DARABSHAH B. DALAL Versus MUSLIM COMMERCIAL BANK Ltd.
ORDER
MUSHTAK ALI KAZI, J.-- This High Court Appeal under section 96, C.P.C. is directed against the judgment and decree passed in Suit No.248/74 by our learned brother Naimuddin J., whereby the suit under Order XXXVII, Rule 2, C.P.C. on the basis of a pronote filed by the plaintiffs bank against the defendant/appellant was decreed for Rs.4,22,559 with interest at 9% per annum from the date of the suit till payment together with the costs of the suit.
2. The defendant/appellant had originally applied for leave to defend the suit unconditionally on the ground that the suit was time-barred, that the promissory note was not properly stamped and that the suit had been filed on acknowledgement. It was contended that the suit first having been filed three years after its expiry was barred by limitation. The plaintiffs, however, relied on two documents dated 8-9-1972 and 27-1-1973 as acknowledgement of liability on the part of the defendant/appellant. The trial Court accordingly held that the suit was not time-barred; that it was not a bond and it was, therefore, properly stamped and lastly that the suit had not been filed on acknowledgement as the basis but on a pronote. The Court was of the view that the defendants were not, therefore, entitled to even conditional leave but in view of the large amount involved leave to defend was granted on condition that the defendant/appellant would furnish bank guarantee for the amount claimed in the suit within 3 weeks.
3. The defendant/appellant failed to furnish security within the time allowed and the time was thereafter extended. The appellant, however, went in appeal, against the order granting conditional leave to defend, to the Supreme Court but the Supreme Court dismissed the petition observing that the plea had been rejected by the High Court rightly as the provisions of section 19 of the Limitation Act are to be read alongwith Article 158, that the effect of the two acknowledgements was that the sum covered by the promissory note became payable within three years of the date of the last of the two acknowledgements.
4. The plaintiff Premier Bank was then merged with the Muslim Commercial Bank under the Banks Nationalisation Act (XIX of 1974). The defendant/appellant then made an application under Order VII, Rule 11 before the trial Court for rejection of the plaint alleging that the Premier Bank Limited, had ceased to exist after the filing of the suit which could not proceed. The plaintiff on the other hand filed an application under Order I, Rule 10, read with section 151, C.P.C. for substitution of the name of the Muslim Commercial Bank limited in place of the Premier Bank Limited in the heading of the plaint as it was stated that the Premier` Bank Limited had since merged with Muslim ` Commercial Bank Limited and had succeeded to all its assets. The learned Judge by an order dismissed the application made by the defendant/appellant for rejection of the plaint and allowed the application of the plaintiff bank for substitution of the name of the Muslim Commercial Bank Limited in place of the Premier Bank Limited in the heading of the plaint. The defendant/appellant again preferred an appeal against this order in the Supreme Court. This appeal was dismissed by the Supreme Court by an order dated 20-2-1976 and it was observed that it had been laid down in clause (a) of section 16 of the Banks' Nationalisation Act that all assets, rights, powers, authorities, privileges of property movable or immovable, cash balances, reserve funds, investments and all the other rights and interests arising out of such property as were immediately before the commencing day in the ownership, possession, power, or control of a bank whether within or outside Pakistan shall unless other provisions are made for their predisposition in accordance with a scheme prepared under subsection (1) of section 15, continue to vest in that bank, and all borrowing liabilities, including contingent liabilities, and obligations of a bank of whatever kind subsisting immediately before the commencing day shall, unless other provisions as aforesaid are made for their discharge or performance, continue to be borrowing liabilities and obligations of that bank. In that connection clause (c) of that section also laid down that if on the commencing day, any suit, appeal or other legal proceedings of whatever nature by or against the bank was pending in any Court the same shall not abate, be discontinued" or be in any way prejudicially affected by any provisions of this Act. It was accordingly further observed by the Supreme Court that the High Court had relied on these provisions and held that the suit could be continued by the newly substituted plaintiff i.e. the Muslim Commercial Bank under Rule 10 of Order XXII of the Code; that prima facie the impugned order passed by the High Court appeared to be unexceptionable. The petition was dismissed with the remarks that being an interim order passed by the High Court the petitioners could reagitate this issue alongwith other issues arising out of the suit after the final disposal.
5. The main suit was then decreed as above since the conditional leave to defend was not availed of and no bank guarantee was furnished. Against the judgment and decree the defendant/appellant has preferred this High Court Appeal.
6. In this High Court Appeal the defendant/appellant has reagitated the matter and called in question the earlier orders passed by the learned Single Judge rejecting application for unconditional leave to defend; regarding the suit being time-barred or insufficiently stamped and the suit having been brought under Order XXXVII, Rule 2 etc. The learned counsel for the appellant has cited A I R 1930 Bom.364 in support of his contention that appeal lies from final judgment in default of security not having been furnished under Order XXXVII, Rule 3(2). A preliminary objection was taken in that case by the respondents that no appeal lies from the first order imposing the condition in question (for furnishing security); that being so the second order was rightly passed ex parte and that no appeal would lie from that order also in the circumstances. Their Lordships Marten C.J., and Kemp. J. were, however, of the view that technically an appeal lies from the final judgment through whether on merits it- would have the slightest chance of success was another matter. They further observed that distinction between "whether an appeal lies" and "whether it has any chance of success", was indeed pointed out in the Full Bench case of Narain Patupa v. Valikunt Subaya A I R 1927 Bom. 1.
"But to avoid any misconception I may add that though pro forma of appeal may lie, still in the vast majority of cases the appeal will be one of those known as hopeless, because the conditions imposed by the lower Court will be reasonable ones, and accordingly if they are not fulfilled the only result will be that the appeal will be dismissed with costs."
Lastly it was observed in the Bombay case that there were ample grounds before the learned Judge on which High Court rightly came to the conclusion either that leave to defend should not be given at all or alternatively that very stringent terms should be imposed as a condition for giving leave to defend; that under the circumstances the discretion exercised by the learned Judge could not be interfered with. The appeals were accordingly dismissed with costs.
7. We entirely agree with the principles laid down in the above Bombay case A I R 1930 Bom. 364 that technically an appeal from the final judgment is not barred although the leave to defend granted conditionally was not availed of. We are also of the view that the question, whether unconditional leave to defend should have been granted, could be raised in the course of appeal from the final decree. But in the present case we find that there are hardly any grounds for interference with this exercise of discretion by the learned Single Judge. This was not a case where it could be said that the promissory note was executed without consideration or that the defence raised a real issue or disclosed a plausible defence. The conditional leave was, therefore, rightly granted as even observed by the Supreme Court. Nor could it be said that the merger under the Banks Nationalisation Act, deprived the successor bank from realising the assets of the Premier Bank.
8. We accordingly find no substance in this appeal which is dismissed in limine.
AA./D-30/K Appeal dismissed.