| Case ID |
3013d38a-f8cd-41b9-b2ab-b93219bf5c75 |
| Body |
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| Case Number |
Civil Petitions for Leave to Appeals Nos. 1120 and |
| Decision Date |
Jul 11, 2002 |
| Hearing Date |
|
| Decision |
The Supreme Court of Pakistan upheld the independence of bank guarantees, emphasizing that they are autonomous contracts that impose absolute obligations on banks to comply with their terms, irrespective of any disputes between the parties involved. The court ruled that the bank must honor the guarantee upon demand unless there is clear fraud of which the bank has notice. The court also clarified that the existence of other claims or counter-claims does not impede the enforcement of a bank guarantee. Thus, the court dismissed the petitions for leave to appeal as devoid of merits, maintaining that the encashment of bank guarantees should not be restrained unless exceptional circumstances such as fraud are present. |
| Summary |
This case revolves around the enforceability of bank guarantees under the Contract Act and highlights the principle that banks must honor guarantees without interference from courts, except in cases of fraud. The Supreme Court of Pakistan ruled that the bank guarantee is an independent contract, ensuring that the commitments made by banks in international and domestic commerce are upheld. The court emphasized the importance of maintaining trust in the banking system and international trade, stating that only exceptional circumstances could warrant interference. This ruling reinforces the autonomy of bank guarantees and clarifies the obligations of banks regarding their guarantees, making it a significant case for banking law in Pakistan. Key phrases for SEO include 'bank guarantee enforceability', 'autonomous contracts', 'Supreme Court of Pakistan banking law', and 'Contract Act 1872'. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
Not available
|
| Judges |
JAVED IQBAL,
TANVIR AHMED KHAN,
MUHAMMAD NAWAZ ABBASI
|
| Lawyers |
M. S. Baqir,
Imtiaz Muhammad Khmi
|
| Petitioners |
SHIPYARD K. DAMEN INTERNATIONAL
|
| Respondents |
Karachi SHIPYARD AND ENGINEERING WORKS LTD.
|
| Citations |
2003 SLD 3430,
2003 PLD 191
|
| Other Citations |
Province of West Pakistan v. Mistry Patel & Co. PLD 1969 SC 80,
W.J. Younie and others v. Tulsi Ram Jankiram and others AIR 1942 Cal. 382,
Farr Smith & Company Ltd. v. Messers Limited (1928) 1 K B 397,
Printpac (Pvt.) Ltd. v. Rice Export Corporation of Pakistan Ltd. 1992 MLD 1161,
Messrs Jamia Industries v. Messrs Pakistan Refineries Limited, Karachi PLD 1976 Kar. 644,
Sirafi Trading Establishment v. Trading Corporation of Pakistan Limited 1984 CLC 381,
United Commercial Bank v. Bank of India AIR 1981 SC 1426,
National Construction Company Limited v. Aiwan-e-Iqbal PLD 1994 SC 311
|
| Laws Involved |
Contract Act (IX of 1872),
Civil Procedure Code (V of 1908),
Arbitration Act (X of 1940),
Constitution of Pakistan (1973)
|
| Sections |
126,
127,
10,
17,
18,
O.XXXIX, Rr. 1 & 2,
S.20,
Art. 185(3)
|