MCB BANK LIMITED vs UZMA TEHREEM — 2026 SCMR 533 SUPREME-COURT

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MCB BANK LIMITED VS UZMA TEHREEM. Section 133---Contract Act, 1872---Financial Institutions (Recovery of Finances) Ordinance (XLIV of 2001), Section 9---Discharge of surety by variance in terms of contract---Scope. The record, including the Letter of Guarantee, revealed that the guarantee furnished by the respondent as one of the directors of the customer/company in pursuance of the second renewed running finance facility was continuing and was furnished to secure all amounts becoming due or payable by the customer/company. The guarantee did not stand discharged under Section 133 of the Contract Act, 1872 due to variance in terms of contract, including execution of the relevant restructuring agreement, which had also been signed by the director/respondent in his capacity as guarantor. Where variation or composition of loan or extension of time for repayment was allowed by the creditor to the borrower and consent or assent in advance thereto was given by the guarantor in the Letter of Guarantee, such variation, composition, extension, change or indulgence, being within the contemplation of the parties at the time of execution of guarantee, did not affect discharge of the surety or guarantee from obligations arising under the guarantee. The surety continued to remain bound by the terms of the guarantee despite moratorium, enlargement of time, composition and variations between the creditor and the principal borrower. Since no substantial question of fact or law requiring evidence to be recorded had arisen in favour of respondents/customers/company, there was no occasion for the High Court to grant respondents leave to defend the suit. The Supreme Court set aside the impugned judgment and decree passed by the Appellate/High Court in favour of respondent/customer, being barred by time and having no merits. Appeal filed by the bank was allowed.

MCB BANK LIMITED vs UZMA TEHREEM — 2026 SCMR 533 SUPREME-COURT

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