Mst. PARVEEN AMIR vs NATIONAL BANK OF PAKISTAN and 3 others

' JAWWAD S. KHAWAJA, J.---The appellant, namely, Mst. Perveen Amir has assailed the judgment and decree, dated 31-7-1996 passed by the Banking Tribunal No, II, Lahore, against her and three other defendants, who are respectively respondents Nos. 2, 3 and 4 in this appeal.

2. The facts of this case are relatively straightforward. The National Bank of Pakistan respondent No,1 filed a suit for recovery of a sum of Rs, 11,679,849.88 against the defendants together with mark-up, costs and other charges. The appellant, who was arrayed as defendant No,4 in the suit filed by the respondent-Bank, was sued as a guarantor for the liability owned to the respondent- Bank by M/s. Sharia Habib Corporation, respondent No,2 herein. The basis of the Bank's claim against the appellant/defendant was a guarantee executed by her in favour of the respondent- Bank. By means of the said guarantee, which is on record, the appellant/defendant undertook to guarantee and pay to the respondent-Bank any sums of money due and payable by M/s. Sharia Habib Corporation under an agreement, dated 5-6-1989 entered into between the said Corporation and the respondent-Bank. The maximum amount guaranteed, under the aforesaid guarantee was Rs,7,000,000.

3. We have examined the agreement, dated 5-6-1989 and note that a facility of Rs,50,00,000 was allowed to M/s. Sharia Habib Corporation by the respondent-Bank. The facility was to expire on 30- 6-1990. The aforesaid Corporation was required to pay to the Bank a sum of Rs,5,920,000 on or before 30-6-1990 in lump sum.

4. Learned counsel for the appellant has argued that the liability of the appellant/defendant as guarantor was expressly limited to the amount specified in the agreement dated 5-6-1989. He drew the attention of the Court to the statement of account filed before the Banking Tribunal by the respondent-Bank. It is clear from the said statement of account that on 16-9-1990 the entire outstanding amount, due and payable by M/s. Sharia Habib Corporation, was repaid to the respondent-Bank. This is clear from the credit entry appearing in the statement of account, which shows that there was no outstanding amount due and payable by the aforesaid Corporation to the respondent-Bank as the same had been adjusted on 16-9-1990. There is another entry in the statement of account dated 16-9-1990 showing that finance amounting to Rs,3,000,000 was allowed to M/s. Sharia Habib Corporation by the respondent-Bank.

5. Relying on the facts narrated above, learned counsel for the appellant argued that the appellant/defendant had only guaranteed the liabilities of M/s. Sharia Habib Corporation arising out of the agreement, dated 5-6-1989. The said liabilities, even according to the above-referred statement of account prepared by the respondent-Bank, stood fully repaid and adjusted on 16-9- 1990. According to him, if the Bank had advanced some other finance to M/s. Sharia Habib Corporation, the appellant could not be held liable for the same. Learned counsel for the respondent-Bank, however, contended that M/s. Sharia Habib Corporation had requested for the renewal of its facility by means of an application dated 19-9-1990. According to him, it was at the request of the said Corporation that finance of Rs,3,000,000 was allowed to M/s. Sharia Habib Corporation as is reflected in the statement of account through an entry dated 16-9-1990. He, therefore, contended that the said finance allowed to M/s. Sharia Habib Corporation was, in fact, a continuation of the facility granted to the said Corporation under the agreement dated 5-6-1989. It was on this basis that he argued that the appellant/defendant was liable for the renewed facility also.

6. After hearing both learned counsel and going through the record, we are unable to agree with the arguments advanced by learned counsel for the respondent-Bank. A guarantor can only be burdened to the extent and in accordance with the terms of a guarantee, which may be executed by him. In the present case, it is clear that the appellant/defendant guaranteed the liabilities of M/s. Sharia Habib Corporation arising under the agreement of 5-6-1989. Admittedly, and as per terms of the said agreement itself, the finance facility ended on 30-6-1990. Thereafter, on 16-9- 1990, the entire liability of M/s. Sharia Habib Corporation owed to the respondent-Bank stood cleared as is apparent from the statement of account, referred to above. If the respondent-Bank chose to extend fresh finance to the aforesaid Corporation whether by way of renewal or otherwise, the Bank could not have recourse under the guarantee executed by the appellant/defendant. This is obvious from the fact that the term of the finance facility under the above-noted agreement expired on 30-6-1990 and this was the express representation relied upon by the appellant/defendant while executing a personal guarantee in favour of the respondent-Bank. No fresh guarantee was obtained from the appellant/defendant for the new/renewed facility allowed by the respondent-Bank to M/s. Sharia Habib Corporation on 16-9-1990. The Bank, in fact, unilaterally appears to have entered into an arrangement with the above-named Corporation, whereby, a facility was allowed to the said Corporation which is now being termed by learned counsel for the respondent-Bank as a renewal of the earlier facility. Whether the said facility is a renewal of the earlier facility or constitutes a fresh facility, is not particularly relevant because in either event, the appellant/defendant did not give her concurrence to such facility or to the variation of the terms of the agreement, dated 5-6-1989 between M/s. Sharia Habib Corporation and the respondent-Bank.

7. In the above circumstances, we have no doubt that the appellant/defendant was not liable for any amount advanced to M/s. Sharia Habib Corporation by way of a fresh facility or renewal of the earlier facility. In this view of the matter, we find that the learned Banking Tribunal No, II was not justified in passing the impugned decree against the appellant/defendant in favour of the respondent-Bank. As a consequence, the decree in favour of the respondent-Bank against the appellant/ defendant No,4 is set aside. There shall be no order as to costs.