KATHMANDU, AUGUST 2
The Himalayan Bank (HBL) and Bank of Kathmandu (BoK) have won a long fought legal battle in China against China Railway 15 Bureau Group to recover Rs 1.6 billion in counter guarantee money from China Construction Bank (CCB).
A case hearing by the High People's Court (appellate court) of Henan Province held today has ruled in favour of the two Nepali banks and ordered the CCB to pay the advance payment guarantee and performance guarantee to HBL and BoK, informed Gandhi Pandit, senior advocate and lead lawyer for HBL and BoK in the case.
Although the Zhengzhou Intermediate Court had also ruled in favour of HBL and BoK back in 2020, the China Railway 15 Bureau had appealed the case in the high court, which extended the duration of the case further.
"Over a year after the Chinese contractor company filed for an appeal, the high court has also ruled in favour of the Nepali Banks, stating that the earlier ruling of the Zhengzhou Intermediate Court was right," Pandit said.
In 2008, the China Railway 15 Bureau Group was given the contract to build a 27-kilometre-long tunnel for the Melamchi Drinking Water 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.
But the Melamchi Water Supply Development Board scrapped the contract with the Chinese company in September 2012 over its poor performance in handling the project.
The same year, the Patan High Court ordered HBL and BoK to pay the guarantee amount to the Melamchi project.
On the other hand, the Chinese contractor filed a fraud case against Melamchi at Zhengzhou Intermediate People's Court, which prevented CCB from releasing the counter guarantee amount to the Nepali banks, which led to the HBL and BoK also filing a counterclaim against China Railway Bureau and CCB in 2014 in Zhengzhou Intermediate People's Court. The banks had then sought legal support of Pandit to work with their Chinese lawyer in the case.
This is a second major international win of senior advocate Pandit, who had earlier argued a case for Nepal Investment Bank Ltd. The bank had won the legal battle in June of 2020 to recoup Rs 2.044 billion against Italian firm Cooperativa Muratori e Cementisti di Ravenna (CMC) after the Italian high court ruled in its favour in a case involving CMC's performance guarantee to Tanahu Hydropower Ltd.
A version of this article appears in the print on August 3, 2022 of The Himalayan Times.
