1. NASIM HASAN SHAH, J.--This appeal, by leave of this Court, is directed against the judgment, dated 25-2-1979 passed by the High Court of Sind, Karachi, in Suit No. 630 of 1978 filed by the appellants herein against the respondents above named on the original side of the High Court under Order XXXVII, C.P.C. For the recovery of Rs.1,97,169.11 being the amount due upon a promissory note, dated 17-4-1974.
2. In the said suit the appellants pleaded that loan facilities to the extent of Rs.2,00,000 were allowed on and from 17-4-1974 to the respondents by the appellants upon, inter alia, pledge of imported goods. The respondents executed a promissory note on 17-4-1974 in the amount of Rs.2,00,000 to further secure the loan facilities allowed to the respondent. An account was provided to them in respect of the aforesaid loan facilities and in the said account the payments made by the appellants to and on behalf of the respondent were also entered. It was also alleged that certain payments were made by the respondent in the said account on release or sale of pledged goods.
3. The amount in suit was claimed on the footing of the pronote with reference to the balance due upon the account.
4. Upon the admission of the suit, the respondents were served with the summons on 20-9-1978 in the prescribed form requiring them to apply for leave to defend within ten days. No application within the prescribed the was made and instead an application under Order VII, rule 11, C.P.C. Was filed on 24-10-1978 which the respondent withdrew on 14-1-1979. On the same date, they filed an application under rules 22 and 23 of Sind Chief Court Rules read with Order XXXVII, rules 2 and 3 and section 151, C.P.C. Praying that the suit should be treated as a long cause matter because it was not based on the promissory note admittedly executed by it and because the interest claimed by the appellant as well as some charge referred by it in its statement of account annexed to its plaint had to be calculated.
5. The appellant contested this application and its plea, inter alia, was that the suit should be decreed as the respondent had not obtained leave within the statutory period but the learned Judge who heard the case allowed the respondents' application by his order, dated 25-2-1979 and directed that the suit be treated as an ordinary long suit.
6. In support of this appeal the learned counsel for the appellant submitted that though the Court possesses the power to examine the question whether the suit is competent or not under the provisions of Order XXXVII, rule 2, C.P.C. But this power is exercisable only at the the when the suit is admitted. In any case, even if the Court could go into this question after the admission of the suit the same cannot be done unless the other party to whom the summons are issued comes forward within the prescribed period of ten days and applies for leave to appear and defend the suit and after getting the leave, raises the objection.
7. In this case, the respondent-Corporation was served with the summons on 20-9-1978. From this date onward the respondent-Corporation had ten days at its disposal for applying for leave to appear and defend the suit, but the Corporation in its own wisdom allowed this the to pass and did not apply for leave and the period of ten days available to the respondent for applying for leave to appear and defend the suit came to an end on 30-9-1978. The respondent-Corporation was conscious of the fact that after 30-9-1978 the application for leave to appear and defend the suit could not succeed for the reason that the delay could not be condoned by the Court because the provisions of section 5 of the Limitation Act, 1908 were not applicable to such an application.
8. It is further submitted that the application moved under rules 22 and 23 of the Sind Chief Court Rules (original side) read with Order XXXVII, rules 2 and 3 and section 151, C.P.C. Was in fact and substance an application for leave to defend under Order XXXVII, C.P.C. And howsoever disguised it may have been it could not but be treated as an application under Order XXXVII, and was liable to be dismissed as barred by limitation and the suit of the appellants entitled to be decreed, without any further proof of the allegations in the plaint.
9. Mr. S.M. Abbas, in reply to this submission, submitted that the right to raise the defence is a substantive right, while the rules contained in Order XXXVII, rules 2 and 3 are procedural rules and the respondents' said right could be exercised notwithstanding the fact that leave to defend was not obtained. In this connection, he relied upon Vithal Krishna Shanbhag v Sogmal Nathmal & Co., Bombay AIR 1958 Bom. 92.
10. On the merits, the learned counsel for the appellants submitted that the view of the learned Judge of the High Court that this case was not covered by Order XXXVII, C.P.C. Because the power of the Court therein is restricted to the grant of a decree for the principal sum due on the instrument and interest calculated in the prescribed manner. In other words the "requirement of Order XXXVII, C.P.C.
11. Is that the plaint should disclose an open and shut case for the plaintiff to prove and the defendant to defend, with reference to the instrument relied upon in the plaint and no more" is not a correct enunciation of law. He submitted that there is nothing wrong with the frame of the suit filed by the appellant, which was competent and came within the purview of the Order XXXVII, C.P.C.
12. Mr. S.M. Abbas, however, relied upon the reasoning given by the learned Judge in the High Court on this aspect of the case.
13. We have given our anxious consideration to the submissions made by the learned counsel for both the parties and also carefully perused the record and the judgment delivered by the learned Judge in the High Court.
14. We feel that the learned Judge has taken a to narrow view of the scope of the provisions of the Order XXXVII, C.P.C. And are inclined to agree with the view taken by Farooqui, J. (the eminent late Judge of the Sind High Court), who, in somewhat similar circumstances, observed in Suit No. 175 of 1963, which was decided by him:-- "The question which then arises is that in cases where the lender, such as the bank, obtains a promissory note by way of collateral security and opens an account in which advances are made, does the reference to such account or accounts in a plaint alter the character of the suit though it is expressly based upon promissory note or notes?"
15. After noticing the contention of the learned counsel he went on to observe:-- "What he contends is that in so far as the accounts have been pleaded, this suit must be held to be in substance a suit upon accounts and the mere phraseology of the plaint would not turn it a suit on a negotiable instrument. On a careful and a long consideration of the question I have come to the conclusion that Mr. Rizvi's contention cannot be upheld. Why should a suit which is based upon a promissory note lose its character merely because there is a reference to an account? It is not disputed that the consideration of the promissory note in this case was the advance which was made from the to the in the to accounts. The to promissory notes were admittedly a collateral security for these advances. The security was for the repayment of the loan. A suit is permissible upon a promissory note and unless the note contains all the terms of the contract the claim may also be made on the original consideration."
16. We respectfully agree with this enunciation of the law.
17. In this case, the suit was on a pronote and merely because pledge of goods and accounts were also pleaded would not take suit out of the ambit of Order XXXVII, C.P.C. The loan advanced in the account and amounts repaid or realised by release or sale of pled g ed goods in the said account and the payments made to or on behalf of the respondents by the appellants in the said account had been stated merely for the purpose of showing consideration for the pronote. A suit upon the said promissory note was permissible and fell within the purview of Order XXXVII, C.P.C.
18. The upshot is that this appeal must succeed. The judgment and order passed by the learned Judge in the High Court is, accordingly, set aside and the suit decreed as prayed. The appellant shall also have the costs of the proceedings in this Court.