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The Suit would Abate upon the Guarantor's Death --- Islamabad High Court, Islamabad

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The Suit would Abate upon the Guarantor's Death --- Islamabad High Court, Islamabad

Islamabad 20-05-2024: The Islamabad High Court upheld the order of Trial Court whereby suit was abated due to death of guarantor. The Honourable Judge of Islamabad High Court, Mr. Justice Sardar Ejaz Ishaq Khan, while rendering judgment in [Writ Petition No. 2480 of 2022] observed that according to the facts of the case the Higher Education Commission (HEC) has challenged an order dated 18.04.2022, by the trial court, which abated the suit against defendant No. 2 due to his death. The HEC had filed a suit against defendant No. 1 for failing to fulfill a scholarship agreement, which required serving in Pakistan for five years post-Ph.D. The defendant No. 1 contended that her guarantor, defendant No. 2, had passed away in 2011, leading the Trial Court to pass the impugned order.

The Court examined the distinction between a "surety bond" and an "instrument of guarantee," noting that a bond typically entails personal liability not extending to the estate of the deceased, as per Section 514(6) of the Civil Procedure Code regarding the discharge of a surety's estate upon death. The Court further deliberated whether the surety bond's language effectively bound the legal heirs of the guarantor. Citing "National Bank of Pakistan v. Muhammad Raies Ahmad and others" and "Mst. Ameer Begum v. Abid Hussain," the court found these precedents inapplicable to the current case, as they involved specific contexts of charges on property.

The Court determined that the surety bond in question did not constitute a "continuing guarantee" under Section 129 of the Contract Act, as it pertained to a single transaction funding the scholarship and not a series of transactions. Furthermore, the court dismissed HEC's argument that the declaration of assets with the surety bond implied a charge on the guarantor's property, as such instruments require express language indicating a charge, which was absent. Thus, the impugned order correctly concluded the suit abated with the guarantor's death, leading to the dismissal of HEC's petition.