P L D 1968 Karachi 1 (PLP)

WAHIDUDDIN AHMAD, J.‑This is a Letter Patent Appeal from the judgment of a learned single Judge is Suit No. 295 of 1965 dated 31st October 1963. By this judgment the learned Judge passed a decree in favour of Respondent No. 2 against Respondent No. 1 for a sum of Rs. 2,22,827‑4‑6 with costs and interest at 7 per cent. from the date of suit till payment. He further passed a decree in favour of the Respondent No. 1 against the third party appellant in the sum of Rs. 1,20,855 with costs and interest at 7 per cent. from the date of the suit till payment.

2. Tire facts giving rise to this appeal are that M. A. Shirazee, Respondent No. 1 opened a current account with the Bank of Bahawalpur Ltd., Respondent No. 2 at Karachi on 16th October 1951 and from about March 1952 the respondent No. 2 bank‑accommodated Respondent No. 1 by allowing him overdraft facilities from time to time against pledge ‑with the respondent No. 2 of his stocks, shares and securities. It is not disputed that Respondent No. I during the period of 1952, 1953 and 1984 utilised the overdraft facilities in his account with Respondent No. 2 against the securities of shares and he was running a regular overdraft account with the bank. On or about 14th September 1955, a sum of Rs. 4,09,997‑15‑0 was found due from Respon dent No. 1 to Respondent No.

2. The above amount was not paid in spite of notice of Respondent No. 2 and thereupon they sold the shares of Respondent No. 1 held by them as securities and, after adjusting the sale proceeds of the shares, a sum of Rs. 2,22,827‑4‑6 was found payable by Respondent No. 1 to Respondent No.

2. Thereafter in or about April 1956 Respondent No. 2 filed Suit No. 295 bf 1956 against Respondent No. 1 for the recovery of the above amount.

3. Mr. Shirazee, Respondent No. 1, appeared in the suit and filed written statement in November 1956. He resisted the suit on the allegation that he was obliged to Khwaja Muhammad 1qbal, the then General Manager of Respondent No. 2's Bank who had given him overdraft facilities in his time of need and that in the account in the name of his partnership firm of Ahmed Umer & Company he bad overdrawn to the full extent of the limit, that is, Rs. 1,30,000 and .he had been told not to withdraw any more on, this account. Thereafter he made certain payments reducing the overdraft to Rs. 1,17,

000. He alleged that on 23rd August 1954, he was called by the appellant who asked him to give him a blank cheque which he wanted to utilise for a small amount which he needed. He gave him this blank cheque as he was under his obliga tion but later on was surprised to discover that on this a very large amount namely Rs. 2,61,247 had been drawn by the appellant. On discovering this he went to the appellant and asked him to deposit this amount in his account and to do something about it because it was beyond his means to meet such a liability. Thereupon the appellant assured the respondent that whatever had been done was done with the clear consent of the Respondent No. 2 and that the amount was more than fully secured and he had deposited securities acceptable to the bank in the name of the defendant worth more than the amount overdrawn and, as everything was done and could be done with the consent of the bank, there was nothing for the defendant to worry about. It will be noticed that the alleged cheque which is for a sum of Rs. 2,61,247 was admittedly utilised for payment of the price of Rs. 17,400 shares of the Karnaphuli Paper Mills and is item No. 1 in the Schedule of the securities given in the plaint. Respondent No. 1 further alleged that these shares were not his property but the property of the appellant and it had never been deposited by him with the bank. He therefore pleaded that it is not he but the appellant who was the party liable for this amount.

4. In view of the above allegations Respondent No. 1 moved an application on 1st March 1958, under Rule 168 of the Chief Court Rules on the Original Side of this Court along with an affidavit dated 19th February 1958 and asked leave of the Court that the third party notice be issued to the appellant for the full and final adjudication of the dispute between the parties. On 8th March 1958, the matter came before the learned Single Judge and he directed that a notice to the appellant as third party be issued.

5. In response to the third party notice the appellant filed his written statement and pleaded that the notice under section 168 of the Original Side Rules was illegal, that the claim of Respon dent No. 1 was barred by limitation and that he was not liable to contribute or indemnify Respondent No. 1 for any amount. He emphatically denied that he had obtained any blank cheque from Respondent No. 1 or that he had recovered the amount of that cheque from the bank. According to him, 17,400 shares of Karnaphuli mentioned in the Schedule to the plaint were the property of Respondent No. 1 and he disclaimed any connec tion with it. He alleged that these shares were deposited by Respondent No. 1.

6. It will thus be noticed that so far as the claim of Respondent No. 1 was concerned, it was neither denied by Respondent No. 1 nor by the appellant. The only dispute in the above suit between the parties was in respect of 17,400 shares of Karnaphuli. The case of Respondent No. 1 was that it belonged to the appellant whereas the case of the appellant was that they belonged to Shirazee. A further question was whether the appel lant had used the cheque Exh. 8/1123 dated 24th August 1954, for the payment of these 17,400 shares and was liable to indemnify the Respondent No. 1 to the extent of the difference between the sale proceeds of these shares and the amount of the cheque. The other question for consideration before the learned Single Judge was whether Respondent No. 2 was entitled to a decree for the whole sum claimed in the suit against Respondent No. 1.

7. On the pleadings of the parties the following issues were framed:‑

(1) Whether the plaintiff is entitled to a decree for the amount claimed or any other amount. If so, should the decree be against the defendant or third party or both ? (2) Whether the claim of the defendant against the third party is barred by limitation? (3) Whether the defendant is entitled to claim contri bution or indemnify as against the third party, if so for what amount? (4) What decree should be passed?

8. In support of their case the parties examined a number of witnesses. Both Shirazee, Respondent No. 1 and Khawaja Muhammad Iqbal, the appellant were examined as D. W. 4 and D. W. 6 respectively. In addition to these witnesses Respondent No. 1 examined P. W. Khalid, the Manager of Bahawalpur Bank, Liaquat Bazar Branch and proved the claim of Respondent No. 2 Bank against Respondent No.

1. P. W. 2 Mr. Cyril G. Bhan, a handwriting expert, who compared the signatures of the appellant on certain documents was also examined. Respondent No. 1, besides ‑him, examined D. W. 1 Kazi Naimullah, D. W. 2 Haji Hassan, D. W, 3 Muhammad Sharful Haq and D. W. 5 Abdul Rashid.

9. On the evidence produced by the parties the learned Single Judge held that no case of fraud has been made out against the appellant because, even after Shirazee was told that so much money had been withdrawn from his account, he did not challenge bank and allowed himself to be satisfied by the assurance given to him by Muhammad lqbal. As Muhammad Iqbal had no authority from the bank and used this money for his share business, any transaction or arrangement of assurance given by the appellant would sot be binding upon Respondent No.

2. In that view of the matter the claim of the bank against Respondent No. 1 was decreed in full. It may be stated that Respondent No. 1 has not challenged this finding in this appeal.

10. In the third party proceedings the learned single Judge rejected the story of the appellant that the Karnaphuli shares were purchased by Shirazee and for that purpose he was given a further overdraft facility of Rs. 2,61,247 on 24th August 1954. His finding is that the 17,400 shares of Karnaphuli had been bought in March and April 1954, by Muhammad lqbal, the appellant from Haji Hussain Shakoor and not from Shirazee, Respondent No. 1 and the cheque Exh. 8/1123 was obtained by the appellant to meet bas own liability in respect of these shares. As a result of this he held that the difference between the sum of Rs. 2,61,247 and the sale proceeds of 17,400 shares of Karnaphuli is the liability of the appellant.

11. On the question whether the appellant could be fastened with any liability in the suit as a third party he rejected the plea of the appellant that no leave was obtained by the Court for issuing third party notice or for impleading the appellant as third party in the above suit. He further rejected the plea of the appellant that the claim against the appellant of Respondent No. 1 was barred by time and also rejected his plea that as no case of contribution had been made out, he could not be made liable for the amount in dispute in the third party proceedings. The appellant has challenged these findings in this Letters Patent Appeal.

12. In support of the appeal Mr. S. M. Sohail, the learned counsel appearing for the appellant, has not challenged the finding of fact by the learned single Judge that Muhammad Iqbal having been pressed by Haji Hussain Shakoor had to find money. He himself could not draw money from the bank and therefore approached Shirazee to allow him to make use of his account so that he could draw the money from the bank using his position as a general manager and pay this money into the account of Haji Hussain Shakoor." In our opinion the learned counsel very rightly did not challenge this finding because there is over whelming evidence on the record to support this conclusion. There is not the slightest doubt that 17,400 shares of Karnaphuli were purchased by Muhammad lqbal, D. W. Haji Hussain Shakoor, the broker, stated that he had sold these shares to Muhammad Iqbal and recovered from him a sum of Rs. 2,59,000 and odd and that Shirazee owed him no money. About the cheque, Exh. 8/1123 he categorically stated that he saw it for the first time when it was shown to him by the C.' I. D. people some time in the year 1955 when they were investigating a case against Muhammad lqbal, the appellant whose services .had been termi nated by Respondent No.

2. He candidly stated that the cheque Exh. 8/1123 had never been received by him and had been directly dealt with by the bank and the amount of the cheque was credited to his account and he received a credit note from the Bank. According to the practice of the bank, whenever the shares along with the bills were received in the bank for the clients the accountant Mahmud Qasmi who was dealing with such matter used to issue a receipt. Admittedly he issued receipts Exhs. 17/1 to 17/6 in respect of the shares which were the subject‑matter of the 15 bills which are mentioned in Exh. 7/7. Muhammad Iqbal, the appellant when these receipts were put to him denied that these shares were deposited in his account but admitted that these receipts were issued by the bank under the initials of the accountant. The fact that in the first instance the account of Haji Hussain Shakoor was credited with the sum of Rs. 2,61,247 and later on his account was debited to the extent of Rs. 2,215‑1.0‑0 and a debit note Exh. 17/8 was sent to him in order to equalise it with the price of these shares which came to only Rs. 2,59,031‑6‑0 clearly indicate that respondent Shirazee's account was used by the appellant Iqbal for his benefit and the shares in dispute were purchased by appellant Muhammad Iqbal.

13. Mr. Sohail, the learned Advocate appearing for the appellant, however, challenged the decree passed against the appellant on certain technical grounds. In the first place, the learned counsel contended that there was, no order of the Court to issue notice as contemplated by rule 168, sub‑rule 3, of the Chief Court Rules (Original Side) and the order to issue notice in the suit was merely a preliminary step for hearing the parties before passing a final order to implead the appellant as a third party; and therefore the appellant was not rightly impleaded as third party in the original suit. Secondly, the Learned counsel contended 'hat on the facts of this case Article 57, 58 or 83 applied and article 120 of the Limitation Act was not applicable. Lastly, he contended that the transaction in question as alleged by Respon dent No. 1 was one of loan together with misrepresentation and fraud and this being so the question of contribution and indemnity as contemplated by rule 168 of the Chief Court Rules (Original Side) did not arise. We propose to discuss these points separately.

14. The first contention of the appellant's counsel that no leave was obtained from the Court for the issue of third party notice under rule 168, sub‑rule 3, need not detain us because Respondent No. 1 made an application dated 19th February 1958, which was presented in Court on 1st March 1958, under the above‑mentioned rule for obtaining leave to issue third party notice to the appellant. This application was accompanied by an affidavit stating all the circumstances and facts on the basis of which the liability of the appellant to indemnify Respondent No. 1 was brought to the notice of the Court. The office made a notice on this application as under:

"Notice to the third party may perhaps be issued as prayed." The matter was taken up by the learned Single Judge in chamber and he passed the order by noting on the record the word "Yes" and put his signature underneath it. Thereafter a notice was issued to the appellant in Form No. 9 in Appendix A, which is issued after leave is granted under the above‑mentioned rule. Thus it is quite clear that in the present case the Court granted leave against the appellant ex parte and directed the office to issue a third partly notice in accordance with law. It will be noticed that the provisions of rule 1613, sub‑rule 3, are borrowed from the English Courts. In the English Courts also the practice is that an applica tion in the Chancery Division for leave to issue and serve a third party notice under Order XIV, rule 48 is passed ex parte. A reference to the case of Furness, Withy & Co. Ltd v. Pickering ((1908) 2 Ch. D 224) will show that the same procedure is followed in, the English Court as was done in the present case on the Original Side of this Court. We are, therefore, satisfied that the learned Single Judge on the Original Side had granted ex parte leave for issue of third party notice against the appellant and thereafter the appellant was directed to appear in Court in order to defend the claim against him. It will further be noticed that when the application under Rule 168 was later on brought to the notice of the Court the learned single Judge on 13th April 1959, recorded that this application had already been disposed of. In these cir cumstances we find no force in this contention which is repelled.

15. The next question for consideration is whether the claim of Respondent No. 1 against the appellant was rightly held to be within limitation. It is not disputed by the parties that the appellant became party to the suit as from the date of the service of the third party notice, that is, 7th March 1959, when it was pub lished in the newspapers. Therefore, the appellant became party to the Original Suit on 7th March 1959. The contention of the learned counsel for the appellant is that the cheque Exh. 8/1123 was drawn by Respondent No. 1 on 24th August 1954, and money was paid by the Respondent No. 2 bank under it on the same date; and therefore it was a case of a loan by Respondent No. 1 to the appellant and either Article 57 or Article 58 of the Limitation Act would apply in which the period of limitation is three years. In this connection it will be noticed that the learned single Judge's finding on the nature of the transaction between the parties is to the following effect:‑

"I have also reached the conclusion that he assured Shirazee that he will keep him secure and his interest would not suffer. Muhammad Iqbal was thus clearly promising to keep Shirazee indemnified and was merely using his account for the purpose of meeting his liability. He was in a position to do so as he was the general manager of the bank. Mr. Sobail, the learned counsel for the appellant, was unable to satisfy us that this finding of the learned Single Judge is not based on proper appreciation of the evidence. There is little doubt in our mind that the appellant took advantage of his position as General Manager of the bank and used the blank cheque issued by Respondent No. 1 in order to withdraw money without his con sent from the bank and used it for the purchase of 17,400 Karnaphuli shares. Later on when Respondent No. 1 came to know about it he assured him that the appellant acted in the above manner with the consent of Respondent No. 2 and that everything will be done to secure his interest and he would not suffer in any way. There can be no other conclusion than the one reached by the learned single Judge on this aspect of the question. Mr. Sohail's contention that it was a case of fraud and therefore the claim of the Respondent Mo. 1 was governed by Article 95 of the Limitation Act has not impressed us. The finding of the learned single Judge is that later on when Shirazee came to know about it he did not challenge the bank and accepted the assurance given by the appellant that his interest would be properly secured. In these circumstances the question of fraud can have no bearing on the present case.

16. The alternative argument of Mr. Sohail that Article 83 applies to the present case is most damaging to his contention that the claim of the appellant is barred by limitation, because under this Article the period of limitation is three years from the date when the plaintiff is actually damnified. In all contracts of indemnity it would start when the damages are sustained by a, party which entitles him to be indemnified and sue the indemnifier for reimbursements. Ordinarily, a person 'cannot be said to be indemnified before he has been deprived of anything. As held in the case of Sham Sundar v. Chandu Lal and others (A I R 1935 Lah. 974) a remote chance of being deprived of anything will not entitle him to realise damages from his indemnifier. In the present case the date on which the respondent No. 1 was damnified was the date on which the decree was passed against him. Therefore at the time when the appellant was impleaded as third party in the original suit, the period of limitation had not begun to run and it is not possible to hold that under Article 83 the claim of Respondent No. 1, at the time when the appellant was impleaded as a party, was barred by limitation. We would, therefore, hold that the claim of Respondent No. I was within limitation and was rightly decreed against the appellant.

17. The last contention of Mr. Sohail that rule 168 was not applicable to the present case because it is not one of those cases in which the question of indemnity is covered by the Con tract Act. The learned counsel further contended that this is not a case of contribution as ,contemplated under the Contract Act. In our opinion this contention has no force for the simple reason that in order to claim the benefit of rule 168 it is not necessary that the right of indemnity should arise always out of some contract between the parties, though in the present case the learned single Judge has come to the conclusion that the appellant had given an assurance to the Respondent No.1 that they would indemnify him in case he was made liable for the payment of the said amount from his account. According to the decision cited at the Bar the view of the English Court is that to bring a case within the above rule, there must be a direct right to indem nify as such, a right which can be enforced either at law or in equity. This view was expressed in Johnson and others v.' The Salvage Association and McKiver ((1887) 19 K B D 458) and Birmingham and District Land Co. v. London and North. Western Railway Co. (34 Ch. D 261). Even if we were to hold that the assurance given by the appellant was not proved on the record the Respondent No. 1 was in equity entitled to be indemnified or reimbursed for the act of the appellant in using the money out of his account for his own benefit. We would, therefore, repel this contention also.

18. After hearing the learned counsel for the parties, we are satisfied that the learned single Judge was perfectly justified in allowing the claim of Respondent No. 1 against the appellant. We therefore, find no force in this appeal which is dismissed with costs. K. M. A. Appeal dismissed.