SARHAD FLOUR MILLS LTD. vs PUNJAB FLOUR MILLING CORPORATION AND Other
This matter arises from a petition seeking leave to appeal against an interim order passed by the Lahore High Court, which stayed the recovery of a sum of money from the petitioner subject to the furnishing of a bank guarantee. The petitioner, the Sarhad Flour Mills Limited, was nationalised under the Flour Milling Control and Development Act, 1976, and subsequently denationalised in September 1977 under the Flour Milling (Repeal) Ordinance, 1977. Following a notice to pay valuation dues, the petitioner challenged the recovery proceedings through a constitutional writ petition before the High Court. The core legal question concerned the propriety of the High Court's discretion in conditioning the interim stay order on the furnishing of a bank guarantee rather than a simpler security, given the petitioner's financial losses. The Supreme Court held that the imposition of terms for interim relief falls within the discretionary domain of the High Court and that the requirement of a bank guarantee was neither unreasonable nor arbitrary. The petition was accordingly dismissed, laying down the principle that appellate courts will not interfere with the reasonable exercise of discretion by the High Court in granting conditional interim relief.
- Whether the High Court can condition an interim stay order on the furnishing of a bank guarantee?
- Does the imposition of a bank guarantee for an interim stay constitute an unreasonable or arbitrary exercise of discretion?
- Will the Supreme Court interfere with the discretionary terms imposed by the High Court for granting interim relief?
- Section 3, Flour Milling (Repeal) Ordinance 1977
ORDER
1. ANWARUL HAQ, C. J.-This petition :s barred by 6 days but the delay is condoned for the reasons given in the relevant application, subject to all just exceptions.
2. The petitioner is aggrieved by an interim order made by a learned Judge of the Lahore High Court on the 27th of November, 197x, directing that the realisation of a certain sum of money from the petitioner shall be stayed during the pendency of its writ petition provided it furnishes a Bank guarantee in terms of an order made by the Court earlier on the 10th of November, 1979.
3. The Sarhad Flour Mills limited was nationalised under the provisions of the Flour Milling Control and Development Act, 1976, but no compensation was paid. In September, 1977, the Mill was denationalised under section 3 of the Flour Milling (Repeal) Ordinance of 1977. The petitioner received a notice from the respondent-Corporation for the payment of Rs. 2,68,072 on account of present valuation under the relevant provisions of law, to which the petitioner objected and asked for the necessary record like the balance-sheet etc. This request was not complied with and instead a final notice was served on the petitioner on the 28th of August, 1979, to recover the amount in question. The petitioner thereup3n invoked the writ jurisdiction of the High Court, and obtained an interim order for stay of the realisation of the money subject to furnishing a bank guarantee.
4. It is submitted by the learned counsel that the damage to the machinery etc. Having been done by nationalisation, it was, therefore, just and proper for the High Court to grant a stay order without insisting on a Bank guarantee, as the High Court could easily have asked for security, which would be easier to furnish. I he learned counsel submits that furnishing a Bang guarantee really means that the petitioner has to deposit an equivalent sum with the Bank, which it is not in a position to do in view of the substantial losses occurring on account of the damaged condition of the machinery etc. We do not find any substance in these submissions, for it is within the discretion of the High Court to grant interim relief on certain terms. The terms imposed by the High Court, in the present case, do not appear to us to be unreasonable or arbitrary in any manner.
5. The petition, accordingly, fails and is hereby dismissed.