank guarantees. Ltd. was hearing a case on a bank guarantee issued to him.
The case came to light after the bank failed to issue a payment of Rs 6.67 crore as unconditional bank guarantee to Indian Oil Corp Ltd on behalf of Simplex Projects Limited. The division bench of Justice Sanjib Banerjee and Justice Kaushik Chanda while giving its directions said that the conduct of the appellants should be taken care of and the Reserve Bank of India should consider what appropriate steps to take against the bank, including the cancellation of the Bank of Baroda license Can go. ”
Indian Oil Corp Ltd alleges that Simplex did not fulfill its promise after which it agreed to implement the bank guarantee. On this basis, the bank had no right to stop the immediate payment without guarantee.
It has also been argued that the payment could not be deferred after the guarantee was implemented. Nevertheless, the bank denied that the bank had not been provided the money by Simplex. The court says that despite being a nationalized bank, the way Bank of Baroda operates is wrong. The court has asked the RBI to take appropriate steps in this matter.