| Case ID |
2baf766a-7d65-44dd-a2b9-a90f1fe46481 |
| Body |
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| Case Number |
F.A.O. No. 94 of 2005 |
| Decision Date |
Jul 21, 2005 |
| Hearing Date |
|
| Decision |
The Lahore High Court ruled that the trial court's order granting a temporary injunction against the encashment of a performance guarantee was set aside. The court found that a bank guarantee is an independent contract and that the encashment cannot be restrained based on disputes between the parties involved in the main agreement. The plaintiff had sought a decree for the amount of the performance guarantee, thereby asserting a pecuniary loss that could result from its encashment, which undermined their right to seek an injunction. Furthermore, the court noted that there was no evidence of fraud or special equities that could justify the injunction. Therefore, the appeal was allowed, and the temporary injunction was invalidated. |
| Summary |
In the case F.A.O. No. 94 of 2005, Pakistan Petroleum Limited appealed against the interim injunction granted by the trial court, which restrained the encashment of a performance guarantee by BBJ Pipe Industries. The Lahore High Court determined that performance guarantees are independent contracts and that the encashment could not be blocked simply due to disputes in the underlying agreement. The plaintiff’s own claims for damages weakened their position to seek an injunction. The court emphasized that the validity of the bank guarantee must be upheld unless clear fraud was demonstrated. This case highlights crucial principles regarding the enforceability of performance guarantees and the limitations of injunctions in commercial contract disputes. Keywords: performance guarantee, bank guarantee, injunction, Lahore High Court, commercial contracts, enforceability, legal principles, Pakistan Petroleum Limited, BBJ Pipe Industries. |
| Court |
Lahore High Court
|
| Entities Involved |
PAKISTAN PETROLEUM LIMITED,
BBJ PIPE INDUSTRIES (PVT.) LIMITED
|
| Judges |
SH. AZMAT SAEED
|
| Lawyers |
Asad Munir,
Shahid Karim,
Pervaiz Hussan,
Jawwad Hassan,
Ali Hassan Sajjad
|
| Petitioners |
PAKISTAN PETROLEUM LIMITED
|
| Respondents |
ANOTHER,
BBJ PIPE INDUSTRIES (PVT.) LIMITED
|
| Citations |
2005 SLD 410,
2005 CLD 1710
|
| Other Citations |
Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191,
Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Ltd. v. Messrs Allied Bank of Pakistan PLD 2003 SC 215,
Sahara Trading International (Pvt.) Ltd. v. Bank Al-Falah Ltd. PLD 2004 SC 925,
Pak Consulting and Engineering (Pvt.) Limited v. Pakistan Steel Mills Corporation (Pvt.) Ltd. 2003 CLD 251,
Messrs National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311,
Pakistan Engineering Consultants v. PIA 1989 SCMR 379
|
| Laws Involved |
Contract Act (IX of 1872),
Specific Relief Act (I of 1877),
Civil Procedure Code (V of 1908)
|
| Sections |
126,
54,
XXXIX, Rr. 1 & 2
|