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

Section: 10

(a) Financial Institutions (Recovery of Finance) Ordinance (XLVI of 2001)---Ss. 10 & 9(5)---Constitution of Pakistan (1973), Art.185(3)---Suit for recovery---Leave to defend the suit--­Defaulter company had not filed application for leave to defend the suit but guarantor prayed for leave to appear and defend the suit---Banking Judge declined to grant relief to the guarantor on the premises that no bona fide dispute had been pointed out and no tenable explanation had been offered and the application to appear and defend the suit was dismissed as a result whereof the suit was decreed in favour of the Bank and against the Defaulter-Company and the guarantor---Order of the Banking Judge was affirmed by the High Court---Contention of the Defaulter-Company was that the Company had availed the finance facility through the guarantor being its Chief Executive as per the documents relied upon by the Bank itself therefore, application to appear and defend the suit by the guarantor should have been treated by the Banking Judge as well as the High Court on behalf of both of them in the interest of justice and Company may not have been non-suited merely for technical reasons---Validity---Decree having been passed by the Banking Judge after- taking into consideration the material available on the record, and Company being the principal borrower in its own juristic capacity/status, had not applied for leave to defend, according to S.10 of the Financial Institutions (Recovery of Finance) Ordinance 2001, after receiving summons issued by the Banking Court under S.9(5) of the Ordinance, therefore, the application which was submitted by the guarantor having a distinct and different status, being a guarantor, shall not be deemed to be application for leave to defend on behalf of the principal borrower as well, and in such view of the matter, Banking Court had rightly decreed the suit and guarantor in her capacity as guarantor could not challenge the legality or otherwise of the decree---Principles. Admittedly the Company was a Private Ltd. Company under the Companies Ordinance 1984. It got its own independent juristic character. As far as the guarantor was concerned, she…

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