Law: Contract, Act, 1872

Section: 126

Law: Specific Relief Act, 1877

Section: 42 & 54

Law: Civil Procedure Code (V of 1908)

Section: O.XXXIX, Rr. 1 & 2

Contract Act (IX of 1872)---

--S. 126---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Specific Relief Act (I of 1877), Ss. 42 & 54---Suit for declaration and injunction---Interim injunction, refusal of---Bank guarantees, types of---Object, purpose and scope--Principle of strict liability---Applicability---Plaintiff/company sought stay against encashing of bank guarantees issued to defendant for Performance of Contract and to secure Mobilization Advance---Validity---Bank guarantee is an autonomous contract, and as such it has to be construed on its own terms, independent of underlying contract between principal and beneficiary, irrespective of claims pending between them---Accordingly nature and text of bank guarantee assumes great importance---Of the two well-known types of bank guarantees, Mobilization Guarantee is given to secure advance payment received by principal from beneficiary for contracted works---Usually beneficiary deducts that advance payment from bills raised by principal from time to time and Mobilization Guarantee is then renewed for unadjusted amount---Performance Guarantee, generally speaking, is to guarantee fulfilling of obligations by principal under underlying contract---Mobilization Guarantee is essentially beneficiary's money with principal---Courts ordinarily invoke 'the rule of non-interference' with a banker's obligation to construe such guarantee as not being subject to a restraining order even if there is a dispute between the parties to the underlying contract---In cases involving guarantees such as Performance Guarantees, Courts grant or refuse injunction depending upon the text of the guarantee construing it on 'the rule of strict compliance'---Plaintiff did not bring forth any exception to unsettle general rule of non-interference with bank guarantees, and the demand raised on bank guarantees too met the test of strict compliance---Plaintiff did not have a prima facie case for the grant of temporary injunction to stay payment under the bank guarantees, nor was it a case of irreparable harm---High Court declined to grant interim injunction restraining encashing of bank guarantees as balance of convenience was also in favour of defendant---Application was dismissed, in circumstances.

Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191; EFU General Insurance Ltd. v. Zhongxing Telecom Pakistan (Pvt.) Ltd. PLD 2022 SC 809; Guangdong Overseas Construction Group Company v. Creek Marina PLD 2011 Kar. 304; Shan Associates v. Getz Pharma 2020 CLD 808; Husein Industries v. Sui Southern Gas Company PLD 2020 Sindh 551; Pakistan Real Estate Investment and Management Company v. Sky Blue Builders 2021 CLD 518; Sazco (Pvt.) Ltd. v. Askari Commercial Bank Ltd. 2021 SCMR 558; National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311; National Grid Company v. Government of Pakistan 1999 SCMR 2367 and Equitable Trust of New York v. Dawson Partners Ltd. [1926] 27 Lloyd's Rep 49, 52 rel.