Law: Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997

Section: 9

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---S.9---Contract Act (IX of 1872), Ss. 127 & 133---Suit against guarantor for recovery of loan amount---Plea of defendant was that guarantee given by him in consideration of original loan granted to principal borrower stood discharged after granting of fresh loan through subsequent agreement having no reference to original loan nor pleaded so in plaint---Validity---Record did not show that defendant had executed fresh personal guarantee---Plaintiff neither produced original loan agreement nor referred to same either in plaint, affidavit-in-evidence of witnesses or documents produced by witnesses---Guarantee of defendant was continuing one, but consideration on which same was based was original agreement---Plaintiff in order to have such guarantee enforced in suit was required to prove that claim in suit had arisen out of original loan agreement, which facility had been renewed by subsequent agreement, thus, defendant was liable under his guarantee being continuing one---Provisions of S.127 of Contract Act, 1872 fixes engagement of guarantor to things already done or promised to be done for benefit of principal debtor--­Engagement of defendant as guarantor by guarantee was for benefit of principal borrower arising out of original agreement---Claim in suit was based on subsequent loan agreement, in which engagement of defendant as guarantor had not been established---Plaintiff had not established any nexus between original loan agreement and subsequent loan agreement, although there was a specific issue on the point---Suit against defendant as guarantor was dismissed in circumstances. Gulzar Ahmad v. Sindh-Punjab Goods Transport Co. PLD 1966 Kar. 253; Abdul Ghani v. Mst. Zaheda Begum PLD 1982 Lah. 401 and National Commercial Bank Ltd. Karachi v. Muhammad Tufail PLD 1975 Kar. 671 ref. Muhammad Mushtaq v. Bashir Ahmad Chaudhry PLD 1991 Lah. 400; Messrs Ruby Trading Company v. Mst. Zainab Khanum 1984 CLC 169; Samar Gul v. Central Government PLD 1986 SC 35; Muhammad Ayub v. Additional District Judge, Gujranwala 1985 CLC 1745; Muhammad Amin v. Member (Colonies), Board of…

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