1. ' SAJJAD ALI SHAH, J.---This appeal with leave is directed against the impugned order dated 5-2- 1985 passed by Division Bench of Sindh High Court, whereby H.C.A. No, 86 of 1984 has been dismissed in limine maintaining order passed in suit granting leave to defend subject to furnishing security. Briefly stated the relevant facts are as under:-- ' Standard Bank Limited, ownership, management and control whereof stood transferred to and vested in the Federdal Government under the Banks (Nationalisation) Act, 1974 filed Suit No, 279 of 1974 in the High Court of Sindh under Order XXXVII, Rule 2, C.P.C. On Promissory Notes against ARK Industrial Management Limited. In the plaint prayer was made for recovery of Rs,68,18,531.23 with future interest at 30% per annum with monthly rests from the date of the suit till payment, costs of the suit and any other such relief deemed fit and proper to be granted. Claim was made on the basis of three promissory notes, firstly dated 31-12-1971 for Rs, 51,75,517.81 at the rate of 5% per annum over the published State Bank of Pakistan rate with a minimum of 10% per annum with monthly rests. Secondly two promissory notes dated 29-2-1972 and 31-3-1972 for Rs, 85,076.99 and Rs, 44,679.02 respectively were executed on account of interest for the months of January to March 1972. After filing of the suit, Standard Bank Limited on its nationalization was merged with Habib Bank Limited and accordingly the title of the plaint was amended with permission of the Court. (For the sake of convenience hereafter parties before us shall be referred as plaintiffs and defendants in the suit). Defendants in the suit filed an application bearing No, CMA 1905/74 under Order 37, Rule 3, C.P.C. For grant of unconditional leave. Stand was taken by defendants in the suit that they were private limited company and were carrying on business as Managing Agents and Management Consultants. Their Directors promoted and established another company called "Rahmania Fauji Sugar Mills" (to be referred hereafter for the sake of brevity as RFSM) with a view to carry on business as manufacturers of sugar. Latter company entered into an agreement and appointed defendants as managing agents of the said company with all powers of management of that company. One of the participants and promoters in RFSM namely, Army Welfare Directorate invested a sum of Rs,90 lacs. Since RFSM was established without aid of public subscriptions there was strain on the sources and defendants as managing agents of RFSM had to borrow funds, hence loans were provided by the plaintiffs at the instance of defendants either directly to RFSM or routed to it through defendants as managing agents of RFSM. On 30th December, 1971 Chief Martial Law Administrator promulgated MLR 103, whereby RFSM was dissolved and sugar mill project was made over to Fauji Foundation alongwith all its assets and liabilities. In consequence, denfendants were disassociated with RFSM and ceased to be its managing agents. In the month of March 1972 Mr. Shamimur Rehman, Managing Director of defendants was threatened by the plaintiffs that State Bank of Pakistan had taken objection to the loans advanced to RFSM for want of proper security and documentation and consequently he was coerced into executing three promissory notes prepared by the plaintiffs which were signed but not executed for consideration as would appear from the account books. Objection was also taken that Managing Director of defendants had no power to borrow or commit the company to a liability of over 25 lacs without proper resolution of the Board.
2. 'Opposing the application for leave to defend, counter affidavit was filed by Mr. Younus Omer Shaikha, Officer of the plaintiffs' bank in which stand is taken that amounts were not advanced as loan covered by promissory notes to RFSM at the instance of defendants either directly to RFSM or routed to it through the defendant as Managing Agents of RFSM as has been claimed by the defendants. Initially plaintiffs had advanced call loan of Rs, 21 lacs to RFSM Limited. Defendants through their letter dated 15th December, 1970 requested the plaintiffs to grant a further loan of Rs, 21 lacs and also requested the plaintiffs to transfer the proceeds to RFSM on their behalf.
3. Accordingly plaintiffs granted call loan of Rs, 21 lacs to the defendants and transferred the same to the call loan account of RFSM as required by the defendants in the said letter. Letters of defendants and RFSM Limited both dated 15-12-1970 were singed by Mr. Shamimur Rehman and the photostat copies were produced. Allegations of coercion were denied on the ground that the main promissory note was executed on 31-12-1971 while loan of RFSM was adjusted in December 1970. Mr. Inamur Rehman, father of Mr. Shamimur Rehman, was himself Managing Director of the plaintiffs' bank at the relevant time. Loan covered by promissory note was given to the defendants from time to time. Mr. Inamur Rehman continued to be the Managing Director of plaintiffs during his house arrest. Even after restrictions were removed he continued to act and manage the affairs of the plaintiffs as its Managing Director and was not removed by State Bank of Pakistan from this position till quite some time thereafter. Allegation that promissory notes were executed for no consideration was denied. It was asserted that account books of the plaintiffs show that various amounts making a total of Rs,51,75,517.81 were advanced to the defendants upto 30th December 1971. There was due and owing from the defendants to the plaintiffs an amount of Rs,51,75,517.81 inclusive of interest as on 31-12-1971 for which they executed promissory note. Apart from call loan account, defendants had two other accounts with plaintiffs, one current account bearing No, CD 3781 with Karachi office which was started on 6-7-1970 and another account bearing No, CC 64.
4. This was also with Karachi office of the plaintiffs which was opened in December 1971. It is stated in paragraph 10 of the counter affidavit that the defendants in their letter dated 18-2-1972 had acknowledged the existence of the other loan account and had requested the plaintiffs to keep the original loan intact and debit the interest accruing thereon in their current account CC.
64. Defendants executed two more promissory notes on account of interest accrued on the amount of Rs, 51,75,517.81 which are also subject-matters of the suit. Defendants had annexed with their application a copy of their cash credit account maintained by them at their Karachi office, while call loans covered by promissory notes were given by the plaintiffs at its Head office. It was positively asserted by the plaintiffs in their counter-affidavit in paragraph 14 that loans were advanced and credited in their cash credit account and/or paid to Rehamnia Fauji Sugar Mills Limited on their request and/or to other parties and accordingly debited in their call loan account.
5. Defendants had executed promissory note after being fully satisfied with correctness of the account and balance shown therein as promissory note is not in round figure but in the exact amount which was outstanding against the defendants on 31-12-1972. Assertion was made in the counter-affidavit that defendants had put up a purely false defence and were not entitled to any relief and in any case not unconditional leave.
6. ' Learned trial Judge in the High Court vide his order dated 8-8-1984 had disposed of two applications, namely CMA 1905 of 1974 for leave to defend and CMA 2098 of 1981 for permission to cross-examine Mr. Younus Umer Shaikha and in the result allowed first mentioned application granting leave to defend on furnishing security and second application mentioned above was dismissed as having been filed to delay the proceedings. Those orders were passed after examination of documents and discussion of pleas raised by the parties. Defendants in the suit not being satisfied with the order of learned trial Judge filed H.CA. No, 86 of 1984 which is dismissed by order dated 5-2-1985 whereby appeal is dismissed in limine. Leave is granted by the Supreme Court vide order dated 29-4-1985 to examine whether High Court has erred in imposing condition of furnishing of security while passing order granting leave to defend the suit.
7. In the instant case suit was filed based upon promissory notes as such it was filed under Order XXXVII, C.P.C. Which envisages summary procedure of suits based upon negotiable instruments.
8. Under Rule 3 of Order XXXVII, C.P.C., Court is competent upon application by the defendant to grant leave to appear and defend the suit unconditionally or subject to such terms as to payment into Court giving security, framing and recording issues or otherwise as the Court thinks fit. It is clear from the language used in Rule 3 that the Court shall grant leave upon application and affidavits in support thereof which disclose such facts as would make it incumbent on the holder to prove the consideration or such other facts as the Court may deem sufficient to support the application. So far the question of grant of leave unconditionally or conditionally is concerned, discretion is left to the Court as contemplated under Rule 3(2) of the said Order. Mr. Muhammad Ali Sayeed, counsel for the defendants in the suit has contended before us that in the instant case facts and pleas raised by defendants are such that leave should have been granted unconditionally. According to him promissory notes were not executed for consideration by defendants in the suit but were for the benefit of third party i,e, RFSM for whom the defendants were acting as Managing agents and Management consultants. Secondly that these promissory notes were executed under duress in adverse circumstances when there was undue pressure of the Government and Mr. Inamur Rahman father of Managing Director of defendants was under house arrest. From the contentions raised before us on behalf of defendants in the suit and contents of application for leave to defend, it is clear and beyond dispute that execution of promissory notes so far as signatures are concerned is not denied but objection is taken that reasons for signing those promissory notes and factual background in which they were signed were different. In this context it will be pertinent to point out that the party which makes the assertion that the signatures were made on promissory notes for different reasons and different facts which are not reflected in the contents of promissory notes, onus of proof is on the party making such assertion. Contentions which have been raised before us were also raised before the trial Court and the Appellate Court as is manifest from pleadings and orders of those Courts which are on the record. So far the question of duress is concerned it appears from the record that controverting the pleas raised in application filed by defendants seeking leave to defend, counter-affidavit was filed by Mr. Younus Umer Shaikha against which no futher-affidavit in rejoinder was filed by the defendants. This shows that facts stated in the counter-affidavit have not been challenged. Not only duress but in the counter- affidavit all other facts alleged by the defendants in the suit as background of signing promissory notes are challenged and disputed and in support documents have been filed. Strangely defendants in the suit did not file further affidavit in rejoinder against the counter-affidavit and instead chose to file another Misc. Application CMA 2098/1981 under Order XIX, Rule 2, C.P.C. With prayer that they may be allowed to cross-examine Younus Umer Shaikha who is deponent of the counter-affidavit filed on behalf of plaintiffs. Even this application for permission to cross-examine was filed after a delay of nearly 7 years because first application for leave to defend was filed in the year 1974 and counter-affidavit was filed by Mr. Younus Umer Shaikha in December 1974. No doubt for deciding application for leave to defend it is open to the Court to some times record evidence if it is found necessary but in the instant case no affidavit in rejoinder was filed by defendants for about 6 years and after such inordinate delay application was filed for permission to cross- examine deponent of the counter-affidavit which was rightly dismissed by the trial Court for valid reason that purpose behind that was nothing else except to delay the proceedings.
9. 'Contention raised on behalf of the defendants that they were not the actual beneficiaries of the loan and had raised the same as Managing Agents and Consultants for RFSM is untenable and this argument was raised before the Courts below and was not accepted for valid reasons. In this context we reproduce relevant portion from impugned judgment as under with which we agree in toto:-- "The learned Single Judge has dealt with the plea of the appellants that the loan was never borrowed by them. The appellants in paragraph 3 of their application under Order XXXVII Rule 3 have clearly admitted that loans for completing the Mill's Project were provided by the respondents at the instance of the appellants either directly to the Mill or through the appellants. It therefore clearly establishes that loans were advanced by the respondents at the instance and request of the appellants which were either paid through the appellants or directly to the Mill. The appellants have not stated in detail particulars of such loans and kept such material facts completely vague.
10. The learned Single Judge has taken note of the letter of the appellants dated 15-12-1970 which has been quoted. According to this letter the appellants had requested the respondents to grant them a further loan of Rs, 21 lacs and transfer the proceeds to Rehmania Sugar Mill Ltd. On their behalf.
11. This request was complied with. From this letter it is clear that the appellants had requested for grant of "further loan" which indicates that besides the loan of Rs, 21 lacs other loans had also been granted to the appellants. In these circumstances the appellants should have stated and classified the loans borrowed by them or through them. The promissory notes and the statement of account produced by the respondents and there being nothing on record to show that up to the date of filing the suit, the appellants had challenged or objected to the execution of the promissory notes or to the entries in the statement of account, makes the appellant's defence unsatisfactory and doubtful. If the appellants case is that they had arranged the loans for the Mill then even in that case they can hardly deny their liability."
12. 'Question arises for consideration as to when leave is to be granted unconditionally. According to Mr. Muhammad Ali Sayeed, defendants have made out incontrovertible case in defence as such leave should have been granted unconditionally. On facts we do not agree with the learned counsel that incontrovertible case has been made out by the defendants for the reason that this is assertion of the defendants which they have failed to prove as stated in earlier part of the judgment. It is for the defendants to satisfy the Court that they had executed promissory notes for the benefit of RFSM for whom they were acting as Managing agents and Management consultants.
13. Perusal of promissory notes on the record does not give any such indication nor at any time subsequently bank was informed in positive terms that defendants were acting only as Managing agents of RFSM which will be personally responsible to discharge their liability. On this point both Courts below have given concurrent finding against the defendants for cogent reasons with which we agree. Now we shall deal with legal side of the proposition advanced by Mr. Muhammad Ali Sayeed to the effect that when defendants have made out incontrovertible case, leave is to be granted unconditionally as a matter of right. In support of the proposition he has cited a number of rulings mostly from Indian jurisdiction. The first case cited by him is Joshuna B. Powers Incorporated v. Express Newspapers Ltd. And another (AIR (39) 1952 Madras 17). It was held in this case that in application for leave to defend, the Court is not to examine the defence in detail but has to consider whether there is real defence to the suit and if the Court is satisfied that defence is not imaginary, speculative or fanciful but real and bona fide then the leave must be granted. It was further held that plea taken by defendant of arrangement with third party for whom the loan was taken was sufficient to constitute a bona fide and real defence. Although this authority is not on the point of unconditional leave but emphasis of Mr. Muhammad Ali Sayeed is that arrangement with a third party as pleaded in the instant case by defendants is a good defence and the question whether it is proved or not will come later and will be determined after production of evidence.
14. Second case in the series is Santosh Kumar v. Bhai Mool Singh (AIR 1958 SC 321), in which it is held that discretion under Order XXXVII, Rule 3(2), C.P.C. Is to be exercised along judicial lines, and whenever defence raises a triable issue, leave must be given and when that is the case it must be given unconditionally. Third case is of Messrs Mechalec Engineers and Manufacturers v. Messrs Basic Equipment Corporation (AIR 1977 SC 577), in which High Court interfered in revision under section 115, C.P.C. With order of unconditional leave holding that triable issues arose for adjudication and granted leave to defend on payment of amount in the Court. It was held by the Supreme Court of India that only in cases where defence is patently dishonest or unreasonable that it could not reasonably be expected to succeed, then exercise of discretion by the trial Court to grant leave unconditionally may be questioned. Last case cited from Indian jurisdiction is Messrs Baba Industries and another v. The Mehta Traders (AIR 1978 Madras 146). In this case prima facie defence was available to the defendants and leave to defend was granted unconditionally subject to the defendants depositing one half of the suit amount into the Court. It was held that Supreme Court is emphatic that no condition as to payment into Court of any portion of the amount claimed, or furnishing of security, would arise in a case where a triable issue is found and a prima facie defence is disclosed.
15. ' It would be pertinent at this stage to point out that although Order XXXVII in both Indian Civil Procedure Code and Pakistan Civil Procedure Code is common pertaining to summary procedure on negotiable instruments but in that provision in India amendments took place and Rule 3 has been recast by section 84 of Civil Procedure Code Amendment Act, 104 of 1976 including a rider in the shape of proviso requiring that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or fictitious. There is no such proviso in Rule 3 of Order XXXVII of our Civil Procedure Code which provides that leave to defend should be given unconditionally or subject to such terms as to payment into Court, giving security, framing and recording of issues or otherwise as the Court thinks fit. Consequently rulings cited from Indian jurisdiction mentioned above are distinguishable and not attracted to the facts of the instant case.
16. ' So far case-law on the point mentioned above from our own jurisdiction is concerned, view taken consistently is that it would be improper to lay down a rule of thumb for the exercise of powers in matters of discretion vesting in a Court when even a statute has left it unfettered. In view of the legislative history of these provisions the overall object envisaged by the legislature was to provide for expeditious disposal of litigation involving commercial transactions of a particular nature by a summary procedure so that the defendant does not have the means open to exploitation in the ordinary procedure for trial of suits to prolong the litigation and to prevent plaintiff from obtaining an early decision by raising untenable and frivolous defences. It is in this context that discretion to impose condition is to be exercised. In support of the proposition reference can be made to the case of Abdul Karim Jaffarani v. United Bank Ltd. And 2 others 1984 SCM R 568 in which case-law on the subject has been reviewed in great detail and it is held categorically that if the Court is of the opinion tha the defendant is trying to prolong the litigation and impeding a speedy trial although on the allegation made in the application, a triable issue has been raised then the Court would be justified to impose condition. But it will be improper exercise of discretion to impose condition simply because at the leave stage defendant is unable to adduce his evidence on the pleas raised in his defence. The view mentioned above holds the field and is being followed consistently. In the case of Messrs Sargroh Services (Pvt.) Ltd. v. Messrs Hoechst Pharmaceuticals Pakistan (1989 SCM R 1834) order passed by the High Court allowing application for leave to defend subject to the furnishing of Bank Guarantee and for remaining amount furnishing of security bond was not interfered with on the ground that at that stage merits of the case could not be gone into and fact was not denied that one promoter/director of the company had acknowledged the liability on behalf of defendants in the suit. In Nizam Ahmed and 2 others v. Habib Bank Ltd. And others (1991 SCM R 72), Banking Court granted conditional leave to defend the suit after applying its mind to the facts of the case, interference was declined on the ground that discretion was properly exercised and plea was rejected that defendants were entitled to unconditional leave because a triable defence was raised.
17. ' For facts and reasons mentioned above, order of the High Court impugned in this appeal is hereby maintained and the appeal is dismissed. However, there will be no order as to costs,