2004 PLP 490 (CLD)

JAWWAD S. KHAWAJA, J.‑‑‑This appeal assails the judgment and decree dated 6‑6‑1995 passed by the learned Special Judge Banking, Lahore. The facts necessary for the disposal of the appeal are relatively straightforward. The appellant‑Bank filed a suit for recovery of Rs.33,37,034.43 alongwith interest and costs against the respondent defendants, under the provisions of the Banking Companies (Recovery of Loans) Ordinance, 1979. The respondent‑defendants filed an application seeking leave to appear and defend the suit. The execution of the loan documents by the respondent's defendants in favour of the appellant‑Bank and the deposit of original title deeds with the said Bank was not denied by the respondents defendants.

2. When the application seeking leave to appear and defend was listed for hearing none appeared on their behalf. They were, therefore, proceeded against ex parte. Documentary evidence was duly exhibited on record and the case was heard ex parte. However, by means of the impugned judgment and decree the suit of the appellant Bank was dismissed.

3. The ground which has weighed with the learned trial Court while dismissing the appellant's suit is that the memorandum of deposit of title deeds executed by Muhammad Younis Malik respondent‑defendant was neither stamped nor registered. The learned trial Court was of the view that the said document required registration as, according to the Court, the document was a mortgage deed and not a mere memorandum of deposit of title deeds. In coming to this conclusion the learned trial Court relied on Mu11a's Treaties on the Transfer of Property Act (IV of 1882) and also on the judgment of the Sindh High Court in the case titled Master Abdul Ghafoor Khan and another v. Commerce Bank Ltd. PLD 1978 Karachi 861.

4. Learned counsel for the appellant assailed the reasoning adopted by the Court below and argued that the memorandum of deposit of title deeds executed by Muhammad Youhis Malik respondent‑defendant did not create or purport to create any mortgage in praesenti. On this basis it was contended that the said document did not require stamp duty or registration. We have gone through the contents of the said memorandum of deposit of the title deeds and note that it records the fact that title deeds were deposited prior to the execution of the said document. This is established from the following words used in the aforesaid memorandum of deposit:‑‑ . "I have deposited with you the documents in original."

5. Learned counsel for the respondents‑defendants however, relied on the above referred case titled Master Abdul Ghafoor Khan and another v. Commerce Bank Ltd. PLD 1978 Karachi 861 and on other precedents including the case titled Messrs Eagle Star Insurance Co. Ltd. v. `Messrs Usman Sons Ltd. and others PLD 1969 Karachi 123 and Messrs Bank of Oman Ltd. v. Messrs East Trading Co. Ltd. and others PLD 1987 Karachi

404. We have gone through the cited precedents. It is clear from the ratio of the precedent cases that only those documents which create a mortgage in praesenti require registration and attract the stamp duty applicable on mortgage deeds. The cited precedents as such support the conclusion reached by us that the memorandum of deposit of title deed executed by Muhammad Younis Malik respondent defendant was not required to be registered or stamped as a mortgage deed because of the wording thereof reproduced above.

6. The learned trial Court also, initially, was of the opinion that the promissory note (Exh.P.l) relied upon by the appellant‑Bank was not duly stamped. However, after examining the provisions of the Stamp Act, it concluded that the said promissory note was properly stamped.

7. In view of the above discussion,, we find that the learned Special Judge Banking was not justified in dismissing the suit filed by the appellant‑Bank on the grounds set out in the impugned judgment. As a consequence the impugned judgment and decree dated 6‑6-1995 are set aside. However, considering that the respondents‑defendants did not have the opportunity of arguing their application for leave to appear and defend before the learned trial Court the case is remanded to the learned Banking Court. The respondents‑defendants shall be entitled to file a fresh application seeking leave to appear and defend conforming to the provisions of section 10 of the Financial Institutions (Recovery of Finances) Ordinance 2001. S.A. K. / B‑13 1 / L Case remanded.