Find a Lawyer

Civil Miscellaneous Appeals Nos. 4356, 5068 of 1984 and 1202 of 1985 in Suit No.470 of 1984, decided on 3rd August, 1986.

Civil Procedure Code (V of 1908)--

--O. XXXVII, R.3--Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S. 6--Leave to appear and defend suit--One defendant, a statutory body and nothing on record to show that it was liable to pay loan advanced to principal debtor/defendant-- Unconditional leave ' to appear and defend was granted to such defendant--Other defendant who was guarantor of the principal debtor had mortgaged valuable immovable property in favour of plaintiff which was in occupation of the latter without paving any rent yet another plea raised by guarantors defendants was that they could not in any case be liable for the post nationalization of the Banks period--Unconditional leave to defend granted to such defendants--Nothing pointed out to show that defendant (guarantor) was liable to pay loan advanced to the other defendant--Other defendants (guarantor), also denying liability in respect of loan granted after nationalization and making claim against plaintiff for substantial amount of rent allegedly not paid by him-- leave to defend suit granted to defendants unconditionally.

Anwar Mansoor Ahmed Khan for Plaintiff.

Muhammad Akram Zuberi, Wajihuddin Ahmed, Nizam Ahmed and Rashid A. Rizvi for Defendants.

The plaintiff has filed this suit for recovery of Rs.26, 45, 472.61 under the yanking Companies (Recovery of Loans) Ordinance, 1979, C.M.A. No.4356/84 has been filed under Order XXXVII, Rule 3, C :P. C . by defendant No.3 for leave to appear and defend the suit. Similar application C. M. A. No. 5048 of 1984 has been filed by defendants No.4 and 8 while C.M.A. No.1282 has been filed by defendants No.l and 5. The defendants No.4, 6 and 7 have not filed any application.

From the year 1965 the defendant No.3 had an account with the plaintiff. At the request of defendants No.3 to 7 cash credit facilities were granted to defendant No.3. On 31-3-1971 a sum of Rs.2, 52, 441.02 was due from the defendant No.3. To secure this payment a promissory note dated 22-4-1971 for the said amount was executed on behalf of defendant No.3. Letters of hypothecation and pledge of goods were also executed by defendant No.3. At the request of the defendant No.3 the limit was raised to Rs.5,50,000 and another promissory note dated 20-7-1973 was executed for Rs.5,50,000. On 2-9-1973 by Act LXIV of 1973 the defendant No.3 was nationalised and taken over by the defendant No.l. As security for repayment of loan the defendant No.3 had mortgaged her immovable property situated at D'Cruze Road, Karachi. The defendants No.4, 5, 6 and 7 have stood as surety and their letter of guarantee was signed before the nationalization. The defendant No.8 stood as guarantor for defendant No.3 for the sum of Rs.1,43,789.34 after the nationalization i.e. 5-9-1973.

So far defendant No.2 is concerned, it is a corporation created under the statute and nothing has been pointed out to show that it is liable to pay the loan advanced to defendant No.3. In these circumstances unconditional leave to appear and defend the suit is granted to defendant No.2.

Mr. Rashid Rizvi, Advocate for defendant No.3 has contended that as Rs.5,00,000 to which the interest has accumulated was drawn by the previous directors and the present company has only drawn Rs.1,43,789.34 as loan they are to be liable for the later amount. By virtue of Act 65 of 1973 the share holding and management has been taken over but the liabilitv of the defendant No.3 was not changed, altered or discharged. Mr. Rashid Rizvi the learned counsel has contended that the defendant No.5 as guarantor had mortgaged her property whose present value is about Rs.20,000. This property is situated at D'Cruze Road, Garden East, Karachi. It is a double storeyed building and is occupied by the plaintiff which is running its training institute there. it is also alleged by defendant No.3 that the plaintiff is not paying rent since the year 1973 which would at least be @ Rs.60,000 per annum. Mr. Nizam Ahmed Advocate for defendant No.4 has submitted that after nationalization all the share holding have been taken over by the defendant No.l and the defendant No.4 has been deprived of all of his assets and that he had undertaken the liability at a time when he was Director and was operating the account. In these circumstances the learned counsel contended that the liability of the guarantor is discharged. So far defendant No.5 is concerned she has already mortgaged her prop::rty whose present market value according to the defendants, is Rs.20,000,00. Although this value is disputed by the learned counsel for the plaintiff it cannot be denied that this property is in a locality where the price of the houses is very high. Considering the contentions raised by defendants No.3, 4 and 5 it seems that they have made out an arguable case and there is sufficient security for plaintiffs claim. The defendants No.4 and 5 have further contended that if at all they are liable it will be restricted to loan which they had guaranteed before the nationalization. They deny the liability in respect of loan which was granted after the nationalization although the plaintiff has made a claim against them B for the entire amount. Considering this plea also and the fact that these defendants have made claim against the plaintiff for substantial amount of rent which has not been allegedly paid by the plaintiff, they are allowed to defend- the suit unconditionally.

So far defendant No.8 is concerned the learned counsel has contended that the surety was furnished in his capacity as a managing director. I am not inclined to accept this contention as the letter of guarantee was executed by the defendant No.8 in his personal capacity.

It was contended that the defendant No.8 will be liable for the loan advanced after nationalization and not for the loan advanced prior to that date. Mr. Anwar, the learned counsel for the plaintiff does not dispute it. In the circumstances the application filed by defendant No. 8 is rejected.

S.Q./A-149/K Order accordingly.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.