1. ' KHILJI ARIF HUSSAIN, J.---Aggrieved by the order dated 8-9-1998 granting leave to defend conditionally to appellant and order dated 19-9-1998 decreeing the suit against the appellant on his failure to furnish security, the appellant preferred this appeal.
2. ' Brief facts to decide the appeal are that respondent-Bank filed Suit No,67 of 1987 against three persons including appellant namely Abdul Ghaffar Adamjee, Adamjee Industries Limited, hereinafter referred to as "the Company/Principal borrower". Farooq A. Shaikh, Managing Director of the Company. Messrs Adamjee Industries Limited was a Public Limited Company and suit was filed against company as a principal borrower whereas suit was filed against the appellant as guarantor on the basis of guarantee executed on 25th June, 1981. Suit was filed under Banking Companies (Recovery of Loans) Ordinance, 1979.
3. ' The defendants filed application for leave to defend under Order XXXVII, rule 3, C.P.C. As required under section 7(2) of Ordinance, 1979. The application for leave to defend was filed by the appellant as well as others remained pending till the Ordinance of 1979 was repealed by Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997. On 8-1-1998 after the repeal of the Ordinance, 1979 application for leave to defend was decided by the learned Single Judge. Learned Single Judge decreed the suit, dismissed the application for leave to defend the suit, against the principal borrower and others and granted appellant leave to defend the suit but subject to furnishing surety in the sum of Rs,23,174,599. On failure to furnish the surety as ordered the suit was decreed against the appellants jointly and severally along with the Principal borrower.
4. ' Heard Mr. Muhammad Akram Sheikh learned Advocate for the appellant and Mr. Rizwan Ahmed Siddiqui for the respondent.
5. ' Mr. Muhammad Akram Sheikh learned Advocate for the appellant questioned the impugned order granting leave to defend the suit on furnishing surety on the ground that after repeal of Ordinance, 1979 and promulgation of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, leave to defend cannot be granted conditionally and on failure to disclose serious and bona fide dispute Court can reject the application for leave and in case serious and bona fide dispute is raised in an application, then leave has to be granted unconditionally. In support of his contention learned Advocate relied upon judgments of Agro foster (Pvt.) Ltd. And 2 others v. Judge, Banking Court No,5, Karachi, PLD 1999 Karachi 398, Muhammad Ali Enterprises v.
6. Special Banking Court No,III and another, 2005 CLD 521.
7. ' On the other hand, Mr. Rizwan Ahmed Siddiqui, learned Advocate for the respondent, argued that the guarantor's liability is co-extensive with the liability of the principal borrower and since the suit against the principal borrower has been decreed the guarantor's liability being co-existensive with the Principal borrower, suit against him ought to have been decreed. In support of his contention learned Advocate relied upon the cases of Habib Bank Limited v. Cargo Dispatch Co. Ltd. And 4 others, 1987 CLC 1002, Messrs Abdul Aziz Ramzan Valli and others v. Habib Bank Limited 2000 SCMR 95 and Messrs Huffaz Seamlen Pipe Industries Ltd. And 2 others v. Messrs Security Leasing Corporation Ltd., 2002 SCMR 1419.
8. ' We have taken into consideration respective arguments advanced by the learned Advocates for the parties and, perused the record. The respondent-Bank filed suit for recovery of dues against the appellant as guarantor and other under Banking Companies (Recovery of Loans) Ordinance, 1979.
9. Section 3 of the Ordinance, 1979 provided that provisions of Ordinance, 1979 shall be in addition and not in derogation to any other law for the time being in force. Special procedure was provided by the Ordinance, 1979 to deal with the Banking matters expeditiously. Section 7(2) of Ordinance, 1979 provided that Special Banking Court shall, in all suits before it, including suits based on mortgages of all kinds of statement of accounts for recovery of money paid to, or to the order of, the defendant, follow the summary procedure provided for in Order XXXVII in the first Schedule to the Code of Civil Procedure, 1908. .Ordinance, 1979 deals with the loan provided by Banking companies on interest basis.
10. ' To provide mechanism for recovery of finance provided by the Banking Companies under a system of finance which is not based on interest, Banking Tribunal Ordinance (Ordinance LVIII) 1984 was promulgated. The Ordinance, 1984 provided speedy summary procedure to deal with the matters based upon Islamic mode of financing. To consolidate Banking Companies (Recovery of Loans) Ordinance, 1979 and Banking Tribunal Ordinance, 1984 the said two Ordinances were repealed and re-enacted by Banking Companies (Recovery of Loans Advances, Credits and Finances) Act, 1997 (hereinafter referred to as Act, 1997).
11. ' Section 7(6) of Act, 1997 provided that all matters pending either before the Special Courts constituted under Banking Companies (Recovery of Loans) Ordinance, 1979 or under Banking Tribunal Act, 1984 shall stand transferred to Banking Court established under the Act, 1997.
12. Subsection (7) of section 7 of Act, 1997 laid down that proceedings transferred to the Banking Court shall proceed from the stages which the proceedings had reached immediately prior to transfer.
13. The legislature provided special procedure by Act, 1997 to deal with the Banking matters whether on interest basis or on non-interest basis, other than the procedure provided under Ordinance, 1979 or Ordinance, 1984.
14. ' Neither Ordinance, 1979 nor Ordinance, 1984 provided that Banking Court while granting leave for disputed amount, can decree the suit to the extent of undisputed amount. The legislatures intentionally provide that Court can give leave to defend the suit if serious bona fide dispute is raised in the application filed by the borrower/customer, instead of following the procedure under Order XXXVII of C.P.C. Learned Single Judge's attention apparently for want of proper assistance was, not drawn to this fact that he has to decide the matter after repeal of the Ordinance, 1979 in terms of procedure as provided under Act, 1997.
15. As regards the contention of Mr. Rizwan Ahmed Siddiqi that the liability of the guarantor is co- extensive with that of the principal debtor, there is no cavil to it. Section 128 of the Contract Act provide that liability of the surety is co-extensive with that of the principal debtor.
16. ' In the case of Habib Bank Limited (supra) while repelling the contention of the guarantor that he is not liable for the guarantee executed by him, as he has resigned from Directorship of the Company, learned Judge rightly held that since guarantee was executed in personal capacity and stipulated that same shall continue to be binding on the guarantors or their representatives in respect of the liabilities, despite guarantor has resigned from the Company, he will continue to remain liable as guarantor.
17. ' From the case of Messrs Abdul Aziz Ramzan Valli and others (supra) it appears that Honourable Supreme decided the matter arising out of proceeding under the Banking Companies (Recovery of Loans, advances, Credits and Finances) Act, 1997 and held that under clause (2), rule 3 of the Order XXXVII leave to defend the suit may be granted either unconditionally or subject to furnishing security. The principle laid down by the Honourable Supreme Court in the case of Messrs Abdul Aziz Ramzan Valli and others is not applicable to the facts of the matter in hand as learned Judge decided the matter as Banking Judge while exercising power under Act of 1997.
18. ' In the case of Messrs Huffaz Seamless Pipe Industries Ltd. And 2 others (supra), leave to appeal filed by the guarantor who has not denied the execution of guarantee for creditor and did not contest the matter, objected on technicalities to defeat the claim of the creditor, the Honourable Supreme Court held that even where the contract being unenforceable against the principal debtor the guarantor would still be liable for the surety he had executed.
19. ' None of the cases relied upon by the learned counsel for the respondent is of any help to him and or applicable to the question involved in the matter. Respondent has not filed cross-appeal to call in question leave granting order on the ground that appellant has not raised serious and bona fide issue in this application.
20. ' Only question now is whether while granting leave under Act, 1997 condition, can be attached or not?
21. ' Sub-Rule (2) of rule 3 of Order XXXVII, C.P.C. Provided that leave to defend can be granted either unconditional or subject to such terms as to payment in Court or give a surety, as the case may be, but the legislature in its wisdom intentionally deviated from the old provision of law and provided that while exercising power under section 10 of Act, 1997 Banking Court shall, on an application, made by defendant,' grant leave to defend the suit if serious and bona fide dispute raised.
22. ' In the case of Agrofoster (Pvt.)Ltd. And two others v. Judge Banking Court No,5, Karachi and another, PLD 1999 Kar. 398, a Division Bench of this Court held:-- .
23. "Adverting to the instant case, it is noted that only condition as per section 10 of the Act for granting leave to defend the suit is that the nature of the dispute be serious and bona fide. The word "serious" in the Oxford English Dictionary has been defined to mean; important, grave, consequences giving cause for concern worthy of consideration etc. And the "bona fide" means; good faith freedom from intent to deceive, guarantees of good faith, credentials. Combined effect of these two words is if the dispute ex facie, appears to be genuine, arising out from good faith and free from mala fide, the Banking Court shall grant leave to defend the suit.
24. ' Once the case if found fit for granting leave no condition of furnishing security can be attached as it would tantamount to reading more than what actually the Legislature has mentioned in the said section. Any other construction which contradicts the letters of a statute and permits substitution of views other than, expounded by Legislature, shall, as a rule, be avoided. Neither the principle of aforesaid maxim is applicable to this case nor the plea of substantial justice to both the parties would apply. The Legislature in its wisdom has not thought it propped to put any condition for seeking leave to defend the suit, except mentioned earlier."
25. ' In the case of Muhammad All Enterprise 2005 CLD 521, a Division Bench of this Court while dealing with an application under section 10 of, Act, 1997 after re-producing relevant provisions under Ordinance, 1978, Ordinance, 1979 and Ordinance, 1984 held:-- "Once a Banking Court, deciding leave to defend application under section 10 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 came to the conclusion that, "it appears that in the affidavit the defendant has shown prima fade defence in order to obtain leave to defend" the Court was obliged to grant leave to defend without any condition thereto.
26. From a bare perusal of various provisions of different Banking Enactments both, before and after the Banking Companies (Recovery of Loans, advances, Credit and Finances) Act, 1997, it becomes abundantly clear that, a departure was made in Act, XV of 1997. Legislature in its astuteness did not attach any condition on the exercise of discretion of Banking Court while granting leave to defend the suit provided that, a serious and bona fide dispute is raised by the defendant."
27. The appellant denied the execution of personal guarantee in his personal capacity and alleged that guarantee executed by him was for and on behalf of principal borrower a Public Limited Company. Learned single Judge in the impugned order recorded finding that the signature of defendant No,3 appears on reverse of page 3 which shows that it was signed by appellant as a Managing Director of defendant No,1 "for and on behalf of Company". The question as to whether signature is to be treated as his personal guarantee or one on behalf of defendant No,1' is not clear and may require evidence.
28. We have also examined letter of guarantee Annexure-E of the plaint but we are not dealing with this issue whether appellant has executed guarantee in question in his personal capacity or on behalf of principal borrower as the same may prejudice interest of either party and while respectfully agreeing with the principle laid down in the case of Agrofoster (Pvt.) Ltd. And 2 others (supra) set aside the judgment and decree passed against the appellant and granted appellant unconditional leave to defend the suit.
29. ' The appeal is allowed however with no order as to costs.