1980 PLP 1375 (CLC)

It was urged by Mr. Ali Akbar, learned counsel for the defendant that if Exhibits 6, 8, 9, 10 and 11 are to be read together it will show that it is a case of creation of mortgage in praesenti. In support of his above conten tion he has referred to the case of United Bank of India Ltd. v. Aziranessa Bewa alias Azizannesa Bewa (P L D 1965 S C 274) the case of Messrs Eagle Star Insurance Co. Ltd. v. Messrs Usrnan Sons Lid., and others (P L D 1969 Kar. 123) the case of Muhammad Farooq Khan v. Sulainian A. G. Panjwani and 2 others (P L D 1977 Kar. 99) and the case of Master Abdul Aziz Ghafoor Khan and another v. Messrs Commerce Bank Ltd., Karachi (P L D 1978 Kar. 830). On the other hand Mr. G. M. Qureshi has urged that in view of sections 91 and 92 of the Evidence Act the defendant is precluded from urging any thing contrary to what has been witnessed in the documents. It was also urged by him that nothing can be imported in Exhibit 10, whereby the creation of the equitable mortgage was witnessed. (b) Reverting to the 1965 Supreme Court case it may be observed that in the said case it was held that the question whether letters by way of memorandum of transaction require registration would depend upon the facts of each case. In the aforesaid case, the letter of depositing the title deed read as follows :-- (1) this is to put on record that (2) this day I deposited with you with your Head office in Calcutta the documents specified in the Schedule hereto, (3) with intent to create an equitable mortgage upon all my right, title interest and estate in the properties to which such documents relate, (4) for the purpose of securing due repayment to the Bank on demand of all moneys now swing or which may hereafter be owing from me. On the basis of the above letter it was held that there were no words in the letters which puported to create any relationship in praesenti and that the mention of deposit is in the past tense and that there are no words used to show that in praesenti the security was being created. But the words "I deposited" it the deposit was made prior to the writing of the above letter. (c) Reverting to case of P L D 1969 Kar. 123, it may be stated that a Single judge reiterated the principle enunciated in the aforesaid Supreme Court case of 1965, and on the bass of the wordings of the documents executed for depositing of the title deeds it was held that the same constitute contracts of mortgage and create the relationship of mortgagor and mortgagee between the parties in praesenti and are not mere record of completed transaction: The relevant portion of the document was reproduced in the said judgment which inter alia provided as follows :-- that the documents are sent herewith by way of equitable mortgage ..", "which they hereby mortgage as equitable mortgage with Eagle Star Insurance Co. Ltd.," "that Nisar Ahmed has full Authority to mortgage their (that is his principals) shares in the properties and in exercise of the powers their shares are hereby mortgaged by him", "that Mohammad L1mar is duly constituted attorney of hfst. Zubaida Begum hereby mortgage her share and that the properties in question are free from and kind of encumbrances and shall not be encumbered or alienaied by the mortgagors before the payment of loan." ; (d) Reverting to the case of Mohammad Farooq Khan v. Sulaiman A.G Panjwani it may be observed that in the aforesaid case it was held that the document evidencing merely a record of past transaction and not containing terms of contracts of bargain operating in praesenti would qualify ass mere memorandum and does nor require registration. (e) Reverting to 1978 Karachi case, it may be stated that in the above case it was held that a receipt executed by a creditor merely acknowledging delivery of documents of title by debtor does not by itself create equitable mortgage, and that the loan can be subsequently secured by mortgaging of property on deposit of title deeds by debtor with creditor. (f) There cannot be any cabil to the above proposition of law propounded in the aforesaid cited case, the question which requires consideration is as to whether the instant case is a case of creation of mortgage in praesenti. In order to appreciate the respective contentions of the learned counsel for the parties, it may be advantageous to reproduce exhibit 10 which reads as follows :- "M/s. Ideal Life Assurance Co. Ltd. 2nd September, 1967 Ilaco House Victorai Road, Karachi Subject : Loan of Rs. 1,00,000 (Rupees one lac only) against property No. 37-Muslimabad, Karachi. Dear Sirs, I shall he grateful if you kindly acknowledge the receipt of the under mentioned document given to your legal consultant, M/s. H. Rauf & Co. (Advocates) 9 Court Chambers, Karachi as security against load of Rs. 1,00,000 (Rupees one lac only) already granted to me by Messrs Ideal Life Assurance Co. Ltd., Ilaco House, Victoria Road, Karachi :- (1) Indenture of lease between Muslimabad (Co-operative Housing Society Ltd., registered under the Bombay Co-operative Societies Act, 1925 (Bombay Act VI of 1925) having registered office at 5, Muslimabad, Karachi, 37 Muslimabad, Karachi, in respect of Plot No. 37 Survey No. 970, Survey sheet J M, Jamshed Quarters, Karachi, registered with Registrar, Karachi under registered No. 87, pages I to 3 of Volume III of Book-l-Additional dated 22nd July, 1967. (2) Copy of the approved plan of building on Plot No. 37, Survey No. 970, Survey sheet J M Jamshed Quarters, Karachi. (3) Certified copy of the extract from Property Register indicating the ownership of Mrs. Kairunnissa wife of Mr. A. G. Mirza in respect of Plot No. 37, Survey No. 970 Survey sheet J. M. Jamshed Quarters, Karachi. (4) Attested copy of the resolution passed by the Managing Committee of the Muslimabad Co-operative Housing Society Ltd., Karachi dated 26th May, 1967 granting permission to mortgage Plot No. 37 Survey No. 970 Survey Sheet J. M. Jamshed Quarters Karachi to M/s. Ideal Life Assurance Co. Ltd., Karachi for loan upto Rs. 2,00,000 (Rupees two lacs only). (5) Original No objection certificate under clause 5 (a) of the West Pakistan Co-operative Societies and Banks (Repayment of loan) Amendment Ordinance, 1966, dated 15th June, 1967 Yours faithfully, (Sd.) (Mrs. Khairunnisa), Wife of Mr. A. G. Mirza." A perusal of the above document indicates that it is not a case of loan transaction in praesenti, but it is a memo, whereby the defendant requested the plaintiffs to retain the documents of title as security for the loan already advanced to her. (g) It was urged by Mr. Ali Akbar, the learned counsel for the defendant, that Exhibits 6, 7, 8, 9 and 10 were executed on the same day, and therefore, Exhibit 6 is to be read with exhibit

10. According to him, as Exhibit 6 contains the terms of the loan and also contemplates crea tion of a mortgage, it is a case of creation of mortgage in praesenti. In my view the above contention is devoid of any force as Exhibit 10 is to be read independently, and nothing can be imported into the aforesaid exhibit from Exhibit 6. (h) It was also urged by Mr. Ali Akbar that the documents relating to title deeds were already with the plaintiffs at the time of advancing of the loan in question and therefore, there would not have been any question of depositing title deeds on 2nd September, 1967. In' this regard it may be pertinent to refer to paragraph 2 of the plaintiffs' letter dated 18th May 1967 (Exhibit 11) which was signed by the defendant as a token of acceptance, provided that all the documents of title in original and such other documents as may be required would be furnished by the defendant for examination by the Company's legal Consultants Messrs A. Rauf & Co. It is in pursuance of the above clause the defendant had submitted the documents relating to title prior to the granting of loan by the plaintiffs. In my view the fact that the documents were already with the plaintiffs at the time of the granting of the loan would not change the 'nature of the mortgage. The equitable mortgage was created by the fact that the defendant allowed the plaintiffs to retain the documents of title to the property as a security against the loan through her letter- dated 2nd September 1967, Exhibit

10. In view of the above discussion, my finding on this issue is that the equitable mortgage is legal and proper. (f) (a) Issue No. 3 : In support of the above issue Mr. Ali Akbar has urged that it was incumbent on the plaintiffs to prove the authority of Mr. P. Sequeira, the then General Manager and Secretary of Plaintiffs' company to sign and to verify the plaint. His further contention was that Order XXIX, C. P. C is not applicable. Mr. Ali Akbar hag referred to the case of Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nahi Corporation Ltd., Lahore (P L D 1971 S C 550) and the case of Messrs Mohammad Siddiquie Mohammad Umar v. The Australia Bank Ltd. (P L D 1966 S C 684), whereas it was urged by Mr. G. M. Qureshi that the fact that Mr.' Sequeira was the General Manager and Secretary has not been denied by the defendant, and the provision of Order XXIX would be attracted to. His further submission was that in any case P. W. 1 has deposed that the plaintiffs' Board of Directors had authorised Mr. P Sequeira to sign and verify the plaint and that the said witness has also produced a resolution of the Board of Directors Exhibit 12/8 of the meeting held on 27th May, 1971. It may be pertinent to refer to Order VI, rules 14 and 15 and Order XXIX, C- I'. C Order VI, rule 14 provides that every pleading shall be signed by the party and its pleader or by any person duly authorised by him to sign the same, whereas Rule 15 of Order VI provides that every pleading shall be verified by one of the parties or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case. Order XXIX, rule 1 provides that any suit by or against a Corporation, any pleading may be signed and verified on behalf of the Corporation by the Secretary or by any Director or other Principal Officer of the Corporation who is able to depose to the facts of the case. It may be noticed that whereas Order VI, rule 14 deals with the signing of a pleading by a party or his agent, Order XXIX, rule 2 provides for the signing and verification on behalf of the Corporation. Though Mr. Ali Akbar has urged that Order XXIX is not attracted to the instant case, but he has not cited any authority in support of his contention. In my view Order XXIX, rule 1 C. P. C. covers not only a statutory Corporation but any other Company or Society incorporated under the Companies Act, or other appropriate provision of law. 'On this view of the matter, in my view, Mr. P. Sequeira was competent to sign and to verify the plaint. It may be observed that it was not even suggested to P. W. I that Mr. Sequeira was not the General Manager and Secretary at the relevant time. Furthermore, the learned counsel for the defendant in the cross-examination asked P. W. 1 as to whether there was any resolution of the Board of Direztors for authorising the General Manager and Secretary to sign the plaint, and in reply to the above question P. W. 1 has deposed that the plaintiff-Company had passed a resolution of the Board of Directors and in support of his state ment he has produced a simple copy of the resolution of the Board of Directors which is Exhibit 12/8. which reads as follows :- "Resolved that the Civil Suit as per plaint drafted by Mr. Dingomal N. Ramcbandani, Barrister-at-Law, and placed before this meeting for the recovery of a mortgage loan amounting to Rs. 1,30,748.99 from Mrs. Khairunnissa A. G. Mirza, in the High Court of Sind and Baluchistan, be and is hereby duly approved and confirmed as also the authorisation to the General Manager and Secretary to sign the Plaint on behalf of the company and to take all further neces sary action in the matter until final disposal of the suit ; the decision to be ratified by the Board and the professional legal fees to be fixed by mutual agreement with Mr. Dingomal N. Ramchandani, Barrister-at-law, whose services be engaged for the conduct of the suit." (6) It was urged by Mr. Ali Akbar that the above copy of resolution is not admissible inasmuch as it is not an attested copy of the resolution of the Board of Directors. It is true that it is not an attested copy, but the fact remains that this copy was produced from the record maintained by the plaintiffs' company in the ordinary course of . business, and this document was produced by P. W. 1 in the cross-examination. The learned counsel for the defendant did not ask P. W. 1 to produce the original record containing the resolution in question in order to challenge the veracity of the statement of P. W.

1. In my view P. W. 1's statement read with this document even otherwise proves that the suit was competent ly filed and verified. Referring to the two aforesaid cases cited by learned counsel for the defendant, it will suffice to observe that in the first case of the Supreme Court of 1971, it was proved that the meeting of the Board of Directors was not validly convened and therefore, the alleged resolution authorising the filing of the suit was not. valid. Whereas in the second case of the Supreme Court of 1966, the validity of a power of attorney executed by a company was in issue. In my view the facts of the above two cases are distinguishable from the instant case. (c) It was also urged by Mr. Ali Akbar that after the nationalisation of the Life Insurance business the .plaintiffs have not got State Life Insurance substituted, and, therefore, suit is liable to be dismissed. (d) When I had already dictated the judgment upto this stage, on 14th October 1979 in the Court in the presented of the learned counsel for the parties upon conclusion of their arguments, the question arose as to whether this Court was competent under Order I, rule 10, C.P.C. to add o Z substitute the State Life Insurance Corporation of Pakistan of its own or at the oral request of a party. At the request of the learned counsel for the pasties I had adjourned the case for today in order to examine the above question. On 16th October 1979 Mr. G. M. Qureshi had filed an application under Order I, rule 10, C.P C. supported by an affidavit an also his vakalatnama, on behalf of the State Life Insurance Corporation. It has been urged by Mr. Qureshi that this Court has power to implead or to substitute any party at any stage of the suit. Whereas Mr. Ali Akbar has urged that though he has not been able to lay his hands on any of the rulings laying down that a party cannot be impleaded while the case is at the stage of dictating of the judgment but his submission was that it cannot be done. In my view, till the time the judgment is concluded and it is signed by the Judge a suit remains pending and, therefore, even at this stage this Court has power to substitute or to add any party. It may be pertinent to observe that Mr. Ali Akbar did not raise any formal objection either by amending the written statement or by filing an application to the effect that the suit could not proceed in the absence of the State Lif Insurance Corporation. However, while arguing Issue No. 3 he had urged the above point. Strictly speaking, issue No. 3 was confined to the ques tion, as to whether the plaint was signed by the authorised officer of the plaintiff and whether it was properly verified when the suit was instituted. However, I permitted Mr. Ali Akbar to urge the above point as it was a legal point. (e) Mr. G.M. Qureshi in support of his contention that a Court. can even implead a party without a formal application has relied upon the case of Ram Narayan Lai alias Lai Baboo v. Khelwan Singh and others (61 I C 378). It may be observed that by virtue of the Life Insurance (Nationalization) Order, 1972. the life insurance business of the plaintiff company and other com panies stood nationalised. Section 17 (2) of. the aforesaid order provides that the suit, appeal or other legal proceedings shall not abate or be discon tinued or in any way prejudicially affect by reason of the transfer to the Corporation or the business of the insurer or of anything done under the Order. But the suit, appeal or other proceedings may be continued, prosecuted and enforced by or against the Corporation. It may also be observed that P. W. 1 who has appeared as a witness is an employee of the State Life Insurance Corporation and as a matter of fact for all practi cal purposes the State Life Insurance Corporation was prosecuting the case though it was merely a technical omission that it was not brought on the record as a party. Being the successor of plaintiff No. 1, the State F Life Insurance Corporation was competent to prosecute the suit by virtue of aforesaid section 17 (2) of the Order mentioned by me earlier. 1, there fore, order that the State Life Insurance Corporation be added as plaintiff No. 2, in the title of the plaint. The learned counsel for the plaintiff is permitted to add plaintiff No. 2 in the title of the plaint by hand in the Court, just now. In view of the above discussion my finding on issue No. 3 is in the affirmative. Issues Nos. 4 to 8

7. In my view the above issues are redundant as I have held that the suit is on mortgage and not on promissory note. Be that as it may. Mr. G. M. Qureshi concedes that if the suit was to be treated as a stilt on promissory note, it would have been barred by limitation. Reverting to the variation in the letter dated 2nd September, 1967 and the promissory note, it may be observed that it was urged by Mr. All Akbar that whereas under the above letter (Exh. 6) the loan amount was to be paid in 5 years equal instalments, but under the promissory note (Exh. 8)'the loan was payable on demand. His further submission was that as a matter of fact the promissory note is a promissory note payable in instalments and, therefore, the stamp duty payable was under item No. 49 Schedule I to the Stamp Act, which is payable on a bill of exchange. In my view, the above contention is devoid of any force as Exh. 8, which is a promissory note, contemplates the payment of Rs. one lac on demand. There is no provision for payment of the above amount in instalments. On the contrary, in para. 8 of Exh. 6 it was provided that in case of default of any instalment of the principal amount or interest or costs the t6tal amount outstanding would become due and payable. It is an admitted position that the defendant did not pay a single instalment towards the loan amount and, therefore, in law the entire balance amount i.e. the original amount had become due and payable and thus even otherwise the promissory note was enforceable in terms of the conditions of the loan witnessed in Exh.

6. There is nothing wrong either with the promissory note (Exh. 8) or the receipt in respect thereof (Exh. 9) which can make them invalid. In view of my above discussion my findings on Issues Nos. 4 and 5 are in the affirmative. My finding on issue No. 6, is that the pro missory note would have been enforceable within the limitation period (which had already expired at the time of filing of the suit) and on issue No. 7 is in the negative. Issue No. 8 :

8. D W 1 who is one of the sons of the defendant has deposed that the defendant is a pardanashin lady and is not conversant with the English language. There is nothing in rebuttal on the record and, therefore, it can be concluded that the defendant is a pardanashin lady and is not con versant with the English language. But in my view this finding does not make any difference on the merits of the case as the defendant has no pleaded any fraud against the plaintiff or against her husband, who was G admittedly the person instrumental in getting the loan amount. It is presumed that the defendant's husband must have explained all the documents to the defendant which he got executed from her. In the absence of any plea of fraud against plaintiff No. 1 or against the husband, the defendant cannot avoid the legal liability merely on the ground that she is a parda nashin lady and that she is not conversant with the English language. No evidence has been produced to substantiate the plea that the document Exhs. 5 to 10 were prepared by the plaintiff No.

1. Be that as it may, even if it is to be held that these documents were prepared by plaintiff No. 1, it would not make any difference so long as the contents thereof were understood by the defendant. It is an admitted position that a loan of Rs. 1 Jac was granted on the basis of the aforesaid documents. In the absence of any plea of fraud, it is presumed that the defendant's husband must have explained the contents of the said documents. In view of the above discussion my finding on this issue is that the defendant is not conversant with the English language but she signed the documents after understanding the contents thereof. Issue No. 9 It was urged by Mr. Ali Akbar that the plaintiff has not proved the statement of accounts through P.W. 1, the attested copy of which is on the record. It is true that the statement of accounts has not formally been proved through P.W. 1 and, therefore, it has not been exhibited but this does not make any difference as it is an admitted position that the plaintiff had given a sum of Rs. one lac as loan and according to the defen dant no amount was paid against the above loan so much so that even the payment of Rs. 2,659.13 through Exh. 12/7 towards the amount of interest was denied by the defendant for the obvious reason for taking the plea of limitation. Since it is a suit on mortgage the limitation period of which is 12 years under Article 132 of the First Schedule to the Limita tion Act, the defendant's dental of payment of the above amount of Rs. 2,659.13 would not make any difference on the question of limita tion period. Since plaintiff No. I has admitted the receipt of the above loan of Rs. 2,659.13 and since the defendant is a widow I would give adjustment of this amount against the decretal amount. 1, therefore, pass a preliminary decree against the defendant in Form 5-A in Appendix D to the First Schedule and declare that a sum of Rs. one lac is due and payable with 8% interest thereon with half-yearly rests as per clause 2 of Exh. 6 from 1st September, 1967 till 31st May, 1971 and further interest at the rate of 6% simple interest from the date of the suit till payment. However, the defendant shall be entitled to an adjustment of Rs. 2,659.13 mentioned in Exh. 12/7 but there will be no order as to costs. If the defen dant pays into the Court the above amount within 6 months from today with subsequent costs, charges and expenses as provided under rule IO of Order XXXIV, C.P.C. together with subsequent interest on the above amount the plaintiff shall deliver to the defendant or to such person as the defendant appoints all documents in their possession or power relating to the mortgage property and shall if so required retransfer the property to the defendant at her costs free from mortgage and free of encumberance created by the plaintiff or any person claiming under them. If the net proceeds of the sale of the mortgaged property are found insufficient to pay the amount due to the plaintiff, they may apply to the Court under Order XXXIV, rule 6, C.P.C. for a decree for the balance amount against the defendant in accordance with law, Order accordingly.