| Case ID |
398dc1ea-e542-445b-9e8c-b301c444464a |
| Body |
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| Case Number |
Civil Petition No.1668 of 2009 |
| Decision Date |
Oct 22, 2009 |
| Hearing Date |
|
| Decision |
The Supreme Court of Pakistan partially allowed the appeal filed by the petitioner, Standard Construction Company (Pvt.) Ltd., against the order passed by the High Court of Sindh regarding the encashment of bank guarantees. The Court held that the authorities were entitled to encash the pre-bid bank guarantee of Rs.18 million while restraining them from encashing the other two bank guarantees until the findings of the Arbitrator regarding the fulfillment of conditions precedent for encashment were determined. The Court emphasized that the demand for encashment must be based on the fulfillment of specified requirements and that the findings of the High Court could unduly influence the proceedings before the Arbitrator. |
| Summary |
In the case of Standard Construction Company (Pvt.) Ltd. vs. Pakistan through Secretary, M/O Communications, the Supreme Court of Pakistan addressed the encashment of bank guarantees related to a construction project. The petitioner, a private limited company engaged in civil works, contested the High Court's decision that referred the dispute to arbitration while dismissing their application for interim relief against the encashment of three bank guarantees amounting to Rs.18 million, Rs.80 million, and Rs.35 million. The key issues revolved around whether the financial close had been achieved as per the Concession Agreement and the conditions for encashment of the guarantees. The Supreme Court clarified that while the first bank guarantee could be encashed, the latter two required a determination by the Arbitrator regarding the fulfillment of conditions. This decision underscores the importance of contractual stipulations in bank guarantees and the proper adjudication of disputes through arbitration, ensuring that parties adhere to the agreed terms. The case highlights critical aspects of construction law, arbitration principles, and the enforcement of bank guarantees, making it a significant reference point for future legal interpretations. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
Standard Construction Company (Pvt.) Ltd.,
National Highway Authority (N.H.A.)
|
| Judges |
MIAN SHAKIRULLAH JAN,
JAN,
CH. IJAZ AHMAD
|
| Lawyers |
Bilal A. Khawaja,
Mehr Khan Malik,
Hafiz S. A. Rehman,
Barrister Ahmed Ata-ur-Rehman,
Col. Muhammad Azeem
|
| Petitioners |
STANDARD CONSTRUCTION COMPANY (PVT.) LTD.
|
| Respondents |
PAKISTAN through Secretary, M/O Communications,
N.H.A.
|
| Citations |
2010 SLD 2626,
2010 CLD 196
|
| Other Citations |
Not available
|
| Laws Involved |
Arbitration Act (X of 1940)
|
| Sections |
20,
41
|