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Suit No.273 and Miscellaneous Applications Nos. 2314, 2315, 1733, 4637 and 4638 of 1985, decided on 6th July, 1986.

‑‑Ss.6 & 7‑‑Civil Procedure Code (V of 1908), O.XXXVII, R.3‑‑Recovery of loans‑‑Leave to defend suit, grant of‑‑Partnership firm/defendant admittedly had undergone many changes and was dissolved and re constituted from time to time‑‑Partners of defendant firm claimed that they had already retired from partnership of firm and had been relieved of all liabilities before plaintiff‑Bank granted advances to defendant firm‑‑Defendant‑partners also pleaded that no loan was granted on their personal security‑‑Considering facts and circumstances of case, defendants partners, held, had made out arguable case‑‑Unconditional leave to defend suit was granted to such defendants.

Lakhani for Plaintiff.

Muhammad Hanif for Defendants.

The plaintiff has filed this suit for recovery of Rs.28,49,681.61. The defendant No.1 is a partnership firm of which the defendants Nos.2, 3 and 4 are partners. Defendants Nos.5 to 17 are legal heirs of one Syed Hussain who was a partner of defendant No.1 and has since died. The defendants Nos.l8 t‑, 24 are the mortgagors and guarantors.

On 8‑1‑1983 the defendant No.1 opened an account bearing No.2085. The plaintiff granted loan against packing credit facility under State Bank of Pakistan Refinance Scheme from time to time for a total amount of Rs.25,00,000 which was fully utilized. As a security, the defendants Nos.18 to 24 deposited title deeds of their immovable property creating equitable mortgage in favour of the plaintiff. The said defendants also executed letter of guarantee and irrevocable power of attorney in favour of the plaintiff. The defendant Nos.3 and 4 and late Syed Hussain personally secured the advances by individual guarantee. The defendants Nos.3 and 4 the partners of defendant No.1 alongwith late Syed Hussain executed a promis ory note, dated 3‑11‑1984 by way of collateral security promising to pay on demand jointly and severally the total advances made to the defendant No.1 with interest. The defendant No.2 also executed personal and joint and several guarantee in favour of the plaintiff alongwith late Syed Hussain. The facility was further secured by the hypothecation of stocks of shrimps and fish. In the middle of February, 1985 Syed Hussain committed suicide. The plaintiff has now filed suit for recovery of the said amount.

In Civil Miscellaneous Application No.4637 of 1985 and Civil Miscellaneous Application No.4638 of 1985 the defendants Nos.3 and 4 have sought leave to appear and defend the suit. It has been alleged that the defendant No.3 was taken as a partner on 1‑2 1982 but he retired with effect from 28‑6‑1983 and the firm was reconstituted on 1‑7‑1983. All accounts were settled and intimation was given to the plaintiff on 28‑12‑1983 thus the defendant No.3 was relieved of all the liabilities. On 13‑8‑1983 Miss Farzana the defendant N.4 also retired from the partnership and firm was reconstituted with defendant No.2 and late Syed Hussain as partners on 1‑7‑1983 but the partnership deed was made on 15‑8‑1983. In this regard these defendants have filed letter, dated 28‑12‑1983 from which it seems that defendant No.2 joined partnership on 1‑7‑1983. The defendant No.3 has stated that the defendant No.1 had requested him to continue to sign the cheques till the signature of the defendant No.2 was approved by the plaintiff and had agreed to indemnify him from all consequences: Collusion and fraud between defendants Nos.l and 2 late Syed Hussain and plaintiff has been alleged. It has been pleaded that no loan was granted on personal security of defendants Nos.3 and 4.

While reiterating these facts in Miscellaneous Application No‑4638 of 1985 the defendant No.4 has alleged, that on 8‑8‑1983 facility upto the Rs.15 lacs was granted on hypothecation of stock and collateral security of Rs.18 lacs at the request of the new partnership. In these circumstances both the defendants have denied their liability. From the documents filed by the plaintiff it seems that the defendant No.1 has undergone many charges, which was dissolved and reconstituted from time to time. In these circumstances the question will arise whether the defendants Nos.3 and 4 after their retirement will be liable for the claim of the plaintiff. The plaintiff had granted advances to the defendant No.1 as stated in Annexures 'N' 0 and 'P' of the plaint. In Annexure 'h' the facility was given on 8‑8‑1983, in Annexure '0' on 26‑11‑198 and in Annexure 'P' on 30‑4‑1984. 'The defendant. No.3 claims that he was not a partner on those dates‑,.and therefore is not liable for the claim. The defendant No.4 retired from partnership on 13‑8‑1983. The amount due under Annexure Nei. Was secured by hypothecation of stock. Considering the facts and circum5Vhnces of the case, the defendants Nos. 3 and 4 have made out an, arguable case, therefore, by a short order passed earlier unconditional leave to defend was granted, more so as there is an acquitable mortgage in favour of the plaintiff by the

Leave to defend granted.

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