' JAWWAD S. KHAWAJA, J.---This appeal impugns the judgment and decree dated 19-6-1998 passed by the learned Banking Court-IV, Lahore.
2. Platinum Commercial Bank Ltd. Respondent No,1 filed a suit on 28-10-1997 against nine defendants including the two appellants herein namely Imtiaz Ahmed and his brother Javed Ahmed, who were arrayed as defendants Nos.8 and 9 in the aforesaid suit. The suit filed by the respondent-Bank was for the recovery of Rs.89,93,742 from the defendants jointly and severally.
The two appellants appear to have been impleaded as defendants on the ground that they were guarantors and had mortgaged their house bearing No,196 including land measuring 4 Marlas 203 sq.Ft. Situated at Satluj Block, Allama Iqba Town, Lahore to secure the advances made by the respondent-Bank to Messrs Plastic Crystal respondent No,6 and Messrs. Polymer International respondent No,7.
3. The appellants submitted a joint application seeking leave to appear and defend on 29-11-1997. It was asserted in the said application that the appellants had no concern whatsoever with the advances made by the respondent-Bank to the respondents Nos.6 and 7 named above, and that they were neither guarantors nor mortgagors for the fiances advanced to respondents Nos.6 and 7.
4. We have gone through the record and heard learned counsel for the appellants and for the respondent-Bank. There is nothing on record to show that Javed Ahmed appellant No,2 had any connection with the finances availed by the other respondents or that he had executed any guarantee or other security documents in favour of the respondent-Bank.
5. Learned counsel for the respondent-Bank merely stated that since the original title deeds in respect of the above referred property jointly owned by the two appellants had been deposited with the respondent-Bank a mortgage in favour of the respondent-Bank in respect of such property stood created. We have considered this contention but find no merit in it. The memorandum of deposit of title deeds recording the deposit of the original property documents with the Bank has not been signed by Javed Ahmed appellant No,2. The Bank admittedly is not in possession of any personal guarantee executed by the said appellant No,2. In these circumstances, we find that the application seeking leave to appear and defend filed by the appellants merited acceptance at least to the extent of appellant No,2. We would therefore, set aside the impugned judgment and decree to the extent of Javed Ahmed appellant No,2. He shall be entitled to contest the suit filed by the respondent-Bank as a regular long cause.
6. As to Imtiaz Ahmed appellant No,1, learned counsel for the respondent-Bank drew our attention to a guarantee executed by him to secure the finance availed by the respondents Nos.6 and 7.
Imtiaz Ahmed appellant has also executed a memorandum of deposit of title deeds, which records and confirms the deposit of the original deed relating to the house referred to above, with the respondent-Bank. The signatures of the first appellant on the two documents have not been denied. The deposit of the original sale-deed of the above-mentioned house with the respondent- Bank is also acknowledged.
7. However, by way of explanation, learned counsel for the appellants has contended that Imtiaz Ahmed was an employee of the respondent-Bank at the relevant time and had applied for a house loan from the Bank. He stated that it was on account of the said loan that Imtiaz Ahmed signed the personal guarantee, deposited the original sale-deed referred to above and executed the memorandum of deposit of title deeds in favour of the respondent-Bank. Learned counsel also argued that under the Bank's own policy an employee of the Bank was prohibited from standing surety for repayment of finance advanced by the respondent-Bank.
8. We note that Imtiaz Ahmed has not placed on record any application for the alleged house loan or any orders on behalf of the respondent-Bank sanctioning such loan. This in our opinion is a material circumstance because had there been any loan sanctioned to Imtiaz Ahmed, he would have had the original sanction advice. Furthermore, the execution of a guarantee 'and deposit of original title deeds would only have followed the sanction of a loan and could not have preceded it.
The reason therefore, proffered by Imtiaz Ahmed to explain the personal guarantee executed by him and the deposit of original title deeds followed by a memorandum of deposit executed by him, is not credible.
9. As for the Service Rules of the respondent-Bank referred to by learned counsel for the appellants, it will suffice to say that whatever the policy of the respondent-Bank, the appellant Imtiaz Ahmed has failed to give a satisfactory explanation for the guarantee and the memorandum of deposit executed by him in favour of the respondent-Bank or for the fact that the original title deed of the property owned by him and Javed Ahmed appellant No,2 is lying with the respondent-Bank.
10. There is another aspect of the matter, which discredits the assertion of appellant No,1, that he had executed a personal guarantee to secure a house loan sought from the respondent-Bank.
There was no occasion for the execution of a guarantee by Imtiaz Ahmed to secure repayment of his own financial obligations to the Bank. The guarantee executed by him secures third party obligations, as noted above. Learned counsel for the appellants, when confronted with this situation, could only say that the guarantee had probably been obtained by the Bank alongwith other documents relating to the alleged house loan. This submission does not satisfactorily explain the execution of the personal guarantee, and we are, therefore, not persuaded to accept it. This is particularly so considering that Imtiaz Ahmed was an Assistant Vice- President of the plaintiff Bank and not some layman unaware of the legal implications of a personal guarantee.
11. Learned counsel for Imtiaz Ahmed appellant next argued that even if the personal guarantee relied upon by the Bank was not in respect of a house loan, the same was unenforceable against Imtiaz Ahmed because of the provisions of section 144 of the Contract Act. For convenience, section 144 is reproduced as under:--
12. "Guarantee on contract that a creditor shall not act on it until co-surety joins. Where a person gives a guarantee upon a contract that the creditor shall not act upon it until another person has joined in it as co-surety, the guarantee is not valid if that other person does not join."
13. Learned counsel for the appellants contended that from the circumstances and, in particular, from the fact that a mortgage by deposit of title deeds was being asserted by the Bank against both appellants, it should be inferred that the personal guarantee was executed by Imtiaz Ahmed on the condition that it would not be enforceable if it was not signed by Javed Ahmed appellant also. We are afraid, this argument is without merit. We have gone through the instrument of guarantee and note that it does not contain any stipulation of the nature set out in section 144, reproduced above.
13. Finally, it was contended by learned counsel for the appellants that the personal guarantee was also void having been executed without consideration. According to learned counsel, the banking facilities were sanctioned in favour of the respondents Nos.6 and 7 vide two sanction letters dated 16-3-1996 and 23-9-1996. The said sanction letters required personal guarantees from the partners of the respondents Nos.6 and 7 and not from a third party. Furthermore, the finance agreement was dated 2-4-1996 and the finance was utilized prior to the date of the guarantee i.e. 2-12-1996.
On this basis, it was contended that any past consideration could not have constituted a valid basis for enforcing the personal guarantee executed by Imtiaz Ahmed at a time when no accommodation was granted to the principal debtors. In support of this contention, learned counsel relied on the case titled Muhammad Asghar and 5 others v. Mst. Jamila Khatoon 1979 CLC 367 and on illustration 'C' to section 127 of the Contract Act. We have considered these submissions of learned counsel and find that these have no merit in the circumstances of the present case. The Bank filed its suit on 28-10-1997, which clearly .Shows forbearance on the part of the Bank in enforcing its rights against the defendants including Imtiaz Ahmed. This, by itself, constitutes sufficient consideration for the issuance of the personal guarantee by Imtiaz Ahmed, particularly, considering the circumstances discussed in paragraphs 7, 8 and 10 above.
14. In these circumstances, we are of the opinion that the application seeking leave to appear and defend was rightly dismissed by the learned Banking Court so far as Imtiaz Ahmed is concerned.
Consequently, in our opinion the decree against Imtiaz Ahmed appellant was rightly passed by the learned Banking Court.
15. For the foregoing reasons the appeal to the extent of Javed Ahmed appellant No,2 is allowed, but is dismissed to the extent of Imtiaz Ahmed appellant No, 1.