Law: Companies Ordinance, 1984

Section: 305

(a) Companies Ordinance (XLVII of 1984)---Ss. 305, 309, 333 & 10(2)---Contract Act (IX of 1872), S.126--­Constitution of Pakistan (1973), Art.185(3)---Winding-up of Company--­Direction by High Court for encashment of investment guarantee--­Validity---Leave to appeal was granted by the Supreme Court to consider, whether the official liquidator should have lodged the claim under the Bank Guarantee up to the last extended validity date or he should have encashed the Bank guarantee on the date when the High Court accepted the official liquidator's reference. (b) Contract Act (IX of 1872)--- ----S. 126---Companies Ordinance (XLVII of 1984), Ss. 305, 309, 333 & 10(2)---Contract of guarantee---Financial Institution was creditor while the guarantee was provided by a Bank which was surety---Said guarantee had been executed 'for the benefit of the company (creditor) now under liquidation---Essence of the guarantee was that the guarantor had agreed to discharge the liability of the debtor if the latter failed in performing his liability which all depended on. the terms of the guarantee and guarantor could not be made liable beyond the terms of his guarantee---Whatever the guarantor had undertaken, the same had to be performed---Guarantee having' been executed by the Bank, satisfaction of the same could not be avoided on mere technicalities. Prudential Commercial Bank Limited v. Hydari Ghee Industries Limited and others 1999 MLD 1694 ref. (c) Contract Act (IX of 1872)--- ---S. 126---Bank guarantee---Liability of guarantor--Scope---Liability of guarantor depends on the language of the guarantee---Terms of the guarantee would demonstrate how far the guarantor .has bound itself to indemnify the creditor---Guarantee may be absolute or conditional, dependant on the performance of a condition by either party within the terms of the guarantee. (d) Companies Ordinance (XLVII of 1984)--- ----Ss. 316 & 333---Contract Act (IX of 1872), S.126---Liquidation of company---Bank guarantee, encashment of--- Jurisdiction---Company Judge to order encashment of Bank guarantee given on behalf of the company in liquidation ---Scope---Bank had undertaken to pay a specified amount to…

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