1. ' ARSHAD NOOR KHAN, J.---This High Court Appeal has been directed against the order dated 24- 10-2007 passed by learned Single Judge in J.M.No,45 of 2000 Industrial Development Bank of Pakistan v. Hyderabad Beverages Company (Pvt.) Ltd. And others whereby the respondent No,6 has been absolved from his liability being guarantor for respondents Nos.1 to 4.
2. ' The facts leading rise to the present appeal in brief are that the appellant sanctioned loan in favour of respondent Nos.1 to 4 in the sum of Rs,9.00 million and respondent No,6 stood guarantor by pledging equitable mortgage of his property bearing Survey No,251 admeasuring 1 acre 11 ghuntas situated in Deh Okewera, Tapo Songal, Gulshan Town, Karachi and executed such document of guarantee in favour of appellant vide Guarantee Deed dated 25-2-1993. It is an admitted position that after advancement of the loan, respondent Nos.1 to 4 committed default in payment of loan which constrained the appellant to file J.M. No,47 of 1994 which ended in compromise in between the parties and after compromise in aforesaid J.M., respondent Nos.1 to 4 again committed default, therefore the appellant Bank filed the present miscellaneous application.
3. During the course of pendency of the present miscellaneous application, the State Bank of Pakistan was moved by the appellant for approval of the package for repayment of the loan by the respondents and the State Bank of Pakistan vide Circular No,29 dated 19th July, 2003 approved the package thereby it was resolved that the borrower will pay the liability to the tune of Rs,9.00 million and a Cheque of Rs,0.90 million on account of down payment will be deposited by the borrowers with IDBP and for balance of Rs,8.100 million, the borrower was required to pay the said amount in 12 equal quarterly installments over a period of three years after signing of the agreement with IDBP.
4. In pursuance of the said approval of the State Bank of Pakistan, the appellant informed respondent Nos.1 to 6 vide their letter dated 17th January, 2004 thereby informing respondents about package approved by State Bank of Pakistan and respondents Nos.1 to 6 were required to pay 10% down payment amounting to Rs,0.90 million within 15 days from the date of issuance of letter and that 12 post dated cheques shall be deposited for balance amount of Rs,8.100 million to be paid in 12 quarterly installment of Rs,0.675 million each in a period of 3 years commencing from the date of execution of the agreement to be signed by the respondents within 15 days from the date of issuance of the said letter. Respondents were also required to properly insure the mortgaged assets/properties till liquidation of the entire liability as per package and all insurance expenses will be borne by them and in case of their failure, the Bank will arrange the insurance policy on their part and premium paid in this regard shall also be recovered from them after 30-9-2002. The said letter was received by respondents Nos.1 to 6, respondents Nos.1 to 4 did not deposit 10% down payment nor the requisite documents were executed, however, respondent No,6 deposited Rs,1,400,000 in pursuance of letter of the appellant dated 17-1-2004 towards part payment Of the loan on behalf of the respondent Nos.1 to 4. The respondent Nos. l to 4 lingered on the matter for sufficient time in spite of repeated letters addressed to them by the appellant therefore the appellant cancelled the package dated 17-1-2004 with retrospective effect vide their letter dated 22-7-2005 addressed to the respondents.
5. ' During the pendency of J.M.No,45 of 2000, the respondent No,6 filed application under section 151, C.P.C. Stating therein certain variation in the original agreement and prayed for his relieving from the responsibility as guarantor. The. Appellant filed objections to the said application. The learned Single Judge after hearing of the learned counsel for the parties accepted application under section 151, C.P.C. CMA No,1610 of 2004 and respondent No,6 was discharged from his liability being guarantor, hence the present appeal, ' We have heard Mr. Aziz-ur-Rehman, Advocate for the appellant, Mr. Abrar Hassan, Advocate for respondent No,6 and Miss Syeda Kanwal, Advocate for respondents Nos.1 to 4. By consent of learned counsel for the parties we propose to decide the appeal at limine stage.
6. ' Mr. Aziz-ur-Rahman, learned counsel for the appellant vehemently contended that there was no change in the agreement in between the parties as such there was no variation in the agreement therefore section 133 of the Contract Act does not attract under the circumstances of the present case and that the respondent No,6 never challenged the package approved by State Bank of Pakistan and in pursuance of the letter of the appellant dated 17-1-2004 he paid Rs,1,400,000 which shows that he was never absolved from his liability of being guarantor for the respondents Nos.1 to 4 therefore it does not lie in the month of the respondent No,6 to plead variation in the agreement.
7. He further contended that 12 posts dated cheques deposited by respondent Nos.1 to 4, on presentation of first cheque was bounced which shows mala fide of the respondents and their intention towards package given to them for their convenience. According to him, there is no material available on record to suggest that at any stage, the respondent No,6 was absolved from his liability being guarantor therefore the learned Single Judge was not justified in relying on section 133 of the Contract Act. Which in fact does not attract to the circumstances of the present case. In support of his contention he has relied upon the case of Dr. M.A. Qadir Khan v. Bank of Bahawalpur Limited and another reported in PLD 1984 Kar: 211; the case of Agriculture Development Bank of Pakistan v. Pak Green Fertilizer Co. Ltd. Reported in 2000 M LD 1066; the case of United Bank Ltd. v. Messrs Sarhad Ghee Mills Limited and others reported in 1999 YLR 323; the case of Messrs Platinum Insurance Co. Ltd., Karachi. v. Daewoo Corporation Sheikhupura reported in PLD 1999 SC 1; the case of Mian Aftab A. Shaikh and others v. Trust Leading Corporation Ltd. And another reported in 2003 CLD 702.
8. ' Mr. Abrar Hassan- in, learned counsel for respondent No,6 vehemently contended that the approval of the package by the appellant tantamount to variation of the terms and conditions of the agreement of debt in between the parties arid the said variation has been made without consent of respondent No,6 as such respondent No,6 is not bound to the variation in the agreement and the said variation without consent of respondent No,6 discharge him from his liabilities of being guarantor, in view of section 133 of the Contract Act, as such learned Single Judge rightly relied upon section 133 of the Contract Act while absolving respondent No,6 from his responsibilities and the order passed by the learned Single Judge does not suffer from any illegality or irregularity so a s to interfere in it. In support of his contention he has relied upon the case of Dr. M.A. Qadir Khan v. Bank of Bahawalpur Limited and another reported in PLD 1984 Kar: 211 and the case of United Bank Limited v. Sarhad Ghee Limited Ltd. And others reported in 1999 YLR 323.
9. ' Ms. Syeda Kanwal, learned counsel for respondent Nos.1 to 4 did not advance any arguments on the pretext that the matter relates to appellant and respondent No,6.
10. ' We have considered the arguments advanced on behalf of the parties and have gone through the entire material available on record.
11. It is not disputed that the respondents Nos.1 to 4 obtained loan which was sanctioned by the appellant and the respondent No,6 acted as guarantor for these respondents by executing collateral mortgage of his agricultural land with the -Bank and executed such deed of guarantee dated 25-2-1993. It is also an admitted position that after obtaining the loan, the respondent Nos.1 to 4 committed default and did not deposit the installment of the loan and amount of Rs,11,224,472.41 accrued due including mark-up till 1994 which compelled the appellant to file J.M.No,47 of 1997 against the respondents. In the proceedings of J. M. No,47 of 1994 the factory of the respondents Nos.1 to 4 was also attached and was sealed and official assignee was directed to take over the possession of the said factory of respondents Nos.1 to 4. The said J.M.No,47 of 1994 finally decided on 9-5-1997 whereby the order regarding attachment of the property of respondents Nos.1 to 4 was made absolute and directions were given to sell the attached property to satisfy the claim of the appellant Bank. During the pendency of auction proceedings, an amicable settlement arrived at between the parties and they also filed compromise application in J.M.No,47 of 1994 under Order XXIII, rule 3, C.P.C. Which was accepted by the learned Single Judge vide order dated 30-6-1999 and by virtue of said compromise, the respondent Nos.1 to 6 admitted their liability in the sum of Rs,23,864,126.30 and Rs,0.100 million as down payment was agreed and paid by respondents Nos.1 to 6 and the remaining loan was payable in 12 quarterly instalments, commencing from 1-7-1999. After disposal of the aforesaid J.M., the respondents Nos.1 to 4 again committed default and did not deposit the quarterly installments. After settlement, the respondent No,6 time and again requested to the respondents Nos.1 to 4 to pay the installments by his repeated letters but the respondents Nos.1 to 4 did not respond the request of the respondent No,6.
12. On the persistent default in payment of installments by the respondents Nos.1 to 4, the appellant filed another J.M.No,45 of 2000 wherein the respondents again approached to the appellant for rescheduling of his loan and succeeded in prevailing the appellant who moved to the State Bank of Pakistan for approval and the State Bank of Pakistan approved the package and communicated to the appellant vide Circular No,29 of 2003 and the appellant communicated the said approval of the package by State Bank of Pakistan to the respondents Nos.1 to 6 vide letter dated 17-1-2004.
13. Prior to approval of the package by the State Bank of Pakistan, the respondent No,6 again requested to the respondents Nos.1 to 4 to clear their part of obligations or furnish other guarantee acceptable to the appellant and relieve him from the responsibility of being guarantor vide letter dated 23-4-2001, 9-8-2001, 14-12-2002, 7-9-2002 and legal notice dated 14-2-2004. The appellant Bank was also asked by respondent No,6 that respondents Nos.1 to 4 have cheated the Bank twice firstly by obtaining the loan wherein he stood guarantor against them and second time again by producing the forged documents of respondent No,5 thereby obtaining loan amounting to Rs,24.00 million and Rs,67.00 million and also informed the Bank about his reservations to sign the new agreement and in response to the package of the appellant communicated to him vide letter dated 17-1-2004 also wrote to the appellant that because of the attitude and conduct of respondent Nos.1 to 4, he is not inclined to consent any variation in the agreement. During the pendency of the proceedings before the learned Single Judge. The respondents Nos.1 to 4 filed application under section 151, C.P.C. C.M.A. No,339 of 2004) praying therein for de-seal and restoration of possession of factory to them for running seasons of mangoes. The appellant and respondent No,6 were put to notice of this application. The respondent No,6 contested the said application and vehemently refuted the prayer regarding handing over the possession of the factory in question to respondents Nos.1 to 4, as according to him he stood guarantor for respondents for specific purpose and on specific terms and conditions and had also served legal notice dated 14-4-2004 on the appellant and respondents and has also reminded to the appellant that the pay order amounting to Rs,4.70 million was returned by the staff of the appellant to respondents Nos.1 to 4 which could had been easily adjusted towards 'the loan and has also enumerated certain specific instances of respondent No,4. Record shows that appellants counsel under the instructions of the appellant stated no objection for de-sealing of the factory and handing over its possession to the respondent No,3 in spite of objections raised by respondent No,6 and vide order of the Court dated 6-5-2004 the respondent No,1 was allowed to run the factory under the supervision of the official assignee and the then management. In spite of reservations of respondent No,6 recorded by the learned Single Judge in his earlier order dated 30-4-2004, the factory was de-sealed and handed over to respondents Nos.1 to 4 but after the end of the mangoes season, the factory was not reverted to the Court, which admittedly is in possession of respondents Nos.1 to 4. The consent of the appellant regarding handing over the possession of the property attached by the Court after de-sealing and handing over to respondents Nos.1 to 4, in spite of vehement objections of respondent No,6 clearly tantamount to the variation of the terms and conditions of the original agreement in between the parties and the provisions of section 133 of Contract Act, comes in operation which provides that in case, if the terms and conditions of the agreement have been varied without consent of the guarantor, he could not be held responsible for the act of the borrowers and the debtors.
14. ' The factory in question is still in possession of the respondents Nos.1 to 4 and vide order of the learned Single Judge dated 10-11-2008 the official assignee inspected the factory and has submitted his report stating therein that about 8-9 workers were working and filling certain bottles of Maaza Juice under the supervision of one Amber Shahab who had no record of orders and productions etc. And that the factory was not fully operational. The operative part of the report of official assignee dated 24-11-2008 is reproduced herein below, for the sake of convenience:- "That in order to run the factory in proper manner the required ingredients are electricity, raw material, qualified/experienced staff, labour record of supply orders, sale of material in the market, record of salaries, wages, profit and loss etc. According to Amber Shahab up till now no profit or loss has been shown because the factory never worked before as it was under lock and it was opened only for repair and maintenance purpose.
15. ' There are no shops in the surroundings of the factory, so also few small nearing factories were also found closed."
16. ' Since the factory in spite of repeated objection of respondent No,6 was handed over to respondents Nos.1 to 4 with the consent of the appellant whereby ignoring persistent objections raised by respondent No,6, tantamount to variation of the terms and conditions of the debt agreement in between the parties without consent of respondent No,6 as such respondent No,6 was rightly absolved from the liability being of guarantor by the learned Single Judge. In the case of Dr. M.A. Qadir Khan, supra, relied upon by the learned counsel for the respondents, the learned Single Judge while considering the scope of section 133 of the Contract Act was pleased to observe that the contract of the guarantee implies the existence of three parties; the guarantor; principal- debtor and the surety and also contract between the creditor and principal debtor which is foundation of contract of guarantee, the surety would reliable and held bound to thing he has guaranteed, he cannot be held bound for things he has not directed once a variation in a contract between the creditors and the principal debtor is made out, therefore the obligations are to be governed by the new terms and unless the surety is consented of such variation, there is nothing for which he can be bound because the obligations of principal debtor would be that what he had guaranteed. The dictum laid down in the aforesaid case of Dr. M.A. Qadir Khan is fully applicable under the circumstances of the present case. Since long the respondent No,6 has objected and any change in the terms and conditions of debt agreement and inspite of his objection, the appellant consented to de-sealing and handing over the mortgage property to the respondents Nos.1 to 4, which is glairing example of variation in the terms and conditions of the agreement.
17. ' In the case of U.B.L, supra, relied upon by the learned counsel for the respondents, it has been observed that the guarantor cannot be held liable unless his assent is shown to have been obtained for variation in the contract.
18. The cases relied upon by the learned counsel for the appellant also speak about the proposition of applicability of section 133 of the Contract Act, in case, if terms and conditions of the agreement have been varied. Therefore, there is no cavil to the proposition that section 133 of the Contract Act applies, in case, if terms and conditions of the surety agreement has been changed without knowledge or consent of the surety and in such state of affairs, the surety could not be held responsible for fulfilling the obligation on his part.
19. ' For all the aforesaid reasons and circumstances, we find that the order passed by the learned Single Judge, impugned herein does not suffer from any illegality or infirmity to interfere in it. The appeal has, therefore, no merit and the same is hereby dismissed summarily.