Law: Contract Act (IX of 1872)

Section: 126

Contract Act (IX of 1872)--- ----S. 126---"Contract of guarantee"---Meaning---Attorney of Bank whether authorised to furnish Bank guarantee---Contract of guarantee means a contract to perform the promise or discharge the liability of a third person in case of his default---Provisions of power of attorney specifically provided for furnishing a Bank guarantee, in spite of absence of word "Bank guarantee" used therein words execution of a contract bond, deed or undertaking to discharge the burden of a third party on his default would amount to furnishing guarantee---Attorney of Bank was thus, authorised to furnish Bank guarantee. PLD 1989 Kar.123 rel. Syed Ali Ahmed Tariq for Appellant. Muhammad Muzaffarul Haque (on pre-admission on Court notice) for Respondents. Date of hearing: 18th September, 1990. ORDER SALEEM AKHTAR, J.---In a suit filed by Ghulam Muhammad respondent No.2 order dated 1-4-1990 was passed whereby the Official Assignee was appointed as Commissioner. He was directed to hand over two equal portions of the shop after getting it partitioned to Ghulam Rasool and Ghulam Muhammad, the appellant, for purpose of business upon furnishing security by each of them in the sum of Rs.5.00.000. In pursuance of this order respondent No.2 furnished a bank guarantee which the appellant challenged on the ground that the attorney of the bank had no specific power to furnish bank guarantee on behalf of the bank. The Na7sr made a reference to the learned Single Judge who by his order dated 31-5-1989 held that the power of attorney properly authorises the officer to execute the bank guarantee. This order has been challenged by the appellant. The learned counsel for the appellant has repeated the same contention which was raised before the learned Single Judge. In this regard reference has been made to the power of attorney produced by the Bank Officer, in which, according to the learned counsel for the appellant, no specific power to furnish bank guarantee has been given. It is true that the word guarantee does not find place anywhere in the power of attorney. However respondent No.2   had pointed out paragraphs 1, 2, 11, 17 and 19 to show that…