' This appeal impugnes the order dated 26-9-2000, of the Civil Judge, Islamabad, whereby the appellant's application under Order 39, rule 1 and 2, C.P.C. Seeking the restraining order regarding the encashment of bank guarantee, has been dismissed.
2. The brief facts of the case are that Messrs K.K.P. (Private) Limited was awarded construction work of roads, drainage, water supply and sewerage by the respondentQuaid-e-Azam University Staff Housing Scheme. The work was awarded on 24-10-1996 and the date of completion was 23-4-1998.
Cost of work was mutually settled as Rs,6,94,70,590 and Rs,1,91,595. The contract was terminated by the respondents on 1st July, 1997, vide letter No,VC-l-3/97/689. This letter reads as follows:-- "The performance of the contract is not legally possible because of the Government decision to withdraw the relaxation under Zonal Regulation of the C.D.A. And orders to wind up the Quaid-e- Azam University Housing Scheme as well as the orders of the Honourable Lahore High Court, Rawalpindi Bench, Rawalpindi, dated 15-12-1996 in Writ Petition No,1906 of 1996. We are, therefore, constrained to inform you that the contract "Construction of Water supply and Sewerage works, Quaid-e-Azam University Staff Housing Scheme, Islamabad" is hereby terminated in FRUSTRATION with effect from 1st July, 1997 under the provisions of clause 3.66 of the contract conditions because of Government's decision and Court's ordeRs,"
3. The demobilize advance of Rs,8,8,63,000 was sanctioned to the appellants subject to the furnishing of bank guarantee to the equal amount and accordingly the bank guarantee was issued by the Askari Commercial Bank Limited, Faisalabad.
4. It is the case of the appellant that due to action of the respondents the appellant suffered a huge loss and despite of repeated requests the respondents did not compensate the appellant.
The appellant invoked the arbitration clause of the agreement, and therefore, filed an application under section 2 of the Arbitration Act for the appointment of the Arbitrator. During the pendency of the petition under section 20 of the Arbitration Act, it is alleged that the respondents with mala fide intention decided the encashment of Bank guarantee. In this view of the matter, the appellant moved an application under Order 39, rules 1 and 2. C.P.C. For grant of temporary injunction restraining the respondent to encash the bank guarantee. This application was dismissed vide impugned order dated 26-9-2000, on the ground that the earlier application under Order 39, rules 1 and 2, C.P.C. Was dismissed by the Court on 30-4-1998 and the second application on the same subject is not maintainable. No stay can be granted for encashment of the bank guarantee.
5. The learned counsel for the appellant on the strength of the cases reported as Messrs Hatta Construction Company (Pvt.) Ltd. v. Faisalabad Development Authority, Faisalabad through Director and another 1995 CLC 1877, 1983 CLC 1292 contends that the temporary injunction regarding encashment of bank guarantee can be granted under Order 39, rules 1 and 2, C.P.C. On the strength of case reported as AIR 1940 Lah.39, PLD 1963 (W.P.) Lahore 566, the learned counsel states that the second application under Order 39, rules 1 and 2, C.P.C. In the presence of the order dated 30-4-1998 through which the earlier application for grant of temporary injunction was dismissed, was maintainable.
6. Conversely, the learned counsel for the respondents states that the civil suit filed by the appellant was dismissed on 13-2-1998. Thereafter an application for grant of stay order was dismissed on 13-4-1998. Another suit was filed by the appellant at Faisalabad which was dismissed on 12-6-2000 and after that the application under section 20 of the Arbitration Act has been filed and without disclosing the factum of earlier dismissal of the application under Order 39, rules 1 and 2 read with section 151, C.P.C. Vide order dated 30-4-1998, the petitioner filed another application which has' been dismissed through the impugned order dated 26-9-2000. He argues that the bank guarantee is a separate and independent contract and no restraining order can be passed by the Court regarding the encashment of the bank guarantee. Reliance has been placed on the cases reported as PLD 1994 SC 311, Messrs Printpac (Pvt.) Limited v. Rice Export Corporation of Pakistan Ltd.
1992 M LD 1161 and Messrs Rafidian Bank, Iraq v. M.L. International (Pvt.) Limited, Karachi 1993 M LD 1234.
7. I have heard the arguments of the learned counsel for the parties and perused the record. It is incorrect that the Court has the jurisdiction to grant stay under Order 39, rules 1 and 2, C.P.C. On subsequent application and earlier order refusing grant of stay by the same Court may not hit by principle of res judicata under section 11 of the C.P.C. Provided that new circumstances arisen and if there is exigency of the case required that the temporary injunction may be issued as it has been held in case of Ishar Das, Proprietor, Punjabee Bhaion Ki Dokan Machhi Hatta, Lahore v. (Firm)
Bhaion Ki Dokan through Sardar Jawahar Singh and others AIR 1940 Lah. 39 and Aman Ullah Khan and others v. Khurshid Ahmad PLD 1963 (W.P.) Lah.
566. In the instant case there were neither new circumstances nor have been pleaded as such. In this view of the matter, in the presence of earlier order dated 30-4-1998 dismissing the application under Order 39, rules 1 and 2, C.P.C. And second application on the same subject without seeking the remedy of appeal, to my mind, is not maintainable. This brings me to deal with the second question to discuss the entitlement of the appellant for the grant of interim injunction. The case of Messrs Hatta Construction Company (Pvt.) Limited v. Faisalabad Development Authority, Faisalabad through Director and another 1995 CLC 1877, relied by the learned counsel for the appellant, the temporary injunction restraining the respondents from recovering the amount in dispute through coercive measure pending the decision of the application under section 8/20 of the Arbitration Act, 1940, was issued because it was yet to be determined and so also liability of the parties inter se was dealt in issue before the learned trial Court. It is admitted position that the Askari Commercial Bank has nothing to do with the progress of the work under the agreement executed between the parties or regarding the payment of any amount by the respondents to the appellant as the said payment was regarding the contract between the parties to the contract. The Bank under contractual as well as legal obligation under the terms of the agreement, was bound to fulfil its commitment. In case of Messrs Rafidian Bank, Iraq v. M.L. International (Pvt.) Limited, Karachi 1993 M LD 1234, it has been ruled that bank guarantee furnished in a case involved an absolute obligation imposed upon the bank executing guarantee to honour same according to its terms.
Exception to such general rule would be only in a special case of fraud or where prima facie a gross injustice was likely to be caused to affected party. The matter of interpretation of the bank guarantee came up for consideration before the Honourable Supreme Court in case reported as Messrs National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311, it has been observed that, Bank guarantees being independent contracts bank authorities must construe them independent of the primary contracts. Discretion exercised by Courts below in refusing to grant temporary injunction by restraining respondent from encashment of bank guarantees in respect of amount advanced to appellant could neither be deemed to be arbitrary nor fanciful. Respondent was rightly found entitled to encash bank guarantees to the extent of the balance unadjusted amount. Temporary injunction for restraining respondent from encashing bank guarantees was rightly refused in circumstances.
8. The above view that bank guarantee is an independent contract and bank authorities must construe it independent of the primary contract, again came up for consideration in the case of Harral Textiles Limited v. Banque Indosuez Belgium, S.A. And others 1999 SCM R 591. The Honourable Supreme Court while interpreting the provision of Order 39, rules 1 and 2, C.P.C. Regarding the stay of the encashment of the bank guarantee that:-- "Contract of Bank guarantee is a trilateral contract under which the Bank has undertaken to unconditionally and irrevocably abide by the terms of the contract. Bank guarantee is founded on an act of trust with full faith to facilitate free growth of trade and commerce in internal or international trade or business Bank guarantee like a letter of credit, creates an irrevocable obligation to perform the contract in terms thereof. Bank must honour a bank guarantee is unconditional and irrevocable, the Bank concerned must pay when demand is made unless the bank has pledged its own credit involving its reputation, generally, bank has no defence except in case of fraud."
9. By following the rule that bank guarantee is an independent contract and the bank authorities must construe them an independent of the primary contract between the parties and the case of Messrs National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311 and Haral Textiles Limited v. Banque Indosuez Belgium S.A. And others 1999 SCM R 591, I have no option to say that the learned Civil Judge rightly dismissed the application of the appellant under Order 39, rules 1 and 2, C.P.C. And refused to stay the encashment of bank guarantee.
' Resultantly, this appeal fails and is dismissed.