ALGEMENS BANK NEDERLAND N.V. Versus FORT SUPER PAKISTAN Ltd.

ORDER

1. This application under Order XXXVII, Rule 3, C.P.C. has been filed by the defendant No.3 who is guarantor. The defendant No.3 does not dispute this position but he has taken the plea that 'the guarantor' is not covered by the definition of borrower under the Banking Companies (Recovery of Loans) Ordinance, 1979, and therefore, the present suit is not maintainable. The word borrower has been defined under section 2(b) as follows:

2. "Borrower means a person who has obtained a loan from a banking company which includes a surety or indemnifier."

3. It is thus clear that the definition of the borrower has been extended to cover a surety or indemnifier and therefore, within the meaning of this provision the guarantor shall be termed as a borrower for the purposes of this Ordinance. Mr.Moulvi the learned counsel for defendant No.3 has referred to the order passed in Suit No.603 of 1986 M/s. Banque Indesue v. Syed Muhammad Sabir and contended that the guarantor is not a borrower. The facts of this case were completely different and it has not been held in this order that the guarantor is f not to be treated as a borrower. There the suit was filed against a defendant on the allegation that the goods were delivered to him for custody but in collusion with the defendant borrower, the goods were alleged to have been sold. The facts of that case are completely distinguishable and the observations are not applicable to the present case.

4. The next contention of the learned counsel for defendant No.3 is that the Banking Companies (Recovery of Loans) Ordinance, 1979 is beyond the scope of law of necessity as enuntiated in Begum Nusrat Bhutto's case P L D 1977 S C 657, and therefore, the Ordinance is void ab initio and unconstitutional. In this regard I suffice to refer to Full Bench Judgment in Nasir Muhammad case P L D 1986 Kar. 516 and Muhammad Bachal's case P L D 1986 Kar. 296. 1n view of the observations in both these judgments by which I am bound, the contention of the learned counsel needs no further consideration and is not tenable.

5. The third contention raised by the learned counsel for defendant No.3 is that the Banking Companies (Recovery of Loans) Ordinance, 1979 is void ab initio and unconstitutional as interest cannot be granted which is un-Islamic. In this regard the learned counsel has referred to Bank of Oman Limited v. East Trading Company P L D 1987 Kar. 404. However, in Habib Bank v. Muhammad and others P L D 1987 Kar. 612 the same learned Judge who had pronounced the judgment in Bank of Oman case after considering the provisions relied by the learned counsel has made the following observation;

6. "I am, however, bound by the decision of the Full Bench of this Court, P L D 1987 Kar. 296, wherein it has been observed that Article 270‑A is valid and the validity of Article 270‑A cannot be tested on the touchstone of Article 2‑A or vice versa. (P.328, para. 17 supra) I am, therefore, constrained to say, with a heavy heart, that the plaintiff is entitled under section 8(2) of the Banking Companies (Recovery of Loans) Ordinance, 1979 to claim interest for the period of pendency of the suit from 3‑7‑1985 till payment which, in this case, has been fixed, by my short order, as 11‑8‑1987. The amount of interest accrued from 3‑7‑1985 to 30‑6‑1987, to be exact, as submitted later on by the plaintiff's counsel, is Rs.3,74,969 which till payment as ordered, will be in the neighbourhood of Rs.4 lacs (approximate). However, the said sum of Rs:4 lacs representing the amount of interest for the period aforesaid stands paid pendentlite by the defendant and is adjustable accordingly."

7. It is, therefore, clear that having considered the same contention raised by the learned counsel before me and taking note of the judgment of the Full Bench, the, Ordinance has not been held to be void.

8. The last contention raised by the learned counsel for defendant No.3 is that in para. 16 of the plaint cause of action has not been specifically mentioned against defendant No.3. In para. 16 a statement regarding cause of action against all the defendants has been made, cause of action and facts have been stated in the entire plaint and it is not the case that no allegation against the defendant No.3 has been made. This contention is not tenant. No other contention has been raised on behalf of defendant No.3.

9. Mr.Pishori has pointed out that the defendant No.3 has admitted to be the guarantor and the correctness of the amount of interest as well as the principal has not been challenged by him. In these circumstances no ground for ' grant of leave to defend has been made out. The defences raised are sham. The[ application is dismissed.

10. 1 & 2. Mr.Pishori states that in view of the legal position operating under the Banking Companies (Recovery of Loans) Ordinance, 1979 he does not. wish to proceed against defendant No.4 in the present suit but reserves the right a file any other action against them in proper Court of law. Consequently the application reservation made by the learned counsel for the plaintiff is granted. The defendants Nos.1 and 2 have not applied for leave to appear and defend the suit. The application under Order XXXVII, Rule 3 filed by defendant No.3 has been dismissed. The claim in this suit has not been pressed against defendant No.4. The plaintiff has filed this suit for recovery of Rs.20,32,855.96. As application for leave to appear filed by defendant No.3 has been dismissed, defendants Nos.1 and 2 have not appeared and as the plaint is verified on oath, I grant a decree against the defendants 1, 2 and 3 jointly and severally for G Rs.20,32,855.96 with interest at the rate of 14% P.A. from the date of suit till recovery. It is however, made clear that the liability of defendant No.3 under the decree will not exceed Rs.22,50,000. The plaintiff will be entitled to costs.

11. H.B.T./A‑338/K Suit decreed.