AZHAR HUSSAIN Versus MUHAMMAD IQBAL

Brief farts of the case are that the appellant filed a suit on 3‑2‑1988, under Order 37, rules 1 and 2, Civil Procedure Code for the recovery of a sum of Rs.23,500 against the respondent on the basis of a pronote Exh. P.1 dated 13‑5‑1985 and a receipt Exh.P.2 of the same date. The respondent moved an application for leave to defend, which was allowed by the learned trial Court after contest. Resultantly, a written statement was filed by the respondent. On the divergent pleadings of the parties, the following issues were framed:‑‑

(1) Whether the suit is not maintainable in its present form? OPD

(2) Whether the suit is time‑barred? OPD

(3) Whether the plaintiff has no cause of action to file the suit? OPD

(4) Whether the plaintiff has no locus standi to institute the suit? OPD

(5) Whether the plaintiff is estopped by his word and conduct to file the suit? OPD

(6) Whether the pronote cannot be treated as a negotiable instrument? OPD

(7) Whether the pronote dated 13‑5‑1985 is without consideration? OPD

(8) Whether the plaintiff is entitled to recover Rs.23,500 from the defendant? OPP

(9) Relief.

2. In order to prove his case the appellant produced three witnesses including himself. Muhammad Saleem Qureshi P.W.‑1 was the scribe of Exh.P.1, the pronote and Exh. P.2 the receipt dated 13‑5‑1985, while P.W.2 Shafique Ahmad was one of the marginal witness of the said two documents. Azhar Hussain, plaintiff appeared as P.W.3. On the other hand, defendant/ respondent appeared as D.W.1 and produced Syed Naseem‑ud‑Din as D.W.2 while Shabeh‑ul‑Hassan was produced as D.W.3.

3. Learned counsel for the appellant contends that D.W.1 Muhammad Iqbal respondent has admitted in his cross‑examination that documents Exh.P.1 and Exh.P.2 i.e. pronote and receipt bears his signatures. Meaning thereby, that the execution of the said documents is admitted. Therefore, in term of the provisions of section 1 18(a) of the Negotiable Instruments Act, 1881, a presumption has to be drawn that the said instrument was with consideration and the respondent was required to displace this presumption with a strong evidence. It is further submitted that in view of section 2(22) of the Stamp Act, 1899, even if no consideration is paid for the execution of a negotiable instrument but a person has promised to make payment upon any condition or contingency, which may or may not be performed or happen, same is executable against such a person, relies on PLD 1987 Karachi 76. Further adds that apart from the presumption of consideration under section 118(a) of the Negotiable Instruments Act, 1881, the plaintiff/ appellant has substantiated payment of consideration through the statement of P.W.2 and P.W.3 i.e. Shafique Ahmad the marginal witness, who had stated that the amount in question was paid in his presence and P.W.‑3 the plaintiff himself had stated that the amount was paid by him to the respondent on his shop. Further adds that respondent had submitted his application for leave to defend and took up the following plea:‑‑

While in his written statement the plea taken was that the pronote was never executed and finally when appeared as his own witness as D.W.‑1, he not only admitted the execution of the documents Exh.P.1 and Exh. P.2 but also introduced a new story of having signed/executed the said documents as a surety and not as a pronote and receipt.

4. On the other hand, learned counsel for the respondent contends that the presumption attached under section 118(a) of the Negotiable Instruments Act, 1881 is a rebuttable presumption and respondent has validly rebutted the said presumption through the statement of respondent himself as D.W.1 and statement of D.W.2 namely Sh. Nabeem‑ud‑Din, who has categorically denied any payment having been made to the respondent by the plaintiff. Although, it was stated by the plaintiff/ appellant that this witness was present at the time when payment was made to the respondent.

5. I have considered the arguments of the learned counsel for the parties.

6. Section 118(a) of the Negotiable Instruments Act, 1881 give rise to a statutory presumption to every negotiable instrument that the said document was executed with consideration. For convenience, the relevant provision is reproduced as follows:‑‑

Section 188. " Presumptions as to negotiable instruments . ‑‑‑Until the contrary is proved, the following presumptions shall be made:‑‑

(a) Of consideration: that every negotiable instrument was made or drawn for consideration, and that ever such instrument when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed negotiated or transferred for consideration;"

In the instant case, the respondent while appearing as D.W.1 had admitted to have signed Exh.P.1 and Exh.P.2. Once it is admitted that the document/ negotiable instrument was executed between the parties, the statutory presumption that the document was with consideration comes into existence and the plaintiff is no more required to lead any evidence to prove consideration. However, this presumption is rebuttable and the defendant has every right to raise a plea of fraud or that the instrument was not intended to be a negotiable instrument or for that matter he may raise any other plea. But such plea has to be raised in his written statement and then proved through evidence. In the instant case the defendant only raised one plea that Exh.P.1 and Exh.P.2 were never executed. This plea was refuted by him in his own statement by admitting the execution of the document.

7. The respondent never pleaded in his written statement that the document executed as a pronote was in fact intended to be a surety and not a pronote/negotiable instrument, therefore, no evidence could have been led by him to this effect. Even if any such evidence is on record, the same cannot be read in support of respondent's case in the absence of proper pleading.

8. The respondent had been changing his stances at different stages of the trial. When he filed his application for leave to defend, it was stated:‑‑ "that plaintiff had some business disputes with different people and the defendant had been trying to resolve them. In this process the plaintiff entertained doubts that his amounts could not be recovered because of the defendant's conduct and because of this the impugned pronote was fraudulently prepared."

In' his written statement it was pleaded:‑‑ "that the alleged pronote was never executed and the amount so alleged was never paid by the plaintiff and was not ever received by the defendant and at no occasion the defendant ever promised to repay the alleged amount to the plaintiff. The plaintiff has concocted a false claim on the basis of a fake document."

And while appearing as D.W.1 it was stated:‑‑ "that the documents pronote Exh.P.1 and receipt Exh.P.2 bears my signatures. However, these were obtained on the pretext of the same being a surety."

9. From the above it is evident that respondent cannot be relied upon .keeping in view the changing pleas and positions.

10. Likewise, D.W.2 Syed Naseem‑ud‑Din Shah has also admitted the execution of Exh.P.1 and Exh.P.2 but he has also stated that said documents were executed by respondent/ defendant in favour of plaintiff on behalf of one Bashir as a surety.

11. Since it was never pleaded by the respondent that pronote was executed in fact as a surety and was without consideration, therefore, this evidence cannot be relied upon and I am constrained to hold that the pronote Exh.P.1 was with consideration, keeping in view the statutory presumption attached to the document under section 118(a) of the Negotiable Instruments Act, 1881.

12. Promissory Note is, defined in section 4 of the Negotiable Instruments Act as follows:‑‑

"A 'Promissory Note' is an instrument in writing (not being a bank‑note or a currency note) containing an unconditional undertaking, signed by the maker, to pay (on demand or at a fixed or determinable future time) a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument."

The definition of Promissory Note has been further widened by section 2(22) of the Stamp Act, 1899 in the following words:‑‑

"'Promissory Note' means a promissory note as defined by the Negotiable Instruments Act, 1881.

It also includes a note promising the payment of any sum of money out of any particular fund which may or may not be available or upon any condition or contingency which may or may not be performed or happen."

Assuming that Exh.P.1 was without consideration and the plea of the respondent was correct that these documents were executed as a surety, still keeping in view the enlarged definition of Promissory Note if a person sands surety for somebody and promises to pay a certain amount on failure of that person and executes a document in furtherance of such promise, such document would definitely fall .with the definition of Promissory Note. As the promissory has undertaken to meet with such a condition or contingency i.e. failure of the third person to pay to the promissee. Now, third person has failed to abide by his commitment. a condition or contingency has arisen where the promissee can ask the promissor to fulfil his obligation under the instrument. Therefore, it is held that even if the respondent had stood surety and has executed Exh. P.1 and Exh.P.2 as such, still he is liable to pay the money promised by him as a surety.

13. For what has been stated above, this appeal is allowed, judgment and decree passed by the learned Additional District Judge, Multan dated 15‑1‑1990, is set aside and the suit filed by appellant/ plaintiff is decreed with no order as to costs.

H.B.T./A‑638/L Appeal allowed.