1995 PLP 302 (CLC)

‑‑‑‑OXXXVII, R. 3 & S. 115‑‑‑Leave to appear. and defend suit granted on furnishing Bank guarantee‑‑‑Defendant denying his liability in toto‑‑‑Liability of defendant was yet to be determined and it involved disputed question of fact, therefore, Trial Court acted arbitrarily in attaching condition of furnishing Bank guarantee for the entire amount in question, which amounted to burdening defendant with amount in question, before full trial of case and affording him opportunity to prove his case‑‑‑Trial Court having acted highly arbitrarily in exercise of its discretionary jurisdiction, its impugned order was illegal and suffered from material irregularity‑‑‑Order requiring defendant to furnish Bank guarantee was set aside and he was granted leave to appear and defend suit on its furnishing security to the satisfaction of Trial Court. Sardar Muhammad Hussain for Petitioner. Chaudhry Naseer Ahmad for Respondent. Dates of hearing: 2nd and 3rd October, 1994. This civil revision is directed against the order dated 6‑7‑1993 passed by the learned District Judge, Rahimyarkhan, whereby he, while granting leave to appear and defend the suit, imposed a condition, on the petitioner/defendant to furnish bank guarantee in the sum of Rs. five lacs.

2. Briefly stated the facts of this case are that the respondent‑‑Hakim Trading Company filed a suit under Order XXXVII of the Civil Procedure Code against the petitioner for the recovery of Rs.5,00,

000. It is alleged in the plaint that the petitioner‑‑Agha Jee Cotton Factory executed three cheques in 1992 which were not honoured. In its application for the grant of leave to appear and defend, the petitioner took up the plea that no cheques were ever issued by it in favour of the respondent and the liability is denied. The learned District Judge, Rahimyar Khan, vide his order dated 6‑7‑1993, granted the leave to appear and defend the suit to the petitioner, subject to furnishing of bank guarantee in the sum of Rs.5,00,000 before 22‑7‑1993, for payment of decretal amount in case the suit is decreed in favour of the plaintiff/respondent. The petitioner/defendant is aggrieved by the conditional leave granting order. Hence, this petition.

3. The learned counsel for the petitioner has referred to various authorities of this Court and of Hon'ble Supreme Court to contend that in such like matters, leave is to be granted unconditionally and asking the petitioner to furnish bank guarantee for the whole amount, specially where the liability is totally denied, amounts to condemning the petitioner unheard and that the condition of furnishing of bank guarantee is harsh and the order of furnishing of security would have met the ends of justice and it is also stated that the petitioner is ready to furnish security to the satisfaction of the learned trial Court. Reliance in this respect is placed on Abdul Karim Jaffarani v. United Bank Ltd. and 2 others 1984 SCMR 568 wherein while interpreting rule 3 of Order XXXVII of the Code of Civil Procedure, it was observed at page 573: "In view of the legislative history of these provisions, the overall object envisaged by the Legislature was to provide for expeditious disposal 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 prevent the plaintiff from obtaining an early decision by raising untenable and frivolous defences. It is in this context that the discretion to impose conditions is to be exercised. If, therefore, the Court is of the opinion that the defendant is trying to prolong the litigation and impeding a speedy trial, although on the allegations made in the application a triable issue has been raised then the Court would be justified to impose conditions. But, as already pointed out, it will be improper exercise, of discretion to impose conditions simply because, at the leave granting stage the defendant is unable to adduce his evidence on the pleas raised in his defence. The proper stage for substantiating his defence by evidence would be at the trial subsequently". In the same case, it was further held by their Lordships of the Supreme Court, at page 576 that "we are unable to agree that conditions could be imposed merely because of an initial presumption that a negotiable instrument is made for consideration under section 118 of the Negotiable Instruments Act since this presumption is a rebuttable presumption. Therefore, the imposition of the conditions requiring the petitioner to furnish security to the extent of the entire claim of the contesting respondent would amount to rendering the grant of leave to defend illusory". Reference was also made to Haji Abdul Wahid v. Hoechst Pakistan Limited and another (1993 CLC (Karachi) 1291) to argue that once the Court was satisfied that leave could not be withheld, then no question about imposing conditions could arise. In the case of Muhammad Nasir v. Muhammad Alam (1992 CLC 1705) in a suit based on promissory note, condition on grant of leave to defend, subject to deposit of half of amount in cash or bank guarantee was held to be harsh and the order was made of furnishing security instead of cash deposit or bank guarantee. In M/s. United Bank Ltd. v. Mrs. Rehmat and another (1991 MLD 1803) also, relied upon by the learned counsel for the petitioner, unconditional leave to appear and defend was granted in a case involving disputed question of fact. Similarly, Salah‑ud‑Din and others v. M/s. Avon Shoes Co. (1990 ALD 606), was also relied upon, in which also, the condition of furnishing bank guarantee for the suit amount was changed into furnishing of personal security.

4. On the other hand, the learned counsel for the respondent has vehemently argued that in the instant case, the debt is not secure and that the precedents relied upon by the learned counsel for the petitioner mostly relate to the banks' recovery suits in which normally, the debts are secured by way of mortgage of the property and reliance was placed on Khalid Javed & Company v. Javed Oil Industries (Registered) (1988 CLC 53), whereas in the instant case, the cheque issued was dishonoured, it was held that the imposing of condition of furnishing bank guarantee is proper where the debt is not a secured one. However, in this case, the execution of cheques was not denied. The respondent also relied on Abdul Malik Ghauri v. Muhammad Hussain Shah and others (1989 CLC 1535) to show the competency of the trial Court to impose condition requiring defendant to furnish bank guarantee or as an alternative the deposit of suit amount in Court. Reference was also made to Khalid Javed & Co. v. Javed Oil Industries (1988 SCMR 391) wherein the leave was refused and the order of trial Court of requiring defendant to defend the suits subject to furnishing of bank guarantee equal to amount claimed within one month was upheld and lastly, reliance was placed on Sh. Abdul Majeed v. United Bank Ltd. (1984 SCMR 1434) in which the order of the trial Court of imposing of condition of the deposit of entire suit amount before the next date of hearing was held to be within the discretion of the trial Court and no illegality was found in exercise of such discretion.

5. After having heard the learned counsel for the parties at length on facts as well as law, I am of the view that no doubt, the trial Court has the discretion to ask the defendant, by way of imposing condition, to deposit cash of the entire suit amount, to furnish bank guarantee or to furnish personal security, while granting leave to appear and defend. On the other hand, the above‑cited precedents also make it abundantly clear that the discretion of the trial Court has to be exercised by it in a judicious manner and whenever this Court finds that the trial Court has acted arbitrarily, illegally or with material irregularity in the exercise of its discretionary jurisdiction, this Court in the exercise of its revisional powers can interfere with the order of the trial Court as laid down by the Hon'ble Supreme Court in Messrs National Security Insurance Company Limited and others v. Messrs Hoechst Pakistan Limited and others (1992 SCMR 718), wherein it was held that the revision is maintainable against an order passed under Order XXXVII, rule 3, C.P.C.

6. In the instant case, the issuance of the cheques by the petitioner in favour of the respondent has been totally denied by the petitioner in its application for the grant of leave to appear and defend, and, therefore, the liability of the petitioner is yet to be determined at the trial and it involves a disputed question of fact and as such, in my view, the trial Court acted arbitrarily in attaching the condition of furnishing bank guarantee for the entire suit amount, which, as held in Salah‑ud‑Din etc. v. M/s. Avon Shoes Co. (1990 ALD 606), amounts to burdoning the petitioner with the suit amount before full trial of the case and affording it an opportunity to prove its case. The trial Court has also not given any reason of asking the petitioner to furnish bank guarantee for the whole amount and has also not applied its mind to the fact that the petitioner has denied any liability whatsoever and' has denied the execution of the cheques involved in favour of the respondent/plaintiff. The learned trial Court having acted highly arbitrarily in exercise of discretionary jurisdiction, therefore, the impugned order is illegal and suffers from material irregularity. The upshot of the above discussions is that this civil revision is accepted, the order dated 6‑7‑1993 of the trial Court is set aside and the petitioner is hereby granted leave to appear and defend the suit on its furnishing security to the satisfaction of the learned trial Court on or before 4‑11‑1994. The parties are left to bear their own costs. AA./A‑723/L?????????????????????????????????????????????????????????????????????????? ??????????? Order accordingly.