Order 37 suit is not maintainable when part payment is received .

FORM NO. HCJDC/A38

JUDGMENT SHEET

IN THE LAHORE HIGH COURT LAHORE

JUDICIAL DEPARTMENT

JUDGMENT

R.F.A.No.1693 of 2014

Shaukat Iqbal Vs Muhammad Shumail

Date of Hearing : 19.05.2022

Appellant by :

Mr. Mehram Ali Bali,

Advocate

The respondent/plaintiff was

proceeded against ex-parte on

19.05.2022

MASUD ABID NAQVI, J.

Brief facts necessary for the adjudication

of this lis are that the respondent/plaintiff filed a suit for recovery of

Rs.300,000/- under Order XXXVII CPC against the appellant/defendant

with the specific averments that he paid an amount of Rs.300,000/- to the

defendant/appellant as a loan on 12.07.2006 in presence of witnesses

namely Zafar Abbas & Mohammad Mushtaq and the appellant/defendant

handed over to the respondent/plaintiff a cheque No.641730 and the said

cheque was dis-honoured for insufficient funds on 09.11.2006.

Thereafter, the respondent/plaintiff presented the cheque on 01.02.2007

& 22.03.2007 but the cheque was not encashed due to insufficient fund,

hence the instant suit. The appellant/defendant denied about the receipt of

loan from the respondent/plaintiff with the claim that the disputed cheque

was handed over to the respondent/plaintiff as رپ وطر ےک زرامضتن. He further

R.F.A.No.1693 of 2014

pleaded that an amount of Rs.100,000/-was returned by him to the

respondent/plaintiff after the initiation of criminal proceedings against

the appellant/defendant. Out of divergent pleadings of the parties, issues

were framed by the learned Trial Court and parties led their respective

oral as well as documentary evidence. After hearing the arguments

advanced by both the parties, the learned Trial Court vide judgment and

decree dated 13.02.2016 decreed the suit. Feeling aggrieved, the

appellant/defendant preferred instant appeal and challenged the validity

of the impugned judgment and decree passed by the learned trial court.

Apart from other arguments, learned counsel for appellant mainly

argues by placing reliance on the case reported as Khalid Mahmood Vs

Tandlianwala Sugar Mills Ltd through Manager, Personnel and

Administration Faisalabad (PLD 2011 Lahore 52) that learned trial court

had no jurisdiction to entertain and adjudicate upon the lis because after

the receipt of an amount of Rs.100,000/- by the respondent/plaintiff

before filing of suit, negotiable instrument lost its enforceability under

special law. I have heard the arguments of learned counsel for the

appellant/ defendant and minutely gone through the record as well as the

impugned judgment and decree.

There is no denial of facts that disputed cheque No.641730 was

issued on 12.07.2006, suit was instituted on 21.10.2009 on the basis of

cheque amount and the respondent/plaintiff admittedly received an

amount of Rs.100,000/- from the appellant/defendant in the year 2008

before filing suit. While appearing as PW-1, respondent/plaintiff

conceded about the part-payment in cross-examination but by concealing

R.F.A.No.1693 of 2014

this fact intentionally, failed to plead this fact in his plaint and simply

filed a suit for recovery of cheque amount. Now the question which

comes up for consideration is as to what the expression “sum of amount

undertaken or ordered to be paid to payee” means in a case where the

admitted liability of the drawer of the cheque gets reduced, on account of

part-payment made by him, after issuing the cheque. No doubt, the

expression “sum of amount undertaken or ordered to be paid to payee”

would mean the amount of the cheque alone in case the amount payable

by the drawer but, can it be said the expression “sum of amount

undertaken or ordered to be paid to payee” would always mean the

amount of the cheque, even if the actual liability of the drawer of the

cheque has got reduced on account of some payment(s) made by him

towards discharge of the debt or liability in consideration of which

cheque in question was issued. If it is held that the expression “sum of

amount undertaken or ordered to be paid to payee” would necessarily

mean the amount of cheque in every case, the drawer of the cheque

would be required to make arrangement for more than the cheque amount

payable by him to the payee of the cheque in case of part-payment by the

drawer of cheque to the payee. Obviously this could not have been the

intention of the legislature to make a person liable to pay more amount

than amount payable through cheque. If the drawer of the cheque is made

to pay more than the amount actually payable by him, the inevitable

result would be that he will have to chase the payee of the cheque to

recover the excess amount paid by him. Therefore, it is difficult to take

the view that even if the admitted liability of the drawer of the cheque has

R.F.A.No.1693 of 2014

got reduced, on account of certain payment(s) made after issuance of

cheque, the payee would be entitled to present the cheque for the whole

of the amount to the banker for encashment or in such a case, if cheque is

dishonoured for want of funds, a cause of action compulsorily will arise

to file a suit for recovery of cheque amount under order XXXVII CPC. I

am also conscious/aware of the situation where with a view to

circumvent and get out of summary procedure under Order XXXVII

CPC, the drawer of a cheque can make part-payment of the amount of the

cheque but this can easily be avoided by payee of the cheque, either by

taking new cheque of the reduced amount from the drawer or by making

an endorsement through a note on the cheque by the drawer

acknowledging the part-payment and then presenting the cheque for

encashment of only the balance amount due and payable to him. In fact,

Section 56 of Negotiable Instrument Act, 1881 specifically provides for

an endorsement on a Negotiable Instrument with regard to part-payment

and the instrument can thereafter be negotiated for the balance amount. If

the drawer and payee of cheque adopt the procedure given in section 56

of Negotiable Instrument Act, then it would be open to the payee of the

cheque to present the cheque for payment of only that much endorsed

balance amount which is due to him. After the receipt of admitted partpayment from the amount of cheque before filing the suit, the payee can

neither present the cheque for encashment without adopting procedure

under Section 56 of Negotiable Instrument Act, 1881 nor can file suit for

recovery of cheque amount while invoking special jurisdiction under

Order XXXVII CPC in new circumstances/ situation which is a

R.F.A.No.1693 of 2014

subsequent agreement rather will file a suit for recovery of balance

amount of cheque before an ordinary civil court of plenary jurisdiction.

Generally, there is no cavil to the proposition that Order XXXVII CPC

does not restrict person(s) /plaintiff(s) from filing an ordinary suit for

recovery of cheque amount before an ordinary civil court of plenary

jurisdiction rather provides discretion to either institute a suit by invoking

special jurisdiction under Order XXXVII CPC or to file the same under

ordinary procedure before ordinary civil court of plenary jurisdiction and

there exists no legal compulsion to restrict the choice of

person(s)/plaintiff(s).

In view of the foregoing discussion, I am of the affirmed view that

the learned trial court erred in law in decreeing the suit vide impugned

judgment dated 30.10.2014, hence, the same is hereby set-aside by

allowing this regular first appeal on the question of jurisdiction with the

direction to learned Additional District Judge to return the plaint under

Order VII Rule 10, CPC to the respondent/plaintiff for filing the same

before an ordinary civil court of plenary jurisdiction.

(MASUD ABID NAQVI)

JUDGE

Approved for reporting.

JUDGE

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