2003 PLP 888 (CLD)

PARVEZ AHMAD, J.

The decree-holder, Muslim Commercial Bank Limited, has assailed the order of the Special Court Banking-1, Lahore, dated 21-7-1988 by virtue of which, an application under Order 21, rule 58, C.P.C. moved by one Syed Atta Ullah Shah with the prayer to release the attached property, which has been purchased by him bona fidely from the judgment-debtor, was accepted.

2. Briefly stated the facts are that the decree-holder initially brought a suit for recovery of money against Messrs All Chemicals and another, which has been advanced in favour of Messrs Ali' Chemicals and others. The said suit was decreed ex parte in favour of the bank vide judgment and decree dated 9-10-1986. During the process of execution of the abovesaid decree passed in favour of the bank, an application under Order 21, Rule 58, C.P.C. was moved by above said Syed Atta Ullah Shah that the property alleged to have been mortgaged in favour of the bank had in fact been purchased by him bonafidely with consideration and without notice of it being mortgaged with the bank through a registered sale deed, as such the objection petition be accepted and the property be released. This application was contested by the bank as well as by the judgment-debtor and after having heard them the learned Judge Banking Court on 21-7-1988 allowed the application moved by the abovesaid Syed Atta Ullah. The present, appellant feeling itself dissatisfied with the decision of the Judge, Banking Court filed the present appeal.

3. We have heard learned counsel for both the parties and the material placed upon record has been perused through their assistance.

4. The main submission of learned counsel for the appellant is that Syed Atta Ullah Shah is not a bona fide purchaser and sale in his favour is not protected under section 41 of the Transfer of Property Act.

5. The learned counsel for the respondents has supported the order of the learned Judge, Banking Court and asserted the respondents to be the bona fide purchaser having made verification with regard to any encumbrances over this property from the revenue authorities and after having getting a proclamation issued in the daily newspaper.

6. After having heard learned counsel for both the parties, the question for determination is whether the alleged sale in favour of Syed Atta Ullah Shah is protected under section 41 of the Transfer of Property Act and for this purpose the provisions of section 41 of the said Act are reproduced below:-- "

41. Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it: provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith." The record reveals that the above said Syed Atta Ullah Shah allegedly verified from the revenue record where nothing was found about the mortgage of the property in question in favour of the bank. The appellant got a non-encumbrance certificate in this regard. The appellant's wife allegedly got a proclamation issued in the Daily Nawa-e-Waqt, Lahore dated 5-2-1987. The appellant has placed on record an affidavit allegedly executed by the judgment-debtor. The contents of the affidavit in para.2 are worth consideration which are reproduced below:-- Mortgage deposit of title decd."

8. Considering the proclamation in the daily newspapers we find that it was done by his wife and analyzing it in view of the law laid down in Khair Din and another v. Mat. Zenab Bibi and 2 others PLD 1973 Lah. 586 which is reproduced as under:-- "Section 41 of the Transfer of Property Act, 1882 is based on principle of natural equity, which must be universally applicable, that where one man allows another to hold himself out as the owner of an estate and a third person purchases it, for value, from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out shall not be permitted to recover upon his secret title, unless he can overthrow that of the purchaser by showing either that he had direct notice, or something which amounts to constructive notice, of the real title; or that there existed circumstances which ought to have put him upon an inquiry that, if prosecuted, would have led to a discovery of it". As a matter of fact the principle is a statutory application ' of the law of estoppel if a man, either by words or by conduct, has initiated that he consents to an act which has been done, and that he will offer no application to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that from which they might have abstained he cannot question the legality of the act he had so sanctioned to the prejudice of those who have no given faith to his words or to the fair inference to be drawn from his conduct. Admittedly the section is an exception to the rule that a person cannot confer a better title that he has and when once we find that the under mentioned ingredients of the section are present in a given case, the protection to the transferee is complete-- (a) the transferor is the ostensible owner; (b) he is so by the consent, express or implied, of the real owner; (c) the transfer is for consideration; and (d) the transferee has acted in good faith, faking reasonable care to ascertain that the transferor had power to transfer." We do not find that all the ingredients for claiming protection under section 41 of the Transfer of Property Act were complied with by the above said Syed Atta Ullah Shah before having an alleged registered sale-deed with regard to the purchase of this property in his favour. The property in question is urban immovable property, as such no revenue record in this regard is relevant. The affidavit speaks to the effect that the property is under equitable mortgage i.e. by the deposit of title deed. The 'C proclamation was issued by his wife and not by the above said Syed Atta Ullah Shah. There is nothing on record that the original documents of the title of the property were ever delivered by the judgment-debtors to the abvoesaid Syed Atta Ullah Shah. Scanning the judgment of the trial Court in this perspective we find that the judgment of the trial Court is not inconsonance with law.

9. In view of above we allow this appeal, set aside the orders of the Special Court Banking-I, Lahore dated 21-7-1988 and resultantly dismiss the petition under Order 21, rule 58, C.P.C. moved by the above said Syed Atta Ullah Shah. No order as to costs. (Sd.) PARVEZ AHMAD, J. (Sd.) MIAN HAMID FAROOQ, J. MIAN HAMID FAROOQ, J.

I have had the advantage of reading the proposed judgment of my learned brother (Parvez Ahmad, J.). Though, I agree with the conclusions arrived at by his Lordship, yet in addition thereto I would like to record my own reasons.

2. Admittedly, the property in question i.e. "factory known as Messrs Ali Chemicals built on a plot of land measuring 3 Kanals and 17 Marlas situated at 20 Kms. Ferozepur Road, Lahore", was mortgaged by Muhammad Humair son of Abdul Hameed, in favour of the appellant bank through the execution of registered mortgage deed dated 9-4-1984 (pages 37 to 42 of the paper book), in order to secure a financial facility of Rs.5,00,000 statedly, advanced to Messrs Ali Chemicals, the judgment-debtors. According to the appellant bank, all the original title deeds/ documents, qua the property in question, were handed over by the aforenoted mortgagor to the appellant bank/mortgagee at the time of execution of the registered mortgage. Approximately, three years thereafter, the respondent, reportedly, purchased the said property from the mortgagor, Muhammad Humair, vide registered sale deed dated 11-2-1987 (pages 108 to 111 of the paper book). It has no where been mentioned in this sale deed that the original documents of title were handed over to the respondent, at the time of the execution of the sale deed, in his favour. Even otherwise I could not find any document on record, which could prove that the documents of title, regarding property in dispute, were handed over to the respondent by the vendor/ mortgagor. The learned counsel for the respondent even could not point out any document from the record showing that respondent ever demanded the original title deeds/documents from the seller. The respondent has not been able to place on record any document in order to show that even after the execution of the sale deed, he ever demanded the original title deeds from the vendor. It flows from the above that the respondent claiming to be a bona fide purchaser, purchased the property in dispute without verifying or examining the original documents of title, which were, admittedly, in possession of the appellant bank as security. Even no publication was made on behalf of the appellant rather he is relying upon the publication, stately, issued on behalf of the wife of the respondent, who has no nexus with the entire transaction inasmuch as no objection petition was filed by her. Even today, it has been acknowledged by the learned counsel for the respondent that the respondent is not in possession of any of the original title deeds qua the property in question. All the original documents are, admittedly, in possession of the appellant bank, which is sufficient to show that a valid mortgage, prior to the date of sale favouring the respondent, exists in favour of the bank.

3. Learned counsel for the respondent has placed much reliance on the affidavit furnished by the vendor at the time of the execution of the sale deed. I am of the view that the said affidavit as a matter of fact demolishes the entire case of the respondent, instead of advancing his case. In the said affidavit, as discussed in the judgment rendered by my learned brother, it has specifically been asserted by the vendor that he is not in possession of the original sale deed; that the same is in possession of one of the brothers of vendor and perhaps he may have mortgaged the said property through deposit of title deed. This should have been a sufficient indication for the vendee/ respondent to presume that the original registered sale deed must have been used elsewhere by the vendor or his brother and the said property is not free from encumbrances.

4. Undoubtedly, the respondent did not act in good faith and failed to take reasonable care to ascertain that the vendor/transferor has a valid title and power to transfer the property in question to the respondent. As a prudent person, the respondent, before the purchase of the property, at least should have asked the vendor to show the original title. deeds of the property, the subject-matter of the sale, and must have verified from the relevant quarters about the title/status of the property. I am of the view that in present circumstances the respondent did not act with due care and attention. It has been held in Industrial Development Bank of Pakistan through Deputy Chief Manager, v. Saadi Asmatullah and others 1999 SCMR 2874 that "if any one of the ingredients of section 41 of the Transfer of Property Act, are not satisfied, the transferee would be ineligible to seek protection under the said provisions of law" and that "an act was said to be done in good faith when the same was done with due care and attention. It has further been held in the case of I.D.B.P. (ibid) that when a person purchased the property without even verifying the original documents of title, he cannot be said to be a transferee in good faith.

5. There cannot be any cavil to the proposition that the mortgage travels with the property and not the person and the transferee of the previously encumbered property steps into the shoes of the debtor. Reference in this regard can be made to a case reported as Chief Land Commissioner v. Maula Dad and others 1978 SCMR

264. In the instant case, property in dispute was, admittedly, mortgaged with the appellant bank, as noted above, and the same was transferred in favour of the respondent during the subsistence of the mortgage, thus, as per the principle laid down in the aforenoted case of Chief Land Commissioner the respondent has stepped into the shoes of the judgment-debtor and, therefore, cannot complain or agitate that the mortgaged property cannot be sold by the appellant bank, being the mortgagee, in execution of the decree.

6. There is another aspect of the case, the mortgage deed in favour of the appellant bank was registered with the Sub-Registrar, thus, the same , would deem to be a notice to the public at large. Reliance is placed on Rahim Dad and 3 others v. Abdul Kareem and 3 others 1992 MLD 2111. On this count too, the respondent cannot be allowed to plead that he has no notice about the creation of prior mortgage and, thus, it cannot be argued that the respondent has taken due care and caution and taken all necessary steps to ensure that the property was free from encumbrances before undertaking sale transaction.

7. In the above perspective and read with the findings rendered by my, learned brother, I am constrained to hold that the respondent cannot take shelter under the cover of bona fide purchaser for consideration as the necessary components, in order to apply the provisions of section 41 of the Transfer of Property Act, are not attracted in this case. I am of the firm view that the respondent is not a bona fide purchaser for consideration and, thus, his objection petition is liable to be rejected.

8. I have examined the impugned order and find that the learned Banking Judge, without taking into consideration the necessary and inseperable ingredients of section 41 of the Transfer of Property Act and in complete oblivion of the law on the subject, has rendered the impugned order, thereby depriving the appellant bank from the valuable security, obtained by it as security. To my mind the impugned order is exceptionable, was passed in complete ignorance of the law on the subject and facts on record, thus, findings rendered by the learned Judge Banking Court are not sustainable and I am not inclined to maintain the same. Accordingly I allow this appeal and set aside the order passed by the learned Banking Court, impugned in this appeal. (Sd.) MIAN HAMID FAROOQ, J. The appeal is accepted and the impugned order dated 21-7-1988, is set aside with no order as to costs. Resultantly the objection petition, filed by the respondent, stands dismissed. M.H./M-155/L Appeal allowed.