P L D 1993 Karachi 90 (PLP)

This application under Order 47, Rule -1, C.P.C. is filed by Intervenor M/s. United Bank Limited praying for setting aside in part the order dated 11-12-1991 whereby the Bank Guarantee furnished by the Intervenor was to be encashed by the Official Liquidator. This application is supported by an affidavit of Syed Riaz Askari, Principal Officer and Attorney of the Intervenor stating that he was a little late when the Reference of Official Assignee bearing No.3, dated 12~9-1991 was called and therefore the same was decided in the absence of the Intervenor . For this reason the Intervenor has moved this application. Mr. J.H. Rehmatullah as well as Mr. Molisin Tayabally, learned counsel for applicants Fazal Corporation (hereinafter called the Company) and another have no objection if the order dated 11-12-1991 may be reviewed on the grounds disclosed in this application. It was contended by Mr. A.I.Chundrigar, learned counsel for the Intervenor that the investment guarantee dated 15-6-1986 for Rs.6,750,000 was issued by the Intervenor for a period of one year in favour of PICIC which was extended by the Intervenor and was last extended tin 16-&1990 and therefore there was no valid and binding guarantee in favour of PICIC on 11-12-1991, when the order of its encashment was passed by the Court. It was further contended that this important aspect of the case was not brought to the notice of the Court and requires re-consideration. Mr. J.H. Rehmatullah learned counsel appearing for the Company on the other hand disputes this position. According to him in terms of the Investment Guarantee dated 15-&1986, the liability of Intervenor Bank commenced on the failure of the Company, the Principal Debtor, to its obligation within time. It would be advantageous here to refer to the relevant portion of the Investment Guarantee addressed to PICIC which states: "Now, therefore, we do hereby guarantee that Borrowers shall as and when required by you and in any case, within 12 months from the date hereof further raise their paid-up capital to Rs.6,750 million and in the event of failure on their part to comply therewith within the stipulated time we do hereby agree and undertake to deposit an amount of Rs.6,750 million with you on the expiry of the period of twelve months from the date hereof, without further reference from you and as and when demanded by you for subscription in the capital of the Borrowers and investment in the Project, provided that the amount of our liability hereunder will stand reduced to the extent the Borrowers raise their paid-up capital as aforesaid. We do hereby further agree that you may without notice to us grant time and/or other indulgence to the borrowers without affecting the liability hereby created." Now the entire case of the intervenor Bank rests on their letter dated 15-6-1986 (U-6) whereby the Guarantee. was extended by them up to 16-6-1990 and reads as follows:-- Messrs Pakistan Industrial Credit and Investment Corporation Limited, State Life Building No.1, I.I. Chundrigar Road, Karachi. LC NoALR/142/86 Dated 15-6-1986 For Rs.6,750,000 OUR BANK GUARANTEE NOALR/142/86, DATED 15-6-1986 FOR RS.6,750,000 FAVOURING YOURSELVES ON BEHALF OF M/S.FAZAL VANASPATI LIMITED. At the request of M/s. Fazal Vanaspati Limited, Karachi, we, United Bank Limited, Al-Rehman Branch, Karachi, do hereby extend validity of our captioned Bank Guarantee up to 16-6-1990. All other terms and conditions of the guarantee will remain unchanged. for and on behalf of AUTHORISED SIGNATURE AUTHORISED SIGNATURE." What may transpire from a bare reading of the above letter of extension was that although it was addressed to PICIC, by the Intervenor, the validity of Bank Guarantee up to 16-6-1990 was extended at the request of the Company. At best arrangement to limit or restrict the liability of the Intervenor Bank up to the said date was between the Company (the Principal Debtor) and the Guarantor Bank having no consent of the Creditor, namely M/s. PICIC and not binding on it. A Contract of Guarantee involves three parties namely, the Creditor, the Principal Debtor and the Guarantor. Any subsequent arrangement between the Principal Debtor and the Guarantor without the consent of the Creditor is not binding on the Creditor Who can always took forward to the Guarantor for enforcement of the original terms of Guarantee. Any attempt by the Guarantor to restrict or limit his liability in terms of time or otherwise as such, to which the Creditor was not a party is of no legal effect. Under the original contract, the guaranteed amount was to be deposited by the Guarantor with the Creditor on the expiry of the period of twelve months from the date thereof i.e. 15-6-1986, without further reference to the said debtor. It may be added that in terms of guarantee only PICIC as creditor could grant further time or other indulgence to the Company, without notice to the Intervenor Bank. Under section 137 of the Contract Act 'mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary discharge the surety.' In the present case there is nothing to the contrary. The further objection of Mr. A.I. Chundrigar that encashment of Bank under the Guarantee is time-barred, therefore, does not appear to me tenable in law for the said reason. As a result the application is dismissed and the order dated 1142-1991 directing the Official Liquidator to encash the Bank Guarantee furnished by the Intervenor Bank is maintained. AA./P-265/K Application dismissed.