Subasinghe Contractors (Pvt) Ltd vs Hon. Mahinda Rajapaksa, et al. – CA INJUNCTIONS 02/2022-2022

In the case between Subasinghe Contractors (Pvt) Ltd. (petitioner) and, among others, Hon. Mahinda Rajapaksa, Minister of Urban Development & Housing, and the Urban Development Authority (respondents), the court addressed the authority of the Secretary to the Ministry to terminate a construction contract without express ministerial approval, and the consequent rights of government authorities and banks to encash related bank guarantees. The application for an injunction preventing the encashment of bank guarantees was dismissed, with the holding that, in the absence of proven fraud, banks are obliged to honor guarantees. This principle, grounded in precedents such as Hemas Marketing (Pvt) Ltd v Chandrasiri and Indica Traders (Pvt) Ltd v Seoul Lanka Constructions (Pvt) Ltd, was reaffirmed;