LARSEN & TOUBRO LIMITED Vs. PUNJAB NATIONAL BANK

JUDGEMENT

(1.) This writ petition is filed by the petitioners seeking the following reliefs:

(2.) Essentially the dispute in the present petition centers around interpretation of section 28 of the Indian Contract Act, 1872 (hereinafter referred to as the 'Contract Act'). The grievance of the petitioner is that based on an erroneous interpretation of section 28 of the Contract Act, respondent bank forces a mandatory and an unalterable claim period of a minimum 12 months for the bank guarantee. It is stated that the claim period is a time period contractually agreed upon 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. This claim period may or may not even exist in a bank guarantee.

(3.) Section 28 of the Indian Contract Act, 1972 reads as follows: