' RUSTAM S. SIDHWA, J.--This judgment will dispose of Civil Appeal No, 277 of 1990 preferred by the National Security Insurance Company Limited, appellant, and Civil Appeal No 278 of 1990 preferred by M/s. Thal Cotton Industries Limited and another, appellants, against the judgment of a learned Single Judge of the Lahore High Court dated 2641-1989 accepting the revision petition filed by Hoechst Pakistan Limited, respondent, and modifying the order of the Additional District Judge, Lahore, by ordering both sets of present appellants to defend the suit, subject to their depositing the amount of Rs 13,94,554.40 in the trial Court.
2. The brief facts of the case are that Hoechst Pakistan Limited, respondent (hereinafter to be referred to as "supplier") instituted a suit against Thal Cotton Industries Limited, Bahawalpur and its proprietor Muhammad Ramzan, appellants (hereinafter to be referrence to as "the agents") and the National Security Insurance Company Limited, appellant (hereinafter to be referred to as "guarantor") for the recovery of Rs,13,94,554.40 on the basis of three promissory notes dated 31-12- 1986 for Rs,5,00,000 each submitted by the agents to the supplier for goods supplied. It was alleged that M/s. Thal Cotton Industries Limited had been appointed as agents by the supplier for sale of its pharmaceutical goods and pesticides and that on the request of the agents, the guarantor had executed and delivered two guarantees dated 24-6-1986 for Ra.10,00,000 and dated 2-9-1986 for Rs 7,00,000 undertaking to pay to the supplier any amounts due by the agents, in the event of their failure to pay the said amounts on demand by the supplier, without reference to the agents.
3. On receipt of summons from the Court, the agents and the guarantor both made separate applications for grant of leave to appear and defend the suit. The supplier filed its replies and contested the applications. The learned Additional District Judge granted leave to the agents and the guarantor on 22-7-1989 to appear and defend the suit unconditionally.
4. Being aggrieved by the above order, the supplier filed a revision petition in the Lahore High Court, which was accepted by a learned Single Judge on 26-11-1989, who modified the impugned order and granted leave to the agents and guarantor to appear and defend the suit, subject to their depositing the amount of Rs,13,94,554.40 in the trial Court within one month of the date of his order, failing which the order for grant of leave to appear and defend would be deemed vacated.
5. Both the agents and the guarantor petitioned this Court for leave to appeal. Leave was granted to the guarantor to consider the question whether the order of the Additional District Judge was revisable under section 115 of C.P.C. In view of the decision of the Lahore High Court reported in Lala Munawar Lal v. Karobar Khandan Mushtraka (AIR 1938 Lah. 548). Since leave was granted to the guarantor, leave was also granted to the agents. Both the appeals are now before us for disposal
6. On behalf of the guarantor company it is submitted that summons in Form No, 4 to Appendix B of the Schedule to the Civil Procedure Code was not served on the guarantor, with the result that it did not know that it was required to defend its suit on negotiable instruments, which was to be governed by the summary procedure and that therefore the proceedings before the Additional District Judge stood vitiated. It is further submitted that the guarantor not having executed any of the three cheques in favour of the supplier, the summary procedure could not be applied to it and that the guarantor should have been allowed to defend unconditionally according to the normal procedure applicable to civil suits. In this connection the learned counsel refers to Habib Bank Limited, Karachi v. Ghanzafar Ullah Khan PLD. 1978 Kar.
263. It is, therefore, contended that the guarantor should be permitted to defend the suit unconditionally according to the procedure normally available for ordinary suits and not under the summary procedure provided by Order XXXVII of the Code.
7. On behalf of the agents it is submitted that the learned Single Judge had no power to exercise revisional jurisdiction in respect of an order passed by the Additional District Judge under Order XXXVII, Rule 3 of the C.P.C. As the same was interlocutory. It is urged that the order being interlocutory, it did not amount to "case decided", within the meaning of section 1L5 of the said Code so as to be revisable. In this connection the learned counsel refers to Lala Munawar Lal v.
Karobar Khandan Mushtaraka (AIR 1938 Lah. 548). In the alternative it is submitted that the agents were approached by the supplier to act as its agents and that the supplier would supply the products on credit basis against guarantees issued by a scheduled bank or insurance company; in addition to the issue of cheques by way of collateral security, that after the sale of the products, the agents could remit the price to the supplier after deducting their commission, that the requisite guarantees were procured from the guarantor and furnished to the supplier, apart from the three cheques of Rs,50,000 each furnished the agents as collateral security, that thereafter the supplier began supply of goods on credit, that certain consignments of defective and damaged goods were supplied against which the agents had a claim of Rs 12,00,000 against the supplier and that the supplier on the last date of validity of the guarantees presented the three cheques for payment and thereafter instituted the suit. In this view of the matter, it is submitted that the agents had strong claim and plausible defence, as a result of which the Additional District Judge granted the agents and the guarantor leave to defend the suit unconditionally. It is contended that the interference of the learned Single Judge in the said matter in revisional jurisdiction was without jurisdiction and has led to a miscarriage of justice. It is prayed that the agents be granted unconditional leave to defend the suit.
8. On behalf of the supplier it is contended that it would have no serious objection if the guarantor is permitted to defend the suit unconditionally according to the ordinary procedure available for defence of normal suits, as is provided by the Code of Civil Procedure, provided that the agents are not granted the said concession. As regards the agents, it is submitted that the learned Additional District Judge in his order dated 22-7-1989 did not refer at all to their defence, but merely allowed unconditional leave, to defend on the following ground.
"There are no reasons to refuse the leave to the defendants to appear and defend the suit on the plain ground that matter is of commercial transaction and the suit has been filed when the cheques of defendants Nos. 2 and 3 were dishonoured. Besides, the liabilities of defendant No, 1 also will be determined according to the guarantee deed. Hence, the defendants are granted leave to appear and defend the, suit. Now the file to come-up on 7-9-1989 for filing of the written statements."
' Considering that the reasons were not given at all for this concession, the learned Single Judge was within his jurisdiction to review the matter as to whether the learned Additional District Judge, Lahore, had acted in the, exercise of his jurisdiction illegally or with material irregularity. It is submitted that Lala Munawar Lal's case (supra) is an ancient authority, whereas there are other more recent authorities of this Court which hold a contrary view and that where a question of fact is involved, namely, whether there was a plausible defence which could be urged at the trial, without holding that the same was present and, if so, whether it entitled the grant of leave unconditionally, the Court could not have passed the order granting leave unconditionally, on no material. In these circumstances it is urged that where an order is passed on no material or the order is so passed that grave injustice would result, the Court's interference under section 115 of the C.P.C. Is not excluded. In this connection Kanwal Nain v. Fateh Khan is referred.
9. We have heard the arguments of the learned counsel for the supplier, the agents and the guarantor and have perused the record, It cannot be denied that the guarantor neither issued nor executed any negotiable instrument in favour of the supplier, as to warrant summary proceedings being initiated against it. Guarantees and indemnity bonds are not negotiable instruments.
Summary suits under Order XXXVII of the Code are only instituted upon bills of exchange, hundias or promissory notes. Since the guarantor had executed guarantee bonds, the summary procedure provided under Order XXXVII of the C.P.C. Was not applicable to it. This position is also admitted by the learned counsel for the supplier. A similar question came up before the Karachi High Court in Habib Bank Ltd. v. Ghazanfar Ullah Khan (PLD 1978' Kar. 263). In that case, on a summary suit by the Bank against the principal debtor and the guarantor on a loan issued on the security of a promissory note executed by the principal debtor, supported by a guarantee furnished by the guarantor, in which both the principal debtor and the guarantor had applied for leave to defend, leave to the principal debtor was refused and the suit decreed against him, whereas unconditional leave was granted to the guarantor and the suit was allowed to proceed against it as an ordinary suit. On an objection being raised by the guarantor in the High Court as td whether the suit was maintainable or not, it was held that, in the absence of any prejudice, the suit against it did not suffer from such an infirmity as to disentide the Bank from enforcing its legitimate claim against the guarantor. In that case the' learned Judge took support from an unreported decision in Suit No, 400 of 1976 in re: Muslim Commercial Bank Limited v. Mat. Khateeja Bai and another, where in the said suit one defendant was allowed to be proceeded under the summary procedure and the guarantor under the ordinary procedure and the maintainability of the suit was not treated as being effected in any material manner. In these circumstances, we have no hesitation in holding that the order of the learned Single Judge granting leave to the guarantor to appear and to defend the suit under Order XXXVII, Rule 3 of the C.P.C., subject to the deposit of the amount claimed, cannot be sustained and must be set aside. The guarantor is entitled to defend the suit unconditionally on the basis of the ordinary procedure applicable to the trial of normal suits as it provided by the Code.
10. With regard to the question whether the order of the learned,. Additional District Judge granting leave to the agents to defend the suit unconditionally under Order XXXVII, Rule 3 of the Code was a valid order and could not be upset in revisional jurisdiction, the first question that arises is what was the nature of the order that was passed by the trial Judge. The examination of the said order shows that the learned Judge did not even refer to any of the alleged defences raised by the agents in their application seeking leave to defend: Without examining the said defences and the objections of the opposite party, the learned Judge could not have granted leave to defend,, much less to have granted leave unconditionally. Under Order XXXVII, Rule 3 of the Code, before the Court can grant leave to a defendant to appear and defend a suit, it must prima fade find from his application and affidavits that there is reasonable material which makes it incumbent on the plaintiff to prove consideration or there exists a plausible defence or some specific question of fact or taw which requires to be tried or investigated. If any authority is required for this view, Fine Textile Mills Ltd. v. Haji Umar (PLD 1963 SC 168), Kodak v. Alpha Film Corporation ((1930) 2 K. B. 340), Muslim Commercial Bank Limited v. Tayyab Sharif (1975 SCMR 398) and Karim v. Zikar Abdullah (1973 SCMR 100) may be referred. During arguments learned counsel for the agents has referred to the fact that his clients had a counterclaim of over Rs, 12,00,000 against the supplier and that they had plausible defences capable of being tried and investigated. No counter-claim was filed by the agents. As regards the alleged plausible defence which the agents alleged, there is no reference of the same in the order. Since the order of the learned Additional District Judge did not disclose even the grounds on which leave was being claimed, though it proceeded to grant unconditional leave, the learned Single Judge of the High Court was within his jurisdiction to re-appraise the matter.
There is no force in the objection raised by the learned counsel for the agents that a revision is not maintainable against an order passed under Order XXXVII, Rule 3 of the Code. The expression "case decided"' does not necessarily mean the decision of the entire suit. It may relate to a decision of an interlocutory matter requiring a judicial mind. The old view that an interlocutory matter did not fall within the expression "case decided", was abandoned by the High Court in Bibi Gur Devi's case (AIR 1943 Lah. 65), and the case cited by the learned counsel for the agents is no longer good law. The order of the trial Judge was passed on no material and ex fade appeared to be perverse. The learned Single Judge therefore could have interfered under section 115 of the Code. See Bashir Ahmed Khan v. Qaisar Ali Khan (PLD 1973 SC 507). The learned Single Judge has given cogent reasons: for interfering with the lower Court's order. The order of the learned Single Judge granting leave conditionally to the agents to defend, is legal and proper and no. Exception can be taken to it.
11. For the foregoing reasons, Civil Appeal (CA.) No, 277 of 1990 filed by the National Security Insurance Company, appellant, is accepted. The order of the learned Single Judge of the Lahore High Court dated 26-11-1989 is set aside qua the said appellant, which is now permitted to unconditionally defend the suit without furnishing any security and which suit against the said appellant will proceed like an ordinary suit according to the normal procedure prescribed under the Code of Civil Procedure. Civil Appeal No, 278 of 1990 filed by Thal Cotton Industries Limited and another, appellants, is dismissed and the appellants shall appear and defend the suit, subject to their depositing the suit amount within the time and subject to the condition as stated in the impugned judgment, which suit shall proceed against them as a summary suit under the provisions of XXXVII of the Code of Civil Procedure.
12. There shall be no order as to costs in both these appeals. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.