1. ' SYED HAIDER ALI PIRZADA, J.---This High Court Appeal by the defendant is directed against the order dated 8-11-1990 passed by the learned Single Judge of this Court whereby allowing the appellant leave to defend the suit conditionally on furnishing security in the sum of Rs,5,55,000 within a period of two months.
2. ' The facts of this case, in substance, are that the respondents filed a suit for recovery of Rs,5,55,032.75 under Order XXXVII, Rule 2, C.P.C. The case of respondents, as set out in the plaint, is that they have common dealers for the sale of the goods by agreement made by either of the plaintiffs/respondents and the plaintiffs/respondents have the right to assign their rights and obligations to each other. The defendant/appellant is a dealer/customer of the respondents/plaintiffs' goods. The defendant/appellant approached them to be appointed as a dealer of the plaintiffs' goods. The defendant submitted an application for dealership which was approved by the Karachi office of the plaintiffs/respondents and an agreement was entered into at Karachi between the parties on 26th July, 1977. It is the case of the respondents that during the course of their business, the defendant/appellant used to place order for supply of goods with them at Karachi and, upon receipt of orders, plaintiffs/respondents supplied goods to the defendant/appellant on credit on various dates. Details of the dates of the goods supplied to the defendant/appellant are given in para. 6 of the plaint. According to the plaintiffs/respondents a sum of Rs,4,78,476.51 remains unpaid against the said invoices. The defendant/appellant issued cheques purportedly in settlement of the outstanding amount but unfortunately the same were dishonoured upon being presented for payment and the defendant/appellant was immediately informed of their dishonour. The details of cheques, dates and amounts are given in para. 7 of the plaint. The respondents/plaintiffs sent a legal notice dated 29-5-1988 calling upon the defendant/appellant to make payment of Ns outstanding dues within a fortnight. In these circumstances, the respondent/plaintiffs filed the above suit for recovery of Rs,5,55,032.75.
3. Summons were issued to the defendant/appellant, who applied for leave to defend the suit. The learned Single Judge permitted the defendant/appellant to defend the suit conditionally on furnishing security in the sum of Rs,5,55,000 in the suit within two months. The same order has been complained against in this appeal.
4. ' We have heard Mr. Muhammad Jamil for the appellant and Mr. Kamal Azfar for the respondents.
5. The question arises whether leave to defend should have been granted conditionally or unconditionally . In this regard, reference has been made to the cases Fine Textile Mills Ltd., Karachi v. Haji Umar PLD 1963 SC 163, Haji Karim and another v. Zikar Abdullah 1973 SCM R 100, Abdul Karim Jaffarani v. United Bank Ltd. And 2 others 1984 SCM R 568 and Ehsanul Haq Kiani v. Allied Bank of Pakistan, Karachi and 2 others 1984 SCM R 963. The principles on which leave to defend conditionally or unconditionally is granted, are well-settled. The consensus of authorities is A that so far the grant of leave conditionally or unconditionally is concerned, it is entirely within the discretion of the Court. In this regard, reference has been made to the case of Haji Karim and another v. Zikar Abdullah 1973 SCM R 100 where after referring to the case of Fine Textile Mills Ltd., Karachi v. Haji Umar PLD 1963 SC 163, it was observed as follows:-- "It will be seen that once the Court is satisfied that the defendant ought to be granted leave to appear and to defend the suit, it has discretion to grant leave unconditionally or subject to such terms as it thinks fit. The decision relied upon by the learned counsel for the petitioners deals mainly with the principles which ought to guide the Court in granting leave to defend. It can, however, be indirectly inferred that unconditional leave might be granted where the defence appears to be incontrovertible. Now, in the present case, although the allegations are made against the plaintiff and the manner in which he manipulated the two promissory notes, yet signatures on these documents are not denied. Under section 118 of the Negotiable Instruments Act, 1881, there is an initial presumption that a negotiable instrument is made, drawn, accepted or endorsed for consideration. Although this presumption is a rebuttable presumption, yet the onus is on the person denying consideration to allege and prove the same. In the present state of the record, we are not at all able to say that the presumption attaching to the two promissory notes under section 118 aforesaid stands rebutted. In these circumstances, the High Court was clearly right in imposing terms on the two defendants."
6. ' In unreported decision dated 29-7-1991 of the Hon'ble Supreme Court in Civil Appeals Nos,608-K, 609-K and 610-K of 1990 in National Security Insurance Company Ltd. And another v. Emirates Bank International and others, held as follows:-- "The consensus of authorities seems to be that where a plausible case has been made out leave must be granted but the question whether it should be granted conditionally or unconditionally is entirely within the discretion of the Court. One of the grounds on which discretion can be exercised in favour of granting unconditional leave is that the defence pleas raised are incontrovertible and unimpeachable. Where the defence plea raised does not come up to this standard the trial Court is competent to exercise discretion in requiring the defendant to furnish security. Therefore, in such cases when such order is challenged, the appellant must establish that the discretion exercised by the Court is perverse, illegal, devoid of any reasoning and principles of justice."
7. ' In the instant case the learned Single Judge who went into the question, expressed the view that the defendant/appellant has raised many legal and technical points, which require trial. He further held that the defendant/appellant cannot be granted leave to defend the suit without furnishing a security, as he is working for gain at a place beyond the jurisdiction of this Court. Moreover, the plaintiff is in possession of documentary evidence in the shape of cheques, issuance of which is not specifically denied. He held that leave to defend has to be granted in the instant case. Having granted such relief, he went into the question whether such leave should be conditional or unconditional. He exercised discretion against the appellant and gave conditional leave subject to the defendant/appellant furnishing security in sum of Rs,5,55,000.
8. ' The defendant/appellant admitted execution of the cheques but pleaded that according to usual practice in the past as security for the consignments supplied to the defendant/appellant and after clearance of the payment of the said consignments, the cheques either used to be returned to the defendant/appellant or would stand cancelled. The defendant/appellant stated that the cheques issued were of the same date and the total amount of the said cheques is not in accordance with the invoices in question, if at all these cheques were issued for the payment of consignment mentioned in the abovesaid invoices, the amount would have corresponded with the amounts of the invoices, hence it clearly proves the fact that the post-dated cheques were in fact given as a security and nothing else.
9. ' This at once raised an issue of fact, the truth and good faith of which could only be tested by going into the evidence and, as we have pointed out, the learned Single Judge held that the defendant/appellant has raised many legal and factual points which require trial. But he held that the defendant/appellant is working for gain at a place beyond the jurisdiction of this Court.
10. Moreover the plaintiff is in possession of documentary evidence in the shape of cheques, issuance of which is not specifically denied. This is surprising conclusion.
11. ' We are of the humble view that the stage of proof can only come after the defendant/appellant has been allowed leave to defend the suit and that the nature of the defence has to be determined at the time when the affidavit is put in. At that stage, all that the Court has to determine, is whether, if the facts alleged by the defendant/appellant are duly proved, they will afford a good or even a plausible, answer to the plaintiffs' claim. Once the Court is satisfied about that, leave cannot be withheld and no question about imposing conditions can arise; and once leave is granted, the normal procedure of a suit, so far as evidence and proof so obtains. We accordingly accept the contention of the learned counsel for the appellant/defendant that the imposition of the condition by the learned Single Judge in the last paragraph of his judgment has to be removed.
12. ' Learned counsel for the respondents, however, wanted to persuadeus, at this stage, that the application was barred by time and that there is no triable issue at all in the instant case. But we are afraid that at this stage of hearing, we are not inclined to take a different view as the learned Single Judge condoned the delay for cogent reasons and found that there is prima facie a presentable defence available to the defendant/appellant.
13. ' The appeal is accordingly allowed. The appellant/defendant is directed to file written statement within three weeks from today. In the circumstances of the case, the parties are directed to bear their own costs.