' MUHAMMAD KHALID MEHMOOD KHAN, J.---The plaintiff filed a suit for recovery of Rs,90,023,592.79 against the defendants. The defendant No,1 is arrayed as a private limited company and defendants Nos.2 to 9 are arrayed in the capacity of guarantors/mortgagoRs, Defendant No,10 has been arrayed as pro forma defendant. In the year 2002, the defendant No,1 requested the plaintiff for allowing a financial facility in the shape of running finance and a letter of guarantee. The plaintiff acceded to the defendant No, l's request and .Allowed a financial facility of Rs,80 Million of letter of guarantee. The defendant No,1 in acknowledgment of ailment of said facility executed number of documents, detailed in para 5 of the plaint. In addition to the documents executed by defendant No,1, defendants Nos.2 to 9 executed an agreement of personal guarantee and created mortgage charge against their properties detailed in the plaint.
2. That on 5-3-2004 the defendant No,1 requested for enhancement of availed facility which the plaintiff allowed vide offer letter dated 29-4-2004. The said letter was accepted by the defendants.
The running finance facility was enhanced upto Rs,120 Million with an expiry period of 31-3-2005.
The defendant No,1 executed number of documents and also executed MODT and created mortgage charge against their properties, the detail of which is given in para 8 of the plaint. On 3- 12-2004 the defendants again requested for allowing a facility of letter of credit on site basis for the import of used construction machinery from Europe. The plaintiff acceded to the defendant No,l's request vide offer letter dated 21-12-2004 and other facility of amount of Rs,14.200 Million was allowed. That the facility referred to above was duly availed by the defendants as shown in the statement of account, as per renewal agreement between the parties, the facility availed was to be paid upto 31-3-2006. The defendants failed to pay the amount as detailed above and offered a further security by way of mortgage as detailed in para 13 of the plaint. The last sanction of finance and availed facilities are as under:--
(1) Running Finance 20 Million.
(2) LG/LC. 120 Million.
Total liability. 140 Million.
3. The said facilities were again not paid and on 13-11-2006 the defendant No,1 passed a resolution and requested the Bank for opening of an inland LC of Rs,8 Million for purchase of pipes. The plaintiff sanctioned the said facility. On 13-12-2006 the defendant again requested for enhancement of already availed facility. The plaintiff acceded to the request of defendants on 22- 12-2006 and facility of Inland LC was allowed, totalling the enhanced entire facility from Rs,140 Million to Rs,157.00 Million.
4. Out of the sanctioned facility of letter of guarantee the plaintiff on 7-2-2007 issued a Bank guarantee of performance bond in favour of WAPDA on behalf of defendant No,
1. On 10-6-2009 the, beneficiary of guarantee WAPDA demanded encashment of a performance guarantee of Rs,72,317,000. The plaintiff on 11-6-2009 informed the defendant No,1 that since the performance guarantee is unconditional and defendant No,1 is bound to provide funds/deposits in its account for immediate payment of the guaranteed amount and further informed that in case of their failure to provide deposit, they will pay the guaranteed amount to WAPDA. The defendants rushed to the Civil Court and filed a suit for declaration and permanent injunction titled Messrs K.K. Private Limited. v. WAPDA and two others for issuance of restraining order against encashment of performance guarantee. The learned Civil Court on 15-6-2009 issued injunctive order directing the plaintiff not to encash the Bank guarantee, but the said restraining order was vacated on 31-7- 2009. The defendant No,1 filed appeal thereagainst which too was dismissed on 21-11-2009. The plaintiff then in terms of their promise on behalf of defendant No,1 made the payment of Rs,72,317,000 to WAPDA the beneficiary of the guarantee.
5. That as per statement of account maintained and prepared in due course of business the defendants are liable to pay Rs,90,023,592.79 as detailed in para 31 of the plaint. The defendants failed to pay the above said amount inspite of plaintiffs' repeated demands and as such the plaintiff prayed a decree of Rs,90,023,592 along with mark up, costs of funds charges, costs of suit from the date of default till the realization of decretal amount.
6. The defendants Nos.1 to 9 filed application for permission to defend the Suit No,252-B of 2010 and raised the following preliminary objections:--
(1) That on 9-6-2009 the WAPDA authority has wrongly declared the defendant negligent and wrongly demanded the payment of guaranteed amount.
(2) The encashment of Bank guarantee is subject matter of a civil suit which is pending disposal before the competent Court.
(3) The defendant has also approached Islamabad High Court through Writ Petition No,1323 of 2009, the honourable Islamabad High Court has passed a restraining order against the WAPDA Authority for taking over other sites from defendant company.
(4) The letter dated 10-6-2009 for encashment of Bank guarantee was issued by an -unauthorized Officer of WAPDA.
(5) The plaintiff has wrongly encased the Bank guarantee by issuing a pay order dated(sic)
72,317,000.
(6) The suit has not been filed by a competent or authorized Officer.
(7) The plaintiffs Board of Director has not passed any resolution for initiating legal proceedings against the defendant.
(8) There are material discrepancies in the amount calculated by the plaintiff
(9) The plaintiff is illegally charging the mark up on an amount of R.72,317,000. The performance guarantee has been encashed in violation of section 126 of the Contract Act.
7. Learned counsel has relied on Pak Consulting Engineering v. Pakistan Steel Mills (2002 SCM R 1781) and Messrs Auaz Builders v. Board of Trusties Karachi Port Trust (2008 CLC 726). The plaintiff has no cause of action and prayed that the leave may be allowed to defend the suit unconditionally.
8. Learned counsel for plaintiff submits that defendants are admitting the ailment of finance but only argument is that plaintiff has wrongly encashed the Bank Guarantee/performance bond. He further submits that defendants are not disputing the amount paid to WAPDA in discharge of the obligation under the performance bond but their defence is that plaintiff has paid the amount in violation of the terms of guarantee but surprisingly they have not pointed out the discrepancies or violation in encashment of Bank guarantee.
9. Learned counsel for defendants submits that plaintiff is wrongly claiming the amount of Bank guarantee as they have wrongly paid the same to the beneficiary of guarantee. The defendants have not committed any default with the employer and as such the employer WAPDA wrongly lodged the claim against defendant No,
1. The plaintiff was duty bound to refuse the request of WAPDA for encashment of Bank guarantee. It is further argued that plaintiff has acted in violation of section 126 of the Contract Act.
10. Heard. Record perused.
11. The ailment of finance is admitted fact between the parties. The defendants are only disputing encashment of Bank guarantee claiming that they have not violated the terms of contract with their employer i,e, WAPDA and as such WAPDA has wrongly demanded encashed the Bank guarantee.
12. Admittedly the defendants have not placed on record the document of guarantee establishing that how the plaintiff has violated the terms of guarantee. It is not the case of defendants that the guarantee was expired and the claim was lodged after the expiry of guarantee. No doubt the plaintiff has also not placed on record the document of guarantee but this is not a factual dispute as the defendants are themselves admitting the issuance of guarantee on their behalf in favour of WAPDA of the amount of Rs,72,317,000. Further the defendants themselves are admitting that they have filed a suit before the Civil Court against. WAPDA and the plaintiff for injunction and declaration for obtaining a restraining order from .The Civil court against the encashment of guarantee. The learned Civil Court has refused to restrain the plaintiff to honour its commitment under the guarantee. The plaintiff has specifically asserted in para 26 of the plaint that on receipt of claim from WAPDA the beneficiary of guarantee, the plaintiff informed the defendants for arranging the payment of guarantee on receiving the letter from plaintiff the defendants filed a suit before the Civil Court for obtaining a restraining order against the claim of WAPDA. Copy of plaint of a suit filed by the defendant is available at page 619 of the plaint. In para 2 of the plaintiff defendants admitted the issuance of Bank guarantee by the plaintiff in favour of WAPDA and in para 9 of the plaint they have only claimed that WAPDA Authorities are wrongly claiming the encashment of guarantee but they have not alleged in the suit that plaintiff is honouring the agreement of guarantee against the terms of contract of performance guarantee. This very admission of defendants is sufficient to prove that plaintiff has not violated any terms or condition of the performance guarantee. It is an established principle of law that a contract of guarantee is an independent contract of the principal contract between the employer and contractor. The plaintiff Bank thus has rightly encased the Bank guarantee in terms of performance bond. As the defendants have failed to point out which of the terms and conditions of the guarantee has been violated, this argument of learned counsel for defendants has no force.
13. The other argument of learned counsel for defendants is that suit has not been filed by duly authorized person as no resolution has been passed for initiation of any proceedings against the defendants. Further the power of attorney/resolution in favour of signatory of plaint are not available on record. At pages 691 and 694 of the plaint the power of attorneys of both the signatories of plaint are available which shows that both the signatories of plaint are competent to file the suit for recovery of amount on behalf of plaintiff.
14. Further the defendant is no one to claim that the signatories of the plaint are not authorized to institute the suit, it is the plaintiff who can ask from the signatories of plaint under what authority they filed a suit as the decree is ultimately to be passed in favour of plaintiff company and plaintiff will be the beneficiary of said decree and as such this argument of learned counsel for defendants has no force.
15. As far as the argument of learned counsel for defendants that plaintiff is charging mark up in excess of agreement between the parties is concerned. In para 16 of the application to defend the suit the defendants are admitting that they have to pay a sum of Rs,19,567,441,78 only. The defendants are rightly saying so as this amount is a debit balance in the defendants' account of running finance facility available at page 638 of the plaint, but the other amount of Rs,68,701,155 is also payable being the amount paid in discharge of the performance guarantee to WAPDA. In fact the Bank paid a sum of Rs,72,317,000 through a pay order available at page 646 of the plaint, but debit amount of Rs,68,701,151 after adjusting the margin provided by the defendant at the time of obtaining Bank guarantee. This fact shows that plaintiff has not charged any mark up on the said amount. This argument of learned counsel for defendants thus bound to fail.
16. In view of above, PLA is dismissed, suit of plaintiff is decreed to the extent of Rs,90,023,592.79 along with costs of suit and costs of funds from the date of decree till realization. The decree will be automatically converted into an execution after expiry of 30 days in case the defendants/judgment debtors failed to pay the decretal amount. Office is directed to draw the decree sheet according to law. KMZ/S-11/L .