SYED SAEEDUDDIN NASIR, J.--- The plaintiff has filed the present suit for recovery of amount under Order XXXVII Rule 2 of Civil Procedure Code, 1908 with the following prayers:--- "The plaintiffs, therefore pray for a judgment and decree against the defendants in the sum of Rs,15,098,520 with profit at the rate of 19% per annum with half early rest from the date of the suit till its realization, costs of the suit; and any other relief or reliefs, which this Hon'ble Court may deem fit and proper in the interest of justice."
1. The brief facts of the case are that the plaintiffs are an Insurance concern incorporated under the Companies Ordinance, having their Head Office at EFU House, M.A. Jinnah Road, Karachi carrying on business of Insurance, inter alia of Marine Insurance, Fire Insurance and other General Insurance etc. Whereas the defendants is a Limited Company involved in the business of processing and export of woven/knitted fabric.
2. Learned counsel for the plaintiff submitted in the plaint that the plaintiffs at the request of the defendants and pursuant to the proposals of Insurance made by the said defendants, issued various all risks policies of Insurance. The said Insurance Policies were issued by the plaintiffs in consideration of Insurance premium which the defendants agreed and promised to pay later on to the plaintiff.
3. Learned counsel for the plaintiff further submitted in the plaint that the defendants fully enjoyed and/or availed the Insurance cover whereas the plaintiffs remained at risks during the period of Insurance Cover. Thus a considerable amount of premium accrued and became outstanding against the defendants. Therefore, the plaintiffs remained the defendants time and again to pay the said outstanding premium and forwarded the statement of outstanding premium from time to time but the defendants kept on assurance the plaintiffs to make payment on some pretext or other. Learned counsel for the plaintiff submitted that the defendants neither disputed the amount of premium nor raised any objection to the said amount of premium due to the plaintiffs, That on intermittent pursuance and in consideration of the said agreed premium and having admitted the amount of premium, the defendants issued their cheques of different amount contained therein, in confirmation and admission of the outstanding premium which was accrued to the plaintiffs on the various Insurance Policies issued from time to time towards the part payment of the said, premium due against the said policies in favour of the plaintiffs.
4. Learned counsel for the plaintiff further submitted in the plaint that the plaintiff accordingly presented the said cheques to the defendants' bank for encashment, the said cheques were returned to the plaintiffs by the defendants' bank as dishonored due to "FUNDS INSUFFICIENT". These facts were brought to the notice of the defendants but neither the defendants paid the said amount nor gave any reason for non-payment of the cheque amount by their bank. The details of cheques dishonored by the defendants bank together with memos. Of the bank are as under- Cheque No. Amount of Cheque Annexure Cheque and Memo 6959724 Rs. 1,000,000 A and A/1 6959725 Rs. 1,000,000 A/2 and A/3 6959726 Rs. 1,000,000 A/4 and A/5 6959727 Rs. 1,000,000 A/6 and A/7 6959728 Rs. 1,000,000 A/8 and A/9 6959729 Rs. 0,447,959 A/10 and A/11 6959730 Rs. 1,000,000 A/12 and A/13 6959731 Rs. 1,000,000 A/14 and A/15 6959732 Rs. 1,000,000 A/16 and A/17 6959733 Rs. 1,000,000 A/18 and A/19 6959734 Rs. 0,774,081 A/20 and A/21 6959738 Rs. 1,000,000 A/22 and A/23 6959740 Rs. 1,000,000 A/24 and A/25 6959781 Rs. 1,000,000 A/26 and A/27 6959782 Rs. 1,000,000 A/28 and A/29 6959783 Rs. 0,876,480 A/30 and A/31 Total of above:- Rs. 15,098,520
5. Learned counsel for the plaintiff further submitted in the plaint that plaintiffs repeatedly approached the defendants requesting them to pay the said amount but they neglected and/or declined to pay the said sum of Rs,15,098,520.
In support of his contentions the learned counsel for the plaintiff has relied upon the following case law:---
(1) X011 CLD 1757 [Karachi] Saeed Abbas v. Agar International (Pvt.) Ltd.
Wherein it is held that the suit for recovery of money on the basis of dishonored cheque or 'dishonored cross-cheque is maintainable. When cheque was dishonored, then its payee could sue its drawer and get decree against him for recovery of its amount.
(2) 2010 CLD 920 [Karachi] M. Muhammad Shafi, & Co. v. Rahman Enterprises.
In this case it is held that basically a cheque or a bill of exchange, being negotiable instrument, on being dishonored gave right to sue to its holder under the summary procedure contemplated by Order XXXVII of the C.P.C.
1908.
(3) 2004 SCMR 1747 Zubair Ahmed v. Shahid Mirza Wherein it is held that where the defence of the appellant evidently not a good standard, would not be considered plausible for grant of unconditional leave.
(4) 2011 CLC 172 [Karachi] Muhammad Saleem v. Waqar Akhtar In this matter it is held that when the defendant not shown any plausible defence in leave to application the trial Court was justified in dismissing his leave to defend application and was justified in passing of decree against him.
(5) 1985 CLC 3023 [Karachi] Habib Bank Ltd. v. Al-Meezan International Ltd.
It was held that where the application filed by the defendant for grant of leave to defend the suit did not disclose any triable issues, the same was rightly dismissed and was rightly rejected.
(6) 2011 MLD 1024 [Lahore] Mirza Irfan v. Muhammad Yaqoob.
In this case it is held that the defendant failed to obtain the required leave to defend the suit the plaintiff is entitled to a decree in circumstances.
(7) 1985 MLD 181 [Karachi] Industrial Mining Enterprises v. Industrial Mineral Corporation Ltd.
In this case it is held that post dated cheque when issued, consideration for that was oral agreement between the parties, in pursuance of said oral agreement one other cheque was also delivered and enchased presumption under Section 118 of Negotiable Instruments Act, 1881 was clearly attracted in circumstances. The plaintiff was held to be entitled to institute a suit for recovery of money under summary chapter equivalent to amount dishonored cheque.
(8) 1993 MLD 637 [Karachi] Tahir Mehmood Shaikh v. Prism Communication Ltd.
In this matter the defendant had acknowledged his liability to pay the amount even if his co- defendant did not pay it. Defendant subsequently issued cheque towards payment which was dishonored in such circumstances the plaintiff is entitled to a decree under Order XXXVII of the C.P.C.
(9) 1985 MLD. 916 [Karachi] Seven Seas Services Limited v. World Marine Services Ltd.
In this matter the plaintiff suing on the basis of oral agreement and dishonored cheque, defendants approving bills of plaintiff for payment by third principal, writing letter to plaintiff..
Conditional leave was granted on furnishing security equivalent to that of dishonored cheque.
(10) 1988 MLD 316 [Karachi] National Security Insurance Co. Ltd. v. Ghulam Hussain Haidayatullah Textile Mills Ltd.
(a) Insurance Act (IV of 1938)--- ----S. 3(2)(3)--Plaintiff issuing policies of fire, marine and accident on advice of defendant on credit---Plaintiff also passed necessary endorsement in those policies and gave corresponding credit or debit---Proof of claim---Evidence produced by plaintiff in proof of issuing of policies and corresponding credit remained unchallenged and unrebutted--- Claim of plaintiff would be deemed to have been established.
(b) Insurance Act (IV of 1938)--- ----S. 3(2)(4)---Plaintiff issuing polices of fire, marine and accident on advices defendant on credit--Policies issued without receipt of premium--Legality and effect of--Insurance companies were enjoined upon not to issue any policy without first receiving premium--Breach of direction would only entail penalties prescribed in Insurance Act itself which were not provided to protect general public or any class thereof---Such penalties have been provided merely to protect the revenue---Contract itself would not be regarded as prohibited by implication---Defendant would thus be liable to pay claimed amount to plaintiff.
(11) 1993 MLD 1239 [Karachi] S.M. Abdullah Sons v. Crescent Star Insurance Co: Ltd.
(a) Insurance Act (IX of 1938)--- ----Ss. 3-C(4), 102 & 103---Insurance Rules, 1958 R.44--- Object behind S-3-C(4) of Act, 1938, was only to ensure recovery of premium and the same could not have the effect of rendering a contract entered into by Insurance Company with insurer null and void---Insurance Act, 1938, itself had provided for various penalties for non-observance or contravention of provision thereof and such contravention would have no effect upon validity of contract entered into between Insurance Company and a third party.
(b) Interpretation of statutes--- Intention of legislature, was to be gathered from provisions of statue itself and if statute did not provide for rendering of a Contract entered into in contravention of breach of any of its provisions void or illegal, same by implication could not become void merely on account of non-observance of certain provisions of statute.
(12) 1980 CLC 1919 [Karachi] Crescent Star Insurance Co. Ltd. v. S.M. Abdullah and Sons.
(a) Insurance Act (IV of 1938)--- ----S. 3-C(4)---Object of S.3-C(4) to ensure of premium and not to provide any protection to public from any act of Insurance Companies.
(b) Insurance Act. (IV of 1938)- ----S. 3-C(4) read with Insurance Rules, 1958, R. 44---Insurance policy, validity of---Insurance Act and Rules framed thereunder---A complete Code providing penalty for nonobservance or contravention of any provision of Act or Rules-- Insurance policy issued in deviation or contravention of S.3-C(4) & R.44, held, not illegal or unenforceable.
6. Turning now to the arguments extended by the learned counsel for the defendants Mr. Mujahid Bhatti, Advocate, it is inter alia argued that the cheques on the basis of which the present suit has been filed by the plaintiff, were handed over to the Financial Institutions i,e, Habib Bank Ltd. And Askari Bank Ltd. As blank and unfilled at the time of granting different finance facilities to the defendant by them, however, since the dispute arose between the aforesaid Financial Institution and the defendant, the said Financial Institutions misused the said cheques and handed over the same to the plaintiff. It is further argued by the learned counsel for the defendant that the present suit of the plaintiff is a counter blast suit to the suit of the defendant earlier filed against the plaintiff bearing Suit No,16 of 2011 before the Insurance Tribunal for recovery of loss along with liquidated damages. It is further contended that the present suit is nothing but only to harass the defendants and to compel the defendants to withdraw the aforesaid legitimate claim against the plaintiff. It is further contended that the plaintiff has no locus standi to file the present suit to claim under the alleged policies, which have neither been relied upon nor any documentary evidence of the same has been furnished with the plaint in support of the claim of the plaintiff. It is further contended by the learned counsel for the defendant that present suit is not maintainable inasmuch as an unauthorized person has signed the plaint and filed the same without any Resolution passed by the Board of Directors of the plaintiff authorizing him for filing the present suit on the basis of which the attorney was authorized to file the present suit. He further contended that the plaintiff has failed to produce even a single request letter or any proposal made by the defendant for issuance of so- called alleged policies, which have neither been filed along with plaint nor any other documentary proof has been filed to substantiate the claim of the plaintiff in the plaint. The learned counsel for the defendant stated that it is incorrect that the so-called alleged insurance policies were issued by the plaintiff in consideration of insurance premium which the defendant agreed to pay later on to the plaintiff.
7. He next contended that the defendants did not issue their cheques of different amounts contained therein, in confirmation and admission of the outstanding premium which was accrued on the policies from time to time towards the part payment of the said premium due against the said policies in favour of the plaintiff. The said cheques were issued to the Financial Institutions, who in collusion with the plaintiff handed over the same to the plaintiff, the plaintiff neither served any notice of dishonor of said cheques upon the defendant nor filed any suit for recovery of loss under the insurance policy and liquidated damages. The learned counsel states that the cheques were handed over to the plaintiff by the defendant.
8. At the end of his arguments the learned counsel for the defendant prayed for grant of unconditional leave to defend the suit to the defendants in the interest of justice. Learned counsel for the defendants has relied upon the following case law in order to substantiate his arguments:-- -
(1) 2010 CLD 701 [Karachi] United Bank Ltd. v. Pak. Leather Grafts Ltd.
In this matter it is held that when the suit had been filed through unauthorized sub-attorney, the authenticity of sub-power of attorney could be thrashed out at the time of trial. Defendant was granted leave to defend the suit in circumstances.
(2) PLD 1959 SC (Pak) 258 Khan Iftikhar Ahmed Khan of Mamdot v. Messrs Ghulam Nabi Corporation Ltd., Lahore.
Suit on behalf of Company by a person (Director In-charge of Company) not competent unless he is so authorized by a resolution passed by Company's Board of Directors-Meeting of Directors not duly convened unless due notice of it is given to all Directors.
(3) 2007 CLC. 657 [Karachi] National Bane of Pakistan v. Anwargaib White Cement Ltd.
In this case it is held that the appointment of sub-attorney by General Attorney to institute suit and verify plaint on oath on behalf of Corporation is strictly in accordance with law.
(4) 1993 MLD 997 [Karachi] Ciba-Geigy (Pak) Ltd. v. Muhammad In this matter it is held that when the suit is on the basis of negotiable instrument, opportunity should necessarily be given to the defendant to plead his case.
(5) 2010 PLC (C.S.)1150 [Karachi High Court] American Insurance Company (Pakistan) Ltd. v.
Commissioner, Sindh Employees, Social Security Institution.
In this case it is held that legal proceedings on behalf of, a company instituted through a person not duly authorized would be nullity in the eye of law.
(6) 2004 CLC 356 [Karachi] Balooch Akbar Khan v. Muhammad Hussain.
In this matter it was held that when the plaintiff failed to produce any document along with plaint to establish the claim made in the plaint the allegations can only be established by recording of evidence-leave' to defend the suit was granted unconditionally.
(7) CLD 2008 239 [Karachi] Qamran Construction (Pvt.) Ltd. v. Saleemullah.
In this matter plaint was rejected and the suit was filed on behalf of private limited company without resolution of Board of Directors and Memorandum and Articles of Association.
9. The learned counsel for the plaintiff, while addressing the Court in rebuttal to the arguments of the counsel for the defendants had drawn attention of the Court to the documents filed along with counter-affidavit of the plaintiff filed in response to leave to defend application of the defendant, which are as annexures 'B & E' to the same, which are letters dated May 10, 2007, and January 24, 2008, wherein the defendant has acknowledged its liability for the payment of insurance premium accrued upon the insurance policies extended by the plaintiff to the defendants. Learned counsel for the plaintiff has also drawn attention of the Court to the Power of Attorney of the Managing Director/Chief Executive of the plaintiff executed in favour of Mr. Nadeemuddin Farooqui authorizing him to file the present suit. In the first clause of the aforesaid Power of Attorney the executant namely Saifuddin N. Zoomkawala, Managing Director/Chief Executive of EFU General Insurance Limited has stated that under clause 19 of Article 116 of the Articles of Association of the plaintiff he was authorized to appoint any substitute and to delegate him all or any of the powers thereby conferred upon him including appointment of an. Attorney to represent the plaintiff before the Court of law.
10. Lastly the learned counsel for plaintiff Mr. Naeem Ahmed has argued that leave to defend application filed by the defendant should be dismissed and suit may be decreed inasmuch as no plausible defence, triable issue and/or substantial question of law or fact could be raised by the defendant in its leave to defend application and the pleas taken in the supporting affidavit are farce and sham.
11. I have heard the learned counsel for the parties at length and have carefully examined the material available on record, the case law cited by the learned counsel for the parties and have come to the conclusion that it is an admitted position that the plaintiffs at the request of defendants and pursuant to the proposals of insurance made by the said defendants issued various all risks policies of insurance in consideration of insurance premium, which the defendants agreed and promised to pay later on to the plaintiff. The defendants fully enjoyed and availed the said insurance cover whereas the plaintiffs remained at risks under the period of insurance cover. A considerable amount of premium accrued and became outstanding against the defendants, but the defendants did not pay the same. However, the defendants ultimately issued cheques of different amounts contained therein, in confirmation and admission of the outstanding premium which accrued to the plaintiffs on various insurance policies issued to them from time to time. It is the case of the plaintiff that when the cheques were presented to the defendants' bank for encashment, the said cheques were returned to the plaintiffs by the defendants' bank as dishonored due to "FUNDS INSUFFICIENT" remarks.
12. As discussed above the defendant has denied the liability altogether by stating that the defendant never took insurance policy from the plaintiff. The instance of the defendant that the defendant has taken in the leave to defend application and its supporting affidavit is belied by its own aforesaid two letters dated May 10, 2007 and January 24, 2008 which are annexures 'B and E" to the Counter Affidavit filed by the plaintiff in response to the leave to defend application of the defendant wherein the defendants have categorically admitted their liability to pay premium on the insurance policies issued, to them by the, plaintiff.
13. The aforesaid letter dated May 10, 2007 the defendant has acknowledged its liability in the following terms:-- "May 10, 2007, The Manager, EFU General Insurance Limited, S.I.T.E. Branch, Karachi.
Subject:-- Renewal of Insurance Policies/Cover Note.
Dear Sir, Please refer to your meeting held on yesterday with our Directors regarding the Subject noted above and agreed, therein, that we will try and clear the maximum outstanding amounts. You are therefore, requested kindly renew all insurance policies and cover notes which have been expired on 28th February, 2007 at your earliest.
Your kind cooperation in this regard shall be highly appreciated. Thanks and regards.
Yours faithfully, For NINA INDUSTRIES LIMITED. Mr. Fayyaz Karim, Chief Financial Officer."
In the next letter dated January 24, 2008 the defendants again admitted the payments of premium due and payable by the defendants to the plaintiffs in the following terms:- "January 24, 2008 The Manager, EFU General Insurance Limited, S.I.T.E. Branch, Karachi.
Attention:- Mr. S.M. Haider.
Subject:- Paym ent of outstanding premium of 2005-06 and 2006-07 Dear Sir, Please refer to our meeting dated 24-1-2008, regarding the payment of outstanding premium, we are enclosing herewith cheques as discussed.
I may please be noted that the amount of marine cover note Rs,4,774,081 for the period from 1-1- 2000 to 28-9-2006, are required to the reconciled and in this respect we have already requested for a detail ledger of Nina Industries Ltd. Maintained by EFU.
Your kind cooperation in this regard shall be highly appreciated. Thanks and regards.
Yours faithfully, For NINA INDUSTRIES LIMITED Tanveer Ahmed (General Manager)"
14. I have also carefully examined the Power of Attorney executed by the General Manager/Chief Executive Officer of Messrs E.F.U. Appointing Mr.Nadeemuddin Farooqi as true and lawful attorney of the Company to file the present suit. The Chief Executive also mentioned in para-1 of the Power of Attorney that he is authorized under clause 19 of Article 116 of the Articles of Association of E.F.U.
General Insurance Limited to authorize and appoint any substitute and to delegate to him all or any of the powers thereby conferred upon him. Therefore, I am of the opinion that by virtue of the Power of Attorney the present suit has been filed by a person duly authorized by the Company's Chief Executive to file the present suit, therefore, the objection of the learned counsel for the defendants with regard to maintainability of the suit filed by unauthorized person is not sustainable. The case-law relied upon by the learned counsel for the defendant in this context is, therefore, not relevant as well.
15. The burden to show that the suit has been filed by the authorized person is upon the plaintiff and the plaintiff has successfully discharged that burden by producing the Power of Attorney executed by the Managing Director/Chief Executive Officer as aforesaid. It is also settled principal of law that in case if there is no defect in the institution of proceedings, the suit is maintainable. The Power of Attorney clearly states that by virtue of whatever is contemplated by clause 19 of Article 116 of the Articles of Association of the plaintiff company, the Chief Executive Officer is empowered to appoint sub-Attorney to file the suit.
The defendant has not been able to make out a case for the grant of leave to defend the suit as the defendant has not been able to raise any plausible defence, triable issue, and/or raise substantial question of law or fact for the grant of the same. It is settled law of the superior Courts of Pakistan that in the summary suit on promissory notes and cheques when the defence sought to be set up is fake, without any material to support, and just bald allegations without any substance, both on legal and factual planes, the leave is to be refused outright, and when the issues raised by the defendant in the leave to defend application are illusory, the leave should not be granted, and should be refused. I am fortified in my view by the judgments reported in cases of Fine Textile Mills Ltd. Karachi v. Haji Umar - PLD 1963 Supreme Court page 163 and Muhammad Anwar v. Hoechst Pharmaceutical PAU (Pvt.) Ltd. Reported in 1989 MLD page 171. I, therefore, dismiss the application C.M.A. No,11705 of 2011 for leave to defend the suit filed by the defendant and decree the suit as prayed along with cost of the suit.
Above are the reasons for the short order passed by me in the open Court on 27-11-2014