Law: Contract Act, 1872

Section: 133,134,135,141

Law: Civil Procedure Code (V of 1908)

Section: O.XXIII,R.3

Contract Act (IX of 1872)---Ss. 133, 134, 135 & 141---Civil Procedure Code (V of 1908), O.XXIII, R.3---Composition by creditor with debtor without consent of guarantor, effect of --Composition by creditor with debtor without consent of guarantor would discharge guarantee given by guarantor for payment of debt. Federation of Pakistan v. National Bank of Pakistan 1981 CLC 847; Begum Zia Farhat Awan v. Islamic Republic of Pakistan 1993 CLC 365; Pirthi Singh v. Ram Charan Aggarwal AIR 1944 Lah. 428 and (1812) 128 ER 405 and 56 Mad. 652 ref. ORDER By order dated 16-5-2001 the suit was decreed as against defendant No. 1, however, the question of the liability of the guarantors was left open, in which it was specifically stated, that whether by novation and taking over of the said company under law, would the guarantors prior to take over, continue to be liable. On 20-2-2001, a similar question was framed and the case was fixed for final disposal. Today, this question has been argued. It is the case of Mr. Akber Mirza that earlier, in J.M. No.39 of 1997 one Mr. Saadat Hussain Khan, Ex--Chairman, Federal Chemical Corporation Limited was appointed as the Chief Executive of the company, namely, the defendant No. 1. The appointment of the Chief Executive was not objected as neither any counter-affidavit was filed, nor anyone for them appeared .... was passed on the basis of the report of the Registrar that the company was running in a loss and that its shareholders and Creditors were not benefiting out of the said company and for the purposes of investigation of the affairs of the company an Investigator initially, Messrs Saadat Hyder & Co. were appointed who were subsequently replaced by Messrs Rehman and Sarfraz & Co. The investigator had not submitted any report till the date of the order in J.M. No.39 of 1997 Mr. Habibur Rehman is stated mentioned that the Inspectors were not allowed entry Into the company for the purposes of discharging their professional obligations, thus such a report could not be completed. This Court held that there was mismanagement in the affairs of the company and that in case the company is not taken over and a Chief Executive…

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