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Suit No. 147 of 1984, decided on 8th August, 1985.

--O.XXXVII, R.3--Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S. 6--Leave to defend suit--Defendant failing to show that he had got such a defence as to entitle him to leave to defend suit--No question of law or fact needing trial shown by him and defence which he set up was illusory--Leave to defend suit refused in circumstances.

P L D 1965 Kar. 671 and P L D 1964 S C 193 ref.

Mansoor Ahmed Khan for Plaintiff.

A.S. Wasbani for Defendants.

This is an application under Order XXXVII, Rule 3, C.P.C. for leave to defend the suit filed by Irshad Mahmood Defendant.

This suit has been filed by Allied Bank against the defendants for recovery of Rs. 10,03,544.23. It is alleged that defendant No.1 had applied for opening and establishing letter of credit in favour of M/s. Cheery Trading Company Hong Kong. Defendant No.2 had guaranteed due execution of the terms and conditions of the L.C. by the defendant No.1. The beneficiaries shipped the goods and drew the amount of their draft from the advising bank in Hong Kong after delivery of the shipping documents to them. These documents were received by the Plaintiff in Pakistan in due course. The vessel carrying the above goods arrived in Karachi, but the defendants neither came forward to retrieve the documents nor arranged to take delivery. Hence the suit.

Mr. A.S. Wasbani, who appeared for defendant No. 2 has alleged that the bank officials had not taken marginal deposit sufficient or proper security from defendant No.1. He has also alleged that even security documents were not taken from the Defendants by the Bank Officers. He has further alleged that no efforts were made by the Bank Officers to recover the loan from defendant No.1. He has submitted that he was liable for payment. of money only when defendant No.1 had failed to pay the same. The argument of defendant No.2's counsel is not at all convincing. These derelictions, even if proved, on the part of the officials of the Plaintiff Bank would not help the defendant No.2 at all. He has to stand on his own legs. It was admitted on behalf of defendant No.2 that he had signed the application, the agreement, as well as the pronote and all other connected documents but he has alleged that these signatures were obtained by the Manager of the Bank under duress and by instigation which he has neither substantiated nor explained. The plaintiff's counsel has relied upon the decision given by Justice Saeeduzzaman Siddiqui, in an un-reported case (Suit No. 149/83), while allowing an application for leave to defend the suit under Order 37 Rule 3, C . P. C . He has also cited P L D 1965 Kar. 671, P L D 1964 S C 193 and certain other rulings. It is sufficient to say that none of these rulings apply to the facts of the present case. The present case is distinguishable from these rulings because it is a case of letter of credit in which the money was paid to the beneficiary firm outside Pakistan and therefore, there was no possibility of its misappropriation by the Bank Officials whereas these rulings relate to the loan given to the defendants in Pakistan, which could have been misappropriated partly or entirely by the Bank Officials if they were dishonest.

I am, therefore, of the clear view that defendant No.2 has failed to show that he has got such a defence which would entitle him to leave to defend the suit. No question of law or fact needing trial has been shown by defendant No. 2 and the defence which has l been set up is illusory. I, therefore, dismiss the application for leave to defend.

M.Y.H./A-71/K Leave to defend refused.

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