' JAWWAD S. KHAWAJA, J.---This appeal impugns the judgment and decree dated 27-7-1999 passed by the Modaraba Tribunal against the appellants and respondent No,2. The facts of the case are that the respondent Modaraba filed a suit on 3-12-1997 against the respondent-Company and the appellants for recovery of an amount of Rs.70,600,240 before the Modaraba Tribunal established under the provisions of the Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980 (the "Modaraba Ordinance"). The respondent-Company was sued in its capacity as principal debtor, while the appellants/defendants were arrayed as defendants on the basis of personal guarantees executed by them to secure the liabilities of the. Respondent- Company. An application was filed by the appellants and the respondent-Company jointly seeking leave to appear and defend the suit. The said application was dismissed, resulting in the impugned judgment and decree.
2. This appeal was filed by the three appellants only and earlier came up for hearing before another learned Division Bench on 9-3-2000. The appeal was dismissed in limine on that date. It was observed by the learned Division Bench that learned counsel for the appellants had only assailed the jurisdiction of the Modaraba Tribunal to entertain and decide the suit filed by the respondent-Modaraba. However, the question of jurisdiction as also the issue relating to the maintainability of the suit before the Modaraba Tribunal was elaborately discussed. The objections of the appellants in respect of maintainability of the suit and the jurisdiction of the Tribunal were overruled in the judgment and decree dated 9-3-2000.
3. The appellants filed a petition seeking leave to appear which was converted into an appeal by the Honourable Supreme Court which pronounced its judgment dated 24-1-2002 remanding the case to the High Court for decision on merits. The scope of the remand was circumcised by the Honourable Supreme Court in the following terms:-- "5. This petition is converted into appeal by consent, without setting aside the impugned judgment, the case is remanded to the High Court to decide the appeal on merits. In case, the final judgment is passed against the appellants, they shall be at liberty to challenge the same in further proceeding before this Court in which they may challenge the order dated 9-3-2000 impugned in this petition being interlocutory order. There will be, however, no order as to costs."
4. It is in the foregoing circumstances that the appeal has now come up for hearing before us.
Learned counsel for the appellants has strongly contended that apart from the merits of the case, he is also entitled to address arguments on the question of the jurisdiction and the maintainability of the suit before the Modaraba Tribunal. We are afraid, this submission is not consistent with the judgment of the Honourable Supreme Court, the relevant portion of which has been reproduced above. He was, therefore, asked to confine his arguments to the merits of the case.
5. On the merits, it was, firstly, contended by learned counsel for the appellants that the suit filed by the respondentModaraba was barred by limitation. It was asserted on behalf of the appellants that the amount claimed by the Modaraba was disbursed, firstly, through 8 Morabaha agreements, the first one of which was dated 27-9-1992, while the last one was dated 10-5-1993. Learned counsel also drew the attention of the Court to paragraph 6 of the plaint wherein it has been averred that the defendants became defaulters on 31-12-1993. On this basis, it was contended the period of limitation commenced on 31-12-1993. The suit of the Modaraba was filed on 3-12-1997.
6. According to learned counsel, the period of limitation in the suit was governed by Article 64-A of the First Schedule to the Limitation Act, which provides a three-year period of limitation. In order to appreciate the argument of learned counsel, the provisions of Article 64-A are reproduced as under:--- "64- A.Under Procedure of the Code of Civil XXXVIIOrderThree yearsWhen the debt becomes payable.
7. It is clear from the aforesaid provision that it is applicable only to suits filed under Order XXXVII, C.P.C. Upon being pressed, learned counsel for the appellants acknowledged that the suit of the respondent Modaraba had not been filed under Order XXXVII, C.P.C. He, however, argued that by virtue of section 26(2) of the Modaraba Ordinance, a suit filed by the Modrabaha would be governed by Article 64-A, reproduced above, even though the said suit may haVe been based on Morabaha finance and not on a negotiable instrument. We have considered this argument and find that it is misconceived. Section 26, referred to by learned counsel is reproduced as under, for ease of reference:-- "26. Procedure of the Tribunal.---Matters before the Tribunal shall come up for regular hearing as expeditiously as possible and, except in extraordinary circumstances and on grounds to be recorded, the Tribunal shall hear the cases from day to day.
(2) In the exercise of its civil jurisdiction, the Tribunal shall, in all suits before it, including suits for recovery of money, follow the summary procedure provided for in Order XXXVII of the First Schedule to the Code of Civil Procedure, 1908 (Act V of 1908)."
8. It is clear from the aforesaid statutory provisions that only the summary procedure prescribed in Order XXXVII, C.P.C. Has been incorporated in the Modaraba Ordinance by reference. By no stretch of reasoning can the said provision be construed to hold that a suit filed by a Modaraba, regardless of its nature, will be a suit filed under Order XXXVII, C.P.C. We are, therefore, clear that Article 64-A of the Limitation Act was not applicable to the suit filed by the respondent-Modaraba.
9. Learned counsel contended in the alternate that Article 59 of the First Schedule to the Limitation Act would be attracted. Article 59 reads as under:-- "59. For money lent under an agreement that it shall be payable on demand.Three yearsWhen the Loan is made."
10. Learned counsel for the appellants was asked to show if the Modaraba finance advanced by the respondent-Modaraba was payable on demand, because this is a precondition for applying the provisions of Article 59 to any suit. He referred to clause 10 of the Morabaha agreement to state that the amount could, in certain specified circumstances, become payable on demand. We have gone through clause 10 of the agreement referred to by learned counsel. It reads as under:-- "10. ... As Islamic finance requires mutual trust and respect of Due Dates and in the event that the Client shall be in default in any obligation to pay a sum of money due under this agreement or under any other contract of agreements between the [Trust Modaraba] and the Client, the [Trust Modaraba] may by notice to the Client declare all the unpaid amounts immediately due and payable."
11. It is clear from the aforesaid contractual stipulation that the Modaraba finance was, in fact, not payable on demand but was to be paid by the respondent-Company on specified dates. Only in the event of a default by the respondent No,2, was it open to the Modaraba to require payment on demand. In these circumstances, it is obvious that Article 59 cannot be pressed into service by the appellants to support the plea of limitation.
12. Learned counsel for the appellants next contended that if Articles 64-A and 59 of the Schedule to the Limitation Act were inapplicable, Article 5 of the said Schedule would be the relevant provision for determining the period of limitation. To better understand this argument, Article 5 of the Schedule to the Limitation Act is reproduced as under:-- "Under the summary procedure referred to in section 128(2)(1) of the Code of Civil Procedure, 1908 [where the provision of such summary procedure does not exclude the ordinary procedure in such suits].[One year]When the debt or liquidated demand becomes payable or when the property becomes recover-able."
13. Since Article 5 is posited on section 128(2)(f), C.P.C. We have considered the same. We find that section 128(2)(f) is only an enabling provision which enables the High Court to frame rules of procedure for the summary trial of certain categories of cases. The reliance by learned counsel on the provisions of Article 5 of the Schedule to the Limitation Act was again based on the provisions of section 26(2) of the Modaraba Ordinance (reproduced above) prescribing summary procedure for the trial of suits filed by a Modaraba. Learned counsel for the appellants conceded that no summary procedure has been prescribed in the C.P.C., in respect of suits filed by Modarabas. As such, the invocation of Article 5 of the Schedule to the Limitation Act by the appellants is also misconceived.
14. In the absence of any specific Article in the Schedule to the Limitation Act relating to the suit filed by the respondentModaraba, we are not in any doubt that the said suit was governed by Article 120 of the Schedule to the Limitation Act, which prescribes a period of six years from the date when the right to sue accrues. Since the suit was filed on 3-12-1997 and the very first disbursement of Modaraba finance was made by the Modaraba to the respondent-Company on 27-9-1992, it is clear that the suit of the Modaraba was filed within the period of limitation.
15. Even otherwise, we note that the respondent-Company had, within the meaning of section 19 of the Limitation Act, acknowledged its liability to the Modaraba in writing. Such acknowledgement was made through letter dated 22-4-1996 addressed to the Modaraba enclosing three cheques for an aggregate sum of Rs.27,675,068. The said letter also contained instructions to the Modaraba for the appropriation of the said payment in different heads of account. The aforesaid letter of acknowledgement is not disputed and, in fact, a copy thereof has been filed by the appellants themselves with the present appeal.
16. In these circumstances, it was argued by learned counsel for Modaraba that even if the period of limitation was considered to be three years from default as alleged by the appellants, the suit filed by the Modaraba on 3-12-1997 was well within time considering that the acknowledgement made by the above-referred letter dated 22-4-1996 which would operate as extending the period of limitation for a further period of three years commencing from the date of the said letter. This argument is well-founded but has no bearing in the circumstances of the present case because of our finding that the period of limitation was six years as set out in Article 120 of the Schedule to the Limitation Act.
17. Learned counsel for the appellants also raised other grounds by way of defence including pleas to the effect that the Modaraba had made miscalculations in the amount claimed. No miscalculation, however, was specified or adverted to. It was also contended that the entire amount of finance had been repaid, rather an amount in excess of what was due, had been paid to the Modaraba. This plea was also not substantiated by anything on the record.
18. Various other pleas were also advanced on behalf of the appellants, which had not been taken by the appellants in their application seeking leave to appear and defend nor were such pleas substantiated before us during the course of arguments. At this point, it is important to note the objection raised by learned counsel for the Modaraba that the application seeking leave to appear and defend, which had been filed on behalf of the appellants, was not supported by an affidavit as required by the provisions of Order XXXVII, rule 3, C.P.C. We have gone through the record of the Modaraba Tribunal and find that this assertion on behalf of the Modaraba is correct. There is, in fact, no affidavit in support of the application seeking leave to appear and defend. This, by itself, is a sufficient reason for disregarding the grounds set out by the appellants in the said application by way of defence. Quite apart from this, we have not found any serious or bona fide defence disclosed in the said application.
19. For the foregoing reasons, we find no merit in this appeal, which is, therefore, dismissed, with costs.