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First Appeal No. 17 of 1983, decided on 14th March, 1985.

---S. 96 and O.XXXVII, r. 3--Stamp Act (II of 1899), Ss. 12(3) & 35--First appeal--Question of fact--Loan on promissory note--Failure to pay loan--Suit for recovery--Leave granted to defend suit on condition of furnishing surety which was accepted if defendant deposited as security original allotment order of property--Security as required not furnished--Order granting leave to defend suit was vacated--Appeal--Objection for first time in appeal that promissory note was not duly cancelled as required by S. 12 (3) of Stamp Act--Ground not taken in application under 0. XXXVII, r. 3i C.P.C.--Question of fact and law, held, could both be agitated in first appeal.

---Ss. 12(3) & 35--Stamps affixed on promissory note--Some stamps bearing signature of promisor, other stamps cancelled by drawing lines across them--Promissory note, held, had been effectually cancelled as required by S. 12(3) of Stamp Act. Habib Bank Ltd., Karachi v. Raza Sons & Co. and another PLD 1978 Kar. 425 rel.

---Ss. 79 & 80--Civil Procedure Code (V of 1908), 0. XXXVII, r.3--Suit filed under summary procedure--No defence--Allegations in plaint, held, legally deemed to be admitted--Plaintiff entitled to a decree for principal amount due on instrument and for interest in accordance with provisions of S. 79 or 80 of Negotiable Instruments Act, 1881.

Raja Qureshi for Appellant.

Rustom J.E. Kaikobad for Respondent.

Date of hearing: 14th March, 1985.

This is a First Appeal against the Judgment and Decree dated 30-7-1983 passed by the learned District Judge, Karachi, in Suit No. 36 of 1983 whereby the leave to defend the suit earlier granted to the appellant was vacated for failing to furnish surety as ordered by the learned Judge, and consequently the suit was decreed with costs. 2. The facts leading to the present appeal, in brief, are that the respondent advanced a loan of Rs. 1,00,000 (Rupees One Lac) to the appellant who executed a Promissory Note on 2-5-1982 in favour of the respondent. The appellant having failed to repay the loan, the respondent filed a Suit bearing No. 36 of 1983 under Order XXXVII, C.P.C. in the Court of learned District Judge, Karachi. The appellant filed an application under Order XXXVII, rule 3, C.P.C. praying for leave to defend the suit on the ground that he was forced to execute the promissory note before Martial Law Authority and that he had received no consideration. He was granted leave to defend the suit on the condition that he would furnish surety within 21 days from the date of the order which was passed on 5-4-1983. The appellant furnished surety which was accepted, subject to the condition that the appellant would deposit with the Nazir the Original Allotment order of the property sought to be furnished as security, within 2 weeks from 27-4-1983. The appellant failed to deposit the said document and thus the order granting leave to defend was vacated by the learned Judge, Karachi, and the suit was decreed, which is impugned before me. 3. I have heard Mr. Raja Qureshi, learned counsel for the appellant and Mr. Rustom J. E. Kaikobad, learned' counsel for the respondent. Learned counsel for the appellant did not address me on the vacating of the order, dated 5-4-1983 read with 27-4-1983 or the impugned order, dated 30-7-1983 in so far as it relates to vacating the order granting leave to defend. The only contention, or to put in words of the counsel, the crux of the entire matter, is that the Promissory Note was not cancelled as required under section 12(3) of the Stamp Act and so it is hit by section 35 of the said Act. With the result the suit could not be decreed on the basis of the said Promissory Note. In support of his contention he referred to the photostat copy of the Promissory Note which he received alongwith the copy of the Plaint. 4. Mr. Rustom J. E. Kaikobad, learned counsel for the respondent firstly urged that this ground was not taken by the appellant in the application filed by him under Order XXXVII, rule 3 of the Civil Procedure Code and, therefore, the appellant cannot take this ground now in this Court. I repel this contention as in a First Appeal the question of fact and law can both be agitated. Mr. Kaikobad, however 4 further submitted that the Promissory Note is duly cancelled. On seeing the original promissory note which has been filed in this Court on 29-1-1985, I find that 30 Stamps of 50 Paisa each are affixed on the Promissory Note. Three Stamps bear the signature of the respondent whereas, the other stamps have been cancelled by drawing lines cross the other stamps. Section 12(3) of the Stamp Act provides that the stamps can be cancelled by writing on or across the stamp the name of the person who executed the Promissory Note or his initial or the names or initials of his firm by any other effectual manner. The words "effectual manner" have been interpreted in a decision of this Court reported as Habib Bank Ltd., Karachi v. Raza Sons & Co. and another P L D 1978 Kar. 425 wherein two other decisions of the Sind Court were referred to and relied upon by the learned Single Judge of this Court and I find myself in respectful agreement with the observations made therein which, for the sake of convenience, are reproduced below:-

"Now, if an adhesive stamp is affixed on a document and it is B cancelled by drawing a line across it, it cannot be used again unless it is removed from the document which may not be possible without in some measure causing some visible damage to the stamp itself. Moreover, under subsection (3) of section 12, the legislature has not provided that the person required to cancel an adhesive stamp affixed to a promissory note or to a document must do so in such a manner that it is impossible for a criminal-minded person to use that stamp again in any circumstances whatever." I am, therefore, of the view that the promissory note has been effectually cancelled as required by section 12(3) of the Stamp Act. 5. Now, coming to the decree passed by the learned Judge, it is apparent that the suit was filed under summary procedure as provided under Order XXXVII, C.P.C. There being no defence, in the circum stances stated above, the allegations in the plaint were legally deemed to be admitted and the respondent was entitled to a decree for the principal amount due on the instrument and for interest in accordance with provision of 79 or section 80, as the case may be of the Negotiable Instruments Act, 1881 as provided in. sub-rule (2) of Order XXXVII.

I, therefore, find no illegality, both on facts or in law, so as to justify any interference by me in this appeal. The appeal is, therefore, dismissed but in the circumstances there will be no order as to costs. A.A. Appeal dismissed.