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First Appeal No.5 of 1970, decided on 3rd June, 1981.

---O.XXXVII--Suit upon promissory note--Promissory note in respect of loan facility signed by appellant as the Chairman of his private limited company--Leave to defend having lapsed by not furnishing security, suit decreed by District judge with costs and interest--No consent order having been passed by District Judge to the effect that the suit was to proceed as an ordinary suit, no decree, held, could have been passed against appellant upon a promissory note executed by a limited company though signed by appellant as its Chairman--Appellant not agreeable to any consent order being passed to the effect that suit should -be treated as an ordinary suit and proceeded with as such before District Judge--Court, even otherwise, not inclined to remand case as more than ten years having already passed from date of judgment and decree, it would prolong litigation further--Judgment and decree to the extent of appellant set aside.

Chapman v. Smetharst 1 K B 927 7 ref.

Habib Bank Ltd., Karachi- v. Ghazanfarullah Khan P L D 1978 Kar. 263 distinguished.

Muhammad Zaki for Appellant.

Inamul Haq for Respondent.

Date of hearing: 3rd June, 1981.

This is first appeal against the judgment and decree dated 29-7-1970 passed by the learned District Judge, Karachi decreeing the suit for a sum of Rs.10;018,86 with interest and cost.

The brief facts leading to the filing of the appeal are that the respondent No.2, which is a private limited company approached the respondent No.1 for the grant of loan. In response to the above request, the loan facility was granted inter alia on the execution of a promissory note dated 14-7-1965 for a sum of Rs.10,000. The said promissory note was signed by the appellant as the Chairman for Industrial and Commercial Equipment Ltd. The learned District Judge passed the ex parte decree on 16-7-1968 but upon the filing of an application by the appellant and the respondent No.2, the above decree was set aside, and a conditional leave to defend was granted on 29-7-1970 against furnishing a security for a sum of Rs.11,000 on or before 1-8-1970. It seems the appellant tendered security, but the same was refused on 1-8-1970. It also seems from the endorsement dated 9-9-1970 in the diary order dated 21-8-1970 that no solvent security was furnished. Consequently, on 10-9-70, it was ordered that since leave to defend had lapsed by not furnishing security, the suit was decreed with costs and interest. The appellant being aggrieved by the above judgment and decree has filed the present appeal.

2. In support of the above appeal, it has been urged by Mr. Muhammad Zaki, learned counsel for the appellant that the learned District Judge could not have passed the decree against the appellant on the basis of the promissory note signed by the appellant as the Chairman of the private limited company. In support of the above contention he has referred to the case of Chapman v. Smetharst reported in 1 KB P.927, in which it was held that a promissory note signed by the Managing Director of a company does not render the Managing Director liable personally to be sued on the above promissory note. Mr. Inamul Haq, learned counsel for the respondent No.1 concedes this position that no decree could have been passed against the appellant upon the promissory note, but his contention was since the appellant was also a guarantor, in any case the suit cot: have been proceeded with against the appellant on the basis of guarantee after the grant of the leave. His further suhmission w that he has no objection if the judgment and decree are set as and an unconditional leave is granted to the appellant. In support the above contention Mr. Inamul Haq has relied upon the case Habib Bank Ltd. Karachi v. Ghazanfarullah Khan, reported in P1 1978 Karachi 263, in which at the final trial of the suit, it v, contended that no decree could be passed against the guarantor the suit filed was under Order XXXVII, C.P.C. The above contention was repelled by my learned brother Najamuddin, J. and it vas pointed out that by a consent order the aforesaid suit was treated ordinary suit and proceeded as such in as much as the guarantor examined his evidence in defence. In my view, the above case ha; no application to the present case, in as much as .':e instant suit .vas proceeded with as a suit under Order XXXVII. There was no, consent order passed by the learned District Judge to affect that the suit was to proceed as an ordinary suit. In this view of the; matter, no decree could have been passed against the appellant upon, a promissory note executed by a limited company though signed by the appellant as the Chairman. Mr. Zaki is not agreeable to any' consent order to the effect that this court should order that the suit should be treated as an ordinary suit and should be proceeded with before the learned District Judge as such. Even otherwise I am not inclined to remand the case as more than 10 years have already; passed from the date of the passing of the judgment and decree under appeal and this will prolong further litigation.

3. In view of the above discussion the judgment and decree to the extent of the appellant is set aside and the judgment and decree against the respondent No.2 is maintained, but there will be no" order as to costs.

S. Q./S-103/K Appeal allowed.

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