1991 PLP 1763 (CLC)

Date of hearing: 24th March, 1991. The plaintiff has filed this suit for recovery of Rs.1,75,998.53 against the defendants. The defendant No.1 is a partnership firm and the defendants Nos.2, 3 and 4 are the partners thereof. According to the allegations in the plaint, the plaintiff had granted to the defendant No.1 two facilities, name, facility to the extent of Rs.1,50,000 against Foreign Bill Purchase and a facility to the extent of Rs.1,00,000 by way of cash credit. The defendant No.1 had, as security for the aforesaid facilities, executed a promissory note dated the 31st August,1974, for Rs.2,50,000 with interest thereon at 4% above bank rate with minimum of 13% per annum with quarterly rests. As security for payment of the amount of the cash credit, the defendants Nos. 5 and 6 had executed guarantees dated the 25th November, 1975 and the 6th December, 1975 respectively for Rs.50,000 each and the defendant No.2 deposited documents of title of his property by way of equitable mortgage. As security for the amount due on account of Foreign Bill Purchase, the defendant No. 1 hypothecated in land and Foreign Bills by letter of hypothecation dated the 31st August, 1974. It is alleged that the defendants, in spite of being called upon to do so, failed to pay the amount due in the aforesaid two accounts and that, consequently, on the 30th June, 1977 a sum of Rs.1,48,299 in the cash credit account, and Rs. 27,699.53, in the Foreign Bill Purchase account, making a total sum of Rs.1,75,998.53, was due and payable as shown in the statement of account. In the circumstances, the plaintiff has claimed a decree for Rs. 1,75,998.53 against the defendants Nos. 1 to 6 jointly and severally and a decree for sale of the mortgaged property of the defendant No.2

2. The defendant Nos. 1, 3, 5 and 6 filed their written statements while, by order dated the 18th January, 1981, the suit was directed to proceed ex parte against the defendants Nos.2 and 4.

3. On the pleadings of the parties, the following consent issues were settled:‑‑ "(1) Whether the documents in question are insufficiently stamped and are inadmissible in evidence? (2) Whether the Memorandum of Deposit of Title Deed (Annexure `E' to the plaint) is of no effect? If so, to what effect? . (3) Whether any stock was pledged by the defendant No.1 with the plaintiff as alleged by defendant No.2 in para. 10 of his written statement, (4) Whether the plaintiff is entitled to the relief claimed in the suit? If so, against whom and to what extent? (5) What should the decree be?

4. On the date of hearing, the defendants and their counsel remained absent and, after recording the evidence on behalf of the plaintiff, the defendants' side was closed. The plaintiff examined only one witness, namely, Abdul Ghani son of Abdul Karim. I have considered the pleadings of the parties and the evidence on behalf of the plaintiff; and my findings on the issues are as follows:‑‑

ISSUE NO.1.‑‑Mr. S.Mamnoon Hasan submits that the promissory note was executed on 31‑8‑1974 and bears stamp of Rs.10 which was the maximum amounts of stamp duty on that date. The promissory note, therefore, appears to be sufficiently stamped. The guarantees (Exs.8/3 and 8/4) executed by the defendants Nos. 5 and 6 bear stamps of Rs.5 each. The stamp duty payable on guarantees upto December, 1975 was Rs.5. The guarantees, therefore, also appear to be sufficiently stamped. Apart from these documents, the memorandum of deposit (Ex.8/5) does not bear any stamp at all and the agreement of hypothecation (Ex.8/2) dated the 31st August, 1974, bears stamp of Rs.

4. Mr. Mamnoon Hasan says that the "memorandum" is merely a confirmation of deposit of title deeds and does not require to be stamped. ISSUE No.2 ‑‑The mortgage has been created by the defendant No.1, who is ex parte. The memorandum of deposit, as stated above, does not bear any stamp but the creation of equitable mortgage by deposit of title deeds has not been denied and, in any case, execution of a memorandum is not necessary for such creation as, by definition, equitable mortgage is created by deposit of title deeds. In this case, the plaintiffs witness has produced the original indenture of lease relating to the property of the defendant, which is Ex.8/6. ISSUE No.3‑‑This issue seems to have arisen from paragraph 10 of the written statement of defendant No.2 but it appears that the defendant No.2 `has been proceeded against ex parte and there does not appear to be any written statement filed by defendant No.2 on record. In any event, the defendant No.2 has remained absent. Further, if any stocks were pledged by the defendant No.1 with the plaintiff, it was for the defendant No.1 to take such plea and lead evidence in proof thereof. The alleged pledge of stock by defendant No.1 cannot, in any manner, affect the liability of the defendant No.2 as mortgagor. ISSUE No.4.‑‑The defendant No.1 is a partnership firm and the defendants Nos. 2, 3 and 4 are the partners thereof as shown by the partnership letter (Ex.8/8). They are, therefore, jointly and severally liable for the amount claimed in the suit. With regard to the defendant No.2 and his liability as a mortgagor, the mortgage has been created as security for payment of the cash credit only. Therefore, the liability under the mortgage is to the extent of Rs.1,48,299 due under the cash credit with interest thereon from the date of the suit till realization. As regards the liability of the defendants Nos. 5 and 6 under the respective guarantees executed by them, the liability of each of them is only to the extent of principal amount of Rs.50,000 with interest thereon. Mr. Mamnoon Hasan states that at this stage he does not press for decree against the defendants Nos. 5 and 6 but reserves his right to apply for personal decree against them if the amount realized by sale of mortgaged property is not sufficient to pay the decretal amount. ISSUE No.5‑‑In the circumstances, I decree the suit of the plaintiff against the defendants Nos. 1 to 4 jointly and severally for Rs.1,75,998.53 with interest thereon at the rate of 14% per annum with quarterly rests from the date of the suit till realization. As for the defendant No.2, there will be a preliminary decree in the Form 5A, Appendix `D', First Schedule, C.P.C. for Rs.1.,48,299 with interest thereon at the rate of 14% per annum with quarterly rests from the date of the suit till realization and proportionate costs. A.A.???????????????????????????????????????????????????????????????????????????? Suit decreed.