' Through this Constitutional petition seeks a direction to respondents Nos.2 and 3 to effect the recovery of loan amount of Rs,2,00,000 from respondent No,4 and also to declare the demand of respondents Nos.2 and 3 upon the petitioner for the re-payment of loan amount due from respondent No,4 as without lawful authority.
2. The brief facts of the case are that the petitioner is a Lecturer in the Government College, Lahore.
His real sister respondent No,4 and his real brother respondent No,5, both of them obtained a loan of Rs,4,00,000 from respondent No,2 to set up small business under the name and style of 'Nadeem Garments Factory'. The petitioner stood guarantor to respondent No,5 because he was his real brother whereas the guarantor for respondent No,4 was another person who subsequently died.
Respondents Nos.4 and 5 in collusion with respondent No,2 did not set up any business and swa llowed up the loan amount after payment of due percentage to respondent No,2. Respondent No,5 left for England without intimation to the petitioner. Respondent No,4 with whom he was residing did not inform about the programme of respondent No,5 to the petitioner.
' The petitioner suddenly received a notice from respondent No,2 and he was directed to pay the loan amount of respondents Nos.4 and 5 as he was the guarantor. The petitioner claims that he requested respondent No,2 that the recovery may be effected from respondents Nos.4 and 5 but he was in collusion with them and no coercive measures were taken against them and thereby time was given to them that they obtained a stay order from the Civil Court. On 19-5-2001 respondents Nos.2 and 3 came to the house of the petitioner and took him alongwith them to the office and petitioner was detained and was subsequently taken to Police Station Qilla Gujar Singh where he was lodged in the lock-up. The petitioner called his friends and they arranged Rs,2,00,000 and after the payment of the guarantee amount due to respondent No,5 he was allowed to go to his home. Respondents Nos.2 and 3 are now again forcing according to the petitioner, to make the payment of remaining amount of Rs,2,00,000 which is due from respondent No,4 which is illegal and unlawful.
3. Learned counsel for the petitioner contends that the petitioner stood guarantor for respondent No,5 who alongwith respondent No,4 jointly obtained a loan of Rs,4,00,000 and two separate guarantees were given by respondents Nos.4 and 5 hence the petitioner cannot be held liable for the payment of Rs,2,00,000 due from respondent No,4 only due to the reason that the guarantor of respondent No,4 has since been died. It 'is further contended that the petitioner has already paid the total amount of respondent No,5 and the payments were made as the coercive measures were adopted by respondents Nos.2 and 3 with mala fide intention and ulterior motive and the petitioner being a gentleman could not resist and had to make an arrangement for the payment of the said amount and only then he was set at liberty. He further contends that section 146 of the Contract Act, provides that 'where two or more persons are co-sureties for the same debt or duty, either jointly or severally and whether under the same or different contracts and whether with or without the knowledge of each other, the co-sureties, in the absence of any contract to the contrary, are liable, as between themselves, to pay each an equal share of the whole debt, or of that part of it which remains unpaid by the principal debtor'. Section 42 of the Contract Act makes it clear that 'when two or more persons have made a joint promise, then unless a contrary intention appears by the contract, all such persons during their joint lives, and after the death of any of them, his representative jointly with the survivor or survivors, and after the death of the last survivor, the representatives of all jointly, must fulfil the promise'. It is further contended that the demand of respondents Nos.2 and 3 is illegal. He contends that the coercive method cannot be adopted under the Land Revenue Act as the amount cannot be settled as undisputed and is not recoverable from the petitioner and firstly the respondents have to get determined whether the amount is payable or not and after that the amount can be got recovered. He relied upon Pehalwan v. Manager, A.D.B.P. And another PLD 1993 Lah. 525, in which it has been held 'that a Habeas Corpus Petition was accepted as no notices under sections 81 and 82 of the Land Revenue Act, 1967, were issued before the issuance of warrant of arrest'. He also relied upon Manzoor Ahmad v. Malik Yaqoob and another PLD 1988 Lah. 627, where the definition of 'defaulter' has been given. According to this case this Court has held that 'defaulter' means a person liable for arrears of land revenue includes a person who is responsible as surety for payment of the arrears. It has been mentioned therein that the issuance of notice is necessary before further proceedings of arrest etc. And without the show- cause notice under sections 80 and 81 the detention was declared illegal. He has also relied upon Mst. Aisan v. Manager, A.D.B.P. And 2 others 2001 CLC 57. In this case writ petition was dismissed.
However, the authority was directed to firstly get determined the matter of charging of interest which has been declared un-Islamic by the Supreme Court of Pakistan.
4. Learned counsel for the respondents has raised a preliminary objection that under section 7 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), except the Banking Court no other Court has the jurisdiction to determine the loan due hence the writ petition is not maintainable and is liable to be dismissed. He further contends that the petitioner was a guarantor and he was severally and jointly responsible for the payment of loan, hence the proceedings have been initiated against him with lawful authority and the provisions of sections 80 and 81 of the Land Revenue Act, 1967, fully attract in this case and the respondents cannot be restrained from demanding from the petitioner the payment of Rs,2,00,000 as he stood guarantor for the payment of the said amount. He relies upon Emirates Bank International Limited v. Messrs Fair Commission Agency (Pvt.) Limited and 7 others 1991 CLC 450, in which it was held that the rights and liabilities of parties had to be determined with reference to the terms and conditions of guarantee. He also relied upon Kohinoor Fibres Limited and 2 others v. First U.D.L. Modaraba and another 2001 CLC 87 in which it has been held that where a borrower had committed default in payment of loan to the bank the guarantors were liable jointly and severally for such loan under the provisions of sections 127 and 128 of Contract Act.
5. I have heard the learned counsel for the parties and perused the record carefully. As far as the maintainability of this petition is concerned the objection of the learned counsel for the respondents is uncalled for as the respondents have not obtained any decree by a Court of competent jurisdiction and cannot demand the amount as is being demanded by them from the petitioner. The proceedings initiated by respondents Nos.2 and 3 against the petitioner can be looked into in writ jurisdiction whether the demand is being made for an amount which is genuinely due from the petitioner or it is a misuse of authority by respondent No,2 under the garb of recovery of loan of the respondents-Small Business Corporation as arrears of land revenue. This Court can interfere in the misuse of authority by the public functionaries and can look into the legality of the demand being made for the payment of amount as arrears of land revenue.
6. The petitioner admittedly stood guarantor for respondent No,5 but the co-loanee respondent No,4 gave a guarantee of another person who has subsequently died. It is not denied that the petitioner who was a guarantor of respondent No,4 of the total amount of Rs,4,00.000 jointly obtained by respondents Nos.4 and 5 was arrested after the issuance of warrant under section 82 of the Land Revenue Act and he was locked in Police Station Qilla Gujar Singh. The petitioner arranged the guarantee amount of respondent No,5 which was Rs,2,00,000 and he was set at liberty. He was allowed to go home as he had satisfied his liability by payment of the amount of guarantee for payment of the amount as guarantor of respondent No,5. After some time respondents Nos.2 and 3 again initiated the proceedings by sending notices to the petitioner for the payment of remaining amount of the total loan obtained by respondents Nos.4 and 5 and are now bent upon to arrest the petitioner for the payment of remaining amount and are adopting coercive method for the recovery of the amount as arrears of land revenue. The petitioner has also relied on section 42 of the Contract Act, which is as under:-- "Devolution of joint liabilities.---When two or more persons have made a joint promise, then unless a contrary intention appears by the contract, all such persons during their joint lives, and after the death of any of them, his representative jointly with the survivor or survivors, and after the death of the last survivor, the representatives of all jointly, must fulfil the promise."
From a bare perusal of the abovesaid section it has become crystal clear that if there are two guarantors of one loanee the half loan has to be paid by one of the guarantors hence the petitioner has already paid the amount for which he stood guarantor and he cannot be held responsible for the payment of loan due from respondent No,4 for which he did not give any guarantee or security. The action taken by respondents Nos.2 and 3 prima facie seems to be misuse of authority as it cannot be said that this amount which has been obtained by respondent No,4 is also due from the petitioner as he stood the surety of respondent No,5 of a loan jointly obtained by respondents Nos.4 and 5. The demand of respondents Nos.2 and 3 is required to be determined firstly through a Court of competent jurisdiction and only after the decision if it comes in favour of respondents Nos.2 and 3 they can claim the said amount and they cannot for the time being recover the said amount from the petitioner as it is a disputed amount. I am fortified by a case decided by the august Supreme Court in Agricultural Development Bank of Pakistan v.
Sanaullah Khan and others PLD 1988 SC 67 in which it has been held that power of coercive recovery cannot be invoked against a person who did not secure the loan as an agriculturist himself. Son having not obtained credit facilities or secured loan which was being recovered from him, coercive proceedings for recovery of the dues from him was illegal. It was held that the recovery can be effected under subsection (1) of section 25 from an 'agriculturalist' or defaulter in the re-payment of any liability to the bank and such sums which are due to the bank are recoverable as arrears of land revenue. The bank can only set into motion the process for the recovery of the outstanding dues of the deceased father from the son under section 25 of the Ordinance. It has been held that this is the foundational basis of the jurisdiction to exercise the extraordinary powers of recovering the dues of the bank but the coercive method cannot be adopted for the recovery of the amount against a person who did not secure the loan as an agriculturalist himself. It was held that the proceedings for the recovery of the dues from the son through coercive measures was illegal. It has been held that any amount as arrears of land revenue can be recovered under the Land Revenue Act, which authorized any statutory authority to recover any amount as arrears of land revenue but it can be invoked only after determination of the amount of dues as fixed, ascertained and determined sum of money. The disputed amount cannot be recovered as arrears of land revenue. From a bare perusal of the abovesaid case-law it has become crystal clear that the amount which is due from a borrower can be recovered as arrears of land revenue. The petitioner who stood guarantor of respondent No,5 and has already made the payment of the share of loan taken by respondent No,5 cannot be held responsible for the payment of amount due from respondent No,4 as guarantor of respondent No,5 on the plea that they jointly obtained a loan of Rs,4,00,000. The coercive method cannot be adopted against him under the Land Revenue Act by respondents Nos.2 and 3 unless it is determined by a Court of competent jurisdiction that this amount can be recovered from the petitioner hence the proceedings initiated without determination of amount by a Court of competent jurisdiction by respondents Nos.2 and 3 are prima facie illegal and unlawful.
7. For the foregoing reasons this writ petition is accepted and respondents Nos.2 and 3 are restrained from recovering the disputed amount from the petitioner unless the amount due is determined from the Court of competent jurisdiction. There will be no order as to costs.