1. Azizullah M. Memon, J.--The appellant Libra Enterprises has filed this High Court Appeal against the judgment and decree both dated 6.3.1997 passed by a learned Single Judge of this Court in Suit No. 611 of 1995.
2. Heard Mr. Asim Mansoor, Advocate for the appellant and Mr. Ghulam Ghous, Advocate for the respondent.
3. The facts giving rise to filing of this High Court Appeal are to the effect that in its Suit Bearing No. 611 of 1995, the plaintiff/respondent asserted that it was working as a corporate body duly registered under the Corporate Law Authority under the provisions of Companies Ordinance, 1984 and was doing business of the trade/manufacture of pharmaceuticals etc. Defendant/appellant was a distributor/agent of the plaintiff's production at Peshawar but then discontinued the same with the plaintiff with effect from November/December, 1992 and a sum of Rs. 8,47,514.71 remained outstanding against the defendant/appellant towards the supplies made to them by the plaintiff; plaintiff asserted to have "tentatively negotiated the settlement subject to actual accounts to be prepared on the basis of the record available at their respective offices. The parties in presence of witnesses undertook to settle down their actual accounts at suitable time".
4. It was further averred in the plaint that vide letter dated 7th December, 1993 the defendant/appellant was required to pay the said outstanding dues but it failed to pay the same.
5. Hence the plaintiff/respondent prayed in the said suit for decree of the said amount together with equalizer at 10% per annum till final settlement/payment of the said amount from the date it fell due.
6. Vide judgment dated 6.3.1997 a learned Single Judge decreed the said suit by recording his observations, "the defendants were served in the suit and Mr. Sallahuddin Gandapur, Advocate filed Vakalatnama on behalf of the defendants on 6.12.1995 but failed to file written statement. The matter was fixed for final disposal on 5.8.1996, 26.9.1996, 9.10.1996, 28.10.1996, 11.12.1996, 27.1.1997, 17.2.1997 and 5.3.1997. On these dates the defendants' counsel remained absent. The plaintiff's counsel was directed to file affidavit in evidence which has been filed by him. The facts of the plaint have been reiterated by the deponent who is Resident Director of the plaintiff's company. He has stated on oath all the facts duly supported with the documents. There is no rebuttal as such the evidence adduced on behalf of the plaintiff is to be believed and the suit is decreed for Rs.
7. 8,47,514.71 with equalizer at 10% from the date of the suit till realization of the entire amount with costs of the suit". Hence the defendant/appellant has filed this appeal against the said judgment, which was followed by a decree dated 6.3.1997.
8. Learned counsel for the appellant argued that by mutual consent, the distributorship in question was cancelled and the respondent/plaintiff issued certificate dated 31.12.1992 stating therein that the outstanding amount of Rs. 691, 383.60 was actually paid to them by the defendants/ appellants and that nothing was outstanding against the appellants, which was further confirmed by Mr. Jamaluddin Ahmed, the proprietor of the plaintiff on 25.3.2003, further that the appellants were never served with the summons of the suit and that they never executed any Vakalatnama in favour of Mr. Salahuddin Gandapur, Advocate to make appearance on their behalf; that the Vakalatnama filed in the suit purporting to have been executed by the appellants was not so executed by them and contained a forged signature of the appellant who received a notice from the Court of learned Senior Civil Judge, Peshawar on 13.6.2003 informing that an Execution Application was filed against them in respect of the impugned judgment and decree whereafter their representative came to Karachi to make enquiries but could not locate the case file till the month of September, 2003 whereafter the appellant filed an application on 9.9.2003 to have the certified copies of the plaint of the suit, judgment and decree with other documents, that the said Vakalatnama was said to have been signed by one Akbar Qayyum son of Abdul Qayyum on their behalf, whereby appointing Mr. Salahuddin Gandapur, Advocate to appear on their behalf, but the said Akbar Qayyum was never proprietor of the appellant company, nor was ever in employment therein, and was never authorized to engage Mr. Salahuddin Gandapur to make appearance in the suit on behalf of the defendant company.
9. The defendants/appellants have, inter alia, placed reliance on a certificate, dated 31.12.1992 which is said to have been issued by Mr. Jamaluddin Ahmed on behalf of the plaintiff-company, certifying therein that they had received all outstanding dues from the defendants/appellants, and nothing remained to be paid by them, which further bears endorsement dated 25.3.2003 of the said Jamaluddin, proprietor of the plaintiff-company, thereby confirming the contents of the said certificate in presence of the witnesses; the defendants/appellants have specifically pleaded that Akbar Qayyum, who allegedly received the summons of the suit, was neither proprietor of the defendant-company nor was ever appointed by .them in any capacity, nor was ever authorized to receive the process of the suit on their behalf or engage any Advocate to pursue the proceedings of the said suit on their behalf.
10. The said certificate, thereby certifying no dues outstanding against the defendants/ appellants, coupled with the fact that the defendants/ appellants specifically plead that the said Akbar Qayyum not having remained connected with the defendant-company, strengthen the case of the appellants, reference may be made to the observations recorded by the Honourable Supreme Court of Pakistan in Wak Orient Power and Light Limited v. Westinghouse Electric Corporation and others 2002 SCM R 1954 to the following effect:-- "Under Order VIII, Rule 1, C.P.C. The time given for filing of written statement ordinarily would not exceed 30 days but in exceptional circumstances in case of failure on the part of defendant to file the written statement, the trial Court in its discretion may extend the time for filing the written statement beyond the prescribed time of 30 days and further the Court in suitable cases can grant more time if it is satisfied that the explanation offered by the defendant for not filing the written statement within the time given was reasonable, it is also within the domain of the trial Court to condone the default of filing of the written statement of all defendants in a case in which there are more defendants and the explanation offered by one of the defendants is found satisfactory. In the case in hand, it is an admitted fact that Defendants Nos. 3 and 4 were not served till 1st of March, 1999 and fresh summons were issued for their service for 14th of April, 1999. The Respondent No. 1 without proper service through the process of the Court, on coming to know about the filing of suit by the appellant instructed a counsel to watch his interest and the said counsel without 'having power of attorney on behalf of the respondent, represented him, therefore, he would not be deemed to be the recognized agent of the said respondent under Order III, Rule 1, C.P.C. In any case learned counsel who appeared on behalf of the respondents before filing his power of attorney raised the objection relating to the jurisdiction of Court and sought time to seek instructions from his client who was abroad, therefore, in the given circumstances instead of invoking the penal provisional of Order VII, Rule 10 C.P.C. The Court with a view to provide a fair opportunity to the respondents to defend the suit should only proceed further either on their proper service through the process of Court or at least after the submission of power of attorney by the learned counsel appearing on their behalf as without filing power of attorney, he would not be in a position to act as their recognized agent and file the written statement. Legally the respondents were neither being represented by a recognized agent nor were yet served, therefore, non-compliance of order of filing the written statement would be of no penal consequence as no such order could be passed without proper service of the respondents. In any case, the Court in such cases instead of imposing the penalty of striking off the defence under. Order VII, Rule 10, C.P.C. would prefer to condone the delay to avoid any injustice and would be hesitant in exercising the discretionary powers under Order VII, Rule 10, C.P.C. unless there are compelling reasons and exceptional circumstances. It is also not necessary that Court after striking off the defence of the defendant under Order VII, Rule 10, C.P.C. must pass a decree and may proceed against the defendant ex parte as despite failure of defendant to file the written statement, he does not lose the right of participation in the subsequent proceedings and can still defend himself by filing the counter-affidavit and thus, the Court is not bound to essentially pass a decree under Order VII, Rule 10, C.P.C. without recording evidence in a case in which defendant fails to file the written statement."
11. The Honourable Supreme Court of Pakistan, time and again, has laid stress on the fact that the cases in between the parties should be decided on merits and the rules and procedure are framed to foster the cause of justice and should sparingly come into the way of dispensation of the same on merits, reference may be made to "Syeda Tahira Begum and another v. Syed Akram Ali and another 2003 SCM R 29.
12. In the circumstances, we are of the opinion that the defendants/appellants have made out a case to allow them to defend themselves in the abovesaid suit in order that it may be heard and decided on merits, consequently. C.M.A. No. 1079 of 2003 (wherein a prayer has been made to condone the delay in filing this appeal against the impugned judgment and decree) is hereby allowed and the appeal itself also stands allowed. The impugned judgment and decree passed in Suit No. 611 of 1995 are hereby recalled and the defendant/appellant is afforded with an opportunity to file its written statement in the suit within thirty days from the date of announcement of this judgment, provided that they shall pay the cost of Rs. 20,000/- to the plaintiff/respondent for all such purposes, for further proceedings with the suit on merits.