Law:

Section:

(a) Contract Act (IX of 1872)----S.126---Bank Guarantee---Encashment of unconditional Bank Guarantee issued to cover amount advanced by way of mobilization advance---Grant of injunction against such encashment---Scope---No injunction should normally be granted to restrain encashment of such guarantee. (b) Contract Act (IX of 1872)--- ----S.126---Performance Bond/Guarantee---Encashment of---Scope---Where prima facie evidence of breach of contract existed, then allowing encashment of performance Bond/Guarantee would normally be not just and proper. 1989 SCMR 379; Zeenat Brothers v. Awan-e-Iqbal Authority PLD 1996 Kar. 183 and Port Qasim Authority, Karachi v. Al-Ghurrair Company and 3 others PLD 1997 Kar. 636 rel. (c) Arbitration Act (X of 1940)--S.20---Contract Act (IX of 1872), S.126---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Application for filing in court arbitration agreement and referring matter to an arbitrator---Construction contract---Application by plaintiff to restrain defendant from encashing performance Bank Guarantee till disposal of matter by arbitrator---Validity---Dispute regarding completion of work still existed between parties, which would require thrashing by way of evidence before Arbitrator---Plaintiff had completed substantial work under contract, thus encashment of such guarantee at present stage would be detrimental to its interest--- High Court retrained defendant from encashing such guarantee till disposal of suit before Arbitrator. (d) Arbitration Act (X of 1940)--- ----S.20---Contract Act (IX of 1872), S.126---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Application for filing in court arbitration agreement and referring matter to an arbitrator---Construction contract---Bank Guarantee for mobilization advance---Plaintiff's application to restrain defendant from encashing such guarantee till disposal of matter by Arbitrator---Validity---Plaintiff had not denied receipt of such advance at time of commencement of work at site---Such advance being for mobilization of work would be returnable either at time of termination of contract or after completion of entire work in terms of contract---High Court…

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