' MUHAMMAD KHALID MEHMOOD KHAN, J.---The appellant filed a suit under Order XXXVII, C.P.C.
Against respondent for recovery of Rs,14,60,000 on the basis of a pay order number OA0/0-0764729 dated 2-10-2004, claiming that appellant entered into an agreement to . Sell on 2-10-2004 with one Nazir Ahmad son of Haji Islam resident of Ichhra. Lahore for selling his agricultural land measuring 300 acres at the rate of Rs,3,10,000 per acre. As per the terms of agreement to sell the vendee paid Rs,5,40,000 in cash and Rs,14,60,000 through pay order dated 2-10-2004 drawn on respondent. The appellant presented the pay order through his banker Faysal Bank Ltd. On 4-10-2004, the respondent refused to pay on objection. No,9 "Payment stopped by the drawer".
2. The respondent submitted written statement and controverted the appellant's assertions and claimed that beneficiary of Pay Order is Ch. Muhammad Anwar son of Muhammad Ismail resident of Main Bazar Ghari Shau, Lahore. Whereas appellant is Ch. Muhammad Anwar son of Muhammad Shafiq resident of Azizia Street Bakkar Mandi Lahore and as such plaintiff is not the real beneficiary of pay order. The respondent received written instructions on behalf of purchaser of pay order informing that his pay order has lost and its encashment be stopped. Subsequently the purchaser submitted an application for issuance of duplicate pay order, beneficiary of pay order has given his consent for issuance of duplicate pay order, the respondent thus on 4-10-2004 issued duplicate pay order in favour of its beneficiary.
3. Learned trial Court framed issues and after recording evidence dismissed the suit on 4-12-2006.
Hence, the appeal.
4. Learned counsel for appellant submits that respondent being the issuer of pay order is duty bound in law to honour his commitment to a third party for whose benefit the pay order was issued. The respondent colluded with the purchaser of pay order and fraudulently issued duplicate pay order in the name of a planted person. The original pay order is in his possession and as such no duplicate pay order could be issued unless its loss is proved and the appellant gives his consent. He further submits that in the absence of appellant's permission the issuance of duplicate pay order is against law. Learned counsel submits that once a pay order is handed over to its beneficiary its encashment could not be stopped or refused.
5. Learned counsel for respondent submits that respondent received a complaint on behalf of purchaser on 4-10-2004 that .His pay order was lost and they rightly issued duplicate pay, order with the permission of beneficiary. Learned counsel further submits that beneficiary of pay order is Ch. Muhammad Anwar son of Muhammad Ismail, whereas. Appellant is Ch. Muhammad Anwar son of Muhammad Shafique and as such appellant is not a real beneficiary. Learned counsel further submits that appellant was not holder in due course and as such he was rightly refused the encashment. Learned counsel has relied on sections 10 and 85-A of Negotiable Instruments Act and submits that issuer is- duty bound to take every pre-cautions before making the payment, of pay. Order ta its beneficiary. Learned counsel has relied on United_ Bank Limited v. Trustees of the.
Port of Karachi (1994 CLC- 2116)- and Vadlamanu Venkatesam and another v. Manainudi Viswa nadham and another (AIR 1918 Madras 512).
6. We have heard the learned counsel for parties at length.
7: It is an admitted fact that pay order in dispute was issued on 2-10-2004 favouring Ch. Muhammad Anwar and its encashment was stopped on the instructions of its purchaser.
8. The appellant's case is that he entered into an agreement to sell immovable property with one Nazir Ahmad son of Ilaji Islam Din and in terms of agreement Exh.P-1 pay order of Rs,14,60,000 was passed on to him. Number of pay order, date of its issuance and amount of pay order is not in dispute between the parties.
9. Pay order is a banking instrument which the bank issues on receipt of cash from the purchaser in favour of a third party. The beneficiary of pay order is the person in whose favour and benefit pay order is issued. There are three parties in the transaction of pay order, one is the purchaser, second is the issuer and third one is the payee. The appellant presented the pay order through his banker Faysal Bank Ltd.. New Garden Town Branch. Lahore to respondent on 4-10-2004. The respondent returned the pay order as per Exh.P-3 stating that -returned un-paid for reason No,9, "payment stopped by the drawer". P.O reported lost by purchaser and beneficiary."
10. The respondent's case is that they issued pay order in favour of Muhammad Anwar son of Muhammad Ismail and appellant is Muhammad Anwar son of Muhammad Shafique. Exh.D-2 is the application dated 4-10-2004 of one Qadeer Ahmad, the respondent issued pay order of Rs,14,60,000 in the name of Ch. Muhammad Anwar Exh.P-2. Exh.D-3 is an account opening form of Qadeer Ahmad, Exh.D-4 is copy of register of pay order issued, Exh.D-5 and Exh.D-6 are applications of Qadeer Ahmad, Exh.D-7 is indemnity bond executed by Shakeel Ahmad and Rana M. Khalid on behalf of Qadeer Ahmad. Exh.D-8 is pay slip/pay order issue register.
11. Under section 10 of Negotiable Instruments Act, payment in due course means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of amount therein mentioned.
14(sic) Exh.D-2 application for issuance of pay order shows that one 2-10-2004 Qadeer Ahmad requested to issue pay order in dispute in favour of Ch. Muhammad Anwar without mentioning the name of his father, the respondent issued the pay order on 2-10-2004. On 4-10-2004 the respondent received an application Exh.D-5 from Qadecr Ahmad at 9-00 a.m. Informing as under:- - "That he got prepared pay order bearing Serial No,0A0/ 0-0764729 for Rs,14,60,000 on 2-10-2004.
He seriously informs your goodself that pay order dated 2-10-2004 has lost on Saturday 2-10-2004 but due to short bunking hours we could not inform you. Due to exigency of the matter. We request you to ensure stop payment/encashment of the aforesaid pay order and protect me from such huge monetary loss. Please also take necessary steps/measures through your other offices in Lahore to stop its payment and to protect the interest of your valued customer."
15. It is interesting to note that name of beneficiary of pay order is not mentioned in this application.
Exh.D-6 is another undated application which is of the same subject, again this application does find mentioned the details of beneficiary of pay order. Exh.D-8 Pay order issuance register shows that on 4-10-2004 the respondent issued duplicate pay order to Muhammad Anwar, all these documents show that father's name of Ch. Muhammad Anwar is not mentioned. It is an admitted fact on record that Qadecr Ahmad has not lodged any F.I.R. About the loss of pay order. It is also an admitted fact that name of father and address of Ch. Muhammad Anwar is not mentioned on Exh.P-2 original pay order.
16. The question arose from which document and how the respondent came to know that appellant is not the real payee and what is the name of his father.
17. The argument of learned counsel is that identity card number of beneficiary is mentioned in application Exh.D-2 but copy of NIC of Ch. Muhammad Anwar has not been produced. The two applications of Qadeer Ahmad Exh.D-5 and Exh.D-6 have not mentioned the story, narrated by respondent, in these circumstances it is the respondent who has to prove the fact that appellant is not the real payee of pay order. It is interesting to note, the duplicate pay order was also issued in the name of Muhammad Anwar but his father's name is not mentioned thereon as is evident from Exh.D-4. Qadeer Ahmad in his two applications Exh.D-5 and Exh.D-6 is riot alleging this fact that he got issued pay order in the name of Muhammad Anwar son of Muhammad Ismail. The application of alleged Ch. Muhammad Anwar is Mark-A, the said application also not find mention the name of applicant who claims himself to be the genuine and original payee.
18. In a pay order when there are three parties, how without consent of payee a duplicate pay order could be issued. Learned counsel has relied on a fax message which is mark-A received to bank on behalf of alleged Ch. Muhammad Anwar which is read as under:-- "I, Mr. Muhammad Anwar son of Muhammad Ismaeel bearing LD. No,274-92-004768 hereby authorize and tender my consent to issue a duplicate pay order against the original pay order No,764729 for Rs,1,460,000 dated 2nd October, 2004 which was lost/ stolen/ missed by the Original purchaser during the transit and could not reached(sic) me.
' I also give you my free consent to issue duplicate pay order and hand over the purchaser namely Mr. Qadeer Ahmad son of Nazir Ahmad for further disposal.
' Thanking you for your cooperation. Truly yours, ' Ch. Muhammad Anwar.
' I.D No,274-92-004768 ' Date 6-10-2004.
' H# 13, Jalali Street#26 Main Bazar, ' Garhi Shahu, Lahore."
19. The letter shows that the applicant has not mentioned the name of his father, respondent received the letter on 6-10-2004 whereas duplicate pay order was already issued on 4-10-2004.
This letter discloses the entire conspiracy of purchaser of pay order and the bank officials. The bank officials after issuance, of duplicate, pay order on 4-10-2004 when realized that it could, not be issued without consent of beneficiary, they managed a fake person with the name of Ch. Muhammad Anwar and managed a letter of consent from a fake person, the alleged Ch. Muhammad Anwar, if was the real beneficiary, he could appear in court and present duplicate pay order in his possession but he Tailed to appear in witness box nor it has been pleaded that duplicate pay order has been encashed and when.
20. The above facts are sufficient to prove the mala fide and dishonesty of bank officials who colluded with Qadeer Ahmad, the purchaser of pay order and caused loss to appellant..
21. Qadeer Ahmad, the purchaser of pay order appeared as D.W.3, he deposed that he got the first pay order prepared in the name of Ch. Muhammad Anwar son of Muhammad Ismail. The said pay order was lost, on 2-10-2004, he on 4-10-2004 informed the bank about the loss of pay order and requested to issue the duplicate pay order. He admits that father's name of Ch. Muhammad Anwar is not mentioned in the pay order. He in cross-examination states that he got prepared pay order for payment of the medical expenses of his cousin but surprisingly that cousin has not been produced. He admits that his grandfather's name is Haji Islam Din. He borrowed the money of Rs,14,60.000 from his cousin. It is pertinent to mention that cousin who lent money to Qadeer Ahmad has not been produced nor the person for whom the money was borrowed. If the amount of pay order was required for an ailing cousin the pay order should have been prepared in the name of ailing cousin and admittedly Ch. Muhammad Anwar is not an ailing person.
22. The other argument of learned counsel for respondent is that Exh.P-2 was prepared to the debit of Qadeer Ahmad's account on his application, whereas appellant is claiming that he entered into agreement to sell Exh.P-1 with Nazir Ahmad son of Haji Islam Din and as such even if it is assumed that appellant entered into agreement to sell with one Nazir Ahmad the role of Qadeer Ahmad is not available in the transaction. Qadeer Ahmad never entered into alleged agreement to sell with the appellant. This fact is belied from Exh.D-3, the account opening form of Qadeer Ahmad. The account opening form shows the name of Qadeer Ahmad's father as Nazir Ahmad. Agreement to sell Exh.P-1 shows that Nazir Ahmad's father name is Islam Din. D.W.3 Qadeer Ahmad admitted in his cross-examination that his father's name is Nazir Ahmad and his grand father's name is Islam Din.
Infact what happened in this case. Qadeer Ahmad's father entered into an agreement to sell with appellant, the amount was lying in the account of Qadeer Ahmad who got prepared the pay order on the instructions of his father in the name of appellant. Number of pay order. Amount of pay order and its date of issuance is specifically mentioned in the agreement to sell. Qadeer Ahmad while appearing in witness box has narrated a different story that he borrowed the amount of Rs, 14,60,000 from his cousin for meeting the medical expenses of his brother which proved false as stated above, further no medical bill or any evidence to this effect has been brought on record. It appears that parties after entering into agreement to sell Exh.P-1 fell in some dispute and Qadeer Ahmad vide Exh.D-3 advised the respondent to stop payment of pay order alleging that pay order was lost on 2-10-2004. The above said facts show that story narrated by the respondent on facts is false and fabricated, the respondent intentionally arranged the refusal of payment of pay order to appellant.
23. The second question arose whether respondent was within its rights to issue duplicate pay order without the request of beneficiary or to stop payment of instrument of pay order on the request of purchaser.
24. The perusal of section 10 of Negotiable Instruments Act shows the payment in due course is a discharge of obligation by the issuer of instrument, if the beneficiary fulfils the following condition:- "The holder and presenter is the real beneficiary of instrument."
26. Under Banking Law and Procedure the pay order could not be paid or encashed at the counter of bank and it could be collected through banker of beneficiary. The banker of beneficiary while presenting the pay order confirms the payee bank in the following undertaking "payees account credited". This means collecting bank is confirming paying bank that amount collected will be credited to the account of real payee. It is the responsibility of collecting bank to confirm and ascertain the identity of his account holder. Learned counsel for respondent has placed reliance on United Bank Limited v. Trustees of the Port of Karachi (1994 CLC 216). In this case pay order was issued in the name of Karachi Port Trust (KPT) in connection with some tender. The bank made the payment of pay order to its purchaser as the purchaser presented original instrument and represented the bank that the tender was not awarded to him. When the evidence was recorded the pay order was produced and defence of KPT was that it was issued in the name of KPT and without their discharge the amount could not be paid to purchaser or the purchaser cannot get it cancelled. The pay order was presented in court and the Hon'ble Sindh High Court came to the conclusion as under:-- "A bare reading of the Pay Order (Exh.5/2) clearly shows that it does not contain any stamps of the respondent's Engineering Department. The learned Single Judge's observation that it cannot absolve the appellants of their primary responsibility to pay the amount of the Pay Order to the respondents/plaintiffs if the essential ingredient of delivery thereof to the respondents is proved, which has been proved. We have already held that there is nothing on record to show that the Pay Order was handed over to the respondents. We are of the view that even mere handing over of the Pay Order to respondents would not be of any effect. It has come on record that their letter dated 21-5-1974 addressed to Chairman, Karachi Port Trust referred that Messrs Haji Moosa and Sons presented the said Pay Order for cancellation and encashment on the basis of its alleged by them non-utilization and in support of their statement they executed an indemnity bond."
27. Whereas in the present case, it is not the defence of respondent that they have not handed over the pay order to its beneficiary, the respondents claim is that they have issued a pay order in the name of Ch. Muhammad Anwar son of Muhammad Ismail and as such they have rightly refused to encash the pay order on the instructions of purchaser. The said defence has been disproved from the documents produced by respondents themselves. In the present case, pay order was presented to respondent. By the payee's bank, the reason for refusal was that purchaser has stopped payment, the respondent issued duplicate pay order with the alleged consent of payee, whereas in the case, referred to above, it was the claim of purchaser that pay order was got prepared for participating in tender and the tender was not awarded to them, the original pay order was returned to them and as such the pay order be encashed, but in the present case the original order is still in possession of appellant and even there is no evidence on record that duplicate pay order has been encashed.
28. Learned trial court while dismissing the suit has not appreciated the evidence available on record. From the record it is proved that the issuer of pay order Qadeer Ahmad got prepared pay order in the name of appellant in connection with the sale agreement Exh.P-1 which was entered upon between the appellant and father of Qadeer Ahmad. The transaction of sale appears to be not finalized and the purchaser tried to get the amount of pay order saved with the connivance of bank officials. It is further not understandable if the duplicate pay order was issued in the name of one Ch. Muhammad Anwar son of Muhammad Shafiq why he has not produced the same in evidence and why he has not appeared in court. In these circumstances the protection of section 10 of Negotiable Instruments Act was not available to respondent/bank.
29. The upshot. Of above discussion is that this appeal succeeds, the impugned judgment and decree is set aside, and the suit of appellant is decreed.