KAMRAN ZALI vs Messrs UNION BANK LIMITED and 4 others through Manager
This civil appeal arises from a judgment and decree passed by the Banking Court against the appellant and others in a recovery suit filed by the respondent-Bank based on credit facilities availed by a company. The core legal question was whether the appellant, who was neither a director nor a shareholder of the debtor company and had allegedly not executed any guarantee, had raised sufficient grounds to be granted leave to appear and defend the suit. The Lahore High Court held that since the appellant explicitly denied executing any guarantee and demonstrated through bank and company documents that he had no connection as a shareholder or director, he disclosed a bona fide and serious defence. Consequently, the Court allowed the appeal, set aside the judgment and decree against the appellant, granted his application for leave to appear and defend, and directed that the matter proceed as a regular long cause.
- Whether a defendant who denies executing a guarantee and shows no connection to the debtor company is entitled to leave to appear and defend?
- Does the absence of a guarantor's name in the sanction letter and company correspondence constitute a bona fide defence in a banking suit?
- Can a judgment and decree be set aside partially against a single appellant while leaving the rest of the case intact?
' JAWWAD S. KHAWAJA, J.--- This appeal impugns the judgment and decree, dated 3-4-2001, passed against the appellants, who was defendant No,5 before the learned Banking Court and 4 others. The appellant-defendant submitted an application seeking leave to appear and defend.
2. The facts of this case are simple. The respondent-Bank had filed a suit against Messrs Regent Dyeing and Finishing Mills (Pvt.) Limited, respondent No,2, which had availed facilities from the respondent-Bank. Respondents Nos.3, 4 and 5, who were directors and principal shareholders of the respondent-Company, had executed guarantees in favour of the respondent-Bank.
3. The appellant-defendant is neither a shareholder nor a Director of the respondent-Company.
Furthermore, the sanction letter of the respondent-Bank as well as the letter dated 8-8-1997 issued by the respondent-Company to the respondent-bank show that the appellant was not required to execute a guarantee to secure facilities availed by the respondent-Company from the respondent-Bank.
4. The appellant-defendant in his application seeking leave to appear and defend disclosed the above facts. He also expressly alleged that he had not executed any guarantee in favour of the respondent-Bank. It was further stated in the aforesaid application that the appellant-defendant was not connected with the respondent-Company as a shareholder or as a Director. These averments in the appellant's application seeking leave to appear and defend, coupled with the circumstances noted above that he is not even a shareholder of the Company, and considering the letters of the Bank and of the respondent-Company, referred to above, we have reached the conclusion that the appellant-defendant did disclose a bona fide and serious defence to the suit filed by the respondent-Bank. In these circumstances, his application seeking leave to appear and defend ought to have been allowed by the learned Banking Court.
' For the foregoing reasons, we set aside the impugned judgment and decree to the extent of the appellant only. His application seeking leave to appear and defend is allowed. The appellant shall, therefore, submit his written statement before the learned Banking Court within three weeks from today. The matter to the extent of the Bank's claim against the appellant shall therefore, proceed as a regular long cause.
' This appeal is allowed in the above terms. The office shall ensure that the file of the case is sent to the Banking Court within one week from today.
Cited by 6 cases
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- HABIB BANK LTD. vs PARAGON INDUSTRIES (PVT.) LTD. through Chief Executive 2009 CLD 1346
- Dr. HAROON IFTIKHAR vs N. D. F. C. 2009 CLD 622
- Dr. HAROON IFTIKHAR vs NDFC 2009 PLJ Lahore 12
- QAMARUZAAMAN KHAN- vs INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN 2009 CLD 460
- INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN, KARACHI vs Messrs ZAMCO 2007 CLD 217