' MIAN HAMID FAROOQ, J.---The appellant/defendant, through the filing of the present appeal, has assailed the judgment and decree, dated 20-3-2003, whereby the learned Addl. District Judge decreed respondent's suit for the recovery of Rs,5,05,697 with costs and interest at the rate of 20% per annum in favour ofthe respondent.
2. Briefly stated the facts of the case are that the respondents filed a suit for the recovery of Rs,5,05,697 with interest, against the appellant, before the learned District Judge, under the summary procedure provided under Order XXXVII C.P.C., on the basis of six alleged dishonoured cheques, reportedly issued by the appellant. After the receipt of the summons, the appellant filed an application seeking leave to appear and defend the suit, which was resisted by the respondent and the learned trial Court dismissed the said petition vide order, dated 20-8-2002, however upon filing a revision petition (C.R. No,2082 of 2002), this Court set aside the said order and directed the learned Addl. District Judge to decide the aforenoted application afresh vide order, dated 20-11- 2002. Pursuant. Thereto the learned Addl. District Judge allowed the said application and leave to appear and defend the suit was granted to the appellant, however subject to the condition that the appellant shall furnish the bank guarantee for the sum of Rs,3,00,000 and personal surety for the remaining amount of Rs,2,05,697 to the satisfaction of the learned trial Court on or before 10-3- 2003 vide order, dated 17-2-2003. The appellant did not comply with the terms of conditional order, dated A 17-2-2003, therefore, the learned trial Court dismissed its application for leave to appear and defend the suit vide order, dated 10-3-2003. Thereafter the ex parte evidence of the plaintiff was recorded and the learned Court proceeded to pass a decree for the recovery of Rs,5,05,697 with costs and interest @ 20% per annum in favour of the plaintiff and against the defendant, vide judgment and decree, dated 20-3-2003, hence the present appeal.
3. The learned counsel for the appellant has contended that in view of the case, as made out by the appellant, he was entitled for the unconditional leave to appear and defend the suit and the conditional order, dated 17-2-2003 for the grant of leave is not sustainable in law. He has further submitted that the learned trial Court, while decreeing the suit on the basis of order, dated 17-2- 2003, has committed legal errors, hence the impugned judgment and decree deserves to be set aside. Conversely, the learned counsel for the respondent, while supporting various orders and the consequent judgment and decree, has submitted that the appellant could not furnish the bank guarantee and personal surety, as directed by the learned Court on 17-2-2003, therefore, there was no alternative leftfor the Court except to pass the impugned judgment and decree, which was passed in accordance with law.
4. To our mind, pivotal questions, to be determined in the present appeal, are as to whether under the facts and circumstances of the case, the appellant was entitled for unconditional leave to appear and defend the suit and as to whether order, dated 17-2-3003, whereby the appellant was granted conditional leave to appear and defend the suit, was passed in accordance with law. For this, one has to first go to provision of Order XXXVII Rule 3(2), C.P.C., which provides that "leave to defend may be given un-conditionally or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit." It flows from the bare perusal of the aforenoted provision of law that discretion has been conferred upon a Court to grant leave to defend the suit, either unconditionally or subject to such terms as to payment into Court to giving security. In this case, the learned trial Court, while considering the contents of the leave application, came to the conclusion that the appellant is entitled for the grant of leave to defend the suit, allowed its application, but subject to certain conditions, in exercise of powers under the aforenoted provision of law. It has nowhere been laid down under Order XXXVII C.P.C. That when a case is made out, a defendant must be granted unconditional leave to defend the suit and in fact this matter has been left to the discretion of the Court. In this case, the learned trial Court, in exercise of its discretionary powers, has tagged the condition with leave to appear and defend the suit. The attachment of the said condition cannot be termed, under any stretch of imagination, as illegal, without jurisdiction or even arbitrary and harsh. We are of the view that if the appellant would not have been able to make out a case for the grant of leave to defend the suit, then obviously, its application was liable to be dismissed. The learned trial Court, under the present set of circumstances, rightly came to the conclusion that the appellant is entitled for the grant of leave, but the same would be subject to furnishing of bank guarantee and personal surety for the suit amount. The approach of the learned trial Court indicates that it was conscious of the fact that although the appellant is entitled for the grant of leave, yet tagging up of condition of bank guarantee and personal surety would be in the interest of justice. We further find that in this case, the learned trial Court, after the dismissal of appellants' leave application, for the non-compliance of order, dated 17-2-2003, did not act mechanically, but proceeded to record the ex parte evidence of the respondent, wherein, certain document, including the cheques in question were also tendered. In a case reported as Mian Rafique Saigol and another v. Bank of Credit and Commerce International (Overseas) Ltd. And another (PLD 1996 SC 749), it was held that "exercise of discretion by Court granting leave to defend to a defendant, subject to the condition of furnishing bank guarantee was not open to any exception by the Supreme Court in circumstances".
5. There is yet another aspect of the case. It is settled law that it iswithin the discretion of the Court to grant leave to defend either conditionally or unconditionally. In this case, we are of the view that the learned trial Court, while exercising its discretionary powers, has rightly attached a condition of furnishing bank guarantee with the grant of leave. We find that the said exercise of discretion is neither arbitrary nor fanciful and the same has been exercised in accordance with the recognized principles, governing the exercise of discretion. We are not inclined to interfere with the discretionary orders, passed in accordance with law, as the discretion has been exercised properly and in consonance with the record of the case. Reference can be made to Shahzada Muhammad Umar Beg v. Sultan Mahmood Khan and another (PLD 1970 SC 139).
' In the above perspective, we are of the firm view that order, dated 17-2-2003 for the grant of conditional leave to appear and defend the suit was properly, legally and validly passed as we do not find any infirmity in it, hence the same is maintained.
6. The next question, which arises is as to what would be the legal effect, in case the appellant fails to fulfil the condition, subject to which it was granted leave to defend the suit. It is settled law that when the F defendant fails to fulfil the condition subject to which the leave was granted, it is the duty of the Court to pass a decree against the said defendant. If any cases are needed Abdullah v.
Shaukat (2001 SCM R 60), Col. (Retd.) Ashraf Ahmad and others v. Sh. Muhammad Wasim (1999 SCM R 2832), Aftab Iqbal Khan Khichi and another v. Messrs United Distributors Pakistan Ltd. Karachi (1999 SCM R 1326) and Fayyaz-ul-Hassan v. Messrs National Feed (Pvt.) Ltd. (2001 M LD 1630) can be referred.
7. We have examined the impugned judgment and decree and find that the learned trial Court under the present set of circumstances, was justified in passing a decree of Rs,5,05,697 for the recovery against the appellant, hence the judgment does not call for any interference and findings to that extent are maintained.
8. There is another aspect of the case, which cannot be ignored. Upon the examination of the impugned judgment, we find that the learned trial Court, while decreeing the suit, has also awarded the interest @ 20% per annum in favour of the respondent, however, it is not discernible from the available record that upon the basis of which material/documents, the learned Court has awarded the interest @ 20%. Admittedly no contractual rate of interest was stipulated between the parties. We do not find any document on record on the basis of which it could be urged by the respondent that the appellant agreed to pay the outstanding amount together with interest @ 20%.
' The issuance of cheques by the appellant has not been denied. It flows there-from that the suit amount was illegally withheld by the appellant, which has definitely caused some loss to the respondent, as he was deprived from the utilization of his amount without any legal justification. In the above perspective, we find that the learned trial Court, while granting interest 20% has exercised its discretions arbitrarily and in a fanciful manner, thus we are inclined to interfere in the discretion exercised by the learned trial Court. In view of section 79 of the Negotiable Instruments Act read with the principle laid down in the case reported as Khan Iftikhar Hussain Khan of Mamdot (Represented by 6 heirs) v. Messrs Ghulam Nabi Corporation Ltd. Lahore (PLD 1971 SC 550) we hereby grant interest @ 6% instead of 20% on the suit amount from the date of the institution of the suit till realization and to that extent the decree stands modified.
9. Upshot of the above discussion is that the present appeal is partly allowed and the impugned judgment and decree is modified to the extent that rate of interest chargeable on the suit amount would be 6% instead of 20%, from the date of the institution of the suit till realization. Rest of the terms of the judgment and decree are intact and shall hold the field.