' SADIQ HUSSAIN BHATTI, J.--- The appellant is aggrieved by the judgment dated 26-11-2012 and the Decree dated 27-11-2012 passed by learned 1st Additional District Judge, Karachi Central in Summary Suit No,22 of 2011, filed by respondent No,1, whereby the suit was decreed. Hence the present first appeal.
2. Brief facts of the case are that the appellant is a builder by profession. By way of a tripartite agreement dated 4-10-2006, the appellant and respondent No,1 along with one Muhammad Hanif Kodvani, entered into a Joint Venture for construction of a project by the name of "Shan Tower" and the respondent No,1 invested a of Rs,10,000,000 (Rupees One Crore) only in the said project.
Thereafter, the appellant and said Muhammad Hanif Kodvani decided to retire the respondent No,1 from the joint venture. Accordingly, Deed of Retirement dated 27-10-2008 was executed between the respondent No,1, the appellant and Muhammad Hanif Kodvani whereby the respondent No,1 was retired from the joint venture and it was settled that the original investment of Rs,1,00,00,000 (Rupees One Crore) and Rs,5,000,000 (Rupees Fifty Lac) as profit of the respondent No,1 from the Joint Venture would be returned to him by the appellant. In terms of the Deed of Retirement the appellant paid a sum of Rs,1,000,000 (Rupees Ten Lac) to the respondent No,1 on 27-10-2008 through Pay Order No,2539833 dated 18-10-2008 drawn on Bank Al Habib, Paposh Nagar Branch and for the remaining amount of Rs,14,000,000 (Rupees One Crore Forty lac) the appellant gave three post-dated cheques amounting to Rs .2,000,000, Rs .3 , 000, 000 and Rs,9,000,000 respectively. The cheque for Rs,2,000,000 was not presented as the appellant had paid the said amount to the respondent No,1 through Pay Order No,2540582 dated 27-2-2009 and the original cheque for Rs,2,000,000 was returned to the appellant by the respondent No,l. However, when the remaining two cheques for Rs,3,000,000 and Rs,9,000,000 were presented both were dishonoured on account of insufficient funds. The respondent No,1 called upon the appellant to discharge his liability who ensured the respondent No,1 that payment in respect of the said two cheques would be made on or before January, 2011. Howevei, the appellant failed to honour his commitment and continued avoiding payment of the said amount on one pretext or the other. Having no option left, the respondent No,1 issued a legal notice to the appellant which was not responded to by him.
Eventually the respondent No,1 filed Summary Suit No,22 of 2011 which was decreed as stated above.
3. Learned counsel for the appellant mainly contended that the cheques were not for repayment of the share/profit of the respondent No,1 rather the same were given as security/surety. In this regard he invited my attention to Clause 11 of the Deed of Retirement and stated that in case of failure of any party to comply with the Deed of Retirement the basic Joint Venture Agreement was to prevail.
Counsel for the appellant submitted that since in case of failure of any party to comply with the Deed of Retirement the consequence is mentioned in Clause 11 thereof, therefore, the learned 1st Additional District Judge was not justified in decreeing the suit of the respondent No,
1. The learned counsel also submitted that due to harsh and cruel behaviour of the respondent No,1" the appellant had suffered a lot mentally and physically and his business activities have come to a standstill.
4. On the other hand, Mr. Raja Sikandar Khan Yasir, learned counsel for respondent No,1 submitted that the respondent No,1 had filed a suit under Order XXXVII, Rule (2), C.P.C., therefore, till such time that leave to defend is granted to defend the suit, the defendant/appellant was not entitled to appear and defend the suit. He stated that even filing of an interlocutory application is barred unless leave to defend is obtained by the defendant. He submitted that once the defendant is unable to obtain leave to defend, the suit is to be decreed as prayed. In this regard he relied on the case reported as United Distributors Pakistan Limited v. Ahmad Zarie Services and another (1997 M LD 1835) and the case of Fidaaly v. Syed lqbal Shabbir and another (PLD 1960 (WP) Karachi 241).
The learned counsel further submitted that leave was granted to the appellant to defend the suit subject to his furnishing surety for the amount in dispute which he failed to provide and, therefore, the suit was to be decreed in favour of the plaintiff/respondent No,l. He relied on the case of Industrial Control (Pak) (Pvt.) Ltd. And others v. Alpha Insurance Company Limited and another (1994 CLC 1526).
5. I have heard the learned counsel for the parties and have gone through the record and the case-law cited before me.
6. It is an admitted position that the appellant and the respondent No,1, along with one Muhammad Hanif Kodvani, entered into a Joint Venture Agreement as a consequence whereof the respondent No,1 invested a sum of Rs,10, 000,000 in the Joint Venture. It is also an admitted position that later on the respondent No,1 was retired from the Joint Venture Agreement vide the Deed of Retirement and it was agreed that the appellant would pay a sum of Rs,15,000,000 to the respondent and the appellant, in view of the terms and conditions of the Deed of Retirement, paid a sum of Rs,1,000,000 to the respondent No,1 through pay order at the time of execution of the Deed of Retirement and also issued three post-dated cheques to the respondent for payment of the balance amount of Rs,14,000,000. Out of this balance amount a sum of Rs,2,000,000 was again paid by the appellant to the respondent No,1 through another pay order and the post-dated cheque for Rs,2,000,000 was taken back by the appellant from the respondent No,
1. Till now the terms and conditions of the Deed of Retirement were faithfully being followed by the parties thereto. However, controversy cropped up as soon as the remaining two cheques, amounting to balance amount of Rs,12,000,000, were presented and were dishonoured. After issuing notice to the appellant, the respondent No,1 filed a summary suit under Order XXXVII, rule (2), C.P.C. The appellant filed an application under Order XXXVII, rule (3), C.P.C. For leave to defend which was allowed subject to appellant's furnishing security in the sum of Rs,12,000,000. The appellant submitted property documents of Plot No,I11-1- 2/40, measuring 130 sq. Yards, situated in Nazimabad, Karachi as security. However, the respondent No,1 filed objections on the ground of insufficient surety provided by the appellant. On valuation the value of the said plot was determined to be between Rs,9,000,000 and Rs,10,500,000. Accordingly, the appellant was directed to furnish deficient surety to the extent of Rs,1, 500,000, however, the appellant failed to furnish the same. Accordingly, in view of the provisions of Order XXXVII, rule (2), C.P.C., the trial Court decreed the suit in favour of the plaintiff/respondent No,1 to the extent of Rs,12,000,000. The appellant challenged the same before this Court by filing the present First Appeal which came up for hearing on 10-1-2013 when stay was granted subject to deposit of the decretal amount by the appellant with the Nazir of this Court. Later on an application was filed by the appellant seeking exemption from depositing the decretal amount with the Nazir on the ground that surety has already been furnished by the appellant before the trial Court. This, however, was a misstatement as on this very ground the leave to defend application filed by the appellant was dismissed and the suit was decreed in favour of the respondent No,
1. It was not brought to the notice of this Court by the counsel for the appellant that deficient surety was provided by the appellant before the trial Court and the deficiency, despite being opportunity, was not removed.
7. Rule (2) of Order XXXVII, C.P.C. Reads as under:--- "(2) In any case in which the plaint and summons are in such forms respectively the defendant shall not appear or defend the suit unless the obtains leave from the Judge as hereinafter provided ' so to appear and defend; and in default of his obtaining such leave or of his appearance and defence in pursuance thereof the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree ..."
8. In the case of United Distributors Limited (supra), a learned Single Judge of this Court held as under:--- "5. At the outset it may be observed that in a suit based upon negotiable instrument in which summons have been issued in Form No,4 Appendix B, the defendant is not entitled to appear or defend the suit as a matter of course unless he obtains leave from the Court so to appear and defend. In default of his obtaining such leave for his appearance and defence in pursuance thereof the allegations in the plaint shall be deemed to be admitted and the plaintiffs' shall be entitled to a decree. The advantage in adopting the procedure prescribed by Order XXXVII, C. P. C.
Is that the defendant is not as a matter of right entitled to appear or to defend, but if he deserves to be heard he must apply to the Court for permission to appear and defend within 10 days of service of summons as envisaged by Article 159 of the Limitation Act. Till such time as leave to defend is granted the defendants cannot even file interlocutory application in order to agitate the point of jurisdiction or to question the transactions between the parties or to challenge validity, and legal effect of the promissory note and crossed cheque issued by them in favour of the plaintiffs. In my view these issues can be decided at the trial after recording evidence after leave to defend is granted to the defendants on disclosing a sufficient cause."
9. In view of the provisions of Rule (2) of Order XXXVII, C.P.C. And the principle laid down in the above cited case, I am of the opinion that once conditional leave was granted to appellant to appear and defend the suit filed by the respondent No,1 and the appellant could only appear and defend the suit once the condition for grant of the leave to defend was met. Since the appellant failed to meet the condition imposed by the trial Court, the trial Court was fully justified in decreeing the suit of the respondent No,
1. Needless to point out that the word "shall" has been used in the above quoted Rule (2) of Order XXXVII and thus, once leave is not granted or when leave is granted conditionally and the condition is not fulfilled by the defendant, there is no option left with the Court but to decree the suit as prayed.
10. The plea taken by the learned counsel for the appellant that the cheques were given as security/surety and not for repayment has no force as the appellant at the time of execution of the Deed of Retirement had paid Rs,1,000,000 to the respondent No,1 and has also paid Rs,2,000,000 in lieu of one of the cheques. It was also mentioned in the Deed of Retirement that "on account of unavoidable circumstances the parties feel that it would not be possible for them to proceed with the construction of the Project and complete the same in terms of Joint Venture Agreement..." It is also mentioned in the Deed of Retirement that "the party of first part (i,e, the appellant) has agreed to pay off the share and the profit of the party of the second part within the stipulated time..." Thus, the appellant had taken full responsibility of paying the share of the respondent No,1 and the post- dated cheques issued by him to the respondent were in fact for payment of the share of the respondent No,1 in respect of his investment in the Joint Venture Agreement. In the case of United Distributors Pakistan Ltd. (supra), it was also held that "the plaintiffs are legally entitled to sue the defendants under the summary procedure on the strength of promissory note as well as crossed cheques notwithstanding the circumstance that they have pleaded transaction between the parties."
11. In view of the above, I find no force in this appeal which is hereby dismissed and the pending applications are also dismissed.