Law:

Section:

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-------S. 18---Contract Act (IX of 1872), S. 126---Bank guarantee---Execution of counter guarantee in favour of bank to secure Bank guarantee issued in shape of limit---Scope---Agreement for finance would not be required in cases of bank guarantees---Individual counter guarantee could be obtained in single transaction in bank guarantee cases---Counter guarantee would not be required in respect of every issue of bank guarantee---Signatures of guarantors of borrower would not be required on counter guarantees. Muzammil Brothers and another v. Saudi Pak Commercial Bank Ltd. through Manager 2006 CLD 1546; United Dairies Farms Pvt. Ltd. and 4 others v. United Bank Ltd. 2005 CLD 569; Habib Credit and Exchange Bank Ltd. v. Emirates Bank International Ltd. 2002 CLD 524 and Soneri Bank Ltd. v. Classic Demin Mills Pvt. Ltd. and 3 others 2011 CLD 408 ref. Muhammad Manzoor-ul-Haq for Appellants. Muhammad Saleem Iqbal for Respondent No.1. Date of hearing: 9th September, 2013. JUDGMENT This regular first appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was filed against the judgment and decree dated 26-2-2013 passed by Judge Banking Court-I, Multan. 2. Brief facts of the case are that appellants Nos. 1 to 4 requested for sanction of fund based/non-fund based facilities from the respondent/bank in the year 2007/08. Appellant No.1 acting through appellants Nos.2 to 4 vide request letter dated 12-1-2009 sought for sanction/renewal of existing non fund based facility i.e. bank guarantee facility (assignable) which was approved by the respondent/bank on 22-1-2009 having expiry dated 31-12-2009 against existing securities already held by the respondent/bank. In order to secure bank guarantee facility appellants executed various charge/security documents including counter guarantee in favour of respondent/bank. Memorandum of deposit of title deeds and registered mortgage deeds were duly executed by the owners/ mortgagers in favour of respondent/bank. On the request of the appellants, respondent/bank issued the following bank guarantees:-- Sr. No. B.G. No. Date of issue…

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