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Bank Guarantee if can e invoked after its validity

(Querist) 03 June 2009 This query is : Resolved 
Dear all learned members,

Under what circumstances a bank guarantee can be invoked by beneficiary after it's validity?
A V Vishal (Expert) 03 June 2009
Dear Mr Saxena,

Kindly furnish details regardin the invocation clause of the bank guarantee. However, in my opinion a bank guarantee which is not invoked within the time limit set as per the guarantee agreement is void.
Y V Vishweshwar Rao (Expert) 04 June 2009
The Bank Guarantee can be invoked with in the Stipulated time only - Valid Period only -
The Terms of the BG to be verified
Murali Krishna (Expert) 04 June 2009
Bank guarantee has to be invoked within the time prescribed in the bond.

Some times banks give more time for invocation of guarantee bond than validity of the guarantee.

However, some times guarantee is extended by express terms. In such case, within such extended time guarantee has to be invoked.

I am sure more elaboration than this to Kamalnarayan Saxena is not required.
KamalNayanSaxena (Querist) 04 June 2009
Dear friends,
There are two clauses in the guarantee bond which are in my opinion contradictory to each other i.e.

1. This performance gurantee shall remain valid and full effect until it is decided be discharged by the Govt.

2. The BG shall remain valid until 31.03.2009.

Now, facts of the case are that beneficiary directed bank on Dt. 19.03.2009 to renew the BG and not make payment until discharged by Govt. Bank refused for renewal without written consent of applicant.

Now Govt. surreders bond for payment on Dt. 05.05.2009 invoking BG.

So, under above said circumstances can the Govt. invoke BG?

Some where I read that if a notice regarding renewal of BG was issued by beneficiary to the bank as well as to the applicant before its expiry and applicant failed to renew the BG, than such notice may be deemed as the notice for invocation.

Kindly give your valuable opinion.
Y V Vishweshwar Rao (Expert) 05 June 2009
Dear Saxena Your View is Correct , There are clauses as mentioedn in the BG .
There will be another clause it should be invoked /claimed on or before --------. Every BG is for alimited period with stipulated BG Fee for the period , it can not be renewed by the benificiary, it is for the BG Applicant to pay the BG Fee and request the Bank to renew the BG . It may be correct that the benificiary while requirign the BG Applicant to Renew the BG and to submit the renewed BG and the copyof the same letter might be marked to the Bank with a request to renew the BG and if not renewed to treat the said letter as demand for payment under the BG - That letter may be taken in to consideration for invoking the BG , if not renewed - Each case facts to be verifed . I will inform any judgment as you require, if it comes to my notice

with regards
B.B.R.Goud. (Expert) 06 June 2009
my dear learned friends, thank you very much, for giving a valuable info...


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