P L D 1970 Karachi 76 (PLP)

8. On the pleadings of the parties the following common issues were settled in all the five suits :‑ (1) Whether the plaintiffs have not invested the amount of the two instalments of loan in dispute in construction of the proposed building as laid down in the mortgage‑deed and have diverted the same to some other use? (2) Whether the decision of the defendants in recalling the loan vide notice dated 7‑6‑1967 issued under section 29 of the House Building Finance Corporation Act, 1952 is illegal? (3) Whether the suit is barred by section 56 read with section 21 of the Specific Relief Act? (4) Was the agreement between the parties varied and modified by letters dated 27th March 1964, 24th November 1964, 29th July 1965, 13th September 1965, 25th April 1967? (5) Are the plaintiffs entitled to the reliefs claimed if so what ought to be the decree?

9. The main issues are issues Nos. 1 and

4. Under issue No. 1, the question is whether the loans granted to the plaintiffs have been diverted to other purposes, and under issue No. 4 the point for consideration is whether, if it is held that there was such diversion, then was this diversion with the agreement of the defendants, so that this agreement should be treated as novation of contract contained in clause 5 of the mortgage‑deeds referred to above. With regard to the first issue, the plaintiffs have admitted that the loans granted to the five societies, namely, "Aurangzeb", "Farukhsyr", "Humayun", "Shah Alam" and "Bahadur Shah", were not invested in the construction of flats which these societies undertook to carry out under the mortgage‑deeds and that part of these loans was diverted to purposes other than for which the loans were granted. This position is established from the evidence of J. L. D'Silva, who was examined as plaintiffs' witness. This witness admitted that contrary to the agreements of loan, even the land on which the flats were to be constructed was purchased with the loans advanced by the defendants. In all the five suits, the plaintiff No. 2 is Hussain D'Silva Enterprise Limited, which is a private limited company controlled by two persons, namely, A. R. Hussain and J. L. D'Silva, who appear to have set up several firms and companies under 'different names. Thus, under the name of Karachi Talkies Limited they purchased the lands for the five societies from Eduljee Dinshaw Limited .at Rs. 50.00 per square yard. They have also two firms, one is Cosmopolitan Housing Project, and the other is, Hussain D'Silva Trading Company. J. L. D'Silva admitted that out of each sum of Rs. 4,10,000.00 granted by the defendants to the five societies, Rs. 1,00,000.00 have been diverted to Hussain D'Silva Trading Company, and= Rs. 1,50,000.00 to Cosmopolitan Housing Project. Thus each. of the five societies received a loan of Rs. 4,10,000.00 and out of each of these sums, Rs. 2,50,000.00 were diverted to the private firms in which A. R. Hussain and J. L. D'Silva are partners. The witness produced Exh. 8/37, a statement which shows how the loans advanced by the defendants to the societies were used. The diversion of funds to Hussain D'Silva Trading Company and Cosmopolitan Housing Project is confirmed by this statement. J. L. D'Silva further admitted that though mortgage‑ deeds were executed and registered in 1963, till November 1967,. no construction at all was undertaken for "Aurangzeb", "Farukhsyr", "Humayun", "Shah Alam" and "Bahadur Shah".. With regard to "Humayun", he said‑construction was undertaken, in 1964, and was under progress at the time he came to give: evidence in these suits. But in cross‑examination he was shown Exh. 7, a letter written by Hussain D'Silva Enterprise Limited, the plaintiff No. 2 in each suit, on 3rd November 1966, in which the dates for commencement of construction for each society were given. For "Humayun", it was stated in this letter that construction would commence in March 1967. Upon seeing this letter, the witness changed his statement and gave the version that construction for "Humayun" commenced in 1964, but was stopped due to the failure of the defendants to release further instalments of loan, and that the construction had again been undertaken in 1967. The plaintiffs' witness, namely Shaikh Muhammad Aslam, who is Chief Accountant of the five societies before me, confirmed what J. L. D'Silva stated,. that each of the societies paid Rs. 1,50,000.00 to Cosmopolitan Housing Project and Rs. 1,00,000.00 to Hussain D'Silva Trading. Company. According to this witness, the payment to, Cosmopolitan Housing Project was for sanitary works in the proposed flats and that to Hussain D'Silva Trading Company was for installation of lifts in the fiats. This witness also admitted that the balances of the loans remaining with the five societies were utilised for construction of the flats of the remaining four societies, namely, "Baber", "Akbar", "Jehangir" and "Shah Jehan". J. L. D'Silva also admitted that the conditions contained in clauses 4 and 5 of the mortgage‑deeds, requiring commencement of construction within one month from the execution of the mortgage‑deeds, and use of the loan granted to each society only for the construction of the flats of that society, had not been complied with. The witness agreed that he and his partner, A. R. Hussain, under Exh. 7/4, 7/5, 7/7, 7/8, 7/9, 7/11, 7/13, 7/14, 7/15 and 7/16 had given undertakings to complete construction of each society within the period stipulated in the mortgage‑deeds. The attention of this witness was invited to Exh; 8/36, which is a letter sent by the defendants to the plaintiffs on 26th December 1963, in which enquiry was made as to how the loans advanced by the defendants were being utilised. From this letter, it is clear that as early as December 1963, the defendants had impressed upon the plaintiffs that the loans advanced to them should be used only for the purpose of construction, for which purpose the loans were advanced under the agreements of loan as well as the mortgage‑deeds. But, as admitted by J. L. D'Silva, no construction was taken in hand for any of the five societies up to November 1967. The witness did contend that construction for "Humayun" had been undertaken in November 1964. But I cannot believe him in this respect in view of Exh. 7, which was written by his partner, A. R. Hussain, on 3rd November 1967, stating that construction for this society would commence in March 1967. Under this issue, that is, issue No. 1, 1 would therefore, hold that the plaintiffs were in breach of the condition of the loan agreements as well as of the mortgage‑deeds with regard to the commencement and completion of the flats undertaken by each of the five societies, for which purpose they had obtained loans from the defendants.

10. The plaintiffs justified their failure to commence and complete construction in accordance with the stipulations contained in the loan agreements and the mortgage‑deeds by setting up the plea that there was novation of contract contained in these documents, which novation is sought to be proved by Exh. 6/21 dated 13th September 1965, addressed by the defendants to the 9 societies and to A. R. Hussain and J. L. D'Silva: In this connection, other letters mentioned in issue No. 4 were not relied upon by the plaintiffs. It is on this, document that the plaintiffs have rested their whole case and it would, therefore, be useful to reproduce the whole of this letter here "Dear Sirs,. The Board of Directors in the meeting held on 25th and 26th August 1965, has considered the question of investment of amounts. of instalments of loan already advanced to your societies. It has been decided by the Board that the Corporation might release the remaining instalments of loan to Shahenshah Shah Jehan provided inter‑guarantees in the form enclosed is given by all the nine Co‑operative Societies supported by the original, or duly attested copies of the amended bye‑laws authorizing the Societies to give inter‑guarantees and resolution passed by the General Body of all the Societies authorizing you to execute the inter‑guarantees and Bond of Indemnity on behalf of the Societies in favour of the Corporation. You are, therefore, advised to please take further necessary action in the matter. The remaining instalment of loan will be released to Shahenshah Jehangir Co‑operative House Building Society Limited after the amount to be advanced to Shahenshah Shah Jehan is utilized in the construction of the former and duly certified by our Engineer. Similar procedure will be adopted in respect of the remaining Societies. It has also been decided by the Board that the rates of construction per sqr. ft. which were enforced at the time of sanction of the loans to the 9 Societies shall not be altered to their advantage as the Societies were responsible for the delay in completing their construction as per terms of the mortgage‑deeds. Yours faithfully, (Sd.) Salahuddin Khan, General Manager." Mr. Nasim Faruqui laid emphasis on the last two sentences of the first paragraph of this letter, which are to the effect that (i) the remaining instalment of loan will be released to "Jehangir" after the amount to be advanced to "Shah Jehan" is utilised in the construction of the former (that is, "Jehangir"); and (ii) similar procedure will be adopted in respect of the remaining societies. The contention of Mr. Nasim Faruqui is that this arrangement meant that construction of one society at a time would be taken in hand and that loans already granted to other societies will be diverted to the construction for the time being in hand. In other words, according to Mr. Faruqui, first "Humayun" will be completed, and loans advanced to the remaining four societies would be utilised for this purpose, and then the construction of the next society would be taken in hand with similar procedure. Now, it is admitted that this letter purports to have been written in pursuance of Exh. 10/7, which is the resolution of the defendants' Board of Directors passed at its meetings held on 25th and 26th August 1965. The resolution was passed with reference to Item No. 14 of the agenda. It is necessary to look at the resolution as a whole and I would, therefore, reproduce it in full here "Item No. 14.‑To consider the case of the nine Co operative Societies in the light of the discussion held with the Joint Secretary, Mr. Majed Ali, C. S. P., Ministry of Finance, Government of Pakistan. The case of the 9 Co‑operative Societies scheduled below :‑ (1) Shahjehan Co‑operative Housing Society, (2) Jehangir Co‑operative Housing Society, (3) Akbar Co‑operative Housing Society, (4) Humayun Co‑operative Housing Society, (5) Baber Co‑operative Housing Society, (6) Aurangzeb Co‑operative Housing Society, (7) Shah Alain Co‑operative Housing Society, (8) Farukhsyr Co‑operative Housing Society, (9) Bahadur Shah Co‑operative Housing Society. was considered in the light of the demi‑official Letter No. 13 (62)IFV/63 dated 13‑8‑65 of Mr. A. R. Siddiqui, C. S. P., Deputy Secretary, Ministry of Finance (IF), Rawalpindi addressed to Mr. M. Reza Ali, GAR, Managing Director, H. B. F. C., Dacca and the minutes of the discussions held by the Managing Director with Mr. Majed Ali, C. S. P., Joint Secretary, Ministry of Finance and M/s. Hussain D'Silva the sponsors of the aforesaid Societies at the Zonal Office of the Corporation in Karachi on the 28th July 1965 for finding out a solution for the settlement of the question of loans granted to the above mentioned 9 Co‑operative Housing Societies and it was Resolved that‑ "(a) After obtaining inter‑guarantees enforceable at law from all the nine Co‑operative Societies and after proper satisfaction of the Managing Director regarding the title of the Societies to the land mortgaged with the Corporation by metes and bounds, the societies that have fulfilled their conditions be given instalments due to them according to the progress of construction, as admissible under the rules and at such stages as the Managing Director may deem fit. (b) The aforesaid inter‑guarantees required to be furnished by all the 9 Societies shall vouchsafe the interest of the Corporation so that the 9 Co‑operative Societies shall be made jointly and severally responsible to fulfil their contractual obligations and indemnify the Corporation against any loss that may be incurred by the corporation due to the failure of any of the Societies in fulfilling the terms and conditions of the mortgage‑deeds executed by them. (c) The rates of construction per sq. ft. which were enforced at the time of sanction of the loans to the 9 Co‑operative Societies shall not be altered to their advantage as the Societies were responsible for the delay in completing their construction as per terms of the mortgage deeds." It would be seen that there are three operative parts of the resolution, divided into paragraphs (a), (b) and (c). Under paragraph (a), the Board of the defendants decided that remaining instalments of loans should be released to such of the societies as had established their title to the mortgaged land and had fulfilled the conditions on which the loans were granted to them after taking from all the Societies inter‑guarantees mentioned in the next following paragraph. Paragraph (b) stipulates that all the nine societies should stand surety for each other, so that they are jointly and severally responsible to fulfil each other's obligations and indemnify the Corporation (that is, the defendants) against any loss that may be incurred by the Corporation. Under paragraph (c) the Board refused to alter the rates of construction which had been accepted by the defendants at the time the loans were granted to the societies. Nowhere in the resolution there is any statement that the loans advanced to "Shabjehan" may be utilised for the construction of "Jehangir" or that such. procedure may be followed with regard to the other societies also. The letter, Exh. 6‑21, was written by Mr. Salahuddin Khan, the then General Manager. J. L. D'Silva admitted that this gentleman, after leaving the defendants' service, was employed by him and his partner, A. R. Hussain. This would suggest a friendly co‑operation between him on the one hand and A. R. Hussain and J. L. D'Silva on the other. Mr. Salahuddin, however, when he was examined on 16‑5‑1969 at the plaintiffs' instance, stated that this letter was written according to the instructions of the then Managing Director, Mr. Reza Ali. But he admitted that Mr. Reza Ali did not give these instructions in writing, nor did he remember whether the draft of the letter was put up before Mr. Reza Ali for his approval. In cross‑examination the witness admitted that since the loans granted to the five societies were under the sanction of the defendants' Board of Directors, neither he, nor the Managing Director, were competent to alter the conditions of the loan approved by the Board. He also admitted that neither he nor the Managing Director permitted the plaintiffs to divert the loans advanced to them to other purposes or for construction of other societies. In answer to a question from the Court, the witness admitted that there was no such provision in Exh. 10/7, the resolution of the Board, as is contained in Exh. 6/21, by which the loan of one society was allowed to be utilised for construction of any other society, but he thought that an inference to this effect could be drawn from paragraph (b) of the Board's resolution. However, I fail to see how any such inference can at all be drawn. Paragraph (b) of the Board's resolution is only to the effect that each of the nine societies shall be surety for the others. One further fact may be noted in this connection. At the time when Exh. 6/21 was written, this witness was posted at Karachi as the defendants' General Manager for West Pakistan, while the defendants' head office was and is still at Dacca. The witness admitted that copy of Exh. 6/21 was not sent to the defendants' head office, which is rather curious, considering the fact that this document purported to alter the conditions on which the loans to the nine societies were granted by the defendants. In my opinion, only one conclusion can be drawn, which is, that Exh. 6/21 was written without the authority of the defendants' Board of Directors or even of the defendants' Managing Director. I do not believe Mr. Salahuddin when he says that Exh. 6/21 was written on the instructions of Mr. Reza Ali. I were to believe him in this respect, I would have to hold that Mr. Reza All was on quite friendly terms with A. R. Hussain and J. L. D'Silva, and did intend to accommodate these latter, notwithstanding that .the procedure permitted by Exh. 6/21 did not have the sanction of the defendants' Board of Directors. But this conclusion would be contrary to J. L. D'Silva's own evidence, who stated that Mr. Reza Ali was hostile to him and his partner, A. R. Hussain, as these latter were supposed to have been on friendly terms with the defendants' former Managing Director, Mr. Hafiz Ahmad. The version given by Mr. Salahuddin that Exh. 6/21 was written on the instructions of Mr. Reza Ali is inconsistent with M. J. D'Silva's contention that Mr. Reza Ali was actuated by hostile motives to him and his partner, and that the notice of recall of the loans was the result of this hostility.

11. Mr. Nasim Faruqui contended that Exh. 6/21 contains a statement that the procedure stated therein for utilisation of the loans by the plaintiffs and for repayment thereof had the sanction of the defendants' Board of Directors, and that since this letter was under the signature of the defendants' General Manager, the defendants were estopped from disputing that Exh. 6/21 did not have the sanction of the defendants' directors. I do not find much substance in this contention as, in my opinion, there is sufficient material on the record to show that .the General Manager was on friendly terms with A. R. Hussain and J. L. D'Silva who, as also the five societies before me, could not therefore presume that Exh. 6/21 had the sanction .of the defendants. Mr. Faruqui, however, argued that this contention had the support of decided cases. He first referred me to the decision of the Court of Exchequer Chamber in the Royal British Bank v. Turquand (119 E R 89 5) which was on appeal from a decision of the Queen's Bench. In this case, a joint stock company executed a bond, signed by two directors under the seal of the company, whereby the company acknow ledged themselves to be bound to the plaintiff in 2,

000. There was a registered deed of settlement, which showed that the directors of the joint stock company were authorised, under certain circumstances, to borrow on bond such sums as should from time to time they be authorised by a general resolution of the company. It was contended that there was no resolution of the company authorizing the making of the bond. The appellate Court, however, armed the decision of the Queen's Bench that the plaintiff had a right to presume that there had been a resolution at the general meeting authorizing the borrowing of the money on bond. This decision affirmed the rule applied by English Courts that outside parties are not concerned with the internal Management of a limited company. But the decisions in which this rule has been recognised have proceeded generally on the principle that the representation held .out on behalf of a company should amount to an estoppel, that is, that the outside party should have acted on such representation, so that to deny or repudiate the representation would cause loss or injury to such party. The English decision, cited by Mr. Nasim Faruqui, also appears to have been given on this principle, as the plaintiff in this case had advanced a loan of 2,000 presuming that the directors of the borrower were duly authorised by the resolution of the general meeting to borrow this sum. This decision, however, is not applicable to the present case, where it has not been shown that the representation said to be contained in Exh. 6/21, that this document had the sanction of the defendants,' Board, led the plaintiffs to act in such way that the repudiation of this representation now would involve them in any loss or injury. Mr. Nasim Faruqui then referred to a decision of the Court of Appeal in Freeman and Lockyer (a Firm) v. Buckhurst Park Properties (Mangal) Ltd. and another ((1964) 1 A E L R 630) where one of the directors of the company, representing himself to be the Managing Director, employed architects and surveyors in relation to the company's property, without obtaining authority of the Board. It was held by the Court that the company was liable for the claim of the architects and the surveyors. But this case is clearly distinguishable. In the first instance, it was found that the director who employed the architects and surveyors was held out by the company, as its Managing Director. Secondly, this director, in employing the plaintiffs, was found to have acted within the ordinary ambit of the authority of the Managing Director. It is not the plaintiffs' case before me that the defendants either held out Mr. Salahuddin to be competent to make the representation which is contained in Exh. 6/21, or that the making of such e representation was within the ambit of Mr. Salahuddin's authority as General Manager of the defendants. Mr. Nasim Faruqui then referred to a decision of the High Court of Calcutta, namely, Satibbusan Mukherjee v. The Corporation of Calcutta (A I R 1949 Cal. 20) in which it was held that the Calcutta Municipal Corporation was bound by a letter written by its Junior Law Officer to an auction purchaser that Rs. 434‑10‑0 only were outstanding in connection with the arrears of consolidated rates in respect of the property which was the subject‑matter of the auction sale. It was, however, found that it was part of the duty of the Law Officer of the Corporation to give demand notices when consolidated rates were in arrears, and to take steps for their recovery, and that the letter written by the Junior Law Officer concluded by demand for payment of Rs. 434‑10‑0 forthwith, with a threat of legal proceedings. Accordingly, it was held, that the representation made by the Junior Law Officer with regard to the outstanding amount of consolidated rates was within the ambit of this officer's authority. This case also cannot be applied to the proceedings before me. It has not been proved that the representation contained in Exh. 6/21, or even the postponement of the repayment of the loans, or alteration in the mode of use of these loans, was within the ambit of Mr. Salahuddin's authority as General Manager of the defendants. Another case cited by Mr. Nasim Faruqui is T. R. Pratt (Bombay) Ltd. v. E. D. Sasson & Co. Ltd. and another ((1936) 6 Coy's. Cas. 90). But in my opinion the decision in this case goes against the further contention of Mr. Nasim Faruqui that the subsequent conduct of the defendants showed that they had ratified what is contained in Exh. 6/21. In this case, it was held that there can be no, ratification by a company of an unauthorised act unless the company had full knowledge of all the circumstances attending the transaction, or had adopted the transaction with the intention to adopt it under any circumstances. In the proceedings before me, there is no evidence at all to show that the defendants were even aware of the existence of Exh. 6/21. There can,, therefore, be no question of the defendants ratifying this letter. Thus, none of the cases relied upon by Nasim Faruqui is of any' assistance to the plaintiffs. On the other hand, the rules laid down in these cases go against Mr. Faruqui's contention. Moreover, Mr. Faruqui's contention that the defendant should be held bound by the representation contained in Exh. 6/21 ignore the important rule that all persons dealing with a statutory body or its agents are deemed to have notice of the limits publicly set to their authority. It has not been shown that Mr. Salahuddin acted as General Manager under any power‑of attorney given to him by the defendants. The ambit of his authority is therefore to be ascertained from the provisions of the House Building Finance Corporation Act, 1952 or the Regulations promulgated thereunder or the resolutions of the Defendant's Board. But I do not find any authority in these provisions, or in any resolution, to enable the General Manager of the defendants to alter the purposes for which the defendants may have granted any loan, or to alter the mode of use of such loan or permit postponement of its re‑payment. Another important point to be taken note of is, that the principal is not bound by the acts or representations of an agent which were done or made, not for the general or special benefit of the principal, but for the agent's private ends. Reference in this connection may be made to the English decision The British Mutual Banking Company, Limited v. The Charnwood Forest Railway Company ((1887) 18 Q B D 714) In which this rule has been given effect to the defendants before me are a statutory body and the plaintiffs should, therefore, be presumed to have knowledge of the limitations on the powers of the defendants' officers and agents. Further, it appears from the evidence on record that the General Manager, who signed Exh. 6/21, was on friendly terms with A. R. Hussain and J. L. D'Silva, the promoters of the five co‑operative house building societies before me. Accordingly, whatever is contained in Exh. 6/21 cannot be' said to have been written by the General Manager for the benefit of the defendants and, accordingly, Exh. 6/21 cannot be said to be binding on the latter.

12. The last contention of Mr. Nasim Faruqui is that Exh. 6/21 should be held to be an alteration in the duration of the repayment of loans granted by the defendants to the 5 societies, which alteration is within the powers conferred on the defendants' Managing Director under the defendants' Regulation No. 56 (f). But I have already held that Exh. 6/21 was not written with the authority of the then Managing Director namely, Mr. Reza Ali. Further, Mr. Reza Ali could not have given sanction to the General Manager to write Exh. 6/21 to the plaintiffs, in view of J. L. D'Silva's admission that Mr. Reza Ali was actuated by hostile motives towards him and his partner, A. R. Hussain, as these two were supposed to have been on friendly terms with a previous Managing Director. Moreover, Exh. 6/21, in effect, permits diversion of the loans to purposes other than those for which these loans were granted by the defendants. The Managing Director, in any case, did not have any power to permit such diversion.

13. The further consideration against placing reliance on Exh. 6/21 is that this document varies the terms of the mortgage deeds. Exhs. 7/18, 7/19, 7/20, 7/21 and 7/22. Since this document is unregistered, it is inadmissible in evidence for the purposes of proving such variation. I am supported in this view by three decisions. The first of these cases is Rao Sahib Pydah Venkatachalapathi Garu and others v. Mathu Venkatachalapathi and another (A I R 1914 Mad. 639) in which it was held that an unregistered letter is inadmissible in evidence to show either that the sale executed the previous day is in effect a mortgage or that it conveys no title and that in either view the unregistered letter "affects immovable property" within the meaning of section 17 and is not admissible in evidence without registration. The second case is that of the Chief Court of Oudb, namely Afsar Jehan Begum and another v. Beche Lal and others (A I R 1931 Oudh 288). In this case an agreement was entered into between the mortgagor and the mortgagee to vary the term of the registered mortgage‑deed relating to the rate of interest payable under the deed. It was held that the agreement, in effect, was for relinquishment for a portion of the mortgage‑deed exceeding Rs. 100 and could not be admitted in evidence without registration. The third case is that of the Indian Supreme Court, Kashinath Bhaskar Datar v. Bhaskar Vishweshwar (A I R 1952 S C 153) which again relates to interest payable under a registered mortgage. It was held that one part of the mortgagee's interest in the mortgaged property is the right to receive interest at a certain rate when the document provides for interest, and that, if that rate is varied, whether to give advantage or otherwise to the mortgagee, then the mortgagees' "interest" in the property is affected and, therefore, the agreement varying the rate is inadmissible in evidence unless it is a registered document. Now, the question is whether Exh. 6/21 affects the defendants' interest in the properties mortgaged with them under registered mortgage‑deeds, Exhs. 7/18, 7/19, 7/20, 7/21 and 7/22. The five mortgage‑deeds are identical with regard to their contents. Thus, all the five deeds create mortgagee in the defendants' favour not only in the plots of land on which the blocks of flats were proposed to be constructed, but in all the buildings and constructions which were proposed to be erected thereon. The mortgage‑deeds further provide that construction would commence within one month after the registration of the mortgage‑deeds, and would be com pleted within the period stipulated therein ; that the loans or any part thereof should not be used for any purpose other than the construction of the flats; that the loans shall be payable in instalments commencing from the first day of they third month following the date of the receipt of the last instalment of the loans by the mortgagers ; and that the mortgagers shall keep the mortgaged property in good and proper conditions till the loans were repaid in full to the defendants. Looking at Exh. 6/21, I find that it postpones .the construction of buildings, for which the loans were granted, by permitting diversion of loans for purpose other than the constructions required to be made under each mortgage‑deed. In this respect, the security under each mortgage‑deed would remain confined for a considerable period of time to the plot of land on which the flats had to be constructed with the loans granted by the defendants. This would affect the defendants L `interest' in the mortgage property, in that the value of this property would remain reduced for considerable duration of time. Again, permission to use loans for purposes other than these stipulated in the mortgage deeds, amounts to variation of the term that construction would commence within one month from the registration of the mortgage‑deeds and also of the condition that the loans should be repaid within the stipulated period of time. Thus, Exh. 6/21 materially affects the rights and interests of the defendants in the mortgaged properties, and since this document is unregistered, it cannot be admitted in evidence for the purpose of varying the terms of these deeds. T would, therefore, decide Issue No. 4 against the plaintiffs.

14. Issues Nos. 2, 3 and 5 may be dealt, with together, as they raise a common question with regard to the defendants power to recall the loans granted to the five co‑operative house building societies. It has been noted that each of the five mortgage deeds contains provisions to the effect that the defendants shall be at liberty to recall the loans if the borrower fails in fulfilment of any of the terms and conditions contained in the deed or in the loan agreement, and a further provision to the effect that the conditions contained in the deeds are in addition, and without prejudice, to the powers conferred on the defendants under the House Building Finance Corporation Act (XVIII of 1952). Section 29 of this Act provides that notwith standing any agreement to the contrary, the defendants may by notice require any borrower, when loan has been granted or its surety forthwith, to repay the loan in full :‑ (b) if the borrower has committed a breach of the terms of his agreement with the Corporation relating to the loan; or (c) if the loan is not being utilized for the purpose for which it was made; or (d) if the house is not constructed and completed within the period allowed in the agreement between the borrower and the Corporation and the failure is not due to causes beyond the control of the borrower; (g) (h) if, for any other reason, it is necessary in the opinion of the Board to do so in order to protect the interest of the Corporation." I have already held that the five co‑operative house building societies are in breach of the conditions contained in the mortgage‑deeds and in the loans agreements, as the loans granted to them were utilized for purposes other than those permitted by the defendants, that is, that the construction of the blocks of flat for which the loans were granted was neither commenced, nor completed, within, the stipulated periods. Accordingly; the n defendants were within their power, conferred on them by the aforesaid statute, to recall the loans by the notices impugned in the proceedings before me. Since these loans were recalled by the defendants in exercise of their statutory powers, as well as under the powers reserved to them in the five mortgage deeds referred to above, the plaintiffs are not entitled to the relied of declaration and prohibitory or mandatory injunction which they have sought in the five suits before me.

15. For the foregoing reasons, therefore, I have come to the conclusion that these suits are not maintainable, and I con sequently dismiss them with costs. S. A. H. Suits dismissed.