IN THE HIGH COURT OF SINDH, KARACHI

Ist Appeal No.111 of 2024

[ Shahid Ali Vs. Shehzada & another ]

 

 

            PRESENT:

            Mr. Justice Arshad Hussain Khan

                                                   Mr. Justice Amjad Ali Sehto        .

 

*************

 

Appellant

Through Mr. Deedar Ali Khoso, Advocate

 

Respondents

Through M/s. Naeem Akhtar Khan Tanoli and Saad Naeem Tanoli, Advocates

 

Date of Hearing:

24.03.2026

Date of Decision:

24.03.2026

 

JUDGMENT

 

ARSHAD HUSSAIN KHAN, J:         The appellant by means of this Ist Appeal under Section 96 of CPC has assailed judgment and decree dated 02.08.2024 passed by the Court of Additional District Judge-XII/Model Civil Appellate Court, Karachi-South in Summary Suit No.201/2023 whereby the Suit filed by the respondents under Order 37 of CPC for recovery, was decreed to the extent of principal amount of Rs.1,38,50,000/-.

2.         Precisely, the facts are that the appellant/defendant, engaged in a trading business, approached respondent No.2/plaintiff No.2 for investment with an assurance of daily business profit. Pursuant to an agreement dated 01.08.2023, respondent No.2, along with one Habib-ur-Rehman, invested an amount of Rs.1,38,50,000/- with the appellant. Upon default in payment of profit and on demand for return of the principal amount, the appellant issued Cheque No.10012875 dated 22.09.2023 drawn on Bank Al Habib in favour of respondent No.1; however, the same on its presentation in bank was dishonoured with the remark “payment stopped by the drawer”. Despite intimation, the appellant failed to make payment, whereupon the respondents instituted Summary Suit No.201 of 2023 for recovery of the amount. The appellant entered appearance and sought leave to defend under Order XXXVII Rule 3, C.P.C., which was allowed conditionally vide order dated 07.03.2024, subject to furnishing security equivalent to the cheque amount. Upon failure to comply, the appellant was debarred from filing written statement on 08.04.2024, and the suit proceeded ex-parte. Thereafter, the respondents led evidence, and the suit was decreed to the extent of the principal amount vide judgment dated 02.08.2024, which has been impugned in the present appeal.

3.         Learned counsel for the appellant, while reiterating the contents of the memo of appeal, contends that the impugned judgment and decree are unsustainable in law and on facts, as the learned trial Court failed to apply its judicious mind and to properly appreciate the nature of the transaction, which, according to him, was in the nature of a guarantee. It is further contended that the cheque in question was an open cheque, lacking specific particulars such as date, name, and amount, and was allegedly issued under pressure, thereafter the appellant promptly instructed stoppage of payment. It is also urged that the impugned judgment and decree were passed at a time when the appellant was incarcerated, thereby depriving him of an effective opportunity to defend the proceedings. Learned counsel submits that the appellant has been condemned unheard and that the right to fair trial, guaranteed under the Constitution of Pakistan, has been violated. He emphasizes that the law favors adjudication on merits rather than on technicalities. It is, therefore, prayed that the impugned judgment and decree be set aside and unconditional leave to appear and defend the suit be granted so that the matter may be decided afresh on merits.

4.         On the other hand, learned counsel for the respondents, while supporting the impugned judgment and decree, contends that the same has been passed strictly in accordance with law and does not call for any interference by this Court. It is submitted that the appellant, having failed to comply with the order whereby conditional leave to defend was granted to him to defend the suit, rightly attracted the consequences thereof, and the learned trial Court was fully justified in proceeding against him and decreeing the suit. Learned counsel further submits that the present First Appeal is devoid of merit and liable to be dismissed with costs. In support of his contentions, reliance has been placed upon case law reported as 2024 CLD 435, 2004 SCMR 882, 2011 SCMR 659, 2018 CLD 104 and 2007 CLD 10605.

 

5.         Heard learned counsel for the parties and perused the material available on record.         

6.         From the record, it transpires that vide order dated 07.03.2024, the learned trial Court granted conditional leave to defend subject to furnishing security equivalent to the cheque amount within 30 days. Admittedly, the appellant neither complied with the said condition nor assailed the order; thus, the same attained finality.

7.         It is observed that the primary purpose of Order XXXVII, C.P.C. is to facilitate the expeditious disposal of cases involving commercial transactions and negotiable instruments. In such summary proceedings, the defendant does not possess an inherent right to defend the suit; rather, such a right is contingent upon obtaining leave from the Court. In the instant case, the learned Trial Court exercised its discretion by granting conditional leave to the appellant, subject to the furnishing of security equivalent to the cheque amount. This condition is a standard judicial safeguard to ensure that the recovery of documented debt is not frustrated by protracted litigation. The appellant’s failure to comply with this condition, despite being afforded an opportunity, legalized the consequences under Rule 3(6) of Order XXXVII, whereby the allegations in the plaint are deemed admitted and the plaintiff becomes entitled to a decree[1]. Even in appeal, such disability continues, and the defendant cannot claim a better right to contest the case on merits merely by filing an appeal.

8.         In the circumstances, the appellant cannot now be permitted to raise pleas that the cheque in question was issued as a guarantee or was an open cheque allegedly issued under pressure, as such defences could only have been agitated upon compliance with the conditional order and by availing leave to defend. His failure to do so entails the presumption under Section 118 of the Negotiable Instruments Act, 1881, in favour of the holder, and the averments in the plaint are deemed to be admitted. Guidance is drawn from the judgment of the Honourable Supreme Court of Pakistan in Muhammad Ramzan and others v. Ghulam Qadir (2011 SCMR 659), wherein it has been authoritatively held that a defendant who fails to comply with a conditional order granting leave to defend cannot subsequently assail the decree on merits.

9.         In view of the above, no illegality or perversity is found in the impugned judgment and decree warranting interference in appellate jurisdiction. The only scope available to the appellant was to demonstrate a legal error in passing the decree despite non-compliance of the conditional order; however, no such ground has been made out. Consequently, the instant appeal, being devoid of merit, is hereby dismissed. Parties shall bear their own costs. 

JUDGE

JUDGE

 

 

Naveed PA


[1] Haji Ali Khan & Company, Abbottabad and 8 others  v. M/s. Allied Bank of Pakistan Limited, Abbottabad, [PLD 1995 SC 362], Naeem Iqbal v. Mst. Zarina  [1996 SCMR 1530] and Col. (Retd.) Ashfaq Ahmed and others v. Sh. Muhammad Wasim [1999 SCMR 2832].