Surat Diamond Bourse in Hot Water: Court Orders Rs 100 Crore Bank Guarantee for Unpaid Dues

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A court in Surat has directed the Surat Diamond Bourse (SDB) to provide a bank guarantee of Rs 100 crore to a construction firm, PSP Projects, in a case involving alleged non-payment of dues amounting to Rs 631.32 crore.

Background of the Dispute

PSP Projects, the construction firm that built the SDB building near Surat city, approached the court after the SDB allegedly failed to make the final payment of Rs 538.59 crore even after the completion of construction and handover of the building over a year ago. With interest, the outstanding amount has reached Rs 631.32 crore.

SDB's Response

The SDB management has neither made the payment nor rejected the bill presented by the construction firm, according to the petition filed by PSP Projects.

Court's Observations

The court noted that the final bill was raised after the SDB issued a virtual completion certificate on October 21, 2022, and has been pending for more than a year.

Auction of Office Space

The construction firm expressed concerns that the SDB has started allotting office space in the building through an auction, which could jeopardize their ability to recover any dues if an award is passed in their favor.

Significance of the SDB Building

The SDB building, located at Khajod village near Surat, is known as the world's largest office building with 67 lakh square feet of floor space. It houses approximately 4,500 diamond trading offices.

Upcoming Inauguration

Notably, the SDB recently announced that Prime Minister Narendra Modi will inaugurate the newly-built building at the Diamond Research and Mercantile (DREAM) City on December 17.

The court's order to furnish a bank guarantee aims to protect the interests of the construction firm involved in the SDB building project. The ongoing dispute highlights the importance of timely payments and adherence to contractual obligations in large-scale construction projects.