1. This application for leave to appear and defend the suit under Order 37, Rule 2(2), C.P.C. Has been filed on behalf of defendant No.2.
2. Mr. Essani, learned counsel for the defendant No.2, has contended (i) that the plaintiff directly extended loans to sugarcane growers in defendant No.2's Thatta Sugar Mill's area under loan agreements between the plaintiff and sugarcane growers against guarantees issued by defendant No.2; (ii) that neither the agreements executed between the plaintiff and the growers nor the names of the defaulting growers have been produced with the plaint nor does the defendant No.2 have copies of these agreements or the names of the defaulting growers; (iii) that defendant No.2's liability is denied under the alleged/purported accounts unilaterally maintained by the plaintiff; (iv) that defendant No. l is not a legal entity to seek agricultural production finance nor is it legally possible for defendant No.2 to extend guarantees on behalf of a legally non-existent person; (v) that it is not legally conceivable for defendant No.2 to stand guarantee for a person who does not exist in law. The six guarantees referred to in paragraph 6 were executed in context to the agricultural loans extended by the plaintiff directly to the sugarcane growers; (vi) that it has been specifically denied that defendant No.2 at any time admitted any liability, inter alia, (a) sought the details of the growers in respect of which there were outstanding amounts, (b) demand of the plaintiff to discharge its legal obligations as creditor by effectively resuming pursuit of the growers without any further forbearance to the detriment of the defendant No.2; (vii) that the payment of the loans made by the defendant No.2 to the plaintiff before or after the repayment deadline date
(1) were made on behalf of the loanees, and (2) were made in the capacity of the plaintiff's recovery/collection agent without consideration and not as guarantor; (viii) that the payments by the defaulting loanees, if any, of the principal/interest after the repayment deadline date by or on behalf of the growers does not extend the limitation against defendant No.2 as guarantor even if the said payments were made with the consent of defendant No.2; and (ix) that the suit is barred by law and limitation.
3. Mr. Ismail Merchant, learned counsel for plaintiff, has contended (i) that defendant No. l is a project of Sindh Sugar Corporation Limited and carrying on the business of sugar industry and has its factory situated at Deh Bijora, Thatta-Sujawal Road, District Thatta; (ii) that defendant No.1 is the project of defendant No.2. Defendant No.2 has been sued in its capacity as guarantor for all the outstandings of defendant No.1; (iii) defendant No.1 requested the plaintiff for agricultural production finance to be allowed to growers against the guarantee of defendant No.2 on the terms and conditions mentioned in the plaint; (iv) that in consideration of the grant of financial facilities as aforesaid to the defendant No.1 and as an acknowledgement of liability and security for repayment the defendant No.2 executed and delivered to the plaintiff their continuing guarantees, which are annexed with the plaint as Annexures B-1, B-2, B-3, B-4, B-5 and B-6.
4. For the sake of convenience, relevant paragraphs of the continuing guarantee, Annexure B-1, are reproduced as under:--- "(e) That in the event of any default committed by all or any of the borrowers, you can debit the A/C of Thatta Sugar Mills or the A/C of the Corporation for repayment/liquidation of all such advances, without any further notice of reference to any of A/C holders, the Thatta Sugar Mills the Sindh Sugar Corporation.
(f) That you may, without reference to the Corporation grant the borrowers time or other indulgence. The liability under the guarantee shall not be discharged by any such act or by efflux of time.
(g) That you may take any action for recovery of the amount due and payable by the borrowers against the corporation without impleading the borrowers as defendant, as if the corporation was a principal debtor.
(h) That any certificate issued by your branch regarding the liability of any borrower shall be accepted as conclusive proof of the liability and shall not be disputed by the corporation or any one claiming through it."
5. Annexure E-2 is a registered letter, dated 20-10-1992 sent by Mr. Liaquat Merchant, Advocate for the plaintiff to Sindh Sugar Corporation Ltd. The defendant No.2, relevant portions of which are reproduced as under:--- "Our clients further state that as on October, 1992, a sum of Rs.10,004,831.56 was outstanding due and payable by you to Muslim Commercial Bank Ltd., Thatta Branch in the aforesaid accounts which you have neglected and failed to repay/clear in spite of repeated requests and your promises and assurances in this behalf.
6. In reply to the above letter legant consultants of defendant No.2, M/s. Essani Associates replied by their letter dated 27-10-1992 which is Annexure E-3, relevant portions of which are reproduced as under:--- "At the outset, our client wishes to reassure Muslim Commercial Bank of its commitment to honour the valid binding agreements between them.
Your client had been requested by our client to furnish the details of the outstanding amounts against respective growers of Dadu & Thatta Sugar Mills for necessary reconciliation. This exercise is being jointly performed.
Muslim Commercial Bank vide its Area Executive Office Karachi ' C', Hyderabad/Sukkur Letter No.AEO/C/HS/Misc/71 dated 23-8-1992 indicated the settlement of its dues, if any, after the sale of our client's Thatta & Dadu Sugar Mills which is in process."
7. Mr. Ismail Merchant has drawn my attention to the letters, Annexures D-3, D-12, D-13, D-16 and D- 23, issued by the defendant No.1 to the plaintiff's Branch at Thatta. Perusal of these letters clearly shows that the parties were negotiating for settlement of the accounts or for the waive off the interest portion of the loan.
8. Mr. Ismail Merchant, learned counsel for the plaintiff, has cited following case-law:
(1) AIR 1939 Mad. 300 Case of V. Subbaramayya v. Yerri Iragam Reddi and another: The-rule laid down in this authority is as under:--- "Admission of existence of open account and expression of willingness to have it settled implies admission of liability for amount which may be found due on settlement."
(2) AIR 1960 SC 953 Case of Sahibzada Muhammad Kamgarh Shah v. Jagdish Chandra Deo and others: "A letter sent by the defendant to the plaintiff stated that a sum as shown in the enclosure to the document was according to the defendant due to the plaintiff for 1930 on account of royalty. This was followed by a sentence that as soon as the statement of dues was accepted as correct a cheque in payment thereof would be sent."
(3) PLD 1971 SC 784 Case of M/s. Jamal Jute Baling & Co. v. M/s. M. Sarkies & Sons: "A legal person is entitled to carry on business in different assumed names and styles. A parent company carrying on business under name of Messrs F & Co. Having a department set apart for dealing in business of jute and this department run under name and style of Messrs S & Sons.
Contract signed on behalf of S & Sons valid."
(4) PLD 1974 SC 174 Case of M/s. M.G. Kadir & Co. v. Abdul Latif: "Acknowledgement of liability---In reply, to letter of demand by creditor, debtor writing "you are no doubt correct in stating that there is a credit balance of Rs.20,500 in your personal account in my books" but at the same time debtor claiming a set-off---Writing by debtor, held, amounted to unequivocal admission of existing liability---Limitation for recovery consequently extended under section 19 for three years from the date on which letter was written."
(5) PLD 1986 Karachi 464 Case of Messrs United Bank Ltd. v. President, Bazm-e-Salat and another: "The guarantee being always by the third person and not by borrower himself. In these circumstances the cutting of the rubber stamps represented the correct and true intention of the parties and did not invalidate the letter of guarantee.
From the contents of the letter of guarantee it seems that the defendant No.2 had undertaken to guarantee the repayment of the loan advanced to the defendant No.1. Therefore, filling in the blank in the letter of guarantee so far the amount of loan is concerned, cannot be challenged. Although the amount was written in the letter of guarantee afterwards, from its contents the intention of the parties can be ascertained, as it refers to payment of all money which shall at any time be due from the defendant No. 1.
(6)1992 CLC 1108 Karachi Case of Grindlays Bank Ltd. v. Messrs Cheap John: The learned Judge was pleased to observe as under:--- "The liability was acknowledged in writing by defendants from time to time in their various letters, first of which was dated 23-10-1968 and the last is dated 22-4-1975. In these letters the defendants had acknowledged the debt and in the last letter requested for three months' time. The suit is therefore, within time. "
9. From the perusal of the letters herein referred to above and the contents of the continuing guarantee, specially paragraphs (e), (f), (g) and (h) and the contents of the letter of the legal consultant of the defendant to the plaintiff, which has been referred in the earlier part of this order, prima facie, it is clear that the suit is not barred by the provisions of Limitation Act. The defendants on their own had furnished the guarantee with the plaintiff and are bound for repayment of the loan alongwith mark-up. There is applicability in the case-law cited by Mr. Ismail Merchant so far the facts and circumstances of this case are concerned.
10. At the time of arguments, Mr. Ismail Merchant, had stated at the Bar that leave may be granted to the defendants to appear and defend, the suit on furnishing security. However, in view of the facts of the case I grant leave to defendant No-2 to appear and defend the suit on furnishing bank guarantee in favour of the plaintiff before the Nazir of this Court to, the satisfaction of the decree with a period of 60 days.