Irfan Saadat Khan, J.--This High Court Appeal has been filed against the judgment dated 02.06.2010 passed by the learned Single Judge in Suit No. 1438/2006.
2. Briefly stated the facts of the case are that the Respondent is a private limited company duly registered with the Security and Exchange Commission of Pakistan incorporated under the Companies Ordinance, 1984 having its registered office at House of Agar Boulton Market Road, Karachi 74000 and is engaged in the business of import and export of vegetables and pulses etc. The appellant is a local wholesaler buyer at the wholesale vegetable and fruit market New Sabzi Mandi, Karachi. The appellant and the Respondent entered into a business deal by which the Respondent was to supply garlic and ginger to the appellant and the appellant had in turn to make the payment thereof. The appellant used to pay the amounts to the Respondent through cross cheques. In the beginning the relations between the parties were good and the business transactions entered between them were going on quite smoothly. However differences arose between them and their relations started to get worse. Thereafter both the parties started leveling allegations upon each other for not fulfilling their part of the promise and the payment matters started to delay.
3. The applicant issued 48 cheques to the Respondent which were presented in the bank but to the utter surprise of the Respondent all these cheques were dishonored with the result that the total payment of these 48 cheques of Rs. 20,597,047/- became outstanding against them. After the said cheques were dishonored the respondent approached the appellant for payment of the same but as per the respondent the appellant delayed the payment on one pretext or the other. The Respondent came to the conclusion that the appellant did not seem to be sincere in making the payment and thereafter made a complaint to the area police who registered an FIR against the appellant. When the appellant came to know that the Respondent had approached the police and lodged a FIR against him he thereafter filed two cases Bearing Nos. 1016/2006 and 1050/2006 before this Court which are pending. The Respondent also filed a suit Bearing No. 1438/2006 against the appellant with the prayer that the disputed amount of Rs. 20,597,046/- be recovered from the appellant alongwilh the mark-up etc. This suit Bearing No. 1438/2006 came up for hearing before the learned Single Judge who decreed the same in favour of the Respondent with the following observations: "Hence the plaintiff is entitled for a decree of unpaid cheques amounting to Rs. 205,970,46/-. The suit is therefore decree in a sum of Rs. 205,970,46/- alongwith interest at the rate of 10% per annum payable from the date of filing of this suit till recovery of the entire decretal amount."
It is against this order that the present High Court. Appeal has been filed.
4. Mr. Syed Hassan Ali Advocate appeared on behalf of the appellant and submitted that the order passed by the learned Single Judge is not in accordance with the settled principles of law. While elaborating his arguments he submitted that the learned Single Judge has not taken into consideration that the cheques annexed with the plaint were not in the name of the Respondent, moreover the bills annexed in this regard also do not bear the name of the Respondent. He submitted that this important aspect has not been considered by the learned Single Judge while granting the decree in favour of the Respondent. He in this regard invited our attention of Section 123-A of the Negotiable Instruments Act. He stated that as could be seen from the cheques the name of the Respondent is Agar International (Pvt) Limited whereas the cheques and the bills clearly show the name as that of Agar Corporation. According to the learned Counsel the bank should not have honored these cheques issued as Agar Corporation and Agar International are two separate entities. In support of his above contentions the learned Counsel relied upon the decisions reported as Muhammad Tariq Khan v/s Khawaja Muhammad Javed Ansari (2007 SCMR 818), Muhammad Ayub v/s Barkat Ali Shah (2011 CLC 349) and M/s. C.M. Textile Mills (Pvt.) Ltd. V/s ICP (2004 CLD 587).
5. Mr. Qazi Abdul Hameed Advocate appeared on behalf of the Respondent and at the very outset submitted that the appellant has approached the Court with unclean hands. He stated that the business transaction was carried out between the parties without any hindrance, however subsequently their relations started to aggravate. He submitted that the contention of the learned Counsel for the appellant that Agar Corporation and Agar International are two different entities is belied from the assertion of the appellant himself that he had issued cheques and bills in the name of the Agar Corporation and no problem arose in this regard but however due to reasons best known to the appellant the disputed 48 cheques were dishonored on the flimsy stance taken by the appellant that Agar Corporation and Agar International are two different entities. He submitted that this indifferent altitude of the appellant is so obvious from the fact that when the respondent approached the appellant informing him about the dishonoring of the said cheques, he went on lingering the matter by promising to the respondent that payment will be made in a short span of time. However when the Respondent came to the conclusion that no fruitful result will be achieved, he filed a complaint to the area police and approached this Court. The learned Counsel kept on to argue that the appellant deliberately and willfully failed to pay the disputed amount of Rs.
20,597,046/- and the learned Single Judge was quite justified in passing the decree against the appellant. The learned Counsel also invited our attention to Sections 4, 5 & 6 of the Negotiable Instruments Act by stating that a cheque is a Negotiable Instrument and dishonoring of the same would entail not only lodging of appropriate action as provided under criminal law but also claim of which under civil law as well. He stated that the case of the Respondent is a simple case of mis- naming only as the appellant had not only issued the present disputed 48 cheques but previously had issued a number of cheques in the same name which were encashed by the Bank of the appellant and he had never objected to such encashment. The learned Counsel invited our attention to 118 of the Negotiable Instruments Act also and stated that the present High Court Appeal has been filed with a malafide intention and hence the same is liable to be dismissed with cost. In support of his above contentions the learned Counsel has relied upon the cases reported as Ponnuswa mi Chetiar v/s P. Velai Muthu Chetiar (AIR 1957 Mad 355), Zujya Pascol Damel v/s Manmohandas Lalubhai Partap (AIR 1940 Bombay 164), Karachi Road Transport Corporation v/s Fazal Brother Limited and another (PLD 1971 Karachi 583), M. Muhammad Shafi and Co v/s A.Rehman Enterprises and others (2010 CLD 920) and Muhammad Sultan v/s The Slate (2010 SCMR 806).
6. We have heard both the learned Counsel at length and have also perused the record and the decisions relied upon. We also sought assistance of Dr. Muhammad Farogh Naseem, who was present in the Court in some other cases and are grateful to him for providing us his opinion.
In order to reach to a final conclusion, it is expedient to first discuss the relevant law in this regard as relied upon by the learned Counsel. Sections 4, 5, 118 & 123-A of Negotiable Instrument Act are reproduced as under:-- "4. "Promissory note".
"Promissory note" is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking, signed by the maker, to pay certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument'.
5. "Bill of exchange".
"Bill of exchange". A "bill of exchange" is an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument.
6. "Cheque" "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
118. Presumptions as to negotiable instruments-- Presumptions as to negotiable instruments--Until the contrary is proved, the following presumptions shall be made:-- (a)of consideration; that every negotiable instrument was made or drawn for consideration, and that every such instrument, when if has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration ; (b)as to date; that every negotiable instrument bearing a date was made.or drawn on such date (c)as to time of acceptance; that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d)as to time of transfer; that every transfer of a negotiable instrument was made before its maturity; (e)as to order of indorsements; that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f)as to stamp; that a lost promissory note, bill of exchange or cheque was duly stamped; (g)that holder is a holder in due course; that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof by means of an SP offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burthen of proving that the holder is a holder in due course lies upon him.
123. Cheque crossed generally.
Cheque crossed generally. Where a cheque bears across its face an addition of the words "and company" or any abbreviation thereof between two parallel transverse lines, or of two parallel transverse lines simply, either with or without the words "not negotiable," that addition shall be deemed a crossing, and the cheque shall be deemed to be crossed generally".
8. Reading of the above sections would reveal that a cheque is a negotiable instrument which may be negotiated and the bank has the duty to place into the account of payee the amount indicated on the cheque when collected and not into any other account. However so far as cross cheque is concerned the same is to be dealt with under specific provisions like Sections 123-A, 124, 129 and 130 of the Act. When a cheque is dishonored the payee could sue for an action for the payment of amount of cheque from its drawer, meaning thereby that if a person gives a cheque for the amount due to be presented at a certain bank on a certain date and if a cheque is dishonored on presentation a person can sue for consideration and get the decree for recovery of that amount in his favour. A cheque is a negotiable instrument resembling a bill of exchange but entirely different, in the ordinary course, it is not intended for a circulation but it is meant for the payment to the person on whose name the said cheque was made. Section 6 defines the cheque as a bill of exchange drawn on a specific bank and not expressed to be payable otherwise than on demand.
The drawer must be a person who enters into the contract and should be pointed out with certainty and his signatures on the cheque has to be obtained. Whenever a cheque is dishonored then in such cases execution has been admitted and it is presumed that the said cheque was executed for the consideration mentioned therein and the drawer could hardly wriggle out of the situation that the said cross cheque was meant for any other consideration other than mentioned on the said cheque. The onus in this regard squarely lies on the drawer. Even on reading of Section 123-A of the Act, it is clear that when a cheque is crossed account payee it will cease to be negotiable and it will be the duty of the banker collecting payment of cheque to put the same in the account of the payee mentioned in the said cheque. However if the said Section 123-A of the Act is read with Order XXXVII CPC which applies to all bills of exchange whether negotiable or not a suit upon a crossed cheque account payee only is maintainable. The provisions of Order XXXVII CPC are not only relevant to negotiable instruments only but applies to crossed cheques also.
9. We will now discuss the decisions relied upon by the learned Counsel for the appellant. In the first decision relied upon by him that of Mr. Muhammad Tariq Khan it was held by the Hon'ble Supreme Court of Pakistan that "when the basic order is without lawful authority then the super structure shall have to fall on the ground automatically". In the next decision relied upon by him authored by one of us namely Irfan Saadat Khan. J, a similar view has been reiterated. In the third judgment it was held by a Divisional Bench of Lahore High Court that the Court is bound to consider and examine the plaint as well as the documents relied' upon by the plaintiff forming basis of the pleadings before deciding the suit, as a decree could not be passed by the Court in a routine or in cursory manner just because the defendant failed to file a written statement in this regard.
10. The learned Counsel for the Respondent has relied upon the judgments mentioned supra wherein in the case of Poonaswa mi, quoted supra, it was held as under:- "The main point of law is whether the absence of the name of the payee in a promissory note will make the note invalid, though the payee was known with certainty even at execution.
Though the name of the plaintiff was not mentioned (perhaps by sheer slip or accident), the lender and borrower knew it, and there was the description. To say that the name must always be mentioned to make a promissory note valid is, in my opinion, not sustainable in any modern Court of justice, equity and good conscience, though such a plea might have been allowed in a Court, like the old Auglo-saxon. Courts deciding on outworn formulate without reference to living facts".
In the case of Zujya it was held as under:-- "(d) Negotiable Instruments Act (1881), S.8-Words "in his own name"-- Scope. The words "in his own name" in S.8 do not and cannot mean the personal name of the person, and there is no reason to suppose that any 'alias' or assumed trade name would not fall within the meaning of those words".
In the case of Karachi Road it was held as under:-- "But, for my part, the rule which is really applicable to the point at issue is laid down by the English Court of Appeal in Alexander Mountain and Co. vs. Rumere Ltd. (7). In this case, one Alexander Mountain carried business in the name of "Alexander Mountain & Co. " and during his life time entered into a contract under this name. After his death, his executrix brought an action but she sued in the name of Alexander Mountain & Co., which was only a trade name of a sole proprietor who was already dead. It was contended that the action brought by the executrix was bad as the person in whose name the action was brought was already deed. But the Court of Appeal held that the mistake was of misnomer only and allowed the executrix to be substituted as plaintiff. Thus, I find no Weight in the objections raised with regard to limitation".
In the case of M. Muhammad Shafi it was held as under:-- "The course of procedure under summary chapter was converted into one applicable to an ordinary Civil Suit and the appellant was not afforded proper opportunity to lead evidence in the sense it ought to have been provided. The respondents were twice granted time to furnish surety but they failed to comply. On the whole the procedure adopted was highly prejudiced to the interest of the appellant. Instead of suit being decreed on failure of the respondents to furnish surety which was a condition precedent to put forth any defence the respondents were allowed to cross-examine the appellant whereas the respondents themselves did not volunteer to subject themselves to the test of cross-examination on the affidavits filed by them in support of application for leave to defend".
In the case of Muhammad Sultan the Hon'ble Supreme Court of Pakistan observed as under:-- "Thus the appellant has not disputed the signature on the cheques in question. It is against the natural conduct that a person would keep a blank signed cheque in the cheque book. Furthermore, D.W.1 has stated that on 26-01-2005 an application was filed by the appellant for stopping the payment of the cheque and that at that time the balance in the account of the appellant was Rs.
300 only. We have perused the said application from which we find that the appellant did not take, the plea that his cheque book was stolen or that a cheque from the cheque book was missing. It appears that balance in the account of the appellant was Rs. 300 only at the time when the application was moved as such it does not appeal the common sense that the appellant would request the bank to stop the transaction when there was meager amount lying in the account.
After considering the material available on record, we are of the considered view that the concurrent findings of the Courts below do not call for interference. The appeal has no merits, therefore, the same is dismissed".
11.Perusal of the above law and the decisions cited supra would leave no room of doubt that a number of cheques were issued by the appellant to the Respondent which were dishonored on presentation. Specific notices were given to the appellant in the suit proceedings to file leave to defend application, which remained unattended. It is clear from the record that no leave to defend application was filed by the appellant and only when the suit came up for final disposal objections were raised that the cheques were issued in the name of Agar Corporation whereas the present suit has been filed by Agar International Limited, little realizing the fact that in the past the appellant had been issuing cheques to the respondent in the name of Agar Corporation limited which aspect has not been denied by the learned Counsel representing the appellant. The learned Counsel for the appellant has also not denied the fact that bills pertaining to the Respondent i.e. Agar International Limited had been issued in the past by the appellant in the name and style Agar Corporation, fully admitting the fact that the bills and cheques were issued in the regard pertains to the present Respondent. Hence taking a somersault now by stating that the cheques were issued by him in the name of Agar Corporation and not in the name of Agar International Limited is unwarranted. It is clear from the pleadings of the appellant that they were mindful of the fact that Agar Corporation and Agar International were the same entity and only took this plea just to wriggle out of the present situation.
12.In our view the learned Single Judge had rightly come to the conclusion and had rightly decreed the suit in favour of Respondent by thrashing out the case in detail and not only examining the material facts going to the roots of the case but also examining the bank statements fully depicting that all the cheques issued by the appellant were deposited in the account of Agar International Limited which subsequently were dishonored. It is evident from the record that all the previous bills were in the name of Agar Corporation and cheques also were in the name of Agar Corporation which were not only deposited timely but were also encashed except the present 48 cheques, which were dishonored with the specific remark of the bank "due to insufficient funds". The malafide on the part of the appellant is also evident from the letter dated 19.06.2006 addressed by the appellant to Abdul Majeed Agar requesting to hold the cheques till July 2006 as due to summer and slow down of season the recovery was very slow. In the said hitter it has categorically been mentioned that the present cheques be submitted after July 5th 2006. In the said letter the appellant had categorically apologized to the respondent about the sad/unhappy/embarrassed reason. This above specific letter fully controverts the contention raised by the appellant as on one hand he states that the cheques issued by him were not in the name of Agar International and were in the name of Agar Corporation and these two companies are distinct entities whereas on the other hand he requested to hold the cheques till certain date and apologized for the inconvenience.
13.It is also seen from the record that after dishonoring the cheques, a complaint was filed by way of lodging FIR Bearing No. 215/06 at P.S. Kharadar u/S. 489-F and the Vth Civil Judge/Judicial Magistrate Karachi (South) in the Criminal Case No. 1176/2010 found the appellant to be guilty of charges and liable to be punished for R.I. of three years and a fine of Rs. 45000/- and in case of default of payment of fine to further suffer R.I. for 2 months, vide order dated 28.01.2011.
14.It is also seen from the audited report of the Respondent company of June 2006 that they have duly shown in their list of traders debtors an amount of Rs. 205,970,46/- to be outstanding against the appellant, which also proves that they have claimed the said amount outstanding against the appellant.
15.We, therefore, in view of the uncontroverted facts have come to the conclusion that the appellant had, in consideration of their business dealings, handed over 48 cheques to the Respondent to be encashed as per past practice and by dishonoring of these cheques the appellant has exposed himself to legal action against him. Hence the learned Single Judge was quite justified in decreeing the suit in the amount of Rs. 205,970,46/- alongwith an interest of 10% per annum from the date of filing of suit till the recovery of entire decretal amount. This High Court Appeal thus being bereft of any merit is hereby dismissed.