Malik Ehsan Qadir vs Muhammad Razzaq

Stereo. H C J D A 38.

Judgment Sheet

IN THE LAHORE HIGH COURT, RAWALPINDI BENCH,

RAWALPINDI

JUDICIAL DEPARTMENT

RFA No.159 of 2018 Malik Ehsan Qadir versus Muhammad Razzaq

JUDGMENT

Date of hearing: 17.9.2025 Appellant by: Malik Waheed Anjum, Advocate Respondent by: In person

MALIK MUHAMMAD AWAIS KHALID, J:- The

appellant has filed the instant appeal u/s 96 of CPC against the ex- parte judgment and decree dated 29.9.2018 passed by learned Additional District Judge, Rawalpindi (hereinafter shall be called as trial court), whereby the suit of the respondent under Order XXXVII Rule 2 CPC for recovery of Rs.7,50,00,000/- was decreed to the extent of Rs.5,00,00,000/- along with costs of the suit.

I. BRIEF FACTS:

2.Succinctly, the facts of the case are that the respondent Muhammad Razzaq instituted a suit under Order XXXVII Rule 2 CPC against the appellant and 4 others for recovery of Rs.7,50,00,000/- along with up-to-date profit/mark-up at market rate with the averments that he (respondent/plaintiff) invested an amount of Rs.7,50,00,000/- with the appellant/defendant No.1 and defendants No.2 to 5 in the presence of witnesses who assured the respondent that they will pay profit on monthly basis to him and as and when the

respondent demanded his capital amount, the same would be returned to the respondent by the appellant and other defendants. It was further averred in the plaint that they neither paid profit nor returned the capital amount to the respondent. In this regard, on repeated requests of the respondent, the appellant issued a cheque No.00145919 dated 23.5.2017 amounting to Rs.5,00,00,000/- and promised to return the residual amount of Rs.2,50,00,000/- within two months.

Subsequently, on presentation of said cheque for encashment, the same was dishonored by the Bank because of insufficient funds in the account of the appellant. Afterwards, the respondent contacted the appellant and other defendants to return his actual amount but they instead of paying the same threatened the respondent of dire consequences. The respondent ultimately constrained to lodge F.I.R No.348 dated 3.7.2017 u/s 489-F PPC at Police Station Ganjmandi, Rawalpindi against them and Section 406 PPC was subsequently added by the police against them. According to the version of the respondent, the appellant and other defendants committed fraud with the respondent by not returning his capital amount, hence the respondent was constrained to file the instant suit.

3.Initially, the respondent/plaintiff filed suit against the appellant and 4 other persons i.e. defendants No.2 to 5. Subsequently, on 3.2.2018, the suit to the extent of defendants No.2 to 5 was dismissed as withdrawn on the statement of learned counsel for the respondent/plaintiff.

4.The application for leave to appear and defend the suit filed by the appellant was accepted on 20.7.2018 subject to furnishing surety bond of Rs.5,00,00,000/- with one local surety in the like amount or two sureties having aggregate value of property in the like amount to the satisfaction of the trial court on or before 7.8.2018 but from the record it appears that the appellant did not furnish the surety bond despite availing opportunities and lastly, on application, subject to payment of cost of Rs.2000/-, the time was granted to the appellant till 29.9.2018 notwithstanding a clear cut warning that in case the appellant failed to do so, the suit of the respondent will be decreed even without recording respondent’s evidence and law will take its own course. On 29.9.2018, no one appeared on behalf of the appellant, so he was proceeded against ex-parte, the conditional leave granting order was recalled, the application of the appellant for leave to appear and defend the suit was dismissed and consequently the learned trial court partially decreed the suit of the respondent to the extent of Rs.5,00,00,000/- along with costs of the suit, vide impugned judgment and decree dated 29.9.2018. It is pertinent to mention here that the respondent/plaintiff instituted the suit for recovery of Rs.7,50,00,000/- but the same was decreed to the extent of Rs.5,00,00,000/- declining the claim of the respondent/plaintiff from 7,50,00,000/- to Rs.5,00,00,000/-. Hence, the instant appeal has been filed by the appellant before this Court.

II. APPELLANT’S ARGUMENTS:

5.It is argued by the learned counsel for the appellant that admittedly the respondent/plaintiff was a Manager of the appellant/

defendant and the story of the respondent is false. Further added that due to Muharram-ul-Haram, the appellant could not arrange for the surety bond and thereafter no sufficient opportunities were granted to the appellant to arrange for the surety bond of such huge amount. He further argued that the appellant categorically requested the learned trial court that there is no property of the appellant in District Rawalpindi so he may be given opportunity to provide surety bond from another district from where he belongs. He further submitted that imposing of such condition was tantamount to refusal of leave and that the security was also very harsh. Further added that the learned trial court after recalling the conditional order for grant of leave to appear and defend the suit did not record the statement of the respondent after passing the ex-parte order against the appellant and straightway decreed the respondent’s suit against the appellant which is against the verdicts of the superior court, even Articles 4 & 10A of the Constitution of the Islamic Republic of Pakistan, 1973; and that the learned trial court while passing the impugned judgment and decree, relied on the cheque and dishonor slip but the said documents were not produced under the law and the learned trial court has committed grave illegality and irregularity.

III. RESPONDENT’S ARGUMENTS:

6.Whereas, on the other hand, it has been argued by the respondent in person that various opportunities were granted to the appellant to furnish surety bond with a warning that in case of failure, the suit of the respondent would be decreed without recording his

evidence, but the appellant failed to avail the said opportunities and now at this stage, the appellant cannot adopt it as justification that the suit has been decreed without recording respondent’s evidence, hence the impugned judgment and decree is liable to be sustained.

7.We have heard the arguments and perused the record.

IV. SOLVENT SECURITY:

8.It is the duty of the learned trial court to consider the law in its true perspective right from the initial stage. Though, it was the discretion of the court to fix any of the security but it ought to have been fixed according to facts and circumstances of the case. The learned trial court knocked out the appellant by imposing a condition that he was not able to furnish the surety bond in the sum of Rs.5,00,00,000/- with one local surety in the like amount or two sureties having aggregate value of property in the like amount to the satisfaction of court, while conditionally allowing him to defend the suit. However, while exercising discretion it was necessary for the court to take into consideration the scope and object of the summary procedure of suit provided under Order XXXVII CPC. The Hon’ble Supreme Court of Pakistan in the case of Abdul Rauf Ghauri1 has held as under:-

“...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 the appellant stated before us that he was prepared to offer any solvent security to the satisfaction of the Court equal

Abdul Rauf Ghauri vs. Mrs. Kishwar Sultana and 4 others (1995 SCMR 925)

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.”

(Underlining is added)

9.In another case of Muhammad Ashraf vs. Akhlaq Sheeda (2007 CLD 267) the view of the court was as under:- “...In my view, the ends of justice shall meet if the petitioner is directed to furnish the solvent security qua the suit amount to the satisfaction of the Court. Therefore, the order imposing the condition of deposit etc, is untenable.”

(Underlining is added)

V. DISCRETION OF THE COURT &

PRESUMPTION ATTACHED TO

SECTION 118 OF NEGOTIABLE

INSTRUMENTS ACT, 1881 WITH

REFERENCE TO ORDER XXXVII

CPC:

10.The principles regarding the exercise of discretion by a trial court in the context of granting leave to appear and defend the suit unconditionally or conditionally, as the case may be, have been enunciated in the case of Fine Textile Mills Ltd.2 and were reaffirmed by the Hon’ble Supreme Court of Pakistan in the case of Abdul Karim Fine Textile Mills Ltd., Karachi vs. Haji Umar (PLD 1963 SC 163)

Jaffarani vs. United Bank Ltd. and 2 others3. After reviewing the precedent cases, the Hon’ble Supreme Court of Pakistan held that no hard and fast rule can be laid down for determining the question as to how the discretion vested 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. The Hon’ble Supreme Court was of the opinion that laying down a rule for exercise of powers in matters of discretion vested in a court would be improper since the legislature itself has not placed fetters on how the discretion has to be exercised under sub-rule (2) of Rule 3 of Order XXXVII of the C.P.C. However, it has been observed that while exercising discretion it was necessary for the court to take into consideration the scope and object of the summary procedure of suit provided under Order XXXVII. If the Court is of the opinion that the defendant is attempting to prolong the litigation and impeding a speedy trial, then it would be justified to impose conditions. The proper stage for substantiating and taking evidence would not be the leave granting stage but the subsequent trial proceedings4. The court is under obligation to see the legality and genuineness of the issue brought before it. The observation of the learned trial court, therefore, reflects dealing with a cause in a mechanical manner, without application of judicious mind5. It is also well settled law that the act of the court shall prejudice no-one and where any court did not comply with a Abdul Karim Jaffarani vs. United Bank Ltd. and 2 others (1984 SCMR 568) Adamjee Insurance Company Limited vs. Techno International and other (2025 SCMR Misbah Khanum vs. Kamran Yaseen and another (2022 SCMR 1629)

mandatory provision of law or omitted to pass an order in a manner prescribed by law6. Therefore, in such like situation, where injustice caused due to act or omission on the part of the court, that court is required to cure the defect which occurred as a consequence thereof7.

Furthermore, once leave is granted, the suit shall be converted into a regular civil suit. If the defendant succeeds to obtain the leave, the procedure given in Order XXXVII, Rule 7 of the Code is to be followed8, which reads as under:-

“Procedure in suits:- Save as provided by this Order, the procedure in suits hereunder shall be the same as the procedure in suits instituted in the ordinary manner.”

Likewise, in the case of Muhammad Ali Khalid9, it was held as under:- “Order XXXVII, C.P.C. is a special dispensation. Under this Order and unlike in a regular civil suit, procedure has been provided to file and proceed with the suit filed on the basis of negotiable instruments, as contemplated in the Negotiable Instruments Act, 1881. In a suit filed under this Order, which is summary in nature, under Rule 3 of the said Order, a defendant who has been served, within stipulated time has to seek leave to appear and defend the suit and once the leave is granted, the suit shall be converted into a regular civil suit and will be decided in accordance with the general procedure prescribed in C.P.C.”

Similar view has been adopted in the cases titled Sahibzada Azhar Saleem and Irfan Fazal vs. Zahid Iqbal10. Therefore, in this case, the court adjudicating a summary suit under Order XXXVII CPC cannot Muhammad Ijaz and another vs. Muhammad Shafi through LRs (2016 SCMR 834) Shirin and 4 others vs. Fazal Muhammad and 4 others (1995 SCMR 585) & Jai Behram vs. Kedar Nath (AIR 1922 PC 269)

Abdul Ghaffar vs. Umar Farooq (2025 CLC 1253)

Muhammad Ali Khalid vs. Muhammad Talha (2024 CLC 1184) Sahibzada Azhar Saleem vs. Muhammad Hanif (2002 MLD 696) and Irfan Fazal vs. Zahid Iqbal (2004 CLC 384)

brush aside above aspect and the available record. The court is required to apply its judicious mind even in cases where leave to defend has been refused. The burden of proof in a summary suit is lighter than it is on a plaintiff in a regular suit but here the application for leave to appear and defend the suit was allowed conditionally.

However, the court while adjudicating a summary suit has to see facts narrated by the plaintiff and adjudge whether the plaintiff is entitled to the relief sought. This exercise cannot be done in a perfunctory and arbitrary manner and requires judicial deliberation. In the present case, cheque is a negotiable instrument which falls under the category of negotiable instrument and, therefore, has to be governed by the Negotiable Instruments Act, 1881. Here, due to failure on the part of the appellant/defendant to comply with the condition of leave, he shall not be entitled to defend the suit on this ground and the court has passed a decree in favour of the plaintiff. However, this does not necessarily mean that the court is not required to apply its mind under law to the facts and the documents before it. Every Court is required to apply its judicious mind before passing any 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 law11 & 12 .

11.As a sequel of above discussion, while relying on the referred cases i.e. Abdul Rauf Ghauri vs. Mrs. Kishwar Sultana and 4 Haji Ali Khan & Company, Abbottabad and 8 others vs. M/s Allied Bank of Pakistan Limited, Abbottabad (PLD 1995 SC 362)

Fine Textile Mills Ltd., Karachi vs. Haji Umar (PLD 1963 SC 163)

others (1995 SCMR 925), Muhammad Ashraf vs. Akhlaq Sheeda (2007 CLD 267), Fine Textile Mills Ltd., Karachi vs. Haji Umar (PLD 1963 SC 163), Abdul Karim Jaffarani vs. United Bank Ltd. and 2 others (1984 SCMR 568), Adamjee Insurance Company Limited vs.

Techno International and other (2025 SCMR 756), Misbah Khanum vs. Kamran Yaseen and another (2022 SCMR 1629), Muhammad Ijaz and another vs. Muhammad Shafi through LRs (2016 SCMR 834), Shirin and 4 others vs. Fazal Muhammad and 4 others (1995 SCMR 585), Jai Behram vs. Kedar Nath (AIR 1922 PC 269), Haji Ali Khan & Company, Abbottabad and 8 others vs. M/s Allied Bank of Pakistan Limited, Abbottabad (PLD 1995 SC 362), Abdul Ghaffar vs. Umar Farooq (2025 CLC 1253), Muhammad Ali Khalid vs. Muhammad Talha (2024 CLC 1184), Sahibzada Azhar Saleem vs. Muhammad Hanif (2002 MLD 696), and Irfan Fazal vs. Zahid Iqbal (2004 CLC 384), the application of the appellant for leave to appear and defend the suit was rightly allowed by the trial court on 20.7.2018. We, therefore, allow this appeal subject to payment of cost of Rs.2,00,000/- (two lac) to be paid by the appellant to the respondent, set aside the impugned judgment & decree of learned trial court and remand the case to the learned trial court with a direction to impose a condition upon the appellant to its satisfaction while keeping in view the case law supra by affording him only one opportunity to comply with the same. If he fulfils the condition within the stipulated period, the trial court shall proceed with the suit after recording of parties’ evidence under the law and decide the same expeditiously, preferably

within a period of one month. Parties are directed to appear before the concerned learned trial court on 10.10.2025.

(JAWAD HASSAN) (MALIK MUHAMMAD AWAIS KHALID)

JUDGE JUDGE

SN

Approved for Reporting

JUDGE