Law: Code Of Civil Procedure, 1908.

Section: 118(a)

Law: Negotiable Instruments Act, 1881

Section:

    The appeal arose from a decree passed by the Additional District Judge, Nowshera, in a summary suit under Order XXXVII CPC. The respondent claimed that during the course of long-standing business dealings, he advanced various amounts to the appellant. After disputes arose, the parties settled the matter through a jirga, where the appellant acknowledged liability of Rs. 7,000,000. This settlement was recorded in writing, and the appellant issued two cheques of Rs. 3.5 million each in favour of the respondent. The appellant challenged the decree on the grounds that the cheques were issued only as security, the respondent had failed to prove the source and dates of the alleged advances, and the dispute required a regular civil suit or rendition of accounts instead of summary proceedings. The High Court rejected these arguments, holding that the written acknowledgment of liability together with the issued cheques converted the dispute into a crystallized and enforceable debt. The Court held that once execution of the negotiable instruments was admitted, the statutory presumption under Section 118 of the Negotiable Instruments Act, 1881 applied, shifting the burden to the appellant to prove absence of consideration. Since the appellant produced no convincing evidence to rebut this presumption, his defence remained merely a bald assertion. The Court further observed that Order XXXVII CPC is intended to provide a speedy remedy where liability is evidenced by written instruments and negotiable instruments. It is not necessary for the plaintiff to prove the detailed source of funds or reconstruct the entire financial history once the liability has been acknowledged in writing. Finding no legal error or jurisdictional defect in the trial court's judgment, the High Court dismissed the appeal and upheld the decree in favour of the respondent. Core Point A written acknowledgment of liability supported by issued cheques creates a crystallized debt enforceable through Order XXXVII CPC. The defendant cannot avoid liability by merely claiming that the cheques were issued as security or by questioning the source of funds without producing evidence to rebut…