1. SAEEDUZZAMAN SIDD)QUI, J: =-The above appeal with the leave of this Court is directed against the order of High Court of Sindh, dated 13-11-1989, whereby H.CA. No.208 of 1989 filed by the appellant to challenge the order of a learned Single Judge of that Court directing the appellant to join respondent No. 2, as a defendant in pending Suit No.642 of 1986 instituted by appellant only against respondent No.1, was dismissed in limine.
2. The appellant filed Civil Suit No. 642 of 1968, before the High Court of Sindh, for recovery of a sum of Rs. 31,318,443.00 against respondent No.1 on the basis of two Bank .Guarantees executed in his favour. During the pendency of the suit, respondent No.2 applied to be joined as defendant in the suit on the ground that the amount of Bank Guarantees claimed in the suit is not correct. The appellant resisted the application of respondent No.2 but the learned Judge in Chambers allowed the application of respondent No.2 and directed the appellant to implead respondent No.2 as defendant in the suit observing as follows:--- "In the present case the facts that have been brought on record are that the plaintiffs have made a declaration in respect of the amount due from the intervener under the bank guarantees which is less than the amount claimed in suit and further that the guarantee itself provides for progressive reduction. These two facts coupled together bring this case within the exception enumerated in the afore stated judgments: In my view the presence of intervener in the suit will be necessary for adjudicating the dispute between the parties. I, therefore, grant the application with this restriction that the intervener will not be allowed to take any defence except the plea that the amount due under the guarantee claimed by the plaintiff is not correct."
3. The High Court Appeal filed by the appellant against the order of learned Judge in chambers ordering joinder of respondent No.2 as defendant in the suit, failed whereupon leave was obtained from this Court against the A judgment of High Court of Sindh for consideration of the point, whether in the circumstances of the case respondent No.2 was rightly joined as party in the suit.
4. The learned counsel for the appellant contended before us that the suit instituted by the appellant against respondent No.1 was for enforcement of obligations arising under the Bank Guarantees executed by respondent No.1 in favour of appellant, which provided for unconditional payment of the amounts mentioned in the Bank Guarantees on demand by the appellant without reference to respondent No.2, and as such respondent No.2 was neither a necessary nor proper party to the suit.
5. The learned counsel further contended that mere existence of a commercial interest of respondent No.2 in respect of the subject-matter of the suit was not sufficient ground to add him as a defendant in the suit. It is lastly, contended by the learned counsel for the appellant that by adding respondent No.2 as defendant in the suit, the Court has enlarged the controversy outside the scope of the suit as respondent No.2 is now entitled to raise all possible defences to defeat the claim of appellant in the suit and thus protract the proceedings.
6. The learned counsel for respondent No.2 on the other hand supported the order of the High Court and contended that respondent No.2 was very much shown as a party in the Bank Guarantees executed by respondent No.1 in favour of appellant and as such the presence of respondent No.2 before the Court in the suit instituted by appellant to enforce the obligations arising under the Bank Guarantees was essential for a proper and effectual determination of the controversy in suit. It is also contended by the learned counsel for respondent No.2 that the Bank Guarantees relied by the appellant in the suit provided a progressive reduction of the amount of Bank Guarantees which could not be determined effectually and finally in the suit in the absence of respondent No.2. The learned counsel for respondent No.1 supported the contention of respondent No.2. We have heard the learned counsel for the parties and are of the view that no case for interference with the orders of High Court is made out.
7. Sub-rule (2) of Rule 10, C.P.C. Which is relevant in the present case deals with .The powers of the Court to strike off the names of the parties improperly joined in the suit either as defendant or plaintiff. This rule also authorises the Court to order for adding the name of any other party either as plaintiff or defendant in the suit who ought to have been joined in the proceeding or whose presence is felt by the Court as necessary to settle and adjudicate all questions involved in the suit, completely and effectually. This power can be exercised by the Court either on its own motion or on the application of either party to the proceedings. A careful reading of sub-rule (2) ibid, will show that power to add parties to the suit can be exercised by the Court in two' cases: Firstly, the Court may order joinder of a party in a suit either as a defendant or plaintiff, if it reaches the conclusion that a party who ought to have been joined as a party in the proceedings is not before it.-The other case in which the Court may direct joinder of a party in the suit as plaintiff or defendant is, where the B Court finds that the presence of that party will facilitate the Court to decide effectually. And finally all questions arising in the suit. In the first case, the joinder is of a necessary party to the suit while in the latter case the party added to the proceedings is only a proper party. Failure to implead a necessary party is always fatal to the proceedings while it ,may not be so in the other case and the Court may proceed. To determine the matter in controversy between the parties before it. It is, therefore, not at all necessary that some relief must have been claimed in the suit against the party which is. Joined in the proceedings as a proper party. The primary object of impleading a proper party in the suit is to avoid multiplicity of legal proceedings and to determine effectually and finally all questions arising in the proceedings. This Court in the case, of Islamic Republic of Pakistan V. Abdul Wali Khan PLD 1975 SC 463 observed as follows on the scope of joinder of a. Proper party to the proceedings:--- "Now a proper party is a party whose presence before the Court 1S' necessary to enable the Court to effectually and completely adjudicate upon and settle all questions involved in the proceedings.
8. The term `questions involved' includes all matters, material to a proper decision of the case but, the object of making such persons parties is to prevent multiplicity of proceedings.. The person must, therefore, be a person whose interest is likely to be affected even though no relief is claimed against him. This does not, therefore, extend to persons who have no interest which is likely to be affected by the proceedings nor does it embrace persons only generally interested in common with others nor can persons be added as parties so as to set up a new cause of action which does not concern the original parties.
9. In the case of Pakistan Banking Council and another v. Ali Mohtararn Naqvi and others 1985 SCM R 714 the provisions of 0.1, R.10(2), C.P.C. Were interpreted by this Court, as follows:--- It is needless to reiterate the true scope of powers vested in the Court for adding parties to a pending suit under Order 1, rule 10(2) of the Code of Civil Procedure. It is now well-settled that under this provision two classes of persons, namely, necessary parties and proper parties can .Be joined.
10. The former, consists of persons who ought to have been joined as parties and the latter of persons without whose! Presence the questions in the suit cannot be completely and effectually adjudicated upon. If a person does not fall in. Either of these two classes, that is to say, he is neither a necessary nor a proper party, then the Court has no jurisdiction to add him as a party under this sub-rule. This is why the Court is called upon not to drag any parties in the array of the suit to suffer the rigours of a trial unnecessarily. It must be further pointed out that the question of addition of parties under this rule is generally not one of initial jurisdiction of the Court, but of judicial discretion which has to be exercised in view of the facts and circumstances of a particular case. No party can be allowed to argue that as the Court has a wide discretion in the matter of the joinder o parties, any person who is neither a necessary nor a proper party may be joined at the convenience of the.
11. Applicant. It is in this context that the Courts have held that in exercising their power under this rule, Courts ought to see that they do not load the record with the parties wholly shown to have no interest in the suit and that the trial of the --suit is not embarrassed by the simultaneous investigation of totally l unconnected controversies."
12. In the light of above discussed legal position, we are of the view that) although the Bank Guarantees were executed by respondent No.1 alone in favour of appellant but both the respondents, 1 and 2, were jointly made responsible for payment of the amount of Bank Guarantee to appellant under the terms of guarantee which provided as under:--_ "Between M. Iftikhar & Company Limited with its Head Office at Iqbal Building, Ravi Road, Lahore and Regional Office at 95, Jmnah Cooperative Housing Society, Tipu Sultan Road, Karachi (to which all correspondence be addressed) and Uzinexport-Import, through Trade Commissioner of Romania in Pakistan, Karachi, a company with its Head Office in Bucharest, Romania hereinafter called "Contractor", a contract has been concluded for the carrying out of construction erection works for Attock Cement Project. In compliance with the provisions under the aforementioned Contract Uzinexport-Import. Contractor undertakes to pay to the Sub-Contractor M. Iftikhar & Company Limited an advance payment amount to Rs.21,500,000 ---(Rupees twenty-one million five hundred thousand only) representing 10% (ten per cent.) of the said Contract value against a Letter of Bank Guarantee of equal value.
13. Further as aforesaid we, the Union Bank of the Middle East Limited, LI. Chundrigar Road, Karachi, undertake jointly and irrevocably together with M. Iftikhar & Company Limited Company Sub-- contractor to pay back either wholly or part thereof the amount of Rs.21,500,000 (Rupees twenty- one million five hundred thousand only) on the simple declaration of Uzinexport -Import that. The Sub--contractor M. Iftikhar & Company Limited has failed to fulfil its contract obligations without it being necessary for Uzinexport-Import Contractor to have recourse against the Sub-Contractor M.
14. Iftikhar & Company Limited or to refer to any arbitration or to any Court of Law and without the right either on our behalf or on behalf of the Sub--contractor M. Iftikhar & Company Limited, to raise any objection, opposition or claim any division or any currency restriction.".
15. The Bank Guarantees further provided for a progressive reduction in the amount of Bank Guarantees, as follows:--- "The value of this Letter of Bank Guarantee shall be progressively reduced by the amount corresponding to the percentage of 10% applied to the amount of each payment certificate honoured' by Uzinexport-Import, Contractor. Our liability under this Letter starts from date of its issue i.e. 14-7-1981 until 30-4-1984 respectively, 30 (thirty) days after the completing of the works."
16. The above provisions in the Bank Guarantees, which are the basis of the suit instituted by the appellant, fully justified the joinder of respondent No.2 as defendant in the suit as not only the correctness of the amount claimed under the Bank Guarantees was disputed but it was also an admitted position that the amount claimed in the suit by the appellant .Was less than the amount' mentioned .In the Bank Guarantees. The learned counsel for the appellant also I contended that by adding respondent No.2 as defendant in the suit, the Court ' has enlarged the controversy beyond the scope of the suit as respondent No.2 is now free to raise any defence in the suit to protract the proceedings. The apprehension of appellant is totally unfounded. The learned Judge in chambers, while allowing the application of respondent No.2 for being made a defendant in the suit, also specified the defences which could be raised by him in suit, which is evident from the observation reproduced by us earlier in this, judgment. Apart from. It, any attempt by respondent No.2 to enlarge the[ controversy beyond the scope of suit can be successfully countered by the appellant by pressing into service the provisions contained in the contract of F the Bank Guarantees. We, therefore, find no merit in the above contentions of appellant.
17. The learned' counsel for the appellant relied on a reported decision of Indian Supreme Court (Razia Begum v. Anwar Begum, AIR 1958 SC 886) in support of his contention that where a party has only a commercial interest in the subject-matter of the suit, he cannot be impleaded as a party in the suit, under Order I, Rule 10, C.P.C. Firstly, in the circumstances of the present case it cannot he argued that respondent No.2 has only a commercial interest in the subject-matter of the suit.
18. Respondent No.2 is jointly responsible along with respondent No.1 under the terms of Bank Guarantees for the amount of Bankl Guarantees. The Bank Guarantees also provide for a progressive reduction of the amount of Bank Guarantees, in the manner provided in the clause reproduced earlier in the judgment. In these circumstances, the Court is required to determine the amount payable to appellant under the Bank Guarantees before the claim in the suit is decreed.
19. The determination of the amount payable under the Bank Guarantees by the Court, in the suit, is likely to affect the interest and obligations of respondent No.2 under the Bank Guarantees. The learned Judge in Chambers was, therefore, right in adding respondent No.2 as a proper party to the suit as his presence in the suit will facilitate the Court to determine effectually and finally the controversy in the suit.
20. No case for interference is made out. The appeal is dismissed. We will, however, make no order as to costs in the circumstances of the case.