' IJAZ UL AHSAN, J.---The petitioner assails order dated 20-10-2009 passed by the learned Additional District Judge, Lahore Through the impugned order, the learned subordinate court has dismissed an application under order VII, Rule 11, C.P.C. Filed by the petitioner,
2. Brief facts of the case are that the respondent filed a suit under Order XXXVII, C.P.C. On the basis of two cheques allegedly issued by the petitioner against a loan liability. The cheques were presented for encashment and were dishonoured. The respondent, therefore, filed a suit for recovery of Rs,3,450,000, the amount mentioned in the cheques together with future interest/mark- up. The suit was contested. The petitioner filed an application for leave to appear and defend the suit. After hearing the parties, .The learned trial Court was pleased to grant, leave vide order dated 2-1-2009 against the security of bank guarantee, which was duly furnished by the petitioner, The learned trial court, thereafter framed issues and called upon the parties to produce evidence.
During the course of recording of evidence, the respondent produced two agreements to sell relating to certain land, indicating that the parties had entered into an agreement to the effect that in case the petitioner was unable to repay the amount represented by the cheques, the said amount will be treated as earnest money towards sale of a portion of the property owned by the petitioner. The respondent was obligated to pay the balance sale consideration of Rs,5,000,000, on receipt of which the petitioner undertook to execute a sale-deed in favour of the respondent to the extent of his portion in the joint property. It is noted that the fact of execution or the agreement to sell was not mentioned in the plaint, however, the said issue was highlighted in the written statement filed by the respondent. However, during the course of recording of evidence, the respondent appears to have admitted the said agreements, which were also placed on record and duly exhibited.
3. The learned counsel for the petitioner submits that once the agreement to sell had been admitted, the suit under Order XXXVII, C.P.C. Was neither maintainable nor could it proceed. He argues that at the time that the suit under Order XXXVII, C.P.C. Was filed, the agreement had already been executed and therefore, the cheques were no longer alive as the amount represented by the said cheques stood adjusted towards the earnest money. He, therefore, submits that the respondent. Did not have a cause of action arising out of the cheques at the time the suit was filed. In consequence, an application under Order VII, Rule 11, C.P.C. Was correctly filed and was liable to be accepted. He further submits that the remedy of the respondent lies in filing a suit for specific performance. If and when such suit is filed, the petitioner would contest the same and raise such defences as may be available to him under the law, the learned counsel also points out that by virtue of dishonouring of cheques in question, the respondent had filed criminal proceedings by way of lodging two F.I.Rs, under section 489-F, P.P.C. The petitioner was convicted by the learned trial court, however, in appeal, the appellate court considering the fact that the parties had entered into an agreement to sell, had acquitted the petitioner. He, therefore, submits that order dated 28-10-2009 suffers from a patent illegality and failure to exercise jurisdiction and is, therefore, liable to be set aside and the application moved by the petitioner under Order VII, Rule 11, C.P.C. Is liable to be accepted, in consequence of which, the pending suit under Order XXXVII, C.P.C. Is liable to be dismissed. The learned counsel further argues that,issue No,4 which was framed by the learned trial court was wrongly framed in view of the fact that such issue did not arise out of pleadings of the parties. Even otherwise such issue falls within the jurisdiction of a court proceeding with a suit relating to specific performance rather than under Order XXXVII, C.P.C.
4. The learned counsel for the respondent submits that the respondent had invested a sum of Rs,2,650,000 with the petitioner. The petitioner had undertaken not only to return the aforesaid amount but also to pay monthly profit @ 2.5%. The cheques in question had been issued towards repayment of the principal amount. Both the cheques in the sums of Rs,900,000 and Rs,1,100,000 respectively, were dishonoured on presentation. Consequently, two F.I.Rs, were lodged by the respondent against the petitioner. When criminal proceedings were initiated against the petitioner; he contacted the respondent and offered an out of court settlement. He undertook to pay the entire outstanding amount on or before 30-11-2008. In order to safeguard the interest of the respondent, it was mutually agreed that the respondent would file a suit under Order XXXVII, C.P.C.
The petitioner will not contest the same and consent decree will be obtained. Further, the petitioner agreed that the respondent would execute an agreement in order to safeguard his interest in consequence of which agreement dated 28-8-2008 was signed between parties. The learned for the respondent submits that it was on the basis of aforesaid agreement that the suit was filed on 1- 9-2009. During pendency of the suit, a second agreement was executed between the parties on 5- 9-2008 in which the aforesaid understanding was reflected. It was stated in the agreement that the petitioner would get his statement recorded before the trial court to the effect that the suit be decreed in favour of the respondent. He points out that a joint application was accordingly filed before the learned trial court, which was signed by both the parties. However, when the trial Court had recorded the statement of the petitioner, he refused to sign the same. According to the learned counsel for the respondent, the effect of the agreement dated 59-2008 was to novate the earlier agreement dated 28-8-2008. He points out that when the application for leave to appear and defend the -suit was filed by the petitioner, no objection regarding maintainability of the suit was raised. However, once the application was allowed and the petitioner was permitted to defend the suit, the question of agreements and its effect was raised in the written statement, in consequence of which the trial court framed issue No,4 in the following terms:- "Whether the amount of cheques in question already stands adjusted towards the agreement to sell having been executed by the defendant in favour of the plaintiff with respect to some immovable property, if so, its effect? OPD.
' It is further pointed out that the petitioner filed a suit before the civil court for cancellation of the agreements alleging that agreements were fraudulently procured by the respondent. The said suit is still pending before the court of competent jurisdiction. The learned counsel for the respondent points out that even in the said suit no prayer was made for cancellation of the aforesaid cheques which are the subject-matter of the suit under Order XXXVII, C.P.C. Before, the learned Additional District Judge.
5. It is pointed out that pursuant to framing of issues, both the parties produced their evidence. The evidence of the respondent was concluded on 17-4-2009, whereafter various adjournments were sought on behalf of the petitioner to produce his evidence, which was not produced. Subsequently, on 13-7-2009, an application under Order VII, Rule 11, C.P.C. Was moved praying rejection of the plaint. As far as the question of criminal proceedings is concerned, the learned counsel for the respondent points out that although the petitioner was convicted by the learned trial court, his appeal was accepted and he was acquitted. However, the order of acquittal is under challenge before this court.
6. On the legal plain, the learned counsel for the respondent submits that in deciding an application under Order VII, Rule 11, C.P.C., the learned trial court is required only to look at the contents of the plaint. He submits that in case, from a reading or the plaint, a cause of action is made out, the plaint cannot be rejected in exercise of powers under Order VII, Rule 11, C.P.C. In support or his contentions, the learned counsel relies on Mst. Shabeona Perveen v. Messrs Defence Officers, Housing Society Authority, Karachi (1993 CLC 2523), Hakim Bashir Ahmad (Represented by Legal Heirs) v. The Government of Sindh through Deputy Commissioner, Hyderabad and 2 others (1984 CLC 3061) and Fatima Moeen v. Additional District Judge, Sheikhupura and 22 others (1992 SCM R 1199). The learned counsel further points out that superior courts have discouraged the practice of rejection of the plaint at the last stage of the suit specially so where evidence has already been recorded. Reliance is placed on Mst. Perveen Akhtar v. Sh. Muhammad Jameel and another (1999 M LD 1786), Mst. Karim Bibi and others v. Zubair and others (1993 SCM R 2039) and Miss Gul-e-Rana v. Muhammad Mansoor Khan and 4 others (2000 CLC 1673). The learned counsel finally argues that once issues have been framed, a plaint cannot be rejected. He points out that in the present case, the learned trial court has not only framed issues, but has also recorded evidence and the case is at its final stages, He, therefore argues that rejection of the plaint, at this stage would lead to miscarriage of justice. To support his contention he relies on Egypt Air v. Sarfraz Ahmad Tarar (2003 CLC 1425) and Sharjeel Younus v. Salahuddin Mirza (2008 YLR 1523) and Faiz Ahmad v. Ghulam Ali (2000 AC 739). He, therefore, submitted that order passed by the learned trial court is in accordance with the settled principles of law specially so where a specific issue regarding the effect of aforesaid agreement has been framed and the learned trial court would decide the said issue in the light of the documents placed on record and the evidence produced by the parties. He submits that in case the petitioner is aggrieved of any such order, he would have adequate remedies by way or appeal at the appropriate stage. He therefore submits that a case for rejection of the plaint at this stage is not made out.
7. I have heard the learned counsel for the parties at length and have also examined the relevant record, issuance of cheques which are subject-matter of the suit has not been denied. Likewise the fact that the cheques were presented for encashment and were dishonoured is also not disputed.
Whether the cheques in question were issued towards the payment of principal or profit is a question that would require determination by a court of competent jurisdiction, which has already recorded evidence. It is noticed that two agreements one dated 28-8-2008, which was allegedly executed before filing of the suit on 1-9-2008 and the other which was executed on 5-9-2008 alter filing of the suit, point towards some arrangement between the parties relating to payment of amount, represented by the cheques. The effect of the said agreements on the cheques is a question, requires determination by the learned trial court, which has already framed an issue on the subject. In case (as argued on behalf a the petitioner) learned trial court comes to the conclusion that the effect of the two agreements is that the financial liability arising out of the cheques stands merged in the agreement to sell the property and requires the respondent to pay the balance sale consideration, there is no bar on the jurisdiction of the learned trial court to pass an appropriate order in this regard. On the contrary if on examination or the documentary and oral evidence, the learned court comes to the conclusion that the agreements were meant to safeguard the interests of the respondent arising out of the negotiable instrument, on the basis or which the suit was filed, and that the same were not intended to extinguish the liability in question, it would have the jurisdiction to proceed and decide the case in accordance with law and on the basis of evidence available before if. These are only two out of a number or possible scenarios that may come before the learned trial court when the entire evidence produced by the parties is before it. The learned trial court would obviously examine and appraise such evidence and consider all facts, circumstances, documents and other evidence produced by the parties in arriving at its conclusion/whatever they may be.
8. The main question before this Court is whether or not the learned subordinate court was justified in dismissing the application under Order VII, Rule 11, C.P.C. Moved by the petitioner under the facts and circumstances narrated above. The scope of Order VII, Rule 11, C.P.C. Is limited to situations where the suit does not disclose a cause of action, relief claimed is undervalued and the plaintiff on being required by the court to correct the valuation within a time to be fixed by the Court, fails to do so or the relief claimed is properly valued but the plaint is written on insufficiently stamped paper and the plaintiff fails to supply the requisite stamp paper within the time to be fixed by the court or where the suit appears from the statement in the plaint to be barred by any law.
9. In order to exercise, jurisdiction under Order VII, Rule 11,C.P.C., every averment made in the plaint has to be accepted as correct and the defence taken the written statement cannot be looked into while considering the application for rejection of the plaint. In this regard reference may be made to Mst. Shabeona Perveen v. Messrs Defence Officers, Housing Society Authority, Karachi (1993 CLC 2523), where it was held as follows:-- "It is well-settled that in order to reject a plaint under Order VII, Rule 11, C.P.C., the plaint must be shown to be barred under some law on the basis of averments made in the plaint. Every allegation made in the plaint has to be accepted as correct while rejecting the plaint under Order VII, Rule 11, C.P.C. The fact that the plaintiffs may not ultimately succeed in establishing the allegations in the plaint cannot be a ground for rejecting a plaint under Order VII, Rule 11, C.P.C. In the instant case the respondent had already filed written statement. It is an admitted position that the pleas of valuation and maintainability of the suit were not taken by the respondent. The trial court has not applied its mind to this aspect of the case. The plea raised by the respondent is in the nature of a defence in the suit and cannot be looked into while considering the application under Order VII, Rule 11, C.P.C. The pleas of maintainability of suit and valuation be open to be raised by the respondent at the time of trial of the suit it seems that the learned appellate court has also not applied its mind to this aspect of the case. In this view of the matter the impugned orders of the trial court as well as appellate court suffer from material irregularity or are made in excess of jurisdiction as such are set aside."
' The same question was also examined in Hakim Bashir Ahmad (Represented by legal Heirs) v. The Government of Sindh through Deputy Commissioner, Hyderabad and 2 others (1984 CLC 3061), where it was held that:-- "It is well-settled law that in order to reject a plaint under Order VII, Rule 11, C.P.C., the plaint must be shown to be barred under some law on the basis of the averments made in the plaint. The Court at that stage is neither entitled to look into the pleas raised by the defendant nor can examine the merits of the allegations made in the plaint. Every allegation made by the plaintiff in the plaint has to be accepted as correct while rejecting the plaint under Order VII, Rule 11, C.P.C. The fact that the plaintiff may not ultimately succeed in establishing the allegations in the plaint cannot be a ground for rejecting a plaint under Order VII, rule 11, C.P.C."
' In the case of Haji Allah Bakhsh v. Abdul Rehman and others (1995 SCM R 459), the question was examined by the Hon'ble Supreme Court of Pakistan. Ajmal Mian, J writing for the Court held that in order to press into service the provisions of Order VII, Rule 11, C.P.C., the averments contained in the plaint, are to be presumed to be correct. The plaint on such criterion should be examined and if the case falls under any of the clauses or Rule, 11 of Order VII, C.P.C., the plaint, will he liable to be rejected and not otherwise.
10. It is common ground between the parties that the evidence or the respondent has been recorded in the suit after framing of issues. In this regard the observation made by his lordship Saiduzzaman Siddiqui, J. In Jewan and 7 others v. Federation of Pakistan through Secretary Revenue, Islamabad and 2 others (1994 SCM R 826) may be referred to with advantage:-- "The rejection of plaint under Order VII, Rule 11, C.P.C. Is contemplated at a stage when the Court has not recorded any evidence in suit. It is for this reason precisely, that the law permits consideration of only averments made in the plaint for the purpose of deciding whether the plaint should be rejected or not for failure to disclose cause of action or the suit being barred under some provision of law. The court while taking action for rejection of plaint under Order VII, Rule 11, C.P.C. Cannot take into consideration pleas raised by the defendant in the suit in his defence as at that stage the pleas raised by the defendants are only contentions in the proceedings, unsupported by any evidence on record. However, if there is some other material before the court apart from the plaint at that stage, which is admitted by the plaintiff, the same can also be looked into and taken into consideration by the court while rejecting the plaint under Order VII, Rule 11, C.P.C. Beyond that the court would not be entitled to take into consideration any other material produced on record unless the same is brought on record in accordance with the rules of evidence."
' In the case or Mst. Karim Bibi and others v. Zubair and others (1993 SCM R 2039), the principle laid down was that where evidence has already been recorded and the parties were seriously at issue, the court. Should instead of the plaint, decide the dispute on merits by referring to the evidence of the parties. The aforesaid judgment has consistently been followed in a number of cases including Miss Gul-e-Rana v. Muhammad Mansoor Khan and 4 others (2000 CLC 1673). In Egypt Air v. Sarfraz Ahmad Tarar (2003 CLC 1425), this court while discussing the scope and import of Order VII, Rule 11, C.P.C. Held that "at the time of deciding the application under Order VII, Rule 11, C.P.C. Mainly the contents of the plaint are to be taken into consideration as per principle laid down in Kamal-ud- Din v. Province of Punjab and others (1977 MLD 21)." In the said case, the Court found that the issues had been framed, statement of the plaintiff had already been recorded and the respondent had reserved his right, to cross-examine the petitioner. In such circumstances application under Order VII, Rule 11 CPC, was moved, which was found by this court to be mala fide and with an intent to prolong the litigation. Relying on Principal, Government Higher Secondary School, Oghi v. Mir Afzal and 2 others (1995 CLC 525), it was observed that pleadings of the parties would show that almost all the objections raised by the petitioner in his application under Order VII, Rule 11, C.P.C. Through which he wanted the lower Court to reject the plaint, had duly been reduced into various issues.
Evidence had already been recorded and it would be appropriate if the case were decided on merits after recording evidence of both parties.
11. In relatively recent case Sharjeel Younus v. Salahuddin. Mirza (2008 YLR 1523), it was held as follows:-- "While considering an application under Order VII, Rule 11, C.P.C. Only contents of the plaint are to be seen and defence cannot be considered. The plaint can only be rejected if comes within the mischief of Order VII, Rule, 11, C.P.C. The plaintiff has not claimed any declaration and for claiming specific performance disclosing of legal character is not a requirement of law. The question whether at the time of entering into agreement the defendant had title to the property or not is a question of fact and the same cannot be decided without allowing the parties to lead evidence."
' In the Faiz Ahmad v. Ghulam Ali (2000 AC 739), a Division Bench or this court while examining the provisions of Order VII, Rule 11, C.P.C. Came to the conclusion that the plaint cannot be rejected without deciding the issues already framed. In such case the proper course for the court would be to decide all issues together. In the aforesaid situation, the order of the subordinate court in dismissing the suit under Order VII, Rule 11, C.P.C. Was set aside.
12. The main argument of the learned counsel for the petitioner is that the plaint is liable to be rejected in view of the fact that no cause or action was in existence at the time that the suit was filed. The said question needs to be determined by considering the effect of the agreements and the circumstances in which these were executed. An issue has been framed in this regard and the parties have been called upon to produce evidence. The respondent's evidence has already been concluded. The learned trial court would obviously consider the evidence in determining those questions. The judgments cited by the learned counsel for the petitioner in support of his contention that the plaint should be rejected where the court comes to the conclusion that the plaintiff has no cause of action, have been rendered under different sets of circumstances and in my opinion are inapplicable to the facts and circumstances of the present case. Abdul Rehman v.
Sher Zaman and another (2004 CLC 1340) relates to a situation where the court comes to the conclusion that the suit was incompetent or that the plaintiff has failed to show any infringement of his right, the plaint can be rejected. Likewise Abdul Zahid v. Mir Muhammad and 10 others (1999 CLC 246), cited by the learned counsel for the petitioner deals with the situation where the court, at any stage of the proceedings, comes to the conclusion that the plaintiff has no cause of action. On such conclusion being reached, the court can pronounce judgment and reject the plaint, However, such power can be exercised only on such conclusion being reached by the court after applying its mind to the contents of the plaint and coming to the conclusion that even if averments made in the plaint are presumed to be correct the plaintiff has no cause of action. Both the said judgments do not apply to the facts and circumstances of the present case and do not help the petitioner in any manner. As far as the finding or acquittal recorded by the learned appellate court in the criminal proceedings are concerned, suffice it to say that the same are sub judice before a higher forum and are not of any help in the facts and circumstances of the instant case
13. It is an admitted fact that the petitioner had issued cheques in favour' of the respondent, the said cheques had been dishonoured on the basis of which the suit had been filed. From the contents of the suit a cause of action is clearly disclosed in favour of the respondent. The effect of subsequent events and disclosure of certain facts including execution of agreements, the circumstances and the purpose for which the said agreements were executed, will be the subject- matter of examination by the learned trial court in light of the evidence produced before it. The learned trial court alter recording evidence of both parties would also be competent to determine the effect of the said agreements on the suit filed by the respondents.
14. The argument of the learned counsel for the petitioner that in view of emergence of aforesaid agreement, the cause of action in favour of the respondent, on the basis of negotiable instruments, has ceased to exist and therefore, the instant suit under the provisions of Order XXXVII, C.P.C. Is liable to be dismissed is not sustainable. Special summary procedure provided in Order XXXVII, C.P.C. Envisages a special mechanism for trial or the suits based upon negotiable instruments.
However, it is settled law that once leave to appear and defend the suit is granted, the same is converted into a regular civil suit and is to be tried accordingly. Admittedly, the petitioner was granted leave to appear and defend the suit against furnishing of a bank guarantee which has already been furnished by him and the petitioner has already filed his written statement. On the basis of pleadings of the parties, the court has framed issues and has also recorded evidence of the plaintiff. The suit is presently at the stage of recording evidence of the defendant/petitioner. All material facts including documents have been placed on record and the rest will come on record when the petitioner/defendant produces his evidence before the trial Court. It is on the basis of such material documents and evidence that the trial court will arrive at certain conclusions which will be incorporated in its judgment and decree. In the fact and circumstances of the case, I am not convinced that this is a fit case for rejection of plaint in exercise of powers under Order VII, Rule 11, C.P.C. Even otherwise perusal of the plaint clearly indicates that prima facie a cause of action is disclosed. As far as the impact of Exh.P7 and P8 namely the agreement referred to above is concerned, a specific issue has rightly been framed by the court on which the parties have been called upon to adduce evidence. Once the evidence has been concluded, the learned trial Court would be in a much better position to appreciate the legal and factual aspects of the controversy and decide and matter through a comprehensive judgment and decree.
15. The learned counsel for the petitioner has not been able to convince me that the impugned order passed by the learned subordinate court suffers from any illegality or material irregularity. It is, however, clarified that the observations made in this order are of a tentative nature only and shall not influence the mind of the learned trial court in deciding the suit on merits on the basis of material and evidence before it.
15-A. For the foregoing reasons, I find no merit in this petition. It is accordingly dismissed.