1986 PLP 473 (MLD)

11. The plaintiff has denied all the assertions made in the petition for leave to appear and defend the suit as also in the application under section 5 of the Limitation Act. Preliminary objections raised, inter alia, include the objection that the petition under Order XXXVII, Rule 3 of the Cods: of Civil Procedure is itself barred by time.

12. The learned counsel for the plaintiff in support of the preliminary objection that the petition for leave to appear and defend the suit is barred by time submitted that defendants Nos. 1,3,4 and 5 have given no explanation whatsoever as to why they did not heed within the time prescribed by law to make an application under Order XXXVII, Rule 3, C . P . C . He also urged that no explanation worth consideration has been given even by defendant No.2. Elaborating his arguments the learned counsel for the plaintiff contended that no details have been given by defendant No.2 in his application as to the date on which he left for Baluchistan and Karachi; the date on which he returned, the reasons of his visit to the aforementioned places and that no documents such as Air Ticket or Rail Ticket, etc. have been annexed with the application under section 5 of the Limitation Act to show that the visit asserted to have been made by defendant No. 2 to Karachi and . Baluchistan had in fact been made.

13. The learned counsel for the plaintiff also submitted that it has been mentioned in para. 4 of the said application that the defendant had to obtain some documents but neither any detail of the documents which were required has been given nor any document has been annexed with the application for condonation of delay or with the petition for leave to appear and defend the suit which shows that this is just a lame excuse without any basis.

14. The learned counsel for the plaintiff next contended in this regard that the other ground which has been raised in para. ‑3 of the application under section 5 of the Limitation Act also does not show any sufficient cause for condonation of delay as ignorance of law is no excuse.

15. The learned counsel for the plaintiff submitted that the summonses by post were despatched on 2‑1‑1985 through registered post and those must have been delivered to the defendants other than defendant No.2 on 5‑1‑1985 as none of those had been returned. The notice‑to defendant No.2 was received back with the postal remarks that he has sold the house and that he has left no address which obviously appears to be a manoeuvred report. He submitted that in the attendant circumstances the other, defendants in any case must have acquired knowledge of the summonses in Form 4 of Appendix 'B' of the Code of Civil Procedure latest on 5th of January, 1985, but the application has been filed on 6th of February, 1985, much beyond 10 days prescribed under the law as the period for making such applications.

16. The learned counsel further submitted that as regards defendant No.2 also the limitation having expired on 16‑1‑1985 the application for leave to appear should have been made within the shortest possible period after 16‑1‑1985, and if he for genuine reasons could not make the said application before that date, the application for condonation of delay should have explained ‑delay of each day from the date of expiry of the limitation viz. 16‑1‑1985 till the application had been made. Such an explanation for the period 17‑1‑1985 to 6‑2‑1985, he urged, is not forthcoming in the applications made by the said defendant. He pointed out that defendant No.2 had on his own admission acquired knowledge on 27‑1‑1985 and even for the delay of the period commencing 27‑1‑1985 till the making of the application for leave to defend the suit viz. 6‑2‑1985, no explanation which could be termed sufficient for condonation of delay has been offered.

17. Lastly, the learned counsel for the plaintiff submitted that counting the period even from 27‑1‑1985, 10 days expired on 5‑2‑1985.

18. The learned counsel for the defendants, in reply to the above preliminary objection, urged that the defendants had come to know of the summonses only on 27th of January, 1985, and counting from that date the petition for leave to appear and defend 4he suit has been made within 10 days as 27th of January, 1985, had to be excluded in computing the period of limitation.

19. He next contended that the period from 27th of January, 1985 to 6th of February, 1985 has also been adequately explained. He, however, was unable to give any detail of documents which the defendants had to procure or in fact procured during the period 29‑1‑1985 to 5‑2‑1985 nor has he controverted any of the other assertions made by the learned counsel for the plaintiff regarding non‑filing of any document to establish the visit 'of defendant No.2 to Baluchistan and Karachi or, for that matter, about the non‑furnishing of particulars of dates of his departure, return, etc.

20. As regards merits of the petition for leave to appear and defend the, suit, the learned counsel for the defendants raised the following contentions: ‑ (i) That the limitation for filing such suits is governed by Article 5 of the Schedule to the Limitation Act which prescribes a period of one year as limitation and the demand promissory notes dated 26th of April, 1982, the limitation had expired on 25 long before 17‑2‑1984 on which date the suit was filed; (ii) That the mortgagors‑defendants cannot be termed borrowers the meaning of Banking Companies (Recovery of Loans) Ordinance, 1979, and as such the suit is not maintainable; (iii) That the demand promissory notes though executed by the defendants were without consideration inasmuch as there was no actual payment made thereunder but these were got executed in respect of the amount outstanding in the cash credit account of defendant No.1 as it stood on the date of execution of the promissory notes; (iv) That the penal interest and insurance charges mentioned in the statement of account are not recoverable as the demand pertaining thereto has not been supported by any document; and (v) That the documents of title of the mortgaged property having been deposited in the Cantonment Area, the alleged equitable mortgage was not validly created in view of section 59 of the Transfer of Property Act read with section 287 of the Cantonment Act, 1924.

21. The learned counsel for the plaintiff in reply to the submissions of the learned counsel for the defendants on merits of the petition for leave to appear and defend the suit contended: First, that there being no ground whatsoever given for granting permission to appear and defend the suit leave should be refused especially when the liability has not been denied and the execution of the documents has also been admitted. He referred to para. 3 of the petition of the defendants in support of his contention that in fact the liability has been clearly admitted therein; Secondly, that the objection about the suit being barred by time is wholly baseless that the Article which governs the suit is 64‑A of the Schedule to the Limitation Act and not Article 5 thereof. He submitted that section 7(2) of the Banking Companies (Recovery of Loans) Ordinance, 1979 excludes such suits from the jurisdiction of the civil Courts and, therefore, Article 5 of the Limitation Act would otherwise be not applicable; Thirdly, that section 58‑F of the Transfer of Property Act allows the creation of equitable mortgage by any person and when, read with section 59 of the said Act there is no doubt left that the creation of equitable mortgage by the defendants is absolutely valid and enforceable at law; and Fourthly, that as regards the contention that the documents of title having been deposited in the Cantonment Area the creation of equitable charge is not valid, this could have been urged successfully only if the property had been located in a Cantonment Area.

22. In respect of entries of penal interest and insurance premium, the learned counsel for the plaintiff had to concede that these were not made on the basis of any agreement. He also had to concede that no documents in support of the insurance charge have been placed on record

23. Having given consideration to the controversy involved I am inclined to agree with the contentions raised on behalf of the plaintiff that the petition for leave to appear and defend the suit has been belatedly filed and is, therefore, liable to be dismissed as barred by time. It is a well‑settled principle that for seeking condonation of delay in making any application within the prescribed period of limitation the default of each day has to be succinctly explained so as to furnish a sufficient cause for seeking the same. There can also be no two opinions regarding the well‑established principle that when an application is made beyond the period of limitation on the plea of belated knowledge limitation will not be computed afresh from the date, of such knowledge. Father the situation thus arising places the applicant under an obligation to explain each day's delay has occurred since the expiry of the prescribed period of limitation.

24. In. the case in hand, there is no explanation whatsoever offered by defendants Nos. 1, 3, 4 and 5 for having not made the application for leave to appear and defend the suit within the prescribed period of Limitation viz. 10 days from the receipt of the summonses in Form 4 of Appendix 'B' of C.P.C. The summonses aforementioned, as bore from the record had been despatched by registered post on 2‑1‑1985. Unless it‑ had been shown otherwise it shall have to be presumed that these had been duly delivered in the normal time spent for delivery of a registered communication which as pointed out by the learned counsel for the plaintiff, would be 5th of January, 1985 latest. Counting the period of 10 days from the above date, the limitation for filing the petition under Order XXXVII, Rule 3 had expired on 16th January, 1985. As already observed above, nothing has been shown by defendants Nos. 1,3,4 and 5 as to why they did not file the petition on or before 16th January, 1985 and what is their explanation for the period 16th of January, 1985 to 6th of February, 1985, when actually the petition was filed. As regards these defendants, therefore, there is no doubt in my mind in holding that their petition for leave to appear and defend the suit is hopelessly barred by time and that no cogent grounds have been made for condonation of delay.

25. Adverting now to‑ the case of defendant No. 2, I am again inclined to agree with the contention raised by the learned counsel for the plaintiff that he too has not been able to advance any sufficient reason for condonation of delay. It has been correctly pointed out on behalf of the plaintiff that the alleged visit of the aforementioned defendant to Baluchistan and Karachi has not been substantiated by any document as neither any document has been annexed with the application nor any produced even today. The lack of details such as the date of departure from Islamabad and date of return further lends support to hold that this is an incorrect assertion and in any case it is vague and unsupported by documentary or other reliable evidence.

26. Again the period from 27th of January, 1985, which is the admitted date on which defendant No.2 had acquired knowledge of the summonses, to 5th of February, 1985, the date on which the application has been made, has not been adequately explained. The period from 29th of January, 1985 to 5th of February, 1985 does not at all stand explained for lack of details of the documents that the defendant had to procure for filing the petition for leave to appear and defend the suit as neither any description of documents have been given in the application nor any such documents have been annexed with the application of the said defendant nor even produced today, or, for .that matter, named during the hearing.

27. In the circumstances as discussed above I have no hesitation in holding that the explanation offered by this defendant viz. defendant No.2 for having filed the petition for leave to appear and defend the suit beyond the period of limitation is not sufficient so as to warrant condonation of delay. His petition is also, therefore, liable to be dismissed on the short ground of being barred by time.

28. Otherwise, on merits also, I am not convinced that the defendants have made out a case for grant of leave to appear and defend the suit. The first contention of the learned counsel for he defendants that the suit is barred by time having been filed after the expiry of period of limitation prescribed by Article 5 of the Schedule of Limitation Act is obviously not tenable. Article 5 of the Schedule of the Limitation Act which prescribes the period of limitation as one year can no longer be made applicable to suits under Order XXXVII, C.P.C. in view of the addition of Article 64‑A of the said Schedule, which Article specifically provides the period of limitation for suits provided for any Order XXXVII of the Code of Civil Procedure. There ought not be any cajole with the principle that when there is a special Article of the Schedule available for particular types of suits then a general Article of the Schedule for suits of that nature will give way to the special Article. This contention of the learned counsel for the defendants has, therefore, no force.

29. As regards the submission that Demand Promissory Notes were without consideration I suffice by saying that it has in no manner been document or otherwise that the said notes were got executes to cover the outstanding liability in the Cash Credit Account of defendant No.

1. Even assuming it to be so, the promise to pay the amount mentioned in the promissory notes, which admittedly related to the outstanding amounts in the Cash Credit Account would be sufficient consideration for execution of the said promissory note especially when it is the admitted position that there were outstanding amounts in the Cash Credit Account of defendant. No.1.

30. The only other contention of the learned counsel for defendants which merits to be considered is whether the mortgage is invalid. I am afraid there is no force in this contention either. There is no denying the proposition that equitable mortgage by deposit of title deeds can be created in the Province of the Punjab by virtue of the provisions of section 58(f) of the Transfer of Property Act read with section 59 thereof. In Gurdas Mall v. The Punjab and Sind Bank Ltd. reported as 147 I C 942, it was held that a transaction purporting to create a mortgage by deposit of title deeds is invalid if it is effected at a place where such transactions are prohibited, the situation of the property mortgaged in such cases being immaterial, and consequently when such a mortgage is effected in a Cantonment Area it is invalid. This rule was laid down by application, of section 287 of the Cantonment Act, 1924 which, inter alia, provided that section 59 of the Transfer of Property Act with respect to the transfer of property by registered instrument shall on and from the commencement of Cantonment Act extend to every cantonment. Now section 59 of the Transfer of Property Act as it stood upto 1929 read as under:‑ "Where the principal money secured is one hundred rupees or upwards, a mortgage can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses. Where the principle money secured is less than one hundred rupees, a mortgage may be effected either by a registered instrument signed and attested as aforesaid, or (except in the case of a simple mortgage) by delivery of the property."

31. Section 59 of the Transfer of Property Act was, however, amended in 1929 by Amending Act XX of 1929 and its first para. as it now stands after promulgation of the Amending Ordinance reads as under:‑ "Where the principal money secured is one hundred rupees or upwards, a mortgage other than a mortgage by deposit of title deeds can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses."

32. Section 287 of the Cantonment Act read as under:‑ "(1) Paragraphs 2 and 3 of section 54 and sections 59, 197 and 123 of the Transfer of Property Act, 1882, with respect to the transfer of property by registered instrument, shall, on and from the commencement of this Act, extend to every cantonment. (2) The Registrar or Sub‑Registrar of the District or Sub‑District formed for the purposes of the Registration Act, .1908, which any cantonment is situated, shall, when any document relating to immovable property within the cantonment is registered, send information of the registration forthwith to the Board or such other authority as the Federal Government may prescribe in this behalf.

33. On a conjunctive reading of section 287 of the Cantonment Act, 1924 and section 59 of the Transfer of Property Act, 1882, it clearly emerges that section 59 ibid as it stands now after the amendment, has to apply in cases of cantonments as well. The amended section 59 allows the creation of an equitable mortgage by deposit of title deeds and the said section having been made applicable to Cantonment Areas by virtue of section 287 of the Cantonment Act, 1924, it follows that an equitable mortgage by deposit of title deeds in Cantonment Areas can be validly created. The contention of the learned counsel for the defendants being based on a precedent which can no longer be applied in view of the amendment brought about in the Transfer of Property Act is thus not tenable.

34. In view of the forgoing discussion, I reject the application of the defendants‑ petitioners under section 5 of the Limitation Act and consequently dismiss their petition under Order XXXVII, Rule 3, C.P.C. as barred by time and also being without merit.

35. The application for leave to appear and defend the suit made by the defendants (P. L.A. 5‑B of 1985) having been dismissed, the contents of the plaint shall be deemed to be correct, except for the amounts of penal interest and insurance premium which the plaintiff has admitted to be Rs. 1,45,868 and Rs. 26,747, respectively. Needless to mention here that it being the admitted position that there was no agreement between the parties for charging the penal interest there would be no lawful basis for allowing the charge of the said interest. Similarly no proof for payment of insurance premium having been brought on record the amount in respect thereof will also not be recoverable from the

36. Resultantly a decree with costs for the recovery of Rs.18,56,302.10 plus future interest at the rate of 14$ per annum from the date of institution of the suit till realization of the total amount is passed in favour of the plaintiff and against the defendants. The defendants are allowed 6 months time for payment of the decretal amount, failing which the said amount shall be recovered first by sale of the hypothecated goods as mentioned in the statement appended with the plaint and if the amount received from the aforesaid sale is not sufficient to satisfy the decree, the mortgaged properties as mentioned in paras. 9 and 10 of the plaint shall be sold for satisfaction thereof. In case the sale‑proceeds of the mortgaged properties are also not found to be sufficient to satisfy the decree, the plaintiff‑bank may apply for a decree for recovery of the balance otherwise in accordance with law. H.B.T Suit decreed.