1. ' MS. SOOFIA LATIF, J.---By a single order, I intend to dispose of the three C.M.As No,1605 of 2008 filed by defendants Nos.2, 3 and 4, C.M.A. No,1607 of 2008 filed by defendant No,6 and C.M.A. No,7711 of 2008 filed by defendant No,1 in Suit No,B-01 of 2008 and Suit No,B-38 of 2008 as ident4cal facts and grounds are involved therein. "
2. ' Facts, giving rise to above C.M.As are that the plaintiff Bank Al-Falah Ltd., at the request of defendant No,1 Messrs Callmate Telips Telecom Ltd. Provided various financial facilities, which are as follows:-
(1) Current Finance (CF) of Rs,75.000 million
(2) TF of Rs,6.000 Million
(3) SLC/ULC/ Acceptance of Rs,80.000 Million
(4) Letter of Guarantee Rs,30.000 Million.
3. ' The above financial facilities were on mark-up basis/ commission in different amounts and renewed/revised the same from time to time against inter alia security of demand promissory note, hypothecation of movable/fixed assets and third party mortgage and personal guarantees.
4. In consideration of the aforesaid facilities, the defendant No,1 executed letters of hypothecation in favour of the plaintiffs bank on its movable properties, stocks and fixed assets, book debts and receivables, which were duly registered with the Securities and Exchange Commission of Pakistan as per requirement of law. It is also the case of plaintiffs bank that in consideration of the aforesaid financial facilities, the defendant No,5 first deposited the title deeds of her immovable property i,e, Bungalow No,22, Khayaban-e-Shamsher, Phase-V, Defence Housing Authority, Karachi and then confirmed the factum by executing a memorandum of deposit of title deeds in favour of the plaintiff dated 31-5-2004. She also executed inter alia undertaking, Iqrarnama and agreement to create legal mortgage. The defendants Nos.2 to 6 also executed their personal guarantees in favour of the plaintiff undertaking and guaranteeing the repayment of all the outstanding and dues of the defendant No,1 to the Bank.
5. ' It is also the case of plaintiff that at the request of defendant No,1 the financial facility limits were renewed in favour of defendant No,1 and also allowed additional credit facility vide letter dated 4- 5-2005 and 30-1-2006, the facilities were also secured through the continuing securities earlier provided by the defendants. They further executed their personal guarantees in favour of the plaintiff. According to the plaintiff on 1-2-2006 the plaintiff at the request of the defendant No,1 opened an L/C (Usance-365 days) bearing L/C No,MBK/0049/2006 in the sum of USD $ 1,292,313 for import of hard and software telecommunication equipments in favour of Messrs Huawei Tech Investment Company Limited but the defendants failed to liquidate the outstanding amount as a consequence thereof suit has been filed for recovery of said amount along with accrued mark-up.
6. ' Whereas the defendant No,5 Mrs. Yuba Jamil Ansari, who purportedly stood mortgagor/guarantor on behalf of defendant No,1 in Suit No,B-1 of 2008, filed Suit bearing No,B-38 of 2008 for declaration, permanent injunction and redemption of the mortgage property on the averments that the Suit No,B-1 of 2008 is not maintainable against her due to doctrine of "Novation of Contract" and/or principle of "discharge of guarantee(s)", in view of sections 128, 133, 134 and 56 of Contract Act, 1872.
7. The alleged guarantee was expired on 30-8-2004 and no demand was made within due time, however, she also requested for redemption of her mortgaged-property in lieu of depositing the amount of PKR 18.2 Million being the mortgage amount/money with the Nazir of this Court.
8. ' The defendants Nos.2, 3, 4 and 6 filed listed C.M.As No,1605 of 2008 and 1607 of 2008 for leave to defend in Suit No,B-1 of 2008, whereas in Suit No,B-38 of 2008 the Bank filed C.M.A No,7711 of 2008 for seeking leave to defend.
9. ' I have heard learned counsel for parties at length and gone through the record very carefully.
10. ' Mr. Saalim Salam Ansari learned counsel appearing for defendants Nos.2, 3, 4, 5 and 6 in Suit No,B- 1 of 2008 and plaintiff in Suit No,B-38 of 2008 has contended that the leave to defend be granted in view of sections 132, 133 and 134 of the Contract Act, 1872 and in pursuance of Doctrine of "Novation of Contract" or principle of Discharge of Guarantee(s)". In this regard Mr. Saalim has invited my attention to the annexure "L" to the plaint, contended that the previous guarantees, mortgages, securities, if availed by the defendants Nos.2 to 6 have been discharged, revoked as the renewal is without the consent of the mortgagor the defendant No,5 and/or the guarantors the defendants Nos.2 to 6 as the renewal is in between the principal borrower/defendant No,1 and/or the plaintiffs Bank. It is further urged that mere on this point the leave to defend was granted by the High Courts and Honourable Supreme Court in many cases. In support of his contentions, reliance is placed on the following case laws:--
(1) 1981 CLC 847 (D.B);
(2) PLD 1984 Karachi 211;
(3) PLD 1986 Karachi 107;
(4) 1994 CLC 854;
(5) AIR 1935 Privy Council 21;
(6) AIR 1932 Bombay 168;
(7) AIR 1918 Privy Council 210;
(8) PLD 1968 SC 83;
(9) 2009 CLD 460;
(10) 2003 CLD 905 (D.B);
(11) 2002 CLD 1707 (D.B);
(12) 2004 CLD 388 (D.B);
(13) 2004 CLD 110 (D.B);
(14) 2005 CLD 581 (D.B);
(15) PLD 1963 SC 163;
(16) PLD 1996 SC 749;
(17) PLD 1991 SC 976;
(18) 1998 MLD 529;
(19) 2001 YLR 1244 (S.B).
11. ' It is next urged by Mr. Saalim Salam that under section 10(B) of Financial Institutions (Recovery of Finances) Ordinance, 2001 if substantial and/or mixed questions of laws or fact(s) are involved for which the evidence is to be recorded, the defendants are entitled for ,,leave to defend. It is also urged that in annexure P/2, P/3 to the leave to defend application, there is clearly mentioned the word "not accepted" which is evident and the contention that mortgage and corporate guarantee were not executed and in annexure P/4 it is also mentioned as crossed or negative that corporate guarantee of defendant No,6 and mortgagor is not accepted by defendants Nos.5 and 6, therefore, no mortgage or corporate guarantee can be trusted/forced upon in view of the observations made in 2006 CLD 1506.
12. ' It is further urged by Mr. Saalim Salam that under section 18(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, no blank document can be taken by the bank as it is evident from annexure P/5, P/6 and P/7 to the leave to defend application that the guarantees have been taken by the Bank as blank, which is clear violation of section 18(ibid); the documents signed under "Economic duress" are also "void" under the provisions of sections 10, 14 and 16 of the Contract Act.
13. Reliance is placed on PLD 1997 Karachi 62 (D.B.)
14. ' It is next urged that the defendant No,1 is principal borrower, who has been wound up and Official Assignee of Sindh High Court has been appointed as official liquidator and an ex parte decree has been passed against the defendant No,1 in Suit No,B-1 of 2008 and an Execution No,39 of 2008 is pending against them and in view of the observation made in 1987 CLC 2364, there is no liability of the guarantors, if the company has been wound up/liquidated.
15. ' It is next urged that the signatures of defendant No,5 are different in four documents (annexure C, C/1 at page 87, 89 and. C/3 to the plaint) and the court can examine itself the signature under the provisions of the Qanun-e-Shahadat Order, 1984. It is next urged that as regard the guarantee of defendant No,6, which is a private limited company, it is without resolution of Board of the Directors of company and/or if the guarantee of private limited company is not backed by resolution, it will be treated as "null" and "void".
16. ' Mr. Abdul. Sattar Lakhani learned counsel appearing for plaintiff in Suit No,B-1 of 2008 and defendant No,1 in Suit No,B-38 of 2008 has contended that as the defendants Nos.2, 3, 4 and 6 have executed personal, guarantees, hence fall within the definition of customer. They being directors/sponsors of defendant No,1 have accepted the liability as that of principal debtor and the guarantees expressly empower the plaintiff to allow the principal borrower time or other indulgence. Mr. Lakhani has denied that the guarantees were expired on 30-8-2007, whereas the same are continuing demand guarantees for repayment of all the dues of the bank. The law does not make any exception in favour of the defendants as guarantors, sureties, indemnifiers and they are legally bound to repay the outstanding amount due against defendant No,
1. It is also urged that the defendants have executed corporate, guarantee as guarantor of defendant No,1, therefore, cannot claim discharge of guarantee for any reason. Mr. Lakhani has also denied that there was novation of contract in respect of the said facilities, nor the guarantee of defendant No,5 Mrs. Yuba was ever discharged. The guarantee accepted by her is valid, subsisting and enforceable and she is liable to pay all the outstanding and dues of principal borrower the defendant No,
1. Mr. Lakhani has also urged that Mrs. Yuba the defendant No,5 in Suit No,B-1 of 2008 and plaintiff in Suit No,B-38 of 2008 cannot seek redemption of mortgage by way of afterthought and with mala fide intention.
17. However, Mr. Lakhani has made request to grant leave to defend to the Bank in Suit No,B-1 of 2008 and refuse the leave in Suit No, B-1 of 2008 to defendants Nos.2, 3, 4 and 6. In support of the above contentions reliance has been placed on the following case-laws:-- ,
(1) 2006 CLD 178;
(2) 2003 CLD 1406;
(3) PLD 1994 Karachi 196;
(4) 2006 SCMR 619;
(5) PLD 1998 Karachi 278;
(6) 2004 CLD 1741; ' In order to appreciate the contentions of learned counsel for the parties, I have examined all documents available on record as well as the relevant statutory provisions on the subject and the case laws cited at the bar.
18. ' Admittedly the defendant No, l's company, the principal borrower for which the defendant No,5 mortgaged her property by executing mortgage deed and defendants Nos. .2 to 6 were the guarantors, has been wound up and official Assignee has been appointed as official liquidator. Suit No,B-1 of 2008 has been decreed against the defendant No,1 and an execution application is pending. Nothing has been filed by the plaintiff's Bank to show that any claim has been filed regarding the outstanding or loan against the defendant No,1 with the official liquidator.
19. ' As regards the point of rescheduling of the loan and manifestly includes mark-up, according to the plaintiff in Suit No,B-1 of 2008 at the request of defendant the facility limit was renewed and also allowed additional credit facility vide letter dated 4-5-2005, defendants Nos. 2 to 6 further executed their personal guarantees in favour of plaintiff on 2-5-2005. In their leave to defend application the defendants Nos. 2 to 6 have categorically denied the execution of documents dated 2-5-2005. They have stated that they have no knowledge about the rescheduling and their consent was not obtained. On account of their denial the dispute cannot be resolved without A recording their evidence. It is a well-settled law that for adjudicating the bona fide question raised, requiring probe investigation. Another question arise whether the guarantors are bound for the thing they have not guaranteed. In this context reference has been made in the case of Dr. M. A.
20. Qadir Khan v. The Bank of Bahawalpur Ltd., and others reported in PLD 1984 Karachi 211, it has been observed that surety cannot be held bound for things he has not contracted. Once a variance in contract between creditor and principal debtor is made their obligations are governed by new terms and unless debtor is made their obligations are governed by new terms and unless surety has consented to such terms he cannot be bound for variation. It has further been held that contract between creditor and principal debtor varied without consent of surety. Surety, held, will be discharged. Same observation has been made in the case of Messrs United Bank Ltd., v. Messrs Mujahid Transport reported in PLD 1986 Karachi 107. On this point the case laws cited by learned counsel for plaintiff are not attracted to the facts of the instant case. It is universally accepted principal that every ruling in bank case governs its own facts unless the facts of both cases are identical the principle deduced in such authorities cannot be extended to the case under consideration.
21. ' It is also very surprising to see annexures P/5 to P/7 to the leave to defend application (guarantees) that the guarantees were obtained blank which is a clear violation of section 18 of Financial Institutions (Recovery of Finances) Ordinance, 2001, which states as under:-- "18. Banking Documents. (1) No financial institution shall obtain the signature of a customer on banking document which contains blanks in respect of important particulars including the date, the amount, the property or the period of time in question:
(2) Finance agreements executed by or on behalf of a financial institution and a customer shall be duly attested in the manner laid down in Article 17 of the Qanun-e-Shahadat Order, 1984 (P.0.10 of 1984).
(3) Nothing contained in subsection (1) and (2) shall affect the validity of any document executed prior to the date of enforcement of this Ordinance.
(4) Notwithstanding anything contained in this section or any other law, the Banking Court shall not refuse to accept in evidence any document creating or purporting to create or indicating the creation of a mortgage, charge, pledge or hypothecation in relation to any property or assumption of any obligation by a customer, guarantor, mortgagor or otherwise merely because it is not duly stamped or is not registered as required by any law or is not attested or witnessed as required by Article 17 of the Qanun-e-Shahadat Order, 1984 (:P.O. 10 of 1984) and no such document shall be impoundable by the Banking Court for any other Court or authority: ' Provided that nothing contained in this subsection shall operate to defeat the legal rights of a bona fide purchaser for value without notice of a document which ought to have been registered:: As regards the point that annexures P/2 and P/3 to the leave to defend application, there is clearly mentioned the word "not accepted" and annexure P/4 it is also mentioned as crossed or negative, on perusing the aforesaid annexures, it appears that the words "not accepted" is written therein.
22. However, the plaintiff has denied this fact in their replication, therefore, this disputed point cannot be resolved without recording evidence.
23. ' In Suit No,B-38 of 2008 the plaintiff has taken a plea that she being guarantor is bound to pay her liability to the extent of her liability in view of the documents executed by her. In this regard reliance has been placed by the learned counsel for plaintiff in a case reported in CLD 2006 1506.
24. ' The dictum laid down in the above citation reveals that the liability of the mortgagor can only be trusted upon in view of the documents executed by her.
25. ' For the reasons discussed above, keeping in mind the above cited judgment and objections raised by the defendant in both suits, I am of the considered view that the defendants Nos.2, 3, 4 and 6 in Suit No,B-1 of 2008 and defendant No,1 in Suit No,B-38 of 2008 have made out a prima facie, case for grant of unconditional leave as 'the object received require detailed investigation through recording of evidence. Consequently, the leave to defend is granted to the defendants Nos.2, 3, 4, 6 in Suit No,B-1 of 2008 and in Suit No,B-38 of 2008 to the defendant No,1 for adjudication of both suits on merits. Leave to defend applications in both suits are treated as written statement and parties are directed to file their proposed issues for the purpose of determination of the points of law and facts involved in the matter.
26. Accordingly the listed C.M.As Nos.1605, 1607 and 771 of 2008 are hereby allowed in above terms, however, there will be no order as to costs.