RAJA MEHBOOB ELAHI vs U.B.L. OF PAKISTAN THROUGH MANAGER And Another
This matter concerns a petition for leave to appeal against an order of the High Court, which dismissed a regular first appeal filed by a borrower and a guarantor against an ex-parte decree for the recovery of money. The suit was originally filed by a banking company under the Banking Companies (Recovery of Loans) Ordinance, 1979. During the appellate proceedings, the High Court had issued an interim order requiring the borrower to deposit a specific sum of money, which was not complied with. Consequently, the High Court dismissed the appeal of both the borrower and the guarantor based on this non-compliance. The core legal question is whether the High Court erred in dismissing the appeal of the guarantor solely due to the borrower's failure to comply with the court's interim deposit order, particularly when the guarantor had allegedly fulfilled the requirements stipulated under Section 12(5) of the Banking Companies (Recovery of Loans) Ordinance, 1979. The Supreme Court granted leave to appeal to examine the validity of the High Court's dismissal order in light of the guarantor's specific legal position and compliance status.
- Can an appellate court dismiss a guarantor's appeal solely due to the borrower's failure to comply with an interim deposit order?
- Does the failure of a principal borrower to comply with a court-ordered deposit automatically invalidate the appeal of a co-appellant guarantor?
- What are the legal requirements for a guarantor under Section 12(5) of the Banking Companies (Recovery of Loans) Ordinance 1979?
- Section 12, Banking Companies (Recovery of Loans) Ordinance 1979
- Section 12(5), Banking Companies (Recovery of Loans) Ordinance 1979
ORDER
SAJJAD ALI SHAH, C.J.--- Respondent No. 1 herein filed a suit for recovery of money under section 12 of the Banking Companies (Recovery of Loans) Ordinance, 1979 against respondent No. 2, who is borrower, and the petitioner, who is guarantor. Since the defendants in the suit were not served initially, the suit was decreed ex-parte and after acquiring knowledge during execution proceedings application was filed for setting aside ex-parte decree, which was dismissed. A regular first appeal was filed in the High Court by both the judgment-debtors, who are brothers inter se, and interim order was passed on 19.9.1994 allowing borrower Raja Muhammad Ashraf to deposit Rs. 100,000 within two months and to approach the bank for remission of interest. No objection was raised to this order by the counsel of the bank and for the further proceedings the hearing was adjourned. Finally the appeal was dismissed with costs vide the impugned order on the ground that undertaking given to the Court to deposit Rs. 10,000 within two months was not complied with.
2. Contention is raised that if borrower did not comply with the direction how appeal of guarantor could be dismissed on the ground as stated above particularly when requirements contemplated under section 12(5) of the said Ordinance had been complied with. Leave is granted to examine whether the High Court has erred in passing the order in view of the contention mentioned above.