UMAR ATA BANDIAL, J.---The only point of controversy arising in the present matter is whether the cheque bearing No. FE-055763, dated 31.12.1992 was issued by the respondent to the appellant for consideration or merely as an acknowledgment/receipt for the investment made by the latter in certain forests, namely , Khachloga, 'Tanger and Khand'ia.
2. Brief facts of the case are that the appellant advanced a sum of Rs. 1,540,000 to the respondent out of which Rs. 920,000 was invested in the aforementioned forests. The balance amount of Rs. 620,000 was given to the respondent as a loan. On 31.12.1992, to return this amount the respondent gave the appellant a cheque for Rs.
620,000. However , on presentment of the said cheque on 21.02.1993 to the National Bank of Pakistan, Mansehra Branch, the same was returned to the appellant with the remark 'refer to drawer .' Thereafter , the appellant contacted the respondent for payment. As a result, on 27.07.1996 the respondent revalidated the original cheque but this was also declined by the Bank on 05.08.1996 with the same remark. Consequently , the appellant filed a suit before the learned District Judge under Order XXXVII, C.P.C. which was dismissed vide order dated 16.09.1999 on the ground that the cheque was a non-negotiable instrument and so the suit should be filed before the appropriate Civil Court. Feeling aggrieved by this the appellant filed an FAO before the Peshawar High Court which by order dated 22.01.2002 remanded the matter back to the District Judge for determination after holding that the cheque was a negotiable instrument.
3. Pursuant to this direction, the learned Additional District Judge on 23.06.2006 dismissed the suit of the appellant with the observation that the balance amount of Rs. 620,000 could be realised by the latter in two separate suits pending between him and the responden t for rendition of accounts. This decision was upheld by the learned High Court by its order dated 06.12.2013. It is this judgment which is challenged before us.
4. Today learned counsel for the respondent has submitted that the cheque issued to the appellant was not meant for encashment. Instead it was merely an acknowledgement of the investment made by the appellant in the forests.
5. We have heard the arguments of both the parties and have also perused the record. As already stated above, the only dispute in the present case is about the purpose of the cheque issued by the respondent to the appellant.
Learned counsel for the respondent has argued that the cheque was only a receipt and was never meant to be encashed. However , such a contention of learned counsel is misplaced for the simple reason that it is by now a well-established principle that a cheque is intended to be for immediate payment. Evidence for this can be gathered from section 6 of the Negotiable Instruments Act, 1881 ("the Act") which defines the term 'cheque': "6. "Cheque.". A "cheque" is a bill of exchange drawn on a specified banker and not expressed payable otherwise than on demand ."
(emphasis supplied)
6. Indeed, a cheque is not even entitled two days of grace, as arc promissory notes and bills of exchange. Reliance in this regard is placed on section 22 of the Act: "22. "Maturity" ----------- Days of grace--- Every promissory note or bill of exchange which is not expressed to be payable on demand , at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable."
(emphasis supplied)
These two provisions prove that in ordinary circumstances cheques arc exchanged between parties for the purpose of immediate payment. Any different interpretation would render redundant the objective, behind making cheques payable on demand and not entitled to the three day period of grace (unlike other negotiable instruments).
7. Support for this view can also be found in section 118 of the Act which sets out certain presumptions applicable to negotiable instruments. For ease of reference, this provision is produced below: "118. "Presumptions as to negotiable instruments". Until the contrary is proved, the following presumptions shall be made,
(a) that every negotiable instrument was made or drawn of consideration, and that every such instrument, when it has been accepted, endorsed negotiated or transferred, was accepted, endorsed negotiated or transferred for consideration;"
(emphasis supplied)
Although the presumption stated above, that every negotiable instruments is made/drawn for consideration, is rebuttable, it is trite law that the burden to rebut this presumption lies upon the party arguing that the negotiable instrument has not been made/drawn for consideration. Reference is made to the case of Haji Karim v. Zikar Abdullah (1973 SCMR 100 at page 101). However , this raises the question: how can this presumption be rebutted? The answer has been provided by the Indian Supreme Court in the case of Bharat Barrel and Drum Manufacturing Company v . Amin Chand Payrelal ([1999] 1 SCR 704).
"13. ...The defendant, can prove the nonexisten ce of consideration by raising a probable defence... The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relics... The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintif f. To disprove the presumption the defendant has to bring on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would. under the circumstances of the case shall act upon the plea that it did not exist."
(emphasis supplied)
8. It may be noticed from the above cited passage that the bare denial of a party that a negotiable instrument has been made/drawn for consideration does not rebut the presumption in section 118(a) of the Act. Nevertheless, in the present case, this is precisely the respondent's defence; a bare denial. In fact, he has produced no independent evidence which supports his plea that the cheque was issued merely as a receipt. In coming to this conclusion, we are guided by a judgment of this Court which was decided on near identical facts: Col. (Recd.)
Ashfaq Ahmed and others v. Sh. Muhammad Wasim (1999 SCMR 2832 ). In that case, the respondent had received cheques from the petitioners. However , on presentment to the bank these were returned with the remark 'refer to drawer .' Thereafter , the respondent repeatedly asked the petitioners to return the requisite amount with no success. As a result, he filed a suit under Order XXXVII of the C.P.C. The petitioners raised the plea (amongst other defences) that the cheques were not meant to be honoured/encashed. However , this contention of the petitioners was dismissed by the Court in the following manner: '13: ... on inquiry during arguments, learned counsel for petitioners was not able to furnish any plausible reasons why 'despite presentment of cheques which had been undisputedly issued by the petitioners, no protest was lodged for displaying their stand and alleged intention of not honouring encashing the same. We 'are aware that unless anything contrary is duly established, presumption of validity flows in favour of Negotiable Instruments [e]specially when its execution is not disputed."
(emphasis supplied)
9. Quite similarly in the present case no protest was lodged by the respondent when the appellant on 21.02.1993 presented the cheque for encashment to the National Bank of Pakistan, Mansehra Branch. In fact, the respondent revalidated the cheque on 27.07.1996. If we accept the respondent's contention that the cheque was issued merely as a receipt, what then was the purpose behind revalidating the cheque. In our considered view, the only reasonable explanation is that the cheque was issued and revalidated by the respondent so that the appellant could recover the balance amount of Rs. 620,000 owed to him by the respondent.
10. Be that as it may, we notice that this material aspect of the case has escaped the consideration of both the learned Additional District Judge and the learned High Court. As a result, the impugned judgments passed by them have arrived at an incorrect conclusion. Consequently , these are set aside. This appeal is therefore allowed.