Q: What is contingent liability ?
Ans: Contingent liability is the liability of any uncertain event in future.
A contingent liability is defined as a liability which may arise depending on the outcome of a specific event.
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Q: Elaborate the citation of Hindustan Construction Co. Ltd. vs State of Bihar and othrs ?
Ans: Hindustan Construction Co. Ltd vs State Of Bihar And Ors on 8 October, 1999 In this case, the honourable Supreme Court held that the bank only pays the amount after certain conditions which might be enumerated in the guarantee contract, are fulfilled by the debtor. Conditions can be like- Proof of default, approval of a third party etc. To invoke the encashment of the bank guarantee, the conditions put forth in the contract have to be fulfilled. Injunction against encashment of conditional Bank guarantees can be granted by the courts in view of the facts of the case present and the beneficiary can’t have an unrestrained right to invoke the bank guarantees. Therefore, the invocation of the bank guarantee should be in strict conformity with the conditions on which the guarantee is issued. In the case of Hindustan Construction Co. Ltd. vs State of Bihar and othrs, the honourable supreme court held that under conditional bank guarantees, the beneficiary does not have an unf...
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