1. One Haji Ibrahim Usman had an account with the plaintiff to whom over--draft facility to the extent of Rs. 75,000 was granted. The borrower had pledged with the plaintiff 900 shares of Rs. 10 each of Faqir Spinning Mills Limited and the repayment was guaranteed by Col. F. S. Wahiduddin the predecessor-in-interest of the defendants. On 2.1-4-1970 Rs. 1,14,932'72 was due and payable by the borrower. The defendants acknowledging their liability to pay the amount executed a promissory note dated 21st April, 1970 in favour of the borrower and delivered it to the plaintiff. The defendants also executed a letter of guarantee dated 20th April, 1973 whereby they undertook to pay the amount due and payable by Haji Ibrahim Usman. The plaintiff has claimed Rs. 150,502'08 which is due from the borrower. The defendants have pleaded that the suit is not maintainable for non joinder of Haji Ibrahim Usman and that the same is barred by time. The defendants have stated that they cannot admit the execution of documents without look--ing into it. \ They have further denied that any overdraft facility was allowed to the defendants and the statement of account is false and incorrect. On the pleadings of the parties the following Issues were framed;
(1) Is suit bad for non joinder of the borrower ?
(2) Whether the suit is barred by time ?
(3) Is there any cause of action against defendants.
(4) To what relief, if any, is the plaintiff entitled.
2. The plaintiff has examined Feroze Shah and produced the documents in support of their claim. No witness has been produced by the defendants nor they have appeared on the date of hearing.
3. My findings on the Issues are as follows;- Issue No. 1-In the negative.
4. Issue No. 2-In the negative.
5. Issue No. 3-In the affirmative.
6. Issue No. 1. The defenants have been sued as guarantors. The plaintiff's case is that one Haji Ibrahim Usman was an account holder with the plaintiff to whom advance facilities were granted at the instance and on the guarantee of Col. F.S. Wahiduddin who is the predecessor-in-interest of defendants Nos. 1, 2 and 3. In support thereof the plaintiff has produced Exh. 5/1 a promissory note dated 15-10-1964 executed by Col. F. S. Wahiduddin in favour of Haji Ibrahim Usman in the sum of Rs. 7,500 which was endorsed by the borrower in favour of the plaintiff. This promissory note was delivered to the plaintiff under covering letter which is jointly signed by F. S. Wahiduddin and the borrower. Again on 14-10-1967 another promissory note in the same manner was executed by Col. F. S. Wabiduddin for a sum of Rs. 75,000. It was also delivered to the plaintiff with a covering letter of the same date. The pronote was endorsed in favour of the Bank by the borrower. These pronotes were from time to time executed as security for the loan of Rs. 75,000 advanced to the borrower.
7. Again on 21st April, 1970 the defendants jointly executed a pronote in favour of the borrower in the sum of Rs. 1,14,932'74. This pronote was not endorsed by the borrower in favour of the plaintiff but the defendants by a covering letter of the same date had delivered this pronote to the plaintiff.
8. Again on 20th April, 1973 the defendants executed a pronote in favour of the plaintiff for a sum of Rs.
9. 1,54,571.36 only. On the same day a letter of guarantee was executed by thedefendants jointly in favour of the plaintiff relevant parts of which are reproduced hereunder.
10. "In consideration of your having at our request and guarantee and on the guarantee of our deceased father, namely, Col. Fakir . Syed Waheeduddin, made advances to Haji Ibrahim Usman (here--inafter referred to as the "Borrower") to the extent of Rs. 75,000 (Rupees seventy-five thousand only) and in Further consideration of your not taking any legal action for 3 years against the said Bor--rower for the recovery of the abovesaid amount, I hereby agree, undertake and guarantee as under ;- I. (i) due payment and discharge on demand of the aforesaid advance of Haji Ibrahim Usman together with all moneys and liabilities paid or incurred or which you may pay or incur to or for the use or accommodation of the Borrower in respect of the aforesaid Advances together with interest thereon at the rate of 10 per cent. Per annum with quarterly rests and all charges, commission, payable thereon and costs and expenses incurred or that may be incurred by you.
(ii) And due observance and performance by the Borrower of all terms and conditions and obligations on which the said Advances have been given by you to the said borrower."
11. II. In consideration aforesaid I/we do hereby further agree, undertake and guarantee as follows :- ,
(i) That my liability to you hereunder shall be that of principal debtor and at your option you may treat me as .Primarily liable or the aforesaid . : . . . Advances and interest, commission, other charges, costs and expenses payable to you by the Borrower.
(ii) That this Guarantee shall not be considered as satisfied or dis--charged by any payment or satisfaction of the whole or arty part of the sum or sums of money owing now or at any time hereafter by the Borrower or by discharging of the Borrower by operation of law or otherwise or, for any other reason but shall be continuing security and shall extend to cover any sum or sums of money which shall for the time being constitute the balance due to you from the Borrower in respect of the Advances mentioned above.
(iii) . ..................
(iv) That you may as you think fit with or without reference or notice to me at all time without prejudice to this Guarantee and without dis--charging or in any way affecting my liability hereunder, grant time or other indulgence to or accept or make any composition or arrange-- ment with the borrower or any person or persons liable in respect of the indebtedness and liability hereby guaranteed and also vary, abstain from perfecting, exchange, renew, discharge, release, realise, enforce and deal with any securities, guarantees, obligations or decrees now or hereafter held by you in respect thereof.
12. From the statement of facts it is clear that the defendants had executed the letter of guarantee which was not disputed or challenged at the time of its production. The same stands proved. The learned counsel for the defendants has contended that the stamps on which the gu4rantee was executed were purchased on 2nd October, 1972, whereas it was executed on 20th April, 1973 and, therefore, this discrepancy is sufficient to invalidate the guarantee. He has further pointed out that in para. II (i) of the guarantee the amount has not been mentioned and, therefore, the guarantee is invalid. The objections raised by the learned counsel for the defendants have no force. Merely because the stamp papers were purchased earlier and the guarantee was executed after some time, in the absence of any evidence to the effect that it was fraudulent, is not sufficient to invalidate it. The learned counsel has contended that in fact the letter of guarantee was executed on 2nd October, 1972, but in order to save the period of limita--tion the date was left blank it has been filled in by the plaintiff to its advan--tage. The defendants have not produced any evidence to substantiate this allegation. In the absence of any evidence to this effect it is difficult to up--hold this contention. P. W. 1 has stated the guarantee was executed by the defendants in his presence on 20th April, 1973. In the face of, this evidence and the fact that the defendants have not produced any evidence to the controversy the letter of guarantee is valid and proper. Mr. Mansoorul Arfin, the learned counsel for the plaintiff, has contended that besides the afore--stated documents the defendants had orally guaranteed the repayment of loan in October, 1964, when the loan was granted to the principal debtor. P. W. 1 has feebly stated it but, he has not explained whether such an oral guarantee was given in his presence. In the absence of any cogent and convincing evidence, I am not inclined to accept this contention. The repay--ment had been guaranteed by the father of the defendants and there does not seem to be any reason why these defendants would volunteer an oral guarantee.
13. Now it remains to be considered whether the plaintiff should have joined the principal debtor as a defendant in the suit. The learned counsel for the plaintiff has referred to section 128 of the Contract Act, which provides that the liability of surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract. There is nothing in the letter of guarantee to suggest otherwise. The liability of the surety arises immediately on the failure of the principal debtor and unless otherwise provided in the Contract a creditor cannot be compelled to first exhaust his remedy against the principal debtor b-.Fore initiating any action against the surety. The liabilities of the principal debtor and the surety are separate and distinct. Even in cases where the liabilities of both the parties arise from the same transaction of the same document, the liabilities are distinct.
14. Reference can b A made to the case PLD 1975 Kar. 504. The surety is liable under his contract which he executes in favour of the creditor. In terms of the letter of guaratee the defendants have agreed that their liability to the plaintiff shall be that of principal debtor and at plaintiff's option the defen--dants may be treated as primarily liable for the amount due from the borrower: There is nothing to suggest that the plaintiff should first exhaust its remedy against the borrower/principal debtor. This view finds support from the provision ~ of section 137 of the Contract Act, which.
15. Provides that a mere forbearance to sue the principal debtor or to enforce any other remedy against him does not in the absence of any provision to the contrary discharge the surety: In these circumstances the fact that the creditor has not sued or joined the principal debtor can hardly be a defence in a suit against the. Surety. This principal is so well settled that it is not necessary to discuss B the authorities on the point. Suffice to mention, AIR 1921 Lah. 396 ; AIR 1932 Lah. 419 ; AIR 1935 Mad. 748 and AIR 1957 Pat 256. In Mahanth Singh v. U. Ba. Yi. AIR 1939 P C 110, it was held that failure to sue the principal debtor until recovery was barred by the Statute of Limitation did not operate as discharge of the surety.
16. The creditor's right to proceed against the surety is not accessory to the right to proceed against the principal debtor personally. A surety in the absence of a contract to the contrary cannot compel the creditor to firs C exhaust his remedy against the principal debtor.. In view of the above discussion as in the present case liability of the surety is based on a letter of guarantee, which is distinct from the liability of the principal debtor, the suit is maintainable.
17. Issue No. 2.-The suit is based on the letter of guarantee dated 20th April, 1973 and was filed on 8-3- 1976. A suit against surety based on the letter of guaratee may be filed within 3 years from the date of the letter of guarantee. Reference is made to PLD 1975 Kar. 671. The suit is within time.
18. Issue No. 3.-In view of the above discussion the plaintiff has a cause of action against the defendants.
19. Issue No. 4.-The plaintiff has produced a statement of accounts duly certified by the Manager as provided by the Bankers Books Evidence Act. According to this statement the sum of Rs. 1,50,502.08 was due and payable by the borrower. The account starts from 5th October, 1964, when loan of Its.
20. 75,000 was granted. Thereafter most of the entries relate to interest accrued from time to time.
21. From the statement of accounts and the documents the plaintiff has proved that the principal debtor was liable to pay Rs. 1,50,502.08. I, therefore, decree, the suit against the defendants in the sum of Rs. 1,50,502.08. In the promissory note, dated 20th April, 1973, the defendants had undertaken to pay interest at "4 % above Bank rate minimum 10 % per annum with quarterly rest".
22. There is no evidence of the Bank rate and, there--fore, I will award interest at 10 % per annum from the date of suit till reco--very, with costs.