IN THE HIGH COURT OF SINDH, KARACHI

Ist Appeal No.68 of 2025

[ Muhammad Jawaid v. M/s. Crown Feeds Pvt Ltd ]

PRESENT:

Mr. Justice Arshad Hussain Khan

Mr. Justice Amjad Ali Sahito

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

Appellant Through Mr. Abid Hussain Jutt, , Advocate.

Respondent Nemo.

Date of hearing 15.09.2026

Date of Decision 15.09.2026

JUDGEMENT

ARSHAD HUSSAIN KHAN, J: Through the instant First Appeal filed under Section 96 of the Code of Civil Procedure, 1908, the Appellant has called in question the Judgment and Decree dated 28.04.2025 passed by the learned IVth Additional District Judge, Malir, Karachi in Summary Suit No. 33 of 2022 (M/s. Crown Feeds (Pvt.) Ltd. vs. Muhammad Jawaid). By virtue of the impugned judgment, the learned trial Court partially decreed the summary suit filed under Order XXXVII CPC in favor of the Respondent to the extent of Rs. 900,000/- on account of nine dishonored cheques, while dismissing the unliquidated balance claim of Rs. 260,151/-.

2. The essential facts leading up to the institution of the present appeal are that the Respondent (plaintiff) instituted a summary suit under Order XXXVII C.P.C. for recovery of Rs.11,60,151/- against the Appellant (Defendant No. 2) and for recovery of Rs.12,88,731 against another defendant who was subsequently struck off from the array of parties. Thereafter, the Respondent filed an amended plaint claiming recovery of Rs.11,60,151/- against the Appellant.

The case of the Respondent as per plaint is that both parties entered into a commercial transaction for the supply of poultry feed pursuant to an agreement dated 09.01.2019 (Reference No. 1023). In satisfaction of outstanding liabilities incurred during the business relationship, the Appellant issued nine (09) cheques drawn on Al-Baraka Bank (Pakistan) Limited, Gulshan-e-Maymar Branch, Karachi, bearing Cheque Nos. 22300682, 22300684, 22300685, 22300687, 22300688, 22300689, 22300690, 22300691, and 22300692, each for an amount of Rs.100,000/-, totaling Rs. 900,000/-. Upon presentation, all nine negotiable instruments were dishonored by the bank due to "Insufficient Funds." Upon obtaining leave to defend, the Appellant filed his written statement, denying liability and contending that the instruments were undated "security cheques" and that payments had been made through other channels. Following the settlement of issues and recording of evidence, the learned trial Court held that the issuance of the cheques and signatures thereon stood proved, and accordingly decreed the suit for the principal cheque amount of Rs.900,000/- while rejecting the unliquidated ledger balance of Rs.260,151/-.

3. Learned counsel for the Appellant vehemently contended that the impugned judgment and decree passed by the learned trial Court is illegal, perverse, and based on a complete misreading and non-reading of the evidence available on record. He argued that the summary suit filed in late 2022 was hopelessly barred by limitation, as the nine cheques in question had bounced back in June, July, and August 2019. He submitted that under the terms of the customer agreement executed in January 2019, the cheques were explicitly issued as undated security instruments for smooth business operations rather than towards an existing liquid debt. Learned counsel further highlighted that during cross-examination, the Respondent’s witness admitted receiving payments amounting to Rs.8,75,000/- through different transactions between 2019 and March 2021, a material fact completely ignored by the trial Court. Additionally, he asserted that the Respondent took contradictory stances regarding the total outstanding debt across the plaint, the lodged FIR (FIR # 157/23), and oral testimony, thereby disentitling the Respondent to any discretionary or summary relief.

4. As per the written objections on record, the Respondent maintained that the trial Court's judgment is legally sound, well-reasoned, and passed in strict accordance with the material evidence produced at trial. The Respondent submitted that the Appellant approached the appellate forum with unclean hands by suppressing material facts and that the evidence sought to be relied upon by the Appellant was beyond the scope of his original pleadings therefore, the same is not considerable at all. The Respondent asserted that the execution of the business agreement and the signatures on all nine negotiable instruments were admitted by the Appellant in cross-examination, which eliminated the need for further proof under the law. Furthermore, the Respondent maintained that the defense of "security cheques" was a mere afterthought aimed at frustrating a valid debt, and therefore prayed for the dismissal of the appeal with special costs.

5. We have given thoughtful consideration to the arguments advanced by the learned counsel for the Appellant, carefully examined the written objections filed on behalf of the Respondent, and perused the material available on record as well as the impugned judgment.

6. The primary question for determination before this Court is whether the trial Court committed any material irregularity or error of law in decreeing the suit for Rs.900,000/- based on the nine dishonored cheques. A perusal of the record reveals that the Appellant did not deny his signatures on the nine cheques in question nor did he dispute the underlying business relationship for the supply of poultry feed under the agreement (Exh. P/3). Under Section 118 of the Negotiable Instruments Act, 1881, read with Article 129 of the Qanun-e-Shahadat Order, 1984, once the execution of a negotiable instrument and signature thereon are admitted, a legal presumption arises that the instrument was issued for valid consideration. The presumption is, however, rebuttable, and the burden therefore lay upon the Appellant to rebut the same through legally admissible and credible evidence that the instruments were devoid of consideration or were strictly intended to serve as collateral security that had been fully discharged.

7. With respect to the Appellant’s defense that the cheques were merely "security cheques" and that payments totaling Rs.8,75,000/- were made between 2019 and 2021, we are of the considered view that the business transactions between the parties were of an ongoing running-account nature. The receipts and online transfer slips produced by the Appellant reflect periodic payments made towards continuous supplies of feed over several years, rather than specific adjustments against the nine dishonored cheques. The Appellant failed to produce any specific discharge voucher, ledger reconciliation, or written acknowledgment from the Respondent demonstrating that the specific liabilities represented by these nine cheques were satisfied. It is a well-settled proposition of law that a plea of "security cheque" cannot absolve a debtor of liability when an underlying debt arising out of commercial transactions remains unpaid at the time the instrument is presented for encashment.

8. Regarding the plea of limitation raised by the Appellant, Article 80 of the Limitation Act, 1908 prescribes a period of three years from the date the instrument becomes payable for a suit by the holder of a negotiable instrument. The record demonstrates that although the cheques were initially issued in 2019, the running business account and partial payments continued up to March 2021, which, under Section 20 of the Limitation Act, 1908, had the effect of extending the period of limitation afresh from the date of each such part-payment where duly evidenced on record. The formal legal demand notice was thereafter issued in June 2022 upon default. The question of limitation, therefore, has to be examined with reference to the nature of the underlying transaction, the terms of the agreement between the parties, the subsequent payments admittedly made during the course of the business relationship, and the cause of action pleaded by the Respondent. In the circumstances of the present case, the Appellant has failed to establish that the liability represented by the nine cheques had become barred by limitation on the date of institution of the suit. The objection regarding limitation, therefore, does not render the impugned decree unsustainable.

9. The argument regarding minor discrepancies in the overall amounts mentioned in the FIR or oral testimonies does not impair the core claim decreed by the trial Court. The learned trial Court exercised due caution and strictly limited the decree to Rs.900,000/-, which represents the exact liquidated sum of the nine dishonored cheques produced in original along with official bank return memos citing "Insufficient Funds." The unliquidated balance of Rs.260,151/- was rightly excluded from the summary decree. Thus, no misreading, non-reading of material evidence, or legal infirmity has been pointed out in the impugned judgment that would justify appellate interference under Section 96 CPC.

10. For the foregoing reasons, we find no merit in the instant appeal. Consequently, the appeal is hereby DISMISSED, and the impugned Judgment and Decree dated 28.04.2025 passed by the learned IVth Additional District Judge, Malir, Karachi in Summary Suit No. 33 of 2022 is UPHELD. Parties shall bear their own costs.

JUDGE

Naveed PA