Messrs ZOR ENGINEERS LTD. vs THE STATE BANK OF PAKISTAN and others
This petition for leave to appeal arose from a dispute between a contractor and the State Bank of Pakistan regarding a construction contract. Following the contractor's failure to complete the project, the State Bank filed a suit for recovery of damages and sought an interim injunction to restrain the contractor from selling their tools, plants, and machinery. The trial court granted the injunction, preventing the disposal of this property without court permission, despite the property not being the direct subject matter of the suit. The High Court dismissed the contractor's appeal in limine. The Supreme Court addressed whether a court can restrain the disposal of property not directly involved in the suit to secure potential future damages. The Court held that the High Court correctly exercised its inherent powers to affirm the trial court's order. The ratio established is that a court may, under its inherent powers, impose restraints on a party's assets to ensure the satisfaction of a potential decree, even if those specific assets are not the subject matter of the litigation.
- Can a court restrain the disposal of property that is not the subject matter of the suit to secure a potential decree?
- Does a court have the inherent power under Section 151 of the Code of Civil Procedure 1908 to issue an interim injunction to protect the recovery of damages in a pending suit?
- Section 151, Code of Civil Procedure 1908
ORDER
1. ' S. USMAN ALI SHAH, J.---Leave to appeal has been sought by the petitioners against the order of the Lahore High Court dated 7-10-1989, whereby FA.O. Of the petitioner was dismissed.
2. ' The petitioners herein were contractors who were awarded the contract of civil work of construction of the State Bank of Pakistan building on Shahrah-eQuaid-e-Azam, Lahore. As the petitioners could not complete the construction work in the stipulated period but on their request they were granted extension for completion of their work. They have also made a request for some cash payment to be made to them by the respondent which was not acceded to. As for some reasons the petitioner could not carry out the contract hence the respondents filed a suit for the recovery, as per condition of contract, made the contractors liable to pay the compensation to the tune of Rs,2,85,59,842.11 as damages for the unfinished work, also moved an application against the petitioners to be restrained from selling the tools, plants and machinery etc., each worth Rs,30,000.00 without the prior permission of the Court. The said application was allowed by the trial Court on 3-7-1979 and an interim injunction was granted to the respondents that the petitioners would not dispose of their above-mentioned property without the prior permission of the Court, till the final decision of the suit. An appeal was preferred before the High Court by the petitioners and the same was dismissed in limine by the High Court vide its order dated 7-10-1989. Hence, this petition for leave to appeal.
3. The main thrust of the arguments of the learned counsel for the petitioners is that the property on which the embargo is imposed by the trial Court was not the subject-matter of the suit. We find that there is no check on the petitioners to use and have full control over the tools, plants and machinery and if it becomes unserviceable, we think that the Court on the request of the petitioners will allow them to dispose it of, with a view to ensuring the payment of the amount due to the respondents in case of the success of the suit, and thus, the Court can take any step in this regard though the property on which the restraint so made was not the subject-matter of the suit.
4. ' Under the circumstances, we are of the view that the High Court has rightly acted in its inherent powers under section 151, of the C.P.C. And rightly affirmed the decision of the trial Court. Thus, we find no merit in this petition, which is, accordingly dismissed.