1. This is an application for leave to defend.
2. The plaintiff has filed the suit under the provisions of Order 37 for recovery of a sum of Rs.21,61,366 based on cheques allegedly given on behalf of defendant No.1 Messrs Bexshim Corporation, a partnership firm under the signature of defendant No.2.
3. The case of the plaintiff as disclosed in the plaint is that he supplied Grey Cloth to defendant No.1 at Karachi amounting to Rs.21,61,363 from time to time and the defendant in payment thereof issued seven post-dated cheques as follows:-- S. No.Cheque No. Dated Amount Rs.
(i) 003205665 10-12-1993 4,47,829
(ii) 00320566 20-12-1993 5,73,798
(iii) 42716 22-12-1993 3,50,000
(iv) 427178 29-12-1993 3,57,824
(v) 003205571 5-1-1994 2,00,000
(vi) 00320572 6-1-1994 1,00,000
(vii) 00320576 8-1-1994 1,00,000 Total 21,61,366 It was the case of the plaintiff that defendants Nos.2 and 3 requested the plaintiff not to present the said cheques on due dates, as they had no amount in the account of the firm and they would make payment to the plaintiff in cash. The defendants failed to make the payment of the aforesaid amount or any part thereof in spite of several requests by the plaintiff. The plaintiff served notice on 24-11-1996 calling upon the defendants to make payment of the said amount but defendants failed and neglected to pay the amount, hence the suit was filed.
4. Defendants Nos.1 and 4's name were struck off as the plaintiff failed to pay the cost. Defendant No.2 has applied for leave to defend.
5. The plea taken in support of the application filed by defendant Muhammad Feroz Punjabi has been disclosed in para. No.3 of the affidavit that the plaintiff is the man of defendant No.4 and her husband, who have got instituted this false case through him against him and his father. There was no business/transaction/deal between the plaintiff and defendants Nos.1 to 3 till 9-8-1994, the date when the whole business of defendant No.1 was captured by defendant No.4 forcibly with the help of her companions including her husband and son. Her husband namely, Muhammad Younus was the patron of defendant No.1 firm by consent of the partners. No cheque was ever issued to the plaintiff by him or by the defendants Nos.1 to 3 in any connection. No amount of the plaintiff was ever due against them in any manner. The husband of defendant No.4 was the patron of the firm whereas defendants Nos.2 and 3 were working partners. Since the husband of defendant No.4, was the patron of the defendant firm and whole finance was also of the defendant No.4, hence he on her instance/demand, as well as, of her husband used to sign the blank cheques of the firm and they themselves used to fill in the other particulars viz. amount, date and the name of the payee in those cheques according to the needs and convenience without referring those cheques to him.
6. Defendant No.4 being partner of 51% share in the defendant firm, he had no option but to sign those cheques in good faith. He did not sme llwhich they were nursing in their hearts against him. Under these circumstances, the cheques referred in the plaint were signed by him on behalf of the firm but without any consideration. Complete finance, control and management and policy making of the defendant firm was with the said Muhammad Younus, husband of the defendant No.4, who was its partner.
7. The dispute arose between them and defendant No.4 and her husband in connection with the purchase of Messrs Thatta Cement Company Limited from Privatization Commission. Such dispute gone worst to worst and finally on 9-8-1994, defendant No.4, her husband and son and others came to the office of defendant No.1 and forcibly occupied the premises including the business record, accounts book and other articles lying there. Further asked the defendants to leave the office for ever and all the office keys were taken by them forcibly. Under these circumstances they were forced to file the Suit No.352 of 1994 for declaration and permanent injunction, which is pending before the 8th Senior Civil Judge, Karachi South. Defendant No.4 intimated to the concerned bank on 27-10-1994 as follows:-- "This is for your kind information and immediate implementation, that we have some disputes/problems in our Partnership Deed and as I am majority share-holder I request you to kindly stop every transaction/withdrawl from abovementioned account till my further instructions."
8. It was further case of the defendant that defendant No.4 and her husband took advantage of the situation and having been in possession of the account books, cheques etc. including the said cheques of defendant No.1 firm lying in its office forcibly occupied by them after dispossessing the defendant No.1 on 9-8-1994, got filed this case through their man, the plaintiff, with mala fide intention and ulterior motives in December, 1996, after about 2 years and 4 months just to harass and pressurize them to surrender in the pending litigation. Defendant No.4 herself admitted in para. 11 of her written statement in Suit No.852 of 1994 that she and her companions are in exclusive possession, control, management and business of defendant No.1. He has already filed Suit No.793 of 1994 for recovery of damages against defendant No.4 her husband before this Court. On account of the failure of the suit, the present suit has been filed only to pressurize him to withdraw the suit. He has also denied receipt of notice.
9. The question is whether the defendant has made out a case for grant of leave to defend? If so whether leave should be granted conditionally or unconditionally. In this context of grant of leave, the Court is required to A examine all the question, which can or may arise by way of defence, as deducable on the plea raised by defendant.
10. The learned counsel for the applicant has maintained that the defendant's application was filed beyond 10 days from the date of summons but for the purpose of limitation time would start running from the day when the copy of the plaint was supplied to the defendant. In this case, the copy of the plaint was supplied under the Court direction and the application was tiled within 10 days. In support of his contention, he referred the cases of Ali Akbar v. Gulzar Ali Shah PLD 1984 Kar.
11. 252 and Aziz Ahmed v. Ashraf 1991 CLC 1261.
12. In the above cases in the similar circumstances, the application for leave to defend was found to be within time from the date of receipt of copy of the plaint. The learned counsel for the plaintiff has not opposed the application on the ground of the application being time-barred and in view of the decisions in the above cases the application is to be treated within time.
13. Learned counsel for the plaintiff has maintained that the defendant has admitted issuance of cheques. The dispute as disclosed in the supporting affidavit is in respect of the partnership firm between the partners and the plaintiff has no concern with the affairs of the partnership as such once issuance of cheques is admitted and its presentation was withheld on the request of the defendant, as such there is no plausible defence and there is no triable issue involved, as such the suit may be decreed by refusing leave to defend the suit.
14. The counsel for the defendant maintained that the defendant is one of the partners. The names of defendants Nos.1 and 4 were struck off as the cost for the process was not paid with a purpose so that defendant be pressurised to come to terms. He further contended that the defendant has only admitted the signature on the cheques in view of the circumstances narrated in the supporting affidavit but has denied that the cheques were handed over to the plaintiff and maintained that the same were without consideration.
15. In the present case, the signing of cheques in the circumstances narrated in the supporting affidavit is admitted but simultaneously it has been pleaded that the plaintiff and the firm has no business transaction and the cheques were without consideration. No doubt, presumption under section 118 of the Negotiable Instruments Act, that a negotiable instrument is made, drawn, accepted or endorsed for consideration, but this presumption is a rebuttable presumption and the onus is on the person denying consideration to allege and prove the same.
16. The learned counsel for the defendant further contended that the defendant has raised triable issues indicating that it is a fair bona fide and reasonable defence, in such circumstances the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend and in support of his contention he referred the case of Messrs Mechalee Engineers and Manufacturers v. Messrs Basis Equipment Corporation AIR 1977 SC 577. The principle applicable to the cases covered by Order 37, C.P.C. in case of Smt. Kiranmoyee Dassi v. Dr. J. Chatterjee (1945)
17. 49 Cal. WN 246 at p.253, authored by Das, J. was approved. The following principles were laid down for grant of leave to defend the suit:-- (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 bona 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.
18. (c)If the defendant discloses such facts as may be deemed sufficient to entitle him to defend.
19. That is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, shows 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 plaintiffs 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 of trial but not as to payment into Court or furnishing security.
20. (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.
21. (e)If the defendant has no defence of the defence is illusery 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."
22. He also referred the case of Fine Textile Mills Ltd. v. Haji Umar PLD 1963 SC 163, wherein leave to defend was granted by observing that "in a suit of this nature where the defendant discloses upon his affidavit 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".
23. Applying the above principles, the defendant has raised plausible defence by asserting question of fact and law to be tried or investigated into more particularly whether there was any business transaction between the plaintiff and the defendant firm and whether cheques were without consideration. In such circumstances, the defendant has raised the triable issues indicating that he has fair and reasonable defence although not a positively good defence. The plaintiff is not entitled to leave to sign the judgment and the defendant is entitled to unconditional leave to defend as ruled in case of Messrs Mechalee (supra).
24. In view of the above discussion, the application of the defendant for leave to defend is allowed unconditionally. The defendant is allowed to file written statement within four weeks.