IN THE HIGH COURT OF SINDH AT KARACHI

H.C.A. No.89 of 2022

___________________________________________________________________ Date Order with signature of Judge

___________________________________________________________________

PRESENT:

Mr. Justice Aqeel Ahmed Abbasi

Mr. Justice Mahmood A. Khan

FRESH CASE:

1. For order on CMA No.603/2022 (Urgent).

2. For order on office objection a/w reply as at ‘A’.

3. For order on CMA No.604/2022 (Exemption).

4. For hearing of main case.

5. For order on CMA No.605/2022 (Stay).

---------------

4^th March 2022

Mr. Mayhar Kazi alongwith Mr. Shahbakht Pirzada, Advocate for Appellant.

Mr. Taha Alizai alongwith M/s. Fawad Syed and Shaezer Azmat, Advocate for Respondent No.1.

-*-*-*-*-*-

O R D E R

1. Urgency granted.

2. Learned counsel for the appellant undertakes to comply with office objection before next date of hearing.

3. Exemption granted subject to all just exceptions.

4&5. Instant High Court Appeal has been filed against an order dated 03.03.2022 passed by the learned Single Judge of this Court in Suit No.370 of 2022 filed by the respondent No.1 and J.M. No.7 of 2022 filed by the appellant, whereby, the injunction application filed by the appellant (CMA No.3680/2022) seeking restraining order in respect of encashment of Standby Letter of Credit (SBLC), has been dismissed alongwith similar injunction application (CMA No.3665/2022) filed by the respondents.

Learned counsel for the appellant submits that there is an Arbitration Clause 18.2 in the Master Agreement dated 25.01.2017 executed between the parties for the sale/purchase of LNG, which is to be governed under Section 3 of the Recognition and Enforcement (Arbitration Agreements and Foreign Awards) Act, 2011, pursuant to which, in case of any dispute between the parties, the matter is required to be referred to the Arbitration in London, under the Rules of London Court of International Arbitration, as the contract is governed by English Laws. However, according to the learned counsel for appellant, while the application filed by the appellant for referring the matter to the Arbitration is pending, the impugned order has been passed, whereby, request of the appellant seeking restraining order in respect of encashment of Standby Letter of Credit (SBLC) / guarantee pursuant to demand made by the respondents has been declined, whereas, the consequence of the dismissal of injunction application is that an amount of US$ 53.819.136 has been debited from the accounts of appellant on 01.03.2022 and, therefore, the claim of appellant that no default has been made by the appellant and the matter requires Arbitration in accordance with terms of Arbitration, will become infructuous before the learned Single Judge in Arbitration proceedings. According to learned counsel for the appellant, since the matter is required to be referred to the Arbitration, therefore, it would have been appropriate if, without passing any order, including impugned order, the matter would have been referred to the Arbitration. It has been prayed that the impugned order may be set aside and respondent No.2 may be restrained from making payment against the demand of respondent No.1.

Conversely, Mr. Taha Alizai, learned counsel for the respondent No.1, who has shown appearance in Court pursuant to service of notice under Order 43 Rule 3 CPC, undertakes to file vakalatnama on behalf of the respondent No.1, waives notice of instant High Court Appeal and requests for time to file objections/reply. However, without prejudice to his right to file objections, he submits that if the appellant would undertake to renew the Standby Letter of Credit (SBLC) within two (02) working days, as per terms of the Master Agreement executed between the parties, respondent No.1 will not press their demand in respect of subject SBLC, whereas, instant appeal may be disposed of accordingly. It has been contended by the learned counsel for respondent No.1 that such disposal of instant appeal in the above terms, the order will cease to have any effect, if the appellant fails to renew the SBLC within the time as may be given by the Court and the respondents will be at liberty to press such demand as per terms of SBLC in accordance with law.

Learned counsel for the appellant submits that without prejudice to appellant’s claim, right and merits of the case in the subject suit/JM pending before the learned Single Judge, appellant is willing to renew the SBLC on same terms, provided the bank/respondent No.2 may be directed to immediately remit the amount received against respondent No.1’s demand (US$ 53.819.136) to SBLC issuing bank i.e. RaboBank of Netherlands to enable the appellant to renew SBLC by using those funds within two (02) working days from the date of receipt of such amount, whereas, the appellant is willing to give an undertaking that in case of default in this regard, respondents will be entitled to immediately seek encashment of the aforesaid demand in accordance with law.

Learned counsel for the respondent No.1 does not oppose disposal of instant High Court Appeal in the aforesaid terms, however, submits that appellant may be directed not to press the demand in respect of SBLC of the respondents till renewal of the appellant’s SBLC.

Accordingly, instant High Court Appeal is disposed of in the aforesaid terms alongwith listed applications. However, in order to avoid any further complication and litigation in respect of the subject controversy between the parties, it will be appropriate if, both the parties, instead for pressing their demand pursuant to SBLCs may obtain appropriate order(s) from the learned Single Judge in the suit/JM with regard to referring the matter to the Arbitration or otherwise.

It is clarified that this order is without prejudice to both the parties’ respective rights and claims in their respective cases.

J U D G E