' The present. Constitutional petition was dismissed by this Court vide order dated 28-11-2001, however, the Honourable Supreme Court of Pakistan, while allowing the appeal, remanded the case for its decision afresh vide order dated 18-4-2002 in the following terms:-- "With the consent of both the parties, the petition is converted into appeal and the same is allowed.
The case is remanded back to the learned Single Judge of the Lahore High Court, Lahore for consideration afresh all the factual as well as the legal aspects of the matter after affording an opportunity of hearing to both the parties and to decide the same afresh possibly within one month as the huge amount of Rs,22 million of public exchequer is involved in this case."
2. The present petition impugns the order dated 7-5-1995, whereby the learned Additional District Judge, dismissed petitioners' appeal and maintained the order dated 12-10-1994 passed by the learned Civil Judge, through which, he dismissed an application for the grant of interim relief, filed by the petitioners, under section 41 of the Arbitration Act read with Order XXXIX, rules 1 and 2, Civil Procedure Code, with the prayer that both the orders be declared to have been passed without lawful authority and may be set aside.
3. Brief facts, leading to the filing of the present petition are that pursuant to the invitation of bids, by the Privatization Commission, for the sale of Fazal Vegetable Ghee Mills (Pvt.) Limited, (respondent No,2) reportedly owned by Ghee Corporation of Pakistan (respondent No,1), petitioner No,1 purchased 1,63,240 shares, i,e, 37.1% of the total paid-up capital of petitioner No,2, for a total consideration of Rs,2,12,21,200, which amount was, statedly, paid by the petitioners and consequent to that, sale agreement dated 28-8-1991 was executed between the parties and the aforementioned shares were transferred in favour of the petitioner No,1. Accordingly, management, possession and control of the petitioner No,2 was, admittedly, handed over to petitioner No,1 on 16- 10-1991. It has been narrated in the petition that under clause 11 of the sale agreement, statement of accounts in respect of the amount due between the petitioner No,2 and the respondent No,1, was to be prepared, which was to be secured through a bank guarantee, to be furnished by the petitioneRs, According to the petitioners a reconciliation statement was prepared showing a sum of Rs,21,493,922.65 as payable by the petitioner No,1 to the respondent No,1, however, the said statement also shows that the same was subject to audit. In order to secure the aforenoted amount, the petitioners furnished bank guarantee, issued by the respondent-Bank, to the tune of Rs,22 million. It is the case of the petitioners that they were to make the payment of the aforenoted amount within a period of ,two yeaRs, It has been submitted in the petition that the respondent No,1, instead of making the arrangements for the conduct of audit of the accounts, deducted an amount of Rs,26.859 million from the duty drawback, which the petitioners received from the Government of Pakistan. According to the petitioners, despite their repeated demands, the joint audit was not carried out and on the other hand, the respondent No,1 approached the respondent- Bank for the encashment of the bank guarantee, which necessitated the filing of an application, by the petitioners, under section 20 of the Arbitration Act, before the learned Civil Judge with the prayer to refer the dispute to the arbitration. Alongwith the main petition, an application for the grant of interim relief, thereby restraining the respondents from encashing the bank guarantee, was also submitted. However, the learned Senior Civil Judge, after calling for the replies to the said applications, dismissed the application for the grant of temporary injunction vide order dated 12- 10-1994. Discontented with the said order, the petitioners assailed the same before the learned Revisional Court, but without any success as their revision petition was also dismissed by the learned Additional District Judge vide order dated 7-5-1995, hence the present Constitutional petition, calling in question the aforenoted two ordeRs,
4. The learned counsel for the petitioners, while relying upon Messrs Jamia Industries Ltd. v. Messrs Pakistan Refinery Ltd., Karachi (PLD 1976 Karachi 644), has contended that the temporary injunction can be granted restraining the encashment of bank guarantee. He has further submitted that both the Courts below, while declining the temporary injunction to the petitioners, proceeded on erroneous assumption inasmuch as both the impugned orders were passed in complete oblivion of the facts of the case and law on the subject. Conversely, the learned Deputy Attorney-General has vehemently refuted the contentions raised by the learned counsel for the petitioners and has submitted that the consistent views of the superior Courts are, not to grant temporary injunction against the encashment of the bank guarantees. He while relying upon Tauseef Corporation (Pvt.)
Ltd. v. Lahore Development Authority and others (2002 SCMR 1269), has added that the loss allegedly to be suffered by the petitioners, on account of encashment of the bank guarantee, is measurable in terms of money, therefore, the petitioners would not suffer any irreparable loss, thus, the present petition merits dismissal.
5. Admittedly, a reconciliation statement was prepared and in order to secure an amount of Rs,21,493,922.65, the petitioner No,1, furnished the bank guarantee to the respondent No, 1 . It would be appropriate to reproduce the operative portion of the said bank guarantee, which has a grave nexus with the legal question, involved in the present case:-- "Now therefore we M/s. Allied Bank of Pakistan Ltd., Sector 1/9 Branch, Islamabad, do hereby conditionally guarantee the payment to you by the Company of a sum of Rs,22.000 million within a period of 2 years commencing from the date of completion of all the following formalities by Mian Muhammad Shah in favour of and as per satisfaction of the Bank and prior to this Bank shall not accept any liability under this guarantee. The condition of this guarantee is that if the Company makes payment to you of the said amount of Rs,22.000 million then this guarantee shall be void but if the Company fails to make the payment of Rs,22.000 million within a period of 2 years commencing from the date of completion of following formalities by Mian Muhammad Shah as stated above, then we shall within one month of written demand made by you make payment to you of the amount in default not exceeding Rs,22.000 million." (Underlining is mine).
' It flows from the perusal of the contents of the bank guarantee, a portion whereof has been reproduced above, that the respondent No,2 has unequivocally undertaken to encash the bank guarantee, irrespective of any dispute between the principal debtor and the beneficiary. The only condition, which would have made the said guarantee as void, is that if the company makes the payment of Rs,22 million to the respondent No,1, which amount has, admittedly, not been paid by the petitioners to the respondent No,1 uptil now. The respondent-Bank has clearly undertaken to pay the said amount of Rs,22 million to respondent No,1, within one month of the written demand made by respondent No,1, if the company fails to make the payment of the said amount. It is not the case of the bank that the petitioners did not fulfil the conditions, subject to which, the guarantee was issued. I have examined the written statement, filed by the bank, wherein, as a matter of Act, they have raised no objection to the encashment of the bank guarantee and has prayed that the matter is between the petitioners and the respondent No,1 and be decided on merits.
6. Honourable Sindh High Court in a case reported as Sirafi Trading Establishment v. Trading Corporation of Pakistan Ltd. (1984 CLC 381) after referring the case of Messrs Jamia Industries Ltd. v.
Messrs Pakistan Refinery Ltd., Karachi (PLD 1976 Karachi 644), relied upon by the learned counsel for the petitioners, and other cases as well, came to the conclusion that the bank guarantees, furnished in cases, are governed by the same principles of law applicable to payment by banks against confirmed letters of credit and absolute obligations thus imposed upon Bank, which executes guarantee to honour the same according to its terms. This Court in a case reported as Attock Industrial Products Ltd. v. Heavy Mechanical Complex (Pvt.) Ltd. (1999 MLD 1876) after referring the cases reported as Manzoor Textile Mills Ltd. v. Special Judge Banking, Lahore and others (1996 CLC 422) and Messrs National Construction Ltd. v. Aiwan-e-Iqbal Authority (PLD 1994 SC 311), held that "petitioner according to agreement was entitled to encash bank guarantees without reference to respondent or without waiting for any decision or judgment against respondent and banks were legally obliged to encash the same on raising demand by petitioner without reference to respondents".
' The Honourable Supreme Court of Pakistan, in the aforenoted judgment of Messrs National Constructions Ltd., after distinguishing the case of Messrs Jamia Industries Ltd., came to the conclusion that the guarantees are independent contracts and the bank authorities must construe them, independent of the primary contracts. Following observations made by the Honourable Supreme Court of Pakistan, which are completely applicable to the facts of the present case, appear necessary to be reproduced, as they would clinch the matter in hand:-- "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 bank 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.". (Underlining is mine).
' In view of the resume of the case-law on the subject, the learned Law Officer is right in contending that no temporary injunction can be granted restraining the encashment of the bank guarantee.
7. The main thrust of the arguments, on behalf of the petitioners, is that the bank guarantee cannot be encashed as uptil now, respondent No,1 has failed to carry out the joint audit and the accounts have not been settled. For this, one has to revert to the terms of the sale agreement dated 28-8- 1991, admittedly, entered between the parties. Clause (8) of the agreement, specifically prescribes that the seller (respondents) shall be responsible for the preparation and audit of the accounts from the previous year and such audited accounts shall be binding upon the buyer when approved by shareholders in general meeting. Furthermore, as per clause-II of the agreement, both the parties undertook to accept as correct the statement of accounts of the amounts due to or from the company to the seller as verified from the accounts maintained by the company/seller on a consistently followed basis of accounting. Upon examination of the other terms of the agreement, I do not find that the parties were consensus ad idem that the final accounts would be subject to joint audit. There is no provision in the said agreement that at first, the parties would carry out a joint audit and thereafter, the calculated amount shall be paid by the petitioneRs, Contention raised, by the learned counsel is misconceived and misdirected.
8. In view of the above discussion, coupled with the findings hereinafter given, I am of the firm view that the petitioners have got no prima facie case in their favour entitling them for the grant of temporary injunction restraining respondent No,1 from encashing the bank guarantee. Furthermore, the balance of convenience also IA tilts in favour of the respondents.
9. So far as the causing of irreparable loss is concerned, learned Deputy Attorney-General has rightly relied upon case of Tauseef Corporation (Pvt.) Limited (supra) wherein, the august Supreme Court declared the law as under:-- "As regards the ingredient of irreparable foss suffice it to say that loss allegedly suffered by the petitioner appears to be measurable in terms of money."
' In the instant case, the loss, allegedly to be caused to the petitioners on account of the encashment of bank guarantee, is measurable in terms of money, therefore, being guided by the aforesaid dictum laid down by the Honourable Supreme Court of Pakistan, I am constrained to hold that in case of encashment of bank guarantee, no irreparable loss will be caused to the petitioneRs, The petitioners have failed to establish the three necessary and inseparable ingredients for the grant of temporary injunction, i,e, prima facie case, irreparable loss and balance of convenience, thus, they are not entitled for the grant of temporary injunction and I am not inclined to accept the present petition.
10. Admittedly, the petition under section 20 of the Arbitration Act, 1940, filed by the petitioners, is pending before the learned trial Court and it has to give its final verdict after recording the evidence of the parties. If the application of the petitioners would be accepted, in that case, the arbitrators would be competent to decide which party is at fault. Suffice it to say at this stage that, as has been held above, the petitioners failed to establish the three basic ingredients for the grant or refusal of temporary injunction, therefore, I am inclined to maintain the impugned ordeRs,
11. Another aspect of the case is that both the Courts below, in exercise of their discretionary powers, have refused to grant the temporary injunction of course, while taking into consideration the facts of the case and the law applicable thereto. I am of the firm view that the discretion, exercised by both the Courts below, has been exercised in accordance with the recognized principles, governing the exercise of discretion and the same has not been exercised arbitrarily, perversely or in a fanciful manner. I am not inclined to interfere in the orders passed by both the Courts below in exercise of their discretionary poweRs,
12. It is a matter of record that pursuant to the execution of the sale agreement, the petitioner No,1 took possession of Ghee Mills on 16-10-1991 and is in continuous possession of the same uptil now.
The petitioners have been successful in withholding the public money for the last more than 10 years on one pretext or the other. Under the circumstances the petitioners cannot be allowed to forestall the said amount to cause further loss to the ex chequer. In these circumstances, petitioners are not entitled to the relief in the exercise of Constitutional jurisdiction, thus, I am not inclined to exercise the Constitutional jurisdiction in the matter, which is otherwise, discretionary and equitable.
13. I have examined the Courts below and of the legal, unexceptional and interference by this Court in jurisdiction, thus, both maintained orders passed by both the view that the same are do not call for any exercise of its Constitutional the orders are hereby maintained.
14. In the above perspective, the present Constitutional petition is devoid of any merits, thus, the same is dismissed with no orders as to costs.