2026 M L D 409

 2026 M L D 409

[Lahore (Multan Bench)]

Before Anwaar Hussain, J

RAAZIQ INTERNATIONAL (PVT.) LTD.---Appellant

Versus

MULTAN EXPORT COMPANY and others---Respondents

Regular First Appeal No. 117 of 2011, decided on 25th September, 2025.

Civil Procedure Code (V of 1908)---

----O. XXXVII, Rr.2 & 3---Suit for recovery of money---Dishonored

cheques---Security cheques---Proof---Appellant / plaintiff company

was aggrieved of dismissal of its suit seeking recovery of money on

the basis of five cheques valuing Rs.1,496,480/---Validity---There was

not only business relationship acknowledged, but cheques in

question could not have been issued merely as security---Cheques in

question represented subsisting and admitted liability arising from

services actually rendered---Appellant/plaintiff, was entitled to

claim entire sum covered by the cheques, or that amount which had

been acknowledged through letter dated 06-10-2007 exhibited by

appellant / plaintiff which had confined its suit only to

Rs.934,491.90, a figure consistent with reconciled balance after

adjusting payments made by respondent / defendant---Such fortified

bona fides of the claim of appellant/plaintiff had demonstrated that

Trial Court failed to correctly appreciate evidence on record---On

proper appraisal of record and issues which were core point of

determination, suit should have been decided in favour of appellant

/ plaintiff---Admitted issuance of cheques coupled with the

established course of dealings proved the claim of appellant /

plaintiff---Respondent / defendant failed to substantiate its defence,

hence, Trial Court s conclusion was legally flawed---High Court set

aside judgment and decree passed by Trial Court and decreed the

suit of appellant / plaintiff---Appeal was allowed accordingly.

Shakeel Javaid Chaudhry for Appellant.

Malik Tariq Saeed for Respondents.

Date of hearing: 8th September, 2025.

JUDGMENT

ANWAAR HUSSAIN, J.---Through this appeal, challenge is laid to

judgment and decree dated 23.02.2011, passed by the Trial Court,

whereby the suit instituted by the appellant, under Order XXXVII, Code

of Civil Procedure, 1908 ( C.P.C ) for recovery of Rs.934,491.90, on the strength of five cheques issued by the deceased proprietor of the

respondent business concern namely, M/s Multan Export Company,

was dismissed.

2. By way of factual background, it has been noted that the appellant

is involved in rendering services of customs clearing, freight

forwarding and logistics etc. In the plaint of its suit, the appellant set

up a case that the appellant rendered certain services to the

respondent for export/shipment of mangoes to Dubai and Europe,

during the years 2006 07, and for the said transactions, the respondent

side issued five cheques of an aggregate sum of Rs.1,496,480/-.

However, the appellant confined its claim to Rs.934,491.90, asserting

that upon reconciliation of accounts this lesser sum remained

outstanding and payable and despite repeated solicitations, the said

balance was not cleared by the respondent. The suit was contested by

the respondent through filing of leave to defend. An independent

declaratory suit was also instituted by the respondent and it was

pleaded that the cheques were handed over, merely, as security. The

respondent set up the case that the relationship was governed by a

written agreement dated 08.06.2007, which stipulated advance

payment for all services; that during 2007 an amount of Rs.5,684,830/-

was paid, by the respondent to the appellant, against a liability of

Rs.5,200,000/-; and that a surplus of Rs.483,194/- stood in its favour. On

such premises, it was claimed that the cheques were issued as security,

without consideration. Leave to defend was granted and as many as

nine consolidated issues were framed. The plaint of the suit instituted

by the respondent was returned under Order VII, Rule 10, C.P.C for

presentation before a Court of plenary jurisdiction whereas the suit

instituted by the appellant was dismissed on merits, after recording of

evidence holding that the cheques were given as security and that the

appellant had failed to prove passing of consideration for their

issuance.

3. Arguments heard. Record perused.

4. The core point of determination is to examine whether the

cheques issued by the respondent were pursuant to payment due on

account of services rendered by the appellant or were given as a

security. The entire controversy was condensed in the following three

issues:

ISSUES

1. Whether the plaintiff has no cause of action and locus standi to

file the suit as he is estopped by his words and conduct and the

suit is not competent as declaratory suit for cancellation of impugned cheques is pending adjudication before the Civil

Court? OPD

2.

3. Whether a sum of Rs.9,34,491.90 was outstanding against the

defendant, who issued cheques in favour of the plaintiff which

were dishonoured and plaintiff is entitled to recover the same?

OPP

4. Whether the Cheques on the basis of which Raziq International

Pvt has filed the suit under order XXXVII Rule 2, C.P.C. were

given as security and without consideration, therefore, they are

liable to be cancelled? OPP

5. It is an admitted fact that the business relationship existed

between the parties. It is also admitted that the respondent instituted a

declaratory suit wherein issuance of the cheques were acknowledged

albeit that the same had been given as security. It is, therefore, not in

dispute that the cheques were drawn by the respondent. Upon

institution of the suit under Order XXXVII, C.P.C, the first aspect which

ought to have engaged the attention of the Trial Court was whether, at

the threshold, the suit was competent as one under Order XXXVII,

C.P.C. when the cheques issued aggregated to Rs.1,496,480/- whereas

the claim was confined to Rs.934,491.90. In this regard, issue No.1 was

framed. However, if the Trial Court considered this discrepancy fatal,

it should have returned the plaint straightaway as incompetent under

the summary procedure envisaged under Order XXXVII, C.P.C.

However, the Trial Court allowed leave to defend to the respondent

and thereby converted the matter into an ordinary suit. Once leave is

granted, the suit loses its summary character and proceeds in form of

a regular trial, where the Court must adjudicate on the basis of

preponderance of evidence. A summary suit under Order XXXVII,

C.P.C. ordinarily has two phases: the first, being the stage of summary

proceedings commencing from the institution of the suit and ending

with the decision on leave to defend. If the plaint is returned on

account of jurisdiction or leave is refused, the matter concludes at this

stage. If the leave is granted, the second phase follows, in which the

suit is treated as a regular/ordinary trial: issues are framed, parties

adduce their evidence, the burden of proof is determined in the light

of those issues, and the case is decided on merits, in accordance with

the general procedure of the C.P.C. and law of evidence.

6. The legal consequence of granting leave to defend and conversion

of summary procedure into a regular trial has not been kept in sight

by the Trial Court. The Trial Court decided the case as if it was still at

the stage of summary proceedings and did not examine the issues in the manner in which a regular trial of a civil matter is to be concluded.

The Trial Court erred by not appreciating that the issuance of the

cheques was admitted and no allegation of fraud was attributed to the

appellant/plaintiff side qua procurement of the cheques. The business

relationship between the parties was also clearly admitted. It is

imperative to note that the respondent took following stance in the

leave to defend, which was allowed:

(Emphasis supplied)

The respondent asserted that the cheques were given merely as

security and that in fact payments had been made in excess of liability.

When the appellant discharged its initial burden by producing the

cheques the issuance whereof was admittedly underpinned by

business relation and rendering of services by the appellant, for

shipment of mangoes of the respondent, the evidentiary onus then

shifted to the respondent to substantiate its claims of advance/excess

payments and to produce the written agreement allegedly governing

the business relationship. The respondent, however, failed to

discharge this burden. The alleged written agreement dated 08.06.2007

was never produced. No contemporaneous receipts, vouchers, ledger

accounts or bank statements were produced to corroborate the claim

of payments totalling Rs.5,684,830/-. In the absence of such material,

the plea of excess payment remained a bald assertion particularly

when the plaint of respondent s suit was returned and, admittedly, the

said suit was never filed before the Court of plenary jurisdiction. The Trial Court overlooked this deficiency and instead non-suited the

appellant on peripheral grounds.

7. Equally untenable is the finding of the Trial Court that the

cheques were issued as security. If the arrangement for rendering of

services was strictly on advance payment as per the purported

agreement dated 08.06.2007, issuance of security cheques was wholly

inconsistent with such arrangement. Such a plea as woven by the

respondent is clearly mutually destructive as, in the ordinary course of

human business, it is not normal to give security cheque of an amount

which, under the agreement, was to be paid in advance. Security

instruments come into equation only where the services are to be

performed prior to or contemporaneous with the payment. The very

existence of the cheques negates the respondent s stance of an

advance-only arrangement. This contradiction was neither noticed nor

resolved by the Trial Court. Therefore, the reliance placed by the Trial

Court on the fact that the appellant sued for a lesser sum than the

aggregate value of the cheques is misconceived. As observed above,

once leave to defend was granted, the proceedings under Order

XXXVII, C.P.C. were converted into an ordinary suit and it was

immaterial whether the plaintiff had confined its claim to a lesser

amount. The correct inquiry was whether, on a balance of

probabilities, the appellant had established its entitlement to the

claimed amount. Similarly, the observation that the witnesses of the

appellant were its own employees or that a criminal case in respect of

one cheque had been cancelled cannot form the basis of dismissal of

the suit. Testimony of employees is admissible evidence subject to

appreciation of credit; and the fate of criminal proceedings has no

determinative effect upon civil liability arising out of negotiable

instruments.

8. Another dimension of the matter that has been altogether

overlooked by the Trial Court is the effect of Exhibit P-7, a letter dated

06.10.2007, wherein the respondent side expressly admitted its liability

and sought time to discharge the same in the following terms:

We hereby confirm that your outstanding payment of airfreight is to

the tune of Rs.1.76 (M) at the end of Mango Season of the year

2007. We explained the situation wherein at this stage we are

unable to pay your said amount and hereby made a request that

to please allow us sometime to settle the said amount through

cash and post dated cheques.

This document (Exhibit P-7) was brought on record without any

objection by the respondent. Its veracity was neither challenged in

cross-examination, nor was any contradictory evidence, receipt or

voucher produced to displace it. The admission contained therein renders it evident, beyond cavil, that not only was the business

relationship acknowledged, but the cheques in question could not

have been issued merely as security; rather, they represented

subsisting and admitted liability arising from services actually

rendered. Significantly, the appellant, despite being entitled to claim

the entire sum of approximately Rs.1.496 million covered by the

cheques, or Rs.1.76 millions acknowledged through letter dated

06.10.2007/ Exhibit P-7, confined its suit only to Rs.934,491.90, a figure

consistent with the reconciled balance after adjusting payments made

by the respondent. This fortifies the bona fides of the appellant s claim

and demonstrates that the Trial Court failed to correctly appreciate the

evidence on record.

9. This Court is of the opinion that on a proper appraisal of record,

issues Nos.3 and 4, which are the core point of determination, should

have been decided in favour of the appellant. The admitted issuance of

cheques coupled with the established course of dealings sufficed to

prove the appellant s claim. The respondent failed to substantiate its

defence, hence, the Trial Court s conclusion is legally flawed.

10. For the reasons recorded above, this appeal is allowed. The

impugned judgment and decree is set aside. The suit of the appellant

stands decreed as prayed for. Parties shall bear their own costs.

MH/R-21/L Appeal allowed.