Injunctions in commercial disputes: the real law of interim relief

In Pakistani commercial litigation the interim injunction is often the whole case. A supplier restrained from calling a bank guarantee, a board restrained from registering a share transfer, a lender restrained from enforcing security — each order reshapes the commercial position for the years the suit will take. Because the stakes are real, the law is more demanding than the volume of injunction applications suggests. This briefing states the position as of June 2026.

Where the power comes from

Temporary injunctions are granted under Order XXXIX, rules 1 and 2 of the Code of Civil Procedure 1908, supplemented by the court's powers under section 94. Final injunctions — perpetual and mandatory — come from the Specific Relief Act 1877, chiefly sections 52 to 55, and are decided at trial, not at the interim stage. Section 56 of the Specific Relief Act lists what an injunction cannot do: it cannot restrain a person from prosecuting a judicial proceeding in most circumstances, it cannot prevent the breach of a contract whose performance could not be specifically enforced, and it cannot issue where equally efficacious relief is available by another mode [text of section 56 — TO BE VERIFIED BY REVIEWING LAWYER]. Applicants routinely ignore section 56; respondents should not.

The three-part test, taken seriously

Every temporary injunction requires three concurrent findings: a prima facie case, the balance of convenience in the applicant's favour, and irreparable loss if the order is refused. The three are cumulative. Failure on any one is fatal, and the settled case law of the superior courts says so consistently [CITATION — TO BE VERIFIED].

Prima facie case does not mean a case the applicant will probably win. It means a serious question to be tried, raised on material the court can act on — pleadings supported by documents, not adjectives. Balance of convenience asks who is hurt more by the wrong interim outcome: the applicant if relief is refused and he later wins, or the respondent if relief is granted and the applicant later loses. Irreparable loss is the limb on which commercial applications most often fail, because loss that can be measured and compensated in money is not irreparable, and most commercial loss can be measured in money. The recurring exceptions are loss of a business as a going concern, destruction of confidential information, transfer of shares in a contested company, and alienation of specific immovable property.

Ex parte orders and their price

Order XXXIX rule 3 requires notice to the other side before an injunction is granted, unless the object of the injunction would be defeated by the delay. An ex parte order is therefore the exception, and it comes with obligations. The applicant owes the court full and frank disclosure, including of facts that hurt him; suppression is an independent ground for vacating the order and can poison the suit. Courts increasingly record reasons for dispensing with notice and fix an early return date [procedural requirements in the relevant province — TO BE VERIFIED BY REVIEWING LAWYER]. The court can also require an undertaking or security as the price of interim relief, and a respondent who suffers loss under an injunction later found unjustified can pursue compensation. An ex parte order obtained on a thin affidavit is a liability wearing the costume of a victory.

What courts will not restrain

Three categories deserve particular care.

Bank guarantees and letters of credit. The instrument is independent of the underlying contract. The settled position is that a court will not restrain encashment of an unconditional bank guarantee except in cases of clear fraud of which the bank has notice, or comparable special circumstances [leading authorities — CITATION TO BE VERIFIED]. Buyers and contractors ask for this injunction constantly; it is granted rarely, and an application built only on the underlying commercial dispute will fail.

Public revenue. Interim orders against the recovery of taxes and public dues are constrained both by statute and by the Constitution. In writ jurisdiction, Article 199(4A) provides that an interim order in matters concerning public revenue ceases to have effect on the expiry of six months unless the case is finally decided [scope of Article 199(4A) — TO BE VERIFIED BY REVIEWING LAWYER]. A stay against the FBR is a wasting asset, and the litigation plan must treat it as one.

Contracts of personal service and unenforceable bargains. Where the underlying contract could not be specifically enforced — employment, agreements requiring continuous supervision — section 56 generally bars the injunction that would enforce it by the back door.

Injunctions and arbitration

Where the dispute is subject to a domestic arbitration agreement, section 41 of the Arbitration Act 1940, read with the Second Schedule, allows the court to grant interim relief in aid of the arbitration, including injunctions and orders preserving property. Where the arbitration is foreign-seated under the Recognition and Enforcement Act 2011, the availability of interim relief from Pakistani courts is less settled, and the answer may turn on the forum and the drafting of the clause [TO BE VERIFIED BY REVIEWING LAWYER]. Parties negotiating arbitration clauses with Pakistani counterparties should address interim relief expressly rather than assume it.

Living with an order — or getting rid of one

An order granting or refusing a temporary injunction is appealable under Order XLIII rule 1(r) of the Code. A respondent hit with an ex parte order has two immediate moves: apply to the same court to vacate it, on notice, attacking disclosure and the three limbs; and prepare the appeal in parallel. Speed matters on both sides. An applicant who obtains an injunction and then lets the suit sleep invites vacation for want of prosecution, and courts have grown less patient with injunctions used as commercial leverage rather than protection. Interim relief is meant to hold the ring for a decision, not to replace one.

What this means for you

If you are seeking an injunction, build the application around irreparable loss, because that is where it will be tested; if your loss is money, say what makes damages inadequate or the defendant unable to pay, with evidence. Disclose the bad facts yourself. Ask only for the restraint you need — an over-broad order is easier to vacate than a narrow one. If you are resisting, move to vacate at once rather than waiting for the appeal, and put the applicant's disclosure under a microscope. Do not spend money seeking to stop a bank guarantee without evidence of fraud known to the bank. If your dispute is headed to arbitration, seek interim relief through the route the statute actually provides, and write the next clause so the question does not arise. And on both sides, treat the injunction hearing as the trial it usually turns out to be: the record made in the first month decides more cases than the evidence led in the fifth year.