P L D 2006 Lahore 474 (PLP)

MUHAMMAD SAIR ALI, J.

In the respondent's suit under Order XXXVII, Rule 3, C.P.C. of the Civil Procedure Code, 1908 for recovery of Rs.6,70,000, the petitioner as the defendant was granted leave to appear and defend the suit through order dated 17-1-2006 of the learned Addl. District Judge, Lahore but subject to the term of furnishing of surety bond in the sum of Rs.6,70,000 on or before 4-2-2006.

2. On 4-2-2006, the petitioner filed an application under section 148, C.P.C. to seek extension of time owing to his inability to deposit surety bond because of the surety's illness. It was prayed that the petitioner in order to produce the surety and to furnish the surety bond be allowed time extension. This application was granted by the learned Addl. District Judge, Lahore. The petitioner was permitted to furnish the required surety bond by 15-2-2006. On 15-2-2006, the learned trial Judge was on leave and the case was adjourned to 23-2-2006.

3. After obtaining the extension in time on the ground of and with the object of producing the surety and the surety bond in the Court, the petitioner filed the present civil revision on 22-2-2006 to assail order dated 17-1-2006 to the extent of imposing the term of furnishing the surety bond for the suit amount.

4. The learned counsel for the petitioner with reference to the case of "Mian Rafique Saigol and another v. Bank of Credit & Commerce International (Overseas) Ltd. and another" (PLD 1996 SC 749), contended that on the finding of the existence of a plausible and triable issue particularly when the execution and the existence of the negotiable instrument was denied, the leave granted through order dated 17-1-2006 could not have been made subject to the condition of furnishing a surety bond for the suit amount. The learned counsel for the petitioner also referred to the cases of "Habib Bank Ltd. v. Asghar Ali others" (1998 CLC 353) and "United Bank Limited v. U.T. C. Limited and others" (1994 CLC 1404) to contend that the petitioner was entitled to an unconditional leave to appear and defend the suit.

5. Heard.

6. The leave to appear and defend the suit was granted to the petitioner by the learned Addl. District Judge, Lahore through order dated 17-1-2006. This order was conditional upon the furnishing of the surety bond by or before 4-2-2006. The petitioner till 4-2-2006 did not furnish the surety bond. Instead he made an application for the extension of time with the following grounds and prayer:--

7. In the above reproduced paras. of the petitioner's application under section 148 of the Civil Procedure Code, the petitioner unconditionally undertook to produce the surety as well as the surety bond in the Court during the extended time. The learned trial Judge exercised his discretion per order dated 4-2-2006 in favour of the petitioner and granted further time for furnishing of the surety bond uptill 15-2-2006. Having thus obtained the extension in time, the petitioner apparently failed to furnish the surety bond by 15-2-2006. Confronted with this situation, the learned counsel for the petitioner. stated that on 15-2-2006, the learned Court was on leave and the case was adjourned to 23-2-2006. He however categorically stated that the petitioner was not seeking any further extension in time and no prayer thereto was made.

8. In the opinion of this Court, in the application for the extension of time, the petitioner undertook and represented to the Court that extension was being obtained for the production of the surety and the surety bond during the extended time. The Court acting upon the faith of petitioner's representation, undertaking and reasons exercised its jurisdiction and granted the relief prayed for. The petitioner thus essentially lost the right to question the impugned order dated 17-1-2006 imposing term upon the leave. The petitioner also forfeited his right to seek revisional indulgence of this Court under section 115, C.P.C. Petitioner's conduct disentitled him to the equitable and discretionary assistance of this Court.

9. On the legal side, petitioner has relied upon the case of Mian Rafique Saigol and another v. Bank of Credit & Commerce International (Overseas) Ltd. and another (PLD 1996 SC 749) to contend that as per the principles laid down in the said case, the petitioner should have been granted unconditional leave to appear and defend the suit.

10. The question thus is as to whether upon the finding of the existence of a plausible ground of defence and prima facie material for the grant of leave to appear and defend the suit, was the learned trial Court legally competent under Rule 3 of Order XXXVII, C.P.C. to subject the leave to the term of surety bond.

11. A very illuminating review of the case law and that of the applicable principles was made in the case of "Mian Rafique Saigol and another v. Bank of Credit and Commerce International (Overseas) Ltd. and another" (PLD 1996 SC 749). In this case, the appellants were aggrieved of the imposition of the condition of furnishing bank guarantees on the leave to defend. On reviewing the record the Hon'ble Supreme Court sustained the conditions .of bank guarantees. The Court observed: "From the preceding discussion, it is quite clear that leave to defend in a suit instituted under Order XXXVII, C.P.C. shall be granted by the Court where the facts disclosed by the defendant on affidavit make out a case of shifting of onus on plaintiff to prove consideration for the instrument, which is the basis of the suit. Leave may also be granted on any other ground or facts which the Court considers sufficient to support the application for grant of leave meaning thereby that refusal to grant leave to defend is a rare phenomena, confined to cases where no defence at all is disclosed by the defendant. Ordinarily, the Court would not decline leave to defend even in cases wherein defence appears to be very weak or a sham one, as in such cases leave may be granted by the Court conditionally. The next important question which arises for consideration is, when leave to defend may be granted by the Court unconditionally. Grant of conditional or unconditional leave, is undoubtedly a matter within the discretion of the Court which is to be exercised keeping in view the facts and circumstances of each case. It is, however, neither possible nor advisable to lay down any hard and fast rule in this behalf."

12. The principles settled by the Hon'ble Supreme Court of Pakistan in the case of "Fine Textile Mills Ltd. Karachi v. Haji Umer" (PLD 1963 SC 163) being relevant are also referred to. It was held that: "In a suit of this nature where the defendant discloses upon his affidavits 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 if 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 are not dissimilar to the principles 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 XLV 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 (1930) 2 KB 340- 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 allegation 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." It was further observed in this case that "where the allegations are not merely illusory, leave to defend should be granted." However the Hon'ble Supreme Court of Pakistan holding that " the allegations in the affidavit filed on behalf of the petitioner in the present case are by no means illusory" proceeded to make the leave subject to the condition of deposit of the entire amount of Rs.90,000 in the Court. The Hon'ble Supreme Court of Pakistan further found that the conduct of the appellant was not entirely free from suspicion.

13. While pronouncing the above principles, the Hon'ble Supreme Court of Pakistan re-considered and revisited the facts disclosed in the affidavit seeking leave and it was held that the defendant in that case had failed to show connection of the appellant i.e. Fine Textile Mills Limited with that of defendant's partnership business with the Chairman of the appellant-company wherefor triable issues were found to have been raised regarding absence of consideration for the cheques and employment of fraud or misrepresentation by the plaintiff in obtaining these cheques. Despite finding existence of a "plausible defence" or a "substantial question of fact or law" or a "triable issue", the Hon'ble Supreme Court subjected the grant of leave to the term of cash deposit in the Court by the appellant (defendant in the suit) for the reason that conduct of the appellant was not entirely free from suspicion.

14. In the present case also, the learned trial Judge on finding of existence of a plausible case, granted leave to the petitioner but made the leave, under the circumstances of the case, subject to the submission of surety bond equal to the disputed amount. The petitioner did not comply with the term but obtained extension of time.

15. Reliance of the learned counsel for the petitioner on the cases of "United Bank Limited v. U.T.C. Limited and others" (1994 CLC 1404) and "Habib Bank Ltd v. Asghar Ali and others" (1998 CLC 353) is inapt. In these cases, it was held that leave could be granted by the Court even unconditionally.

16. On the question of exercise of the discretion to grant leave to defend conditionally or unconditionally, an Hon'ble Division Bench of Sindh High Court Karachi in the case of "Haji Abdul Wahid v. Hoechst Pakistan Limited and another" (1993 CLC 1291) upon consideration of numerous precedents held that: "The principle on which leave to defend conditionally or unconditionally is granted, are well-settled. The consensus of authorities is that so far the grant of leave conditionally or unconditionally is concerned, it is entirely within the discretion of the Court." In the unreported decision dated 29-7-1991 of the Hon'ble Supreme Court in Civil Appeals Nos.608-K, 609-K and 610-K of 1990 titled "National Security Insurance Company Ltd. and another v. Emirates Bank International and others", held as follows: "The consensus of authorities seems to be that where a plausible case has been made out leave must be granted but the question whether it should be granted conditionally or unconditionally is entirely within the discretion of he Court. One of the grounds on which discretion can be exercised in favour of granting unconditional leave is that the defence pleas raised are incontrovertible and unimpeachable. Where the defence plea raised does not come up to this standard the trial Court is competent to exercise discretion in requiring the defendant to furnish security. Therefore, in such cases when such order is challenged, the appellant must establish that the discretion exercised by the Court is perverse, illegal, devoid of any reasoning and principles of justice."

17. In the case of "Mian Rafique Saigol and another", reference was also made to the following observations from the case of "M/s Ark Industrial Management Ltd. v. M/s Habib Bank Ltd." (PLD 1991 SC 976): "It would be improper to lay down a rule of thumb for the exercise of powers in matter of discretion vesting in a Court when even a statute has left it unfettered. In view of the Legislative history of these provisions the overall object envisaged by the legislature was to provide for expeditious disposal of litigation involving commercial transactions of a particular nature by a summary procedure so that the defendant does not have the means open to exploitation in the ordinary procedure for trial of suits to prolong the litigation and to prevent plaintiff from obtaining an early decision by raising untenable and frivolous defences."

18. In the case of "Haji Sh. Muhammad Hussain & Co. Ltd. and 9 others v. Citibank N.A. Alfalah Building Lahore" (1985 CLC 2467), this Court observed that for forming a judgment: "???It is the quality of the defence and not the extent of the security which should be the governing factor in considering the question of leave." In this case, the Division Bench went through the record of the case and upheld the orders of the trial Court for the deposit of the entire suit amount as a condition for grant of leave to defend.

19. The rule that thus emerges from the principles of law settled in the above precedents is that the facts and the questions as disclosed in the affidavit and application for leave, form the basis for grant or refusal of the leave and/or to allow the leave upon terms or otherwise. Imposition of a term is in the Court's discretion to be exercised judicially upon the facts of the case before it. Such exercise should of course not be arbitrary, perverse or unduly harsh so as to deny legitimate defence to a deserving defendant.

20. In the present case, the petitioner in his affidavit and the leave application filed under Rule 3 of the Order XXXVII, C.P.C. admitted that the parties had a business relationship whereunder the respondent plaintiff gave lease of the land or garden purportedly on agreed financial terms placing liability of certain payments upon the petitioner.

21. The learned trial Court on consideration of the defence of the petitioner concluded that the petitioner's defence deserved a trial and granted leave conditionally upon the furnishing of a surety bond for the suit amount. The learned trial Judge thus exercised discretion to impose a term on evaluation of the case circumstances.

22. Examining the record to assess whether exercise of discretion of subjecting the leave to a condition by the learned Additional District Judge was improper or perverse or arbitrary, I find that the petitioner's plea in fact proves existence of a financial transaction between the parties whereunder payment of money was to be made by the petitioner. The liability or non-existence of liability was to be determined on evidence in the trial.

23. Furthermore blank and unsubstantiated oral pleas of the petitioner are not adequate at this stage to displace the initial presumption attached under section 118 of the Negotiable Instruments Act that the negotiable instrument was made, drawn, accepted or endorsed for a consideration. The petitioner has yet to discharge his onus of proof that the Promissory Note made and drawn by him was not for a consideration or was forged.

24. Under these circumstances, this Court is of the considered opinion that the learned trial Judge validly and reasonably exercised the discretionary powers vesting in him to grant leave to defend the suit conditionally upon the submission of surety bond equal to the disputed amount by the petitioner. As such the impugned orders do not deserve interference by this Court.

25. Under these circumstances and for the reasons stated above, this civil revision is liable to be dismissed. M.B.A./A-69/L??????????????????????????????????????????????????????????????????????????????????? Revision dismissed.