1988 PLP 629 (MLD)

C.M.A. No: 1903/87 is an application for leave to defend the suit which is for recovery of Rs. 10,17,464.35 under Order XXXVII, Rules 1 and 2, C.P.C.

2. The case of the plaintiff is that the defendant had purchased from him cement and in consideration of the price thereof issued and handed over a cheque for the amount of Rs. 14,06,250 on 8‑7‑1986. On 15‑7‑1986 the cheque was presented for encashment and was dishonoured. It was presented again and again on the request of the defendant but every time it was dishonoured. On 4‑12‑1986 the defendant made payment of Rs. 40,094.45. He made further payments of Rs. 61,451.60 and returned 4,200 bags of cement worth. Rs. 2,37,300 to the plaintiff. Hence this suit for the balance.

3. In the application for leave to defend the defendant has taken the plea that he was an agent of the plaintiff and had to act as the distributor. He has pleaded that he had given the cheque as a security and that he had paid the entire price of the bags sold by him to the plaintiff and had returned the unsold bags and nothing was due from him.

4. Mr. Munir A. Malik submitted that he had produced the Bilties and contended that the bags of cement were consigned by the plaintiff to the defendant which shows that the defendant has acted as an agent and distributor of the plaintiff. It is not so. The photostat copies of the Bilties which have been produced by the defendant show that the defendant M/s. Best Foods Limited were the sender and had sent all these bags to themselves. This in itself shows treat its:: goods were not sent by the plaintiff and therefore the question of the defendant being their agent does not arise. Moreover, the defendant, as appears from their name, are dealers in food. It is therefore obvious that they might not be dealing in cement. Their position therefore appears to be that of a buyer.

5. The plaintiff's counsel submitted that at the best the case of the defendant would be that of a favoured buyer. He had placed reliance on the case of Hope Prudhomme and Company v. Hamel and Horley Ltd. reported in AIR 1925 PC 161 which reads as under:‑‑ "There is great force in the observations which were made to their Lordships upon the extension which modern business had given to the terms `agent' and `agency'. In many trades‑‑particularly for instance, in the motor‑car trade‑‑the so‑called agent is merely a favoured and favouring buyer, one who under an overriding contract undertakes to do his best to find a market for the manufacturer's stock, who is given some special advantages, such as special discount or preference m complying with his orders; but who in each particular contract acts as a buyer from the manufacturer and sells at whatever price he can get, unless‑‑as is sometimes the case‑‑he is by a special. provision in the overriding contract forbidden to sell too cheaply or required not to spoil the market by asking too much. It would be quite possible that, in the present case, the position of the respondents, though frequently described by both parties as that of agent, was notwithstanding, merely that of agents according to the modern business extension of the phrase, so that they would be entitled to treat themselves as buyers from the appellants and to sell at the best price they could get, in which case any damages which they would have to pay the buyers from themselves on account of the non‑delivery of the cargo would be damages which they in their turn could recover as damages from the appellants."

6. As against this Mr. Munir A. Malik relied upon the case of Azmat Wali v. Hussain‑al‑Adawi reported in 1953 CLC 546 and submitted that leave to defend is to be granted even if any amount of defence is made out, be it plausible or illusory.

7. I have gone through this ruling. It does not help the defendant at all. In this ruling it has been clearly held that a suit can be filed under Order XXXVII, C.P.C. on the basis of a pronote even if that was given as a collateral security for repayment of the loan; mere argument that it was a collateral security will not entitle the defendant to leave to defend the suit.

8. The defendant has admitted to have issued and signed the cheque in favour of the plaintiff. He has also admitted to have reserved the consideration. His defence at the most is that the payments made by him were not fully accounted for. The burden of proof, that he made payments more than that which were admitted by the plaintiff, was on the defendant himself. Under these circumstances I do not find any justification whatsoever to grant the leave to defend the suit. The application is therefore dismissed.

9. The result is that the suit of the plaintiff is decreed for a sum of Rs. 10,17,464.35 with interest at the rate of 6% per annum from the date of filing of the suit till recovery of the amount. Costs of the suit will be borne by the defendant. S.O./T‑33/K??? Suit decreed.