P L D 2024 Balochistan 106
Before Zaheer- ud-Din Kakar and Gul Hassan Tareen, JJ
Syed MUHAMMAD ZAHIR and others ---Appellants
Versus
Mrs. SHAHNAZ AKHTAR and others ---Respondents
R.F.As. Nos. 22 and 33 of 2021, decided on 27th March, 2023.
Negotiable Instruments Act (XXVI of 1881) ---
----S. 118--- Civil Procedure Code (V of 1908), O.XXXVII, R. 2(2) ---Suit for recovery on the
basis of three cheques ---Negotiable instrument- --Presumption of truth ---Scope ---Application
for leave to defend, acceptance of ---Effect ---Onus of proof ---Plaintiff impugned the
judgment passed by the Trial Court as his suit was partially decreed--- Held, that provisions
of S. 118 of the Negotiable Instruments Act, 1881 and O. XXXVII, R. 2(2) of the Civil
Procedure Code, 1908, indicate that statutory presumption is attached with a negotiable instrument---Such presumption operates in favour of plaintiff unless and until leave to defend is granted---Where the Court, ceased with such a suit, refuses leave to defend or where a defendant fails to fulfill a condition attached to a leave granting order or fails to apply within the prescribed time for leave to defend, then the Court shall decree the suit
without any further proof of the suit on the basis of statutory presumption under S. 118 of the
Negotiable Instruments Act, 1881---However, where the very execution of instrument is
denied and leave is granted by the Court, then the said initial presumption in favour of
plaintiff would not arise ---In such a case, the mode of disposal of the suit from summary
would convert to ordinary regular form of suit ---In such circumstances the consideration for
discharging the burden of proof would be the same as in an ordinary civil suit pending before
a Civil Court ---In the present case, after grant of leave to defend, appellant's predecessor
submitted written - statement and denied execution as well as consideration of three cheques,
sued upon---Therefore, the burden of proof of the execution of cheques by appellant' predecessor as well as consideration was upon the appellant ---Appellant produced the
official witnesses who merely produced the record of impugned cheques and dishonor slips and he had not led any evidence to prove that indeed the impugned cheques were executed towards fulfillment of an obligation or towards consideration---Appellant's own statement, without proof of consideration independently through concrete evidence, was not sufficient to prove his claim ---Since, the appellant failed to discharge burden of proof, therefore, the
burden did not shift upon the shoulders of defendants/respondents to disproof in rebuttal as the same would not make any difference ---Defendants in evidence denied execution of the
impugned cheques as well as the consideration mentioned therein---Thus, the Trial Court had misinterpreted S. 118 of the Negotiable Instruments Act, 1881 and was wrong in placing the onus of proof of relevant issue on the defendants ---High Court set -aside the impugned
judgment being not sustainable in law; resultantly, suit instituted by the appellant was dismissed ---Appeal filed by the plaintiff was dismissed with costs of Rs. 50,000/- and costs
of proceedings.
Syed Haider Aabdi v. Syed Javed Aabdi 1986 MLD 2298; Habib Bank Ltd. v. Ali
Mohtaram Naqvi PLD 1987 Kar. 102 and Muhammad Aziz -ur-Rehman v. Liaquat Ali 2007
CLD 1542 ref.
Shabbir Sherani and Khalil Ahmed for Appellant (in Regular First Appeal No. 22 of
2021).
Adnan Ejaz Sheikh for Respondents (in Regular First Appeal No. 22 of 2021).
Adnan Ejaz Sheikh for Appellants (in Regular First Appeal No. 33 of 2021).
Shabbir Sherani and Khalil Ahmed for Respondent (in Regular First Appeal No. 33 of
2021).
Date of hearing: 13th March, 2023.
JUDGMENT
GUL HASSAN TAREEN, J. ---Through this common judgment, we intend to decide
the afore captioned Regular First Appeals, filed under section 96, the Civil Procedure Code,
1908 ('the Code'), from the same judgment dated 11 September, 2021 ('impugned judgment'), passed by the Court of Additional District Judge -V, Quetta ('Trial Court') in Civil Suit No.
232/1999, whereby suit instituted by Syed Muhammad Zahir, appellant in R.F.A No. 22/2021, under Order XXXVII, the Code was partly decreed against Shahnaz Akhtar and others, appellants in R.F.A No. 33/2021.
2. Relevant facts of the case are that, Syed Muhammad Zahir ('appellant') instituted a
summary suit under Order XXXVII, the Code, with the averments that he entered into partnership with the predecessor of Shahnaz Akhtar and others ('appellants') vide Partnership Deed dated 18 July, 1997. He invested a huge capital with the said predecessor, however, he had not paid the investment and the profits in the sum of Rs. 20,59,30,000/ -. He used to send
only nominal profits through cheques. He issued a nominal portion of the profits through three cheques, description whereof is as under:
S # Cheque No. Name of Bank Amount
1 06705040 Dated
21.03.1999 Muslim Commercial Bank Rs. 34,40,000/ -
2 5849652 Dated
21.12.1997 Bank of Punjab Rs. 20,00,000/ -
3 5849685 Dated
19.01.1998 -do- Rs. 29,00,000/ -
The appellant presented the cheques for encashment which were not cleared and
dishonoured. Since, the predecessor failed to discharge the liability of cheques; therefore, the
appellant prayed for recovery of Rs.83,40,000/ - with interest @ 14% per annum along with
costs of the proceedings.
3. The predecessor of appellants submitted a contesting written statement. During
pendency of the suit, he passed away and appellants were impleaded in the suit as his legal representatives. On such pleadings following issues were framed:
1. Whether the suit filed by the plaintiff is not maintainable in view of legal objections F and H?
2. Whether the parties entered into partnership through Partnership Deed dated 18.7.1997?
3. Whether the Cheque No. 06705040, dated 21.3.1999, of Muslim Commercial Bank amounting Rs.34,40,000/ -, cheque No. 5849652, dated 21.12.1997, Bank of Punjab
amounting to Rs. 20,00,000/ -, Cheque No. 5849685, dated 19.1.1998, Bank of Punjab
amounting to Rs. 29,00,000/ - were issued by defendant in favour of plaintiff?
4. Whether the cheques mentioned in issue No. 3, were not cleared and no payment has been made to plaintiff?
5. Whether the plaintiff is entitled for recovery of Rs. 83, 00000/ - at the rate of 14% per
annum as profits and invested capital in result of partnership deed?
6. Relief?
4. The appellant produced following evidence:
PW-1: Abdul Rehman, Record Keeper, who produced in evidence cheque at serial
Nos. 1, 2 and 3 as Ex: P/1, Ex: P/2 and Ex: P/4 respectively. He also produced the dishonor slip of cheques at serial Nos. 2 and 3 as Ex: P/2 and Ex: P/5 respectively;
PW-2: Tanveer Ahmed, Representative Allied Bank, New Zarghoon Road, Quetta,
who produced in evidence the record of Ex: P/1 as Ex: P/1- 6; and
PW-3 Ghulam Nabi, Credit Officer, Muslim Commercial Bank, Jinnah Road Branch
Quetta, who produced in evidence the entry of Ex: P/2 as Ex: P/2- 7-A and Ex: P/2- 7-
B.
The appellant appeared as his own witness, made statement on oath and produced the
partnership deed as Ex: P/VIII.
5. The appellants could not lead any evidence and through attorney, appellant No. 5,
deposed on oath, and tendered in evidence, the judgment passed in Civil Suit No. 157/1999 (Ex: D/1 -B), memo of appeal (Ex: D/1- C), judgment of this Court (Ex: P/1- D), order of the
Supreme Court of Pakistan (Ex: D/1- E), an arbitration application (Ex: D/1 -F), judgment on
arbitration application (Ex: D/1 -G), judgment of this Court (Ex: D/1 -H), suit for rendition of
account (Ex: D/1 -J), written statement (Ex: D/1 -K), application under Order XXIII, the Code
(Ex: D/1 -L), and order and decree (Ex: D/1- M).
6. On completion of evidence, the Trial Court vide impugned judgment partly decreed
the suit to the extent of cheques at serial Nos. 2 and 3 in the sum of Rs. 49,000,000/ -, while
to the extent of cheque at serial No. 1 in the sum of Rs. 34,40,000/ -, the suit was dismissed.
Against part dismissal of the suit, the appellant has preferred R.F.A No. 22/2021, whereas the appellants preferred R.F.A. No. 33/2021 against the part decretal of the suit.
7. Messrs Shabbir Sherani and Khalil Ahmed, Advocates, (counsel for appellant in
R.F.A No. 22/2021) contended that the appellants pleaded that the cheques were stolen and the appellant forged them by forging signatures of their deceased predecessor thereon and since, they have not denied the cheques; therefore, according to section 118, the Negotiable Instruments Act, 1881 ('the Act'), the burden of proof of forgery was upon the appellants which they have failed to discharge through production of evidence i n rebuttal. It is further
contended that the appellants admitted the partnership deed; therefore, the appellant has
proved his claim according to law and has also proved the cheque at serial No. 1 through PW-2; however, the Trial Court has misread the evidence to such extent. They prayed for
acceptance of appeal to the extent of cheque at serial No. 1 and placed reliance on the following case laws:
Mst. Kanwal v. Dr. Muhammad Suhail
2022 CLD 1063
Asad Javed v. Ahmed Shah
2022 CLD 332
Akbar Ali v. Shahid Hayat Khan
2022 MLD 762
Rooh Ullah and another v. Matiullah and another
2021 CLC 1998
Abbass Ali v. Asif Abbas and 3 others
2016 CLC 604
Muhammad Javed Azmi v. Javed Arshad
2021 MLD 1473
8. In rebuttal, Mr. Adnan Ejaz Sheikh Advocate, (counsel for appellants in R.F.A No.
33/2021) states that the appellant produced in evidence photocopies of cheques which, as secondary evidence, were not admissible; that the appellant produced the cheques through record keeper of the Court instead of representative of the relevant Bank; therefore, copies of cheques were not admissible in evidence; that the Trial Court had no territorial jurisdiction to try the suit under section 20, the Code, because the predecessor of the appellants used to reside and carries on business at Multan; that the impugned cheques were also subject matter of a civil suit and arbitration application which were finally dismissed; therefore, the suit of the appellant was barred by the principle of Res judicata. Finally, it is contended that the appellant has dragged appellants in frivolous litigation since more than twenty years; therefore, his appeal should be dismissed with special costs.
9. We have heard learned counsel for the parties at length and have gone through the
record of the case.
10. The plain reading of the provisions of section 118, the Act and Order XXXVII, Rule
2(2), the Code, would indicate that statutory presumption is attached with a negotiable instrument, to a particular stage of proceedings, in a suit instituted under Order XXXVII, the Code. Such presumption operates in favour of plaintiff unless and until leave to defend is granted. Where Court ceased with such a suit refuses leave to defend or where a defendant fails to fulfill a condition attached to a leave granting order or fails to apply within the prescribed time for leave to defend, then Court shall decree the suit without any further proof of the suit on the basis of statutory presumption under section 118, the Act. However, where the very execution of instrument is denied and leave is granted by the Court, then the said initial presumption in favour of plaintiff would not arise. (Syed Haider Aabdi v. Syed Javed Aabdi reported in 1986 MLD 2298). In such a case, the mode of disposal of the suit from summary would convert to ordinary regular form of suit. In such circumstances the consideration for discharging the burden of proof would be the same as in an ordinary civil suit pending before a Civil Court.
11. The predecessor of the appellants applied for grant of leave to defend the suit. The
leave was allowed by the Trial Court on 19 March, 2004 subject to his furnishing surety in
the sum of rupees ten million, consisting of two sureties. The appellants' predecessor
impugned such conditional leave granting order in Civil Revision No. 50/2004 before this Court. Vide judgment dated 21 December, 2004, the revision petition was allowed and the order dated 19 March, 2004 to the extent of imposing condition of surety was set aside. The relevant from the order is reproduced hereunder:
"The perusal of impugned order shows that the learned Judge granted leave as according to her, many issues arise in the mind of Court such as in what capacity cheques were issued, whether the suit was hit by principle of res judicata, plaintiff has
to prove consideration for the instruments. Under such circumstances, after finding triable issues between the parties, especially when it has to be proved through the
evidence as to whether the cheques were issued in some consideration or otherwise, the learned trial Court should have granted leave unconditionally as held in a number of cases by the Superior Courts.
For the foregoing reasons, I would allow the petition. The order dated 19th March, 2004 to the extent of imposing condition is set aside. The parties are left to bear their own costs."
12. After grant of leave to defend, appellants' predecessor submitted written statement
and denied execution as well as consideration of the three cheques, sued upon. Therefore, the burden of proof of the execution of cheques by appellants' predecessor as well as consideration was upon the appellant. The appellant produced the official witnesses, who merely produced the record of impugned cheques and dishonor slips. The appellant has not
led any evidence to prove that indeed the impugned cheques were executed and issued by the
appellants' predecessor and were issued by him towards fulfillment of an obligation or
towards consideration. The appellant's own statement, without proof of consideration
independently through concrete evidence, is not sufficient to prove his claim. Since, the appellant failed to discharge burden of proof; therefore, the burden was not shifted upon the
shoulders of appellants to disproof in rebuttal. Non- production of evidence by the appellants
in rebuttal would not make any difference. The appellants through attorney appeared on oath
in support of their pleading and denied execution of the impugned cheques by their predecessor as well as the consideration mentioned therein. The contention of appellant does not carry any legal weight, whereas the learned Trial Court vide impugned judgment has misinterpreted section 118, the Act and was wrong in placing the onus of proof of issue No. 3 on the appellants. We may place reliance on the case reported as Habib Bank Ltd. v. Ali Mohtaram Naqvi (PLD 1987 Karachi 102), wherein the Sindh High Court has held as under:
"9. A close look at Order XXXVII would show that this Order consisting of only 7 rules prescribes summary procedure for disposal of suits filed on the basis of negotiable instruments. The plaintiff remains plaintiff and the defendant remains defendant. The only difference is that the burden of proof which usually rests on the plaintiff is shifted to the defendant. It may be said that in suits under Order XXXVII, C.P.C. the plaintiff starts with an initial advantage of presumption in his favour and the defendant with an initial handicap of discharging the burden of first displacing this initial presumption. This is evident from the words used in sub- rule (2), which
postulates "In default of his obtaining such leave the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to the decree for the principal sum due on the instrument and for interest". The effort for getting rid of this presumption against him is made by defendant through an application to be filed by him under sub -rule (2) of Rule 2 of this order. The defendant must enter appearance
within 10 days after service of notice of the filing of the suit and satisfy the Court that initial presumption drawn in favour of the plaintiff on the strength of negotiable instrument is not well- founded and that he has a good defence to the claim lodged by
the plaintiff. This is usually called the application seeking permission or leave to defend the suit. After the defendant enters appearance the plaintiff would press for a decree and the defendant would make an effort to get rid of initial presumption and the Court shall be obliged to examine the merits of the contentions of both the parties and render the decision. If the defendant fails to dislodge the initial presumption the decree would be passed outright without any further evidence. The negotiable instrument itself would be treated as conclusive evidence against the defendant. In case the defendant succeeds in demolishing the initial presumption he would be allowed to defe nd the suit and the suit will proceed in the normal way. It needs no
efforts to emphasize that what could be achieved through the process of a prolonged
procedure has been compacted to be done in a summary manner in this Order. The
negotiable instrument dominates over all other facts and over weighs against all other evidence. Without leading any evidence in support and cutting down all procedural trappings in the way the plaintiff would be entitled to a clean and final decree if no application to defend the suit has been filed within 10 days or the application has been
filed but leave has been refused. By no means it can be said that to obtain a decree
anything further would be required to be done. As stated in the earlier paragraphs if
leave is refused decree would be passed and as such nothing would be left to be stayed. If however, the leave is granted then it would amount to converting the mode of disposal of the suit from summary to regular form and in such an eventuality the consideration for discharging the burden of proof would be the same as in any other case."
The Supreme Court of Pakistan in the case reported as Muhammad Aziz- ur-Rehman
v. Liaquat Ali (2007 CLD 1542) has held that "burden of proof of non- payment of
consideration where execution of a negotiable instrument was admitted would be upon
executant of document." In this case, the appellants denied the execution of the negotiable
instruments (impugned cheques) in their pleading as well as in their statement on oath;
therefore, it can safely be held that the burden of proof was upon the appellant which he has
failed to discharge. The findings of the learned Trial Court on issue No.3 are not in
accordance with law.
13. So far as contention of appellants' counsel that suit was barred by Resjudicata is
concerned, the same is not correct. According to appellant's counsel, the impugned cheques
were also the subject matter of a civil suit and an arbitration application made by the
appellant which were finally dismissed. The provisions of section 11, the Code applies to a
subsequent suit. The appellant instituted the instant suit on 28 August, 1999, whereas civil
suit and arbitration application were subsequently instituted and made; therefore, the provisions of section 11, the Code do not place a clog on institution of the instant suit.
14. The appellants' counsel vehemently argued that the Trial Court had no territorial
jurisdiction and in this respect a specific legal objection was raised in their pleading. During pendency of the suit, the appellants had not applied to the Trial Court for framing a specific issue on the question of territorial jurisdiction. This objection was a mix question of law and fact and since both parties did not lead any evidence on this objection; therefore, the Trial Court neither framed any issue nor rendered any finding on this objection. Parties are in litigation since 1998; therefore, it would be highly inconvenient to the parties that the case is remanded to the Trial Court for framing of an issue on the question of territorial jurisdiction and to record further evidence and re -write the judgment on such proposition of law. Even
otherwise, the appellants' counsel cannot establish that prejudice was caused to the appellants due to pendency of suit at Quetta instead of Multan.
15. The appellant has claimed that the predecessor of the respondents withheld the
invested capital and the profits amounting to Rs.20,59,30,000/ -. For recovery of such sum
(excluding the amounts of three cheques), the appellant, on 29 October, 1999 instituted a Civil Suit No. 157/1999 before the Court of Senior Civil Judge -I, Quetta, which was
concurrently dismissed by the Trial Court as well as by this Court (Ex: D/1- B and Ex: D/1 -
D). The appellant impugned the concurrent decrees before the Supreme Court of Pakistan in C.P. No. 105- Q/2009. The appellant did not press his petition and submitted that he be
allowed to agitate his case before Trial Court at Multan. Vide order dated 28 April, 2009, the Supreme Court allowed appellant to withdraw the suit with permission to institute fresh, if need be (Ex: D/1- E). The appellant instead of filing a suit at Multan, made an application
under section 20, the Arbitration Act, 1940, which was dismissed by this Court in Civil Miscellaneous Appeal No. 02/2013, vide judgment dated 27 April, 2017 (Ex: D/1- H). The
appellant also instituted a Civil Suit No. 49/2009 before the Court of Judicial Magistrate -
IX/Civil Judge, Quetta for rendition of accounts (Ex: D/1- J) and later made an application for
withdrawal of it which was allowed by the Court vide order dated 26 November, 2013 with compensatory cost of Rs. 25,000/ -
The aforementioned reveals that since, 1999, the appellant has dragged the
respondents in uncalled for litigation; therefore, his appeal is liable to dismissal with costs.
The case laws relied upon by the learned counsel for the appellant are not relevant to
the facts and circumstances of the instant case.
16. What has been discussed above, the impugned judgment is not sustainable at law, as
such, we would allow R.F.A. No. 33 of 2021; impugned judgment dated 11 September, 2021
passed by the Court of Additional District Judge -V, Quetta in Civil Suit No. 232/1999 is set
aside, resultantly suit instituted by the appellant is dismissed. Accordingly, R.F.A No. 22/2021 is dismissed with costs of Rs. 50,000/ - and costs of proceedings.
Decree sheet be drawn.
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