Financial Capacity of Lender and Evidentiary Value of ‘Probable’ Forensic Opinion in Recovery Suits under Order XXXVII CPC.
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| Order 37 financial capacity |
آرڈر 37 کے تحت 2 کروڑ روپے کی ریکوری کا دعویٰ کیا تھا۔
📌 کیس کا مختصر خلاصہ (Short Case Story)
1️⃣ فرانزک رپورٹ کی حیثیت
2️⃣ سیکشن 118، نیگوشی ایبل انسٹرومنٹس ایکٹ
3️⃣ مالی استطاعت (Financial Capacity) کی اہمیت
➡️ نتیجتاً، قرض کا دعویٰ غیر ثابت قرار پایا۔
📜 حتمی فیصلہ (Final Holding)
⚖️ اہم قانونی نکات
Must read Judgement
Stereo. HCJDA 38.
JUDGMENT SHEET
LAHORE HIGH COURT
MULTAN BENCH MULTAN JUDICIAL DEPARTMENT
RFA No.08/2013
Liaqat Ali Versus Liaqat Ali Shah
JUDGMENT
Date of Hearing:
Appellant by:
30.09.2025
Mr. Aurangzeb Alamgir Janjua, Advocate
Respondent by:
Proceeded against ex-parte, vide order dated 10.02.2022.
Anwaar Hussain, J. This appeal is directed against judgment and decree dated 21.12.2012 passed by the Trial Court whereby the suit of the appellant under Order XXXVII of the Code of Civil Procedure, 1908 ("CPC") for recovery of Rs.20,000,000/- was dismissed.
2 Learned counsel for the appellant submits that the impugned judgment is result of misreading of evidence and non-appreciation of record. It is argued that despite failure of the respondent to prove that the cheque was stolen, and in spite of the opinion of the forensic laboratory that the signatures on the impugned cheque were "probably" those of the respondent, the appellant has been non-suited merely on the ground that it is not expected that a person would be keeping Rs.20,000,000/- in cash, at home, which reasoning is not persuasive to rebut the presumption of correctness attached to a negotiable instrument, under Section 118 of the Negotiable Instruments Act, 1881 ("the Act").
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Conversely, the respondent was proceeded against ex-parte, vide order dated 10.02.2022.
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Arguments heard. Record perused.
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The appellant claimed that he had cordial relations with the family of the respondent, who was said to be residing in the U.K. and
RFA No.08/2013
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requested a loan of Rs.20,000,000/-, on account of business losses. The amount was allegedly paid in cash, and the impugned cheque was issued by the respondent as security, which upon presentation was dishonoured. In defence, the respondent filed leave to contest, denying residence in the U.K. and contended that he had borrowed only Rs.135,000/- and had never issued any security cheque, which according to him had been stolen and misused. Leave was granted, issues were framed and evidence was recorded. The suit was dismissed. The pivotal issue framed by the Trial Court reads as under:
"Whether the defendant received Rs.20,000,000/- from the plaintiff on 02.07.2006 and issued cheque No.40647399 dated 03.08.2006 of his account? OPP"
- In the light of the ex-parte arguments advanced, the core questions requiring determination are as under:
(i) Whether the Trial Court was justified in discarding the forensic report regarding the signatures on the cheque, and in holding that the presumption of correctness under Section 118 of the Act stood rebutted?
(ii) Whether the Court can inquire into the existence/probability of the underlying transaction with reference to the financial capacity of the lender of amount for which a negotiable instrument is executed?
- The case of the respondent in his application for leave to defend was that the cheque in question was never issued in discharge of any liability but the same had been stolen, and therefore could not be made the basis of recovery proceedings. Leave to defend having been granted, the matter proceeded as a regular civil suit in which both parties led full evidence. The forensic report with regard to the signatures on the cheque opined only to the extent that they were "probably" of the respondent. At this juncture, it is imperative to note that whenever a forensic comparison is undertaken, whether it pertainsRFA No.08/2013
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requested a loan of Rs.20,000,000/-, on account of business losses. The amount was allegedly paid in cash, and the impugned cheque was issued by the respondent as security, which upon presentation was dishonoured. In defence, the respondent filed leave to contest, denying residence in the U.K. and contended that he had borrowed only Rs.135,000/- and had never issued any security cheque, which according to him had been stolen and misused. Leave was granted, issues were framed and evidence was recorded. The suit was dismissed. The pivotal issue framed by the Trial Court reads as under:
"Whether the defendant received Rs.20,000,000/- from the plaintiff on 02.07.2006 and issued cheque No.40647399 dated 03.08.2006 of his account? OPP"
- In the light of the ex-parte arguments advanced, the core questions requiring determination are as under:
(i) Whether the Trial Court was justified in discarding the forensic report regarding the signatures on the cheque, and in holding that the presumption of correctness under Section 118 of the Act stood rebutted?
(ii) Whether the Court can inquire into the existence/probability of the underlying transaction with reference to the financial capacity of the lender of amount for which a negotiable instrument is executed?
- The case of the respondent in his application for leave to defend was that the cheque in question was never issued in discharge of any liability but the same had been stolen, and therefore could not be made the basis of recovery proceedings. Leave to defend having been granted, the matter proceeded as a regular civil suit in which both parties led full evidence. The forensic report with regard to the signatures on the cheque opined only to the extent that they were "probably" of the respondent. At this juncture, it is imperative to note that whenever a forensic comparison is undertaken, whether it pertains
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to signatures or to thumb impressions, the evidentiary value of the expert's report essentially depends on the degree of certainty expressed therein. If the expert opines in terms of "probably," or in terms of expressions like "may be," "appears to be," the clarity of the impression is doubtful, such opinion cannot be treated as a conclusive finding can be drawn against a party. Therefore, in present case, expert report alone being inconclusive, could not by itself furnish a safe basis for holding the cheque to be duly executed, particularly, when alterations and cuttings on the said instrument were also noted by the bank official who appeared as PW-1.
proof. The element of probability diminishes its decisiveness, and in
such cases corroboration from other independent evidence and
surrounding circumstances becomes indispensable before any adverse
As regards the second legal question, formulated hereinabove,
- this Court is of the opinion that the presumption under Section 118 of the Act stood neutralized after grant of leave to defend. Therefore, it was incumbent upon the appellant/plaintiff to prove, affirmatively, the advancement of the alleged loan by showing when, how, and in whose presence the sum of Rs.20,000,000/- was paid in 2006. The appellant/plaintiff produced witnesses of the transaction, however, one of the witnesses PW-3 is his real son whereas PW-4 contradicted the stance of the appellant. The argument of learned counsel for the the financial capacity of the lender may not assume much significance. However, in cases where liability is denied and the lender has also failed to furnish details of the alleged transaction, it becomes essential to scrutinize and establish the lender's financial capacity in order to assess the plausibility of the claim. The appellant/plaintiff's case had to stand on its own legs, as he cannot be allowed to unjustly enrich himself, simply on account of the
appellant that financial capacity of a plaintiff in suit for recovery
under Order XXXVII, CPC, is irrelevant, is also misconceived. Where
the issuance of a cheque by a borrower or taking of a loan is admitted,
4
420 B/s
44
RFA No.08/2013
presumption of correctness albeit rebuttable attached to a negotiable instrument, which otherwise stood neutralized after grant of leave to defend. The non-existence of the consideration on account of lack of financial capacity was so probable in the present case that a person of ordinary prudence cannot believe that in the year 2006, the appellant could have a hefty amount of Rs.20,000,000/- lying in cash at his home. The appellant/plaintiff failed to establish his financial capacity. especially when it is admitted that he was not a taxpayer at the relevant time. In the absence of credible material to substantiate the lending of such a substantial amount, the assertion of loan remained unproven. The Trial Court, therefore, correctly dismissed the suit by holding that the plaintiff failed to establish the foundation of his claim. Therefore, no ground for interference is made out.
- In view of the above discussion, the present appeal is devoid of any merit and is accordingly dismissed. No order as to costs.
(ANWAAR HUSSAIN) JUDGE
Announced on the same day in open Court and dictated on 02.10.2025 and finalized/signed on 20.10.2025.
Approved for reporting
Judge
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