2004 PLP 1366 (CLD)

MIAN SAQIB NISAR, J.‑‑‑The instant R.F.A. No.494 of 2002, as also R.F.A. No.574 of 2002, R.F.A. No.575 of 2002 and R.F.A. No.576 of 2002, are being disposed of together, as common questions of law and facts are involved in these matters.

2. The respondent‑Bank, instituted a suit for recovery of an amount of Rs.82,43,903 against the present appellant, as also inter alia, the appellants in the other connected appeals. The suit wholly has been decreed to the extent of Rs.77,95,711, but against the present appellant, is to the extent of Rs.34,95,125.

3. Learned counsel for the appellant states that, according to the case set out by the respondent‑Bank, and also found by the learned Banking Court, the appellant was only a surety towards the letters of guarantee and not the demand finance; the bank has admitted that out of five letters of guarantee, four have been adjusted; the liability on account of fifth letter of guarantee is only to the extent of Rs.31,10,434 whereas, the amount of Rs.38,47,616 is already lying with the bank for adjustment/ payment of this letter of guarantee. It is, therefore, argued that the appellant in the facts and circumstances, as guarantor is not liable to pay single penny. It is further argued that the appellant is not liable for any demand finance, procured by defendant No.1; which altogether is an independent transaction.

4. In R.F.A. No.576 of 2002, Mr. Ali Akbar Qureshi, Advocate, who represents the appellants‑defendants Nos.6, 8 and 9, has stated that the said appellants are alleged to be the mortgagers of property bearing No. 128‑13, Civic Center, Sabzazar Scheme, Lahore. Admittedly, the said property is co owned by Muhammad Irshad, appellant No.1 to the extent of 6‑1/4 Marlas, Muhammad Akram and Mst. Inayat Begum, the other two appellants have share of 3‑3/4 Marlas each, and the remaining 6‑1/4 Marlas is owned by Basharat Ali, their close relative; the MODT, which has been placed on the record by the bank allegedly envisaging the mortgage of the property, is not signed by either of the appellants; they have specifically denied this factum and had set out a case that the original documents were with Basharat Ali, the co‑sharer, who in collusion with the bank, has deposited these documents; besides, the appellants have also controverted and denied the execution of their personal guarantee. But unfortunately, the learned Banking Court, while considering the leave application of the appellants, has misread the record in holding that, the appellants have admitted the mortgage of their property and also the personal guarantees; this according to the learned counsel for the appellant is a clear case of misconstruing the fact available on the record.

5. In R.F.A. No.574 of 2002, Mirza Hafeez‑ur‑Rehman, Advocate, learned counsel of the appellant/ defendant No.5, states that according to the bank, the said defendant is alleged to have mortgaged his plot measuring 1 Kanal, bearing No. 12, Block‑I, Sector C‑II, Township, Lahore, for which, he had appointed Basharat Ali, the appellant in R.F.A. No.575 of 2002 as general attorney, through power of attorney dated 13‑9‑1995, but the appellant admittedly on 22‑12‑1996, had sold the said plot in favour of one Zulfiqar, whereas the alleged guarantee on the basis of this property by Basharat Ali in favour of the respondent‑Bank was created on 25‑7‑1998. It is, thus, argued that as the subject‑matter of the alleged power of attorney has already been disposed of by the appellant/owner before the guarantee, therefore, the power of attorney in favour of Basharat Ali, stood cancelled and revoked. Resultantly, on the basis of the power of attorney, he could neither mortgage the property, which is not even the case of the bank, nor could stand as guarantor for the appellant. It is also argued that in the power of attorney dated 13‑9‑1995, there is no specific and clear power conferred upon Basharat Ali, enabling him to make the appellant liable as guarantor, and according to the judgment, reported as Fida Muhammad v. Pir Muhammad Khan (deceased) through legal heirs and others PLD 1985 SC 341, a power of attorney should be strictly construed and any unlawful authority exercised beyond its scope, would have no legal effect. upon the rights of the principal.

6. While arguing the R.F.A. No.575 of 2002, Mian Hameed -ud‑Din Kasuri, Advocate, learned counsel for the appellant, contends that according to the bank's own case, the appellant has not executed the personal guarantee with regard to the property bearing No. 12, Block‑1, Sector C‑II, Township, Lahore, because the appellant has only allegedly executed the guarantee document as an attorney for Muhammad Aslam, therefore he is not personally liable in this behalf; as regards the MODT about the property bearing No. 128‑13, Civic Center, concerned, the appellant is only the co‑owner to the extent of 6‑1/4 Marlas of the said property and the MODT has been signed by Irshad and riot by Basharat. It is also his case that, the appellant has never mortgaged his property or executed said document, but unfortunately, these aspects have not been considered by the learned Banking Court, while refusing to grant the leave.

7. Heard Replying to the argument of Mr. Aish Bahadar Rana, Advocate, learned counsel for the appellant in R.F.A. No.494 of 2002; learned counsel for the respondents states that, the cash margin of Rs.38,47,616 was available with the bank, but this amount has been adjusted towards the demand finance due from the defendant No.1 to the extent of Rs.17,24,320 and towards the L.C., to the tune of Rs.13,30,136 and thus, after the adjustment of those amounts still an amount of Rs.34,95,125 is due under the L.C. However, meeting the point of demand finance, it has been conceded that, the appellant was never a guarantor for the said facility and. therefore; is not liable to pay any amount in this behalf. Accordingly, if any decree has been passed against the appellant on the basis of the demand finance, as alleged by the A appellant's counsel, because of some amendment in the decree, the same shall have no effect and is liable to be set aside. For the letter of credit, suffice it to say that, the question whether the margin amount of the guarantee has been appropriately proportioned by the respondent‑Bank and whether on account of availability of such amount, the appellant as guarantor is liable, are the substantial questions of facts and law, which have not been adverted to by the learned Court below and resultantly, the rejection of the leave application is unfounded.

8. As regards R.F.A. No.576 of 2002 is concerned, the property in question is co‑owned property and has not been mortgaged by the present appellants, because their signatures are not available on the MODT. They have denied the execution and have taken up the plea that, the property has been mortgaged by Basharat, the other co‑sharer, who has also handed over the original title documents to the respondent Bank, and have denied the execution. Obviously, this is serious question of fact, which required proper trial and thus, on account of the above, the said appellants are also entitled to the grant of leave.

9. As far as R.F.A. No.574 of 2002 is concerned, obviously the property had been sold by the appellant/ defendant No.5 before Basharat on the basis of the said property, could stand as surety for the appellant, therefore, the question, whether the property having been transferred, the power of attorney of Basharat stood revoked and cancelled, is serious question of law, which needed attention and determination by the Court. Besides, in the power of attorney dated 13‑9‑1995, there does not seem any power vested with the attorney to stand as surety for the principal. Resultantly, in the light of the judgment reported as Fida Muhammad v. Pir Muhammad Khan (deceased) through legal heirs and others PLD 1985 SC 341, whether Basharat could at all execute the guarantee, was another important question to be seen. Theses aspects have not been considered by the Court below and, therefore, the refusal of leave to the appellant is for invalid reasons.

10. As regards R.F.A. No.575 of 2002 is concerned, it is the case of Basharat that, he had not executed the guarantee on his behalf rather on behalf of Muhammad Aslam, the other defendant of the case. But because, we have granted leave to Muhammad Aslam, the effect of such guarantee on the rights of Muhammad Aslam as also Basharat, are substantial and significant questions, which needed determination through evidence. For the mortgaged property bearing No. 128‑B, Civic Centre, Sabzazar Scheme, Lahore, the case of Basharat, that he has not signed the MODT, rather it is Irshad the co‑owner of the property, who had executed the same and the original title documents were also deposited by him, is prima facie substantial question of facts, which needed the determination. Therefore, all the questions, which have been highlighted in the above preceding paragraphs, are substantial questions of law and facts, for which, the present appellants are entitled to the grant of leave. In the light of above, we accept these appeals, set aside the impugned judgment and decree against the appellants, allow their applications for leave to appear and defend; directing the Court below to decide the suits after trial, as expeditiously as possible. M.A.W./Z‑218/L Appeal accepted.