PESHAWAR: Peshawar High Court has stopped encashment of bank guarantee by provincial government of an engineering firm, which claimed of executing a multimillion rupees project of irrigation department but had not been returned the said bank guarantee.

A bench consisting of Justice Ijaz Anwar and Justice Mohammad Faheem Wali issued notices to the relevant project director of irrigation department and Bank of Khyber (BoK) through its managing director, seeking their response within a fortnight to a petition filed by the firm, M/S Design and Engineering System that sought directives for the department to issue Taking Over Certificate (TOC) of the project and also to return the bank guarantees to the tune of Rs41.28 million to the petitioner.

The bench also directed the respondents including BoK and the irrigation department to maintain status quo till further order. The petitioner has requested the court to declare as illegal a letter of BoK to a private bank on July 15, 2025, asking the latter to encash the said bank guarantees.

The petitioner’s counsel Ameenur Rehman Yousafzai stated that his client was a leading construction, engineering and infrastructure development company.

Seeks response of BoK, project director in plea for not returning guarantee

He said that irrigation department awarded a contract of certain works including upgradation of existing pump houses and related electro mechanical works to a joint venture of M/S New Malik Afridi and JDs Engineering through project director for remodeling of Warsak Canal systems in Peshawar and Nowshera districts.

He stated that the contract agreement was signed on Feb 22, 2018, and the project was executed through the petitioner on the strength of irrevocable power of attorney executed on Nov 20, 2019. He said that bank guarantee amounting to Rs41.28 million was issued by BoK on Nov 14, 2018, which was provided to the project director for issuance of mobilisation advance and the said guarantee was valid till Feb 13, 2019.

Mr Yousafzai pointed out that bank guarantee was later on extended up to Apr 22, 2025, and a request was made by the project director on Apr 22, 2025, for extending it up to July 28, 2025, which was the expected date of issuance of the TOC.

He said that the in compliance with the said request, the petitioner provided the extension of supporting guarantee from a private bank up to July 29, 2025, to the leading partner for providing it to the project director through BoK on Apr 30.

He contended that the construction work had been completed and the relevant consultant Nespak-Electra-ICS JV recommended for issuance of TOC through a letter on June 30, 2025. He added that the total amount of the mobilisation advance had already been adjusted through payments.

He said that astonishingly BoK issued the impugned letter on July 15 and requested the private bank head office in Karachi for encashment of the bank guarantee on the plea that the customer was not cooperating with BoK and irrigation department.

The counsel stated that the petitioner company went from pillar to post but all its requests fell on deaf ear and the project director squarely denied entertaining its departmental representation on July 21, 2025.

He argued that the actions of the respondents were based on malafide and the petitioner had not been treated fairly.

Published in Dawn, July 27th, 2025