01 / ANALYSIS
Overview of the Case
The Lahore High Court declined to interfere with orders refusing to dismiss a specific-performance suit merely because a bank guarantee was not furnished within an interlocutory deadline. The direction was independent of interim relief, specified no consequence of non-compliance, and the disputed balance of consideration required evidence. The High Court's observations were expressly tentative.
The judgment concerns the effect of an interlocutory direction to furnish a bank guarantee in litigation over an agreement to sell. The High Court distinguished the disputed merits of the underlying sale from the consequences of failing to comply with a direction that did not expressly provide for dismissal.
02 / ANALYSIS
Brief Facts
The parties entered into an agreement to sell dated 8 April 2017 concerning property in Okara for a stated price of Rs 2,02,00,000. The seller received Rs 50,00,000 as earnest money and a further Rs 91,00,000; the parties disputed payment of the remaining Rs 61,00,000. Part of the property had been transferred corresponding to consideration already received.
The seller filed a cancellation suit in October 2017. The purchasers filed a suit for specific performance in January 2018, withdrew it with permission to file afresh in March 2018, and instituted another specific-performance suit in November 2019. The two sides' suits were consolidated.
The trial court dismissed the purchasers' application for interim relief on 17 February 2020. On appeal, an order dated 13 June 2020 granted interim relief and directed the purchasers to furnish a bank guarantee for Rs 61,00,000 within 45 days. The guarantee was not furnished within that period.
The seller sought dismissal of the specific-performance suit because of non-compliance. The trial court rejected the objection on 3 January 2024 and allowed an additional seven days, within which the purchasers complied. The District Judge dismissed the seller's revision on 15 April 2024. The seller then challenged those orders in W.P. No. 31130 of 2024 before the Lahore High Court.
03 / ANALYSIS
Questions of Law
- Does missing a court-directed bank guarantee deadline automatically dismiss a suit for specific performance?
- Was the bank guarantee direction a condition of the interim injunction?
- Could the disputed remaining sale consideration be decided without evidence?
- Do findings made on interlocutory objections bind the trial court on the merits?
04 / ANALYSIS
The Court's Answers
Does missing a court-directed bank guarantee deadline automatically dismiss a suit for specific performance?
Answer. No, not on the facts of this case. The appellate direction was not expressed as a condition determining the suit and provided no penal consequence. The disputed payment issue remained for trial.
“no reason to dismiss the main suit”
Was the bank guarantee direction a condition of the interim injunction?
Answer. The High Court treated it as an independent direction. The appellate order granted interim relief without expressly making that relief dependent on deposit of the guarantee.
“issued independent of the order”
Could the disputed remaining sale consideration be decided without evidence?
Answer. No. The parties disagreed about payment of the remaining amount and a trial issue had already been framed. The court considered the merits to be a matter for evidence rather than summary dismissal on the interim-order objection.
“determined after recording of evidence”
Do findings made on interlocutory objections bind the trial court on the merits?
Answer. No. The High Court made clear that its observations were tentative, leaving the trial court free to decide the consolidated suits on the evidence.
“shall not prejudice the trial court”
05 / ANALYSIS
Practical Relevance
In specific-performance litigation, the wording of an interim deposit or guarantee direction matters. A direction that does not specify dismissal, lapse of an injunction or another consequence should not automatically be treated as an order determining the substantive suit. The effect of non-compliance must be assessed against the precise terms of the order and the procedural record.
Where the parties contest whether the sale price has been paid, trial issues and evidence may remain essential. Practitioners should avoid presenting disputed allegations as established facts or asking a court to decide contested payment issues solely on an interlocutory objection.
Parties seeking interim relief should seek clarity about whether security is a condition of that relief and what non-compliance entails. Equally, parties resisting specific performance should preserve substantive contractual and procedural defences for determination on the merits. The High Court expressly stated that its own observations would not prejudice the trial court.