Mian FURQAN IDREES vs JS BANK LIMITED Ss — 2022 CLD 1395 LAHORE-HIGH-COURT-LAHORE

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Mian FURQAN IDREES VS JS BANK LIMITED Ss. 9 & 22---Contract Act (IX of 1872), Ss. 129, 133, 135 & 136---Suit for recovery of finance---Maintainability---New management, liability of---Liability of surety---Appellants/defendants were guarantors who assailed judgment and decree passed against them by Banking Court---Plea raised by appellants/defendants was that after their resignation from Board of Directors of the company, new management was responsible for finances availed from respondent/Bank---Validity---Condition precedent for maintaining a suit under S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 by a financial institution was commission of default by a customer in fulfilment of any obligation with regard to a finance---Neither members of new management fell within the definition of 'customer' who would have committed any default nor any finance was extended by respondent /bank to members of new management nor they ever defaulted in fulfillment of any obligation---Members of new management never executed or replaced guarantees executed by appellants/defendants---Principal debtor company was separate juristic person and its liability could not be transferred to its shareholders---Members of new management were only shareholders and not guarantors---Banking Court rightly dismissed suit against new management---Mandate of law contained in provisions of Ss. 129, 133, 135 & 136 of Contract Act, 1872 created a right in favour of surety which was private in nature---Parties by fiction of law were allowed to surrender, relinquish or waive those rights by agreeing with each other---Members of new management did not fall within the definition of 'customer', therefore, their non-impleading was neither malicious nor unlawful---Resignations of appellants/defendants from directorship or selling project of principal debtor company to third party or transferring shares in their favour had not absolved appellants/defendants from their liability as guarantors' liability as the same was coextensive with that of principal debtor company and they were jointly and severally liable to pay decretal amount---No restructuring or rescheduling between respondent/Bank and new management, therefore, appellants' liability as guarantors never stood discharged---High Court declined to interfere in judgment and decree passed by Banking Court as there was no legal infirmity in it---Appeal was dismissed, in circumstances.

Mian FURQAN IDREES vs JS BANK LIMITED Ss — 2022 CLD 1395 LAHORE-HIGH-COURT-LAHORE

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