MACDONALD LAYTN & COSTAIN LTD. Versus AVARI HOTELS LTD.
The petitioner, a construction company, entered into a contract with the respondent for the construction of a hotel, which included a provision for a mobilisation fund secured by a bank guarantee. Following a dispute where the petitioner ceased construction work, the respondent sought to encash the bank guarantee. The petitioner filed an application before the High Court under the Arbitration Act, 1940, seeking an injunction to restrain the respondent from encashing the guarantee. The High Court dismissed the application. Upon appeal to the Supreme Court, it was noted that an appeal against the High Court's order was already pending before the High Court itself. Consequently, the Supreme Court declined to interfere, holding that the matter should first be adjudicated by the High Court in the pending appeal. The petition was dismissed on the principle that the Supreme Court will generally not entertain a matter while an appeal regarding the same subject matter is already sub judice before the High Court.
- Should the Supreme Court entertain a petition when an appeal regarding the same matter is already pending before the High Court?
- Can a party seek an injunction to restrain the encashment of a bank guarantee under the Arbitration Act, 1940?
- Section 20, Arbitration Act 1940
- Section 41, Arbitration Act 1940
ORDER
1. SALAHUDDIN AHMED, J. ‑The petitioner had been given a contract by the respondent for the construction of a hotel at Lab ore to be styled as "Lahore Hilton". The contract, inter alit, provided for furnishing the petitioner with a mobilisation fund for executing the work at Lahore. For this mobilisation fund the petitioner through Messrs National and Grindlays Bank Ltd. Karachi furnished to the respondent a hank guarantee to cover the amount of the mobilisation fund. For some petitioner stopped the construction work and the respondent pressed the bank for encashment of the aforesaid bank guarantee the petitioner, however, disputed the encashment of the bank guarantee and this is the dispute before us.
2. The petitioner made an application under sections 20 and 41 of the Arbitration Act, 1940, before the High Court of Sind, Baluchistan and prayed for an order restraining the respondent from or encashing the said bank guarantee furnished by the National and Grindlays Bank. The High Court dismissed the petitioner's application tinder section 20 and 41 of the Arbitration Act, 1941 asked for.
3. It appears that the petitioner has already filed an appeal before the High Court and it has been admitted for hearing.
4. We, accordingly, think that the matter should first be decided by the High Court‑‑ The petition is dismissed.
5. Petition dismissed.