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Before Ibadat Yar Khan, J
HABIB BANK LTD.-Plaintiff
versus
ALI MOHTARAM NAQVI--Defendant
Suit No. 986 of 1985, Civil Miscellaneous Applications Nos. 450 and 4025 of 1986, decided on 1st January, 1987.
(a) Civil Procedure Code (V of 1908)-
----S. 10-Stay of suit-Requirements-Where parties in previously instituted suit and in suit sought to be stayed were same and matter directly and substantially in issue in both suits was also same, best criterion to determine similarity between two suits, held, would be to compare pleadings in both suits - Offshoots originating from main cause of action though could differ a little but crux of matter should be so similar that findings in one could cast heavy shadows on findings of other.
(b) Civil Procedure Code (V of 1908)-
-- Ss. 9, 10 & O. XXXVII, R. 2--Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S. 3 - Summary suits and regular suits - Classification of suits whether visualized in S. 10, C. P. C. - Bar under S. 10, C. P. C. is applicable to all classes of suits without any distinction-Provisions of S. 10, C. P. C. being mandatory in nature Court would stay its hands as soon as matter falling within provisions of S. 10, C. P. C. was brought to its notice.
(c) Civil Procedure Code (V of 1908)-
-- S. 10-Words "suits" and "institution", connotation of-Words "suits" and "institution", indicate that suit filed under summary chapter was also to be treated as suit from the moment of its institution and there was nothing to show why same should be differently treated from those suits which were filed in regular manner.-[Words and phrases].
(d) Civil Procedure Code (V of 1908)-
-- O. XXXVIL Rr. 1 to 7 - Suits filed on basis' of negotiable instruments-Procedure for disposal of such suits, stated.
A close look at Order XXXV1I, C. P. C., 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 and 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 XXXVII, C. P. C. 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 postulates "In, default of his obtaining such leave the. allegations in the 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 appearance within 10 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 instrument is not well-founded and that he has a good defence to the claim lodged by the plaintiff. This is usually called 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 get rid of initial presumption and the Court shall be obliged to examine the merits of the contentions of both the parties and render the decision, If the defendant fails to dislodge the initial presumption the decree would be passed outright 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 prolonged procedure has been compacted to be done in a summary manner in this Order. The negotiable instrument dominates over all other facts and overweighs against all other evidence. without leading any evidence in support and cutting down all procedural trappings in the way the plaintiff would be entitled to a clean and final decree if no application to defend the suit has been filed within 10 days or the application has been filed but leave has been refused. By no means it can be said that to obtain a decree anything further would be required to be done. 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 form and in such an eventuality the consideration for discharging the burden of proof would be the same as in any other case.
In either case where the leave is refused or leave is granted the order of the Court would discuss some of the merits of the case and pass the order with certain reasoning. This by itself would mean expression of opinion on the merits of the case which would cause adverse effect in the previously filed suit. The mandate postulated in section 10, C. P. C. 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 become a dead letter from the point of view of the defendant who was entitled to the protection of section 10, C. P. C. on account of the previous action which he had filed in the Court.
(e) Civil Procedure Code (V of 1908)-
-- S. 10-Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), S. 6-Purpose and scope of S. 10, C. P. C.-Concept of S. 10, C. P. C. is that no two adjudications should be produced which could clash against each other whether adjudications were made by ordinary Courts or a Special Banking Court-Hardly any difference exists between provisions of O. XXXVII, C. P. C. and Banking Companies Ordinance except that a Special Court has been provided by Ordinance XIX of 1979.
(f) Civil Procedure Code (V of 1908)-
-- S. 10 & O. XXXIX, Rr. 1 & 2-"Application for stay of suit" and "interlocutory application"-Comparison.
The interlocutory 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, C: P. C. ranks higher than the application for interim/interlocutory relief. Conceptually speaking such an application is not the application in the suit. It is an application out of ambit of the suit. If the consideration and disposal of the application under section 10, C. P. C. is deferred till after the leave application is decided it would result in consequences diagonally opposed to those which section 10 seeks to achieve, 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.
Alternatively if leave is granted then the stay should be granted. In other words what could be done at the earliest stage is now being done after the disposal of the application. 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. On 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 to a judgment which is appealable.
P L D 1982 Kar. 745 ref.
(g) Banking Companies (Recovery of Loans) Ordinance (XIX of 1979)-
-- S. 6-Civil Procedure Code (V of 1908), S. 10 & O. XXXVII, R. 3-Regular suits and suits based on negotiable instruments-Bar of S. 10, C. P. C. whether applicable inter se - Neither statutory requirement nor rule of prudence clothes S. 10, C. P. C. with interpretation to restrict operation thereof to one class of suits and exclude other class of suits from its operation-Provisions of S. 10, C. P. C. being mandatory, previously instituted suit by defendant would proceed while subsequent suit filed by plaintiff on negotiable instrument was stayed.
Ibrahim Peshori for Plaintiff.
A. Razzaq Siddiqui for Defendant.
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 C. P. C. and section 6 of the Banking Companies (Recovery of Loans) Ordinance, 1979.
2. The defendant has moved an application C. M. A. No. 450 of 1986 under Order XXXVII, Rule 3, C. P. C. 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 C. M. A. No. 4025 of 1986 under section 10 read with section 151, C. P. C. The learned counsel for the defendant insists that C. M. A. No. 4025 of 1986 should be decided first. He submits that if C. M. A. No. 450 of 1986 is decided first, the second Application No. 4025 of 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. 3. The contention raised in this application C. M. C. No. 4025 of 1986 is that as the defendant has filed another suit being Suit No. 681 of 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 of 1983 was filed by the defen dant on 28th of November, 1983, about two years prior to the filing of the present suit (986 of 198) which has been filed in this Court on 11th December, 1985.
4. The learned counsel for the defendant reads section 10 of the C. P. C. which runs as under :-
"10. Stay o1 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 is directly and substantially the same. It may be said that the offshoots 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 A heavy shadows on the findings of the other. The best criterion to determine 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 iii Suit No. 681 of .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 issue in Suit No. 681 of 1983 filed two years earlier. In view of the above the learned counsel for the defendants gets a strong footing for his contention that proceedings in the present suit should be stayed in terms of section 10, C. P.C.
6. The legislative intent for enacting section 10, C. P. C. is summarised by Aamer Raza in his C. P. C. para. 1 of the commentary of section 10, C. P. C. 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 re-sub judice, whilst section 11 relates to matters which have been adjudicated upon i.e., res judicata (c)."
7. Learned counsel for the plaintiff, however, advanced two-fold arguments in opposition to the defendant's application. Firstly he tried to draw a distinction between the suits filed under Order XXXVII, C. P. C. 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 lie 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 notionally speaking is not a suit at all because unless and until leave is granted under sub-rule (2) of Rule 2 of Order XXXVII, 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, C. P. C. would become operative and consequences visualized in this section would immediately begin to follow. I am afraid I cannot read any such classifica tion of suits in section 10 of the C. P. C. In my reading the bar under section 10, C. P. C. is applicable to all classes of suits without any distinction 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. And I must add that there is no dispute that the provisions of section 10, C. P. C. 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, C. P. C. 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, C. P. C. Before proceeding further it is better to read Order XXXVII, C. P. C. :-
"All suits upon bills of exchange, Hundis or promissory notes, may, in case the plaintiff desires to proceed hereunder, be instituted by presenting a plaint in the form prescribed ; but the summons shall be in Form No. 4 in Appendix B or in such other form as may be-from time to time prescribed."
8. The words "suits" and "institution" clearly indicate 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 XXXVII would show that this Order consist ing of only 7 rules prescribes summary procedure for disposal of suits file on the basis of negotiable instruments. The plaintiff remains plaintiff and 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 XXXVII, C. P. C. 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 postulates "In default of his obtaining such leave the allegations in the 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 o defendant through an application to be filed by him under sub-rule (2) of Rule 2 of this order. The defendant must enter appearance within 10 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 instrument is not well-founded and that he has a good defence to the claim lodged by the plaintiff. This is usually called 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 get rid of initial presumption and the Court shall be obliged to examine the merits of the contentions of both the parties and render the decision. If the defendant fails to dislodge the initial presumption the decree would be passed outright 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 prolonged procedure has been compacted to be done in a summary manner in this Order. The negotiable instrument dominates over all other facts and over weighs against all other evidence. Without leading any evidence in support and cutting down all procedural trappings in the way the plaintiff would be entitled to a clean and final decree if no application to defend the suit has been filed within 10 days or the application has been filed but leave has been refused. By no means it can be said that to obtain a decree anything further would be required to be done. As stated in the earlier paragraphs if leave is refused decree would be passed and as such nothing would be left to be stayed. I however, the leave is granted then it would amount to converting the mode of disposal of the suit from summary to regular form 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 of 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. 1n my humble opinion the mandate postulated in section 10, C. P. C. 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 become a dead letter from the point of view of the defendant who was entitled to the protection of section 10, C. P. C. 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 he 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. The controversy between the parties and consideration for its resolution remain the same. The concept of section 10, C. P. C. is that no two adjudications should be produced which E may clash against each other. Whether these adjudications are made by the ordinary Courts or a Special Banking Courts is not of much consequence. Moreover, there is hardly any difference between provisions of Order XXXVII 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 P L D 1982 Kar. 745. In this case the suit was filed under Order XXXVII 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 defendant 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, therefore, 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 be was entitled to stay by force of section 10, C. P. C. The learned Judge after hearing the parties and their Advocates and also four other learned counsels who appeared as amicus curiae in the case answered this question and ruled that the plaintiff's application under section 10, C. P. C. for stay did not lie till his application for leave to defend was not allowed by the Court. Holding that the provisions of section 10, C. P. C. 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 interlocutory application including an application under section 10, C. P. C. The consideration of application under section 10, C. P. C. is deferred till the defendant's application under Order XXXVII, rule 2, is decided."
14. It appears to me that the learned Judge has treated the application under section 10, C. P. C. as an interlocutory application in the suit. With great respect to the learned Judge my approach is different. The interlocutory application seeking an interim relief is subservient to the relied 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, C. P. C. ranks higher than the application for interim/interlocutory 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, C. P. C. 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 me in the preceding paragraphs if leave is refused a decree would immediately be F 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 P L D 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. On 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 applicable. 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 P L D 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, C. P. C. and Order XXXVII, C. P. C. Section 10 is man datory and has been couched in a prohibitory language. The object of section 10 is to prevent Courts 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 and 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 is respect of the same subject-matter and controversy should be discharged."
I fully concur with the above analysis but cannot see any reason why a suit under Order XXXVII 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 suits 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 to restrict its operation to one class of suits and exclude another class of suit from its operation. In my view the application under section 10, C. P. C. G filed by the defendant is maintainable and the provisions of section 10 being mandatory I have no discretion or option to either 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.
A. A. Application granted.
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