KATHMANDU, NOVEMBER 6
After an eight-year-long court battle, Himalayan Bank Ltd (HBL) and Bank of Kathmandu (BoK) may finally be able to retrieve more than Rs 1.50 billion from China Construction Bank (CCB) in the case of counter guarantee money for Melamchi Drinking Water Project.
“The Zhengzhou Intermediate Court has reverted its earlier decision and ruled in favour of HBL and BoK and ordered CCB to pay over Rs 1.50 billion covered by advance payment guarantee and performance guarantee to the Nepali banks,” informed Gandhi Pandit, senior advocate and lead lawyer for HBL and BoK in the case.
“The decision was taken on Thursday and communicated to us today,” he added.
The years-long legal fight, however, may not be over yet.
“There is still a chance they might appeal, but that would only be buying time because as per the international law and practice, the guarantee provided by CCB to both the Nepali banks is an independent and unconditional obligation,” said Ashoke SJB Rana, chief executive officer of HBL. “We should have a clearer picture early next week.”
It all started in 2008 when the China Railway 15 Bureau Group was contracted to build a 27-kilometre-long tunnel for the Melamchi project. HBL had issued $6.665 million as performance guarantee, while BoK had issued $6.2 million and 1.40 million euros as advance payment guarantee to Melamchi Water Development Board to provide the counter guarantee to CCB. The CCB was the guarantor for the China Railway 15 Bureau Group.
The row over the guarantee amount erupted after the Melamchi Water Supply Development Board terminated its contract with the Chinese contractor in September 2012 over poor performance in executing the project.
After scrapping the contract, the Melamchi board had sought payment of performance guarantee and advance payment guarantee from the two banks.
While HBL and BoK subsequently filed a case agains