1. JUDGMENT MOHAMMAD SAYEED AKHTAR, J. - The plaintiff filed a suit against the defendants on-21.3.1994 for recovery of Rs. 9,42,26,552/- as due on 7.10.1992. It was averred therein that the company/defendant No. 1 obtained a financial assistance to the tune of Rs. 1,87,39,000/- (local currency) and a sum of Rs. 3,19,07,184/- (foreign currency) vide sanction letter dated 10.10.1984, 14.4.1985, 14.10.1985, 20.8.1985 and 20.10.1985. In order to secure this loan the defendants executed the following security documents:--
(a) Mortgage Deed dated 24.7.1985.
(b) Memorandum of Deposit of Title Deeds.
(c) Agreement to Create Mortgage on Future Assets dated 24.7.1985.
(d) Agreement to Create Mortgage on .Future Assets dated 15.1.1986.
(e) Deed of Hypothecation dated 24.7.1985.
(f) Deed of Hypothecation dated 24.7.1985.
(g) Irrevocable General Power-of-Attorney.
(h) Personal Guarantees of defendants namely Mrs. Najma Khalid Malik; Anwar Aziz Malik; Mrs. Shaista Anwar Aziz Malik; Khalid Aziz Malik.
(i) Demand Promissory Note dated 15.1.1986.
(j) Delivery letter for Demand Promissory Note dated 15.1.1986.
2. The following properties were also mortgaged with the plaintiff:-
(i) Plot No. 157, Land measuring 2.01'4 Acre, Industrial Area, Township Scheme, Lahore.
(ii) The entire Fruit Juice Plant, Machinery, Parts and equipments relating thereto whether locally manufactured or imported from abroad.
(iii) The entire construction and building in which the factory of Fruit Juice Plant exists.
(iv) Vehicles etc. The defendants availed the said finances but failed to adhere to the repayment schedule as stipulated in the agreement(s). A sum of Rs. 9,42,26,552/- was outstanding against the defendants.
3. 20% liquidated damages were also claimed.
4. The defendants to 8 (in the un-amended plaint) filed their PLA. The plaintiff submitted its reply to the PLA.
5. A development took place that the company/defendant No. 1 was ordered to be wound up by the Company Bench vide order dated 1.3.1994 passed on CO. No. 9/1991 titled BEL Vs. Malik Foods Industries etc. And the instant suit was adjourned sine die vide order dated 5.3.1997. The suit was revived on 12.1.2004 on the statement of the learned counsel for CIRC that the company was ordered to be wound up. The assets of the company have been sold and the company has been dissolved and that the suit can proceed against the guarantors. During the pendency of the suit Mst. Najma Khalid Malik and Amjad Wakil Malik, defendants died. The amended plaint was filed. The defendants have filed their PLAs as follows:-
(1) PLA No. 36-B/2004 on behalf of defendant No. 10.
(2) PLA No. 39-B/2004 on behalf of defendants 2 to 4 and 11 to 14.
(3) PLA 14-B/2004 on behalf of defendants 6 to 9. The defendant No. 5 was proceeded ex parte.
2. Learned counsel appearing for defendants ,6 to 9 in PLA No. 44-B/2004 contended that Amjad Wakil Malik, defendant No. 7 (in the original plaint) died during the pendency of the suit and he is represented by defendants 6 to 9 in the amended plaint. He had not submitted any guarantee to the plaintiff bank nor any was appended with the plaint. Not a word has been stated in the plaint as to why he has been impleaded as defendant. The plaintiff submitted the personal guarantee after his death and that too with the reply to the PLA submitted under Section 10(12) of the Financial Institution (Recovery of Finances) Ordinance, 2001. The legal heirs of Amjad Wakeel Malik cannot be taken by surprise. He further contended that the defendant company (the principal debtor) stands dissolved. Being non- existed no decree can be passed against it. In the absence of any decree against the principal debtor no decree can be passed against the alleged guarantors. It. Was further argued that the defendants 6 to 9 were brought on record as legal heirs after the prescribed period.
6. Learned counsel for the defendant No. 10 in PLA No. 36-B/2004 contended that the defendant was a Director of the Company holding nominal share .03% of the total paid up capital of the company (50 shares only). The suit-has been filed against him on the basis of personal guarantee but no such guarantee has been appended with the plaint. He also adopted the arguments raised by Mr. Naeem Sultan, learned counsel for defendants/ to 9 in PLA 44-B/2004.
7. Learned counsel for the defendants 2 to 4 and 11 to 14 also adopted the arguments raised by Mr. Naeem Sultan, learned counsel for defendants 6 to 9, Learned counsel for the plaintiffs -submitted that the defendants are guarantors. Their liability is co-extensive with that of the principal borrowers. They are not absolved of their liabilities. He further submitted that the personal guarantees of the predecessor-in-interest of defendants 6 to 9 were filed with the reply to the PLA and this Court can look into that under Order XIII, Rules 1 and 2, CPC.
8. Reliance was placed on Rafique Hazquel Masih Vs. Bank Alfalah Ltd. And others (2005 SCM R 72), Messrs Platinum Insurance Company Limited, Karachi through Managing Director Vs. Daewoo Corporation, Shaikhupura through Director Administration and Finance (PLD 1999 SC 1) and United dank Ltd. Vs. Haji Bawa Company Ltd. And 3 others (1981 CLC 89).
3. I have gone through the relevant record -and considered the arguments of the learned counsel for the parties, It is not denied by the defendants that the finance was obtained by the defendant/defunct company. Under Section 9 of the Financial Institution (Recovery of Finances)
9. Ordinance, 2001 where a customer or a financial institution commits a default in fulfillment of any obligation with regard to any finance, the financial institution or as the case may be, the customer may institute a suit in the Banking Court. The expression Customer has been defined in Section 2(c) of the Financial Institution (Recovery of Finances) Ordinance, 2001 as follows:-- "Customer means a person to whom finance has been extended by a financial institution and includes a person on whose behalf a guarantee or letter of credit has been issued by a financial institution as well as a surety or an indemnifier."
10. Suit can be instituted against the defendants if they fall within the definition of 'customer'.
11. Under Section 128 of the Contract Act, 1872 the liability of the guarantor/surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. They are jointly and severally liable to pay the outstanding amount to the creditor. A guarantor cannot shirk from the liabilities incurred by him through the execution of documents, In the case of Rafique Hazquel Masih Vs. Bank Alfalah Ltd. And others (supra) the Hon'ble Supreme Court observed as under:-- "In absence of any specific stipulation in the contract of loan or any consideration of equity, a guarantor cannot take up the plea that the Bank should enforce the liability against the principal debtor before proceeding against the guarantor. The reason being that the Bank grants loan only on the guarantee and in absence of letter/contract of guarantee the Bank may not have sanctioned the loan."
12. Similarly view was taken by the Hon'ble- Supreme Court in . The case of Messrs Platinum Insurance Company Limited, Karachi through Managing Director Vs. Daewoo Corporation, Shaikhupura through Director Administration and Finance (supra).
13. Admittedly the personal guarantees of the predecessor-in-interest of defendants 2 to 4 and 11 to 14 are appended with the plaint. They are the customers as declined in Section 2(c) of the Financial Institution (Recovery of Finances) Ordinance, 2001. The suit against them is maintainable. The availing of the afore-mentioned finance is not denied. The finance is secured by the finance agreement, promissory note, personal guarantees and other documents. The execution of the same has not been denied. The PLA of the defendants 2 to 4 and 11 to 14 is, therefore, dismissed.
14. As far as the defendants 6 to 9 are concerned their predecessor-in-interest, Amjad Wakeel Malik filed the PLA. Alongwith the plaint his personal guarantee was not appended with the same nor the same was relied upon in the list under Order VII, Rule 14, CPC. Documents may be filed either under Order VII, Rule 14, CPC alongwith the plaint or under Order XII, Rule 1, CPC at the first hearing of the suit or under Order XIII, Rule 2, CPC at a subsequent hearing. The plaintiff had neither appended the copy of the personal guarantee of Amjad Wakeel Malik, deceased with the plaint nor relied upon the same in the list filed under Order VII, Rule 14, CPC. Under Section 9(2) of the Financial Institution (Recovery of Finances) Ordinance, 2001 the plaint shall be supported by the statement of account and all other relevant documents relating to the grant of finances. Copies of the plaint, statement of account and other relevant documents are to be filed with the Banking Court. The personal guarantee of Amjad Wakeel Malik has been filed at a belated stage. His signatures on the personal guarantee cannot be compared with his actual signatures as he is dead. Under Order XIII, Rule 1, CPC the parties or their lenders shall produce at the first hearing all the documentary evidence of every description in their possession or power on which they intended to rely and which has not been filed in the Court. Under Rule 2 of. The same Order no documentary evidence in possession or power of any party which should have been produced shall be received at any subsequent stage of the proceedings unless good cause is shown. Private documents are ordinarily not allowed to be produced at belated stage. The genuineness of the documents is also not beyond doubt, the specimen signatures of the defendant for comparison cannot be obtained since he is dead. The Hon'ble Supreme Court in the case of Allah Baklhsh \/s. Mst. Fathe Bibi (1994 SCM R 1945) observed as under:-- "It is to be noticed that the petitioner had , neither relied upon this document nor produced it at the earliest stage of the proceedings, In the circumstances, the order of the Trial Court rejecting his prayer to receive the document in evidence at a belated stager was just in accordance with the provisions of Rule 2, Order XIII, Civil Procedure Code, It should, therefore, hardly be described as illegal."
15. In the instant case the plaintiff in fact has failed to show any good cause for not appending the personal guarantee allegedly executed by the predecessor-in-interest of defendants 6 to9. The defendants cannot be taken by surprise. Mere inadvertence of the plaintiff is no ground for receiving the document, It cannot be looked into at this stage, In this view of the matter the petition for leave to defend the suit is allowed and the defendants 6 to 9 are granted leave to defend the suit.
16. On similar grounds PLA of defendant No. 10 is also allowed and he is also granted leave to defend the suit.
17. The statement of account shows that an amount of Rs. 2,72,12,722/- is outstanding against the Local Currency Account. However, the same shows that interest has been charged on the Local Currency Finance on 30.6.1989 to 11.11.1991. These three amounts of interest i.e. Rs. 28,87,211/-, Rs.
18. 22,87,810/- and Rs. 39,67,745/- are disallowed. No interest can be charged on a finance disbursed in Local Currency. The Foreign Currency Account also shows the charging of salary of Chowkidar vide entries dated 2.8.1993 to 1.11.1998 which is disallowed. The liquidated damages are also disallowed, In view of the above the suit is decreed against defendants 2 to 4 and 11 to 14 in the sum of Rs. 8,49,08,118/-. Since the suit remained dormant for no reason of the defendants it is decreed with costs and cost 6f funds on the Local Currency Account only from the date of the decree. The defendant No. 5 was proceeded ex parte. However, there is ho document on the record showing him as customer/guarantor, therefore, the suit against him is dismissed. To come up on 13.6,2005. .