The Trial Courts have the Authority to determine whether to grant Leave to Defend Conditionally through Bank Guarantee or Unconditionally --- Supreme Court of Pakistan
Islamabad 11-03-2025: The Supreme Court of Pakistan has dismissed a petition filed by Adamjee Insurance Company Limited, affirming the Lahore High Court’s decision that upheld the Trial Court’s discretion in granting conditional leave to defend in a summary suit. The judgment reiterates that the discretion of trial Courts in such matters cannot be interfered with unless there is a manifest illegality or arbitrary exercise of power.
The dispute arose when Adamjee Insurance Company Limited filed two separate recovery suits against Techno International & Others under the summary procedure of Order XXXVII of the Code of Civil Procedure, 1908 (CPC). The Trial Court granted conditional leave to defend, requiring the respondents to furnish surety bonds. Dissatisfied with this decision, Adamjee Insurance challenged the order in the Lahore High Court, which dismissed the revision petitions. The insurance company then approached the Supreme Court of Pakistan, arguing that the security should have been in the form of a bank guarantee instead of surety bonds.
A two-member bench, comprising Mr. Justice Munib Akhtar and Mr. Justice Athar Minallah, heard the case and rejected Adamjee Insurance’s plea. The Court emphasized the well-established principles of summary procedures under Order XXXVII CPC, reaffirming that:
- Leave to defend should generally be granted unless the defense is completely baseless, vague, or fraudulent.
- Trial Courts have wide discretion to impose conditions, including whether a security should be in the form of a bank guarantee or a surety bond.
- The case Mian Rafique Saigol Vs. Bank of Credit and Commerce International (PLD 1996 SC 749) does not impose a binding rule requiring a bank guarantee in all summary suits.
The Court cited Fine Textile Mills Ltd. Karachi Vs. Haji Umar (PLD 1963 SC 163) and Abdul Karim Jaffarani Vs. United Bank Ltd. (1984 SCMR 568), reiterating that no hard and fast rules exist for determining security conditions in summary suits.
The Supreme Court of Pakistan refused to grant leave to appeal, holding that no substantial question of law was raised. The Trial Court’s discretion was upheld, and the petition was dismissed.
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