1. This suit has been instituted by National Bank of Pakistan against M/s. Faqir Spinning Mills Ltd., and four others for recovery of Rs.4,45,459.64. It has been alleged in the plaint that at the request of the defendant No.1, to be granted on 4-3-1964 a cash credit limited to the extent of Rs.10,00,000, to the defendant No.1, which was utilised by it in full on 9-3-1964, from its accounts maintained with the plaintiff at Nicol Road Branch, Karachi. As security for the repayment of the plaintiffs dues which may at any time be found due and payable by the defendants to the plaintiff the defendant No.1 by way of second simple collateral mortgage deed dated 4-3-1964 mortagaged all its assets including the land, building, plant and machinery installed at its Mills situated at Gambit in favour of the plaintiff. The mortgage decd was duly registered with the district Registar, Karachi at 15 pages 4 to 19 in Volume No.18 of Book No.1 (ADDL) (DR). The said property is equitably mortgaged by way of first simple mortgage in favour of the defendant No.3. The cash credit limit of Rs.10,00,000 was subsequently enhanced to Rs.15,00,000. As a result of enhancement of this limit the defendant No.1, by way of collateral registered mortgage deed dated 29-3-1966 created a mortgage in favour of the plaintiff over all its immovable property of its Mills situated at Gambat including land, building, plant and machinery installed therein. The registered mortgage was executed by the defendant No.1, in favour of the plaintiff to cover and secure a sum of Rs.16,69,640 which was outstanding against it on 19-3-1966 as well as to secure Rs.35,00,000 which was agreed to be granted by the plaintiff to M/s. William Sons & Co. The mortgage deed was duly registered with the District Registrar, Karachi and at No.21 pages 47 to 48 in volume 24 of Book No (ADDL)(D R). The said property stands mortgaged by way of simple mortgage in favour of defendant No.5. As a further security the defendants 2 to 4 executed and delivered to the plaintiff two letters of guarantees dated 6-5-1957 and 23-1-1970 The defendant No.1 by its various writings dated 31-12-1964, 31-12- 1965, 31-12-1966, 31-12-1967, 21-3-1970 and 23-1-1970 acknowledged their liability and promised to pay the plaintiff---s dues. The plaintiff sent notice to the defendant. Thus, a sum of Rs,44,45,459.54 was due and payable to the defendants l to 3.
2. The defendants Nos.1, and 5 riled separate written statement. The defendant No.1 pleaded in its written statement that the suit as framed is not maintainable. The suit is barred by time. The suit is bad for non-joinder of the parties as well as misjoinder of cause of action. It has been alleged in the written statement that the plaintiff has not disclosed is the plaint, as to whether the bank has actually advanced sum of Rs.35,00,000 which was agreed to be granted by the plaintiff to M/s. William Sons & Co., Ltd., and so when the amount was granted to M/s. William Sons & Co. Ltd. The plaintiffs have not joined M/s. William Sons & Co., Ltd and as such the suit is bad for misjoinder of the parties. The defendant No.1 denied the claim of the plaintiff.
3. On the pleadings of the parties the following issues were framed on 31-3--1979.
4. (1). Whether the suit is barred by time?
5. (2). What amount the plaintiff entitled to?
6. At the trial Mr. Abdullah Khan was examined as P.W. No.1,(Ext. 5) He was working with the plaintiff Nicol Road Branch, Karachi, in the year.1964 when the transaction took place. He proved the cash credit limit to the defendant No.1 and produced the promissory note dated 9-3-1966 as Ext. 5/1. He produced delivery letter as Ext. 5/2. He produced General Powers of attorney as Ext. 5/3. He produced mortgage deeds as Exts.5/4 and 5/5. He produced deed of guarantees executed by defendants 2,3 and 4 as Ext. 5/6. He also produced letters of guarantee dated 21-3-1970 as Ext. 5/7., He also produced confirmation slips duly executed by the defendants as Exts. 5/9 to 5/ 12. He also produced letters written by defendant No.1 as Exts. 5/12 to 5/22. He produced legal notice dated 13- 2-1976 as Ext. 5/32.
7. Mr. Abdul Razzak was examined as P.W. 2 (Ext. 6) who was working at Nicol Road Branch from 1969 to September, 1976.
8. The defendant No.1, pleaded in the written statement that the cash credit was granted on 4-3-1964.
9. The initial cash credit was enhanced to Rs.15,00,000 on 29-3-1966. The letters of guarnatees were executed on 6-5-1966 and 23-1-1970 (Exts. 6 and 7). The suit having been filed on 19-2-1976 i.e. Beyond three years of the granting of cash credit as well as the execution of letters of guarantees, was barred by time.
10. The learned counsel for the plaintiff urged before me that a clear restraint had been put on the plaintiff to file a suit and the right to sue had also been postponed in view of what is mentioned in letter of guarantee (Eats.6 & 7). The learned counsel for the plaintiff drew my attention to the relevant portion of letters of guarantee Ext.5/7 which is reproduced herein below:- "Which for the purpose of such guarantee shall be considered continuing notwithstanding it may in the meantime at any time or from time to time be brought to credit until notice in writing that the same is closed is given by the Bank to me/us on the understanding that the Bank shall be at liberty to take steps to enforce payment of the said Promissory Note at any time after notice in writing demanding payment thereof posted to me/us at my/our usual or last known address and default being made in payment for three days after the posting of such notice."
11. A perusal of the above portion shows that the plaintiff would not be able to file a suit unless it has posted a notice in writing and unless three days had expired thereafter. This in my opinion, is a clear restraint put upon the plaintiff bank on its right to sue. Its right to sue also stand postponed.
12. The learned counsel for the plaintiff has also placed before me a photostat copy of judgment dated 15-9-1964 in unreported Suit No.103 of 1960 National Bank of Pakistan v. Trust Industrial and Agencies Ltd., and others wherein a learned Single Judge of the erstwhile Court of West Pakistan, (Karachi Bench) while construing the letter of guarantee in that case after referring to the case of Bishumber Dey Poddar v. Hungeheshur Mukerjee 4 Calcutta Law Reports 34 and Braford Old Bank v.
13. Sutcliffe 1918 (2) K.B.833 held that in all these cases the view taken was that the guarantor would be liable only after a demand was made on him. The learned Judge also cited with approval the following passage from Rustomji Limitation (1958 Ed.) at 439.
14. "Each case turn on the construction of the particular document then before the Court and if in fact the parties intended that the demand should be a condition of the contract effect will be given to their contract (m). Where a pro-note was made payable `3 months after notice, "Held limitation did not begin to run until the expiration of 3 months after notice.(n)
15. 1981 CLC 89, hit. Tanzilur Rehman, J., while construing the letter of guarantee in that case after-- referring various decisions observed:- "...The letter of guarantee embodying the term of repayment as `within 2 days after demand' will be read, according to me, as a condition precedent for enforcing the right against the guarantor but not by itself enlarge the period limitation, at the will of parties and to leave it to the sole discretion of the creditor to sleep over his right, to let the debt become time-barred against the debtor and to catch hold of the guarantor at any time he likes, simply by not giving a notice of demand..'
16. "...In my view the giving of notice in writing to defendant No.2 was a condition precedent to giving a cause of action to the plaintiff. With the result the date of acrual of cause of action, in this case, will be two days after the notice dated 7-2-1974 laving been served by the plaintiff on the defendant:"
17. The suit against the defendant No.1, is based upon mortgage deeds dated 4-3-1964 and 19-3-1966 (Exts. 5/4 and 5/5). The suit was filed on 19-3-1976. The suit was filed within twelve years from the date of execution of mortgage deeds.
18. The suit shall be listed before the Additional Registrar (O.S.) for further hearing on 8-9-1988 M.Y. H/N-189/K