2002 PLP 1709 (CLD)

MIAN HAMID FAROOQ, J.‑‑‑The present appeal, under section 21 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, instituted by the appellants/judgment‑debtors, proceeds against judgment and decree dated 15‑5‑1998, whereby the learned Judge Banking Court, while dismissing an application, filed by the appellants, seeking leave to appear and defend the suit, decreed the suit for recovery of Rs.58,84,589.59, against the appellants.

2. Brief facts leading to the filing of the present appeal are that the respondent‑Bank filed a suit for the recovery of Rs.58,84,589.59 against the appellant, before the Special Judge Banking, asserting therein that the appellant No. 1, is a customer and on his request, a loan facility amounting to Rs.4 Million, under IBRD credit scheme, was sanctioned on certain terms and conditions, contained" in the sanctioned letter and reproduced in the plaint, consequent thereto, the appellant executed voluminous documents favouring respondent‑Bank as mentioned in. para. 6 of the plaint. It was averred in the plaint that the appellants availed the said facility, but failed to adjust the said facility as per the repayment schedule despite repeated reminders, which compelled the respondent‑Bank to file a suit for recovery, thereby claiming a decree for the ‑recovery, of Rs.58,84,589.59 jointly and severally against all the appellants. Consequent to the service of summons, the appellants filed an application, as provided under Order XXXVII, rule 3, C.P.C., seeking leave to appear and defend the suit on the grounds enumerated in para.3 of the said application. However, the learned Judge Banking Court, after finding that the appellants failed to show plausible defence, rejected the application filed by the appellants for the grant of leave to appear and defend the suit and consequent thereto, passed a decree for the recovery of Rs.58,84,589.59, together with costs and interest against all the appellants, vide judgment and decree dated 15‑5‑1998, hence the present appeal.

3. The learned counsel for the appellants has raised the only contention that the appellants Nos.3 and 4 are neither borrowers, nor guarantors, nor mortgagors, therefore, no decree could have been passed against the said appellants, thus, the impugned judgment and decree is liable to be modified to that extent. On the other hand, learned counsel for the respondent‑Bank has submitted that as the appellants Nos.3 and 4 had deposited the original title deeds, qua their property, as security for the repayment of the loan facility obtained by appellants Nos. 1 and 2, thus, an equitable mortgage deemed to have been executed by the said appellant, thus, they are mortgagors of the property and the decree has rightly been passed against the said appellants.

4. We find from the perusal of para. 3 of the plaint that the appellants Nos.3 and 4, were impleaded in the suit as guarantors as according to the respondent‑Bank, they stood "guarantors in their personal capacity for having executed the documents and furnished securities for the repayment of the loan in case of defendant No. 1's of becoming defaulter". Coming to mortgage deed dated 24‑3‑1991, it was executed between the Rajput Dairy Factory Private Limited and National Bank of Pakistan, which was signed by defendant No.2 only. It is evident from the bare reading of the mortgage deed that the appellants Nos.3 and 4 were neither party nor signatory to the said document and even the said appellants have not witnessed this document. On the strength of this document, appellants Nos.3 and 4 did not incur any liability.

5. When the learned counsel of the respondent‑Bank was confronted with the photocopies of documents, itself, placed on record by the respondent‑Bank, before the learned Banking Court, in support of their claim and was asked to explain as to which of the documents were executed by appellants Nos.3 and 4 on the basis of which they have been impleaded as defendants, learned counsel unequivocally admitted that the defendants Nos.3 and 41 did riot execute any document and that they were impleaded as defendants only because they deposited, with the respondent‑Bank, the original title deeds of the property, wherein they are co‑owners. In this context, he has referred to memorandum of deposit of title deeds (page 89 of trial Court's file).

6. Upon the examination of the memorandum of deposit of title deeds it is evident that the same was executed by defendant No.2 who only by virtue of deposit of title deed acknowledge the mortgage of land measuring 54 Kanals, by way of creating equitable mortgage, for securing the repayment of loan, allowed by the Bank to the appellant No.

1. The appellants Nos. 3 and 4 are neither the parties nor the signatory to the said document and they have not even witnessed this document, which as noted above, was solely executed by appellant No.2. In depth perusal of this document amply manifests that Muhammad Javed appellant No.2, only acknowledge the surrender of title deeds relating to the land, statedly, owned by him. To our mind, the said document was consciously executed by appellant No.2, so as to exclude the participation of appellants Nos. 3 and 4 in mortgaging the land, as it has specifically been stated in the document under discussion that the land measuring 88 Kanals was purchased by Muhammad Javed and Muhammad Farhad etc. (appellant No.3 etc.), through a registered sale‑deed bearing Serial No.6268, Book No. 1, Volume No.2601, dated 8‑6‑1987, and subsequently the said land was partitioned, through registered agreement of partition, whereby land measuring 16 Kanals came to the share of Muhammad Farhad, Imran Ali appellants Nos.3 and 4, leaving behind the land measuring 72 Kanals, out of which the appellant No.2 sold the land measuring 18 Kanals in favour of Rajput Dairy, vide sale‑deed dated 28‑1‑1991, thus, appellant No.2, was left with only 54 Kanals of land, which was acknowledged to be mortgaged through an equitable mortgage, by appellant No.2, on the strength of execution of memorandum of deposit of title deeds. It flows from the above that the afore-noted memorandum of deposit of title deeds was only executed by appellant No.2, regarding the land measuring 54 Kanals, wherein appellants Nos. 3 and 4 have no role. The respondent‑Bank is, most probably, banking upon that as the original sale‑deed, in favour of appellants Nos. 2 to 4, was deposited with the respondent Bank, therefore, they appear to be under the erroneous assumption that perhaps the total land has been: mortgaged in favour of the respondent‑Bank by appellants Nos. 2 to 4 completely forgetting that the partition agreement dated 12‑2‑1991, which find mention in the memorandum of deposit of title deeds, was also surrendered alongwith original sale‑deed which shows that the property was partitioned between the appellant No.2 on the one hand and appellants Nos. 3 and 4, on the other. We are of the considered view that the appellants Nos. 3 and 4 have no nexus with the execution of the memorandum of deposit of title deeds and it cannot be said that they also mortgaged their land, thus, the reliance of the learned counsel for respondent‑Bank on this document is completely misconceived, unfounded and devoid of any force.

7. In the above perspective, we have also examined the impugned judgment and find that despite the facts that a specific plea (Ground‑D), was raised by the appellants, in their leave application, that they are neither borrowers, nor guarantors, nor mortgagors, yet the learned Judge Banking Court failed to give any findings on this material aspect on the case, inasmuch as not even a single word has been written on this crucial point, which determines the fate of appellants Nos.3 and 4 qua this case. The learned Banking Court without adverting to the plea taken by the appellants Nos. 2 and 3, without determining their liabilities in the suit and without the examination of the documents on record, qua the said appellants, proceeded to pass the impugned judgment and decree thereby saddling appellants Nos. 3 and 4, with colossal liability of the said amount, thus, we are inclined to set aside the impugned judgment and decree as against appellants Nos. 3 and 4, while maintaining the judgment and decree against appellants Nos. 1 and 2.

8. Upshot of the above discussion is that the present appeal, to the extent of appellants Nos.3 and 4, stands accepted and the impugned judgment and decree against the said appellants is hereby set aside, while the same is maintained against the appellants Nos.1 and 2 and consequent thereto, the impugned judgment and decree is modified in the above terms, with no order as to costs. S.A.K./R‑147/L Order accordingly.