CH. MUHAMMAD IQBAL, J. Through this regular first appeal under section 13 of The Gas (Theft Control and Recovery) Act, 2016 the appellant has challenged the validity of the judgment and decree dated 30.09.2022 passed by the learned Judge Gas Utility Court, Faisalabad whereby the suit for recovery of Rs.1,48,27,000/- filed by respondent was decreed.
2. Brief facts of the case are that the respondent/plaintiff-Sui Northern Gas Pipelines (Pvt.) Ltd.
[hereinafter referred to as "SNGPL") filed a suit for recovery of Rs.1,48,27,000/- under section 6 of The Gas (Theft Control and Recovery) Act, 2016 against the appellant/defendant on account of Bank Guarantee along with markup/interest contending therein that Messrs Chenab Limited Spinning Division as a consumer of the SNGPL applied for supply of industrial gas connection at its business premises. A contract for supply of gas for industrial (captive power) in the name of Chenab Limited Spinning Division, Toba Tek Singh was duly executed between the parties. After installation of the connection, the appellant-defendant (banking company) executed independent bank guarantee No. FB-LB/20050086 dated 26.03.2005 amounting to Rs. 1,48,27,000/- [hereinafter referred to as the "Guarantee] in favour of the SNGPL on behalf of Messrs Chenab Limited Spinning Division. The appellant-bank renewed the Guarantee in favour of the SNGPL time to time and lastly renewed on 27.03.2017. The Chenab Limited Spinning Division failed to abide by the terms and conditions of contract and avoided to deposit the bills/due to the SNGPL and was also involved in violating terms and conditions of the gas sale contract and became defaulter of an amount of Rs.4,89,66,010/- as on February, 2019. The respondent SNGPL lodged a claim for encashment of Guarantee through a letter No. 10 dated 21.01.2019 whereafter so many other notices were served to the appellant-bank for encashment of Bank Guarantee but the appellant refused to encash the same. The appellant/defendant contested the suit initially through filing PLA which was allowed and subsequently the written statement was filed. The learned trial Court framed issues, recorded evidence of the parties and vide judgment and decree dated 30.09.2022 decreed the suit. Hence, this appeal.
3. I have heard the arguments of learned counsel for the parties and have gone through the record with their able assistance.
4. The material controversy revolved around issues Nos. 1 and 2 which are reproduced as under:
1. "Whether an amount of Rs.1,48,27,000/- is due against the defendant Bank secured against bank Guarantee bearing No. FB-LG/20050086 due to willful default and the plaintiff gas company is entitled to get a declaratory decree as prayed for? OPP
2. Whether the defendant Bank is defaulter of outstanding amount as well as violated the gas sale agreement and the impugned bill was rightly sent to him? OPP"
To prove the aforesaid issues, the SNGPI, produced Qasim Javed, Senior Accountant (P.W.1) who produced his authority letter (Exh.P.1) and produced his statement in shape of affidavit (Exh.P.2) and deposed that his signatures on affidavit are available as Exh.P.2/1. He tendered the letter No. FB-LG/20050086 dated 27.03.2017 (Exh.P.3), letter dated 27.03.2016 for amendment in the bank guarantee (Exh.P.4), original bank guarantee (Exh.P.5), Gas Sale Agreement (Exh.P.6); Commissioning Advice (Exh.P.7); Disconnection Advice (Exh.P.8); gas bill for February, 2020 amounting to Rs.5,16,32,600/- (Exh.P.9), Bank Guarantee [independent contract of SNGPL with the appellant-bank] (Exh.P.10), renewal/ encashment letter dated 21.01.2019 (Exh.P.11), gas bill for the month of February, 2019 amounting to Rs.4,89.66,010/- (Exh.P.12), letter of encashment dated 28.05.2019 (Exh.P.13), letter of encashment dated 11.06.2019 [first reminder] (Exh.P.14), letter of encashment dated 19.06.2019 (second reminder] (Exh.P.15), letter of encashment [third reminder] dated 21.06.2019 (Exh.P.16), bank letter dated 18.06.2019 (Exh.P.17), bank letter dated 27.06.2019 (Exh.P.18), letter of encashment (Exh.P.19), bank letter dated 08.07.2020 (Exh.P.20), letter by respondent dated 15.07.2019 (Exh.P.21), letter for encashment dated 23.08.2019 (Exh.P.22), letter of encashment dated 02.09.2019 (Exh.P.23), bank letter dated 06.09.2019 (Exh.P.24), letter of SNGPL for encashment dated 18.10.2019 (Exh.P.25), letter dated 24.10.2019 (Exh.P.26). During cross-examination, he deposed that it is correct that Exh.P.5 is an extension of original bank guarantee dated 26.03.2005; that Exh.P.10 is the copy of original bank guarantee; that Exh.P.6 is a contract between SNGPL and Messrs Chenab Limited Spinning Division; that it is correct that Exh.P.6 is a contract of supply of gas; that it is correct that he has produced copy of billing month February 2019 as Exh.P.12; that it is correct that an amount of Rs.18,883.20 is mentioned in Exh.P.12 on account of gas charges; that it is correct that plaintiff has issued 1st notice (Exh.P.13) for encashment on 28.05.2019; that on the request of the bank, the plaintiff has provided details of outstanding amount of gas sales: that Bank letter Exh.P.17 is an attested copy of the original one and he attested the copy of Exh.P.17; that it is correct that plaintiff has mentioned specific gas charges in Exh.P.16; that Exh.P.16 shows outstanding amount of Rs.5,06,39,328/-; that plaintiff has mentioned gas charges including all taxes sold by SNGPL till 24.05.2019. The P.W was asked a question regarding request of the bank for gas consumption bill, which question and the answer given by the P.W is reproduced as under: "Q: The defendant bank never ever requested for gas consumption bill: The bank has only request for outstanding bill accordingly?
A: Whenever bank demands for providing outstanding amount, I through letter in response to bank letter, every time intimated regarding outstanding amount comprising on arrears including tax."
5. Conversely, Muhammad Mubashar (D.W.1) tendered his statement in the shape of affidavit (Exh.D.1), submitted the power of attorney (Exh.D.2), produced authority letter (Exh.D.3) and deposed that the bank has issued bank guarantee No. FB-LG/20050086 dated 26.03.2005, which was renewed from time to time and last in series renewal was made on 27.03.2017 for a period of two years commencing from 26.05.2017 to 25.03.2019 with new claim lodgment date as 25.05.2019; that the claim of the plaintiff is not maintainable particularly when the aforesaid bank guarantee favouring the plaintiff on behalf of Chenab Limited was utility of gas sales/consumption whereas the arrears of Rs.4,9560,993.47 is pertaining to gas infrastructure development cess [GIDC] and other taxes, as such there no question arises to encash the guarantee by the defendant-bank.
During cross-examination he deposed that it is correct that bank guarantee No. FB-LG/20050086 was firstly executed on 26.03.2005; that it is correct that since execution of bank guarantee till its expiry, he has not signed any document in this regard; that it is correct that amount of bank guarantee is Rs. 1,48,27,000/- ; that it is correct that Exh.P.5 is lastly renewed bank guarantee; that it is correct that claim lodgment date was 25.05.2019; that it is correct that Exh.P.11 is renewal/encashment letter which was issued to Chenab Limited Spinning Division and CC to Manager Al-Baraka; that it is correct that Exh.P.17 issued by the Al-Baraka Bank to SNGPL; that he owns the contents of Exh.P.17 and Exh.P.18; that it is correct that the bank is bound to pay Rs.1,48,27,000/- only on account of gas, sales; that it is correct that gas bill consists upon all government taxes and fees which time to time levied by the government. The appellant also produced Muhammad Azeem Khan (D.W.2) in support of its version.
6. The Guarantee (Exh.P.10), its subsequent renewals) as well as the entire correspondence made between the parties in this regard are admitted documents. It is settled law that admitted facts need not to be proved. Reliance is placed on the cases of Mst. Nur Jehan Begum through LRs v.
Syed Mujtaba Ali Naqvi (1991 SCMR 2300), Chief Engineer, Irrigation Department, N.W.F.P.
Peshawar and 2 others v. Mazhar Hussain and 2 others (PLD 2004 SC 682) and Mst. Rehmat and others v. Mst. Zubaida Begum and others (2021 SCMR 1534).
7. The Guarantee between the appellant-defendant (bank) and respondent/plaintiff (SNGPL) is an independent contract. At the time of obtaining of Guarantee by the respondent-SNGPL, no objection was raised by the appellant/defendant side. The respondent/plaintiff proved its case through production of the admitted and reliable documents whereas the appellant/defendant failed to controvert the said documents and it is settled law that the documentary evidence always takes preference over the oral deposition as the man can tell a lie but a document cannot. A document can be rebutted by the document having better legal sanctity only. In this regard, reliance is placed on the cases of Abdul Ghani and others v. Mst. Yasmeen Khan and others (2011 SCMR 837) and Saleem Akhtar v. Nisar Ahmad (PLD 2000 Lahore 385).
8. It is settled law that a bank guarantee containing a categorical undertaking impose absolute obligation on the guarantor bank to pay the guaranteed amount without being influenced by the performance of primary contract. The Hon'ble Supreme Court of Pakistan in a latest judgment cited as Atif Mehmood Kiyani and another v. Messrs Sukh Chayn Private Limited, Royal Plaza, Blue Area, Islamabad and another (2021 SCMR 1446) has held in this regard as under:- "5. A bank or insurance guarantee that contains a categorical undertaking and impost absolute obligation on the guarantor, i.e. the bank or the insurance company, to pay the guaranteed amount, irrespective of any dispute which may arise between the parties regarding breach of the contract for which performance that one party furnishes the guarantee to the other, is an independent contract; therefore, the guarantor must discharge its obligations under the contract of guarantee as per the terms thereof, independent of the dispute as to performance of the primary contract between the parties. In a similar case of "National Construction Ltd. v. Aiwan-e- Iqbal Authority" (PLD 1994 SC 311), this Court, while maintaining the orders of the High Court and the trial court refusing to grant temporary injunction for restraining the respondent therein from encasing the bank guarantee, observed:
4. ........ The contents of para.3 of mobilization advance guarantee, clearly visualized that the respondent can get encashed guarantee without any question or without any reference of any nature, whatsoever to the contractor (appellants) and irrespective of any dispute between the parties or before any arbitrator or any Court of law...... In the instant case, therefore, the bank guarantees furnished by the appellants contain categorical undertaking and impose absolute obligations on the banks to pay the amount, irrespective of any dispute which may arise between the parties regarding the breach of contract. In our view the Courts must give effect to the covenants of the hank guarantees: the performance guarantees, for the smooth performance of the contracts. Those guarantees are independent contracts and the bank authorities must construe them, independent of the primary contracts. They should encash them notwithstanding any dispute arising out of the original contract between the parties. In the instant case, therefore, the encashment of the bank guarantees cannot be postponed pending decision of the arbitration proceedings, which may take years to conclude.
Likewise, in the case of "Shipuard K. Darrten v. Karachi Shipyard" (PLD 2003 SC 191) this Court maintained the orders passed by the High Court refusing the prayer for interim orders to restrain the respondents from encashment of Performance Bank Guarantees, and observed:
23. The law is thus settled that extraneous claims and counter-claims do not bar the enforcement of the bank guarantee. The enforcement depends upon its terms and conditions. If bank guarantees are unconditional, there is no other option for the bank and moreso, the bank would have no defence, when its guarantee is sought to be enforced......
24 ...... encashment of bank guarantee has no nexus with the spirit of the contract executed between the parties being an independent contract containing its own terms and conditions to be performed by the concerned parties. The encashment of the bank guarantee had nothing to do with the alleged dispute between the petitioners and the respondent, which must be decided independently on the basis of terms of that contract without involving the contract of bank guarantee. It must be noted that bank guarantee is an autonomous contract and imposes an absolute obligation on the bank to fulfill the terms and the payment on the bank guarantee becomes due on the happening of a contingency on the occurrence of which the guarantee becomes enforceable.
In view of this legal position, we find that the judgment of the High Court setting aside the order of the trial court and dismissing the application of the petitioners for temporary injunction to restrain the respondent No. 1 from encashment of the insurance guarantee till decision of the suit is in accordance with the law declared by this Court in the above cases, and thus do not call for any interference. CPLA No. 3209 of 2020 is, therefore, dismissed and leave refused."
Further reliance is placed on cases cited as Messrs National Construction Ltd. v. Aiwan-e-Iqbal Authority (PLD 1994 SC 311), Standard Construction Company (Pvt.) Limited v. Pakistan through Secretary Ministry of Communications and others (2010 SCMR 524) and SEPCO-III Electric Power Constructions Co. Ltd. v. Federation of Pakistan through Secretary Ministry of Energy and 2 others (2022 CLD 1035).
9. Learned counsel for the appellants has not pointed out any illegality, material irregularity or misreading of evidence in the impugned judgment and decree of the learned trial court, which does not call for any interference by this Court in its appellate jurisdiction.
10. Resultantly, this appeal having no merits is hereby dismissed. No order as to costs. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.