Judgment Sheet
IN THE HIGH COURT OF SINDH AT KARACHI
Suit No. 1699 of 2010
Plaintiffs : Abbas Ali and Asghar Ali, through
Mr. Mehar Khan advocate.
Defendants 1 to 3: Asif Abbas, Mst. Rasheeda Bano and Nisar Abbas, through
Mr. Ghulam Mujtaba Phull advocate.
Defendant No.4 : Hazkeel Qadwani, through
Mr. Muneer Ahmed Khan advocate.
Date of Hearing : 12.10.2015.
J U D G M E N T
NADEEM AKHTAR, J : This Suit was filed on 04.11.2010 by the plaintiffs against the defendants under Order XXXVII CPC for recovery of Rs.4,200,000.00 with markup thereon at the rate of 14.5% per annum till realization of the said amount.
2. The relevant facts of the case, as averred in the plaint, are that the plaintiffs started a Saving / Bachat Committee (B.C.) with defendants 1 to 3 for a period of thirty months commencing from January 2007 and ending in June 2009. They paid their entire agreed contribution of Rs.6,234,000.00 to defendants 1 to 3 who undertook to repay the said amount to the plaintiffs upon maturity in June 2009. As the said defendants were unable to settle their liability, Defendant No.3 transferred in favour of plaintiff No.1 his Shop No. GD-11, situated on the ground floor of the building known as ‘Techno City’, constructed on Plot No.B-10/2-A, Serai Quarters, I.I. Chundrigar Road, Karachi, in partial satisfaction of the plaintiff’s claim. The said property was adjusted at Rs.2,034,000.00, leaving a balance of Rs.4,200,000.000 payable by defendants 1 to 3 to the plaintiffs. Defendants 1 and 2 issued three cheques for Rs.3,600,000.00 in favour of the plaintiffs, and defendant No.4 issued one cheque for Rs.600,000.00 in their favour on behalf of defendants 1 to 3. The total amount of all the four cheques issued by defendants 1 to 4 was Rs.4,200,000.00. All the said four cheques issued by the defendants were dishonoured upon presentation, whereafter this Suit was instituted by the plaintiffs against the defendants for recovery of the said amount.
3. A joint application bearing CMA No.12126/2010 was filed by Defendants 1 to 3, and Defendant No.4 filed a separate application bearing CMA No.1012/2011, seeking unconditional leave to appear and defend the Suit. By a common order dated 01.08.2012 passed on both the above applications, the application filed by defendant No.4 was dismissed as being barred by limitation and the Suit was decreed against him with costs under Order XXXVII Rule 2(2) CPC in the sum of Rs.600,000.00 with mark up thereon as prescribed by Order XXXVII Rules 2(2)(a) and 2(2)(b) CPC ; whereas, the application filed by defendants 1 to 3 was disposed of by granting conditional leave to them to appear and defend the Suit in the following terms :
“Defendant Nos. 1, 2 and 3 are, therefore, granted leave to appear in this Suit and to defend the same subject to furnishing of surety in the sum of Rs. 3,600,000.00 (Rupees three million six hundred thousand only) either by executing their separate personal surety bonds or by furnishing surety of any other person who should be an income tax assessee. In either case, the surety shall be supported by documents of title of immovable property / properties having value of not less than Rs.3,600,000.00. This application is disposed of in the above terms.”
4. On 20.05.2013, learned counsel for defendants 1 to 3 made a statement before the Court that the said defendants had challenged the aforesaid order dated 01.08.2012 through High Court Appeal No.125/2012. He, however, conceded that the aforementioned order dated 01.08.2012 directing the said defendants to furnish surety had not been suspended in their appeal. On that date, defendants 1 to 3 were once again directed to furnish surety on or before 31.05.2013 in terms of the said order dated 01.08.2012.
5. On 12.10.2015, learned counsel for the plaintiffs pointed out that the appeal filed by defendants 1 to 3 was dismissed on 22.09.2015 for non-prosecution. Perusal of the said order passed by the learned Division Bench of this Court, a copy whereof is available in the Court file, has confirmed the above position, which has also not been disputed by the learned counsel for defendants 1 to 3. He, however, submitted that he has filed an application for restoration of the appeal, but conceded that the appeal has not yet been restored nor has the order dated 01.08.2012 directing the said defendants to furnish surety been suspended. In view of this position, learned counsel for the plaintiffs insisted that since defendants 1 to 3 have failed to furnish surety as ordered by this Court, the Suit should be decreed against them under Order XXXVII Rule 2 CPC. In support of his submission, he relied upon Muhammad Ramzan and others V/S Ghulam Qadir, 2011 SCMR 659.
6. In reply to the above submission made by the learned counsel for the plaintiffs, it was contended by the learned counsel for defendants 1 to 3 that decree cannot be passed in this Suit at this stage as the application filed by the said defendants for restoration of their appeal is still pending before the appellate Court, and in case the Suit is decreed, the said application as well as the appeal filed by them will become infructuous. He frankly conceded that till date defendants 1 to 3 have not furnished the surety as directed vide order dated 01.08.2012. With respect to the learned counsel, his above argument, which is misconceived, has not impressed me at all. The appeal filed by defendants 1 to 3 is not pending any more as it was admittedly dismissed on 22.09.2015 for non-prosecution, and pendency of their application for its restoration cannot be deemed to be an appeal by any stretch of imagination. Even if the appeal was pending, it is well-settled that mere filing or pendency of an appeal does not operate as a stay of proceedings or the orders passed therein. In the above circumstances, there is no bar on this Court to proceed further in this Suit under Order XXXVII CPC as defendants 1 to 3 have admittedly failed to furnish the surety as directed in the leave granting order dated 01.08.2012.
7. In the case of Muhammad Ramzan (supra) relied upon by the learned counsel for the plaintiffs, the petitioners therein were granted sufficient time to comply with the direction of the trial Court vis-à-vis furnishing the surety bonds, but such orders were not complied with for no justifiable reason. The trial Court dismissed the application for leave to defend and after taking into consideration the pro-note and receipt, decreed the Suit. The decree was maintained by the Hon’ble Supreme Court. In addition to the above, reference may also be made to the cases of Col. (Retd.) Ashfaq Ahmed and others V/S Sh. Muhammad Wasim, 1999 SCMR 2832, and Murtaza Haseeb Textile Mills V/S Sitara Chemical Industries, 2004 SCMR 882. In the first authority mentioned above, the Hon’ble Supreme Court was pleased to hold that if a defendant fails to appear, or fails to obtain leave to defend in response to a summon served in Form No.4 provided in Appendix-B to CPC, or fails to fulfill the condition on which leave was granted, or where the Court refuses to grant leave, the Court is to pass a decree. In the second authority mentioned above, it was held by the Hon’ble Supreme Court that as the defendant had failed to comply with the order passed by the trial Court for furnishing surety of the Suit amount, the trial Court had no option but to decree the Suit.
8. In view of the law laid down by the Hon’ble Supreme Court, it is clear that when leave to appear and defend the Suit is granted to the defendant subject to any condition, it would imply that if such condition is not fulfilled and the conditional leave granting order is not complied with by the defendant, such order shall cease to have effect to the extent of grant of leave to appear and defend the Suit ; and in such an event, the defendant’s application for leave to appear and defend the Suit shall be deemed to have been dismissed. The overall effect of the above would be that the averments and allegations made in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree under Rule (2) of Order XXXVII CPC.
9. It is well-settled that non-appearance of the defendant or dismissal of his application for leave to appear and defend does not necessarily mean that the Court is not required to apply its mind to the facts and documents before it ; and, every Court is required to apply its mind before passing the order or judgment whether any party has appeared before it or not to oppose such order, or the party who wanted to oppose was not allowed to oppose because it failed to fulfill the requirements of law. Keeping in view the above, I have proceeded to examine the claim of the plaintiffs. It is important to note that defendants 1 and 2 never denied the execution of any of the cheques in question, and in partial satisfaction / adjustment of the liability of defendants 1 to 3, an immovable property of defendant No.3 was transferred in favour of plaintiff No.1. In their application for leave to defend, the only defense of defendants 1 to 3 was that the said cheques were without consideration. They were required to prove this assertion through evidence for which an opportunity was given to them by granting leave to appear and defend the Suit subject to furnishing of surety. However, they chose not to furnish the surety, and as such they cannot prove the above assertion now. Due to this reason, there is nothing on record to rebut the claim made by the plaintiffs. In view of the specific provision in Rule (2) ibid and also in view of the presumption as to the cheques in question under Section 118 of the Negotiable Instruments Act, 1881, the contents of the plaint and the allegations made therein are to be deemed to be admitted. The plaintiffs are, therefore, entitled to a decree jointly and severally against defendants 1, 2 and 3 in the sum of Rs.3,600,000.00 (Rupees three million six hundred thousand only), being the aggregate amount of the cheques admittedly issued by the said defendants, with profit / markup thereon as prescribed by Order XXXVII Rules 2(2)(a) and 2(2)(b) CPC. The plaintiffs are also entitled to the costs of the Suit.
10. Forgoing are the reasons of the short order announced by me on 12.10.2015, whereby this Suit was decreed with costs in favour of the plaintiffs jointly and severally against defendants 1, 2 and 3 in the sum of Rs.3,600,000.00 with profit / markup thereon as prescribed by Order XXXVII Rules 2(2)(a) and 2(2)(b) CPC.
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J U D G E