SAIDUZZAMAN SIDDIQUI, J.---Leave was granted in the abovementioned 3 appeals filed by Mian Rafiq Saigol and Mian Shafique Saigol hereinafter to be called as the appellants to consider the following questions of law:-- "After hearing the learned counsel for the parties, we grant leave to appeal to examine whether condition of furnishing bank guarantee imposed at the time of grant of leave to defend the suit was justified and in line with the case-law on the subject."
2. Although the leave granting order in the abovementioned cases is common but in order to appreciate the respective contentions of the parties, it is necessary to state the relevant facts of each case separately.
3. Civil Appeal No,570 of 1994.--This appeal arises out of Civil Suit No,48-A filed by Messrs Bank of Credit and Commerce International (Overseas) Limited (in liquidation) and Bank of Credit and Commerce International S.A. (in liquidation), hereinafter to be referred as the respondents only under Order 37, C.P.C. Against the appellants before the District Judge, Lahore, for recovery of Saudi Riyals 3,371,436.91 and US $ 4,735,622.26. The amount of Saudi Riyals 3,371,634.91 was outstanding in Account No,11008675, operated in the name of Messrs Trans Saudi Establishment, a Company established in Saudi Arabia, while the sum of US $ 4,735,622.26 was the debit balance in loan Account No,11004762 in the name of Bredfil Limited, London, a Company incorporated in U.K. And presently under liquidation. The case of respondents as set out in the plaint is that although the above loans were outstanding against two different companies, the liabilities for these accounts were taken over personally by the appellants and in pursuance thereof, they executed blank promissory notes in favour of the respondents besides the letters of guarantee. It was also pleaded that the appellants acknowledged their liabilities for the above amounts on several dates and the last such acknowledgement was dated 20-11-1989 when they signed the audit report forwarded to them by the official auditors of the respondents. The respondents claimed to have filled in the blank promissory notes on the basis of the last acknowledgement of liability signed by the appellants, on 20-11-1989. The appellants, filed application in the suit for leave to defend on the grounds that they never obtained any loan facility from the respondents. That not a penny was paid to them by the respondents in disbursement of any loan. That the respondents unauthorisedly filled in the blank promissory notes executed by them in connection with some other transactions which the appellants had with the respondents. With regard to the liability against Account No,11008675 it was contended that in the year 1983 M/s. Trans Saudi Establishment received a letter of guarantee from BCCI in favour of National Commercial Bank Damam, Saudi Arabia, in the sum of Saudi Riyals 10 million. On the basis of this guarantee, the National Commercial Bank Daman, advanced Saudi Riyals 10 million to M/s. Trans Saudi Establishment. It was alleged that a part of this loan was repaid to National Commercial Bank, Damam, by M/s. Trans Saudi Establishment and for recovery of the outstanding balance of Saudi Riyals 3.7 millions, the National Commercial Bank enforced the guarantee executed by respondent No,1 on behalf of Trans Saudi in favour of National Commercial Bank. In this way, the appellants claimed that out of the guarantee of Saudi Riyals 10 million executed by respondents in favour of National Commercial Bank a surplus amount of about 6 million Saudi Riyals was left with BCCI which is due to M/s. Trans Saudi Establishment. This amount, according to appellants, has not been paid by the respondents, to M/s. Trans Saudi Establishment. Regarding the amount outstanding against Bredfil Ltd., however, the appellants contended that nothing was due to the respondents from the appellants. It was also contended that Bredfil Ltd., London, was under liquidation and the claim against the Company if any should be preferred before the liquidator. It was further contended that all the documents referred to and relied by the respondents in the plaint were without consideration and they were in fact a part of cover up measures by the respondents to counter the investigation commenced against them in U.K. And U.S.A. By the authorities in respect of the financial irregularities committed by respondents.
Besides, denial of claims on merit, various legal objections regarding competency of suit, territorial jurisdiction of trial Court in the matter and admissibility of documents were also raised in the application for grant of leave to defend the suit. In reply to the above application for grant of leave to defend the suit, the respondents brought on record large number or documents relating to two accounts referred to above wherein the appellants had admitted the amounts due against these two accounts. The respondents admitted that promotes executed in their favour by the appellants were blank but claimed that they had the authority under the law to complete the blanks and which they did after the last balances confirmations were signed by the appellants on 20-11-1989.
4. Civil Appeal No,572 of 1994.--This appeal arises out of Civil Suit No,48-B which too was instituted by the respondents in Civil Appeal No,570 of 1994 against the appellants. The amount claimed in the above suit was originally the liability of Iqbal Saigol and Aftab Saigol Groups in various accounts which they maintained with B.C.C.I. (Overseas) Ltd. However, the appellants informed the respondents towards the end of 1987 that as a result of distribution of family assets, the appellants became beneficiaries of the accounts of Aftab Saigol and' Iqbal Saigol and requested B.C.C.I.
(Overseas) Ltd., to amend the record accordingly. The case of respondents is that in pursuance of the above request of appellants and the subsequent written instruments dated 29-1-1988, a new Account No,11010146 was opened in the name of appellants and after transferring the debit balances of Accounts Nos.11007287 and 00,822 (Iqbal Saigol Group Accounts) and Accounts Nos.14002120, 11007289 and 0400165k (Aftab Saigol Group Accounts) to the new accounts, and the former accounts were closed. Similarly, the appellants also requested the B.C.C.I. (Overseas) Ltd., to consolidate Accounts Nos.11006957 (Unetco Ltd.) and 11004568' (Mian Rafiq Saigol) into one account in the name of appellants who had become the beneficial owners of these accounts. The respondents acting on the above instructions of appellants opened another new Account No,11010107 in the names of appellants and after transferring the debit balances of Accounts Nos.11006957 and 11004568 to the new accounts, closed the former accounts, The appellants confirmed the balances due against them in Accounts Nos.11010146 and 11010179 from time to time and the last confirmation of balances in the accounts was made on 20-11-1989 when they signed the audit confirmation reports showing balances of U.S.$ 8,090,454.67 and $ 3,748,631.61 in Accounts Nos. 11010146 and 11010179 respectively. The respondents claimed to have filled in the blank promissory notes executed by the appellants in favour of respondents on the basis of last balance confirmation slips signed by the appellants.
5. In the application filed before the trial Court for grant of leave to defend the suit, the appellants denied having taken any amount as loan from respondents and asserted that both these accounts were fictitious. It was claimed by the appellants that the respondents 'in order to cover up their financial bungling and misdeed obtained letters and documents relied by them from the appellants by practising deception and fraud. The respondents in reply to leave application of appellants produced large number of letters of appellants wherein they specifically confirmed their liability in respect of two accounts mentioned in the suit from time to time.
6. Civil Appeal No,57 of 1994.--This appeal has arisen out of Suit No,30 of 1993 instituted before the District Judge, Lahore. By International Credit and Investment Company (Overseas) Ltd.
(respondent) against the appellants. The claim in the suit related to Accounts Nos,80226 and 80349 which were operated and maintained by the appellants with the respondent. According to averments made in the plaint, under an agreement dated 18-12-1984 executed between the appellants and respondent, a loan of five million dollars was sanctioned by the respondent in favour of appellants in Account No,80226. The loan was repayable with interest by 30-6-1987. The appellants, on 28-12-1984 executed an undertaking in favour of respondent along with a blank promissory note promising to repay the amount by 30-6-1987. By another letter dated 19-12-1984 one of the plaintiffs acting on behalf of both, thanked the respondent for approving a short term loan in the sum of US $ 4,500,00.00 and requested for disbursement of the said amount direct in certain other accounts details whereof were furnished by the appellants. The respondents in. View of the above instructions of appellants disbursed the loan amount directly in the accounts indicated by the appellants. The appellants allegedly confirmed the balance amount due against them from time to time in the above account and last such letter confirming the balance amount of US $ 3,727,907.23 due against them was Written on 30-6-1989.
7. Similarly, Account No,80349 was also opened at the joint request of appellants by the respondent-bank under an agreement dated 22-11-1985 and the loan amount of U.S.$. 8 million sanctioned in this account was disbursed to various accounts as instructed by the appellants. The appellants at the time of sanction of loan in the above account executed blank promissory note in favour of respondents. The appellants acknowledged their liability in respect of the amount due against them in the above account from time to time and the last confirmation of balance due in the above account was made by the appellants on 14-9-1989 and on the basis of this acknowledgement the blank promissory note was filled in before filing the suit.
8. The appellants in their application for grant of leave to defend the suit took the plea that they never opened any account as alleged by the plaintiffs. It was claimed that transfer of account was a fabrication and-the appellants never received any amount from the respondent-bank at any time. In reply to the application for grant of leave to defend the suit, the respondent produced a large number of documents including the two agreements under which these accounts were opened by the appellants with the respondent. These documents contained alleged admission of the appellants from time to. Time for payment of amount due in the above accounts.
9. Before proceeding further, we would like to mention here that the respondents in reply to the applications for leave to defend filed by the appellants in the suits referred to above, produced along with their reply, number of documents/letters written by the appellants to respondents admitting their alleged liability but these documents were not specifically denied by the appellants. Mr. A.H. Pirzada, the learned Senior Advocate Supreme Court for the appellants contended that the appellants had no opportunity to deny these documents as they were not filed along with the plaint and therefore, these documents should be kept out of consideration. The learned counsel, accordingly, contended that in view of the contentions raised by the appellants in their application for grant of leave which disclosed triable issues, leave to defend should have been granted unconditionally in the three suits by the trial Court. Mr. A.H. Pirzada further contended that the issues of law and facts raised by the appellants were quite substantial in nature and these could only be proved by the appellants if they were allowed opportunity to produce the evidence in these cases. The learned counsel contended that by imposing the condition of furnishing bank guarantee while granting leave to defend, the trial Court practically denied the leave to defend the suits to the appellants, keeping in view the enormous amount involved in these cases.
10. In reply to the above contentions of Mr. A.H. Pirzada, Mr. Ch. Muhammad Farooq the learned counsel for the respondents contended that it was discretionary with the Court while granting leave to defend the suit to impose or not to impose any condition, taking into consideration the circumstances of the cases and the conduct of the defendants in the suit. It is contended by Mr. Ch. Muhammad Farooq that the appellants in a number of documents executed by them before institution of the suit, had admitted their liability to the amount claimed in the suit but in their applications for leave to defend their stand was of a total denial. This conduct of the appellants, according to learned counsel, could not be treated as honest and straightforward. Mr. Ch. Muhammad Farooq further contended that a reading of their leave applications would show that the defences raised by the appellants in all these suits were not only vague but dishonest.
11. After hearing the learned counsel for the parties at length and going through the record before us, we are of the view that the orders granting leave to appellants to defend the suit on condition of furnishing bank guarantee did not call for any interference by us.
12. The short question which requires determination in these cases, is, whether the grant of conditional leave to appellants to defend the suits was justified in the facts and circumstances of the cases. The case of Fine Textile Mills Ltd. v. Haji Umer PLD 1963 SC 163 a leading decision of this Court on the subject which has been referred with approval in many subsequent decisions of this Court, has been relied upon both by the appellants and respondents in support of their respective contentions in these cases. It will, therefore, be appropriate to examine in some detail the facts of this case. The respondent in that case brought a suit under Order XXXVII, C.P.C. Against the appellant on the allegation that the appellant had issued two cheques for Rs,20,000 and 70,000 respectively in partial payment of the claim of respondent against one Abdul Sattar Ahmad Bhai, which were dishonoured by the bank on presentation. The appellant had also issued another cheque for Rs,1,90,000 in favour of respondent. The respondent in his plaint neither disclosed the nature of transaction between him and the said Abdul Sattar Ahmad Bhai nor the connection between Abdul Sattar and the appellant. The appellant in his application for leave to defend before the trial Court alleged that there was partnership for a specific venture between the respondent and the said Abdul Sattar Ahmad Bhai. The respondent in connection with the said partnership had advanced Rs,200,000 to Abdul Sattar but the receipt for this amount was given by the appellant.
This partnership according to appellant was subsisting and the respondent was attempting to back out from the same. With regard to two cheques for Rs,20,000 and 70,0000, it was alleged by the appellant that these cheques were obtained by the respondent through fraud and misrepresentation. It was also alleged that in any event a further arrangement was arrived at between the respondent and Abdul Sattar Ahmed Bhai under which the two cheques issued by the appellant were to be returned and a fresh post-dated cheque for Rs,1,90,000 was issued by the appellant to respondent to enable him to obtain short term loan to meet his financial difficulties.
The two cheques agreed to be returned to the appellant were, however, not returned by the respondent. The respondent denied the above facts alleged by the appellant. The High Court of Sindh where the above suit was filed declined to grant leave to defend to the appellant. On appeal this Court set aside the judgment and decree passed by the High Court and granted leave to defend the suit as follows:- "In a suit of this nature where the defendant discloses upon his affidavits facts which may constitute a plausible defence or even show that there is some substantial question of fact or law which needs to be tried or investigated into, then he is entitled to leave to defend. What is more is that even if the defence set up be vague or unsatisfactory or there be a doubt as to its genuineness, leave should not be refused altogether but the defendant should be put on terms either to furnish security or to deposit the amount claimed in Court.
' The principles upon which the provisions of Order XXXVII of the Code of Civil Procedure should be applied are not dissimilar to the principles which govern the exercise of the summary power of giving liberty to sign final judgment in a suit filed by a specially endorsed writ of summons under Order XIV of the Rules of the Supreme Court in England. One of such principles laid down by the Court of Appeal in the case of Kodak v. Alpha Film Corporation (1930) 2 K B 340 was that at the stage when leave to defend is sought 'the Judge is not to try the action; he is to see that there is a bona fide allegation of a triable issue, which is not illusory; he need not be satisfied that the defence will succeed; it is enough that such a plausible defence is verified by affidavit."
' Again in the case of Powszechny Bank. Zwiazkowy W. Polsce v. Paros (1932) 2 K B 353 Scrutton, L.J., quoted with approval the observations of Field, J., from the case of Millard v. Baddeley (1984) W N 96 to the following effect:-- 'It has been settled law for nearly twenty years that where there is fraud in the inception of a bill, there is no longer a presumption that value has been given and the onus of proof is shifted. Where a defendant says that a bill was obtained from him by fraud, and that he therefore, desires to have the fact that was given by the plaintiff strictly proved, there is no power upon a summons under Order XIV to test the story of either'
' These observations clearly indicate that where the allegations are not merely illusory ,leave to defend should be granted. The allegations in the affidavits filed on behalf of the appellant in the present case are, by no means, illusory. Indeed, in the absence of any allegation to show that the appellant had any connection with the scrap iron business they are rendered probable and thus abundantly raise a triable issue as to the consideration for which the cheques were passed or at any rate raise serious questions of fact which did not lend themselves to determination in a summary manner."
' This Court though found in the above-cited case that the defence disclosed by the appellant in its application for leave to defend was not illusory and that the facts alleged by the appellant, if proved, would have rebutted the presumption of passing of consideration and shifted the onus upon the plaintiff, but granted leave to defend the suit to appellant on condition of depositing the suit amount before the trial Court as the conduct of appellant in the case was found to be not free from suspicion.
13. Mr. A.H. Pirzada, the learned counsel for the appellants also relied upon the following cases in support of his contention that the appellants should have been granted leave to defend the suit unconditionally:-
(1) M/s. Mechalec Engineers v. M/s. Basic Equipment Corporation AIR 1977 SC 577;
(2) Abdul Karim Jaffarani v. United Bank Limited PLD 1981 SC 106;
(3) Abdul Rauf Ghauri v. Mst. Kishwar Sultana 1995 SCM R 925.
' The first-noted case is from Supreme Court of India. In this case the Trial Court granted leave to defend the suit to the defendant unconditionally. The order granting unconditional leave was interfered with by the High Court of Delhi in exercise of its power under section 115, C.P.C. As the defence of the appellant was not found by the High Court as bona fide. The grant of leave to defend the suit was accordingly, made conditional on deposit of the suit amount with interest in the Court. The Supreme Court of India set aside they order of High Court of Delhi, as it was found that principles governing the exercise of power by the High Court under section 115, C.P.C. Were not correctly followed. The learned Supreme Court of India, however, also laid down the following principles for grant and refusal of leave to defend in a suit filed under summary chapter:-- "8. In Sm. Kiranmoyee Dassi v. Dr. J. Chaterjee (1945) 49 Cal. WN 246 at p. 253, Das, J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by Order 37, C.P.C. In the form of the following propositions (at p. 253):
(a) If the defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend.
(b) If the defendant raises a triable issue indicating that he has a fair or bone fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend.
(c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode or trial but not as to payment into Court or furnishing security.
(d) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend.
(e) If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the defendant on such condition, and thereby show mercy to the defendant by enabling him to try to prove a defence.
9. The case before us certainly does not fall within the class (e) set out above. It is only in that class of cases that an imposition of the condition to deposit an amount in Court before proceeding further is justifiable."
' According to Mr. A.H. Pirzada, the learned counsel for the appellants, only in cases falling under category (e) the Court while granting leave to defend the suit may ask the defendant to deposit the suit amount in Court or ask for security.
14. In Abdul Karim Jaffarani v. U.B.L. (supra), the next case relied by Mr. A.H. Pirzada, the appellant (who was defendant in the suit before the High Court of Sindh), was granted leave to defend on furnishing security equal to the amount claimed in the suit. The appellant challenged the order of High Court granting conditional leave to defend before this Court. It was contended before this Court that the appellant had not operated the accounts which were subject-matter of the suit, after January, 1971, and therefore, the suit filed in 1977 was time-barred. The facts asserted in the affidavit filed by the appellant (defendant) in support of the application for leave to defend, were not controverted by the respondent (plaintiff). This Court, accordingly, reached the conclusion that triable issues were raised by the appellant and he was entitled to grant of leave to defend the suit.
On the question whether the leave should be conditional or unconditional, this Court after reviewing the case-law on the subject recorded the following conclusions:-- "8. The review of the cases, therefore, reveals that no hard and fast rule can be laid down for determining the question as to how the discretion vesting in the Court to subject the order for grant of leave to defend to conditions, ought to be exercised as this question depends on the facts and circumstances of each case. It would be improper to lay down a rule of thumb for the exercise of power in matters of discretion vesting in a Court, when even the statute has left it unfettered.
However, we would point out that in order to correctly exercise the discretion vesting in a Court under the provisions in question, it is necessary to examine the scope and object underlying such provisions providing for special procedure of this kind. In view of the legislative history of these provisions, the overall object envisaged by the Legislature was to provide for expeditious disposal litigation involving commercial transaction of a particular nature by a summary procedure so that the defendant does not have the means to exploitation in the ordinary procedure for trial of suits to prolong the litigation and prevent the plaintiff from obtaining an early decision by raising untenable and frivolous defences. It is in this context that the discretion to impose conditions is to be exercised. If, therefore, the Court is of the opinion that the defendant is trying to prolong the litigation and impending a speedy trial, although on the allegations made in the application a triable issue has been raised then the Court would. Be justified to impose conditions. But, as already pointed out, it will be improper exercise, of discretion to impose conditions simply because, at the leave granting stage the defendant is unable to adduce his evidence on the plea raised in his defence. The proper stage for substantiating his defence by evidence would be at trial subsequently."
15. On the merits of the case, this Court found that the appellant in the above case only admitted his signature on the promissory note which could not . Be equated with the admission of execution of the promissory note as at the time promissory note was handed over to respondent, it was blank and did not contain any ascertained amount payable at or on a fixed or determinable future. It was also found that the transaction had commenced in 1969 in two accounts. The appellant executed a promissory note on 4-6-1969 in respect of one of its account in which the debit balance on 5-1- 1970 was Rs,5,10,908.53. This debit balance was transferred to the other account of appellant for which no authority was pointed out. The second promissory note executed by the appellant for the amalgamate account showed debit balance of Rs,22,59,483.97 which also included the debit balance of the 1st account covered by the promissory note dated 4-6-1969, which had prima facie become time-barred. In these circumstances, the order of the High Court granting leave to defend the suit on furnishing security for the entire amount claimed in the suit was not found justified and accordingly in the light of the statement of accounts obtained from the parties in the case, the order granting leave to defend the suit on furnishing security for the entire suit amount was modified to the extent of security only in the sum of Rs,2,80,000.
16. In the last case relied upon by Mr. A.H. Pirzada, Abdul Rauf Ghauri v. Mst. Kishwar Sultana (supra), the respondent brought a summary suit against the appellant for recovery of a sum of Rs,19 lacs.
The suit was based on a dishonoured cheque. Leave to defend the suit was granted to the appellant on furnishing bank guarantee equal to the sum claimed in the suit. The High Court in revision declined to interfere with the order of Trial Court. On appeal from the order of High Court, this Court after referring to the ratio in the case of Fine Textile Mills Ltd. (supra) and taking into consideration the admitted terms of the agreement dated 22-7-1992 executed between the parties, held as follows:-- "After reading above paragraphs of the agreement which is admitted by the respondents, we are of the view that the Trial Court was not justified in imposing condition of furnishing a bank guarantee as a term for grant of leave to defend the suit. The learned counsel for,Ithi appellant stated before us that he was prepared to offer any solvent security to the satisfaction of the Court equal to the amount of claim in the suit. Keeping in view the defence raised in the application for grant of leave to defend and the law laid down by this Court in this regard in the case of Fine Textile Mills (supra), we accept this appeal, set aside the order of the High Court and that of the Trial Court to the extent it imposed the condition of bank guarantee as a term for defending the suit by the appellant filed against him. The impugned order is amended to the extent that the leave to defend the suit will be deemed to have been granted to the appellant on the condition of furnishing any solvent security to the satisfaction of the Trial Court. The security will be furnished by the appellant within two months from today. In the circumstances of the case, there will be no order as to costs."
17. The learned counsel for the respondents on the other hand contended that grant of leave to defend the suit conditionally or unconditionally is within the discretion of the Trial Court and once this discretion has been exercised by the Trial Court, it will not be interfered with unelss the exercise of discretion is found arbitrary or perverse or fanciful. In support of his above contention, the learned counsel cited large number of reported cases from various High Courts, this Court and from Indian Jurisdiction. We do not propose to examine here all the cases cited by the learned counsel for the respondents as the law seems to be well settled by the decision of this Court in Fine Textile Mills Ltd. (supra), which has been relied on either side and which has been followed consistently in almost all the subsequent decisions of this Court. However, reference may be made to the following decisions of this Court which are pertinent keeping in view the facts and circumstances of the present cases:--
(1) Karim v. Zakir Abdullah 1973 SCM R 100;
(2) Abdul Majeed v. UBL 1984 SCMR 1435; and
(3) Ark Industrial Management Ltd. v. Habib Bank Ltd. PLD 1991 SC 976.
18. In the first noted case of Karim v. Zakir Abdullah, the suit was filed on the basis of the promissory note. The signatures on the promissory note were not disputed by the petitioner in that case but he alleged that the resending/plaintiff was responsible for manipulation in the promissory notes. Fine Textile Mills case was referred but leave was refused with these observations:- ' 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 11.8 aforesaid stands rebutted. In these circumstances, the High Court was clearly right in imposing terms on the two defendants."
' In the second case of Abdul Majeed v. United Bank Ltd., the respondent bank filed suit under Banking Companies (Recovery of Loans) Ordinance, 1979 against the petitioner on the basis of loan which was drawn by the petitioner through two cheques. Leave was granted on deposit of the amount claimed in the suit. Leave was declined by this Court in the case for following reasons:-- "4. It has not been denied by the petitioner that he had issued the cheques concerning the loan in question. The High Court has noted that the cheques had been en cashed and that he had even acknowledged his liability to pay, on account of the loan Rs,2,10,036 as due on 31-12-1981 and Rs,2,29,801 as due on 30-6-1982. The grant of leave without a condition in the circumstances would hardly be justified. The imposition of condition is within the discretion of the Trial Court and in the circumstances of the case we find no illegality in the exercise of that discretion. No case is made out for interference. The petition is accordingly dismissed."
' In the last-cited case of Ark Industrial Management Ltd. v. Habib Bank Ltd. (supra), the respondent brought the suit before the High Court of Sindh on the original side, on the basis of three promissory notes. The appellant in that case applied for grant of leave to defend the suit on the ground that they acted merely as the agents of the borrowers and that position too ceased to exist as the borrowers were dissolved through a legislative act and its assets were taken over by Fauji Foundation. Regarding execution of promissory notes by the appellant in that case, the stand taken was that these were without consideration and were obtained under coercion. The trial Judge granted leave to defend in the case on condition of furnishing security. On appeal this Court refused to interfere with the order of trial Judge and observed as follows:-- "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 R.F.S.M. For whom they were acting as Managing Agents and Management Consultants. 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 R.F.S.M. Which will be personally responsibly 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 seal 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. 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 case where a triable issue is found and a prima facie defence is disclosed.
' 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 ruling cited from Indian Jurisdiction mentioned above are distinguishable and not attracted to the facts of the instant case.
' 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 he exercised. In support of the proposition reference can be made to the case of Abdul Karim Jaffarani v. United Band 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 that the defendant is trying to prolong the litigation and impending 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 of 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 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 be cause a triable defence was raised."
19. At this stage, it will be relevant to refer to the provisions relating to institution of summary suits and the procedure prescribed for obtaining leave to defend in such suits contained in the Code of Civil Procedure. These provisions are contained in Rules 1 to 7 of Order XXXVII, C.P.C. The heading of this Chapter shows that it relates to the procedure applicable to suits filed on the basis of Negotiable Instruments. Rule 2 of Order XXXVII (ibid), provides that the plaint in the suits based upon a bill of exchange, hundis or a promissory note, filed under this chapter, should be in the form prescribed under the Code. It further provides that in a suit filed under this chapter the summons will not be issued in ordinary form but will be in form 4 of Appendix B of C.P.C. Or in such other form which may be prescribed from time to time. The rule also provides that when summons are issued in the suit filed under this chapter in the prescribed form, the defendant cannot appear and defend the suit except upon obtaining leave from the Court. When leave is refused or default is made by the defendant in obtaining leave or in appearance the plaintiff becomes entitled to a decree on the basis of averments in the plaint for the principal amount due on the instrument and the interest thereon, in accordance with the provisions of section 79 or 80 of the Negotiable Instruments Act upon the date of institution of suit, or the sum mentioned in the summons of the suit whichever is less. The Court may allow further interest on the principal amount up to the date of decree in the suit and thereafter, either at the rate claimed in the suit or such other rate which the Court may determine. The Court may also order for payment of additional interest in terms of section 34 of the Code, besides granting the costs as prescribed and where plaintiff claims cost in excess of fixed amount the same may be ascertained in the ordinary Courts. The decree passed under this chapter is liable to be executed forthwith sub-rule (1) of rule 3 of Order XXXVII ibid lays down the procedure for the defendant to obtain leave to defend in such suit. It lays down that the defendant may file the application for leave to defend supported by affidavit containing facts and ground on which leave to defend is sought. The Court shall grant leave to defend if the facts disclosed in the affidavit filed by the defendant in support of his application for grant of leave, makes it necessary for the holder of the instrument to prove consideration. Leave to defend may also be granted to the defendant by the Court on other facts which the Court considers sufficient to support the application for leave to defend. Sub-rule (2) of Rule 3 ibid lays down that the Court may grant leave to defend in a case either on condition of deposit of the amount claimed in the suit, or on furnishing security for the amount or on_ any other term/condition which the Court may think appropriate in its discretion. The Court may also grant leave in a case in its discretion unconditionally. The provisions of section 5 of the Limitation Act have been extended to the application for leave to defend through amendments made in the Code by Ordinance X of 1980.
20. From the preceding discussion, it is quite clear that leave to defend in a suit instituted under Order XXXVII, C,P.C. Shall be granted by the Court where the facts disclosed by the defendant on affidavit make out a case of shifting of onus on plaintiff to prove consideration for the instrument, which is the basis of the suit. Leave may also be granted on any other ground or facts which the Court considers sufficient to support the application for grant of leave meaning thereby that refusal to grant leave to defend, is a rare phenomena, confined to cases where no defence at all is disclosed by the defendant. Ordinarily, the Court would not decline leave to defend even in cases wherein defence appears to be very weak or a sham one, as in such cases leave may be granted by the Court conditionally. The next important question which arises for consideration is, when leave to defend may be granted by the Court unconditionally. Grant of conditional or unconditional leave, is undoubtedly a matter within the discretion of the Court which is to be exercised keeping in view the facts and circumstances of each case. It is, however, neither possible nor advisable to lay down any hard and fast rule in this behalf. From a careful analysis of the provisions of Order XXXVII, Rule 3, C.P.C. And review of the case-law, it appears that when the facts disclosed by the defendant in the affidavit filed in support of his application for grant of leave to defend, are such that it becomes necessary for the plaintiff to prove consideration of the instrument, which is the basis of the suit, leave to defend may be granted unconditionally, provided the defence is found to be bona fide and the conduct of defendant is free from suspicion. Leave to defend may also be granted unconditionally, in cases where the execution of the negotiable instrument is denied by the defendant and from the material before the Court it is not possible for it to record a positive finding in this regard at the stage of consideration of the application for grant of leave to defend. Similarly, where the claim in the suit on its face appears to be prima facie time-barred and there is no material before the Court to infer that the defendant has acknowledged his liability to pay the time-barred debt, leave to defend may be granted unconditionally. These instances are however, only illustrative and by no means exhaustive, as there may be other similar circumstances, which may persuade the Court to grant leave to defend unconditionally. However, where the defence disclosed by the defendant in his affidavit filed in support of application for grant of leave to defend is found by the Court to be illusory, or lacking bona fides, or is intended to delay the proceedings or is based on allegation of vague and general nature relating to misrepresentation, fraud and coercion without any supporting material, leave may be granted on condition of either deposit of the amount claimed in the suit or on furnishing of security for the same or on such other terms and conditions which the Court may think fit. The sheet anchor of the arguments of Mr. A.H.
Pirzada, the learned counsel for appellants in the above cases, is the decision of Indian Supreme Court in the case of M/s. Mechalec Engineer v. M/s. Basic Equipment Corporation (supra). However, as pointed out by this Court in the case of Ark Industrial Management Ltd. v. Habib Bank Limited (supra), the decision of Indian Supreme Court proceeded on a different provision of law and as such it is distinguishable. We will, therefore, proceed to determine these appeals in the light of the law laid down by this Court in this behalf.
22. In Civil Appeal No,570 of 1994, the case of the appellants in their application under Order XXXVII, Rule 3, C.P.C. Was of a total denial of their liability to the suit amount. In respect of liability relating to the account of Trans Saudi Establishment, it was alleged that in fact Trans Saudi was entitled to receive back from one of the respondents about 6 million Saudi Riyals which the respondents had failed to return. Similarly, in respect of outstanding liability against Bredfil Limited of London, the appellants contended that the documents, relied by respondents were without consideration and in fact these documents were created by the respondents to cover up their financial mismanagement. A general allegation was made in respect of the documents relied by respondents relating to these accounts that these were perhaps obtained by the respondents through gross misrepresentation or these documents were signed by the appellants under mistake of facts. Mr. Pirzada, the learned counsel for the appellants also contends before us that in respect of account of Trans Saudi Establishment, the appellants were acting only as agents and therefore, they had no personal liability in the case. In addition to above contention, the validity of the power of attorney executed in favour of person who filed the suit, the admissibility of promissory note relied by the respondents, and the jurisdiction of the trial Court to entertain the suit were also raised. The respondents in reply to appellants' application for grant of leave to defend denied the allegation of appellants and in support of their assertions produced large number of documents signed by appellants acknowledging their liability in respect of the outstanding liability of Trans Saudi Establishment and Bredfil Limited. The respondents also filed the pronotes executed by the appellants. The promissory notes acknowledging the liability of suit amount were dated 20-11-1989.
The respondents admitted that the promissory notes when signed by the appellants were blank but contended that they had the authority under the law of fill in the same, and in exercise of that authority 'they completed the blanks on the basis of the balance confirmations signed by the appellants from time to time, the last of such confirmation was signed by the appellants on 20-11- 1989. The reply filed by the respondents to the application of appellants, for grant of leave to defend remained uncontroverted on record. The documents procured by the respondents along with their reply do show that the outstanding balances in the accounts of Trans Saudi and Bredfil Ltd. Were acknowledged from time to time by the appellants. There is no indication in these documents that the appellants while requesting for grant of loan facilities or acknowledging the outstanding liabilities in these accounts were not acting in their personal capacity but in some different capacity. The last' balance confirmation of these accounts signed by the appellants show the amounts which are entered in the two promissory notes and are claimed in suit. The dates of last balance. Confirmation letters and the promissory note are the same e.g. 20-11-1989. When a person delivers to another an inchoate negotiable instrument duly stamped, the delivery prima facie authorises the receiver of such document to make or complete the instrument for the amount specified therein or the amount not exceeding the amount covered by the stamp within a reasonable time. Therefore, the burden of proving that the authority was not exercised by the person completing the inchoate instrument in accordance with the provisions of section 20 of the Act is on the person who executed the inchoate instrument. It is true that the promissory note when executed was not stamped but as the admitted position in the case is that the promissory note was executed in a foreign country, the validity of the instrument is to be determined in accordance with the law of the place where the instrument was made or drawn or accepted or negotiated, as prescribed in section 134 of the Negotiable Instruments Act, 1887. The learned counsel for the respondents relied on the provisions of Bill of Exchange Act, 1882 which did not require stamping of a promissory note. The promissory notes bear the signatures of appellants. The large number of documents filed by the respondents do show that the appellants from time to time accepted their liability in respect of the amounts claimed in the suit. The assertion of respondents on oath made in reply to the application or applications for grant of leave to defend, remained unrebutted on record.- In these circumstances, the vague and general denial of appellants of their liability to the amounts claimed in the suit and the assertion that the documents relied by the respondents were either got executed on misrepresentation or were signed by the appellants under a mistake of fact, did not justify the grant of leave unconditionally. The exercise of discretion by the Courts below granting lave to defend to appellants on condition of furnishing bank guarantee, was not open to any exception.
23. In Civil Appeal No, 572 of 1994, the respondents claimed an amount of a US $ 120,020,155.10 in respect of two accounts namely Account No,11010146 and 11010179. The appellants in their application for leave to defend the suit besides raising legal pleas which they raised in the suit which is subject-matter of Civil Appeal No,570/94 denied the claim of respondents outright. They claimed that neither any amount was disbursed to him in respect of the amount mentioned in the account nor they obtained any loan. The respondents in reply to leave application denied the allegation of appellants made in the affidavit filed in support of the application for grant of leave to defend and produced number of documents. The reply filed by the respondents on oath and documents 'filed with the reply were not controverted by the appellants through rejoinder. The documents filed by the respondents bear the signatures of appellants. These documents which prima facie show that in or before 1987, the appellants wrote a letter to the first respondent with reference to accounts of Iqbal Saigol and Aftab Saigol stating therein that as a result of arrangements distributing the family business, the appellants have become beneficial owners of the accounts standing in the names of Iqbal Saigol and Aftab Saigol. Accordingly, they requested the first respondent to amend its record and transfer these accounts in their names. The appellants in another letter addressed to the first respondent on 6-10-1987 requested that Account No,11006957 and 11004568 standing in the name of Unetco and Mian Shafiq Saigol be consolidated from 1-10-1987 in the name of Rafique Saigol. In this letter it was also mentioned by the appellants that they propose to pay the loan in annual instalments of US$ 1,250,000 including the interest by 30th September, 1990. There are also on record two letters dated 17-3-1989 in which the appellants requested the first respondent for permission to repay the outstanding amounts against them in instalments spreading over a period from 31-3-1989 to 31-3-1992. In addition to these letters there are two letters dated 20-11-1989 signed by the respondents confirming the outstanding balance against them in Accounts Nos.
11010146 and 11010179. The amount confirmed by the appellants in the letters dated 20-11-1989 is the same amount which is claimed by the first respondent in their suit and which is also mentioned in the two promissory notes executed by the appellants. The other grounds for seeking leave to defend in this case are almost identical to those which we have already considered in Civil Appeal No,570/94, and therefore, for the same reasons we hold that the grant of conditional leave to defend the suit by the Courts below was not open to any exception.
24. Civil Appeal No,571/94 arises out of a suit instituted by International Credit and Commerce (Overseas) Limited against the appellants. The respondents in the suit claimed an amount of US$17,250,000 relating to two Accounts bearing No,80226 and 80349. In their application for grant of leave to defend the suit, the appellants denied having opened these accounts and also denied execution of promissory notes. In reply to the application for grant of leave, the respondents denied these allegations and produced large number of documents in the case comprising agreement dated 18-12-1984 under which the accounts were opened and operated by the appellants with the respondents and letters acknowledging the liability by the appellants to pay the amount in the above accounts to the respondents. The documents filed by the respondents in reply to the application of appellants for grant of leave to defend remained unrebutted on record. The various letters addressed by the appellants during the period from 1984 to 1989 show that the appellants time and again acknowledged their liability to pay the outstanding amounts shown by the respondents in their statements of accounts. They also confirmed the balances from time to time, which were shown outstanding against them by the respondents. On the face of unrebutted assertion of the respondents made on affidavit in reply to the application of the appellants for leave to defend supported by the documents executed by the appellants from time to time acknowledging their liability to the amount claimed against them, the exercise of discretion by the Courts below granting leave to appellants to defend the suit on condition of furnishing bank guarantee did not suffer from any infirmity.
25. As a result of the above discussion, we find no merit in these appeals which are, accordingly, dismissed but we will make no order as to costs in the circumstances of the cases.
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