' SYED HAMID ALI SHAH, J.---Brief facts giving rise to this appeal are that respondent No,2, is a Private Company (limited by shares) while respondents Nos.3 to 9 are its Directors, including the appellants. Respondent No,2 approached respondent No,1 for financial assistance, which request was acceded to, resultantly a sum of Rs,45,00,000 under Modaraba agreement dated .21-6-1995 and Rs,820,000 under Modaraba agreement dated 12-7-1995, was disbursed to respondent No,2.
Respondent No,1 filed a suit for recovery of Rs,73,67,971 with liquidated damages, in the Banking Tribunal on 28-4-1999, which was decreed vide judgment and decree dated 17-6-2002, against all the defendants. The appellants who were statedly guarantors of the loan, were impleaded as defendants Nos.4 and 6 in the array of defendants, who have now challenged the impugned judgment through the instant appeal.
2. Learned counsel for appellants states that the respondent No,1 filed a suit for recovery of Rs,7,367,791 comprising of finance facility of Rs,4,500,000 in respect of purchase agreement dated 21-6-1995 and finance facility of Rs,820,000 in respect of purchase agreement dated 21-7-1995 (Annexures C/5 and C/6 with the plaint). The appellants were neither pawners nor the guarantors of the loan. The personal guarantees executed by the appellants on 21-2-1993, pertained to a finance facility of Rs,7,500,000 in respect of finance guarantee dated 31-1-1993. The shares were pledged by the appellants through pledge agreement dated 13-9-1992, which relates to agreement dated 20-8-1992 and 31- 1-1993 respectively. The outstanding amounts in respect of these agreements were repaid and nothing, is outstanding in this respect. He has referred to clause 14 of agreement dated 31-1-1993, wherein amendment modification and any other limitation was prohibited except through a written agreement. The clause 14 also provided that the agreement shall supersede any inconsistent provision of any other agreement executed either before or after the said agreement. He has vehemently argued that by virtue of aforementioned clause 14 the subsequent agreements stand superseded. Learned counsel referred to letter dated 16-2-1994 wherein the respondent No,1 conveyed that all the agreements prior to 14-2-1994 stood terminated. Has lastly contended that on execution of agreements dated 21-6-1995 and 12-7-1995, all the agreements signed and executed earlier by the parties stood replaced/ novated. It was then contended that in view of the provisions of section 133 of the Contract Act, 1872, the liability of appellants stood discharged.
3. Learned counsel for respondent No,1 has argued that the appellants have admitted the execution of the guarantee, availing of loan by respondent No,2 and the signing of the documents.
He has referred to clauses (6)(10) (14) of the Contract of Guarantee and argued that combined effect of the said clauses, makes the appellants liable, even for the agreements of finance signed subsequent to the letter of guarantee dated 21-2-1993.
4. Respondents Nos. 2 to 10 were served but failed to appear and were proceeded ex parte vide order dated 24-3-2005.
5. Heard learned counsel for the parties and perused the record.
6. The only question which requires resolution is that the liability of the appellants stands discharged by execution of subsequent agreements between respondent No,1 on one hand and other respondents on the other hand or not? The guarantee furnished by the appellants is not simple guarantee rather it is a continuing guarantee under section 129 of the Contract Act, 1872.
Clause (10) of the Contract of Guarantee is reproduced:-- "Al-Baraka shall be at liberty without any further consent from me/us and without thereby effecting its rights against me/us hereunder at any time to determine, enlarge or vary the amount and the terms of the facility to the customer, to vary, exchange, abstain from perfecting or release any other security held or to be held by Al-Baraka for an account of the repayment intended to be hereby secured or any part thereof, to accept composition from and make any other arrangement with customer in respect of any of its obligations regarding bills, notes or other securities held or to be held by Al-Baraka for and on behalf of customer."
7. The appellants vide clause (1) of the Contract of Guarantee undertook their responsibility as principal debtor and not merely as a guarantor. Clause (1) of the Contract of Guarantee is reproduced hereunder:-- `Though as between the customer and me/us, I/we are surety only for the customer, yet as between myself/ourselves and Al-Baraka, I/we shall be deemed to be principal debtor(s) for all the obligations, the payment of which is hereby guaranteed and, accordingly, shall not be discharged nor shall my/our liability be effected by any of my/our acts, things, omissions or means whereby my/our liability would not have been discharged if I/we had been principal debtor(s)."
8. It is evident from the perusal of the contract of guarantee that the appellants had signed and guaranteed the loan not being the guarantors only but as a principal debtor. Their liability to pay shall not stand discharged merely by resorting to section 133 of the Contract Act, 1872. The liability of the appellants besides being guarantor is also in their capacity as principal debtor.
9. The subsequent agreements do not absolve the appellants of their liability because the appellants have bound themselves by virtue of clause (10) of the Contract of Guarantee that their liability shall remain unaffected even in the event of modification, variation of the terms of facility, composition or other arrangements with the customer. The Contract of Guarantee is itself an independent agreement, the terms whereof bind the parties in isolation with main agreement.
10. The appellant's plea that by execution of subsequent agreements dated 21-6-1995 and 12-7- 1995 between respondents Nos.1 and 2, the liability of the appellants as a guarantor has stood discharged, has no force, in view of the clear stipulations made in clause (10) of the Contract of Guarantee. We find support in this respect from the view of the another learned Division Bench of this Court in the case titled as Mian Aftab A Sheikh v. Trust Leasing Corporation Ltd. 2003 CLD 702.
Relevant portion is reproduced as under:-- "In the present case also appellant guarantors had expressly given their consent as per above reproduced clauses (2), (7), (8), (9) and (10) of the letter of guarantee, dated 23-1-1993 and had assented to any subsequent composition of debt, enlargement of time and other variations between the leasing corporation and the company (UL). The guarantee was continuing guarantee, permitting the creditor and the principal debtor to vary the terms of the leasing agreement. The appellant guarantors had waived their prior right of consent or assent to such variance. In our opinion, contracting parties had a right to contract out of the privilege of release or discharge by executing an agreement of waiver of prior consent/assent in the guarantee. Rescheduling of memorandum of understanding dated 21-6-1995 was within contemplation of above clauses, and, therefore, did not affect discharge of appellants from their guarantee obligations. It will be hair splitting that provisions of section 133 or 135 of the Contract Act visualize consent or assent of the guarantor at the time of variance only and the same cannot be waived by the guarantors in advance."
11. For the foregoing reasons this appeal, having no substance, is dismissed in limine..