RAWALPINDI: On Thursday, the Lahore High Court (LHC) Rawalpindi bench expressed worry about what appears to be an abuse of judicial authority by district courts in instances pertaining to recovery and cheque dishonor.
A division bench made up of Justices Mohammad Sajid Mehmood Sethi and Jawad Hassan decided a case regarding Mohammad Waseem’s recovery of Rs70 million, setting a precedent in the law.
The money was requested by the private business Maple Leaf Cement, which claimed that Mr. Waseem’s misappropriation had resulted in a Rs79 million loss. After a settlement, Mr. Waseem was had to write out a Rs. 70 million check. But because there weren’t enough cash, the check bounced, and a lawsuit was brought against him.
In accordance with Order XXXVII of the Code of Civil Procedure (CPC) of 1908, which addresses the recovery of debt or liquidated amount, the trial court granted the company’s request for the amount.
On the other hand, the LHC division bench decided that a suit under Order XXXVII could not be brought without the parties’ consent.
The judgment’s author, Justice Jawad Hassan, made it clear that Rule 2 of Order XXXVII only allows the filing of a summary lawsuit based on promissory notes, hundis, or bills of exchange.
The ruling emphasized that although a check is negotiable under the Negotiable Instruments Act of 1881, a suit of that kind cannot be started without “negotiation of the parties on an agreement.”
The respondent company did not provide any supporting documentation or evidence of a commercial relationship; the court observed that they only produced a copy of the FIR and the check.
The court reaffirmed that a suit under Order XXXVII must be supported by a negotiable instrument arising from a contractual relationship, citing Section 6 of the Negotiable Instruments Act, which defines a check as “a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”.
By granting the appellant’s request for permission to defend, the high court established a crucial precedent that would prevent checks from being misused in court cases.
Legal experts anticipate that this ruling would shield vulnerable employees and individuals from unwarranted harassment in the form of forced checks.
