P L D 1969 Karachi 599 (PLP)

(a) Civil Procedure Code (V of 1908), O. XXXIV, rr. 4, 14 & 15‑Mortgagee plaintiff praying for sale of mortgaged property in default of payment of amount due‑Such suit, held, not barred under rule 4, 14 or

15. National Bank of Pakistan v. S. A. Sattar P L D 1962 Kar. 271 and Habib v. Daulatram A I R 1956 Raj. 121 rel. Bhajanmal Topandas v. Tikamdas A I R 1947 Sind 12 ref. (b) Civil Procedure Code (V of 1908), O. XXXIV, r. 14‑

Dis qualification raised by rule 14‑--Not applicable to cases of pure and simple Usufructuary mortgages‑Pure and simple usufructuary mortgagee can bring mortgaged property to sale even in respect of claim not connected with mortgage. Afzal Nabi for Plaintiff. This suit under Order XXXIV, rule 4, C. P. C., is based on a mortgage effected by defendant No. 1 on 14th February 1963 of property described in detail in paragraph 2 of the plaint and situated at Lyallpur. In lieu of it defendant No. 1 was granted a loan on 20th February 1963 of Rs. 5 lakhs by the plaintiff for one year with interest at 7% with monthly rests. By way of collateral security, defendant No. 2, the sole proprietorship concern of one Sheikh Muhammad Siddiq, executed a letter of guarantee on 14‑2‑1963 for the repayment of the loan with interest and defendant No. 1 executed a promissory‑note .on 20th February 1963 for the loaned amount. The period for the loan expired on 20th February 1964 and remained outstanding and on being pressed for its repayment the defendants 3 to 6, 8 and 9 and one Haji Sirajuddin, predecessor of defendants 7(a) to 7(n) executed further letters of guarantee in favour of the repayment of the loan with interest. Thereafter, correspondence was exchanged between the plaintiff and defendant No.

1. The latter admitted the liability but failed to pay until the 16th October 1964 when final notice of demand was sent to them, the total sum then due being Rs. 5,44,140.76. 'The prayer in the suit is that this amount be recovered from the defendants, that the property mortgaged be sold and if the sale proceeds are insuffi cient the plaintiffs be allowed the liberty to apply for a decree for the balance under Order XXXIV, rule 6, C. P. C.

2. In their written statement the case of defendants 1 to 6, 8 and 9 is that the snit is one of fore‑closure to the mortgage dated 20th February 1963 and the sale is not, therefore, possible unless the plaintiffs obtain a decree for the payment of money in satisfaction of the claim arising under the mortgage. They contend that the cause of action arose at Lyallpur and not at Karachi and that the plaintiffs agreed to grant financial accommodation to defendant No. 1 for an indefinite period for which interest at 7 % was not claimable. Their case is that the mortgage is defective and unenforceable in law as also the guarantee and the pronote, the latter being without considera tion and that the understanding was that defendant No. 1 would not be called upon to repay the loan until their mill starts production and defendant No. 1 was in a position to repay the loan. This commitment was not honoured and defendant No. I not having started production was unable to pay the entire amount and the plaintiffs in the meantime had rushed to Court.

3. The case of defendants 7(a) to 7(g), 7(m) and 7(n) is that the mortgage‑deed, the pronote and the letter of surety executed by defendant No. 2 only "seem to be a chain of actions to defraud the other defendants of their properties" and that these defendants are only concerned with the letter of guarantee alleged to have been signed by late Haji Siraj Din, defendant No. 7, who was an old man of over 70 years, weak, feeble and a patient of heart disease, who on 5th May 1964 suffered a heart attack and was confined to bed when he was visited by some officials of defendant No. 1 who insisted upon his signature that the officers of defendant No. 1 were accompanied by Muhammad Yasin and Muhammad Siddiq and Siraj Din signed as a Director of Siddiq Textile Mills as the document already bore the signature of the Managing Director of the Mills, that Siraj Din did so in good faith without reading the contents of the document and not knowing English. In paragraph 5 of their statement some conspiracy is alleged, on the contention that Muhammad Siddiq, the proprietor of M/s. Muhammad Siddiq & Sons, defendant No. 2, had arranged this conspiracy for his benefit and with the intention of throwing the liability on Siraj Din.

4. The written statements of, defendants 7(h) to 7(i) through the Nazir as their guardian‑ad‑litem deny the claim of the plaintiffs in all its aspects together with denying the liability to pay the loan and also claiming the lack of jurisdiction of this Court stating that these defendants had inherited no property from late Haji Siraj Din.

5. On 14th November 1968, when the matter was set down for final hearing, none of the defendants had summoned any evidence and in view of the details of the contentions given fn the order‑sheet of that date and as no evidence had by consent not been led by either side arguments of the counsel were, also by consent, heard on the following two issues: (1) Whether from the statements made in the plaint the suit is barred under Order XXXIV, rules 4, 14 and 15, C. P. C., and the plaint is liable to be rejected under Order VII, rule 11, C. P. C., and. (2) Whether the plaintiff in this suit, as framed can obtain a personal decree against the defendants, without specifically relinquishing the security arising under the mortgage and if so, to what effect?

6. Having heard the learned counsel on either side my findings on these two issues are as under (1) The suit is not barred under Order XXXIV, rules 4, 14 and 15, C. P. C. and the plaint is not liable to be rejected. (2) The plaintiffs can in this suit as framed obtain a personal decree against the defendants. It is necessary to add here that Mr. Masood Hussain Khan, the learned counsel for the defendants 1 to 6, 8 and 9 was absent on the date of arguments.

7. Since these two issues are connected I will give my reasons together. The contention of the learned counsel for the plaintiffs is that this suit is based on a mortgage and that the pronote on which the plaintiffs rely had been executed and which is referred to in paragraph 3 of the plaint by way of a collateral security. Taking the prayer clauses in the plaint into consideration, it will be observed that the plaintiffs for the present asked for no personal decree against the defendants. The initial action in which the assistance of the Court is sought is by way of sale of the mortgaged property described in paragraph 2 of the plaint in default of the payment of the amount given in paragraph 11 (a) which is a prayer clause.

8. The answer to the objections raised on behalf of the, defendants at this stage has been previously the matter of consideration in National Lank of Pakistan v. S. A. Sattar (P L D 1962 Kar. 271), where a learned Single Judge of this Court in reference to Order XXXIV, rule 14, C. P. C. observed that the provision is applicable only when the plaintiff first obtains a decree for the payment of the money in satisfaction of the claim arising under the mortgage, and that rule 14 is not applicable to a suit for, recovery of money in satisfaction of the claim under the mortgage but based on a separate promissory‑note. The case under discussion was precisely the same as it is here, namely that the plaintiffs had claimed a decree under Order XXXIV, rule 4, C. P. C. in Form No. 5‑A of Appendix D to the First Schedule to the Code and not a decree under Order XXXIV, rule 14. for under the latter provision a claim should be for the recovery, of the decretal amount of a previous suit by selling the mortgaged property and a decree should be only for the recovery of unrealised decretal amount of the previous suit, from the mortgaged property. In Habib v. Daulatram (A I R 1956 Raj. 121); a Division Bench of that Court in reference to a suit under Order XXXIV, rule 14, C. P. C., based on a usufructuary mortgage observed as follows "In order to make Order XXXIV, rule 14 applicable, two conditions are necessary, namely (1) that the claim on which the mortgagee seeks to bring the mortgaged property to sale arises under the mortgage and (2) that the mortgagee can, in. a given case, bring a suit for sale in enforcement of his mortgage. Both these conditions must be fulfilled in order to attract the disability imposed by the rule. Thus, the disqualification raised against the mortgagee by this rule clearly imports that he can bring a suit for sale to enforce his mortgage, and it is only where he can bring such a suit that the disqualification can be held to be, applicable. And as the mortgagee in the case of a pure and simple usufructuary mortgage cannot bring a suit for sale at all, and that being so, in fairness and justice, the dis qualification raised by Order XXXVI, rule 14 cannot be held applicable to him. Where a usufructuary mortgage‑deed and a lease back to the mortgagor form part of the mortgage transaction, the mortgagee‑landlord can bring the mortgaged property to sale in execution of a decree obtained against the mortgagor- tenant for arrears of rent due under the lease. Such a sale is not barred under Order XXXIV, rule 14." Their Lordships further observed that the language of Order XXXIV, rule 14 is different from that of old section 99 of the Transfer of Property Act which covered all claims whether they arose under the mortgage or not whilst Order XXXIV, rule 14, is only confined to claims arising under the mortgage and not to claims which were unconnected with it thus making it clear that it would be open to a mortgagee under the law, as altered, to bring the property under the mortgage to sale if he has any c claim against the mortgagor, which may not be connected with the mortgage. The same principles were approved of in Bhajanmal Topandas v. Tikamdas (A I R 1947 Sind 12).

9. The learned counsel for the plaintiffs has urged that to the present suit no personal decree has been sought against the defendants, that the question of their personal liability only arises in case the sale proceeds of the mortgaged property in suit are found insufficient to meet the total claim of the loan initially given to defendant No.

1. The question of a resort to rule 6 of Order XXXIV, C. P. C. only arises after the sale of the property mortgaged in the suit. Order XXXIV, C. P. C. refers to suits based on mortgages of immovable property and the procedure to be adopted by the parties for foreclosure or for sale of the mortgaged property. Rule 2, Order XXXIV, C. P. C. states that in a suit for foreclosure if the plaintiff succeeds, the Court shall pass a preliminary decree in terms of that rule. Rule 6 states that where the net proceeds of any sale of the property involved are found insuffi cient to pay the amount due to the plaintiffs the Court may, if the balance is legally recoverable from the defendant otherwise than out of the property sold, pass a decree for such balance. For these reasons my finding accordingly on both these issues in consequence of which I order a preliminary decree as prayed. Order accordingly.