2005 PLP 1462 (CLD)

For the purposes of the construction of a new Tollinton Market at Jail Road Lahore, and also to accommodate the affectees of the old building situated at the Mall Lahore, the Bank of Punjab, (herein after to be referred as the respondent) on the joint request of the appellant and the L.D.A., as the principal borrower and the guarantor, respectively allowed certain financial facility. The appellant as the allottee of the premises which were to be constructed on account of the said financing mortgaged the said premises with the respondent-Bank. And in this behalf requisite agreement and other security/mortgage documents were duly executed by the appellant, the L.D.A. and the respondent. Ultimately, because the repayment of the finance was neither made by the borrower (appellant) nor the guarantor (L.D.A.), the respondent was constrained to file a suit for the recovery against the appellant as also the L.D.A. before the Banking Court at Lahore in which, the appellant filed an application for leave to appear and defend, but without any success, which has been dismissed, followed by the impugned decree dated 8-10-2002.

2. The learned counsel for the appellant when confronted with the judgment of this Court rendered in R.F.A. 256 of 2002 etc, regarding the financing for the construction of Tollinton Market to other allottees of the premises by the Punjab Bank, in which the subject-matter, the facts and questions of law were decided were akin, states that his case is distinguishable from the aforenoted, as in the present matter, the allotment in favour of the appellants, after the grant of finance and its disbursement has been cancelled by the L.D.A.; and some litigation in this regard is pending before the Civil Courts. Therefore, when on the one hand, the appellant's allotment stands revoked, and the possession of the allotted premises have also not been delivered to them, the appellant cannot be compelled to repay the amount to the respondent-Bank. Mover-over, the repayment of the finance was also required to be made after the construction was raised by the L.D.A. and the possession of the said premises was to be delivered to the appellant. But the possession as mentioned earlier, has not been handed over, till to date.

3. When specifically questioned about the execution of the agreement the mortgage and security documents field by the Bank in support of its claim, the learned counsel has not A denied the execution and the validity thereof. It is also not disputed that the shops in question have been mortgaged by the appellant along with the L.D.A., for the purpose of securing the finance from the respondent-Bank. That being so, obviously, the appellant has to discharge his/its liability, as the borrower on the basis of admittedly entered upon transaction of finance, between him and the bank. If there is any dispute between the appellant and the L.D.A. about the cancellation of the allotment of the premises and some litigation in this behalf is pending between, that does not prevent and preclude the respondent-Bank to demand and recovery its finance given to the appellant under the valid financing guarantees. Therefore, we do not find that any illegality has been committed by the learned Banking Court, while refusing leave to appear and defend. Thus, the impugned decree is upheld with the modification that the decree against the appellant is though joint and several with the L.D.A., but shall first be satisfied from the sale of the mortgaged property, and if it is not fully satisfied, only then, the appellant and the L.D.A., shall be B jointly and severally liable for the satisfaction of the remaining amount of the decree without prejudice to his right and any dispute with the L.D.A. but however, if the appellant in order to save the sale of the mortgaged property, wants to satisfy the decree by making payment of the decretal amount to the respondent-Bank, he may do so within four months, and obviously the property shall not be put to auction then. Otherwise, the respondent shall be free to seek the satisfaction/ execution of its decree in accordance with law. S.A.K./A-392/L Order accordingly.