Mst. ZUBAIDA KHANAM Versus Haji MUHAMMAD SIDDIQUE

ANWAAR HUSSAIN, J.--- This Regular First Appeal is directed against the judgment and decree dated 01.03.2013 passed by the learned Additional District Judge, Multan, in a suit, instituted by the respondent against the predecessor-in-interest of the appellants, namely, Khadim Hussain ( the drawer/defendant ), under Order XXXVII of the Code of Civil Procedure, 1908 ( C.P.C. ) for recovery of Rs.3,400,000/- on the basis of a cheque allegedly issued by the drawer/defendant. The suit was decreed after framing of issues and recording of evidence.

2.Having tendered appearance, the drawer/defendant sought leave to defend, inter alia , contending that no business relationship existed between the parties. It was asserted that a dispute had arisen between him and one Sh. Ikram-ud-Din, and that for settlement thereof it was agreed that the matter would be referred to arbitration, pursuant to which two agreements of even date, i.e., 08.02.2007, were executed for appointment of arbitrators. The drawer/defendant appointed Rana Javed Iqbal Nazim as arbitrator, whereas Sh. Ikram-ud-Din appointed the respondent as arbitrator. It was further pleaded that the cheque in question had been handed over as security to the arbitrator nominated by the drawer/defendant, namely Rana Javed Iqbal Nazim, who subsequently delivered the same to the respondent, and that the cheque had been misused.

3.Leave to defend was granted. The drawer/defendant filed written statement, and issues were framed on 04.09.2010. During pendency of the proceedings, the drawer/defendant expired on 26.12.2011. An amended plaint was thereafter filed. Upon their impleadment as legal heirs, the appellants engaged counsel who, on 11.06.2012, recorded a statement adopting and endorsing the written statement already filed by the deceased drawer/defendant. The appellants thereafter led defence evidence. Upon conclusion of trial, the impugned judgment and decree were passed in favour of the respondent.

4.In the memorandum of appeal, the principal contention raised by the appellants is that, in view of Section 50 of the C.P.C., the decree is not executable against them as they have not inherited any movable or immovable property from the deceased drawer/defendant. It is argued that the Trial Court did not determine the essential question as to whether any estate had been inherited by the appellants. Learned counsel submits that only legal representatives of a deceased are liable to discharge obligations of the deceased, and unless it is established that the appellants, though legal heirs, are also legal representatives representing an inherited estate, the decree cannot be executed against them. Reliance has further been placed upon case reported as Muhammad Abaid Ullah v. Ateeq-ur-Rehman and 8 others (2015 CLC 641 Lahore) to contend that the suit itself was not maintainable in terms of Sections 29 and 29-A of the Negotiable Instruments Act, 1881 ( the Act ).

5.Conversely, learned counsel for the respondent has supported the impugned judgment and decree. It is contended that the question of executability falls within the exclusive domain of the Executing Court. However, it has not been disputed that, in the event the appellants have not inherited any estate from the deceased, they cannot be saddled with personal liability beyond such estate.

6.Arguments heard. Record perused.

7.The following questions of law arise for determination by this Court:

Insofar as questions Nos. i and ii are concerned, both are intertwined. To answer the same, it is necessary to examine the scope of Sections 29 and 29-A of the Act.

8.Sections 29 and 29-A of the Act delineate the scope of liability arising from signatures appended to negotiable instruments. Section 29 provides that where a legal representative signs a promissory note, bill of exchange or cheque, such representative incurs personal liability thereon unless the instrument expressly limits the liability to the extent of the estate or assets of the deceased received by him. In other words, absent such qualification, the legal representative is treated as personally bound by the instrument. Section 29-A, on the other hand, embodies the principle that liability on a negotiable instrument is confined to the person who has actually signed it. The provision reinforces the rule that responsibility attaches to the signatory alone, thereby excluding persons who have not executed the instrument. The appellants have not signed the cheque, however, they are legal heirs/legal representatives of drawer/defendant. At this stage, it is appropriate to examine the meaning of the term legal representative . There is no cavil that the expressions legal heirs and legal representatives are distinct though overlapping concepts. A legal heir is a person who inherits the estate of a deceased by operation of law or under a testamentary instrument. A legal representative, within the meaning of Section 2(11), C.P.C., is any person who in law represents the estate of a deceased person, including one who intermeddles therewith. The expression legal representative is thus wider in scope. While it includes legal heirs, it also encompasses executors, administrators and persons otherwise representing the estate in legal proceedings. Both categories may be liable for the debts of the deceased, but only to the extent of assets inherited or possessed. No personal liability arises merely by reason of succession. In the present case, however, this distinction does not advance the case of the appellants as they adopted the defence of the drawer/defendant after his demise and did not raise any question regarding determination as to legal representatives of the drawer/defendant.

9.Moreover, in terms of Order XXII, Rule 1, C.P.C. the death of a party does not, by itself, cause a suit to abate if the right to sue survives. The test is whether the cause of action is personal to the deceased or whether it affects his estate. Personal obligations of the deceased, which are not attached to the estate, do not survive. Conversely, obligations that are pecuniary in nature and can be satisfied from the estate of the deceased do survive. In a summary suit under Order XXXVII, C.P.C., this principle applies with full force when it is instituted in the life time of the drawer and leave is granted albeit the personal liability of the deceased drawer does not get attached to legal heirs or representatives, but the right to recover a debt or enforce a dishonoured instrument survives to the extent it affects the estate of the drawer. Consequently, legal representatives are not personally liable, yet the suit remains maintainable and enforceable against the estate of the deceased. Hence, the objection now raised by the appellants that the suit was not maintainable, keeping in view Sections 29 and 29-A of the Act as also the ratio laid down in case of Muhammad Abaid Ullah supra , is misconceived, due to distinguishable facts. In that case, the original drawer of the cheque had already expired and the suit was instituted directly against the legal heirs as if they were the makers of the instrument. It was correctly held that a summary suit is not maintainable against persons who had not signed the negotiable instrument. In the present case, however, the suit was validly instituted against the drawer/defendant during his lifetime. He sought and obtained leave to defend and contested the claim. Upon his demise, the appellants were impleaded and voluntarily stepped into his shoes by adopting his defence and leading evidence. At no stage before the Trial Court did, they question maintainability of the suit on the basis of Sections 29 and 29-A of the Act. On the contrary, they expressly adopted the written statement of the deceased drawer/defendant and led complete defence evidence. An objection which is neither jurisdictional in nature nor raised at the earliest opportunity, and which stands waived by conduct, cannot be permitted to be agitated for the first time at the appellate stage after full contest on merits. Furthermore, once a suit is maintainable at the time of its institution, subsequent death of a defendant does not render it non-maintainable. Order XXII Rule 1, C.P.C. expressly provides that death of a party shall not cause the suit to abate if the right to sue survives. The settled test is whether the cause of action is personal to the deceased or whether it affects his estate. It is reiterated that an action based upon a dishonoured cheque, involving pecuniary liability, is not personal in nature but directly relates to the estate of the deceased. The right to sue, therefore, survives.

10.Turning to the merits of the case, the primary defence of the appellants was that the impugned cheque had been issued (by the drawer/defendant) as security in the context of arbitration proceedings. Once issuance of the cheque was admitted and it was produced by the respondent along with the dishonour slip, the initial burden stood discharged. The onus then shifted upon the appellants to substantiate their plea that the cheque was issued merely as security. In defence, appellant No.3 Nishat Ahmad appeared as DW-1, Rana Javed Iqbal as DW-2 and Tahir Hussain as DW-3. Documentary evidence included Exh.D1 (receipt), Exh.D2 (copy of FIR), Exh.D3 (cancellation report) and Mark-B (copy of arbitration agreement). The arbitration agreement was central to the defence. However, a perusal thereof reveals that no reference whatsoever is made to issuance of any cheque as security. This omission assumes significance. The marginal witness of the agreement, Syed Khizar Abbas Shah Shamsi, appeared as PW-4 and categorically deposed that no cheque was given by either party at the time of execution of the arbitration agreement. It also defies logic that a cheque allegedly handed over to one s own nominated arbitrator would eventually be delivered to the opposing party. These improbabilities were duly noticed by the Trial Court. The operative part of the impugned judgment reads as under:

10. It is also notable here that as per version of the defendant the arbitrators were appointed to settle the dispute between the defendant and one Ikram ud Din but as per version of the defendant the cheque was only obtained from defendant Khadim Hussain. Neither any cheque on behalf of the other party to the arbitration is placed on the file nor any assertion on the part of defendant that any cheque from other party was received by the arbitrators. This fact makes the defendant s plea doubtful.

11.It is also pertinent to mention here that Rana Javed Iqbal was appointed as arbitrator on behalf of the defendant but the disputed cheque is executed in the name of the plaintiff. The defendant produced a writing regarding receipt of cheque in favour of Muhammad Siddique. It is written on behalf of Rana Javed Iqbal but it bears no signatures of plaintiff Muhammad Siddique, therefore, the same carries no evidentiary value and cannot be relied upon.

(Emphasis supplied)

The appreciation of evidence by the Trial Court does not suffer from misreading or non-reading of material evidence. The appellants failed to discharge the burden cast upon them. The finding that the cheque represented an enforceable liability warrants no interference.

11. The above analysis brings this Court to question No. iii pertaining to the executability of the impugned decree. Section 50, C.P.C. governs execution against legal representatives and limits liability strictly to the extent of estate inherited. The appellants now assert that they have not inherited any estate from the deceased. However, no such plea was taken before the Trial Court, nor was any evidence led in that regard. Equally, this Court cannot determine questions of actual inheritance in the absence of pleadings and evidence forming part of the record. The impugned decree determines liability of the deceased drawer/defendant. Its executability against legal representatives is statutorily circumscribed by Section 50, C.P.C. The Executing Court is competent to determine, upon objection, whether and to what extent any estate has been inherited and is available for satisfaction of the decree. The decree, therefore, is executable only to the extent of any estate inherited by the appellants, and not beyond.

12.For the foregoing reasons, the appeal is devoid of merit and is dismissed . For the purpose of completeness, it is clarified that executability of the impugned decree against the appellants shall be subject to and governed by Section 50, C.P.C. and shall be determined by the Executing Court, in accordance with law.

MQ/Z-3/L Appeal dismissed.