1. ' 1 and 2. Defendants Nos.], 2, 3 and 4 called absent. Mr. A.R. Siddiqui has not opposed the confirmation of ad interim orders dated 17-1-1985 and 28-5-1985. All other defendants are absent.
2. These orders are confirmed.
3. The plaintiff has filed a suit for recovery of Rs,46,41,968.65 against the defendants. The defendant No,5 has filed Miscellaneous Application No,3933 of 1985 for leave to appear and defend the suit.
3. The main allegation in the plaint is that the defendant No,1 applied to the plaintiff for a working capital loan in the sum of Rs,4 million. The defendant No,1 had represented that it had secured a firm order for the export of agricultural machinery and a confirmed irrevocable letter of credit in the sum of L 2,50,000 had been received by it from the U.B.L. The plaintiff agreed to advance loan and the defendant No,1 pledged raw material and finished goods, executed letter of authority to collect proceeds of letter of credit from United Bank Limited. An export finance guarantee was furnished by the defendant No,5. Performance Bond was issued by the defendant No,6 and a promissory note was executed by the defendant No,1 who failed to pay the said loan. As the defendant No,5 had furnished its Export Finance Guarantee the plaintiff called upon it to pay the amount due from the defendant No,1. No payment was made by the defendants, therefore, this suit was filed under the Banking Companies (Recovery of Loans) Ordinance, 1979.
4. ' The defendant No,5 in his application while repudiating the claim of the plaintiff averred that the guarantee in the nature of Insurance Policy was issued at the request of the plaintiff. The defendant No, 5 had guaranteed payment of 66-2/3% of the amount of any loss that the plaintiff might sustain in respect of the loan of Rs,4 million granted by it to the defendant No,1. In this regard the defendant No,5 has filed the following documents:--
(1) Photo copy of the proposal for an Export Finance Guarantee.
(2) Credit Limit Application, and
(3) Export Finance Guarantee (Pre-shipment).
5. ' Mr. A.R. Siddiqui the learned counsel for the defendant No,5 has contended that defendant No,5 has never stood as a surety. According to the learned counsel there was an independent agreement between the plaintiff and defendant No,5 to guarantee the loss suffered by it in the transaction between the plaintiff and defendant No,1. By looking to the documents filed by the defendant No,5 which have not been denied by the plaintiff it is clear that the guarantee was issued by the defendant No,5 at the request of the plaintiff and the defendant No,5 had agreed to indemnify the loss to the extent of 66-2/3% of the loan advanced to the defendant No,1. These two transactions seem to be inter-related but are independent to each other. The question, therefore, is whether on such transactions and documents a suit under the Banking Companies (Recovery of Loans) Ordinance, 1979 will be maintainable against the defendant No,5.
6. Mr. Khalid Anwar has referred to the term 'borrower' under section 2 subsection (b) of the Banking Companies (Recovery of Loans) Ordinance 1979 where it has been defined as a person who has obtained a loan from a Banking Company and includes surety or an indemnifier. The learned counsel has contended that the indemnifier is a borrower, therefore, suit can be filed under the Ordinance. The loan has been defined by section 2, subsection (d). Therefore, in a transaction where loan is advanced there should be an allegation of credit and advance of loan from one party to another. In the present case prima facie I feel that there is absence of such relationship and as at the moment I will refrain from giving a final finding on this point. In my view the defendant No,5 has made out a strong and arguable case for the purpose of grant of leave.
7. I will, therefore, grant the defendant No,5 unconditional leave to appear and defend the suit. The written statement should be filed within a period of three weeks.
4. The Advocate of the defendant No,6 is absent. Civil Miscellaneous Application No,3934 of 1985 is dismissed for non-prosecution.
8. Unconditional .