Law: Specific Relief Act, 1877

Section: 42,54

Specific Relief Act (I of 1877)-------Ss.42 & 54---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Suit for declaration and injunction---Interim injunction, refusal of---Performance guarantee---Encashment---Principle---Respondent / plaintiff was aggrieved of encashing of Performance Guarantee issued on its behalf in favour of appellant / defendant---Trial Court allowed interim injunction restraining encashment of Performance Guarantee furnished on behalf of respondent / plaintiff by insurance company---Validity---Rights and liabilities of parties in a contract of guarantee have to be determined strictly in accordance with terms and conditions of guarantee without recourse to underlined contract---Guarantee, whether captioned as a "bank guarantee" or "performance bond" or "performance security" issued by a bank or an insurance company, is an autonomous contract and imposes an absolute obligation on guarantor to fulfill its terms---It is the language of contract of guarantee that reveals intention of parties---Where a bank / insurance company gives a guarantee in absolute and unconditional terms and where payment is to be made on demand irrespective of the dispute and differences between parties to underlying contract, bank / insurance company is duty bound to honour its obligation and it cannot be prevented by an injunction from honouring such obligation---Irrevocable commitment in the form of irrevocable bank guarantee cannot be interfered with by Courts, except where a case of fraud or irretrievable injustice has been made out---Terms of Performance Security do not defer a claim for its encashment until the resolution of disputes between the parties to underlined contract---Courts do their utmost to enforce a guarantee according to its terms and do not interfere by way of an injunction to prevent its enforcement---High Court set aside interim injunction issued by Trial Courts in favour of respondent / plaintiff restraining encashment of Performance Security in question---Appeal was allowed, in circumstances.Sambo Construction Co. Ltd. v. Laraib Energy Limited 2021 CLC 1914; Montage Design Build v. Republic of Tajikistan 2015 CLD 8; Standard Construction…

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