2004 PLP 150 (CLD)

Three years When 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 (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 years When 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 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 or 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 respondent‑Modaraba, 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 tha t 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 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. M.H./A‑717/L Appeal dismissed.