Law:

Section:

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-------Ss. 9, 10 & 22---Application for leave to defend suit---Security for finance to the principal borrower---Plea of fraud---Appellant (guarantor) had offered security at the time of signing of loan documents---Bank filed suit for recovery of loan amount of Rs.32,326,937 and after dismissal of application for leave to defend the suit, Banking Court decreed the suit against all defendants jointly and severally to the extent of Rs.1,799,723 with future cost of fund---Plea raised by appellant (guarantor) was that he had been made victim as he was induced to create mortgage by fraud and misrepresentation and the said mortgage was created only for the purpose of regulatory requirements without risking his property---Validity---Loan documents showed that the mortgage was created to offer mortgaged property as a security for repayment of liability under the finance and other supplemental agreements---Appellant did not dispute creation of equitable and registered mortgage which unequivocally acknowledged that mortgage had been created in consideration of finance produced or promised by the principal borrower---Appellant could not be allowed to plead any condition extraneous to written terms and agreement between the parties---Appellant might have a remedy against the principal borrower for damages and even otherwise, appellant being surety for the liability of the principal borrower, could proceed against the principal borrower or security lying with the Bank---High Court dismissed the appeal having no merits. Zakas (Pvt.) Limited v. The Bank Alfalah Limited 2004 CLD 1660; Union Bank of India v. Manku Narayana AIR 1987 SC 1078; Haji Fazal Elahi &.Sons v. Bank of Punjab 2004 CLD 162 and Marianne Khan Vs. National Bank of Pakistan 2006 CLD 232 ref. (b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--- ----Ss. 9, 10 & 22---Contract Act (IX of 1872), S.145---Bank loan---Promise to indemnify surety--Mortgagor by executing a mortgage, committed to the mortgagee/creditor that on failure of the borrower/debtor to clear the liability same be set off against the…

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