1. ' This application is preferred under section 12(2), C.P.C. Seeking recall of judgment and decree dated 21st August. 1986, passed in Suit No,985 of 1985. The applicant-company, namely Hyesons Sugar Mills (Pvt.) Limited, was arrayed as defendant No,2 in the suit, which was instituted on 11th November, 1985 with the assertion that agricultural loans were granted by the plaintiffdecree- holder to Small Sugarcane Growers, repayment whereof was guaranteed by defendant No,1 with interest at the rate of 3% above bank rate with a minimum of 13% per annum with quarterly rests.
2. The plaintiffs case further was that the loan was not repaid and the defendant No,1 too, had failed to honour its guarantee. The defendant No,2 had, then, guaranteed repayment of the entire amount outstanding as on 31st December, 1980 with interest thereon at the agreed rate. Still the liability remained uncleared with the result that proceedings for recovery of a sum of Rs,13,629.130 with interest thereon were instituted, as above. The defendants filed applications under Order XXXII.
3. Rule 3, C.P.C. Seeking leave to defend the proceedings and further applied for condonation of delay in filing the above-referred application on the ground that summons were received by them on 1st February, 1986, without copies of the plaint and the annexures thereto which were, eventually, received on 10th March, 1986. The learned Single Judge before whom the applications, filed by the defendants, were put up for hearing, found that the delay in filing the application for leave had not, sufficiently, been explained with the result that application for condonation of delay, was dismissed. Consequently, the leave application, too, was dismissed and the suit was decreed with costs, as prayed. It may be noted that on behalf of the defendants, it was urged before the learned Judge that the suit was not maintainable on account of non-joinder of the Cane Growers who were principal debtoRs, Reference, in support of the above contention, was made to the case of National Commercial Ltd., Karachi v. Muhammad Tufail and another (PLD 1975 Karachi 671). Despite having noted the contention about non-maintainability of the suit, the application for leave was dismissed as barred by limitation. The judgment and decree, passed as above, was assailed in Intra-Court Appeal No,44 of 1986 which, too, came to be dismissed on 17th February, 1987` by a Division Bench of this Court for non-compliance with section 12(5) of the Banking Companies (Recovery of Loans)
4. Ordinance, 1979, whereby pre-condition for deposit of amount equivalent to judgment-debtor furnishing security therefore is prescribed. The plaintiff is stated to have filed Execution Application therefore which is still pending before the subordinate Banking Court. In the meantime, however, it is admitted, the decree has been satisfied under the State Bank of Pakistan Incentive Scheme for settlement of bank dues.
5. ' According to Mr. Maqbool Illah Malik, advocate for applicant, the management of the defendant- judgmentdebtor No,2 had undergone change by virtue of two agreements dated 7th October, 1992 and 24th August, 1993. The new management, represented by Mr. Malik, claims to have never been informed about the proceedings in Suit No,985 of 1985 or the decree,- passed therein, until it came to know about the matter on 23rd June, 1997 through notice of Special Assets Management Group 'C' United Bank Limited, Sukkur. The defendant-judgmentdebtor No, 2 immediately filed application under section 12(2), C.P.C. On 30th August, 1997, being J.M. No,47 of 1997, which was, however, withdrawn on 10th September, 1997, with permission to file fresh application. The present application, having been filed on 30th September, 1997, it is contended, does not suffer from any delay. As regards merits, Mr. Maqbool Illahi Malik has urged that the judgment and decree dated 21st August, 1986, is void for having been passed without jurisdiction. It is further contended that the previous management of defendant judgment-debtor No,2 had committed fraud and suppressed the liability for payment of decretal amount at the time of transfer of management. On account of the fraud, as above, it is argued that the defendant-judgmentdebtor No,2 is not bound by the judgment and decree for the reason that fraud does vitiate most solemn proceedings. The learned counsel has referred to a large number of judgments about the effect of fraud upon judgment and decree including the cases of Chief Settlement Commissioner, Lahore v. Raja Muhammad Fazil Khan and others (PLD 1975 SC 331) and Muhammad Younus Khan and others v. Government of N.- W.F.P. And others (1993 SCMR 618). By reference to the judgments in Haji Abdullah Khan and others v. Nisar Muhammad Khan and others (PLD 1965 SC 690) and Khurshid Ali and others v. Shah Nazar (PLD 1992 SC 822), it is urged that a Court is obliged to do justice and apply correct law. The learned counsel has further argued that non-joinder of necessary parties was fatal in the given circumstances of the case and has referred to the judgments in Abdul Sattar and others v. Ibrahim and others (PLD 1992 Karachi 323) and Mst. Surraya Begum v. Aftab Ahmad Khan (1995 CLC 1603).
6. The propositions of law laid down in the above-referred judgments can, hardly, be disputed and I do not consider it necessary to discuss each and every judgment, cited by Mr. Malik, in detail. The moot question to be decided in the present matter is if the judgment and decree dated 21st August, 1986, passed in Suit No,985 of 1985, is void for want of jurisdiction. In this behalf, the learned counsel has relied tin the case of National Commercial Bank Ltd., Karachi v. Muhammad Tufail and others (PLD 1975 Karachi 671) wherein it was found that the contract of guarantee could not be enforced in the absence of principal debtor. In the cited case, loans were granted in the names of fictitious persons and after having discovered that such persons did not exist, proceedings for recovery of the amount outstanding in the names of fictitious borrowers, were filed against the guarantoRs, It was found that guarantee was a technical term and pre-supposed existence of a principal debtor. In the absence of principal debtor, contract of guarantee could not be brought into effect. To the same effect is the observation of the Honourable Supreme Court in Haral Textile Limited v. Banque Indosuez Belgium S.A. And others (1999 SCMR 591) that a contract of guarantee is primarily a tripartite agreement. In the present case, however, the existence of principal debtors i.e. Sugarcane Growers is not disputed. The validity of the contract of guarantee, thus, is not in doubt.
7. Defendant judgment-debtor No,2, in any event, had guaranteed repayment of liability outstanding against the defendant judgment-debtor No,1 whose legal existence, again, is not disputed. The contract of guarantee, involved in the present case, therefore, appears to be valid. The judgment in the case of National Commercial Bank (supra), therefore, is distinguishable from the present case and does not lay down as a principle that proceedings cannot be filed against guarantors without impleading the principal debtoRs, Converse position finds logical support from the provisions contained in section 128 of the Contract Act. The judgments in the cases of M/s. Platinum Insurance Company Limited, Karachi v. Daewoo Corporation, Sheikhupura (PLD 1999 SC 1) and City Bank v.
8. Tariq Mohsin Siddiqi and others (PLD 1999 Karachi 196) also lend support to the proposition that proceedings for recovery can, competently, be filed against guarantors without joining the principal debtoRs, What is necessary is B existence of a valid contract of guarantee which was found lacking in the case of National Commercial Bank (supra) whereas it is, undisputably, valid in the present case. The judgment and decree dated 21st August, 1986 in Suit No,985 of 1985, therefore, does not suffer from lack of jurisdiction.
9. ' Reverting to the allegation of fraud, Mr. Muhammad Mazhar Ali, Advocate has, rightly, pointed out to the averment, contained in para. 1 of the application. C.M.A. Nu.6543 of 1997, filed by the defendant judgment-debtor No,2 which reads as follows:-- "That the applicant have today filed the accompanying application under section 12(2) of the C.P.C.
10. For setting aside the judgment and decree of this Honourable Court in Suit No,985 of 1985, dated 21-8-1986 on account of misrepresentation and fraud played by the ex-management of Hyesons Sugar Mills Ltd."
11. ' The fraud, alleged by the defendant judgment-debtor No,2, can, only, be considered an internal matter between the previous and the new management of defendant-judgmentdebtor No,2 and cannot afford a ground for intervention under section 12(2), C.P.C. The provisions of section 12(2), C.P.C. Can, only be pressed into service when fraud has been practised upon the Court and judgment is obtained on the basis of such fraud. The new Management of defendant judgment- debtor No,2 had come into picture much after the decree was passed in Suit No,985 of 1985.
12. Moreover, Mr. Bashir Ahmed Khan has, rightly, referred to the case of Ghulam Sarwar v. Muhammad _Hussain and others (1987 SCMR 1440) wherein it is held that the provision of section 12(2), C.P.C.
13. Was not intended to be a duplication of proceedings. The defendant-judgment-debtor No,2, having preferred appeal against the judgment and decree in Suit No,985 of 1985, cannot assail the same in proceedings under -section 12(2), C.P.C. The present application is, additionally, liable to be dismissed for the reason that the judgment and decree in Suit No, 985 of 1985 was passed under banking jurisdiction and in view of the negative provision, contained in the Banking Law, prohibiting review or revision of judgment, order or decree, passed under banking jurisdiction, the power under section 12(2) cannot be invoked. I have already expressed such view in the case of Emirates Bank International Limited v. M/s. Osman Brothers and others (PLD 1998 Karachi 338). It may be noted that Mr. Maqbool Illahi Malik has, candidly, conceded to such position in law but submits that the judgment and decree in. Suit No:.985 of 1985 can, nevertheless, be recalled in exercise of inherent powers of the Court for being without jurisdiction, hence, void. I have already found that the judgment and decree in Suit No,985 of 1985 was, validly and competently, passed and the question of exercise of inherent powers, if any, does not arise.
14. ' It is urged by Mr. Bashir Ahmed Khan and Mr. Muhammad Mazhar Ali that this application is barred by limitation. The explanation with regard to delay, put-forth by Mr. Maqbool Illahi Malik, is based on lack of knowledge about the proceedings in Suit No,985 of 1985. The defendant-judgment-debtor No,2 is a limited company and being a legal entity cannot deny knowledge, about the proceedings to which it was a party. The change of management does not affect the above position. The new management of defendant-judgment-debtor No,2 is to be presumed to have knowledge of decree from the date when it was passed and the application under section 12(2), C.P.C. Suffers from bar of limitation, too. Mr. Muhammad Mazhar Ali has also referred to the balance-sheet of defendant- judgment-debtor No,2 as was supplied to the new management, which shows outstanding amount of Rs,24,103,633 on account of bank borrowings against the company. It is stated that the amount of bank borrowings, shown the balance-sheet, included the decretal amount and the new management had entered the deal for acquiring shares of the company With open eyes. Be that as it may, such being a matter between the present and the previous management of defendant- judgment-debtor No,2, I would refrain from expressing any view definitely in this behalf.
15. ' For the foregoing reasons, the application under section 12(2), C.P.C. Is dismissed alongwith miscellaneous application, listed at' Serial No,2. In view of the questions, involved in the matter, the parties are left to bear their own costs.