MUHAMMAD SHAHBAZ vs MUHAMMAD NASEEM, RECOVERY OFFICER, SMALL
This matter comes before the Lahore High Court through a habeas corpus petition filed by the petitioner seeking the release of his father, who stood as a guarantor for a loan obtained by a third party from the respondent-Bank. The principal amount of the loan was previously paid by the guarantor, but the respondent-Bank subsequently arrested him again demanding interest payments. The core legal question concerns the legality of detaining a guarantor and subjecting him to coercive measures for the recovery of interest when the principal amount has already been cleared and the primary loanee is available and has undertaken to settle the accounts. The Court held that the repeated detention of the guarantor under such circumstances demonstrated mala fides, particularly when proceedings against the principal debtor were pending. Consequently, the Court ordered the immediate release of the detainee, subject to potential future action if the primary loanee fails to resolve the matter within a specified period.
- Whether a guarantor can be repeatedly detained for recovery of interest when the principal loan amount has already been paid?
- Can coercive measures be initiated against a guarantor before exhausting remedies against the principal loanee?
- Whether habeas corpus is an appropriate remedy in cases of illegal detention for loan recovery by a financial institution?
ORDER
' Through this habeas corpus petition the petitioner seeks release of his father namely Muhammad Sadiq son of Lal Din, who stood guarantor for Faisal Shahzad Baig who obtained loan of Rs,2,00,000 from the respondent-Bank in 1995 but did not repay the same according to the promise, hence, Small Business Finance Corporation arrested the father of the petitioner for the payment of the loan, and he made payment of Rs,2,00,000 in the account of said Faisal Shahzad Baig on 17-3-1998.
But again respondent had raided the house of the petitioner and has arrested his father and is demanding Rs,92,217 as interest of the already returned principal amount.
2. Learned counsel for the petitioner contends that without adopting coercive measures against Faisal Shahzad, petitioner's father is being harassed with mala fide intention by the respondent- Bank. According to him firstly they should have approached Faisal Shahzad who is loanee and was beneficiary of the said transaction. It is further contended that father of the petitioner has already suffered a lot, who has been penalized and due to the pressure he had made the payment of total principal amount. It is also contended that writ petition was filed by said Faisal Shahzad in this Court bearing No,8753 of 2002 which was disposed of by this Court with the direction to him to appear before respondent No,1 and settle the account and he gave undertaking that he will settle the amount with respondent-Bank. Learned counsel for the petitioner further contends that in such circumstances father of the petitioner may be released as the proceedings have been initiated with mala fide intention by respondent No,l. It is further contended that father of the petitioner is not actual loanee but only is guarantor and has already suffered a lot.
3. On the other hand, learned counsel for respondent No,1 claims that proceedings have been rightly initiated against the father of the petitioner as he was guarantor and the procedure has been duly followed.
4. In the peculiar circumstances when the father of the petitioner has already paid an amount of Rs,2,00,000 to respondent-Bank in spite of the fact that he has not received even a single penny and he only stood guarantor of said Faisal Shahzad but respondent No,1 consistently is pressurising the father of the petitioner instead of putting pressure on Faisal Shahzad to make payment, the mala fides of respondent'No,I are crystal clear and more so the writ petition was filed by said Faisal Shahzad and he had given undertaking to make payment to respondent No,1.
' The Authorities, concerned are directed to release immediately the alleged detenu, father of the petitioner and shall not arrest him unless the matter is not resolved between the respondent-Bank and Faisal Shahzad. However, respondent can take action against the father of the petitioner if the matter is not settled between Faisal Shahzad and respondent-Bank within 60 days. With this direction this petition stands disposed of.