Lawsuit against e-Bank Guarantee for Government Contract Works – Chennai HC issued order to National Highway Department..!

The Madras High Court has issued an order in a case challenging the order to pay the security amount through e-banking for government contract works. To participate in online tender for any departments under government, it is mandatory to submit EMD(Earnest Money Deposit). Till now the practice of giving a percentage of the contract value as advance in the form of bank draft or fixed deposit or bank guarantee is being followed in any government sector.

However, a new condition has been imposed for all the contract works requested by the National Highways Department that the contractors should pay the advance amount only through ‘e-bank’ guarantee. This e-bank guarantee procedure is yet to be introduced in many banks. It is operational only in selective banks.

Due to this new procedure, eligible contractors who want to participate in National Highway Department tenders are unable to participate. This new practice also calls into question the transparency of contract work. Therefore, Mr. K.Chandraprakash, Founder and Managing Director of KCP Infra Limited has filed a writ petition in the Madras High Court against the e-bank guarantee format that was recently introduced by National Highways Department

The petition came up for hearing yesterday before Justice N. Seshasayee. The Judge adjourned the hearing to the 12th, ordering that the Additional Secretary of the National Highways Department and the Superintendent Engineer should give a proper detailed explanation for this issue.

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