MUSHIR ALAM, J.-- This is a suit for the recovery of Rs. 76,00,000/- filed under Order 37, CPC. Claim in suit is based on two cheques No. CA. 0129253 & CA 012954 both dated 7.10.1996 for a sum of Rs. 3.8 millions each. Plaintiff claims to be subcontractor of Defendant No. 1 and claims to have executed certain work assigned to the Plaintiff under a contract against which running bill No. 15 (IPC-15) was submitted for a total balance of Rs. 39,779,541 though verified by the consultant for a sum of Rs.
22.573 millions was not paid in full, however, in partial settlement aforesaid cheques were issued which were dishonoured thrice, necessitating the instant suit. As noted above suit was instituted under the summary chapter, however, summons were issued to the defendant No. 1 as in long cause and not under the summary chapter, matter was fixed on 30.4.1997 in Court, defendant No. 1 was directed to file written statement within 10 days from-the date of service of the summons and it was noted that the suit has been filed under Order 37, CPC..
2. From the record, it appears the written statement alongwith application CMA 3101/1997, under Section 34 of the Arbitration Act, praying inter alia for staying the proceeding in suit was also filed, by the defendant No. 1 within given time on 31.5.1997. The matter was adjourned from one date to other, apparently on being objected, by the plaintiff, defendant No. 1, filed one application under Section 5 of the Limitation Act being, CMA No. 8113/97 and other for leave to defend CMA No. 8112/87 on 21.11.1997. When this case was taken up for hearing learned counsel for the plaintiff at the very outset took serious exception as to the maintainability of the applications under- Order 37, Rule 2, CPC and application under Section 5 of the Limitation Act being CMA No. 8113/1997.
3. Brief resume of the fact is given to appreciate the contention of the respective parties.
4. I deem appropriate to first dispose of the application under section 34 of the Arbitration Act being CMA No. 3101/1997.
CMA 3101/1997.
5. Contention of Mr. M.L. Shahani is that since summons in ordinary mode were served this suit is a regular suit. Controversy between plaintiff and defendant No. 1 arises out of contractual obligations and issuance of cheques subject-matter of the instant suit is a sequel to such controversy.
Contract between the parties envisages resort to arbitration. This application has been filed instantly without losses of time along with the written statement, he requests that suit is to be stayed and matter be referred to the arbitrator in terms of the Arbitration clause. Mir. Masood learned counsel for the plaintiff opposed such application and contended that the suit is not based on a contractual obligation it arises out of dishonor of two cross cheques subject-matter of the suit. In supports of his contentions he has relied upon S.M. Aqil Fikree v. Muhammad Qamar Zaman (PLD 1982 Karachi 745).
6. I have heard the arguments and perused the record.
7. In the case of S.M. Aqil Fikrre (supra) cited by the learned counsel for the plaintiff the Court was confronted with the application under Section 10, CPC in a suit filed under summary chapter the Court while considering the application, held that in a suit filed under Order 37, CPC unless defendant obtain leave of the Court to appear he cannot file even such interlocutory application, which application was deferred till the decision of application under Order 37, CPC. I was able to lay hand on a D.B. Decision of this Court wherein controversy as to the maintainability of an application under Section 34 of the Arbitration Act in a suit for summary chapter has been set at rest. Case is reported as Cotton Export Corporation of Pakistan Pvt. Ltd., v. Asif Cotton Ginners (1995 CLC 1024). It was finally concluded that where suit is based on promissory no for the recovery of the amount claimed against the defendant in summary manner no dispute between the parties could be assumed which could be referred to arbitration in term of the agreement between the parties.
Resultantly it was held that the application under Section 34 of the Arbitration Act is not maintainable and the order of the Trial Court allowing such application was recalled. Another learned single judge of this Court: in Pioneer Cable Limited v. Sadi Cement (1999 CLC 1841) followed the same view.
8. Under circumstance and in view of the above discussion, . CMA No. 3101 of 1997 under Section 34 of the Arbitration Act is dismissed. This brings me to yet another application which I proposed to deal first in the order priority i.e. CMA No. 8113/97 under Section 5 of the Limitation Act.
CMA No. 8113/1997.
9. In support of said application Mr. M.L. Shahani, learned counsel for the defendant No. 1 contended that pursuant to the direction of this Court dated 30.4.1997 already referred to in earlier part of this order, written statement was filed on 3.5.1997 raising all the grounds that were available with the defendant No. 1 to defend the suit and according to him since, no summons as required under summary chapter were served, consequence for failure to file leave to defend application will not follow. He alternately argued that for the first time objection as to non-filling of application for leave-to defend was taken by the plaintiff when this matter was fixed for hearing of CMA No. 3101/1997 under Section 34 of the Arbitration Act and the plaintiff pointed out that no leave to defend application has been filed such fact has also been stated in pars. 7 of the affidavit to the application under discussion, to which no counter-affidavit has been filed. Mr. M.L. Shahani contended that technicalities should not coming in way to defend the suit and the rule of procedure are meant for advancement for the cause of justice. He further contended that the act of Court do not prejudice any party. According to him plaintiff accepted the written statement without any objections & had not applied for the review of the order dated 30.4.1997 directing the defendant No 1 to file written statement within 10 days and immediately on raising such objections the> defendant No 1 filed the application for leave to defend along with the application for condonation of delay as an abandon caution. .10. Mr. Masood objected to the application under Section 5 of the Limitation Act. He contends that the suit under summary chapter are to be decided on the basis of leave to defend application in this case no such application has been filed and one that has been filed is beyond the limitation same cannot be consider-ed being barred by time.
11. I have heard the arguments and perused the record.
12. It is not disputed that summons in Form-IV Appendix-B to the code of Civil Procedure as required to be served on defendants in terms of Order 37, rule 2(2), CPC were not served indeed while adjourning the case on 30.4.1997 the Court directed the defendant No 1 to file written statement within 10 days from the date of the service of the summons it was further observed by the Court that the suit has been filed under Order 37, CPC. It is settled proposition in law that the act of the Court should not prejudice any one. In exercise of its inherent power, Court in order to foster the cause of justice treat one type of proceeding as another type of proceeding, even wrong quotation of provision of law is not considered impediment in dispensation of justice. No forum of application seeking leave to defend has been prescribed under Order 37, Rule 3, CPC, all what is required under law is that the accompanying affidavit must disclose such facts as would make it incumbent on the holder of an instrument to prove consideration or such other facts as Court may deem sufficient to support the application. Affidavit, under the Code is required to be on oath (Section 139, CPC). Admittedly written statement in this case was filed within 10 days from the date of service and same do discloses some defence for whatever worth consideration it may be, contents whereof are also verified on oath. I was able to lay my hand on cases reported as Muhammad Saleem v. Ashfaq Khan (1989 CLC 1883) & Samina Sohail v. Hamid Naseer AlOwais 1989 CLC 1949 in referred cases written statement was not filed yet defence take-in-counter affidavit filed in response to applications was considered as technicalities are to be avoided, non-suiting a party on mere technicalities of the law which do not prejudice a party never come in way of Court to do justice such course is recommended for the advancement of cause of justice, technicalities has been disapproved in large number of cases one may refer to Lachman Das V. Sarvanand (1995 S.C.M.R. 435), NWFP Government v. Abdul Ghafoor Khan (PLD 1993 SC 418), Imtiaz Ahmed v. Ghulam Ali (PLD 1963 page 382) and Manager, J & K State Property v. Khuda Yar (PLD 1975 SC 678) under peculiar circumstances of case written statement filed in this case, may also be treated as an application for leave to defend. However, since in this case the application for leave to defend has already been filed alongwith application for condonation of delay although, I have held above that the written statement filed in a summary suit under given circumstances, may be treated as an application for leave to defend provided same is filed within the period of limitation, do discloses some discloses some defence and is on oath as prescribed for leave to defend, Listed application for condonation of delay was filed on 21.11.1997, same is coming up for hearing since 16.12.1998, no counter-affidavit has been filed since over two years, to rebut the facts stated therein under peculiar circumstances of the case. I allow the application under Section 5 of the Limitation Act, and propose to dispose of leave to defend application under Order 37, Rule 2, CPC being CMA No. 8112/1997 on merits.
CMA No. 8112/1997.
13. Adverting to the merits of the case learned counsel for the defendant No. 1 submit that material facts have not been disclosed as are required for a summary suit secondly that the defendant No. 1 has already paid a sum of Rs. 4 millions, which has not been disclosed by the plaintiff. Which amount was paid in lieu of dishonoured cheques. Defence as urged by the defendant is that their principal i.e. National Highway Authority committed to pay Rs. 42,564,470 to the answering defendant No. 1, on the basis of such commitment, subject cheques were issued to the plaintiffs but on verification and reconciliation of the account it was found that the defendant No. 1 had been paid in excess therefore, plaintiff were required to surrender the subject cheques against payment of Rs. 4 millions. I was urged that the plaintiff, dishonestly withheld the subject cheques and presented the same to their Bankers.
14. Learned counsel for the defendant has also drawn my attention to a letter dated 1.3.1997 as Annexure D1/6 to show that such cheques were cancelled and i.e recalled it will be advantageous to reproduce the same.
M/s. Indus Engineers Rooms Nos. 2 & 31st floor N.I. Lines, M.A. Jahhan Road Karachi.
Dear Sir; RE: PARTIAL ADVANCE PAYMENT FOR /PC-16
1. We enclosed herewith cheque No. 0129270 to replace cheque Nos. 0159253 & 54 which has been cancelled. Please returned the cancelled cheques.
2. This is partial advance payment against IPC-16 in addition to the Advances already made to you.
3. This payment is made on the condition that you start work immediately based on a schedule of work to be submitted and verified by E.C.
Further advance payment against certified work done shall be made, provided accelerated rate of progress is carried out, when the full balance of the outstanding Rs. 28 Million is received from NHA.
Yours faithfully, Tony Tan Senior Project Manager
15. Above-referred letter, in fact support of the main contention urged by the defendant No. 1. From the perusal of the latter, it is apparent that the cheques subject-matter of suit were cancelled by the. Defendant No. 1 and he was required to return the same subject cheques were also replaced by cheque No. 012970 which is in the sum of Rs. 4 millions which admittedly was encashed by the plaintiff. Mr. Masood,learned counsel for the piaintiff contended that defence taken by the defendant No...:1 is not corroborated by any material on record according, to him cheques were presented thrice to the bankers and lastly it was presented on 6.2.1997 and it was declined by the bankers for the reason payment stopped by drawei'. Mr. Masood learned counsel for the plaintiff further argued that the cheques for Rs. `4 millions was issued against IPC-16, whereas, cheques subject-matter of the suit pertained to. IPC-15 as mentioned in para 4 of the plaint.
16. Contentions of Mr. M.L. Shahani, that the cheque subject-matter of the instant suit were recalled and in lieu thereof cheque for Rs. 4 millions referred to in the letter reproduced above was issued and admittedly encashed shows that the. Cheque on the basis of which instant suit has been filed had in fact had been recalled to which no exception was taken by the plaintiff.
17. Leading case, out lining principle governing leave to defend in cases under summary procedure, is cited as Fine Textile Mills Limited v. Haji Umer (PLD 1963 S.C. 1963) at page 168 following rule was laid down.
"In a suit of this nature where the defendant discloses upon this 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 it 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 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 (1) 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 allegations 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."
The defence whether the cheque for Rs..4 million was in lieu of two dishonoured cheques subject- matter of instant suit or in fact in party settlement of dues against IPC-16 as claimed by the plaintiff such controversy could only be decided at trial. The plea setup in my humble view makes out a plausible defence which needs to be thoroughly examined. In view of such deferice and the dicta laid down by the Hon'ble Supreme Court in leading Fine Textile Mills Ltd. (supra) which till holds the field & was lately followed in Abdul Rauf Ghani v. Kishwar Sultana (1995 SCMR 925). Listed application is granted, subject to furnishing solvent security in the sum, of suit amount with 14 percent markup perannum to the satisfaction of Nazir of this Court, security to be furnished with 30 days from the date of announcement of this order, failing which consequences will follow.
CMA No. 3109/1997.
18,. This is an application under Order 37, Rule 2, C.P.0 filed by the defendant No. 2-Bank. None is present on behalf of the defendant No. 2 similar was position on the last of date of hearing. The suit is based on two cheques issued by the defendant No. 1 i.e. L & M International (Pvt.) Ltd. Drawn on the defendant No. 2 Bank. Allegations against the defendant No. 2 is merely dishonouring of the cheque subject-matter of the suit on account of stoppage of payment by the drawer i.e. Defendant No. 1, admittedly cheques were not issued by the defendant No. 2 nor the claim in suit is based on bill of exchange hundi, promissory note or instrument drawn by defendant No. 2, as required under Rule 2(1) of Order 37 which is a condition precedent for bringing a suit under summary chapter against a person who is drawer of instrument mentioned in sub-rule 2(1) of the Order 37, CPC. When the claim in suit against some of the defendant is based on negotiable instrument & against other on guarantee or indemnity or otherwise, then it is permissible to entertain & decide the suit against drawer of instrument under Order 37 and to proceed under normal procedure against the other defendant who is not privy to such instrument, for reference one may refer to Mst. Khatija Bai and another v. Muslim Commercial Bank (PLD 1978 S.C. 96) & Syed Sarwar Hussain Zaidi (1999 MLD 2931).
19. By issuing cheques, drawer in fact issued command & authorises the drawee/Bank to pay the amount specified therein to the holder in due course, when presented. For payment. The drawee/Bank under law is obligated & duty bound to pay & honour such cheque drawn on him, when presented within reasonable time, for payment. However, such authority & duty to pay cheque is always subject to command & dictate of the drawer, who may countermand & revoke the same anytime before the authority to pay is exercised (S. 122-A of Negotiable intruments Act).
20. Admittedly Defendant No. 1, is drawer of subject cheques, under Section 30 of the Negotiable Instrument, Act, drawer of a cheque, in case of dishonour by the drawee is obliged to compensate the holder. Defendant No. 2, Bank is a drawee and liability of draweeis governed under Section 31 of the Negotiable Instrument, Act, such liability extends only to the extent of compensating the drawer i.e. The person who had made out the instrument i.e. Defendant No. 1 in the instant case, such proposition finds support from the case reported as Jag Givan Mavji Vithlani v. Ranchhoddas Meghi (AIR 1954 S.C. 554).
21. As noted above the suit under Summary Chapter, can only be filed against the drawer of an instrument mentioned in Order 37, Rule 2(1), CPC and not against any other person or drawee thereof who is merely answerable and accountable to the .Drawer or endorsee thereof, that too, only to the extent of the found that may be in his hands. In case before presentation of such instrument drawee receives any instruction to stop the payment, then drawee is not obliged to honour such instrument in the hand of the 3rd party though the drawer himself may be liable for any consequence arising out of such dishonour or refusal to pay by the drawee. (Section 30 of Negotiable. Instruments Act). In this case on, the on showing of the plaintiff in para 7 of the plaint, subject cheques were dishonoured by the Defendant No. 2 Bank on the instructions of the Defendant No. 1, under such circumstance, in my humble opinion the suit against the Defendant No. 2 is wrongly proceeding under the summary chapter Defendant No. 2 has already filed written statement. Let the suit be decided and continued against him, under normal procedure, there is no necessity for leave to defend application as no was required to be filed by him. The application being redundant is disposed of accordingly.