PARRY & COMPANY LTD vs. PIONEER FOOD CANERY AND SAHEL SAHARA BANK [2016]DLHC3514

Date	2016-11-16
Suit No.	SUIT NO.BDC/21/2015
Citation No.	[2016]DLHC3514

HIS LORDSHIP ERIC KYEI BAFFOUR JUSTICE OF THE HIGH COURT

[2016]DLHC3514
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													<main id="main" class="content" style="min-height: 60rem" ><a name="OLE_LINK1">PARRY
&amp; COMPANY LTD<o:p></o:p></a>vs.<o:p></o:p>PIONEER FOOD CANERY AND SAHEL SAHARA BANK<o:p></o:p>&nbsp;[HIGH COURT (COMMERCIAL
DIVISION), ACCRA]<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 1.0pt 0in">

SUIT
NO.BDC/21/2015&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;DATE: 16TH NOVEMBER, 2016 <o:p></o:p>

</div>CORAM:<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 1.0pt 0in">

HIS LORDSHIP ERIC KYEI BAFFOUR JUSTICE
OF THE HIGH COURT<o:p></o:p>

</div><o:p>&nbsp;</o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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RULING<o:p></o:p>

</div>The Plaintiff/Applicant prays for a two headed order
of interlocutory injunction. The first injunction he seeks is to restrain the 1st
Defendant from having recourse to a security in the form of Bank guarantee which
the 2nd Defendant Bank provided. The second injunction he seeks is
directed at the 2nd Defendant/Respondent, the Bank that gave the
unconditional guarantee to the 1st Defendant on behalf of the
plaintiff in relations to the Plaintiff’s obligations under a Sales Stock
Handling Agreement it had entered into with the 1st Defendant. The
Applicant intends to stop 2nd Defendant from honouring any call on
it to perform or make payment to 1st Defendant to the tune of Ghc
1,650.000.00.<o:p></o:p><o:p>&nbsp;</o:p>The 1st Defendant is a manufacturer of a
variety of canned tuna products whiles the Plaintiff until recently, a
distributor of 1st defendant’s products. The parties have been in a
long standing business relationship where the Plaintiff was mandated as the
authorized distributor of 1st defendant’s products. The parties
renewed their contract in 2014 for the supply of starkist brand of canned fish.
The Plaintiff claim that with time the sale and distribution of the 1st
defendant’s product was affected due to infiltration of counterfeit products on
the market and this has occasioned losses to the Plaintiff. The renewal
agreement called for a period of 60 days payment on invoices failing which it
will lead to a call in of the Bank guarantee provided by the 2nd
Defendant. <o:p></o:p>And it was under such circumstance that Plaintiff
claims that 1st Defendant dumped on it quantities of dented, rusted,
near expiry and inferior goods which had been rejected in the European market
for distribution. As a result the Plaintiff has been unable to pay an amount of
US$ 1,376.271.56 plus an interest of US$ 33.770.14 and has led to 1st
defendant making demands on the 2nd Defendant to make good its
obligation under the guarantee it provided.<o:p></o:p>To Plaintiff the guarantee given should not be
honoured because the 1st defendant is indebted to it in terms of
accumulated losses he the plaintiff has suffered, and that the 1st
defendant need to reimburse it for costs expended on advertisement, brand
development, promotion etc, a compensation that ought to be paid it and other
reliefs he seeks from the court. <o:p></o:p>Before the application for injunction was heard 1st
defendant filed a motion to stay proceedings pending arbitration. Counsel for
Plaintiff conceded that it was in principle not opposed to going to arbitration
in terms of the agreement between the parties provided its application for
injunction pending arbitration would be considered by the court. The court has
granted the prayer of the 1st Defendant to stay proceedings and
ordered the parties to submit the dispute to arbitration.<o:p></o:p><o:p>&nbsp;</o:p>What the court will have to determine is whether
pending the arbitral proceedings this court ought to restrain the bearer of an
unconditional Bank guarantee from having recourse to that security.<o:p></o:p><o:p>&nbsp;</o:p>Order 25 of the High Court, (Civil Procedure) Rules,
C. I 47 enjoins the court to grant an application for injunction in all cases
in which it appears just or convenient to do so. Has there been enough showing
on the face of the affidavits and the document filed to convince the court that
it will be just and convenient for the court to hold in abeyance the calling of
the beneficiary the Bank guarantee to his benefit?<o:p></o:p>It is the general rule that the invocation of a Bank
guarantee by the beneficiary can be restrained by an injunction. The caveat is
that the normal consideration which may apply in granting an injunction will
not apply in matters where Bank guarantee or letters of credit are involved.
The reasons are that Bank guarantee agreement is independent of the main
contract. The courts follow strict approach in granting injunctions against the
encashment of Bank guarantee when it appears to be unconditional guarantee such
that even arbitration proceedings will not affect the enforcement of the
guarantee.<o:p></o:p><o:p>&nbsp;</o:p>In the case of UP
STATE SUGAR CORP v SUMAC INTERNATIONAL LTD. (1997) SCC 568 the Indian
Supreme Court had this to say:<o:p></o:p>“whenever an
irrevocable and unconditional bank guarantee to be paid without demur is
invoked, the Bank is bound to honour the guarantee</main>