ALLIED BANK LIMITED vs FEDERATION OF PAKISTAN through Collectorate of Customs, Peshawar S

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ALLIED BANK LIMITED VS FEDERATION OF PAKISTAN through Collectorate of Customs, Peshawar S. 126---Customs act (IV of 1969), S. 202---Bank guarantee, encashment of---Scope---Expiry of bank guarantee---Recovery of Government dues by the Customs department---Contract of guarantee is a standalone and independent contract between the guarantor (in this case, the appellant-bank) and the beneficiary (in this case, the Customs department) for a limited period (unless the guarantee contract specifically states that it is a continuing guarantee or language to that effect and no date or event of expiry thereof is specified) and for a limited purpose (that is, to pay the amount mentioned therein on a call being made within the time specified) without reference to any third party or the underlying transaction that constituted the basis for issuance of the guarantee---Parties to the guarantee contract are bound by the terms and conditions of the guarantee including its date of expiry---Unless a valid call is received by the Guarantor within the time specified in the guarantee, the Guarantor is released of any and all obligations under the contract and the contract itself expires---Guarantor (bank), by reason of issuing the guarantee, does not become subject to section 202 of the Customs act, 1969 in the sense understood by the High Court by reason of guaranteeing payment of certain sums---Guarantor does not become liable to pay "government dues" referenced to in section 202 of the Customs act, 1969 because such liability continues to be attached to the person who owes such dues to the Customs Department---Department can, therefore, rely on section 202 to recover the said dues from the person/company---appeal filed by the bank was allowed and impugned judgment of High Court was set-aside.

ALLIED BANK LIMITED vs FEDERATION OF PAKISTAN through Collectorate of Customs, Peshawar S — 2023 SCMR 1258 SUPREME-COURT

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