2014 PLP 1439 (CLD)
Messrs GLOBAL ENERGY AND COMMODITY EXCHANGE GROUP ITALY SPA (GECX GROUP) and another — Appellants Versus TRADING CORPORATION OF PAKISTAN through Chairman and another — Respondents
| Citation | 2014 PLP 1439 (CLD) |
| Forum / Court | Sindh |
| Bench Members | N/A |
| Parties | Messrs GLOBAL ENERGY AND COMMODITY EXCHANGE GROUP ITALY SPA (GECX GROUP) and another — Appellants Versus TRADING CORPORATION OF PAKISTAN through Chairman and another — Respondents |
| Primary Law | Arbitration Act (X of 1940) |
Q1: What are the key laws and sections cited in 2014 PLP 1439 (CLD)?
This judgment primarily cites: Arbitration Act (X of 1940) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2014 PLP 1439 (CLD)?
The case was heard and decided by the Sindh bench comprising: N/A.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2014 PLP 1439 (CLD) (Messrs GLOBAL ENERGY AND COMMODITY EXCHANGE GROUP ITALY SPA (GECX GROUP) and another — Appellants Versus TRADING CORPORATION OF PAKISTAN through Chairman and another — Respondents). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- Sarfaraz Ali Metlo for Respondents.
Headnotes / Summary
S. 20
Dispute pertaining to performance of contract
Application to restrain encashment of bank guarantee executed by appellant in favour of the respondent
Scope
Contention of the appellant was that respondent should be restrained from encashing the bank guarantee till conclusion of arbitration proceedings between the parties
Held, that encashment of bank guarantee was to be restrained only if a prima facie case was made when there was material available on record to show that the person in whose favour the performance bond was executed, had also committed default in performance of the contract
When such a prima facie case was made out then the court could restrain the encashment of a bank guarantee
In the present case, however, time for performance of the contract by the appellant was extended many times, but the appellant failed to discharge its contractual commitment, and only after getting extension of contract, when the contract was still not performed by the appellant, the bank guarantee was sought to be encashed
No justification therefore, existed to restrain the respondent from encashing the bank guarantee
Appeal was dismissed.
Judgment & Decree
The appellant has filed this appeal in the proceedings filed under section 20 of the Arbitration Act in which application for interim injunction was filed seeking restraining order with regard to encashment of the bank guarantee that was submitted to cover the amount of the performance bond. The trial Court dismissed the injunction application on the ground that let the bank guarantee be encashed as in case of success of the appellant in the arbitration proceedings the respondent would return the amount. Against such judgment present appeal has been filed. The only ground that has been taken in this appeal is where there is a dispute with regard to the performance of a contract and performance bond has been executed then as a rule bank guarantee cannot be allowed to be encashed in terms of the undertaking given in the performance bond. In support of this contention learned counsel for the petitioner has relied upon judgments reported in PLD 1997 Karachi 636, PLD 1996 Karachi 183, 2011 CLD 1625, PLD 1976 Karachi 644 and 1989 SCMR
379. We have seen that in the judgment reported in PLD 1996 Karachi 183 (Messrs Zeenat Brother (Pvt.) Ltd v. Aiwan-e-Iqbal Authority and 3 others) the encasement of bank guarantee was restrained only on the consideration that a prima facie case is made at as there was material available on record to show that the person in whose favour the performance bond was executed has also committed default in the performance of the contract. Similar is the position in the case reported in 2011 CLD 1625 (Messrs Continental Cable (Pvt.) Ltd. v. Messrs China Harbor Engineering Co. Ltd. and another). In this judgment it is clearly held that when prima facie case is made out then Courts can restrain the encashment of the bank guarantee. In the present case the time for performance was extended from time to time but the appellant failed to discharge his contractual commitment and after granting extension when contract was not performed even in the extended period then the bank guarantees were invoked. Hence we do not find any justification to interfere with the order passed by the learned single judge. This appeal is therefore dismissed in limine. KMZ/G-4/Sindh Appeal dismissed.