Law: Contract Act (IX of 1872)

Section: 126

Contract Act (IX of 1872)--- ---- S_ 126 --- Civil Procedure Code (V of 1908), OXXXIX, Rr. 1 & 2-- Encashment of performance guarantee --- Mobilization guarantee --- Restraining defendants from encashing such guarantee --- Essentials --- Encashment of performance bond was dependent on determination of question as to who had committed default in fulfilment of its obligations in completion of assignment within given period --- Such question, however, would not be relevant as far as -mobilization guarantee was concerned for in such cases principal debtor had received consideration from the owner or main contractor (creditor) which he was liable to return or refund as a result of any revocation, termination or completion of contract --- Burden, in such cases would be upon principal debtor at whose instance such mobilization bond was executed or on the surety to show that either no amount was advanced to them as mobilization or advance amount or such amount if received then it had been duly incurred or that he was entitled for appropriation of certain outstanding amount against amount of mobilization bond/guarantee---In absence of, such conditions, Court would be reluctant to grant, interim injunction restraining encashment of Bank guarantee executed against receipt of advance or mobilization fund---Plaintiff's application was disallowed up to the extent of mobilization advance guarantee while it was granted up to the extent of performance bond/guarantee --- Plaintiff had prima facie proved balance of convenience as also irreparable loss if performance guarantee was encashed ---Defendants were, thus, restrained not to encash performance guarantee, while they would be entitled to encash mobilization guarantee. Messrs Jamia Industries and Pakistan Engineering Consultant v. Pakistan International Airlines Corporation and others 1993 CLC 1926; Macdonald Layton & Co. Ltd. v. Pakistan Services Ltd. and others 1983 CLC 2252 and Sirafi Trading Establishment v. Trading Corporation of Pakistan Ltd. 1984 CLC 381 rel.   Messrs Banerjee and Banerjee v. Hindustan Steel Works Construction Ltd. and others AIR 1986 Cal. 374); Messrs Jamia Industries Ltd. v. Messrs…