JUDGMENT MIAN SAQIB NISAR, J.- The suit for the recovery of an amount of Rs, 27,355,729,06 brought by the respondent/bank against the appellants has been allowed by the learned Banking Court, vide judgment and decree dated 21.1.2004.
2. Succinctly the facts of the case are, that the appellant No. 1, which is a private limited Company, through appellant No. 2 its Chief Executive, requested the respondent/bank for the grant of a cash finance facility to the tune of Rs. 19 Million, which was allowed, against the execution of the finance agreements and other necessary documents. The above facility was renewed on 29.6.2001 and the amount was enhanced to Rs. 22 Million, it is stated in the plaint, that in order to secure the facility, besides being the guarantor, the appellant No. 2, had also mortgaged her immovable property in terms of the finance agreements; the defendants/borrowers had paid certain amounts on specific dates to the bank, but thereafter, defaulted, in support of the claim, all the documents establishing the liability of the appellants as the principal borrower and. The guarantor/mortgagor respectively, were field alongwith the plaint, in paragraph No. 14, it is mentioned that " the defendant No. 1 to secure the facility availed also procured a Bank Guarantee from Union National Bank, Abu Dahabi, favoring the plaintiff bank for an aggregate sum of US Dollars 375,000,00. The Guarantee was extended till 25.7.2004 and the Guarantee was amended favoring the plaintiff bank for a sun of US Dollors 425,000,00. The plaintiff bank reserves it right to invoke the guarantee at any time before its expiry."
3. The appellant No. 1, the Borrower Company, did not file any application for leave to appear and defend but it was moved only by appellant No. 2, in her personal capacity, in this leave application, there is no denial about the availing of the finance facility; the execution of the agreements and various other documents, filed alongwith the plaint, the mortgage of the property, but it is stated in the preliminary objection No. 1, "that to the extent of money over and above equivalent to US$ 4,25,000, the suit is pre-mature and without any pause of action and hence to that extent, the plaint merits rejection." Moreover, in paragraph No. 2 of the leave application it is averred as below:- "That the plaintiff, it is submitted with respect, with malafide omitted to mention the exact date when the alleged default by the answering defendants/appellants took place, it is submitted that this deliberate omission is not without purpose. As a matter of fact in view of the guarantee, which the plaintiff bank claims and actually has from Union Bank, Abdu Dhabi, the plaintiff had in its pocket Pak Rupees equivalent to 425 lacs US$. The result effect is as under:-
(a) From the day the default has been allegedly committed the plaintiff bank could have enchased the guarantee at the exchange rate of dollar on that particular date.
(b) The plaintiff bank is not entitled to charge mark up from the answering defendants after that date."
From the above reproduced paragraph of the application, which according to the learned counsel for the appellants, are they key grounds for the leave, it is not very clear as to what, substantial questions of law and facts, have been propounded, which needed the recording of the evidence, especially when the summary in this, behalf, as required by section 10(3) of the Ordinance XLV1 of 2001 is missing, in the application. Anyhow, from the submissions today made, the case set out is that the suit of the respondent/bank is pre-mature and not maintainable.
3. It has been argued by Mr. Azam Rasool, that according to the bank's own showing, the facility provided by the respondent/bank to the appellant No. 1, is secured by the bank guarantee dated 1.8.199, issued by the UNB Abu Dhabi and the consideration of the finance is based thereupon. in the guarantee it is mentioned that UNB, shall be the prime obligator of the finance, rather than being a mere surety. Thus by relying on section 128 of the Contract Act, it is submitted that when the surety has undertaken; to discharge the liability of the principal debtor as the main obligator, then without first resorting to the enforcement of the guarantee, the suit could not have been brought.
To support his submission, learned counsel has relied upon the judgments reported as United Bank Ltd. Vs. Pakistan Industrial credit and Investment Corporation Ltd etc. (PLD 2003 SC 1100) and Shipyard K. Damen International, vs. Karachi Shipyard and Engineering Works Ltd. (PLD 2003 SC 191). it is further submitted that UNB is a necessary party to the suit and without its being impleaded, the same cannot proceed against the appellants and is liable to be dismissed.
4. We have heard learned counsel for the parties and find that the appellant No. 1, (the principal debtor) despite having been duly served has not filed any leave application, resultantly, the decree has been rightly passed against it, which cannot be validly assailed on its behalf in the present appeal. As regards the appellant No. 2, is concerned, she has not denied the availing of the finance by the borrower company, through her as the Chief Executive; the execution of the finance agreements and all other documents, appended alongwith the plaint, which duly support the claim of the respondent/bank. She has also not denied the creation of the mortgage of her property and also being the guarantor of the facility.
Therefore, in the light of the above admitted position, the legal question before us for the determination is; when the finance granted to the appellant No. 1, by the respondent is secured by two set of the guarantors and a mortgagor and admittedly the principal borrower has defaulted in the discharge of its obligation, under the finance agreement, whether the suit brought against the principal borrower and one of the guarantors/mortgagors excluding the coguarantor, is incompetent and pre-mature.
5. To our mind, the proposition is quite simple. Under the law, the debt provided to a debtor can be secured by more than one guarantors or the mortgagors. The provisions of section 128, only enunciates a general rule about the joint and simultaneous obligation of the principal debtor and the surety/sureties, provided it is not otherwise agreed between the parties. If that being so, this section shall be inapplicable, rather the agreement shall prevail. However, this section cannot be interpreted to mean that the creditor is bound and compelled under the law, to always join in the legal action, besides the principal debtor, who under all circumstances is primarily liable to pay the debt, the only or all the sureties of the debt, it is the choice and the prerogative of the creditor to take recovery action against the principal debtor alone or join any of the guarantors, if there are more than one and to leave the enforcement of the surety against any of the co-sureties; specially, when each of the guarantee contract, is independent in nature and has no overlapping effect on each other.
6. In view of the above, and particularly when the appellant No. 1, the principal borrower, has filed no application, for the leave to appear and defend, it was not available for the appellant No. 2, to set out the plea that the suit of the respondent/bank is either premature or the plaint does not disclose a cause of action.
Resultantly, as the appellants had failed to put forth defence raising any substantial questions of law and facts, which required the recording of evidence and consequently, the learned Banking Court, has rightly rejected the application. Therefore, we do not find any merit in this appeal, which is hereby dismissed.