Research on - Loss of opportunity due to non-release of PBG

M/S Kmc Construction Ltd. vs 32. NHAI had issued the Taking Over Certificate on
National Highway Authority Of on
28.02.2004. The Defect Liability Period of twelve months
23 December, 2021
expired on 28.02.2005 in terms of Clauses 10.2 and 10.4 of
O.M.P. (COMM.) 458/2020, I.A. the GCC. NHAI was obliged to return the Performance
Bank Guarantee for a sum of ₹16,47,57,636/- (hereafter
NOS. 257/2021 & 2649/2021
'the PBG') furnished by KMC within a period of fourteen
days thereafter. However, NHAI issued the Defect Liability
Certificate on 24.05.2006. Thus, the PBG was required to
be released latest by 07.06.2006, that is, within the fourteen
days period after the issuance of the Defect Liability
Certificate. However, NHAI did not release the PBG and
this resulted in KMC incurring additional costs on account
of commission paid to the Bank for extending the PBG
along with further interest on that commission. KMC also
claimed interest on the said amount.

In addition, the Arbitral Tribunal also awarded interest at

the rate of 12% per annum on the said amount to be
computed from various dates on which commission was
paid.