1. ' In this suit filed under Order 37 of C.P.C., the plaintiff-Corporation claimed a sum of Rs,6,70,497 from the defendants.
2. ' According to the plaint, the plaintiff advanced a loan of Rs,5,50,000 to the defendant No,1 on 16-10- 1988. Before that the parties entered into a long agreement on 12-9-1988 in pursuance of application of the defendant No,1 for grant of loan for modernization of his factory. In consideration of obtaining the loan the defendant No,1 executed in favour of the plaintiff a promissory note dated 16-10-1988 for Rs, 5,50,000, a receipt of same date confirming receipt of said amount from the plaintiff, a letter of hypothecation dated 12-9-1988 hypothicating in favour of the plaintiff, all its machineries in the factory and a letter of consent dated 22-9-1988 confirming creation of charge over its machineries in the factory, in favour of the plaintiff.
3. ' Notice of this suit was sent to the defendant No,1 as well as to defendants Nos,2 to 7 who are partners of defendant No,1. The summons sent for the defendants could not be served and ultimately defendants were ordered to be served by way of substituted service. A'proclamation for the defendants was published in Daily `Nawa-i-Waqr, Multan dated 29-6-1992 for 24-8-1992. On 24-8-1992 Mr. Tasawar Hussain, Advocate filed power for the defendants and the plaintiff was directed to supply copy of the plaint to the defendants. On 16-9-1992 the defendants moved present application (CMA 5562/92) under Order -37, Rule 3 of C.P.C. For leave to defend. Said application was opposed by the plaintiff who filed counter-affidavit.
4. ' I have heard Mr. Mamnoon Hassan, Advocate for the plaintiff and Mr. Tasawar Hussain Rizvi, Advocate for the defendants.
5. ' Mr. Mamoon Hassan, learned counsel for the plaintiff argued that present application moved on 16-9-1992 is hopelessly time-barred because the application for leave to defend is to be moved within 10 days of service of the summons which in the present case was 29-6-1992 viz the date of publication. It was further argued that no application under section 5 of the Limitation Act was moved for condonation of delay and as such the leave cannot be granted. In support learned counsel for the plaintiff cited the cases of--
(i) United Bank Ltd. v. Fair Fax Textile Ltd. And others (1986 MLD 1%5).
(ii) Allied Bank of Pakistan v. United Builders and others (1986 MLD . 473).
(iii) United Bank Ltd. v. Messrs G. Rauf & Company and others (PLD 1990 Kar. 312).
(iv) National Bank of Pakistan v. Muhammad Rafiq Malik and others (PLD 1982 Kar. 135).
(v) Cotton Export Corporation of Pakistan (Private) Limited v. M/s. National Cotton Ginning and Pressing Factory and others (C.MA. No, 6646/91 in Suit No,794/90, decided on 10-5-1992).
(vi) Cotton Export Corporation of Pakistan (Pvt.) Limited v. M/s. Irshad Model Factory (Pvt.) Ltd.
6. (C.MA. No, 6469/91 in Suit No, 1179/91 decided on (sic).
7. ' Mr. Tasawar Hussain Rizvi, learned counsel for the defendants argued that the suit filed by the plaintiffs was not maintainable as a summary suit because it was based on three documents viz. Loan agreement, letter of hpyothecation and pronote and that a suit under Order 37 can be based only on a negotiable instrument and not on other documents. It was also argued that the amount of the promissory note was Rs,5,50,000 whereas the amount claimed in the suit was Rs,6,70,497 and on this ground also the suit under Order 37 was not maintainable.
8. ' The suits under Order 37 provide a separate procedure for the litigants and in such suits a defendant has no right to contest the suit unless he seeks and is given leave to defend. The essence of these suits is that the plaint should disclose an open and shut case for the plaintiff to prove and for the defendant to defend with reference to the instrument relied upon in the plaint and no more. In the case of M/s. Habib Bank Ltd v. M/s. Kaycee Corporation, Karachi (PLD 1980 Karachi 143) it was held that the basis of the claim in a suit under Order XXXVII must be confined to any of the instruments mentioned in sub-rule (1) of rule 2 and the power of the Court is also restricted to the grant of a decree for The principal sum due on the instrument and interest calculated in the prescribed manner. As against this, the view taken in the case of M/s. Hoosen Brothers Ltd. Kyc v. M/s. Lakhani Corporation Kyc (PLD 1976 Kar. 116) was that Order XXXVII, rule 2 of C.P.C. Is not limited to negotiable instruments only and that said Order applied to all bills of exchange whether negotiable or not negotiable. The question of maintainability of the suit can be considered in depth, after leave to defend is granted. Before obtaining leave to defend in a summary suit a defendant has no locus standi to attack maintainability of the suit.
9. ' An application for leave to defend a summary suit in terms of sub-rule (2) of rule 2 of Order XXXVII, C.P.C. Can be moved within ten days of service of summons as per Article 159 of the Limitation Act.
10. Learned counsel for the plaintiff wanted date of publication of the proclamation in daily `Nawai- Waqr dated 29-6-1992 to be treated as date of service of summons. He relied on case of United Bank Limited (1986 MLD 1965) where the view taken was that the limitation period of ten days for filing application for leave to appear and defend a summary suit by a defendant would be computed from the date of publication of summons in a newspaper and not from the date of knowledge of such publication. In cited case the suit was filed by a bank under Banking Companies (Recovery of Loans) Ordinance, 1979 which provided a completely different procedure for service of summons on the defendant. Where the application for leave to appear and defend the suit has been belatedly filed and condonation of delay is sought, the default has to be succinctly explained and the applicant has to explain each day's delay since expiry of prescribed period of limitation, as held in the case of Allied Bank of Pakistan (1986 MLD 473). In the case of United Bank Ltd. (PLD 1990 Kar. 312), the application for leave to defend was filed after ten days of service of summons on the defendants and it was not accompanied by an application for condonation of delay and such application was held time-barred. In said case there was an endorsement by the postman that the defendant had refused to take delivery of summons. As against these cases cited by the learned counsel for the plaintiff, reference can be made to the case of M/s. United Bank Ltd. v. Ali Habib & Company (1988 CLC 292) where it was held that service by publication is on the same footing as service by summons of by registered post but sub-rule (1) of rule 2 of Ordinance XXXVII, C.P.C.
11. Provides that the summons shall be in Form 4 of a Appendix `B' of C.P.C. Or in such other form as may be from time to time prescribed. It was further held in said case that as the provisions of Order XXXVII, C.P.t. Are of a penal nature prohibiting the defendant from appearing or defending the suit unless he moved application for leave to defend under Order XXXVII, Rule 3 of C.P.C. Within 10 days from the date of service of summons, hence the same have to be strictly construed and therefore the summons are not only to be served in Form 4, but copy of the plaint is also to be attached and served upon the defendant alongwith the summons. It was also held that the service against the defendant cannot be considered good unless summons have been served upon him in Form 4 alongwith copy of the plaint either in person or through his agent or in the manner precribed under Order V, rule 17 of C.P.C. Learned Single Judge who decided the case of United Bank Ltd. v. Ali Habib & Co. (1988 CLC 292) disagreed with the view expressed in case of Union Bank of Middle Fast Ltd.
12. (PLD 1987 Kar. 206) that publication of summons in Form No,4 is sufficient service or that non- supply of a copy of the plaint would not be impediment in filing application under Order XXXVII, Rule 3 of C.P.C. By the defendant. Lastly it was observed in the case of United Bank Ltd. (1988 CLC 292) that the period of limitation of ten days would not start running before the date when the defendant had filed application under Order XXXVII, Rule 3 of C.P.C., where the summons with Form No,4 alongwith a copy of plaint, were not served upon him, and in such a situation there would be no necessity to file application under section 5 of the Limitation Act for condonation of delay alongwith application for leave to defend the suit.
13. ' The other authorities cited on behalf of the plaintiff are not relevant to the point at issue. In the case of National Bank of Pakistan (PLD 1982 Kar. 135) it was held that interest on promissory note was paybale by maker from date of promissory note and not from date of filing of the suit. In the unreported case of Suit No,794/1990, the suit under Order 37 was decreed because the application for leave to defend was time-barred. In Suit No,1179/1991 the counsel for the defendants did not object to the suit being decreed. In said cases the requirement of law about sending of summons to the defendant in Form 4 of Appendix 'B', C.F.C. Was not exa fined. The view taken in the case of M/s. United Bank Ltd. (1988 CLC 292) that the period of limitation of 10 days in a summary suit would not start running before the date of filing of an application for leave to defend where the defendant was not served with summons in Form 4 alongwith copy of the plaint, appears to be correct.
14. Present case is covered by the said case on all the fouRs, In present case the summons in Form 4 was never served upon the defendants and as such the period of limitation did not start running against them on 29-6-1992 when they were served by publication. In the circumstances of this case, the period of limitation of 10 days would start running against the defendants only after they were supplied copy of the plaint. I therefore hold that this application is not time-barred and it does not require condonation of delay.
15. ' The point raised by learned counsel for the defendants about non-maintainability of the suit is relevant for the purpose of granting to the defendants leave to appear and defend the suit. It can be finally decided only during regular trial of the suit, after filing of the written statement. Prima facie the defendants have made out a case for grant of leave to defend, on the ground inter alia that the suit is based not on a single promissory note but on F certain other documents also.
16. ' As a result of the above discussion, the defendants are granted permission to appear and defend the suit, on furnishing security in the sum of Rs,7,00,000 to the satisfaction of the Nazir of this Court