IN THE HIGH COURT OF SINDH, KARACHI

First Appeal No.120 of 2023

[ Muhammad Salman Akram Siddiqui v. Muhammad Tahir ]

PRESENT:

Mr. Justice Arshad Hussain Khan

Mr. Justice Amjad Ali Sahito

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Appellant	Through Mr. Liaquat Ali Khan, Advocate
Respondent	Through Mr. Akhtar Saeed Shaikh, Advocate
Date of Hearing:	12.05.2026
Date of Decision:	12.05.2026

O R D E R

ARSHAD HUSSAIN KHAN, J: The appellant, through the instant First Appeal under Section 96, C.P.C., has assailed the judgment and decree dated 29.11.2023 passed by the learned XIVth Additional District Judge, Karachi-East, in Summary Suit No.44 of 2023, whereby the suit filed by the respondent under Order XXXVII, C.P.C. for recovery was decreed in the sum of Rs.80,00,000/- along with profit / mark-up as per current Bank rate on the suit amount from the date of dishonor of cheques till realization/payment of entire decreed amount with no order as to costs.

2. Brief facts of the case leading to this appeal are that the respondent (plaintiff) is the sole proprietor of a franchise namely “M/s. S. S. S. Communications” of M/s Jazz Pakistan Mobile Communication Limited, a leading cellular service provider in Pakistan. The appellant/defendant was employed as an Accountant with the respondent from 01.12.2012, until 26.07.2022. It is alleged that during the course of his employment, the appellant engaged in fraudulent activities involving cheating and the misappropriation of "Jazz Cash" and "Jazz Load" stocks to the tune of Rs.8,000,000/-. Such acts of the appellant came to the knowledge of the respondent in the month of June, 2022, and following an internal inquiry, the appellant purportedly admitted his liability and, in an attempt to settle the claim, issued two cheques in the name of "S.S.S. Communication": Cheque No.12544463 dated 02.09.2022, amounting to Rs.5,000,000/-, and Cheque No.12544462 dated 02.10.2022, amounting to Rs.3,000,000/- which were dishonored upon presentation to the bank with the return reason marked as "Dormant Account". Despite subsequent demands and efforts by the respondent to recover the outstanding amount, the appellant refused to satisfy the claim. This prompted the institution of the underlying suit for recovery.

Upon service of summons, the appellant/defendant entered appearance and sought leave to defend. The learned trial Court, vide order dated 25.05.2023, granted conditional leave subject to furnishing surety in the sum of Rs.5,00,000/- and directed the appellant to file written statement thereafter. However, despite availing sufficient opportunities, the appellant failed to comply with the said condition and, consequently, vide order dated 15.07.2023, was debarred from filing written statement. Thereafter, the appellant moved an application seeking recall of the aforesaid order, which, after hearing learned counsel for the parties, came to be dismissed vide order dated 04.09.2023. Subsequently, the respondent led ex-parte evidence in support of his claim, and the learned trial Court, after evaluating the material available on record and hearing the parties, decreed the suit only to the extent of prayer clauses (a) & (b) through the impugned judgment and decree. Feeling aggrieved thereby, the appellant has instituted the present First Appeal.

3. Learned counsel for the appellant has contended that the impugned judgment and decree passed by the learned trial Court are contrary to law and facts and, therefore, liable to be set aside. It is argued that the learned trial Court adopted an unduly harsh approach in debarring the appellant from filing written statement vide order dated 15.07.2023. According to learned counsel, it is a settled principle that matters should ordinarily be decided on merits rather than on technicalities or procedural defaults. Learned counsel further submitted that by depriving the appellant of the opportunity to contest the suit, the learned trial Court violated the appellant’s right to fair trial and due process guaranteed under Article 10-A of the Constitution of the Islamic Republic of Pakistan, 1973. It is also contended that the grant of profit/mark-up from the date of dishonour of the cheques was without lawful basis. Lastly, learned counsel prayed that the impugned judgment and decree be set-aside and the matter be remanded to the learned trial Court for decision afresh on merits after affording the appellant an opportunity to defend the suit.

4. Conversely, learned counsel for the respondent has contended that the present appeal is wholly misconceived and not maintainable, as the appellant has approached this Court with mala fide intentions and without clean hands, merely to delay and frustrate realization of the decretal amount. It was argued that the appellant failed to comply with the order dated 25.05.2023 passed by the learned trial Court, whereby conditional leave to defend was granted subject to furnishing solvent security in the sum of Rs.5,00,000/-. Learned counsel further submitted that despite being granted additional time to comply with the said condition, the appellant persistently remained in default, whereafter the learned trial Court rightly debarred the appellant from filing written statement and proceeded to pass the impugned judgment and decree in favour of the respondent. It was also contended that even before this Court, the appellant failed to comply with the order dated 11.01.2024 directing him to secure the decretal amount within one week, despite having expressed willingness to do so. According to learned counsel, such conduct on the part of the appellant clearly demonstrates lack of bona fides and disentitles him from seeking any discretionary relief from this Court.

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

6. From the record, it transpires that vide order dated 25.05.2023, the learned trial Court granted conditional leave to defend, subject to furnishing surety of Rs.500,000/-. Admittedly, despite sufficient opportunity, the appellant failed to comply with the said condition. Consequently, vide order dated 15.07.2023, the learned trial Court, having no other option, proceeded ex- parte against the appellant.

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 reasonable surety. 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 the plea that the cheque in question was issued as a guarantee and not in discharge of any legally enforceable liability of Rs.80,00,000/-, 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. Moreover, the fact that the cheques were returned with the remark "Dormant Account" does not absolve the appellant of liability; rather, it reinforces the respondent's claim of a failed realization of a documented debt. 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. Insofar as the appellant’s objection regarding grant of mark-up/profit is concerned, we are of the considered view that in proceedings arising out of suits instituted under Order XXXVII C.P.C., the Court is competent to award interest/mark-up from the date of dishonour of the negotiable instrument. Such award is intended to compensate the decree-holder for deprivation of the use of money occasioned by the default of the defendant. In the present case, the liability arose out of issuance of cheques which were admittedly dishonoured upon presentation. Therefore, the learned trial Court, while awarding mark-up at the prevailing bank rate, acted strictly within the framework of law and such exercise cannot be termed arbitrary or without lawful authority. Moreover, the appellant, despite directions issued by this Court vide order dated 11.01.2024 to secure the decretal amount, failed to comply therewith. In such circumstances, the appellant cannot seek equitable indulgence against a well-reasoned and lawful judgment passed by the learned trial Court.

10. 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

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].