1986 PLP 2762 (MLD)

acting on behalf of Secretary, Ministry of Communication, Government of Pakistan, ISLAMABAD. Sir, You have entered into a contract, dated 30th March, 1980 with Messrs Continental Engineers Limited, 9‑A, Ganga Ram Mansion, Shahrah‑e‑Qusid‑e‑Azam, Lahore in joint venture with Messrs Kampsax D K‑1553, Dagmarhos, Copenhagon, Denmark and Messrs Wahlas U.K. Limited, 495, Green Lanes London N‑13, for Rehabilitation of National Highway Section‑VI Kot Diji Mile Stone 301 to Rohri Mile Stone 328, and stipulating payment to you by us on account. of the contract for an amount of 15% of the total value of the contract i.e. Rs.1,74,37,500 (Rupees one crore seventy‑four lac thirty‑seven thousand five hundred only). We hereby agree:‑ (1) To make an unconditional payment of Rs.1,74,37,500 (Rupees one crore seventy‑four lac thirty‑seven thousand five hundred only) to you on demand without any further question and without reference to the contractor. (2) To keep this guarantee in force till the due completion of the contract on the date given in the contract or as further extended from time to time and the final adjustment of accounts and the discharge of liability of the contractor in the above contract. (3) If any amendments to the contract under reference are made on behalf of the President the contract so amended shall be needed to be continuing for the purpose of clause (2) above. (4) To waive our consent/notice to any amendment and to the granting of any extension of time with mutual consent of the contracting parties or for any forebearance/indulgence allowed to the contractor. (5) The guarantee hereinbefore given shall not be effected by any change in the constitution of the Insurance Company or the contractor. (6) This guarantee shall remain in force for twenty‑four (24) months i.e. from 30th March, 1980 to 29th March, 1982 (or upto the completion of the project whichever occurs earlier). (7) This guarantee shall be binding on the successors of the Insurance Company or assignees of the said Insurance Co. (8) After the expiry date, this guarantee shall be void and without any legal force unless extended by us in writing before the date of its expiry i.e. 29th March, 1982. SIGNED at Lahore, this day of 30th March, 1980." A careful reading of the above bond will show that it was executed by the respondent on behalf of a joint venture, which consisted of Messrs Continental Engineers Ltd. of Lahore, Messrs Kampsax of Denmark, and Messrs Wahlas (U.K.) Limited of London. It is significant that both, the agreement between the contractor and the petitioner as well as the first bond were executed on 30th March, 1980, but the place of execution of the agreement is Islamabad, while that of the bond is Lahore. It is the case of the respondents that, at the time they executed the first bond, 'they were given to understand by the petitioners that the contract has been awarded to the joint venture, consisting of Messrs Continental Engineers Ltd. of Lahore, Messrs Kampsax of Denmark and Messrs Wahlas (U.K.) Limited of London, and it is for this reason that, both in the title of the bond as well as in the body, the contractor has been referred to with full description of the joint venture. It is contended on the basis of the stipulation in the bond that the respondents never undertook any liability under the first bond, with regard to the Messrs Continental Engineers Ltd., alone. The liability, it is urged, if any, was for the joint venture, which, alongwith the local firm of Messrs Continental Engineers Ltd. , included two foreign constituents, namely, Messrs Kampsax of Denmark and Messrs Wahlas (U.K.) Limited of London, and, as the two foreign constituents of the joint venture were not awarded the contract, dated 30th of March, 1980, referred in the bond, there is no guarantee in the eye of law existing in favour of the petitioner for the contract or Messrs Continental Engineers Ltd. The learned counsel for the respondent, in this connection, also referred to several other documents on record, including the letter of Messrs Nespak, who were appointed by the petitioner to supervise the work, to demonstrate that, even to their own engineering consultants, the petitioners all along represented that the work is to be carried on by a joint venture, consisting of Messrs Continental Engineers Ltd. of Lahore, Messrs Kampsax of Denmark and Messrs Wahlas (U.K) Ltd. of London. In this connection, the learned counsel for the respondent also referred to the subsequent performance bond executed by the respondent in favour of the petitioner, which also referred to the contractor as consisting of a joint venture of Messrs Continental Engineers Ltd. of Lahore, Messrs Kampsax of Denmark and Messrs Wahlas (U.K.) Limited of London. It is an admitted position in the case that the contract, dated 30th of March, 1980, was awarded exclusively to Messrs Continental Engineers Ltd. of Lahore, and in that agreement, there is no mention at all of Messrs Kampsax of Denmark and Messrs Wahlas (U.K.) Ltd. of London. The learned counsel for the petitioner was unable to, explain the reason for accepting the guarantee by the respondent for the joint venture, in spite of the fact that the agreement, dated 30th March, 1980, was executed only between the petitioner and Messrs Continental Engineers Ltd. of Lahore. There is also no satisfactory explanation on record with regard to the performance bond, dated 14th of April, 1980, which was executed much after the execution of the principal agreement, dated 30th of March, 1980, and, in which again, reference to the contractor has been made as a joint venture, consisting of Messrs Continental Engineers Ltd. of Lahore, Messrs Kampsax of Denmark and Messrs Wahlas (U.K.) Limited of London. Dr. Pervez Hassan, learned counsel for the petitioner contends that, since in the agreement, dated 30‑3‑1980, only Messrs Continental Engineers Ltd. is shown as the contractor, it should be presumed that the respondent while executing the 1st bond had notice of this fact. as the agreement dated 30‑3‑1980 is specifically referred in the two bonds executed by the respondent in favour of the petitioner. It is accordingly urged that the description of the joint venture in the two bonds as the contractor was a mistake, which was committed by the respondent, and the respondent cannot be permitted to take advantage of its own wrong. The contention of the learned counsel for the petitioner is not borne out from the material on record. In spite of the fact that, in the first bond, dated 30th of March, 1980, and the subsequent performance bond, dated 14th April, 1980, the respondent specifically and deliberately referred the name of contractor as the joint venture, consisting of Messrs Continental Engineers Ltd. of Lahore. Messrs Kampsax of Denmark and Messrs Wahlas (U.K.) Ltd. of London, and these documents were in possession of the petitioner all along, they had at no stage, raised any objection with regard to the mention of the above joint venture as the contractor in the two bonds. The learned counsel for the petitioner is also unable to explain the reason for mention of this joint venture of the contractor in the letter of. Messrs Nespak, who were admittedly appointed by the petitioner as the technical adviser to supervise the contract awarded to Messrs Continental Engineers Ltd. In this connection, it will be advantageous to refer to a letter of Messrs Nespak Ltd., addressed to Messrs Continental Engineers Ltd., and copy endorsed to the petitioner, dated 22nd of April, 1980. It is as follows:‑ "Messrs Continental Engineers Ltd., Designers & Builders, 9/A, Ganga Ram Mansion, Shahrah‑e‑Qusid‑e‑Azam, LAHORE. Subject: Contract No.7‑Third IBRO Highway Project. Joint Venture Agreement. Reference: Our letter No.NESPAK/HWD/KR./747, dated 3rd April, 1980 Dear Sir, You have been informed in a meeting on 21st April, 1980 held in National Highways Board, Islamabad that in order to release the Mobilization advance and subsequent payments, a Power of Attorney should be obtained from Messrs Kampsax Denmark and Messrs Wahlas (U.K.) Limited, that all payments shall be made to Messrs Continental Engineers Limited (Pakistan) in their name concerning the Rehabilitation of National Highway Kot Diji to Rohri. In order to avoid delays in the payment of mobilization advance the other two Companies may communicate their agreement through Telex No.4730 NESPAK Lahore, but written power of attorney shall be mailed by them immediately which should also be confirmed in the above telex. Yours faithfully, For NATIONAL ENGINEERING SERVICES (PAKISTAN) LTD. (INAM BARI PERVAIZE), Project Manager." The .learned counsel for the petitioner attempted to meet the above argument, by saying that, under clause (5) of the first bond, it is specifically provided that the guarantee given by the respondents under the bond shall not be affected by any change in the constitution of the Insurance Company, or, the contractor. It is true that such a provision exists in the first bond, but prima facie this clause will refer to a change, which may take place in the constitution of the respondent and the contractor subsequent to the execution of the bond. This provision, on a tentative examination, will not cover a re‑constitution of the joint venture, which was mentioned as the contractor in the first bond, and for whom the respondent had executed the guarantee frond. I have only examined the material placed in this case tentatively for the purposes of examining, whether the defences raised by the respondent in denying the liability of the claim made by the petitioner under the first bond is based on bona fide pleas and substantial ground, and therefore, any expression of opinion in this regard should not be treated as final, as this has to be determined conclusively in proceedings, which the petitioners may choose to initiate against the respondents for the purposes of enforcing their liability under the aforesaid bond After examining the above material, which has been placed by the parties before me, I am of the view that the denial made by the respondent is based on triable issues and is neither frivolous nor is merely a cloak to avoid payment under the first bond. As I have reached the conclusion that the denial of liability made by the respondent is based on substantial ground, the remedy by way of winding up order of the respondent is neither equitable nor justified in the circumstances of the case. I accordingly dismiss this petition, but leave the parties to bear their respective costs. The petitioner is at liberty to follow such other course as is available to him under the law for enforcement of the alleged liability of the respondent under the first bond. H . B . T Petition dismissed.