| Case ID |
057775d1-dd99-47e7-9340-b0dad2c025da |
| Body |
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| Case Number |
Civil Petition No.382 K of 2002 |
| Decision Date |
Apr 17, 2002 |
| Hearing Date |
|
| Decision |
The Supreme Court of Pakistan granted leave to appeal based on the contention that the encashment of the Bank Guarantee should not proceed until a determination of the breach of contract terms was established. The Court emphasized that the Bank Guarantee constituted an independent contract with conditions that must be respected. The ruling reiterated that even in cases of litigation between the original parties, the bank is obligated to honor the guarantee unless there is a clear violation of the tender conditions that warrants encashment. The decision underscored the need for judicial scrutiny in cases where the encashment of guarantees is contested, particularly when the terms of the guarantee contain specific conditions regarding the parties' obligations. |
| Summary |
In the landmark case of Civil Petition No.382 K of 2002, the Supreme Court of Pakistan deliberated on the complexities surrounding the encashment of a Bank Guarantee. The case arose when PAK CONSULTING & ENGINEERING (PVT.) LTD. contested the encashment of two Bank Guarantees by PAKISTAN STEEL MILLS amidst ongoing litigation. The Court underscored the independent nature of Bank Guarantees as contracts and established that encashment cannot occur without a clear breach of the contractual obligations defined in the tender documents. The decision emphasized the significance of adhering to specific terms outlined in contracts and the necessity for due legal process before allowing encashment. This ruling contributes significantly to the jurisprudence surrounding commercial contracts and the enforceability of Bank Guarantees in Pakistan, providing a precedent for future cases involving similar legal disputes. The decision serves as a critical reference for legal practitioners, reinforcing the importance of clarity in contract terms and the obligations of parties involved in commercial transactions. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
PAK CONSULTING & ENGINEERING (PVT.) LTD.,
PAKISTAN STEEL MILLS,
Habib Bank Ltd.
|
| Judges |
IFTIKHAR MUHAMMAD CHAUDHRY, JUSTICE,
HAMID ALI MIRZA, JUSTICE
|
| Lawyers |
Fakhr-ud-Din G. Ebrahim, Advocate Supreme Court,
Raja Abdul Ghafoor, Advocate on-Record for Petitioner,
G.M. Dastagir, Advocate Supreme Court,
Mehr Khan Malik, Advocate on-Record for Respondents
|
| Petitioners |
PAK CONSULTING & ENGINEERING (PVT.) LTD.
|
| Respondents |
PAKISTAN STEEL MILLS and another
|
| Citations |
2002 SLD 701,
2002 CLD 1012
|
| Other Citations |
Messrs National Construction. Co. Ltd. v. Aiwan e-Iqbal Authority PLD 1994 SC 311,
Sirat Trading Establishment v. Trading Corporation of Pakistan Ltd. 1984 CLC 381,
Messrs Arul Murugan Traders v. Rashtriya Chemicals and Fertilizers Ltd., Bombay and another AIR 1986 Mad. 161,
Kudremukh Iron Ore Co. Ltd. v. Korula Rubber Co. Pvt. and another AIR 1987 Karnataka 139,
Messrs Synthetic Foams Ltd. v. Simpled Concrete Piles (India) Pvt. Ltd. AIR 1988 Delhi 207,
S. Chand & Co. Ltd. v. Dr. K. Shivarama Karantha and others AIR 1990 NOC 178 (Kant.),
State Associates v. Messrs Farben Industrial Development SPA and another 1992 MLD 1007,
Messrs Zeenat Brother (Pvt.) Ltd. v. Aiwan e Iqbal Authority through Chairman, Lahore and 3 others PLD 1996 Kar. 183,
Generale Biscuit, A French Company through Mr. Benoit Barme and another v. Messrs Diamond Food Industries (Pvt.) Ltd. through Chief Executive/Director/Secretary 1999 YLR 305,
Messrs Kohinoor Trading (Pvt.) Ltd. v. Mangrani Trading Co. and 2 others 1987 CLC 1533,
Messrs Rafidian Bank, Iraq v. M.L. International (Pvt.) Ltd., Karachi and 3 others 1993 MLD 1234,
Pakistan Engineering Consultants v. Pakistan International Airlines Corporation and BCCI and others 1993 CLC 882,
Haral Textiles Limited v. Banque Indosues Belgium, SA and others 1999 SCMR 591,
Pakistan National Shipping Corporation PNSC Building, Karachi v. Samsung Co. Ltd: and 3 others 2001 CLC 1473
|
| Laws Involved |
Contract Act, 1872,
Civil Procedure Code (V of 1908)
|
| Sections |
126,
O.XXXIX, Rr.1,2
|