1993 PLP 1560 (CLC)

Incumbrances: include mortgage and terminable charges (Finance Act, 1894, S.22(1). `Incumbrance' includes a legal or equitable mortgage and a trust for securing money, and a lien, and a charge of a portion, annuity, or other capital or annual sum; and "incumbrancer" has a meaning corresponding with that of incumbrance, and includes every person entitled to the benefit of an incumbrance, or to require payment or discharge thereof (Law of Property Act, 1925, S.205). `The word `incttmbrance' has no strictly technical meaning; but what is usually understood is, that where a person has a right at his pleasure to charge pound 3,000 upon an estate, that is an incumbrance. In such a state of things nobody could say he had an estate free from incumbrances while his estate was liable at any time to be charged with such a sum of money:" Words and Pharases Legally Defined at page No.160: "ENCUMBRANCE. See also INCUMBRANCE Australia.‑‑The word `encumbrances' in its ordinary connotation, means that a person or estate is burdened with debts, obligations or responsibilities. True,, the word is in law especially used to indicate a burden on property, a claim, lien or liability attached to property. But when we remember that the whole estate of the testator is liable in the hands of his executor for payment of debts and the expense of administering his estate, it is not an extravagant use of language to say that his, `whole estate is not free from encumbrance' until those debts and expenses are paid. The estate would in fact, be burdened with those debts, and no tehnical use of the word `encumbrances' can alter that result:' Wallace v. Love (1922) 31 C.L.R. 156, per cur; at p. 164." Stroud's Judicial Dictionary at page No. 1344. INCUMBRANCE. (1) "In Wharton's Law Lexicon, I find `incumbrance' defined as being, `a CLAIM, LIEN, OR LIABILITY, attached to property: and this definition is wide enough to cover the plaintiffs claim, which was, as assignee for value of a revisionary interest, against a person coming in under a subsequent title (per Romer J., Jones v. Barnett (1899) 1 Ch. 620)." (2) A power to charge land with a sum money is an "incumbrance" on the land (Evans v. Evans, 22 L.J. Ch. 785). (3) A lease would not ordinarily be described as an "incumbrance" (District Bank v. Webb (1958) 1 W.L.R.148). But it was held to be an incumbrance if a vendor has contracted to give vacant possession:' Mr. S. A. Pingar learned counsel for the appellant contended that learned Single Judge erred in law in holding that electric charges constituted an encumbrance on the land. He also argued that since respondent No.1 was not in liquidation, as such, the dues claimed by K.E.S.C. and other agencies were not to be paid out of the sale proceeds of auction money, but the same were still the liability of said respondent. In support of his contentions, he cited (1) AIR 1937 Calcutta 129 LA: Creet v. Ghungraj,‑ Gulraj. (2) AIR. 1951 Hyderabad 93, Kashinath v. Phoolchand and others. In Calcutta case, it was observed that position of a purchaser at an execution sale is the same as that of a judgment‑debtor and execution purchaser purchases subject to all the charges and encumbrances, legal and equitable, which would bind the debtors. Further, it was observed that notice is not necessary in the case of an auction purchaser at execution sale; in order to bind him with all the charges and encumbrances standing against the judgment‑debtor at date of auction sale. Rule laid down in this case was followed in Hyderabad case referred to above. Mr. Pingar learned counsel for the appellant also produced a copy of Supreme Court judgment in Civil Appeal No. 169‑K of 1989, Habib Bank Ltd. v. M/s. Ghafoor Textile Mills Ltd. and 10 others, decided on 9‑1‑1993. According to this judgment, Hon'ble Supreme Court, after taking irto consideration the provisions of Order 34, Rule 13, C.P.C., observed as follows:‑‑ "It is therefore, quite clear that except the incidental expenses of sale and the claim of a prior mortgagee no other claim can be paid out of the sale proceeds of the mortgaged property in a mortgage suit, unless the mortgagee/decree‑holder is paid 'in full. Therefore, a person holding any charges, encumbrance or claim against the property cannot claim any preferential payment out of the property sold in mortgage suit under Order 34, Rule 13, C.P.C. Such person, will however, be free to follow his remedies under the law to enforce payment of their claim in the ordinary course." Above‑quoted judgments from Indian jurisdiction and of Supreme Court are distinguishable and the rules laid down in these cases are not applicable to this case. In the case in hand, auction‑purchaser had given an offer to purchase the premises free from all disputes and charges and said offer was accepted with consent of the appellant.. A perusal of above‑quoted definition of word `encumbrance' shows that, though it means a claim, lien or liability attached to property, but it has no restricted technical meaning and its scope is wide enough to include other claims and charges such as a liability to a Local Authority. Electric charges, ex facie, are a liability attached to property and the estate is usually burdened with such type of debts as has been done in this case. Even a lease would be an encumbrance if a vendor has contracted to give vacant possession. As regards the plea that the respondent No.1 was. not in liquidation and was primarily liable for the said charges, it noted that the respondent No.2 in its letter dated 12‑8‑1991 had given offer to purchase the premises free from all disputes, including Government dues Gas, Labour,. K.E.S.C. WAPDA, Custom, water and conservancy charges, Property Tax, Excise dues, and other dues and charges. Above offer was accepted after the appellant had given Written Consent which is as follows:‑‑ "(1) That the plaintiff Bank is agreeable to the cash offer of Rs.37.5 million made by Hussain Industries Ltd. to the Official Assignee in pursuance of the Advertisement dated 11‑7‑1991 published in Dawn English by the Official Assignee. (2) That the Hussain Industries Ltd. has already deposited Rs.4 million to the Official Assignee and in pursuance of the observation made by this Court on 25‑11‑1991 and as per the statement of their counsel Mr. Zahid Hussain Burhani, they have brought today Pay Orders of Rs.16 million in favour of Official Assignee, totalling Rs.20 millions out of the sum offered of Rs.37.5 million. (3) That the balance amount of Rs.17.5 million would be payable within time limits and after the full payment, Hussain Industries Ltd. would be entitled for leasehold rights, title; and interest of land bearing Plot No.1.F./32, measuring about 27,710.60 sq. yards, situated at S.I.T.E., Landhi Industrial Area, Karachi with construction, structures, machineries, furniture s, fittings, and fixtures etc. known as Akbar Cotton Mills, free from any incumbrances." It being so, the terms of the offer, now, cannot be unilaterally modified to the disadvantage of the respondent No.2. Therefore, the electric charges are incumbrance on the premises and these charges are to be satisfied from the sale proceed. The payment of other charges;' enumerated by the Official Assignee, has not been challenged before us. Therefore, those charges as ordered by learned Single Judge, are also to be satisfied from the sale proceed. Accordingly, we do not find any merit in this appeal and the same is dismissed with cost. AA./U‑143/K Appeal dismissed.