1989 PLP 4181 (MLD)

Kh. Saeed‑uz‑Zafar for Appellant. Muhammad Umar Waraich for Respondent. Date of hearing: 10th April, 1989.. This judgment will dispose of Regular First Appeal No.45/82 and R.F.A. No. 46 of 1982 as common questions of law and facts are involved therein.

2. M/s. Commercial Printers & Publishers, respondents herein, filed two suits, for recovery of Rs.12,088 in R.F.A. No.45/82 and for Rs.15,000 in R.FA. No.46/82, under Order 37 of the C.P.C. in the Court of District Judge, Lahore. These suits were filed on the basis of two cheques issued by the appellants which when presented were dishonoured by the Bank. The appellants applied for leave to defend the suit on various grounds, inter alia, that the District Courts at Lahore had no territorial jurisdiction to try the suit and also that since the cheques in question had been specifically crossed those were no more negotiable instruments. The learned District Judge, Lahore on 3rd of March, 1982 found that there was no justification for granting leave to defend the suits and, therefore, rejected the application filed in this behalf and proceeded to decree both the suits in favour of the respondents.

3. Kh. Saeed‑uz‑Zafar, Advocate, who has appeared on behalf of the appellants has made two submissions, firstly that the cheque in question having been specifically crossed by writing the words "Payee's Account only" in two parallel lines, it had ceased to be a negotiable instrument, in view of the provisions of section 123‑A of the Negotiable Instruments Act, 1881, and as such no suit under Order 37 could be filed on the basis of this instrument, and secondly, that the Courts at Lahore had no territorial jurisdiction and therefore, the suits could not be filed at Lahore.

4. As regards the first contention of the learned counsel, suffice it to say that under Order 37 rule 2 C.P.C. a suit can be instituted under the summary procedure prescribed therein, if it is based on a bill of exchange, Hundi or a Promissory Note. It is not denied by the learned counsel that the Cheques on the basis of which the suits were filed are "bills of exchange" within the meaning of law. There is no requirement under Order 37 that the cheques in question should be a negotiable instruments also. This being the position, the first contention raised by the learned counsel has no force and is accordingly repelled. There is, however, considerable merit in the second contention raised by the learned counsel for the appellants. It was specifically alleged in para 1(b) of the petitions for leave to defend the suits that the Cheques in question were issued at Naushera, the defendants's residence and place of business is also at Naushera and no part of cause of action has arisen at Lahore, therefore, the Courts at Lahore had no jurisdiction to try to these suits. In reply filed by the respondents to these applications, these facts were not specifically disputed but it was stated that the cheques were drawn up as payable to the account of the plaintiffs at Lahore, therefore, the Civil courts at Lahore had jurisdiction to try the suits. The learned District Judge was impressed by the fact that the cheques had been crossed with the endorsement "Payee's account only" and as the plaintiffs were maintaining the account at Lahore, the Civil courts at Lahore had the jurisdiction to try the suits.

5. It is well settled that while deciding the petition for leave to defend the suit, the merits of the defence set up by the defendant are not to be gone into. If a substantial question of law or fact is disclosed the leave to defend has to be granted to the defendant. In the present case, it is not disputed that the Cheques were issued at Naushera and also that these were dishonoured at Naushera and further that the place of residence and business of the appellants/defendants is also at Naushera. In these circumstances, the question as to whether any part of cause of action has arisen at Lahore and the District Judge at Lahore had the jurisdiction to try the suit, was a substantial question which needs further consideration. In my view, therefore, the learned District Judge had erred in refusing permission to the appellants to defend the suits. The effect of endorsement "Payee's account only" on a cheque is also a moot question which can only be decided at the trial. In these circumstances, the order refusing leave to defend, appears to be unsustainable. (See, Fine Textile Mills Ltd., Karachi v. Haji Umar (PLD 1963 SC 163) and Muslim Commercial Bank Ltd. v. Tayab Sharif (1975 SCMR 393). In view of what has been stated above, both the appeals are accepted, the impugned decrees are set aside, and the appellants are granted leave to defend the suits subject to the condition that it furnishes security to the extent of the suit amount to the satisfaction of learned District Judge, Lahore within a period of two months from today. In case the security is so furnished, the learned District Judge shall proceed to decide the suits in accordance with law. No order as to costs. H.B.T./S‑484/L Appeal accepted.