' MUNAWAR AHMED MIRZA, J.---The above petitions are directed against Judgments/Orders dated 12-12-1997 and 29-10-1998 passed by Lahore High Court in Civil Revision No,3638 of 1994 and R.A.F.
No,257 of 1998 respectively.
2. Facts relevant for disposal' of above two petitions are that respondent Sh. Muhammad Wasim on 26-7-1994 instituted a suit under Order XXXVII, Rule 2, C.P.C. Seeking recovery of Rs,12,00,000 (Rs, twelve lacs). It was averred that petitioner No,1., Col. (Retd.) Ashfaq Ahmed, who was Chief Executive of M/s. Meditex International Limited had obtained loan from respondent for utilizing in the aforesaid organization and executed a pro-note dated 30-8-1993. He issued post-dated cheques specifying arrangement to repay said amount. Plaintiff/respondent asserted that on presentation some of the cheques were dishonoured with observation "referred to drawer", Therefore, demand was repeatedly made from petitioners, to liquidate their liability but in vain. Eventually above civil suit was filed before Additional District Judge, Lahore, on 1-9-1994. After receipt of notice, the petitioners filed an application under Order XXXVII, Rules 2 and 3, C.P.C. Praying for leave to defend the proceedings. Petitioners inter alia pleaded that requisite revenue stamp has not been affixed on the pro-note besides it was not attested by witnesses, therefore, it was neither admissible not valid. Execution of pronote was also disputed. It is case of petitioners that respondent (Sh.
Muhammad Wasim) and his brother Muhammad Nazim in connection with business transaction had obtained goods of huge amounts, exceeding rupees twelve lacs (Rs,12,00.000). Thus, said amount was factually payable by respondent and his brother to petitioners. However, as regards cheques referred to in the plaint, the petitioners have expressed that same were not intended to be honoured/encashed. Mala fides were also attributed in filing the suit,
3. Trial Court, considering all aspects of the case granted permission to the petitioners for contesting the proceedings subject to furnishing bank guarantee vide order, dated 9th October, 1994. Operative portion is reproduced below:-- "4. The learned counsel for the petitioner has denied that the cheques were issued on his behalf in favour of the petitioner. The petitioner has denied that the consideration mentioned in the pronote was paid to him but on the other hand he has not denied the signatures over it. The respondent has placed on record photo copies of the cheques issued by the petitioner in his favour. The petitioner has denied the issuance of these cheques. The suit is for the recovery of an huge amount, amounting to Rs,12,00,000, therefore, in my opinion, in the interest of justice the petitioner should be provided an opportunity to prove his contention but keeping in view the circumstances stated above petitioner/defendant is granted permission subject to his submitting a bank guarantee of the amount in question on or before 10-11-1994. I would also like to mention at present stage that there is no force in the contention of the petitioner that the suit has been filed against the two defendants while pro-note has only been signed by the petitioner. The same has been duly explained in para. No,1 of the plaint. The application is disposed of accordingly. Now to come up for filing of the bank guarantee on 10-11-1994."
4. Petitioner aggrieved from above decision had filed Civil Revision No,3638 of 1994 before Lahore High Court. It may be seen that learned Judge in Chambers of Lahore High Court on thorough scrutiny of rival contentions ultimately rejected the revision petition vide judgment dated 12-12- 1997. Concluding portion whereof reads, thus:-- "6. Guided by the above touchstones, it is quite clear that respondent had brought a summary suit under Order XXXVII, Rule for recovery of Rs,12,00,000 on the basis of a pronote and two cheques; that the execution of the cheques was not specifically denied and reply was couched in evasive language. The perusal of the petition will show that in first place the applicant had denied the execution or afore-mentioned instruments. Where in the second place, it was suggested that these documents were wholly without consideration. On this state of affair, I have no difficulty in coming to conclusion that the defence furnished by the applicant in his petition as well as his affidavit was/is weak, however, it needs to be tried. In view of this, the learned trial Court was eminently correct in attaching, so imposed, were/are neither arbitrary nor capricious nor fanciful. The imposition of this condition was essentially within the discretionary jurisdiction of the Courts below and such order is not subject to exception in revisional jurisdiction of this Court unless and until it is shown that such order is arbitrary, capricious and fanciful. No such encumbrance was pointed out.
It is hardly necessary to examine the remaining question at this stage.
7. As a result of the above discussion, this revision petition is found to be totally devoid of merit and is accordingly dismissed. There shall, however, be no order as to costs."
5. Petitioners being dissatisfied have challenged above decisions of both the Courts below in Civil Petition for Leave to Appeal No,256-L of 1998 before this Court.
6. It may be seen that during pendency of above proceedings, the trial Court finally concluded the matter and decreed the suit against petitioners vide judgment dated 13-5-1998. This decree was assailed by petitioners before Lahore High Court in R.F.A. No,257 of 1998. The above appeal has been dismissed vide judgment dated 29-10-1998. Civil Petition for leave to Appeal No,263 of 1999 is now directed against above referred judgments/decrees of both the Courts below.
7. Kh. Muhammad Farooq, Senior Advocate Supreme Court, appearing for petitioners strenuously raised following contentions:--
(i) Original order dated 9-10-1994 granting conditional permission for defending suit filed by respondent Sh. Muhammad Wasim subject to furnishing Guarantee, suffered from material defeats, wherein essential requirements of law had been disregarded. This aspect was equally ignored by Lahore High Court while deciding Civil Revision No,3638 of 1994.
(ii) Learned Additional District Judge, Lahore, had passed original decree, dated 13th May, 1998 against the petitioners without proper application of mind, or determination of real controversy.
Principle of law enunciated in case Ali Khan & Co v. Allied Bank of Pakistan Limited (PLD 1995 SC 362) for rendering final decision in such-like matters was completely ignored, resulting in serious prejudice to the petitioners.
(iii) Same error was repeated by Lahore High Court while dismissing R.F.A. No,257 of 1998.
(iv) The amount claimed by plaintiff/respondent was not due from petitioners, therefore, impugned decree is not legally maintainable.
8. Mr. S. Kalim Ahmed Khurshid, Advocate Supreme Court, on caveat for respondent, vehemently opposed the petitioners, objected to maintainability of stand taken on behalf of petitioners, He, thus argued, that:--
(i) Application dated 1-9-1994 filed by petitioners seeking leave to defend original suit contained evasive expression about execution of pro-note and cheques, nothing substantial was even pleaded to rebut the claim in suit.
(ii) Pleadings before different forums in connection with proceedings culminating in filing of present petition for leave to appeal. Disclose implied admission with regard to issuance of cheque under signature of petitioner No,1 . Special plea raised by petitioners that same were issued with no intention to honour or encash the same is, not plausible besides onus heavily lay upon them for proving it.
(iii) Presumption which may normally flow from issuing the cheques would lean towards guarantying its payment. Petitioner have not brought any material to rebut the same.
9. Firstly it may be seen that keeping in view the material on record trial Court by means of order dated 9-10-1994 conditionally granted leave subject to furnishing Bank Guarantee in respect of amount claimed in the suit. Revision petition assailing the above order was also dismissed by learned Judge in Chambers of Lahore High Court on 12-12-1997 upholding above conditional order concerning leave to defend the proceedings. Obviously Order XXXVII, Rule 3 (2), C.P.C. Enjoins upon the Court reasonable discretion for granting permission to defend on such terms as deemed fit in circumstances of each case. Record clearly discloses that petitioners herein without disputing execution of cheques issued in favour of plaintiff/respondent (Sh. Muhammad Wasim) have expressed that same were not intended to be encashed honoured. Therefore, on proper secrutiny of all the aspects relating to claim in suit we feel that initial order conditionally granting leave to defend the proceedings passed by trial Court did not suffer from any material defect. In this view, we are supported by the following observations appearing in case Mian Rafique Saigal and another v. Bank of Credit and Commerce International (Overseas) Ltd. And another (PLD 1996 SC 749):- "When a person delivers to another an inchoate 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 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 Instrument 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 of applications for grant of leave to defend, remained unrebutted or record.
In these circumstances, the vague and general denial of appellants of their lability to the amounts claimed in the suit and that assertion misrepresentation or were signed by the appellants under mistake of fact did not justify the grant of leave unconditionally. The exercise of discretion by the Courts below granting leave to defend to appellants on condition of furnishing bank guarantee was not open to any exception."
10. Learned counsel endeavoured to canvass that trial Court while awarding decree had not applied mind to relevant facts of the case, therefore, impugned judgments/decrees are not sustainable. He supported his contention by relying upon observations in case Ali Khan & Co. v.
Allied Bank of Pakistan Limited (PLD 1995 SC 362).
11. There .Is no cavil to the proposition enunciated in aforequoted judgment, relevant portion whereof is reproduced below:-- "10. The ratio decidendi of the above referred cases seems to be that if a defendant fails to appear or fails to obtain leave to defend in response to a summon served in Form No,4 provided in Appendix B to the C.P.C. Or fails to fulfil the condition on which leave was granted or where the Court refuses to grant leave, the Court is to pass a decree. It may be observed that in sub-rule (2) of Rule 2, C.P.C., it has been provided that if a defendant fails to appear or defaults in obtaining leave, the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree, but no such consequences are provided for in Rule 3 of the above Order in a case where the Court refuses to grant leave or the defendant fails to fulfil the condition on which leave was granted. In our view, notwithstanding the above omission in Rule 3, the effect of refusal of the Court to grant leave or failure on the part of the defendant to comply with the condition of the leave, will be the same i.e, the defendant shall not be entitled to defend the suit on any ground and the Court would pass a decree in favour of the plaintiff. However, this does not necessarily mean that the Court is not required to apply its mind to the facts and the documents before it. Every Court is required to apply its mind before passing order or judgment notwithstanding the factum that no person has appeared before .It to oppose such an order or that the person who wanted to oppose was not allowed to oppose because he failed to fulfil the requirements of law."
12. It may be observed that in the instant case petitioners had failed to fulfil conditions specified in conditional order dated 9-10-1994 passed by trial Court regarding leave to defend. Besides, the material on record coupled with an evasive expressions made by the petitioners were taken into consideration while passing final decree. Additionally, entire record was adequately scrutinized by the High Court while rejecting appeal through impugned judgment. Therefore, reference to said report in the preculiar set of circumstances is inapt.
13. It may be seen that claim for recovery of amount in suit filed by plaintiff/respondent is mainly based on pro-note and various post-dated cheques issued by petitioners for clearing their liability.
Trial Court, in the instant case had conditionally granted leave to defend on 9-10-1994, whereas final decree was eventually passed against the petitioners by said Court on 13-5-1998. Evidently petitioners have not fulfilled the condition and failed to provide bank guarantee till final disposal of the suit, Besides on inquiry during arguments, learned counsel for petitioners was not able to furnish any plausible reasons why despite presentment of cheques which had been undisputedly issued by the petitioners, no protest was lodged for displaying their stand and alleged intention of not honouring encashing the same. We are aware that unless anything contrary is duly established, presumption of validity flows in favour of Negotiable Instruments specially when its execution is not disputed. Therefore, in the absence of any tangible rebuttal, justifiable reasons or plausible cause the trial Court was competent to award decree on the existing material. There is hardly any glaring defect or legal infirmity in the conclusions for passing impugned judgment; which may warrant interference. In this regard following observations in case Naeem Iqbal v. Mst.
Zarina (1996 SCM R 1530) are instructive, relevant portion whereof is reproduced below:-- "We have gone through the pro-note and do not agree with the learned counsel for the petitioner that it is not covered by the definition of negotiable instrument as defined in the Negotiable Instrument Act, It is unfortunate that being properly served with the process, the petitioner did not move an application under Rule 3 of Order XXXVII, C.P.C. For leave to appear and defend the suit. As per sub-rule (2) of Rule 2 of Order XXXVII. C.P.C. If a defendant after being served with summons of a summary suit, does not obtain leave to appear and defend the suit, the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree. It was in pursuance of a aforesaid I provisions that the suit was decreed in favour of the plaintiff on 20-1-1992.
' We are not impressed by the contention that the trial Court lacked jurisdiction or that the document in question which was basis of the suit, was not a promissory note, in light of the provisions contained in the Negotiable Instrument Act. The petitioner could have. Challenged genuineness of the pronote had he obtained leave to defend the suit. His allegations that the document in question is not a genuine one does not take it out from the definition of negotiable instrument under the Negotiable Instrument Act."
' For the foregoing reasons we find no merit in these petitions which are consequently dismissed.
Parties are, however, left to bear their own costs.