P L D 1976 Karachi 116 (PLP)

Nizamant Mohammad Siddiq for Respondent. Dates of hearing: 13th March and 15th September 1975. This appeal is directed against the order of the 5th Additional District Judge, Karachi, dated 9-8-1973, returning the plaint in Suit No. 186/71 to be presented to the proper Court on the ground that a summary suit under Order XXXVII. C. P. C. is not maintainable upon a non-negotiable cheque.

2. Briefly, the facts are that the respondent-firm, Messrs Lakhani Corporation, entered into a contract to sell to the appellant, Messrs Hoosen Brothers Ltd., 500 bags of rape seeds at Rs. 43.50 per maund. As the respondent could not deliver the contracted goods on the due date, the parties settled the contract under which the respondent agreed to pay damages to the appellant. Accordingly, the respondent issued a cheque dated 7-7-1971 drawn on United Bank Ltd. for Rs. 6,000 in favour of the appellant or order and crossed "Payee's A/C only". The said cheque was presented by the appellant to its bankers for collection on more than one occasion but it was dishonoured. The appellant gave notice to the respon dent demanding payment and as it was not complied with, the appellant filed a summary suit upon the cheque under Order XXXVII, C. P. C. against the respondent in the Court of the District Judge. Karachi. The respondent obtained unconditional leave to defend the suit, Inter alia, on the plea that the cheque in question bearing the endorsement "A/C Payee only" was not a negotiable instrument and the suit was not maintainable under Order XXXVII, C. P. C.

3. Several issues were framed and after examining the witnesses, the learned Judge decided only one issue viz., Issue No. 4, whether the suit was not maintainable under Order XXXVII, C.P.C. By the impugned Judgment dated 9-8-73, he held that the suit was not maintainable under Order XXXVII, C. P. C. on the ground that the said cheque was not a negotiable instru ment. Accordingly, he ordered the plaint to be returned to the Appellant to be presented to the proper Court to be tried as an ordinary suit. The present appeal is directed against the said order.

4. There is now no longer any doubt that a cheque crossed "A/C Payee" ceases to be negotiable after the enactment of section 123-A by the Negotiable Instruments (Amendment) Ordinance, 1962. The short question, therefore, is whether a suit is maintainable under Order XXXVII, C. P. C. upon a non-negotiable cheque.

5. Cheques are not mentioned in Order XX KVII, C. P. C. But a cheque is a bill of exchange drawn on a specified banker, as is defined in section 6 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the Ac:"). A bill of exchange is defined in section 5 of the Act and the instrument may be one payable "only to, or to the order of a certain person or to the bearer of the instrument". Where the bill of exchange is of the first kind, that is, payable only to a certain person, the instrument is not a negotiable instrument according to Explanation (i) to the definition of "negotiable instrument" contained in section 13(1) of the said Act, unlike a bill of exchange payable to order or to bearer. From this, it follows that a bill of exchange (as also a promissory note or a hundi) may either be a negotiable or a non-negotiable instrument.

6. The learned Additional District Judge relied upon the general observa tion of Kaikaus, J. (as he then was) in Continental Syndicate of Trade v. The International Express Co. Ltd. (P L D 1959 Kar. 252), at page 255, viz., "a suit under Order XXXVII lies only on the basis of a negotiable instrument". The learned Judge followed this observation implicitly without any examination of the facts of that case and the context in which the general statement was made. The facts of that case briefly were that the respondent who was plaintiff in the suit had consigned goods to the appellant/defendant. The plaintiff drew a sight draft en the defendant in the sum of 2682-5-10 payable to order, which was endorsed in favour of Lloyds Bank, Karachi. The Bank presented it for payment to the appellant/defendant but he refused to accept and pay the same. On these facts the respondent/plaintiff filed the suit upon the sight draft under Order XXXVII, C. P. C. Conditional leave to defend was granted but, as the appellant/defendant failed to furnish security, the suit was decreed by a Single Judge of the High Court. On appeal, it was contended on behalf of the appellant that as he had not accepted the sight draft the suit was not maintainable. This contention was accepted by the Appellate Bench, which held that as the bill of exchange had not been accepted, no suit lay under Order XXXVII, C. P. C. upon that instrument as the personal liability of the acceptor on the instrument does not arise until his acceptance of the bill of exchange under section 7 read with section 37 of the said Act. It is in this context that the observation referred to was made that a suit under Order XXXVII, C. P. C. lies only on the basis of a negotiable instrument.

7. As rightly pointed out by Mr. A. Sattar Osman Memon, learned counsel for the Appellant, the above case is clearly distinguishable on its facts. The appellate Bench was not considering the question whether the Order XXXVII, C. P. C. applies also to non-negotiable instruments. What they were considering was the question whether a drawer of a sight draft which has not been accepted by the drawee, could sue upon the un accepted bill of exchange under Order XXXVII, C. P. C. which they held be could not.

8. The contention of Mr. Nizamani Muhammad Siddiq, learned counsel for the respondent is that the summary procedure of Order XXXVII is available only to certain types of instruments viz., "bills of exchange, hundies or promissory notes" when they are negotiable and that this is clarified by the heading of the group of sections in Order XXXVII which reads : "Summary procedure on negotiable instruments". But, as rightly submitted by Mr. A. Sattar Memon, it is an accepted rule of interpretation of statutes that headings prefixed to sections cannot control the plain words of the statute although they may explain ambiguous words. Maxwell, on "Interpretation of Statutes" 12th Edition (1969) at page 11 cites the following passage from the judgment of Lord Goddard, C. J. in R. v. Surrey (North Eastern Area) Assessment Committee ((1948)K B 29) at pages 32-33:

"While the Court is entitled to look at the headings in An Act of Parliament to resolve any doubt they may have as to ambiguous words, the law is quite clear that you cannot use such headings to give a different effect to clear words in the section, where there cannot be any doubt as to their ordinary meaning." To the same effect is the statement of the rule in Craies "On Statute Law", Seventh Edition at page

209. Mr. Abdul Sattar also referred to The State v. Muhammad Yusuf (P L D 1962 Pesh. 161), to the effect that neither the title nor a preamble of an Act can be used to restrict or extend the enacting part, when the language of the particular provision is not open to any doubt. He also referred to The State v. Gaman Khan and others (P L D 1966 B J 30), that if the language of the section is clear, the heading is not to be taken into consideration and cannot be used to cut down the clear words of the section. A heading can be no more than a convenient mode of expressing the procedure in all suits under Order XXXVII, C. P. C. There is no ambiguity in the expression "bills of exchange", appearing in rule 2(1) of Order XXXVII. The expression is general and is without any restriction or reservation. As observed earlier, a bill of exchange may either be a negotiable or a non-negotiable instrument. He further referred to an unreported judgment of the Lahore High Court in Sutlej Cotton Mills Limited v. Messrs A. W. A. Rahim and another F. O. A. No. 158 of 1968, in which Shafi-ur-Rehman, J. in reversing the judgment of the District Judge, held that a suit under Order XXXVII, C. P. C. upon a cheque crossed "A/C payee" was maintainable. Cases from the Indian Jurisdiction also support the same view that Order XXXVII, rule 2 is not limited to negotiable instruments only and that said Order applies to all bills of exchange whether negotiable or non-negotiable and that a suit upon a cheque crossed "A/C payee only" was maintainable. See Judgment of the Special Bench in Messrs Tailors Priva v. Messrs Gulabchand Danraj (A I R 1963 Cal. 36).

9. For the above reasons I would allow this appeal with costs and remand the suit for trial on the other issues with the direction that the suit shall be disposed of without further delay. S. A. H. Appeal allowed.