2005 PLP 3226 (YLR)

MUHAMAMD RAZA KHAN, J.

In the background of this appeal lies a civil suit filed on 14-1-2004 claiming recovery of Rs.2,35,000 with interest at Bank rate with effect from 2-3-2001 till recovery. The suit under Order XXXVII, C.P.C. was filed in the District Court and it was entrusted to the learned Additional District Judge-I, D.I. Khan. It was based on the dishonour of a Cheque No.23314219 dated 2-3-2001 drawn on Account No.880-6 of Muslim Commercial Bank, Peshawar. The appellant deposited this cheque in his Account No. 117 Allied Bank, Commissionary Bazar, D.I Khan but during the process of clearance, it was dishonoured. The defendant contested the suit by filing a written statement where the objection with regard to the territorial jurisdiction was raised and it was stated that the said cheque was obtained through fraud. An application was also moved on 1-7-2004 under Order VII, rule 10, C.P.C. stating therein that there was an agreement between the parties containing stipulation that only the Courts at Peshawar shall have the jurisdiction to adjudicate upon the disputes between the parties. Hence, it was prayed that the plaint be returned to be presented to the appropriate Court. This application was heard and vide order dated 26-10-2004 it was rejected. This first appeal against order has been filed against the rejection of application under Order VII, rule 10, C.P.C.

2. The learned counsel for the appellant argued that in views of clause 11 of the agreement, the Courts at Peshawar are vested with the exclusive jurisdiction to entertain such matters and that the civil Court at D.I. Khan was not competent to proceed with the case. He further added that the execution of the said contract, dated 18-10-2000 has not been denied by the respondent and therefore, he was bound to comply with the provisions of the agreement signed by him voluntarily.

3. The learned counsel for the respondent argued that parties cannot alter the jurisdiction of the Court and any " agreement in conflict with the provisions of the C.P.C. determining the territorial jurisdiction shall be superseded by the statutory provisions. It was also stated that even if the said provision may be binding, its effect terminated when the relationship between the parties came to an end by the return of medicines from one party and the refund of money by the other through cheque. Hence it was argued that the Court at D.I. Khan has the jurisdiction to entertain and decide the issue.

4. The Code of Civil Procedure lays down in unambiguous terms that the suit shall be tiled in the Court where cause of action has wholly or partly arisen. The dispatch of cheque by the petitioner to the respondent to D.I. Khan and the communication of the tact of dishonour by the Bank at D.I. Khan was a major cause of action and therefore, the Court at D.I. Khan shall have the territorial jurisdiction in this matter. It has been held in several precedents that the jurisdiction of a Civil Court extends to any matter where even a traction of cause of action has accrued within its territorial jurisdiction. The disputes with regard to the quantity, quality, payment of price, the damage to the medicines, quantity of the goods received, etc. are the matters which were covered by the said agreement Exh.P.W.1/2 but the termination of agreement and refund of the money for the returned medicines was a fact subsequent to the termination of the said agreement. When the relationship between the parties terminated, the agreement automatically lost its force. Even during the currency of such agreement, the dishonour of a cheque could not attract the provisions of the said agreement but after the termination of relationship, the said provisions of the agreement have become ineffective and therefore, the matter of refund of money could not be delayed on this frivolous objection. Hence, I am of the view that the present appeal is without force which is liable to be dismissed.

5. However, before parting with the judgment, it has to be observed that the suit under Order XXXVII, C.P.C. was filed on 14-1-2004 in the District Court but unfortunately the provisions of Order XXXVII, C.P.C. were not strictly complied with. It was the requirement of the law that in suit based on Negotiable Instruments, the summons has to be issued in a special form requiring the person to appear within a period of ten days of the issue of summons and to seek leave to defend the suit. Secondly, the application for leave to defend has to be allowed by application of mind whether it should be conditional, i.e. deposit in Court or furnishing security, or unconditional. Thirdly, that the leave to defend could be allowed on specific points to be proved primarily by the person who alleges them and fourthly, as the title of Order XXXVII, C.P.C. indicates, summary procedure has to be adopted in such matters.

6. The purpose of legislation is the expeditious adjudication of commercial matters based on Negotiable Instruments. In case of a promissory note or a bill of exchange, the Courts may exercise the discretion of unconditional leave to defend or grant of leave on the production of surety bond. However, the dishonour of cheque is an unusual event and considerable sanctity is attached to the Negotiable Instruments like cheque and the dishonour thereof should not have been taken in a routine manner like any other civil suit because thereby the very purpose of legislation for summary trial of such matters is defeated. In the cases of cheques, unless coercion is alleged, the contents of the instrument are presumed to be correct in accordance with section 118 of the Negotiable Instruments Act, 1881. In the cases like the present one, where particularly the execution of the cheque and the signature thereon was not denied, the defendant could be granted leave on the condition of deposit in Court of the entire or at least major part of the amount of cheque. Had this been done, the frivolous process of prolonging the suit could have been avoided.

7. In this case the matter has been lingering on for a period of four years and the process is still at square one. Had the statutory provision been complied with carefully, the matter would have been resolved in a couple of weeks or months.

8. The learned trial Court can, therefore, be advised to treat the written statement as an application for leave to defend and by application of mind, decide the same. If the Court finds that the cheque in question was the result of fraud, leave to defend can be granted conditionally on deposit in Court or partly by deposit and partly by security. Thereafter the single issue has to be framed as to whether the instrument was based on fraud and the onus to prove the issue can be placed on the defendant. However, if the Court is of the view that the cheque was bogus, the leave to defend can be granted conditionally where the signature of the drawer can be got verified form the banker or the Handwriting Expert at the cost of the defendant. Thereafter the case can be decided. However, if the Court is of the view that the leave to defend was not justified, the application for leave to defend can be rejected and the decree can be passed which is executable forthwith.

9. With these observations, this appeal is dismissed with costs throughout. Since this appeal was filed against an interlocutory order and the main suit is yet to be processed, therefore, with the dismissal of this appeal, the proceedings shall continue before the learned Additional District Judge-I, D.I. Khan who may proceed further on the lines indicated in para.8 hereinabove. H.B.T./511/P Appeal dismissed.