1985 M I (PLP)

Ibrahim Peshori for Appellants. A.R. Mirza for Respondent. Date of hearing: 111th January, 1985. This appeal arises out of the judgment and decree passed by District Judge, Karachi, in Suit No. 37 of 1973 on 22nd April, 1974.

2. The respondent had filed suit under Order XXXVII, rule 2, C.P.C. for recovery of 115.10,000 against the appellants claiming that the cheque of Its.10,000 issued by the appellants for purchase of 13arytes from the respondent had been dishonoured while another cheque of Rs.4,000 had been honoured earlier.

3. The appellants took the plea that M/s. Industrial, Mineral Corporation had agreed to sell and deliver to the appellants Barytes of Rs.4,000 on or before 15-9-1971 and that the respondent had nothing to do with the same. It was further contended that agreement of sale was in. July, 1971 when the lessee of mines, namely, M/s. Industrial Mineral Corporation had received from the appellants Rs.1,000 in cash as expenses and a cheque of Rs.4,000 dated 7-7-1971 and another post-dated cheque of Rs.10,000 payable on 15-9-1971 for the total price of Barytes to the defendants and therefore the appellants had stopped payment of Rs.10,

000. It was claimed by the appellants that Rs.5,000 was owing to them from the respondents. Two issues .framed in the suit were whether the plaintiffs and "Industrial Mineral Corporation" are separate and distinct different legal entities, if so, what is its effect? Whether the cheque was issued without consideration?

4. The respondents examined one Shahdur Rehman who was Director of Industrial Mineral Corporation. He stated that the Corporation was incorporated in 1966 and he produced the Articles and memorandum of association. He stated that appellants had purchased Barytes in 1971 from their company and gave two post-dated cheque of Rs.4,000 and Rs.10,

000. He asserted that they had given the delivery of Barytes in Lasbela and the appellants had taken all the goods. The cheque. of Rs.4,000 was cashed, the cheque of Rs.1Q,000 was dishonoured. The respondents gave two notices to the appellants on 28-9-1971 and 21-1-1972 being Exhs.10 and

11. In cross-examination he stated that the mines belonged to Industrial Mineral Corporation. He admitted that both the cheques were issued in the name of Industrial Mineral Corporation and not in the name of Industrial Mineral Corporation Limited. He stated that the first cheque was payees account and was encashed. He admitted that the plaintiffs had not obtained receipt of the delivery of the goods but he stated that he was present at the time of delivery and that Mr. Moazam was present and his partner Mr. Bartivas present (Mr. Moazam is the partner of appellants) lie denied that two accounts in the name of plaintiffs as well as of Indusfrial Mineral Corporation were being maintained. He also denied that the delivery of the goods had not been made and therefore the defendants had stopped tire payment of 1(5.10,

000. He stated that cheque was dishonoured on 2'2-9-1971. lie admitted that the respondents were paid Its. 1,000 for transferring lease rights to the defendants but lie did not know whether lease rights were transferred in the .names of defendants or not. Exhs. 10 and 11 show that M/s. Industrial Corporation Ltd. as plaintiffs had written to the appellants that their cheque of Rs. 10,000 had been dishonoured and they demanded its payment. The same were completely ignored by the appellants and the explanation is that because the notice; were sent by a limited company whereas the appellants were dealing with a non--limited company having the time mine therefore the appellants did not bother to reply.

5. Syed Moazam Rasool, the defendants partner, stated that in 1971 they had entered into business transaction with Industrial Mineral Corporation which had agreed to supply Barytes worth ks.l-4,000 and they made an advance payment of Rs.4,000 and gave post-dated cheque of Rs.10,

000. He asserted that the Mineral Corporation did not deliver the Barytes to them and therefore he stopped payment of post-dated cheque of Rs.10,

000. He further said -that Rs.1,000 was paid in cash for expenses for transferring the lease which was in favour of Industrial Mineral Corporation but the lease was not transferred. He asserted that Barytes were never offered and that the Corporation owed Rs.5,000 to them. In cross-examination he admitted that he had the transaction with Mr. Arif Khanzada but he did not know whether Mr. Arif Khanzada is Managing Director of the plaintiffs. He asserted that Mr. Arif -Khanzada was the Proprietor of the Corporation. He admitted having issued a cheque of Rs.10,000 and Rs.4,000 in the name of Industrial Mineral Corporation in payees account. He admitted that cheque of Rs.4,000 was cashed in July 1971. He stated that he had given verbal notice to industrial Mineral, Corporation that in spite of encashment of cheque of Rs.4,000 they had not supplied the goods but admitted that he did not give any written' notice. He admitted having received the notice Exh.10 and stated that because the notice was from Industrial Mineral Corporation Ltd., therefore, he did not reply to the said notice but he admitted that the same had been issued by Mr. Arif Khanzada. The further admitted the receipt of Exh.11 from the same Mr. Arif Khanzada. He admitted that he had not sent any written notice to the -non-limited Mineral Corporation regarding the aforesaid transaction. He admitted that tie had money in the bank before 15-9-1971 but he had withdrawn the same and therefore he did not have money to meet the cheque. He admitted that the bank while returning the cheque had marked the column "referred' to drawer" and not the column which was in respect of "stopping of the cheque by the drawer". lie denied that- lie or his partner accompanied Mr. Shahdur Rehman to take delivery at the site and that he did not go personally to Lasbela for taking delivery.

6. From the evidence on record it appears to me that the decree in question had been rightly granted by the trial Court. Mr. Ibrahim Pishori had contended that the limited concern of the plaintiff was 1A entirely 'a different body from that of Industrial Mineral Corporation with which the appellants had dealt. I do not find any justification for this submission in view of the facts and circumstances of this case. The appellants are merely trying to take advantage of the legal position in view of the provisions of section 23 of the Companies Act which gives a separate and distinct personality to a limited concern. However, in view. of the fact that the cheque of Rs.4,000 had been paid in the account of the plaintiffs and the respondent had informed the appellants on.28-9-1971 as well as on 21st January, 1972 that cheque of Its.4,000 had been cashed by them and the cheque of Rs.10,000 had also been sent by them in their account and the same had been dishonoured, the appellants never bothered even to reply to the said notice nor they took any steps against their own bankers protesting to them as to why they had allowed encashment of a cheque issued in favour of the Industrial Mineral Corporation to be deposited in the account of the plaintiffs,, it therefore appears to me that the appellants had known all-along that they were dealing with the plaintiffs and it was only because of the fact that the lease of the mines at Lasbela was in they name of Industrial Mineral Corporation 0ithout the word 'limited' being suffixed to their name that the cheques were drawn in the name of Industrial Mineral Corporation otherwise in fact it was the plaintiffs with whom the appellant was dealing.

7. Next contention of Mr, Pishori was that there was no consideration for the cheque of Its.10,

000. The same is not a correct observation in view of the fact that when the said post-dated cheque was issued, on 7-7-1971 the consideration of the same was the agreement which had been entered orally between tile appellants and the respondent and in pursuance of which a cheque for Rs.4.000 was also delivered and encashed. The presumption under section 1.18 of the Negotiable Instrument Act was clearly attracted in the case. Moreover there is a statement by Mr. Shahdur Rehman that the Barytes were delivered to the appellants, and of course there is a denial by Mr. Moazam on behalf of file appellants that they did not take delivery of the goods, but looking to the circumstances of tire whole case it appears to one that the presumption under section 118 of Negotiable 111stf-urrrent Act had further the support from the statement of Mr. Shahdur Rehman as well as from the fact that the appellant did not bother to reply to the two notices sent in September, 1971 and January, 1972. They did not even demand back the amount of RS.4,000 which had been paid by them as advance and did not at all bring it to the notice of either the Industrial Mineral Corporation or the respondents that they had not received the goods. Moreover they did not produce any evidence to the effect that they had stopped the payment of the cheque but on the other hand the endorsement from the bank shows that the cheque was dishonoured owing to lack of funds and of course the lack of funds on 15-9-1971 is admitted by the appellants themselves.

8. In these circumstances I do not find any justification to interfere with the impugned judgment and decree and hence t dismiss this appeal with costs. H.B.T. Appeal dismissed.