| Case ID |
371a8cb5-75e9-45b8-8920-b93772c5dbab |
| Body |
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| Case Number |
Suit No.B 49 of 2000 |
| Decision Date |
Sep 07, 2001 |
| Hearing Date |
|
| Decision |
The court ruled that the suit against the guarantors should be dismissed, as the surety had been discharged when the creditor entered into a compromise with the principal debtor without the consent of the guarantors. The court emphasized that any variance in the contract made without the surety's consent discharges the surety from liability for transactions subsequent to the variance. The court found that the financial institution could not revert to the original position by attempting to file a new suit after having previously withdrawn the suit based on the compromise agreement, which did not involve the guarantors. Therefore, the guarantors were not liable for the debts in question. |
| Summary |
In this landmark case before the Sindh High Court, the legal principles surrounding the discharge of sureties under the Contract Act, 1872 were examined. The court analyzed the implications of a creditor's agreement with a principal debtor without the consent of the surety. It was determined that the surety is discharged from liability when there is a variance in the contract that occurs without their consent. The case highlighted the importance of obtaining consent from all parties involved in a guarantee agreement before making any compromises or changes to the terms of the contract. The ruling serves as a significant precedent regarding the rights and obligations of sureties in Pakistan's legal landscape, particularly in the context of banking and loan recovery situations. This decision reinforces the necessity for creditors to engage with guarantors when negotiating terms with principal debtors, ensuring that all parties are aware and agreeable to any changes that may affect their legal responsibilities. |
| Court |
Sindh High Court
|
| Entities Involved |
N.D. LEASING CORPORATION,
NATIONAL FIBERS LTD.
|
| Judges |
ANWAR MANSOOR KHAN, JUSTICE
|
| Lawyers |
A.H. Mirza,
Ms. Sadaf Yousaf
|
| Petitioners |
N.D. LEASING CORPORATION
|
| Respondents |
NATIONAL FIBERS LTD.
|
| Citations |
2002 SLD 678,
2002 CLD 643
|
| Other Citations |
1981 CLC 847,
1993 CLC 365,
AIR 1944 Lah. 428
|
| Laws Involved |
Contract Act, 1872,
Civil Procedure Code (V of 1908)
|
| Sections |
133,
134,
135,
O.XXIII,R.I
|