' JAWWAD S. KHAWAJA, J.---This appeal filed by. Jehanzeb Burki (appellant-defendant) impugns the judgment and decree dated 25-4-2000 passed by the learned Banking Court-II, Lahore. The facts necessary for the disposal of this appeal are relatively straightforward. The Regional Development Finance Corporation (RDFC) which is respondent No,1 in this appeal filed a suit for recovery of Rs.26,72,571 against the appellant and three others namely, Messrs Shaafi Woolen Industries Ltd. (respondent No,2) (hereinafter referred to as the defendant company), Aurangzeb Shaafi Burki (respondent No,3) and Messrs Alpha Insurance Company Ltd. (respondent No,4). The defendant company had been sued as principal debtor while the remaining three defendants including the appellant were sued as guarantors on the basis of guarantees executed by them to secure the liabilities of the defendant company owed to R. D . F. C .
2. The suit was filed before the Banking Tribunal, Lahore, under the provisions of the Banking Tribunals Ordinance, 1984. The Banking Tribunal issued show cause notices to the defendants, which were replied to separately by the defendants including the present appellant. The learned Banking Tribunal did not find the appellant's reply to be satisfactory or as disclosing a good defence to the suit. As a result a decree for the amount of Rs.11,72,571 was passed against the appellant and the other three defendants jointly and severally with costs. It is this decree, which is under challenge through the present appeal.
3. It is not in dispute that the defendant company applied for and availed facilities which were granted by RDFC. On 21-5-1986, RDFC issued a sanction advice setting out the terms of mark-up finance facility of Rs.2 million in favour of the defendant company. The facility was to be valid for a period of one year from the initial date of release of funds and was to be secured, inter alia, by personal guarantees of the sponsoring Directors of the defendant company. The appellant was one of the sponsoring Directors. The sanction advice was followed by a financing agreement dated 29-5-1986. This agreement stipulated a buy-back price of Rs.24,01,500 as the amount payable by the defendant company. The said amount was also secured, as alleged in the plaint, by a guarantee executed by the appellant.
4. On the expiry of the initial term of the facility, a second sanction advice dated 4-8-1987 was issued by R.D.F.C. In favour of the defendant company. This advice purported to he a renewal of the mark-up facility of Rs.2 million. This ,sanction advice also required personal guarantees of the sponsoring Directors to secure the liability of the defendant company. A second financing agreement dated 8-11-1987 was executed between the defendant company and R.D.F.C., pursuant to the sanction advice of 4-8-1987. The buy-back price stipulated in the said financing agreement was also Rs.24,01,500. It is averred in the plaint that the appellant executed a personal guarantee to secure the liability of the defendant company under this second financing agreement dated 8-11- 1987. The execution of the personal guarantee, however, is not admitted by the appellant.
5. After the expiry of the limit allowed by the second sanction advice mentioned above, a third sanction advice dated 21-11-1988 was issued in favour of the defendant company by R.D.F.C. This third sanction advice also purported to be a renewal of the finance facility of Rs.2 million earlier allowed to the defendant company. In this sanction the personal guarantees of the sponsoring Directors of the defendant company were not required as security. In the circumstances, no personal guarantee was executed by the appellant although the Managing Director of the defendant company namely, Aurangzeb Shaafi Burki (respondent No,3 herein) executed such personal guarantee.
6. It is the case of the appellant that although initially he was a Director of the defendant company, he had resigned from that office in 1988 prior to the third sanction advice dated 21-11-1988.
According to learned counsel for the appellant, the appellant has not acknowledged his signature on the two guarantees which have been relied upon by R.D.F.C. And which, according to R.D.F.C., were executed by the appellant to secure the facility covered under the first financing agreement dated 29-5-1986 and second financing agreement dated 8-11-1987 respectively. The admitted position is that the appellant did not execute any personal guarantee to secure the liability of the defendant company arising under the third financing agreement dated 10-2-1989. Learned counsel for the appellant has argued firstly that the execution of the two alleged personal guarantees by the appellant required proof because the same had not been admitted by the appellant. Secondly, and more importantly it has been argued that even if the aforesaid personal guarantees are accepted as having been executed by the appellant, the appellant stood discharged of any liability thereunder because R.D.F.C. Allowed and/or renewed the facility to the defendant company as per sanction advice dated 21-11-1988 followed by a third financing agreement dated 10-2-1989 without the concurrence of the appellant. In support of this contention the case titled Mst. Parveen Amir v. National Bank of Pakistan and 3 others 2002 CLD 509 has been brought to our notice. It does appear to us on the basis of the cited precedent that the appellant has disclosed a serious defence which justified grant to him of leave to appear and defend R.D.F.C.'s suit. Learned counsel for R.D.F.C. Argued that there were clauses in the personal guarantees executed by the appellant (referred to above) and in particular clause (2.2) thereof, which shows that the liability of the appellant was of a continuing nature and did not come to an end at the expiry of the first two financing agreements dated 29-5-1986 and 8-11-1987 respectively.
He relied on the provisions of section 133 of the Contract Act to argue that although the appellant had not given any guarantee to secure the liability of the defendant company arising under the third financing agreement dated 10-2-1989, the liability which had accrued under the initial agreement remained payable by the appellant as guarantor. Prima facie, we find this view to be untenable. The two personal guarantees of the appellant, which have been pressed into service by R.D.F.C., specifically relate to the two agreements dated 29-5-1986 and 8-11-1987 respectively. The claim of the Bank as set out in the plaint appears to be based on the third financing agreement dated 10-2-1989. As noted above, there is no personal guarantee from the appellant to secure the finance availed by the defendant company under the third financing agreement and nor is there on the record, any concurrence given by the appellant for the liability of the defendant company under the third finance agreement.
7. In the foregoing circumstances, we find that the appellant has disclosed a serious and bona fide defence to the suit filed by R.D.F.C.. We, therefore, set aside the impugned decree to the extent of the appellant and grant to him unconditional leave to defend the said suit.