Law: Contract Act, 1872

Section: 131,127,129

Law: Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)

Section: 9

Law: Civil Procedure Code (V of 1908)

Section: O.I,R.10

Contract Act (IX of 1872)--- ----Ss. 131,127 & 129---Civil Procedure Code (V of 1908), O. I, R. 10---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.9---Suit for recovery---Contract of guarantee /surety---Death of surety---Effect---Application for impleadment of legal heirs of surety as party(s) in the suit for recovery---Revocation of continuing guarantee by surety's death---Scope---Plaintiff Bank sought to implead legal heirs of one of the defendants in the suit for recovery, who had died, on basis of a guarantee furnished by the said deceased defendant---Contention of the plaintiff Bank was that the said personal guarantee had stated that in event of his death, defendant's successors would be liable and that S. 131 of the Contract Act, 1872 provided that the death of a surety revoked the continuing guarantee but only in absence of a contract to the contrary---Validity---Contract of guarantee could not be enforced unless there was some consideration for the guarantee and the contract of guarantee must be based on consideration and if the consideration so specified was not brought on record, then court could not assume such consideration---Nothing was mentioned in the plaint as to what financial facility was availed by the said defendant against the guarantee executed by him and it was not mentioned whether any demand was raised against the deceased defendant in his lifetime---Although the deceased defendant had agreed that in case of his death, the bank shall have the right to dispose of his moveable and immovable assets, but no schedule was attached with guarantee to show whether the defendant/guarantor had provided any details of his moveable and immovable assets---Vast difference existed between a "guarantor" and a "mortgagor"; and had the deceased defendant in his lifetime mortgaged property against some finance facility, recovery could have been made through disposal of assets by impleading his legal heirs, however, this was not the situation in the present case---Mere mentioning of the words in the guarantee that the same "would be binding on succesors-in-interests" would have no significance and the legal heirs could not…

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