1. ' Placed at Serial No,2 is the application preferred on behalf of defendants Nos. 1, 2 and 4 to 10 seeking unconditional leave to defend the proceedings under section 7(2) of the Banking Companies (Recovery of Loans) Ordinance, 1979. The application is opposed by the plaintiff who has filed counter-affidavit in reply thereto.
2. ' The suit is filed for recovery of Rs,25,60,09,486.14 with interest thereon and for mortgage decree for sale of property mentioned in the mortgage deeds. The defendant No,1 is sued as the borrower whereas the defendants Nos.2 to 10 are sued as guarantors. The defendant No,11 has been joined only because it has charge over the mortgaged property and was granted leave to appear and defend the suit through order, dated 20-12-1994. The plaintiff's claim according to the averments in the plaint is based on four accounts stated in paragraph 27 thereof and is as follows {{TABLE}} Overdraft A/C No,2-24958-32 Rs,5,24,95,479.27 Cash Credit A/C No,3-35815-79 Rs,8,95,40,240.29 Loan A/C No,192215-45 Rs,9,92,21,569.23 Loan A/C No,192355-86 Rs,1,47,52,197.35 Rs,25,60,09,486.14. {{TABLE}} ' Mr. Shahanshah Hussain, appearing for the defendants, has urged as follows:
(i) The plaintiff's claim is barred by limitation and the plaint, therefore, is liable to be rejected.
(ii) After grant of facilities to the defendant No,1, the terms of the facilities have substantially been varied with the result that the defendants Nos.2 to 10, with exception of defendant No,3 who have been sued as guarantor stand absolved from liability under the guarantees.
(iii) The guarantors cannot be held liable for claim beyond the amount for which guarantee was given.
(iv) The defendant No,3 having died before the institution of suit, the proceedings was not competently filed.
(v) Levy of interest and its claim being opposed to Injunctions of Islam is not permissible.
3. ' Elaborating his first submission, the learned counsel for the defendants has urged that by virtue of Article 132 of the Limitation Act, mortgage suit can be filed within 12 years from the date of money becoming due. According to the learned course, three mortgage deeds were executed by the defendant No,l. The first was executed on 19-5-1976 as security for repayment of a sum of Rs,6 million with interest at the rate of 13% with monthly rests. The second deed was executed on 15-7- 1980 for repayment of Rs,7.5 million with 14% interest per annum calculated with monthly rests. The third mortgage deed, dated 31-8-1982 is for a sum of Rs,10 million carrying interest at the rate of 14% with quarterly rests. It is significant to note that in the second mortgage deed, dated 15-7-1980 and the third mortgage deed, dated 3-8-1982, reference was specifically made to the earlier mortgages acknowledging liability for payment of money secured by the earlier deeds of mortgage and the total amount of liability was also mentioned. According to the learned counsel for the defendants, the payment of money secured by the first mortgage deed became due on the execution of second mortgage deed, dated 15-7-1980. Likewise, the amount covered by the second mortgage deed, dated 15-7-1980 became due for payment upon execution of the third deed, dated 3-8-1982. On the basis of such submission, it is urged that the suit based on the first mortgage deed, dated 19-5-1976 became barred upon expiry of 12 years from 15-7-1980 and the present suit, filed on 31-5-1993, was evidently barred by limitation prescribed under Article 132 of the Limitation Act.
4. I have perused the terms of mortgage deeds which contain provisions to the effect that all sums due from the mortgagor at any time would always be payable on demand notwithstanding any instalment or other arrangement which might have been agreed upon by the plaintiff-bank. The money payable under the mortgage deed became due on demand and cannot be said to have fallen due at any earlier point of time. The contention of the learned counsel for the defendants to the effect that the execution of subsequent mortgage deeds amounts to demand is untenable since such intention cannot be gathered from the terms of any mortgage deed. Indeed, the second and third mortgage deeds, dated 15-7-1980 and 3-8-1982 contain specific provision acknowledging the earlier liability and do contain the cumulative figure of outstanding liability under the earlier deeds of mortgage. The acknowledgment of earlier liability, as above, negates the contention that demand for its re-payment was made. The mortgage suit, in the circumstances, cannot be held as barred by limitation. It is pertinent to point out that on behalf of the plaintiff; legal notice was caused to be issued to the defendant No,1 demanding liquidation of the outstanding liability first on 29-1-1992. The learned counsel for the plaintiff submits that the repayment of outstanding liabilities was demanded for the first time through the legal notice, dated 29-1-1992.
5. Despite reference to the repeated demands allegedly made from time to time in para. 6 of such notice, no material has been placed on record showing any demand having actually been made prior to the said notice. Consequently, even if the matter has to be taken on the basis of contents of the legal notice, limitation cannot be pressed in service to deny relief to the plaintiff in the absence of any material establishing assertion of earlier demands. Evidently, such material ought to have been put-forward by the defendants.
6. ' It is next contended by Mr. Shahanshah Hussain that the three mortgage deeds were executed as security for repayment of the liability covered by overdraft Account No,2-24958-32 and the plaintiffs claim under such account is for a sum of Rs,52,495,479.27. It is urged by the learned counsel that the other three accounts were secured by way of Promissory Notes, Deed of Hypothecation, Letters of Facility and Letters of Guarantee etc. On the basis of such contention, it is urged that the said charge documents having been executed on 21-9-1988 or prior thereto the suit filed on 31-5-1993 is liable to be dismissed or having been instituted beyond the period of three years calculated from the date. Of advancement of loans/facilities by virtue of Article 57 of the Limitation Act. In reply, the learned counsel for the plaintiff submits that the liability due to the plaintiff was acknowledged by the defendant No,1 in the balance-sheet for the year ending 30th September, 1990 which were approved in the Annual General Meeting of Shareholders of defendant No,1 held on 15-8-1991. The learned counsel in order to substantiate his contention to the effect that the acknowledgment of liability in the balance-sheet and/or annual reports is a valid acknowledgment in terms of section 19 of the Limitation Act, has referred to judgment in the case of Deputy Custodian of Enemy Property v. Karachi Electric Supply Corporation Ltd. (1986 CLC 2808) wherein learned Single Judge of this Court, Mr. Justice Saleem Akhtar (as his Lordship then was), after consideration of the case-law cited before him, came to the conclusion that the entries in the balance-sheet amount to acknowledgment of liability. It is further urged by the learned counsel for the plaintiff that the suit based on the Promissory Notes and other charge documents including the Letters of Guarantee would fall under Article 120 of the Limitation Act and for computation of the period prescribed thereunder, the right to sue would accrue upon failure by the defendants to make repayment. According to the learned counsel, in any event, regarding guarantors the limitation would be governed by Article 65 of the Limitation Act which prescribes period of three years for institution of proceedings with effect from the time specified for fulfilment of promise. It is contended by Mr. Salman Hamid that under the Letters of Continuing Guarantee, the defendants Nos.2 to 10 had undertaken liability to make payment within two days after demand. Copies of six letters of guarantee have been placed on record which is executed by different defendants apart from one Haji Ibrahim A. Karim who has not been joined in the proceedings. The first guarantee is, dated 26-12-1981 and is for a sum of Rs,40 million. It is executed by the defendants Nos.2 to 5. The second guarantee is also, dated 26-12-1981 and is for a sum of Rs,28.5 million executed by defendants Nos.2, 4 and the above named Haji Ibrahim H. Karim. The third guarantee for a sum of Rs,23.5 million is, dated 1-9-1982 and is executed by defendants Nos. 2, 3, 5 and the abovenamed Haji Ibrahim H. Karim. The fourth guarantee executed on 9-1-1983 is for Rs,28.5 million and is executed by defendants Nos.2, 3, 4, 6 and the abovenamed Haji Ibrahim H. Karim. The next guarantee is, dated 8-5-1984 for a sum of Rs,14 million and is executed by defendants Nos.3, 4 and 6 to 10. The last guarantee is, dated 26-12-1984 executed by defendants Nos.4, 6 and 7 for a sum of Rs,4.5 million. Although the learned counsel for he defendants has urged that different guarantees were executed for various ccounts, the contents of the Letters of Guarantee do not indicate any such bifurcation or any term to identify if a particular guarantee was given as security or repayment of outstanding liability pertaining to a particular account. All the uarantees are personal guarantees given in consideration of accommodation ranted to the defendant No,1.
7. Except for endorsement of copy of legal notice, dated 29-1-1992 to the defendants Nos.2, 3, 4, 9 and 10, nothing has been shown if the plaintiff had preferred demand for repayment by the guarantors.
8. In much event the filing of the present proceedings has to be treated as demand for payment by the guarantors. The contention of Mr. Shahanshah Hussain about pplicability of Article 57 of the Limitation Act is also untenable since the same s not attracted to a case covered by the Promissory Note or Letters of Guarantee.
9. As to the contention that by virtue of Article 133 of the Contract Act the defendants Nos.2 to 10 stand absolved from the guarantees executed by them, the learned counsel for the defendant was not able to point out any variation in the terms of loan granted to the defendant No,1 so as to claim discharge under section 133 of the Contract Act. No arguments were advanced in relation to the last contention that the grant of interest would be violative of the Injunctions of Islam. As regards defendant No,3, Mr. Salman Hamid states that he is not in a position to controvert the statement made by the other defendants, and therefore, does not press for any relief against such defendant.
10. Rather Mr. Salman Hamid, in the circumstances, seeks deletion of defendant No,3 from the array of the defendants on account of his death before the institution of the proceedings. Such request of Mr. Salman Hamid is granted and the name of defendant No,3 is deleted from the proceedings.
11. ' No other argument having been urged in support of the application, it is dismissed.
12. As a result of dismissal of application seeking leave to defend the proceedings, the contents of the plaint are to be deemed to have been admitted and the plaintiff is entitled to decree in terms of the prayer contained therein. The claim amount is supported by the statement of account filed alongwith the plaint. The statement is duly certified and the benefit under the Bankers' Book of Evidence Act is to be extended thereto. The plaintiff's suit, resultantly, is decreed jointly as well as severally against defendants Nos.1 to 10 (except defendant No,3) in the sum of Rs,25,60,09,486.14 with simple interest at the rate of 18% per annum from the institution of the suit till payment. In view of provisions contained in section 14 of Act XV of 1997 instead of preliminary decree, final mortgage decree under Order XXXIV, Rule 5, C.P.C. For sale of property detailed in the mortgage deed is also passed. The plaintiff shall also be entitled to proportionate costs.