Wakilii

Summit Project Ltd v Uganda National Roads Authority (Miscellaneous Application No. 1089 of 2017)

High Court · [2018] UGCOMMC 38 · 2018 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for temporary injunction arising from civil suit for breach of contract
Decision
Application dismissed for incompetence due to failure to join and serve the bank as a party

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that an application for a temporary injunction restraining liquidation of a performance guarantee is incompetent where the bank holding the guarantee has not been added as a party and served with notice under Order 41 rule 3 of the Civil Procedure Rules. Since the injunction would have the effect of restraining the bank from paying, the bank must be served with notice before the injunction can be granted. Application dismissed.

Outcome

Application dismissed for incompetence due to failure to join and serve the bank as a party

Facts

The applicant entered into a road maintenance contract with the respondent on 28 November 2014 for three years at a total consideration of UGX 10,640,467,200. The applicant furnished a performance guarantee held by Standard Chartered Bank. As works progressed, the respondent accused the applicant of abandoning the project, failing to complete earlier cycles, being unable to execute works in cycle six, and committing fundamental breaches of contract. The respondent issued a notice of intended termination and proceeded to liquidate the applicant's performance guarantee. The applicant filed the main suit and sought a temporary injunction to restrain liquidation of the guarantee pending determination of the suit. Standard Chartered Bank, which held the guarantee, was not joined as a party to the application.

Issues

  1. Whether the court should grant a temporary injunction restraining the respondent from liquidating the applicant's performance guarantee.
  2. Whether an injunction can be granted against a bank that is not a party to the suit.
  3. Whether the applicant satisfied the conditions for grant of a temporary injunction.

Orders

  • Application dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Injunctions — Notice to Opposite Party — Order 41 rule 3 CPR
Before granting an injunction, the court must direct that notice of the application be given to the opposite party. Where an injunction would have the effect of restraining a bank from paying under a performance guarantee, the bank must be added as an opposite party and served with notice under Order 41 rule 3 of the Civil Procedure Rules. An application for such an injunction is incompetent if the bank has not been joined and served.
Performance Guarantees — Autonomy Principle — Payment on Demand
Performance guarantees are essentially unconditional undertakings to pay a specified amount of money to a named beneficiary, usually on demand. Where the beneficiary seeks payment in accordance with the terms of the guarantee, the bank must pay regardless of how unfair that might be to the account party. The bank cannot be forced to pay if it is not a party to the suit unless it is added as an opposite party.

Legislation cited (3)

Cases cited (5)

  • Kiyimba Kaggwa v Abdul Nasser Katende [1985] HCB 43
  • V.K Constructions Works Ltd Vs The Bank of Rajasthen Ltd and Another II (1992) BC 344, 48 (1992)DLT 468,1992(23) DRJ 371
  • Lamba Enterprises Ltd v Attorney General (Miscellaneous Application No. 386 of 2013)
  • E.L.T Kiyimba Kagwa v Haji Nasser Katende [1985] HCB 43
  • Edward Owen Engineering Ltd v Barclays Bank International Ltd [1978] QB 159

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Summit Project Ltd v Uganda National Roads Authority (Miscellaneous Application No. 1089 of 2017) [2018] UGCommC 38 (10 August 2018)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.