1986 PLP 1531 (MLD)

Rs.1,63,22,864.83 (b) LIM account Rs. 4,81,915.93 Total Rs.1,68,04,780.76 In support of the amounts shown outstanding as abovementioned the plaintiff has produced certified copies of the statements of accounts as Annexures E/1 and E/2 to the plaint. After serving legal notices, dated 13th June, 1984 (Annexure F/1) upon the defend is making demand against them for payment of the aforementioned amount, the present suit was filed under the provisions of Banking Companies (Recovery of Loans) Ordinance, 1979 read with Order XXXIV, C.P.C. In the plaint it is also mentioned that the plaintiff had also executed and delivered certain guarantees to various parties for and on behalf of the defendant No.1 and that the plaintiff reserves the right to file separate legal proceedings or amend the plaint in this suit as may be found necessary. The defendant No.1 has filed application (C.M.A. No.4173 of 1984) while the defendants Nos.2, 3, 4 and 5 have filed separate application (C.M.A. No.4991 ‑of 1984) for grant of unconditional leave to appear and defend the suit. In support of application filed by the defendant No.1 the learned counsel raised the following grounds:‑ (i) That a loan of Rs.20 lacs was granted to the said defendant but in the suit claim for recovery of Rs.1,68,04,780.76 has been made. (ii) Though in the promissory note payment of interest has been provided at the rate of 14% per annum with quarterly rests, the plaintiff has also charged penal interest which could not have been done. (iii) That in the account of the defendant No.1 amounts have been debited by way of transfer entries but for the same neither any particulars have been given nor any supporting documents have been produced. (iv) The mortgage created in favour of the plaintiff on 29th April, 1977 was a simple mortgage but it is not shown that it was for any consideration. In any case though the mortgage was a simple mortgage, plaintiff took possession of the mortgaged property but neither let it put nor maintained it as required by the law. The plaintiff according to the defendants is thus liable to account for the lass and damages suffered by the defendants. I would take up the grounds urged by the learned counsel "for the defendant No.1 reproduced above. Ground No.(1): As to the arguments advanced under this ground by the learned counsel for the defendant No.1. I find from the perusal of the record that the same are without any substance. The two promissory notes to which reference was made by the learned counsel, one was executed on 18th April, 1975 for Rs.5 lacs (Annexure A/1 to the plaint) and the other promissory notes, dated 3rd October, 1975 was executed by the defendant No.1 for Rs.15 lacs on 3rd October, 1975. Subsequently however the defendants continued to enjoy the banking facilities granted to it by way of overdraft/advance/LIM facilities which continued to increase the liabilities of the defendent No.1 consequent to which on 29th September, 1977 simple mortgage was created by the defendant No.1 by registered deed by providing security of the property fully described in the said mortgage deed. This mortgage deed was executed in favour of the plaintiff bank as at the request of the defendant No.1 the bank had allowed and agreed to allow the said defendant accommodation by way of loan/overdraft/cash credit/bank guarantees and other banking facilities to the extent of Rs.50 lacs the mortgagor, the defendant No.1 agreeing that it shall create a first legal charge by way of registered mortgage on the mortgaged property by the said deed. The plaintiff has produced certified copies of the statements of the two accounts, Annexures E/1 and E/2 to the plaint. I‑n the statement of account Annexure E/1 the defendant is shown liable to pay Rs.1,63,22,864.83 while the LIM account Annexure E/2 shows that under it the defendant No.1 is liable for Rs.4,81,915.93. Copies of these accounts were supplied alongwith copy of the plaint to the defendant No.1 who in the counter‑affidavit did not challenge aA single debit entry as either wrongly made or falsely made. The vague allegation made in counter‑affidavit that Rs.20 lacs advanced has welled into a claim of Rs.1,68,04,780.76 hardly carries any weight Ground No. 00: As regards the pies that penal interest has been charge the carne counsel for the defendant No.1 was unable to point out any entry in which penal interest was debited in the account of the defendant. Mr. Liaquat Merchant has rightly pointed out that as state in‑ the counter‑affidavit, no penal interest has been charged and that the allegation made by the defendant No.1 is baseless. Ground No. (iii): As regards the transfer entries and the cash debit entries made‑in the account, of the defendant No.1 when questioned as to which of the entries have been challenged in the affidavit filed by the defendant No.1, learned counsel referred to para. 4 of the affidavit filed by Mr. Tufail Muhammad Shaikh. 1 however find that in the said affidavit the defendant No.1 has made grievances against charging of penal interest but none of the entries made in the accounts have been shown to have been challenged. The contention raised in this ground also has no force. Ground No. (iv): Under this ground the learned counsel for the defendant No.1 vehemently argued that in 1980 the plaintiff bank in whose favour simple mortgage without possession was created took possession of the mortgaged property and thus incurred liability of a mortgagee in possession as enjoined by section 76 of the Transfer of Property Act. Learned counsel relied upon the clauses (c) and (d) of section 76 which provide that when during the continuation of mortgage the mortgagee takes possession of the mortgaged property he must in the absence of a contract to the contrary out of the income of the property pay the Government revenue and all other charges of public nature and all rents accrued due in respect thereof during such possession and make such necessary repairs of the property as he can pay for out of rents and profits thereof after deducting from such rents and profits the payment mentioned in clause (c) and the interest on the principal money, Stress was also laid upon clauses (a) and (b) of section 76 which provide that the mortgagee must maintain the property as a person of ordinary prudence would manage as if it was his own and that he must use his best endeavour to collect the rents and profits. Learned counsel placed reliance upon the cases reported in PLD 1982 Kar. 639 and A 1 R 1927 Mad.

964. Reliance was placed by the learned counsel for the plaintiff on the Chowkidari charges which have been debited in the account of the defendant No.1 for the period since 1980 and on its basis he argues that Chowkidara were appointed by the plaintiff Bank who has taken over possession of the mortgaged property. Mr. Liaquat Merchant, learned counsel for the plaintiff however submitted that the possession of the mortgaged property was never' taken over but the Chowkidars were appointed solely for the purpose of safeguarding the property which has been mortgaged with the plaintiff as security for repayment of the loan amount and that the property is in such a condition that it could not be let out. The question raised in the ground No.(iv) raises an issue which requires consideration at the trial though I find much force in the submission made by Mr. Merchant that this plea has been raised in order to impede speedy trial and disposal of the suit. Thus, in the context I am of the view that it is a fit case for exercise of discretion to put the defendant No.1 to terms while granting leave to him to appear and defend the suit in accordance with principles laid down in the case of Abdul Karim Jafrani v. United Bank Ltd. 1984 S C M R

568. The defendant No.1 is thus granted leave to appear and defend the suit subject to its furnishing security for the amount claimed it the suit to the satisfaction of the Nazir of this Court. In favour of th plaintiff already exists a security created by way of mortgage as pe C deed, dated 29th September, 1977 which would be accepted by the Nazir as security for purposes of the case after satisfying himself t its sufficiency for the claim made in the suit. In case it is found that the value of the property mortgaged is lesser than the amount claimed in the suit, the defendant No.1 shall furnish additional security to the extent of deficit. The security shall be furnished by the defendant No.1 within two months. Regarding application made by the defendants Nos.2 to 5 ford leave to appear and defend the suit, since the defendant No.1 has been granted conditional leave, they are also granted leave to appeal and defend the suit provided they furnish security for Rs.15 lacs each to the satisfaction of the Nazir in case the defendant No.1 fails ti furnish security as directed above within the stipulated period. It is clarified that if the defendant No.1 furnishes security as directed, the defendants Nos.2 to 5 shall not be required to furnish securities as they have been said as guarantors for the liabilites of the defendant No.1 in terms of and to the extent mentioned in the deeds of guarantees. A. A. Order accordingly.