SYED HASAN AZHAR RIZVI, J. By this common Order I intend to dispose of CMA No.6224/2020, under Order XXXIX, Rules 1 and 2 read with Section 151, C.P.C. and C.M.A. No.6225/2020, under Section 94, C.P.C., filed in Suit No.914/2020 by SPEC Energy DMCC (hereinafter referred to as 'Plaintiff/SPEC') and C.M.A. No.5148/2020, under Order XXXIX, Rules 1 and 2 read with section 151, C.P.C. and C.M.A.
No.6116/2020, under Section 151, C.P.C., filed in Suit No.321/2020 by Pakistan Petroleum Limited (hereinafter referred to as `defendant/PPL').
2. C.M.A. No.6224/2020 filed by the plaintiff/SPEC seeking a restraining order qua the finalization and creation of third party rights during the subsisting lis including the invitation to bid through Tender No. PD/P&SF/ PQ/12340/2020, letter of Award dated 21.4.2020 and letter of credit issued in respect of various purchase orders as detailed in Annexure Y to T-3 of the plaint in respect of the project.
C.M.A. No.6225/2020 praying that the Official Assignee be directed to conduct a technical audit of entire Project including site, defendant's manufacturing facility in Dubai and the vendors by an international engineering company, as consented upon by -the parties through meeting held on 04.2.2019.
3. C.M.A. No.5148/2020 filed by the defendant/PPL seeking to restrain the defendant from directly or indirectly interfering with any work commenced by plaintiff and from visiting and inspecting the site and equipment thereon and from brining in or taking away their own equipment and materials and from using the equipment already on site in relation to and for the purpose of completing the project. C.M.A. No.6116/2020 filed by the plaintiff praying that the Official Assignee be directed to include defendant's factory in Dubai within the scope of the inspection ordered on 10.7.2020.
4. Counter-affidavits and affidavits-in-rejoinders to the above noted applications were filed and exchanged by the respective parties.
5. Brief facts of the case are that plaintiff/SPEC is a company registered under the laws of the UAE.
Defendant/PPL is a public listed company incorporated under the Companies Act, 2017.
Defendant/PPL operates a gas field at Gambat South, District Sanghar. The gas extracted from this field has to be processed before it can be sold. For this purpose defendant/PPL floated a tender for establishing a gas processing facility at this gas field. The tender was awarded to plaintiff/SPEC.
Defendant/PPL issued a Letter of Award on 06.04.2016. On 09.05.2016, defendant/ PPL and plaintiff/SPEC entered into the Contract for the Project. The relevant features of the Contract are mentioned below: Lump sum fixed price of US$ 63,000,764/- and Rs.811,800,027/-. Payments were to be made under the Contract against completion of specific milestones and not against the delivery of specific equipment; Plaintiff/SPEC had to deposit a Performance Guarantee equivalent to 10% of the contract value and two Advance Payment Guarantees, the first for 10% of the US$ component of the price and the second for 10% of the price; Plaintiff/SPEC had to pay liquidated damages for each week of delay in completion of the Project; Contract could be terminated by PPL with or without cause; Any disputes between the Parties were to be referred to arbitration; and Project had to be completed by 05.10.2017 within 18 months from the date of issue of the Letter of Award.
6. The land/site on which the Project is to be established has been leased by defendant/PPL from local landowners. Defendant/PPL is the lessee. Plaintiff/SPEC has no title, lease or license for the said land. The site is under the control and possession of defendant/PPL. On 02.05.2019, defendant/PPL wrote to plaintiff/ SPEC stating that its personnel would require gate passes from defendant/PPL for the outward movement of any equipment or material from the Site. The gas reservoir underneath defendant/PPL's field extends across adjacent fields. Those fields are being exploited by other companies. Until the Project is completed, defendant/ PPL cannot produce gas from its field. The reservoir, however, is being depleted by other companies extracting gas from their fields. The early completion of the Project is, therefore, essential. Each day of delay in completion leaves less gas for defendant/PPL to produce. From the very inception, however, the Project was delayed on account of plaintiff/SPEC, therefore defendant/PPL terminated the contract on 10.5.2019.
7. I have heard M/s. Khawaja Shamsul Islam, Shahzada Mazhar, Muhammad Jawwad, learned counsel for the plaintiff/SPEC and M/s. Makhdoom Ali Khan and Ali Almani, learned counsel for the defendant/ PPL.
8. Learned counsel for the plaintiff has argued that plaintiff and defendant entered into a contract dated 09.05.2016 for the engineering, procurement, construction and commissioning of a gas processing facility at Gambat, District Sanghar Sindh. He has submitted that under EPCC a contractor is obliged to deliver a complete facility to the developer who need only turn a key to start operating the facility. He has also submitted that an EPCC contract includes preparation of designs, plans and technical specifications of equipment, preparation of performance standards, maintenance and training manuals, designing and planning layout, documenting delivery schedules of equipment, instructions for erection, and includes construction including erection, commissioning, testing and completion of the facility and correction of defects. He has submitted that with regards to procurement it includes provision of equipment, procurement from third parties, clearing of goods at ports, delivery to site and provision of spare parts amongst others from approved vendors under the Contract. He has contended that the instant Contract is also an EPCC contract, as established through the definition of the term "Project" as per Clause 4.2 (e) as meaning all such work including both permanent and temporary works with supply of goods / material as is required to be done by the contractor hereunder for design, engineering, supply, fabrication, construction, installation, testing, commissioning, start up. He has also contended that admittedly being an EPCC contract, the inventory simpliciter cannot calculate the engineering or procurement part therefore in order to measure the complete work done the court is required to carry out the audit of the whole project. Since the contract is an engineering, procurement, construction and commissioning contract and not merely a construction contract. He has contended that construction in fact is only one of the four aspects of the contract as explained above, and thus to resolve the controversy between the parties fairly, it is essential that an evaluation of all the four aspects be done to ascertain the factual position between the parties.
9. Learned counsel for the plaintiff has further argued that the task of inventory preparation on the other hand is insufficient in the present circumstances of the case, as an inventory of the site relates only to appraisal of equipment provided in a supply contract. He has argued that any adjudication by this Court can best be done after the true ascertainment of the work completion under the contract and the additional works performed by the plaintiff on the behest of the defendant through the conduct of technical audit as it is an admitted fact that the defendant has to-date USD 42,588,516, out of a total contract price of USD 63,000,764 for the foreign component which works, out for approximate 70% completion of the project, this is admitted in para-09 of C.M.A. No.5148/2020 in Suit No.321 of 2020. If the unpaid work at site and factory premises is accounted for, the plaintiff's work completion is almost 80% of the total work, making the plaintiff the best party to complete the project at present even. He has contended that in any case the conduct of technical audit is not to hamper the interests of either partsy.
10. Learned counsel for the plaintiff has next argued that the possession of the site is with the plaintiff and in this regard he has submitted that as per the EPCC contract and Clauses 3.73, 3.76 and 3.7.10 of the terms and conditions of the Contract, the possession of the plaintiff is reflected clearly. He has submitted that further the plaintiff was entirely responsible for all the aspects of the project and responsible for handing over a complete facility to the defendant. Thus, until completion of the project, the possession of the site lay with the plaintiff and continues till date. He further submitted that the possession of the Plaintiff is further established by order dated 13.05.2019 passed in Suit 851 of 2019 filed after the illegal termination of the Contract, wherein, this Court was pleased to restrain the Defendant from taking over the site and ordered to maintain status quo to that extent. The Defendant had not challenged this order, which has attained finality and the Defendant cannot claim possession of the site. by illegally by passing the order without getting it set aside. He has also contended that possession also evident from visit of official assignee, which visit was arranged by Plaintiff at site. He, therefore, has contended that the defendant has made mala fide and wrong assertion regarding possession of the site. He, however, has argued that the issue pertaining to Gate Pass of the site the defendant by mala fide design had sought the issuance of gate pass for the first time through email dated 02.05.2019 after the illegal encashment of guarantees on 30.04.2019. This was duly replied vide email dated 04.05.2019. Even after the illegal termination of the Contract on 10.05.2019, the Defendant unsuccessfully tried to assert its possession through emails which were rebutted by emails dated 11.05.2019, 12.05.2019 and afterwards by the Plaintiff. He has urged that once the contention regarding the possession of site is rebutted from the facts, orders of this Court, site inspection by Official Assignee, and the Contract itself the entire superstructure of Suit No 321 or 2020 falls as this is a feeble attempt by the defendant to bypass the logical conclusion of the already pending litigation, which can be resolved now simply by the conduct of a technical audit and the passage of restraining order against the defendant regarding creation of third party rights.
11. Learned counsel for the plaintiff has next argued that the actual ascertainment of an EPCC Contract as distinguished from conduct of inventory which has limited scope. He has urged that there are two inherently distinct concepts. Inventory relates to merely the stock of machinery and equipment at site, whereas technical audit is performed by an expert in the subject field who evaluates, deficiencies or areas of improvement in a process, system or proposal. Such an audit covers technical aspects of the projects implemented and for this requires a deep knowledge of development, design and security standards with latest algorithms updates. He has submitted that the defendant has not denied the fact that it has itself agreed for the conduct of the technical audit firstly through the issuance of unilateral tender for conducting of an audit which process was stayed through order dated 14.11.2019 passed in Suit No. 56 of 2019, subsequently through the minutes of meeting held on 04.02.2019 where it was agreed between the parties that a technical audit be conducted by an international engineering firm, further through withdrawal of Suit No. 56 of 2019. On 11.02.2019 in terms of minutes dated 04.02.2019, and through finalization of terms of reference for the conduct of technical audit. He has vehemently urged that the defendant cannot back out from it agreed commitments especially when it is a step towards the resolution of disputes. Thus, if Terms of references are finalized and a technical audit is confirmed, it would be beneficial for all parties since it would then expedite the resolution of disputes since factual position would be clarified before the Court. He has, therefore, submitted that audit is also necessary because the project is an EPCC contract and can only be reviewed / ascertained by a specialist in the Learned counsel has drawn attention of this Court to C.M.A. No. 8127/2019 filed in Suit No. 851 of 2019 moved by Defendant seeking to calculate the work done, which the Plaintiff's also wants. He has contended that according to the contract as well as the CMA and the counter affidavit filed to the said application, clearly shows that work on the project was not only done at project site at Gambat but also at factory premises of SEPC. Hence in order to measure the work done the inventory needs to be done of not only of the project site at Gambat but also the factory premises. He has further contended that defendant itself agreed to the same vide minutes of the meeting dated 04.02.2019 and thereafter parties exchanged correspondence to finalize Terms of reference for the same, however Defendant later reneged on its own agreed commitments. He has stated that it is important to mention that as per Clause 3.25 of terms and conditions of contract read with 4.15 of the Scope of the work an official of the defendant was present at the Plaintiff's Dubai factory site and was present there until the illegal termination of the contract by the defendant, and this fact was admitted by the defendant's counsel before this Court, since all the machinery and equipment for the project was prepared at the plaintiff's Dubai factory. He has stated that the defendant had in fact conducted an inspection of the project site itself and further a third-party inspection of the already prepared equipment lying at the Dubai Factory of the plaintiff was also conducted under the EPCC contract, which was duly inspected by the defendant whereby the same equipment was inspected and it was ascertained that the said equipment was ready for shipment and the same was approved by the third party and the defendant. Plaintiff only awaits for the payments by the defendant. He has urged that the plaintiff in terms of the Project has completed various works which the defendant is attempting to issue and invite bids for at a considerably higher price.
13. He has drawn attention of the Court to the price comparison chart available at Page Nos. 1337- 1371 of the Suit No.914 of 2020, which clearly shows the lack of transparency and accountability with which the defendant is proceeding with the use of public funds. The same also highlights that the defendant is deliberately misusing public funds by deliberately incurring additional costs to the tune of USD 30 million, whereas, the defendant is required to pay an additional USD 21 Million approximately for the completion of the entire project, majority of equipment which is ready for shipment at the Plaintiff's factory in Dubai. He has contended that this is intended solely for the reason that the defendant's intend to increase the cost of project which was won by the plaintiff for a cost of USD 70 Million, whereas an earlier GPF-11 Project was bid for. USD 153 Million while the capacity of GPF III is 60 mmscfd while GPF-11 is for the capacity of USD 50 mmscfd. He has, therefore, urged that a technical audit would not cause any delay to the project, a period of 6 weeks, is required for the report of the inventory of project site at Gambat. He has further submitted that in the meanwhile a visit to the Dubai factory along with a technical audit of the project site and Dubai factory can easily be arranged and would not consume a substantial amount of time.
He has also urged that a technical audit also includes inventory thus there would be no disruption as to the schedule for which the plaintiff is ready to incur the costs for the inspection of Dubai factory. He has stated that if an audit of the project site and inspection of Dubai factory are completed the factual disputes between the parties would be resolved and then the various litigations pending can also reach their logical conclusion. He has stated that the scope of C.M.A.
6116/2020 is different from. C.M.A. No.6225/2020. C.M.A. No.6116/2020 has been filed only after order dated 10.07.2020 seeking inventory of Dubai factory to bring on record the ready equipment under the Contract, while the technical audit is the actual ascertainment of the entire project. He has submitted that the order dated 10.07.2020 passed by this Court in Suit No. 321 of 2020 goes beyond the prayer made therein. He made reference to the case reported in PLD 2019 Sindh 400, wherein it has been observed that discretion of public functionaries in awarding tenders and spending of public money required a vigilant and vibrant scrutiny by courts and such could not be used arbitrarily or with absolute discretion and such funds must be used with fairness and complete accountability and transparency.
14. Learned counsel for the plaintiff next contended that the time is not the essence of the Contract and the SPCC contract was only extended by actions of defendant. He has contended that admittedly the contract was for a period of 17 months, however Clause 3.20 of the Terms and Conditions of the Contract provided conditions for extension of time, whereby contract could be extended owing to default on pan of defendant as has been done in the existing scenario. He has also made reference to Clause 3.16 of Terms and Conditions of the Contract which calls for the issuance of change notices and orders in relation to the performance of 'additional works under the Contract. Even otherwise, the defendant had the right to invoke liquidated damages under Clause 3.30 of the Terms and Conditions of the Contract. He has further contended that defendant also executed the Contract Amendment Agreement dated 01.03.2018, which the defendant did not mention in Suit No.321 of 2020, with idea of concealment and misleading to this Court, which was executed after the expiry period of the Contract. He has, therefore, submitted that it is an established principle where Contract is postponed / extended then time is not the essence of the contract. In this regard, he has placed reliance upon the case reported in AIR 1993 SC 1742.
Nonetheless, by issuing new request for quotations, inviting tenders and awarding contract, the project is likely to be extended even further, considering plaintiff has already procured and prepared the machinery and equipment for most of the remaining portion of the project, which would be released upon clearance of outstanding payments by the defendant. He has vehemently contended that the defendant itself withheld payments, thus extension was due to the default committed by it. He has further submitted that defendant admitted in the pleading that issuance of new tenders would incur cost of USD 30 million. He has, therefore, submitted that where party itself is responsible for extension of time, then it could not plead that time is essence of the contract. He has stated that defendant had intentionally breached the contract and the same is evident from the correspondence prior to termination on 10.5.2019 whereby it lodged false and frivolous excuses as to non-performance by the plaintiff, in complete contrast to the actual reality.
He has also stated that defendant in fact planned the illegal breach, and now is attempting to seek relief on the basis of its own illegality by citing that since the contract is terminated it cannot be enforced or that injunction cannot be granted. In support of his submissions, learned counsel for the plaintiff has placed reliance upon the cases reported in 1995 SCMR 1431, 1983 SCMR 559, 2018 CLC Note 40, PLD 1990 SC 45 and 2020 SCMR 832.
15. Learned counsel for the plaintiff next contended that illegal termination of EPCC contract is not final since the matter is currently pending adjudication in Suit No.851/2019. He has urged that termination under clause 3.21.1 was subject to issuance of notice of default to plaintiff, which was never issued. He has urged that the question of default is currently pending adjudication before the arbitral tribunal, and any adverse action taken by the defendant is illegal to that extent. Therefore, he has urged that injunction can be sought as presently the termination of the contract is subject to the outcome of arbitration proceedings and Suit No.851 of 2019, and as such the termination of the contract is Lis pendens. The defendant's reliance that the injunction has been refused to the Plaintiff is vague, mala fide and ill founded, as the said application is still pending and has not been decided by this Court, contrarily, an order for continuance of possession has been made in favour of the plaintiff, thus, during the pendency of those proceedings, and in the presence of order dated 13.05.2019, new third party rights cannot be introduced in the instant lis. He has urged that defendant has also not challenged the order dated 13.05.2019 in Suit No. 851/2019, whereby it was restrained from interfering with plaintiff's possession, rather defendant is now pressing the matter through a fresh litigation which is barred under law. In this regard, he has placed reliance on the cases reported in 1995 CLC 1877 Lahore, 1997 MLD 2411 Karachi, PLD 1976 Karachi 644, 2019 CLD 1338 Karachi, 2018 CLD 203 SC and 2017 CLC 857 Lahore.
16. Learned counsel for the plaintiff has drawn attention of the Court to Public Procurement Regulatory Authority Ordinance, 2002 and Rules, 2004 which being violated. He has stated that defendant itself admitted in counter to CMA No.6225 of 2020 that no procedure has been followed in issuing tenders and has not denied the readiness of equipment at Dubai factory awaiting shipment. He has stated that plaintiff was to be paid USD 21 million for the remaining equipment, whereas, defendant is now issuing tenders for USD 30 million, and the cost may even extend beyond that. He has submitted that it was admitted by defendant themselves that the current project is almost USD 90 million less expensive than GPF-III, He has submitted that defendant also concealed the meeting of 04.02.2019 from the Court in Suit 321/2020. He has submitted that Government having 68% shares of defendant entails that defendant is utilizing public funds which it must do so reasonably and transparently. In this regard he has made reference to the cases reported in 2020 SCMR 513 SC and PLD 2019 Karachi 400.
17. Learned counsel for the plaintiff also argued that the goods being designed, procured and constructed by the plaintiff, supply thereof are also covered by the Sale of Goods Act, 1930, which provides for rights to the plaintiff as well, He has argued that plaintiff falls within the definition of Section 45 of the Sale of Goods Act, 1930 as an unpaid seller, as it has prepared various machinery and equipment for which it has not been paid. He has vehemently urged that monetary compensation is not adequate relief since the entire reputation of the plaintiff is on the line, where the contract is terminated, then plaintiff will presumably never be granted another contract in Pakistan and even suffer international disrepute, which would result in loss of future business that cannot be calculated. He has also urged that the contract itself is an EPCC contract and there are various designs and technical drawings etc. In this regard he has given example that where there is a painting by Picasso and the same is stolen, no monetary compensation would he adequate relief, the same is applicable on the designs and equipment prepared on the basis of those technical specifications and designs, which can only be used in the current project and would be regarded as scrap for all other projects or purposes. He has stated that the contract is not revocable, it is subject to the default of plaintiff, currently the question of default is pending adjudication before the arbitral tribunal whose decision shall be final. He has, therefore, submitted that the contract does not fall within the scope of Section 21 or Section 56 of the Specific Relief Act.
Even if it is presumed that Specific Relief act applies, then the relevant applicable section would be Section 54(b) and (c), since monetary compensation would not be adequate relief for the damages that would be suffered by plaintiff. He has submitted that temporary injunction is governed by Order XXXIX, Rules 1 and 2, C.P.C. and not Specific Relief Act, since plaintiff's case is only for the resolution of disputes and a temporary injunction is sought to preserve the rights of the parties. As such, there is no bar to grant of a temporary injunction in the circumstances. In this regard, he placed reliance upon the cases reported in 2014 CLD 1583 Sindh, 1994 CLC 726 Karachi and 1993 CLC 2497 Karachi.
18. Learned counsel for the plaintiff with regard to the performance of additional work, issuance of change notices and orders and commencement of Arbitration proceedings has argued that various additional works were carried out by the plaintiff and ultimately the matter was referred to arbitration as despite the performance of the additional works done by the plaintiff, the defendant refused to pay for the same and refused to clear the pending invoices, stating that it would only pay after the injection of 1st gas. He has argued that admittedly the arbitration proceedings have been stopped under the garb of expiry of time, when the dispute resolution stage had matured for further proceedings, when defendant filed an application. He has submitted that plaintiff has since filed an application under Section 28 of the Arbitration Act, 1940, for enlargement of time, which is still pending adjudication.
19. Learned counsel for the plaintiff has argued that since the commencement of Arbitration since August 2018, the defendant withheld the payments due to the plaintiff against the completed milestones. It must be clarified that when the arbitration proceedings commenced, no litigation was pending between the parties. He has argued that as per the contract, a payment milestone was agreed between the parties, whereby the defendant would release payments against a stipulated schedule of work done by the plaintiff, but the defendant unilaterally and without justifiable reasons started withholding the payments outstanding towards the plaintiff, for the work it had carried out under the EPCC contract. Resultantly, the plaintiff was forced to file the Suit No.204 of 2019, which is pending adjudication. He has contended not only this but the defendant lodged FIR No.21/2019 regarding the theft of SCADA, however it concealed from the Court that the same has been discharged and confirmed by the Court and the summary order of the Magistrate wherein the falsification of the allegation of theft has been clearly established. He has argued that the FIR regarding theft of SCADA system is the perfect example of defendant's malicious actions and frivolous litigation. He has urged that on the contrary defendant's claim of plaintiff being a habitual litigator finds no basis as all suits have been filed by plaintiff against a valid cause of action and duly appreciated by the Court while passing interim orders. He has further urged that Suit No.788/2019 filed against illegal encashment of guarantees. He has submitted that Suit No.851/ 2019 filed against illegal termination and J.M. No.14 of 2019 filed against halting of the arbitration proceedings under the garb of which all subsequent illegal actions of encashment of guarantees, and termination of contract have been done.
20. Mr. Muhammad Jawad, advocate also appearing for the plaintiff has argued that the contract is a works/services agreement and can be specifically enforced. He has further argued that defendant/PPL's failure to abide by the contract is a violation of Islamic injunctions which provide sanctity to the terms of an agreement and require parties to abide by those terms. He has also argued that defendant/PPL has issued purchase orders and entered into contracts in violation of the Public Procurement Rules, 2004 by not conducting an open public bidding process. All contracts entered into and third party rights created in contravention of the 2004 Rules are void. In this regard, he referred to the following cases:- a) Commissioner Income Tax v. Siemen A.G. (PLD 1991 SC 368) b) Jamia Industries Ltd. v. Pakistan Refinery Ltd. (PLD 1976 Karachi 644) c) M. Hanif and another v. Rivaz. Gardens Social Welfare Society (1983 SCMR 598) d) Faiz Muhammad v. Farida Riaz (1997 MLD 2413) e) Sandoz Limited and another v. Federation of Pakistan (1995 SCMR 1431) f) KWSB v. KESC and others (PLD 2012 Sindh 349) g) Gulistan Textile Mills Ltd. and another v. Soneri Bank (2018 CLD 203) h) M. Latif Khokhar v. Latif Khan and another (2018 CLC Note 40), i) Al-Noor v. Province of Sindh (PLD 2019 Sindh 400) j) Shahnawaz Jalil v. Rani & Company (2019 CLD 1338) k) Sakhi Jan and others v. Shah Nawaz and another (2020 SCMR 832).
21. In the end, learned counsel for the plaintiff has submitted that in view of the aforementioned submissions the CMA Nos.6225 and 6224 of 2020 may kindly be allowed and an appropriate order may be passed for the conduct of the technical audit of the project site at Gambat along with the plaintiffs' Dubai Factory premises and vendor's premises. As there is no harm in getting a technical audit conducted of the entire project consented upon by both the parties through minute of the meeting dated 04.12.2019. Further, a technical audit would not prejudice either the defendant or the plaintiff, if the allegations of the defendant are true and the plaintiff has supposedly not done the work in terms of the project as alleged, then a technical audit would duly expose the plaintiff.
Similarly, if the defendant has failed to fulfill its obligations and the plaintiff has in fact prepared and get the machinery ready, then a technical audit would conform the said assertion. In the circumstances, a technical audit would be the ideal way of resolving the factual dispute between the parties. It is further prayed, that till the outcome of the arbitration proceedings and the conduct of and finalization of technical audit, the defendants may very kindly be restrained from creating any third-party rights as detailed in CMA No. 6224/2020, as the question of default is still pending adjudication before the arbitral tribunal while the question of termination of contract is also pending adjudication before this Court. It is further prayed that a Technical audit of project along with the restraining order qua further third-party rights, is thus the way forward towards the ascertainment of the project and can help in resolving the disputes between the parties without infringing the rights of any of the parties, which has been consented upon by the parties earlier as well.
22. Mr. Makhdoom Ali Khan, learned counsel for the defendant/PPL has argued that the Site is under the control and possession of defendant/PPL. He has referred to a letter dated 02.05.2019 wrote by the defendant/PPL to plaintiff/SPEC stating that its personnel would require gate passes from defendant/PPL for the outward movement of any equipment or material from the Site. He has argued that the gas reservoir underneath defendant/ PPL's field extends across adjacent fields, which fields are being exploited by other companies. He has argued that until the Project is completed, defendant/PPL cannot produce gas from its field. The reservoir, however, is being depleted by other companies extracting gas from their fields. He has submitted that the early completion of the Project is, therefore, essential and delay of each day in completion leaves less gas for defendant/PPL to produce. He has argued that from the very inception the Project was delayed on account of plaintiff/SPEC i.e. (i) prolonged the selection of vendors for supplying equipment; (ii) failed to issue purchase orders or release payments to vendors; (iii) raised irrelevant issues with design parameters, which it subsequently withdrew, and (iv) raised frivolous change claims. He has urged that these defaults were consistently pointed out by defendant/PPL through various letters and emails. He has also urged that in the last of these letters, defendant/PPL specifically pointed out that on the basis of plaintiff/SPEC's own monthly progress reports (i) it had only completed 60% of the milestones by January 2019 even though it was supposed to have completed 75%; (ii) it had completed 57% of the milestones by August 2018, which meant that in the 6 months from August 2018 to January 2019 only 3% further milestones had been complete; and
(iii) no work had been completed since then. Defendant/PPL, therefore, requested plaintiff/SPEC to ensure immediate deployment of manpower and other resources and to submit a recovery plan for the Project failing which it would exercise its contractual remedies, however, plaintiff/SPEC failed to rectify these defaults. He vehemently argued that since the inception of the Contract, rather than rectifying defaults pointed out by defendant/PPL, plaintiff/SPEC's standard response has been to the defendant/PM up in litigation prior to the termination of the Contract.
23. Learned counsel for the defendant/PPL has argued that due to persistent defaults and failure to complete the project, on 10.05.2019 defendant/PPL terminated the contract. He has stated that till that date defendant/PPL had paid plaintiff/SPEC US$ 42,588,515.91 and Rs.135,814,144.36 under the Contract. This amount is not disputed by the plaintiff. He has also argued that termination of the Contract prompted a second spate of litigation by plaintiff. On 13.05.2019, plaintiff/SPEC filed Suit No. 851 of 2019 before this Court to challenge the termination notice by falsely claimed that it was in control and possession of the Site and defendant/ PPL was trying to dispossess it. This Court did not grant an ad interim order suspending the Termination Notice but directed the parties to maintain status quo only with respect to the possession of the Site. This suit remains pending. He has also argued that the plaintiff/SPEC and its associated companies filed proceedings against defendant/PPL in Texas, USA for damages for breach of contract. Defendant/PPL filed Suit No.1060/2019 to seek an anti-suit injunction against plaintiff/SPEC. The Single Judge did not grant an ad interim order, defendant/ PPL, therefore, filed HCA No.233/2019. The Division Bench restrained plaintiff/SPEC from proceeding with the foreign cases. This suit and appeal are pending.
Plaintiff/SPEC has, however, in contumacious contempt of court not obeyed the orders of the Division Bench. He has urged that not only this but the plaintiff/SPEC and its associated companies filed proceedings against defendant/ PPL in the Dubai, UAE for damages for breach of contract.
Defendant/PPL filed this Suit No.1061/2019 to seek an anti-suit injunction against plaintiff/SPEC. The Single Judge did not grant an ad interim order. Defendant/ PPL, therefore, filed HCA No.234/2019 wherein the Division Bench restrained plaintiff/SPEC from proceeding with the foreign case. This suit and appeal are pending. The proceedings in Dubai have in the meanwhile been dismissed, but plaintiff/SPEC has how filed new proceedings there.
24. Learned counsel for the defendant/PPL has contended that after termination of contract the defendant/PPL decided to complete this project itself. It placed orders for the required equipment and opened letters of, credit in favour of suppliers. It has awarded contracts for some parts of the remaining work. Plaintiff/SPEC has, however, tried to disrupt the completion of the project by (i) contacting suppliers and contractors to discourage them from working with defendant/PPL; and
(ii) interfering with work carried out by defendant/PPL and its contractors on site. He also argued that plaintiff/SPEC filed Suit No.914/2020 to revive and seek specific performance of the terminated Contract though already failed to obtain such relief in Suit No. 851 of 2019. The Defendant/ PPL has filed Suit No.321/2020 to seek an injunction restraining plaintiff/SPEC from interfering with its completion of the Project. He has urged that it is settled law that a works contract, such as an EPCC Contract, cannot be specifically enforced as it is explicitly barred under Sections 21 and 56 of the Specific Relief Act 1877. He has urged that the only remedy for termination of such a contract is damages for which the plaintiff/SPEC has already filed a claim for damages in a pending arbitration and in Suit No.204/2019 pending before this Court. He has-further urged that the relief sought by plaintiff/SPEC in Suit No.914/2020 cannot, therefore, be granted, in law. He has also urged that the effect to this is that plaintiff/SPEC has no right to interfere in the completion of the project by defendant/PPL.
25. Learned counsel for the defendant/PPL with regard to the legal position to the termination and enforcement of this Contract has argued that the Contract is a works agreement. He has argued that even though Mr. Khawaja Shamsul Islam tried to argue that it is an agreement for the sale of goods, he was contradicted by his own co-counsel Mr. Muhammad Jawwad, who vehemently argued that it is a works contract. He has further argued that the from cursory reading of the contract it is established that it is not a contract for the sale of goods as the Contract does not provide for the sale of any specific equipment, it provides for the engineering, procurement, construction and commissioning of the entire gas processing facility. He has urged that plaintiff/SPEC was responsible for (a) designing the facility; (b) procuring the required equipment and material; (c) constructing the facility; (d) commissioning the facility; and (e) handing it over to defendant/PPL. He has further urged that plaintiff's own argument that it is in possession and control of the Site confirms that this is a works contract. A contractor is never given possession and control of a site in an agreement for the sale of goods i.e. it would have no use of the site if all it was required to do was to deliver goods. He has also urged that the legal consequence of this being a works contract is clear. He has, therefore, urged that under Sections 21 and 56 of the 1877 Act a works contract cannot be specifically enforced and an aggrieved party's only remedy is in damages. He has submitted that Section 21 states that a contract cannot be specifically enforced where for the non-performance of which monetary compensation is adequate relief. In this case, had the Contract been performed, plaintiff/SPEC would have been paid a specific amount of US$ 63,000,764 and Rs.811,800,027. Even if defendant/PPL has breached the Contract, plaintiff/SPEC can be made whole if this amount is paid to it. He has stated that plaintiff/SPEC has itself quantified the damage it has allegedly suffered by filing Suit No. 204 of 2019, its statement of claim in the pending arbitration, and the cases filed in Dubai and Texas respectively. On the basis of its plaintiff/SPEC's own pleadings, therefore, monetary compensation is adequate relief. In this regard he placed reliance upon the following cases:-
(1) Neie-Smadb-Lilley RMS v. Federation of Pakistan (2020 YLR 519).
(2) Zawar Petroleum v. OGDC and others (2003 YLR 1450)
(3) Reliance Consultancy and Engineering `Yorks v. Civil Aviation Authority and another unreported at Paragraph 19 at Page 17 (SB/SHC).
(4) Hasan Qamar Asif v. Central Board of Revenue (2010 YLR 43).
(5) Tauseef Corporation Ltd. v. Lahore Development Authority (1999 CLC 26)
(6) Pakistan Associated Construction Ltd. v. Asif H. Kazi and another (1986 SCMR 820)
26. In the first cap of Neie-Smadb-Lilley RMS v. Federation of Pakistan (2020 YLR 519), relates to the termination of a construction contract. The Court held that damages were an adequate remedy and the contract could not be specifically performed. The injunction was refused.
27. In the second case of Zawar Petroleum v. OGDC and others (2003 YLR 1450), the court noted that any loss caused by the termination of the joint venture agreement was quantifiable. The injunction was refused.
28. In the third case of Reliance Consultancy and Engineering Works v. Civil Aviation Authority and another, which is an unreported judgment of this Court relates to the termination of a construction contract. The court held that damages were an adequate remedy and the contract could not be specifically performed. The injunction was refused.
29. In the fourth case of Hasan Qamar Asif v. Central Board of Revenue (2010 YLR 43), wherein it has been held that a contract for construction was awarded after an open tender but subsequently cancelled. Court refused to grant an injunction since damages were an appropriate remedy.
30. In the fifth case of Tauseef Corporation Ltd. v. Lahore Development Authority (1999 CLC 26) relates to termination of a construction contract and the. Court while declining the injunction held that any alleged loss could be claimed as damaged.
31. In the sixth case of Pakistan Associated Construction Ltd. v. Asif H. Kazi and another (1986 SCMR 820), it also relates to the termination of a construction contract. The court held that damages were an adequate remedy and the contract could not be specifically performed. The injunction was refused.
32. Learned counsel for the defendant/PPL has further argued that a contract which runs into minute and numerous details, or which is so dependent on the volition of the parties that a court cannot specifically enforce its material terms. He argued that the Contract, including its annexures, runs into thousands of pages, which prescribes in minute detail the engineering and design requirements of the gas processing facility. These have to be fulfilled down to the smallest details for the completion of Project and such minute and numerous details are impossible for a court to enforce. He has stated that the litigation pending before this court alone establishes that the relationship between the parties has broken down. A project requiring into this much detail and coordination is completely dependent on the volition of the parties and cannot be enforced by a court. He has also stated that a contract contains an explicit termination clause. Defendant/PPL could revoke it with or without reason therefore the contract is revocable and cannot be specifically enforced. In support of his submission, he placed reliance upon the following cases:-
(1) Qasimabad Enterprises v. Province of Sindh (1999 CLC 441)
(2) Union Construction Company v. Chief Engineer (AIR 1960 Allahabad 72)
33. In the case of Qasimabad ceo Sindh (1998 CLC 441), it relates to the termination of a construction contract for a housing scheme. Court held that since contract ran into minute and numerous details, it could not be specifically enforced. As such even though the Defendant had not acted properly, the injunction was refused.
34. In the case of Union Construction Company v. Chief Engineer (AIR 1960 Allahabad 72), this case also relates to the termination of an engineering contract. Court while declining the injunction held that since contract required technical knowledge it was dependent on the volition of the parties and could not be specifically enforced.
35. Therefore, learned counsel for the defendant/PPL has submitted that the Contract cannot be specifically enforced and plaintiff/SPEC's only remedy for any breach of the Contract by defendant/PPL is damages. He has vehemently argued that plaintiff/SPEC has not cited a single case in which a works contract or a contract similar to this Contract has been specifically enforced.
The reason is that there is none. The case law is unanimous on this issue. He has submitted that plaintiff/SPEC is effectively asking this court to re-write 70 years of case law.
36. Learned counsel for the defendant/PPL has drawn attention of the Court to Section 56 of the 1877 Act and has submitted that no injunction can be granted to prevent the breach of a contract which cannot be specifically enforced. Since the Contract cannot be specifically enforced under Section 21, no injunction can be granted under Section 56 to prevent its breach. He has urged that plaintiff/SPEC has tried to circumvent these legal restrictions by not explicitly praying for the specific enforcement of the Contract in CMA 6224 of 2020 and instead seeking to restrain defendant/ PPL from violating the Contract and awarding the remaining work to any third parties.
Regardless of the language in which the prayer is couched, the legal effect is the same. Granting this prayer would revive the Contract, which has already been terminated and force defendant/PPL to specifically perform it, it would result in the specific enforcement of the Contract, in violation of the explicit bars under the 1877 Act.
37. Learned counsel for the defendant/ PPL has next argued that plaintiff/SPEC has approached this Court in bad faith as it has concealed the relevant facts, made deliberate misrepresentations to. this Court. He has argued that the grant of an injunction is a discretionary remedy and the manner in which plaintiff/SPEC has approached this Court disentitles it to any relief. He has urged that plaintiff/SPEC's bad faith is clearly established from the fact that plaintiff/SPEC sought similar relief to restrain defendant/ PPL from taking any coercive action against it in J.M. No. 21 of 2019 on 19.04.2019, but this Court did not grant ad interim relief. Therefore, plaintiff/SPEC withdrew the case on 27.05.2019; it then filed C.M.A No. 6716 of 2019 in J.M No. 14 of 2019 seeking the same relief. This Court did not grant ad interim relief. It, therefore, withdrew this application on 27.05.0219; and, it filed C.M.A. No. 7394/2019 in Suit No. 851/2019 seeking to restrain PPL from acting in furtherance of the termination notice, creating any third party interests and from taking over the Site. This Court only granted ad interim relief in relation to possession of the Site and directed the parties to maintain status quo in this regard only. He has submitted that this Court was clearly aware of the explicit bar on the specific performance of works contracts and therefore, did not grant any relief in relation to the termination notice or creation of third party interests. He has further submitted that having failed to obtain any ad interim or interim relief through three different cases at the time the termination notice was issued and 15 months after the Contract has been terminated and defendant/PPL has placed orders for equipment and awarded contracts for the remaining work, plaintiff/SPEC is now seeking to revive the Contract and that too, without informing this Court of its failed previous attempts to do so. He has submitted that the manner in which plaintiff/SPEC has acted disentitles it from any discretionary relief. He has urged that the cases on which the plaintiff/SPEC has relied upon are not applicable in the instant case. He has, therefore, prayed that C.M.A. No.6224/2020, C.M.A. No.6225/2020 in Suit No.914/2020 and C.M.A. No 6116/2020 may be dismissed whereas C.M.A. No.5148/2020 may be allowed.
38. I have given due consideration to the arguments of the learned counsel for the parties and with their able assistance examined the material placed on record, so also the case-law cited at the bar.
39. Before discussing the rival contentions of the parties, it is important to note that the question as to whether a contract is a contract of work or a contract of sale is the subject matter. The principles, as decided cases would show, are well defined but the application of those principles to individual cases often poses a difficulty. In determining as to whether a contract constitutes one for work or is a contract of sale, it is the dominant interest and object of the parties in entering into the contract, as evinced by the terms of the contract, the circumstances of the contract and the customs of the trade that provide a guiding indicator and the object of the parties is of necessity to be deduced from the terms of the contract. With reference to the case laws a contract for sale has to be distinguished from a contract of work. Whether a particular agreement falls within one or the other category depends upon the object and intent of the parties, as evident by the terms of the contract, the circumstances in which it was entered into and the custom of the trade. The substance of the matter and not the form is what is of importance. If a contract involves the sale of 'moveable property as moveably property, it would constitute a contract for sale. On the other hand if the contract primarily involves carrying on of work involving labor and service and the use of materials is incidental to the execution of the work, the contract would constitute a contract of work and labor. One of the circumstances which is of relevance is whether the article which has to be delivered has an identifiable existence prior to its delivery to the purchaser upon the payment of a price. If the article has an identifiable existence prior to its delivery to the purchaser, and when the title to the property vests with the purchaser only upon delivery, that is an important indicator to suggest that the contract is a contract for sale and not a contract for work.
40. Admittedly, plaintiff/SPEC and defendant/PPL were entered into the contract dated 09.05.2016 for the engineering, procurement, construction and commissioning of a gas processing facility at Gambat, District Sanghar Sindh and as per Clause 3.14 of the contract the project had to be completed within 18 months from the date of issue of the letter of award by 05.10.2017. Payments were to be made under the contract against completion of specific milestones and not against the delivery of specific equipment. As per clause 3.30.2 of the contract plaintiff/SPEC had to pay liquidated damages for each week of delay in completion of the project and as per Clause 3.21 contract could be terminated by defendant/PPL with or without cause. Defendant/PPL terminated the contract on 10.5.2019 for the reasons that plaintiff/SPEC breached the contract by delivering defective equipment; not following agreed design parameters; raising false change claims; and, failing to complete the project. It is worth mentioning that prior to termination of the contract following cases were filed:- i) Suit No. 2321 of 2017 - one of the Advance Payment Guarantees provided by plaintiff/SPEC was expiring on 31.10.2017. In accordance with Clause 3.28.3 of the Contract, the Guarantee had to remain valid until completion of the Project. Since the Project was not complete by this time, defendant/ PPL requested plaintiff/SPEC to renew the Guarantee. Plaintiff/SPEC failed to renew it. To protect its rights defendant/PPL had to make a claim on the Guarantee. Plaintiff/SPEC filed this suit to restrain defendant/PPL from encashing the Guarantee. It eventually agreed to renew the Guarantee and unconditionally withdrew the suit. ii) Suit No. 1932 of 2018 - Plaintiff/SPEC initiated arbitration proceedings against defendant/PPL for payment of its change claims. The Contract requires each party to nominate an arbitrator.
Plaintiff/SPEC nominated its counsel in Suit No. 2321 of 2017 (the same counsel who is representing it in Suit 321) as its arbitrator. To protect the fairness of the arbitration process, defendant/ PPL had to file this suit to challenge plaintiff/SPEC's nomination. In response, plaintiff/SPEC withdrew its nomination. This suit has been dismissed. iii) Suit No. 56 of 2019 - Defendant/ PPL decided to conduct an audit of the execution of the Project and floated a tender for this purpose. Afraid that its incompetence would be exposed, plaintiff/SPEC challenged this tender. On 11.02.2019, however, it unconditionally withdrew this suit. iv) Suit No. 204 of 2019 - Plaintiff/SPEC filed this suit seeking a direction to defendant/PPL to pay its pending invoices. Defendant/PPL has filed its written statement and counterclaim. This suit is pending. v) J.M. No. 21 of 2019 - On 19.04.2019, Plaintiff/SPEC filed this application under Section 41 of the Arbitration Act, 1940 seeking to restrain defendant/PPL from taking any coercive action against it.
This Court did not grant ad interim relief. Having failed to obtain ad interim relief, on 27.05.2019, plaintiff/SPEC withdrew this application. vi) J.M. No. 14 of 2019 -, Since the time for completing the arbitration proceedings expired on 04.04.2019, plaintiff/SPEC ostensibly filed this application to seek an extension of time for completion. It also filed C.M.A. No. 6716/2019 under Section 41 of the Arbitration Act, 1940 to restrain defendant/PPL from taking coercive action against it, which is the same relief as in J.M No. 21 of 2019. This Court did not grant ad interim relief. Having failed to obtain ad interim relief, plaintiff/SPEC withdrew C.M.A. No. 6716/2019, however, J.M. 14 of 2019, remains pending. vii) Suit No. 788 of 2019: In light of plaintiff/SPEC's persistent defaults, on 30.04.2019, defendant/PPL encashed the Performance Guarantee and Advance Payment Guarantees. Plaintiff/SPEC filed this suit on 02.05.2019 to restrain its bank and defendant/PPL from encashing these Guarantees. The Performance Guarantee and one of the Advance Payment Guarantees had already been encashed. Since this Court granted an ad interim order, the second Advance Payment Guarantee was not encashed. This suit remains pending.
41. After termination of the contract, defendant/PPL decided to proceed with the completion of the project itself. The defendant/PPL issued purchase orders to international vendors for equipment worth US $ 29,387,613.9 and established letters of credit in their favour for US $ 27,861,429. Awarded a contract dated 21.4.2020 for building a boundary wall around the Site to protect the equipment and work on it. Plaintiff/ SPEC filed Suit No.851/2019 to challenge the termination notice. Plaintiff/ SPEC claimed that it was in control and possession of the Site and defendant/PPL was trying to dispossess it. This Court directed the parties to maintain status-quo with respect to the possession of the Site, however, not suspended the termination notice. Plaintiff/SPEC and its associated companies filed proceedings against defendant/ PPL in Texas, USA and Dubai, UAE for damages for breach of contract. The defendant/PPL filed Suits Nos.1060 and 1061 of 2019 seeking an anti-suit injunction against plaintiff/SPEC, which the learned Single Judge did not grant an ad interim order.
The defendant/ PPL, therefore, filed HCAs Nos.233 and 234 of 2019 and the Division Bench of this Court restrained plaintiff/SPEC from proceedings with the foreign cases. The suits and appeals are pending.
42. Learned counsel for the plaintiff/SPEC argued that it has completed 80% of the work under the Contract, but it has not produced a single document establishing that it has completed 80% of the work. On the basis of plaintiff/SPEC's own monthly reports as set out in the termination notice only 60% of the work was completed by the end of January 2019, which is 15 months after the completion date of 05.10.2017. Plaintiff/SPEC's reference to the payments made by defendant/ PPL till the date of termination is inapposite. Defendant/PPL has paid US$ 20 Million more to plaintiff/SPEC than due for the actual work completed by it. Plaintiff/SPEC also ignores the basic fact that the contract is milestone based i.e. payment is tied to achieving specific milestones and not to specific equipment delivered or work done. Similarly, the reference to pictures of equipment being manufactured at plaintiff/SPEC's factory in Dubai, third party inspection certificates and the minutes of meeting dated 12.03.2019 showing that defendant/PPL's team witnesses saw some equipment in SPECs factory in Dubai is not important, as under the contract, plaintiff/SPEC had to deliver the equipment, install and commission the equipment on Site. With regard to the arguments of learned counsel for the plaintiff/SPEC that it is in possession of the SITE and in this regard learned counsel made reference to the visit of Official Assignee, however, it has not produced a single document to establish that it is in possession of the Site. Further, the plaintiff/SPEC also did not point out a single admission by defendant/PPL that it was not in possession and control of the Site. On the contrary, defendant/ PPL has drawn attention of the Court to emails sent on 02.05.2019 and thereafter directing plaintiff/ SPEC to obtain gate passes for any outward movement, which clearly shows that at least since this date defendant/ PPL has been in possession and control of the Site.
43. With regard to the next contention of the learned counsel for the plaintiff/SPEC that parties agreed to audit the Project through an international engineering firm as confirmed in the minutes of meeting dated 04.02.2019, which reflect that the parties agreed to move forward with the process of auditing the project by inviting tenders from international firms and settling terms of reference for such an audit. This process was subject to both parties continuing to perform their obligations under the contract. Learned counsel for the defendant/PPL made detailed references of letters and emails dated 13.02.2019, 15.02.2019, 26.03.2019, and 08.04.2019, which shows that plaintiff/SPEC failed to perform its obligations under the contract. Therefore, on 10.05.2019 defendant/PPL terminated the contract and an audit under the contract cannot be done once the contract itself has been terminated. Learned counsel for the defendant/PPL has stated that during the pending litigation and after the termination of the contract, in order to protect the parties' interests in Suit No. 204 of 2019 and the pending arbitration, defendant/PPL has on two, occasions sought to conduct a joint inspection of the Site. Firstly, it filed CMA No.8127/2019 in Suit No.851 of 2019 praying that the Nazir be directed to make an inventory of the equipment and works on Site, which plaintiff/SPEC opposed the application and filed its counter-affidavit. Secondly, defendant/ PPL wrote to plaintiff/SPEC on 13.05.2019 requesting it to conduct a joint verification of the equipment and works on Site, but plaintiff/SPEC again refused. It was only after this that defendant/PPL engaged a third party to conduct an independent inspection of the Site. He has, therefore, submitted that it is clear that plaintiff/SPEC has no interest in actually conducting an audit of the Site and its prayer is mere subterfuge. It simply wants to stop defendant/PPL from commencing. work by delaying resolution of the pending litigation and divert attention from the fact that it is seeking revival and specific enforcement of a terminated contract.
44. Learned counsel for the defendant/PPL in response to the arguments advanced by learned counsel for the plaintiff/SPEC that defendant/PPL has ordered the same equipment from other vendors which it has already manufactured and which it is willing to provide at a lower cost, it is submitted that defendant/PPL has ordered this equipment because the project cannot be completed without it and plaintiff/SPEC failed to deliver it to Site. If plaintiff/SPEC had manufactured this equipment then it should have delivered it to Site. He has submitted that equipment lying at plaintiff/SPEC's factory in Dubai is of no use to defendant/PPL. He has further submitted that plaintiff/SPEC's suggestion that it could deliver this equipment for a lower cost is based on a deliberate misinterpretation of the contract, as the contract is a lump sum fixed price contract. It 'does not provide a price for specific equipment. It provides a price for achieving specific milestones. In the absence of a specific price being prescribed for any equipment delivered under the contract, there is no basis for comparing costs. He has urged that the figures provided by plaintiff/SPEC for the cost it would allegedly supply the same equipment are, therefore, baseless.
45. In response to the arguments of the learned counsel for the plaintiff/SPEC that the termination notice was issued without first issuing a notice of default as required under the contract, it may be mentioned that notice of default was issued to plaintiff/SPEC on 08.04.2019 in which defendant/PPL specifically pointed out that on the basis of plaintiff/SPEC's own monthly progress reports it had only completed 60% of the milestones by January 2019 even though it was supposed to have completed 75%; it had completed 57% of the milestones by August 2018, which means that in the 6 months from August 2018 to January 2019 only 3% further milestones had been completed, and no work had been completed since then. Therefore, defendant/PPL requested plaintiff/SPEC to ensure immediate deployment of manpower and other resources and to submit a recovery plan for the project failing which it would exercise its contractual remedies, but the plaintiff/SPEC failed to rectify these defaults. Therefore, the defendant/PPL terminated the contract on 10.05.2019. The termination notice was, therefore, issued in accordance with Clause 3.211 of the contract. Even otherwise, as per Clause 3.21.2 of the Contract defendant/ PPL was entitled to terminate the contract without providing any reasons. It appears that defendant/PPL has already overpaid plaintiff/ SPEC almost US$ 20 Million. The defendant/PPL in its counter claim in Suit No. 2M of 2019 and the pending arbitration has claimed liquidated and other damages from plaintiff/SPEC. The question of delaying payments to plaintiff/SPEC in these circumstances does not arise and the delay in the arbitration is due to plaintiff/SPEC's failure to pursue its extension application pending in JM No. 14 of 2019 and its filing of Suit No. 204 of 2019 seeking payment of the same claims. In accordance with Section 35 of the Arbitration Act, 1940 when legal proceedings on the subject matter of the reference to arbitration have commenced, all further proceedings in the reference to arbitration are invalid. Even for assuming that all of plaintiff/SPEC's factual submissions were correct, this would still not entitle plaintiff/SPEC to specific performance of the contract, its remedy would remain damages.
46. Learned counsel for the plaintiff/SECP has relied upon the case of Jamal Ahmed v. Zakari (1987 MLD 295). This judgment relates to an agreement for the sale of immoveable property. The 1877 Act recognizes 'that such agreements can be specifically enforced. Proviso to Section 12 which states that "until and unless the contrary is proved, the Court shall presume that the breach of a contract to transfer immoveable property cannot be adequately relieved by compensation in money...").
This judgment has no relevance to the present case.
47. He further relied on the case of Hatta Construction Co. Ltd. v. Faisalabad Development Authority (1995 CLC 1877). In this case the petitioner sought to restrain the respondent from taking any action to recover amounts on account of damages for breach of the contract. The court granted an injunction restraining the respondent from taking any action to recover such amounts until the competent forum had determined whether such damages were, in fact, due to it. This case has no relevance to the present suits since defendant/PPL is not taking any coercive measures to seek recovery of any amount as damages.
48. He also relied upon the case of H.A. Rahim & Sons v. Province of Sindh and another (2003 CLC 649). This judgement relates to the constitutionality of infrastructure cess imposed by the Province of Sindh through the Finance Act, 1994. The Court held that the cess was unconstitutional as it amounted to a customs duty which fell within the exclusive legislative competence of the Federation. This judgment has no relevance to the present case.
49. Learned counsel further relied upon the case of Arif Majeed Malik v. Board of Governors of KGS (2004 CLC 1029), which relates to an injunction restraining a school from removing students. The court held that as schools were subject to registration with and control of the Government under the West Pakistan Ordinance XI of 1962, they were under an obligation under Section 3 of the 1877 Act which could be specifically enforced under Section 54 of the 1877 Act. Section 54 is itself "Subject to other provisions of the Specific Relief Act, 1877". Section 54 is, therefore, subservient to the express bar on specific performance of works contracts under Sections 21 and 56 of the Act, 1877. This judgment has no relevance to the specific performance of a works contract.
50. In the case of Dada Steel Mills v. Metal Export (2009 CLD 1524). The judgment relates to compensation in lieu of specific performance of an agreement for the sale and purchase of a specified vessel. The court held that under Section 19 of the 1877 Act, the Appellant was entitled to compensation in lieu of specific performance. This judgement relates to the sale of a specific and ascertained property, while the present case relate to the specific performance of a works contract. The sale of specific property in this case (i.e. the vessel) was similar to the sale of immovable property which can always be specifically enforced. The specific performance of a works contract is specifically barred under Section 21 of the 1877 Act.
51. In the case of M. Majid v. Ministry of Manpower and others (PLD 2017 Islamabad 19). This judgment relates to the cancellation of the Petitioner's Overseas Employment Promoter's License by the Director General, Bureau of Emigration and Overseas Employment under Section 12(3) of the Emigration Ordinance, 1979. The court set aside the order of cancellation on the ground that it was a non-speaking order and did not contain any valid reasons. This judgment has no relevance to the present suits, since it related to the exercise of a statutory power which requires providing reasons, while the present case relate to the exercise of a contractual power to which such requirements are not applicable. Even otherwise, the Termination Notice clearly sets out the reasons for termination.
52. In the case of Jamia Industries Ltd. v. Pakistan Refinery Ltd. (PLD 1976 Karachi 644). In this case, the applicant sought to restrain the respondent from encashing its bank guarantees and refer the matter to arbitration. The court restrained the respondent from encashing the guarantees and directed it to file the arbitration agreement in court. This case concerned the encashment of bank guarantees. It has no relevance to the present suits since no such direction has been sought in both these suits.
53. In the case of M. Hanif and another v. Rivaz Gardens Social Welfare Society (1983 SCMR 598). This judgment relates to residents' objection to operation of a petrol pump at a nearby road.
As an interim measure, the lower courts directed the parties to maintain status quo. This order was affirmed by the Supreme Court, which further allowed the petitioner to re-construct a room on site, which had been damaged during riots and to cement the existing underground tank. The facts involved and the issues at stake in the present case are, therefore, entirely different.
54. In the case of Sandoz Limited and another v. Federation of Pakistan, (1995 SCMR 1431). This judgment relates to the award of damages for a contract for the sale of goods. The Hon'ble Supreme Court held that the damages awarded were too remote and allowed the appeals. This judgment has no relevance to the present case, as plaintiff/SPEC is not seeking damages.
55. In the case of KWSB v. KESC and others (PLD 2012 Sindh 349). The issue before the court in this judgment was whether a third party beneficiary (KWSB) could enforce a contract for the supply of electricity between the Government of Pakistan and KE. The court held that it could because despite a repudiatory breach by the Government, KE had itself affirmed the contract. In these circumstances, KE could not back out of the agreement. This judgment has no relevance to the present case. This is not a case of repudiatory breach. Defendant/ PPL has terminated the contract and has awarded the work to third parties.
56. In the case of M. Latif Khokhar v. Abdul Latif Khan and another (2018 CLC Note 40). This judgment relates to the specific performance of an agreement to sell immoveable property. The court held that such an agreement is specifically enforceable. It has no relevance to the present case where plaintiff/SPEC is seeking to specifically enforce a works contract, which is barred under Section 21 of the 1877 Act.
57. In the case of Al-Noor v. Province of Sindh (PLD 2019 Sindh 400). This judgment relates to a challenge to a tender process. The process was set aside by the court. It has no relevance to the present case since no tender process is under challenge.
58. In the case of Commissioner Income Tax v. Siemen A.G. (PLD 1991 SC 368). This case relates to income tax. The Commissioner Inland Revenue held that the Respondents agreement with a third party was a sham whose only purpose was to avoid taxation. The Hon'ble Supreme Court held that when both parties had confirmed the agreement, a third party such as the Commissioner could not question its validity.
59. Learned counsel for the plaintiff/SPEC has relied on the above cited cases, which relate to the specific enforcement of a works contract or similar contracts, which have no applicability and are distinguishable to the facts involved in the instant suits.
60. It may be noted that the defendant/PPL has issued purchase orders for equipment and entered into contracts for part of the remaining work in accordance with the 2004 Rules. Rule 42 of the 2004 Rules allows procurement through direct contracting in cases of emergency or through negotiated tendering in cases of urgency. The defendant/PPL has issued purchase orders to the same vendors from whom plaintiff/SPEC had to procure the equipment under the Contract. These purchase orders were issued, and contracts entered into because of the extreme urgency created by plaintiff/SPEC's failure to complete the Project almost three years after the Completion Date and the continued extraction and resulting depletion of gas from the same reservoir by other companies from adjacent fields and further delay will result in the purpose of the Project being defeated as no gas may be left to produce. It may further be observed that even assuming that these purchase orders were issued, and contracts entered into in violation of the 2004 Rules, this would not entitle plaintiff/SPEC to specific performance of the Contract. At best it would require defendant/PPL to issue new tenders for the equipment and remaining work. The Contract would still remain terminated.
61. With regard to the applicability of Section 58 of the Sale of Goods Act, 1930 is concerned, it is subject to the provisions of Chapter II of the 1877 Act. Sections 12 and 21 are part of Chapter II of the 1877 Act. This means that Section 58 of the 1930 Act is subservient to Sections 12 and 21 of the 1877 Act i.e. specific performance under Section 58 of the 1930 Act can only be granted if it is not barred under Sections 12 and 21 of the 1877 Act. Section 12 of the 1877 Act provides that "until and unless the contrary is proved, the Court shall presume that the breach of a contract to transfer immoveable property cannot be adequately relieved by compensation in money and that the breach of a contract to transfer moveable property can be thus relieved". In light of this, a court has to presume that, unless the contrary is established, a contract for the transfer of moveable property, i.e. sale of goods, can be adequately compensated by money. In this case, plaintiff/ SPEC has not provided a single reason why the breach of the Contract cannot be adequately compensated by money. Section 21(a) of the 1877 Act provides that a contract for the breach of which money is adequate compensation cannot be specifically enforced. Section 56 of the 1877 Act then provides that no injunction can be granted to prevent the breach of a contract that cannot be specifically enforced.
62. Bare reading these provisions together, it is clear that unless plaintiff/SPEC proves otherwise, the Court has to presume that money is adequate compensation for the breach of the Contract. In that case, the Contract cannot be specifically enforced, and no injunction can be granted to prevent its breach. Since plaintiff/SPEC has failed to establish that money would not adequately compensate it for the breach of the Contract, even if the Contract was an agreement for the sale of goods, it cannot be specifically enforced under Section 58 of the 1930 Act. In this case, even if the restrictions under Sections 12 and 21 of the 1877 Act could be circumvented, since this is not an agreement for specific and ascertained goods. Plaintiff/SPEC could provide defendant/PPL with any Amine or HCDP Package. This Court is hearing and deciding a private dispute in its civil original jurisdiction under section 9 of the C.P.C. Its jurisdiction is circumscribed by law. It cannot grant any relief which is specifically barred by a statute. This Court is, therefore, bound by the restrictions prescribed in the 1877 Act. Additionally, it is well settled proposition of law that relief of injunction is discretionary and Court is not bound to grant it in every case and it is not to be granted unless the court is satisfied as to its real need. The discretion is to be exercised in accordance with reasons and sound judicial principles. Court while dealing with application for grant of injunction has to look and to assess all the circumstances obtaining the suit and more so, to equitable relief. Discretion vested in a Court of law has to be exercised judicially and equitably ensuring all the times that justice is adequately applied and administered.
63. On 25.08.2020 by consent of the learned counsel for the parties this. Court directed the learned Official Assignee to hire the services of M/s. NESPAK Karachi for carrying out an inspection on the same date and time fixed by the learned Official Assignee, which will protect the interest of both parties. However, the report of M/s. NESPAK is still awaited. The inspection will ensure that the equipment already delivered and the work already completed by plaintiff/SPEC is identified and the aggrieved party can make a claim for payment. The only remedy for termination of such a contract is damages. Plaintiff/SPEC has already filed a claim for damages in a pending arbitration and in Suit No.204 of 2019 pending before this Court. Therefore, the relief sought by plaintiff/SPEC by applications filed in Suit No.914/2020 cannot be granted.
64. In view of what has been discussed above, I am of the considered view that plaintiff/SPEC has failed to make out a prima facie case in its favour. As such, C.M.A. Nos.6224/2020, 6225 of 2020 in Suit No.914/2020 and C.M.A. No.6116/2020 in Suit No 321/2020 filed by the plaintiff/SPEC are hereby dismissed, whereas C.M.A. No.5148/2020 in Suit No.321/2020 filed by defendant/ PPL is allowed.