PLJ 1987 Karachi 215

Present : ibadatyar khan, J

HABIB BANK LIMITED, Habib Bank Plaza I. I Cbundrigar Road,

Karachi—Plaintiff

versus

AL1 MOHTARAM NAQV1—Respondent

•   CMA No. 4025/1986 (in Suit No. 985 of 1985) allowed on 1-1-1987

(i)   Civil Procedure Code, 1908 (V of 1908)—

—~S. 10—-Res-subjudice —Principle of— Applicability of —Held : B&r under S. 10, CPC being applicable to all classes of suits without any distinction, court to stay its hands (due to maoadatory requirement of section) moment such bar be brought to its notice. [P. 2l8]A

(ii)  Civil Procedure Code, 1908 (V of 1908)—

-------- S. 10—Res sub judice—Principle of—Mandatory nature of—Held : Provisions of S. 10, CPC to be manadatory in nature.    [P. 218]B

(iii) Ci?il Procedure Code, 1908 (V of 1908)—

------- S. 10 —Res sub judice— Principle of—Held:  No   two  adjudications resulting in clash against each other to be made.    [Pp. 219 & 220]J

(ir)  Civil Procedure Code, 1908 (V of 1908)—

------- S. 10—Suit—Stay of—Held : Operation of S: 10 of CPC not to be restricted to one class of suits by excluding another class from its ambit. [P. 22!]N

(v)  Civil Procedure Code, 1908 (V of 1908) —

------- S. 10 & O. XXXVII, Rr. 2 & 3—Suit-Stay of—Application for— Held : Application under S, 10 CPC ranking higher than application for interlocutary relief, consideraton and disposal of such applica­tion (in suit filed under O. XXXVII CPC) not to be deferred till after decision of leave application. [P. 220]L

(?i)  CiTil Procedure Code, 1908 (V of 1908)—

------- O.XXXVII, R. 2—Negotiable   instrument — Summary   Procedure on—Held : Suit filed under O XXXVII not to be given priority over (ordinary) suit filed earlier in point of time. [P. 221[M

(vii)  Civil Procedure Code, 1908 (V of 1908)—

------ O. XXXVII, R  2—Negotiable instrument — Summary   procedure on—Held : Suit filed under O. XXXVII, CPC beiag suit from moment of its institution, same not to be treated differently from suits filed in regular manner—Burden of proof usually resting on plaintiff, however, to be shifted to defendant, in case of suit institu­ted under summary procedure—Plaintiff, in such case, to start with initial advantage of presumption in his favour while defendant (to start) with initial handicap of discharging burden of displacing such initial presumption. [P. 2I8JC&D

(Tiii)  Civil Procedure Code, 1938 (V of 1908)—

------ O. XXXVII, Rr. 2 & 3—Negotiable instrument — Summary proce­ dure on — Defendant failing to dislodge initial (advantage of) pre­ sumption in favour of plaintiff—Held : Negotiable instrument being itseif conclusive evidence against defendant, decree to be passed out­right without any further evidence—Suit, on other hand, to proceed in normal way and defendant to be allowed to defend same in case of his successfully demolishing initial presumption. [P. 219]E

(ix) Civil Procedure Code, 1908 (V of 1908)—

----- O. XXXVII, Rr. 2 & 3—Negotiable instrument — Summary pro­ cedure on —No application to defend suit filed within 10 days nor (such application though filed) leave to defend suit granted by court -
Held: Plaintiff to be entitled to clear and final decree without leading any evidence in support and by cutting down all procedural trapping, in way. [P. 219"|F

(x) Civil Procedure Code, 1908 (V of 1908)—

----- O. XXXVII, Rr. 2 & 3 -Negotiable  instrument—Summary proce dure on — Held : Interlocutory application seeking interim relief being subservient to relief claimed in plaint, such application not to be pressed till grant of leave to defend suit. [P. 220]K

Cxi)  Civil Procedure Code, 1908 (V of 1908)—

------ O. XXXVII, R. 3—Leave to  defend — Application for—Decision on—Held : Court to discuss some of merits of case and to pass order (of grant or refusal of leave to defend suit) with certain reasonings. i. P. 219]H

(xii)  Ciyil Procedure Code, 1908 (V of IS08)—

------ O. XXXVI1, R. 3-Leave to defend suit — Grant   of—Effect of — Held : Grant of leave to defend suit amounting to converting mode of disposal of suit from summary to regular form, consideration for discharging burden of proof in such eventuality to be same as in any other case. [P. 219[G

Mr. Ibrahim Peshori, Advocate for Plaintiff. Mr, A. Razzak Siddiqui, Advocate for Defendant. Date of hearing : 1-12-1986.

order

The suit has been filed by the plaintiff for the recovery of substantial amount of Rs, 30,63, 674.13 under the Summary Chapter of CPC and Section 6 of the Banking Companies (Recovery of Loans) Ordinance, 1979.

2. The Defendant has moved an application CM A No 450/1986 under Order 37 Rule 3 CPC read with Section 7 of the Banking Companies (Re­covery of Loans) Ordinance, 1979. praying for leave to defend the suit. He has also moved another application CM A No. 4025/1986 under Section 10 read with Section 151 CPC. The learned counsel for the Defendant insists that CMA No. 4025 of 1986 should be decided first. He submits that if CMA No. 450/1986 is decided first, the second application No. 402^/1986 which goes to the root of the matter may become infructuous thus depriving the Defendant of a valuable right to which he is entitled under the scheme of the Code of Civil Procedure.

S. The contention raised in this application CMA No. 4025/1986 is that as the defendant has filed another suit being Suit No. 681/1983 against the plaintiff bank for a more extensive and comprehensive relief of dec­laration, redemption of property and damages etc. proceedings in the present suit should be stayed. Suit No. 681/1983 was filed by the defen­dant on 28th of November, 1983, about two years prior to the filing of the present suit (986/1985) which has been filed in this Court on llth December, 1985.

4.   The learned Counsel  for  the  Defendant  reads  Section   10 of the CPC which runs as under :

"10. Stay of suit.—No Court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties, or between parties under whom they or any of them claim litigating under the same title where such suit is pending in the same or any other Court in (Pakistan) having jurisdiction to grant the relief claimed, or in any Court beyond the limits of (Pakistan) established or continued by (the Central Government) and having like jurisdiction, or before the Supreme Court).

Explanation.—The pendency of a suit in a foreign Court does not preclude the Courts in (Pakistan) from trying a suit founded on the same cause of action."

5.   Learned Counsel for the Defendant contends that all the conditions visualized in the Section are fully  satisfied  in   the present case inasmuch as the  parties  in   both  the suits are the same and the matter in issue directly and substantially the same.    It  may be said that the off shoots originating from the main cause of action may differ a little   but the crux of the matter is so similar that it cannot be said that   the  findings   in one would not cast heavy shadows on the findings  of the  other.    The  best criterian to deter­ mine the similarity between the two  suits  is  to  compare  the pleadings in the two actions.   When I asked the learned counsel for the plaintiff whether the written statement in the present case would be the same as contents of the plaint filed in Suit No. 681/1983, the answer of the learned counsel was in the affirmative.    The learned   counsel  for  the  plaintiff frankly  conceded that both the suits related to the same cause of action,   the  matter in issue in this suit is also directly and substantially  in   isrue   in Suit No. 681/1983 filed two years earlier.    In view of the above  the   learned   counsel for the Defendant   gets   a   strong  footing  for  his   contention that proceedings in the present suit should be stayed in terms of Section 10 CPC.

6.    The legislative intent for enacting Section 10   CPC  is  summarized by  Aamer Raza  in his CPC,    Para 1   of the  commentry  of Section 10 CPC  at  page  43  of the  4th  Edition  of this book  may be  reproduced here :

"The object of the rule contained in Section 10 is to prevent Courts of concurrent jurisdiction from simultaneously entertaining and adjudicating upon two parallel litigations in respect of the same matters in issue (a). The policy of the law is to confine the parties to one suit, thus obviating the possibility of contradictory adjudications with regard to the same matters in issue (b). Section 10 codifies the principles of res sub judice, whilst section 11 relates to matters which have been adjudicated upon i,e., res judii'ata (c)."

7.    Learned counsel   for   the  plaintiff however,  advanced  two  foid arguments in opposition to the Defendant's application.    Firstly   he  tried to draw a distinction between the suits filed under Order 37 CPC read with Section 3 of the Banking Companies (Recovery of Loans) Ordinance, 1979, and suits filed in the regular  manner.    He  submitted  that  Section 10 did not apply to the suit of   formal  category.    In  the  alternative  he  argued that if Section 10 is applied to the Summary suits also then  the application under Section 10 would   not   He   till  the   Defendant   has     been  granted leave  to  defend  the  suit.    Argument  advanced   by  the   learned  counsel proceeds on the assumption that the suit filed under  the Summary Chapter notionaliy speaking is not a suit at all  because  unless  and  until   leave is granted under subrule (2) of rule 2 of Order 37, it cannot   be said that the parties are at issue against each other    But once leave is granted, learned, counsel concedes, the stage would come when the provision  of   Section 10 CPC would become operative and consequences   visualized  in  this section would immediately begin to follow     I am afraid I  cannot  read  any such jCiassification of suits in Section 10 of the  CPC,    In   my  reading  the  bar junder  Section   10  CPC  is  applicable  to   all   classes of suits without any Aidistinction and the moment it is brought to  the   notice.. of the  Court, the [Court must stay its hands due to mandatory   requirement   of this Section. JAnd I must add that there is no dispute that   the  provisions of Section 10 BJCPC are mandatory  in nature.    One of the reasons   for not subscribing to the view of the learned counsel for the   plaintiff is  that  if the distinction, between the Summary Chapter  suits  and  regular  suits  is  accepted  then exercise of the power under Section 10 CPC would depend   on   the   option of the plaintiff.    If the   arguments   of  the   learned  counsel   is   accepted then the Court was to pass one order, if   the  suit  was  filed in the regular procedure and another order if' the plaintiff had chosen  to file a suit under the Summary Chapter I am afraid this kind of classification cannot be read in  Section   10 CPC.    Before  proceeding  further    it  is   better  to  read Order 37 CPC :

"All suits upon bills of exchange, hundies or promissory notes, may, in case the plaintiff desires to proceed hereuader, be institu­ted by presenting a plaint in the form prescribed; but the summons shall be in Form No. 4 in Apnendix B or in such other form as may be from time to time prescribed,"

8.               The words "Suits"  and   "Institution"  clearly  indicates  that  the suit filed under the Summary Chapter is also to be  treated as suit from the moment of its institution and there is nothing to  show   why  it  should  be differently  treated  from  those  suits    which    are    filed    in   the  regular manner.

9.        A close look at Order 37 would show that this  Order consisting of only 7 rules prescribes summary procedure for  disposal   of suits  filed  on the basis of negotiable instruments.    The plaintiff remains plaintiff aod the defendant  remains defendant. The only difference is that the burden of proof which usually rests on the plaintiff is shifted to the defendant. It may be said that in suits under Order 3? CPC the plaintiff starts with an initial advantage of presumption in his favour and the defendant with an initial handicap of discharging the burden of first  displacing  this   initial   presumption.    This is evident from the words used in sub-rule (2) which  postualtes "In default of his obtaining such leave the allegations in   ths   plaint   shall  be  deemed to be admitted and the plaintiff shall   be  entitled  to  the  decree  for  the principal sum due on the   instrument  and   for  interest,"    The  effort   for getting rid of this presumption against him is made by   defendant  through an application to be  filed   by  him   under  sub-rule (2)   of  rule   2 of this Order.    The defendant must enter appsarancs within SO days  after service of notice of the filing of the suit and satisfy the Court that initial presump­tion drawn in favour of the plaintiff on the  strength   of negotiable  instru-,T.ent is not well founded and that   he   has   a  good   defence   to   the claim lodged by   the   plaintiff.    This  is   usually  calied  the  application   seeking permission  or   leave    to   defend    the    suit.    After   the   defendant  enters appearance the plaintiff would press for a decree and   the defendant   would make an effort to eei rid   of   initul   presumption   and  the  Court   shall be obliged to examin-Mhe rruriu of the  contentions  of  boih   the   parties and reader the decision      If the defendant tails to dislodge the   initial presump­tion the decree would be passed out   right  without  any  further    evidence. The negotiable instrument itself would be  treated    as  conclusive  evidence against  the  defendant.    In   case   the  defendant succeeds  in demolishing the initial presumption  he would be allowed  to  defend  the  suit  and   the suit will proceed in the normal way.    it needs no efforts  to  emphasize that what could be  achieved  through the process   of a   prolong   procedure has been  compacted   to   be  done   in   a   suintniry manner in this   Order.    The negotiable   instrument   dominates   over   all   othsr   facts  and over   weighs against   all other   evidence.    Withoutjleading   any evidence in support and cutting down all procedural trappings m  the   way the   plaintiff would   be entitled to a clear and ftna! decree if no application   to   defend the suit has been filed within 10 days or the application   has   been   filed   but   leave has beeo refused.   By no mjans it can bs said that to obtain a decree  anything further would b: required to '03 dans.    As stated in the earlier- paragraphs if leave is refused decree would be passed and   as   such   nothing   would be left to be stayed.    If however, the leave is granted   then it  would   amount to converting the mode of disposal of the suit    from   summary   to   regular _, from and   in  such   an   eventuality   the  consideration for   discharging   the burden of proof would be the same as in any other case.

10.               It is to be kept in mind that in either case where the leave is refused/ or leave is granted the order of the Court would discuss some of the merits off the case and pass the order with certain reasonings. This by itself would mean! expression of opinion on the merits of the case  which   would cause adverse/ effect in  the previously  filed  suit.    id   my  humble  opinion   the   mandate postulated in Section 10 CPC should  be  applied  at the earlier stage before the mischief which is intended to be  controlled   has   fully   run   its   course. Once a decree is passed the provision of Section 10   would    ecome  a dead letter from the point of view of the  defendant   who   was   entitled   to the protection of Section 10 CPC on account of the  previous  action which he had filed in the Court.

11.        The learned counsel further  contended   that   this   suit  has  been filed  under  Banking Companies  (Recovery  of  Loans)  Ordinance,   1979 which is aimed at securing speedy   results  of the  actions   launched   under this Ordinance.    This may be so, but unfortunately ha   has   not    been able to show  how such  an  intention   can   be   interpreted  to   frustrate  other 'statutory provisions which are of mandatory nature unless a clear intention is expressed for adopting such a course. Ths controversy between the/ parties and consideration for its resolution remain the same. The concept/I of Section 10 CPC is that no two adjudications should be produced which may clash against each other. Whether these adjudications are made by the ordinary Courts or a special Banking Court is not of much consequence. More-over, there is hardly any difference between provisions of Order 37 and the Banking Companies Ordinance. Merely a Special Court has been provided by the Ordinance for trial of suits of a particular category.

12.              To be fair to the learned counsel I must mention  that  in support of his argument the learned counsel relied on a case   decided   by a learned Single Judge of this Court.    The case is reported in   PLD   1982   K.ar. 74x In this case the suit was filed under  Order 37  on   the  allegation   that  the defendant had obtained a loan   from  the  plaintiff.    In order to discharge this liability the defendant had issued a cheque. This cheque when tendered to  the bank for encashment was  dishonoured obliging the plaintiff to file a suit for the recovery of the amount of this dishonoured  cheque. The defen­ dant denied the claim and pleaded that the  cheque   was  one   of the  nine cheques which the defendant   had issued in various amounts for investment in business.    The plaintiff had realised the amount of one cheque, but after realising the amount had failed to share the profits.    The defendant there­ fore, lost faith in the plaintiff and stopped further payments to the plaintiff which he was to collect   by   negotiating  all  the   remaining  cheques.    The defendant   further pleaded that he had filed a suit  for  declaration that the cheques issued by   him  were   without  consideration  and  they  should be cancelled.

13.              The defendant therefore,   prayed  for  stay   of the   suit pending disposal of the suit  filed  by  him  earlier.    Question  arose whether he was entitled to stay   by force  of  Section   10   CPC.    The   learned   Judge  after hearing the parties and their advocates and   also four other learned counsel who appeared as amicus curias in the case answered this question and ruled that the plaintiff's application under Section 10  CPC   for stay  did  not  lie till  his  applicatibn  for  leave   to  defend  was not  allowed  by the Court. Holding that the provision of Section 10 CPC were   mandatory the learned Judge nevertheless opined that they were not  attracted  till  the  Defendant had acquired a locus   standi  in  the   proceedings   by  obtaining   "leave  to appear and to defend the suit".    The learned Judge held :

"I am of the opinion that unless a defendant obtains leave from the Court to appear and defend the suit he is not entitled to make inter-locutory application including an application under Section 10 CPC The consideration of application under Section 10 CPC is deferred till the defendant's application under Order 37 rule 2 is decided."

14.    It appears to me that the learned Judge has treated the application under Section  10 CPC as an   interlocutory   application  in   the suit.    With great respect to the learned Judge my approach is different.    The interlocu­ tory  application   seeking   an   interim  relief   is  subservient  to  the   relief claimed in the plaint.    Surely such an application is   not  to be pressed till such time  that  leave  to   defend   is  granted  to  the   Defendant.    But  an application under Section 10 CPC ranks  higher  than   the  application   for interim/inter-locutory relief.    Conceptually   speaking   such   an   application is not the application in the suit     It is an application  out of ambit of the suit.    In my humble  opinion   if the  consideration   and  disposal   of the application under Section 10 CPC is deferred till after the leave application is decided it would result   in  consequences   diagonally   opposed   to  those which section 10 seeks to achieve.    As  discussed  by  rae  in the  preceding paragraphs if leave is refused a decree would immediately be passed against the defendant and there would be nothing left to be stayed. The decree would be final decree against which an appeal may be filed but nothing would remain alive so far as the suit is concerned.

15. Alternatively if leave is granted then the learned counsel himself concedes and indeed such is the burden of the judgment in PLD 1982 Kar. 745, that the stay should be granted. In other words what could be done at the earliest stage is now being done after the disposal of this application. Moreover, it is to be noted that in disposing of the leave application whether it is refused or granted the Court will discuss the merits of the case and this discussion would result in a situation which Section 10 seeks to avoid. Un account of discussion in the disposal of the leave application the findings in the previously instituted suit would surely be effected because this discussion would not be tentative in nature but in a judgment which is appealable. To highlight the objects of Section 10 I cannot do better than to refer to the opinion expressed in the judgment of the learned Judge who has himself discussed the impact of this provision of law in para 5 at page 745 of PLD 1982 Karachi :

"Before considering various authorities cited by the learned counsel it would be appropriate first to determine the object and nature of Section 10 CPC and Order 37 CPC, Section 10 is mandatory and has been couched in a prohibitory language. The object of Section 10 is to prevent Coi. ts of concurrent jurisdiction from simultaneously adjudicating and proceeding with trial of two suits in which the matter in issue is directly and substantially the same between the same parties. This section prohibits trial of two parallel litigations in respect of the same cause of action, the same subject-matter the same relief between the same parties. It has always been the policy of law that multiplicity of suits should be avoided and possibility of conflict of decision between two or more Courts in respect of the same subject-matter and controversy should be discouraged,"

I fully concur with the above analysis but cannot see any reason why a suit under Order 37 should be given priority over a suit which has been filed earlier in point of time. Would it not amount to cause violence to the mandate plainly and lucidly enunciated by the learned Judge in the judgment referred to above in the following passage :

"Where the conditions laid down by Section 10 are satisfied the Court had no discretion in the application of this section as the provisions of this section are mandatory and the previously instituted suit alone should be proceeded with and the subsequent suit must be stayed."

16.    The upshot of the discussion above   is that  there  is  no statutory requirement nor indeed any rule of prudence  to   clothe Section 10 with the interpretation advanced by the  learned  counsel  for the  plaintiff and restrict its operation to one class of suits  and  exclude  another class of sui from its operation.    In  my  view the application  under  Section 10  CPC filed by the  defendant is  maintainable   and   the  provision   of Section   10 being  mandatory   I   have   no  discretion   or   option   to  sitber  reject  this application or to defer the consideration of this application till the disposal of the defendant's application  for  leave.    This application  is,  therefore, granted and the proceedings in the suit are stayed.
(TQM)                                                                           Proceedings stayed.