1997 PLP 2411 (MLD)

Abdullah for Defendants. In this suit for recovery of Rs.3,15,98,483 under Order XXXVII, rules 1 and 2, defendant‑company seeks leave to defend unconditionally under the provisions of Order XXXVII, mile 3, C.P.C.

2. The plaintiff is a public limited company registered under the Companies Ordinance whereas defendant company is a sub‑contractor of M/s. Daewoo Corporation with its office at Model Town. Lahore. This company acquired work for construction of different nature and for implementation of the agreement required guarantee from the Insurance Company. Accordingly the plaintiff‑company executed performance bond guarantee dated 10‑1‑1993 in the sum of Rs.1,88,00,000 and mobilization advance guarantee dated 10‑2‑1993 in the sum of Rs.1,26,00,

000. As a counter‑guarantee for the performance of the agreement, defendant‑company through its Managing Director Mr. Imran Shoukat executed counter‑guarantee dated 28‑1‑1993 as well as promissory note on the same day and another counter‑guarantee as well as promissory note both dated 10‑2‑1993 in favour of the plaintiff‑company. On receipt of notices from Daewoo Corporation calling upon the plaintiffs to encash the aforesaid guarantees, plaintiffs called upon the defendants to pay the amount who replied that the matter is under consideration and that case shall be decided shortly. They further added that as and when it was finalished, plaintiffs shall be informed accordingly. On receipt of legal notice from Daewoo Corporation demanding the payment of Rs.3,14,00,000 plaintiffs again called upon the defendant‑company through its Managing Director to pay the amount but the defendant‑company avoided to make any reply. They were called upon again but without any response. Ultimately Managing Director of the defendant‑company visited Head Office of the plaintiffs in the first week of May, 1994 and agreed to pay Rs.3,15,98,483 in full and final settlement of the claim. In satisfaction of this agreement he issued a post‑dated cheque dated 2‑6‑1994 drawn on National Bank of Pakistan, Industrial Area Branch, Islamabad but failed to settle the dispute with M/s. Daewoo Corporation as well as to fulfil the commitments. The Plaintiffs, therefore, issued a legal notice dated 29‑6‑1994 to the defendants to arrange the funds for encashment of the aforesaid cheque but without any response. On tendering the cheque to the bankers it was dishonoured vide bank slip dated 2‑7‑1994. Lastly plaintiffs issued a legal notice dated 4‑12‑1994 calling upon the defendants for payment of the cheque amount but to no avail hence this suit.

3. Grounds urged in support of the application for leave are:‑

(i) that the defendants neither reside nor carry on business at Karachi within the territorial jurisdiction of this Court. (ii) that the summons were not issued in Form No.IV, Appendix ' B' of the Schedule to Civil Procedure Code; (iii) that in fact a blank cheque was issued by the defendants in favour of plaintiffs at Islamabad, therefore., suit could not be filed at Karachi; (iv) that on the promissory notes produced by the plaintiffs revenue stamps have not been cancelled and thus the promissory notes are invalid and inadmissible; (v) that the plaintiffs failed to produce the notices received from Daewoo Corporation.

4. I have heard learned counsel for the parties at quite some length and gone through the material on record. It is contended that the defendants do not carry on business nor do they ordinarily reside at Karachi within the jurisdiction of this Court but the fact of the matter as given out in the plaint and counter affidavit to the C.M.A. is that the Managing Director of the defendant company visited the office of the plaintiffs at Karachi in the first week of May, 1994 aid executed a post‑dated cheque for the suit amount. This material statement was not controverted by way of any rejoinder. In the face of a valid cheque duly written and signed defendants at this stage of the case cannot be allowed to say that they had issued a blank cheque while sitting at Islamabad. Thus, the cause of action arose at Karachi. Since issuance of the cheque and the signatures of Managing Director of defendant‑ company thereon as well as on the promissory note have not been denied on oath prima facie these are valid documents for maintaining the suit and the contention raised to this effect is of no substance.

6. As regards non‑issuance of summons in Firm No. IV, Appendix 'B' of the Schedule to C.P.C. it may be observed that it may be on account of mistake of the office for which no party shall be made to suffer. Needless to say that title of the plaint unequivocally states that the suit for recovery is filed under Order XXXVII, rules 1 and 2, C.P.C. which was duly served on the defendant company. The defendants, therefore, cannot be permitted to raise this objection which in any event would not be fatal to maintainability of the suit.

7. As regards non‑production of the notices received from Daewoo Corporation by the plaintiffs the fact of the matter is that in reply to the notice issued by the plaintiffs to the defendant they did not raise any objection and rather consoled the plaintiffs that the matter is under consideration and it was hoped that the case will be decided shortly. In response to subsequent notices issued from time to time calling upon them to make the payment of performance guarantee bond and the cheque amount the defendants did not have the courtesy to make any reply to admit or deny their liability. As there is no dispute as regards demand of the Daewoo Corporation, the defendants cannot succeed on this ground in seeking unconditional leave to defend.

8. It was then vehemently urged that the suit as framed is not maintainable and liable to dismissal but I would refrain from expressing any opinion as this is not a proper stage for adjudicating upon this controversy. Needless to say in the absence of grant of leave to defend the suit defendants are not entitled to raise such issue at this premature stage of the suit. They would be at liberty to agitate all grounds and contentions in their written statement after they are granted leave to defend the suit. At the moment, they are out of Court and not entitled to question the maintainability of suit on factual grounds, which is otherwise not barred.

9. Likewise I am also not impressed by the submission that the promissory notes produced in Court do not reflect the cancellation of revenue stamps thereon. Be that as it may, this is not the proper stage for dismissal of the suit, rejection of the plaint or passing any adverse order against the plaintiffs on this ground alone. Issue rant be considered and determined at the final hearing of the suit, if properly raised and canvassed.

10. For the aforesaid facts and reasons, no case is made out for the grant of unconditional leave but the defendants are granted leave to defend the suit subject to furnishing a bank guarantee in the suit amount within 45 days failing which law shall take its own course. A.A./P‑29/K Conditional leave granted.