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Suit No. 359 of 1978, decided on 3rd May, 1984.

---S.58--Deposit of title deeds of immovable property--Memorandum confirming deposit as security for repayment of all moneys which bank had already advanced or would advance thereafter or become due- Deposit of title deeds creating equitable mortgage--Plea that such memorandum was invalid, void and unenforceable under law for want of registration held, had no substance--Such memorandum required no registration--Document duly registered under Registration Act, by which defendant acquired ownership of mortgaged property by purchase for valuable consideration, was title deed--In absence of any evidence or material on record, memorandum of deposit was valid and enforceable at law.

United Bank of India Ltd. v. Azirannessa Bewa P L D 1965 S C 274 and Abdul Ghafoor Khan v. Commerce Bank Ltd. P L D 1978 Kar. 861 rel.

---S. 2(8)--Certified copy of account---No error or omission in entries relating to deposit and withdrawal pointed out--Held, such copy was duly certified as required by Bankers' Books Evidence Act and was prima facie evidence of such entries.

---O. VII rr. 1 & 2--Pleadings--Advance of loan, execution .of promissory note and creation of equitable mortgage. pleaded but no plea raised in plaint as to liability of defendant -to pay to plaintiff other charges on account of enhanced interest, conveyance charges, incidental charges, legal notice charges and various other charges--Certified copy of statement of account, held, did not by itself prove liability of borrower on account of such other charges--Such subsequent liability as to other charges should be determined after going into accounts by Commissioner appointed by Court.

---S. 9--Maintainability of suit--Objection to--Defendant failing to show as to how suit was not maintainable--held, there was nothing wrong with suit and same could proceed.

---Art. 132--Period of limitation for filing suit--Suit based upon not only promissory note but also on equitable mortgage--Memorandum of deposit of title deed proved and produced--Suit, held, would be governed by Art. 132, Limitation Act.

Tahir Hussain for Plaintiff.

Defendant and his Advocate called absent.

Date of hearing: 3rd May, 1984.

In this suit brought under Order XXXIV, C.P.C. for recovery of Rs-6.94,940.10, the plaintiff besides claiming the declaration that the immovable property described in para 7(f) of the plaint, is a subject-matter of the mortgage and charged with and liable to be sold for realisation of the above-mentioned plaintiff's dues with interest has also prayed for passing of a preliminary decree under rule 4 of Order XXXIV, C.P.C: in Form 5-A of Appendix D to the First Schedule of the Civil Procedure Code. The plaintiff has also prayed that in the event the sale proceeds of the mortgaged property are insufficient to satisfy the plaintiff's claim, the defendant be directed to personally pay the plaintiff's such amount which after adjustment of the sale proceeds may remain due and payable to the plaintiff. In the alternative judgment and decree against the defendant in the above-mentioned amount with interest at the rate of 14% per annum with quarterly rests from the date of the suit till realization has also been prayed for.

2. The facts, on which the suit has been brought, briefly stated are that the defendant had Current Account No. 1633 with the plaintiff's branch. This account the plaintiff has described as mutual open and current account. According to the plaintiff, on 22nd September, 1972 at the request of the defendant a cash credit limit of Rs.5,50,000 was granted to the defendant subject to interest at 5% above bank rate with minimum interest at the rate of 11% per annum with monthly rests to be secured by mortgage. It is also pleaded that the defendant utilized the said limit in full from his aforementioned account in which account various amounts towards partial payments on different dates were made by the defendant. Promissory note dated 22nd September, 1972 was also executed and delivered by the defendant to the plaintiff for payment of the above-mentioned amount with interest in the manner and the rate stated above. The defendant on the same date also executed letter of general security in favour of the plaintiff hypothecating his properties mentioned in the said deed.

According to the averments made in paras 6 and 7 of the plaint, the defendant created equitable mortgage by deposit of title deed relating to his immovable property consisting of a plot of land with buildings, machinery and equipments thereon known as Sangeet Cinema, constructed on plot of land bearing Survey No. 278/9/VIII G-13, G-II situated in Malir City, Karachi. The memorandum of deposit of the title deed dated 18-4-1975 has been filed alongwith plaint marked 8s Annexure 'C'. According to the plaintiff in 17-4-1975, the amount payable by the defendant to the plaintiff vide debit balance in the said account was Rs.4,82,155.10 which the defendant under his own signature acknowledged. The 'said debit balance confirmation /acknowledgement has been produced as Annexure 'D' to the plaint. According to the plaintiff in acknowledgement of the amount due and promise to pay the said amount and interest thereon and a5 a security for the payment of the said sum of Rs. 4,82,155.10 executed promissory note on 18^th April, 1975 whereby be promised to make payment of the said amount with interest at 4% above the bank rate with minimum interest 13 % per annum with quarterly rests. The delivery letter and the promissory note have been produced as Annexures 'E-1' to 'E-3'. According to the plaintiff on the same date letter of general security dated 18th April, 1975 (Annexure 'F') was also executed by the defendant. Subsequently certain amounts were deposited and withdrawals were also made by the defendant. According to plaintiff the last relevant ,accounting year started from 1st January, 1976 and ended on 31st December, 1976 when Rs.5,70,780.10 was found due from the defendant in his aforementioned account and on 15th August, 1975 (Annexure 'G') the defendant acknowledged the plaintiff's dues and promised to clear the same.

The plaintiff thereafter by notices dated 24-3-1977, 6-5-1977 and 23-11-1978 called upon the defendant for repayment of the plaintiff's due but the latter failed and neglected to comply. In the circumstances after serving the defendant with the final notice dated 26th February, 1978, the plaintiff filed the above-mentioned suit against the defendant.

3. The defendant filed his written statement, wherein without denying the fact that he was granted cash credit limit of 88.5,50,000 by the plaintiff and that he had utilized the said limit in full, after raising certain other pleas, it was pleaded that the advance was made against Fixed Deposit Receipt of RS.4,25,000 and that the plaintiff could have charged interest on Rs.1,25,000 which was the amount over and above the amount of Fixed Deposit Receipt. The defendant denied that any property was mortgaged on 10-10-1972 or the amount was advanced at the alleged rate of 5% per annum above the bank rate with a minimum of 11% per annum with monthly rests. Several other pleas were raised which need not reproduced herein detail, in view of the following consent issues framed upon which the parties went to trial:

1 Whether the a/c of the defendant was open, current and mutual

2. Whether FDR of RS.4,25,000 was a primary security against the alleged overdraft allowed by the plaintiff to the defendant

3. Whether Annexures A/1, A/2, A/3 and 'B' were signed by the defendant

4. Whether any mortgage was created on 18-4-1975

5. Whether Memo of deposit is invalid, void and unenforceable at law

6. Whether Annexure 'D' i5 an acknowledgement of liability

7. Whether the deposits and withdrawals were made by the Defendant

8. Whether the plaintiff have made illegal entries in the ledgers

9. Whether the suit is maintainable at law

10. Whether the suit is time barred

11. What should be the decree "

It may be mentioned here that Issue No. 4 reproduced above was recast with the consent of the Advocates for the parties vide order passed on 10th May, 1983 in place of the issue originally framed.

4. The plaintiff bank examined (1) Mr. Mir Ali Hassan (Exh.5) P.W.1 Manager and (ii) Muhammad Ashraf (Exh.15) P.W.2, Accountant. Both the witnesses are from Nursery Branch of the plaintiff-bank.

The defendant and his Advocates fire absent their side is closed.

5. My findings with the reasons on the above issues are as follows:-

"Issue No.1.

This issue is not pressed by Mr. Tahir Hussain learned Advocate for the plaintiff.

This issue is not relevant for the purposes of this case as admittedly the defendant has already filed a separate suit for recovery of the claim on the alleged Fixed Deposit Receipt against the plaintiff. This suit is pending in this Court.

Issue No.3.

'This issue, the Advocate for the plaintiff has not pressed and therefore requires no finding.

Re-issues Nos.4 and 5.

These two issues can be conveniently disposed of together".

As to the creation of equitable mortgage the case has been pleaded in para 6 of the plaint wherein it has expressly been stated that the defendant with intention to create equitable mortgage deposited with the plaintiff title deed relating to the immovable property consisting of plots of land with buildings, machinery and equipments thereon known as Sangeet Cinema constructed on plot of land admeasuring 1,425 sq. yards bearing Survey No. 278/9/VIII-G-13, G/II, situated in Malir City, Karachi. The particulars of the mortgaged property are given in para 7(f) of the plaint. It was further pleaded that the defendant also executed a memorandum of deposit of title deeds dated 18th April, 1975 confirming the deposit of title deeds as security for repayment to the plaintiff all moneys which the bank had already advanced or that shall thereafter he advanced or become due. The title deed deposited creating equitable mortgage has been produced by the plaintiff as Exh.14. In reply to para 6 of the plaint, the defendant in his written statement admitted the execution of the said memorandum (Exh.8) (a copy of which was produced earlier as Annexure 'C' to the plaint). It was however contended by the defendant that the said memorandum was, executed by him in blank and that the plaintiff had unauthorized] filled in the same to suit its in own hands. It was further pleaded that in any case the document in question is not a title deed in the eyes of law and that even otherwise the memorandum of deposit of title deed is invalid, void and unenforceable under the law.

I have perused the document Exh.14 and find that it is the title deed duly registered under the Registration Act by which the defendant acquired the ownership of the mortgaged property by purchase, for valuable consideration. This title deed was deposited by the defendant with plaintiff in order to secure re-payment of the amount which had already been advanced and the amounts which the bank/ plaintiff may further advance to the defendant thereafter. The memo randum of deposit of title deed confirming the creation of equitable mortgage was executed by the depositor/the defendant on 18th April, 1975 and has been produced as Exh.8. The execution of this document as earlier noted, has been admitted by the Advocate for the defendant. The endorsement made on this document reads:

"Only execution admitted

(Sd. )

Advocate for the defendant."

It would be seen that while admitting the document the Advocate for the defendant had not made any reservation that the document when executed by the defendant /depositor, was a blank document. Even otherwise in view of the evidence on record and absence of any evidence in rebuttal coupled with the fact that deposit of the title deed of the property with the plaintiff (confirmed by the defendant as per memorandum dated 18-4-1975 (Exh. 8) by way of security for re-payment of the moneys which were already due kind for the payment of money which the defendant may become liable, thereafter, the conclusion is irresistable that the defendant had already created equitable mortgage over the property mentioned in Exh.8 fully described in para 7(f) of the plaint.

As regards the plea that the memorandum of deposit is invalid, and unforceable at law in the absence of any evidence or material on record I have no hesitation in holding that this contention has no force.

Apparently this plea has been taken on the ground that the memorandum of deposit of title deed (Exh. 8) is not registered under the Registration Act. However in my opinion this plea cannot succeed in view of the law laid down in the case of United Bank of India Ltd. v. Azirannessa Bewa P L D 1965 S C 274. In the said case while construing the memorandum of deposit of title deed creating mortgage it was observed that there were neither words in the letters which purport to create any relationship in praesenti nor the words used showed that in praesenti the security was being created. It was held that such memorandum did not require registration under the Registration Act. The principles laid down as above were also reiterated in the case reported as Abdul Ghafoor Khan v. Commerce Bank Ltd. P L D 1978 Karachi 861.

For the abovementioned reasons under Issue No .4 it is held that the equitable mortgage already created by the defendant was confirmed by memorandum dated 18th April, 1976 (Exh.8).

The Issue No.5 therefore in view of the above findings, is answered in the negative by holding that the said memorandum of deposit does not require registration.

6. As regards Issue No.6 the document Annexure 'D' to the plaint has been produced and marked as Exh.9. This document bears the endorsement made by the learned Advocate for the defendant to the effect, "Only execution admitted." By this document dated 18th April, 1975 which admittedly was executed by the defendant the latter expressly admitted and confirmed that the balance due by him in the account with the plaintiff was Rs.4,82,155.10 as on 17th April, 1975.

The Issue No.6 therefore is answered in the affirmative.

7. As regards Issue No.7 I find that the deposit and withdrawals made by the defendant have been shown in the certified copy of the account produced as Exh.5/1 which is duly certified as required by the Banker's Books of Evidence Act. Nothing has been shown by the defendant that there is any error or omission in the entries relating to the deposits and withdrawals made in the said account (Exh. 5/1).

The Issue No. 7 is answered accordingly.

8. As regards issue No.8 the plaintiffs' witness Mr. Mir Ali Hassan ( Exh.5) admitted that at the relevant time lie was not employed in the plaintiff bank. The other witness Mr. Muhammad Ashraf Mir brought the original ledger containing account of the defendant wherein according to his evidence there is entry of 23rd October, 1973 in favour of the defendant crediting him with Rs.371.65. He also deposed about the entry of withdrawal of Rs.1,000 in the said statement which according to him was incorrect and therefore was scored out in the statement (Exh. 5/1) as there was no corresponding entry in the ledger. The photostat copy of the ledger containing entries in tire account of the defendant of 23rd October, 1973 was produced its Exh. 15/1.

The perusal of the pleadings of the parties show that though the plaintiff had pleaded as to the advance of the loan, execution o promissory note and creation of the equitable mortgage but no plea has been taken in the plaint as to liability of the defendant to pay to the plaintiff other charges namely on account of enhanced interest, conveyance charges, incidental charges, legal notice charges and various other charges. The promissory Note dated 18-11-1975 (Exh. 6) is for repayment of Rs. 4,82,155.10 subject to a minimum interest at 13 % per' annum with quarterly rests. Bearing the same date i.e. 18th April, 1975 is the acknowledgement /confirmation endorsement of the amount due and payable by the defendant which has been produced as (Exh. 9). No other evidence is on the record except the statement of account Exh. 5/1 which is the certified copy of the statement of account which by itself does not prove the liability of the defendant on account of the aforementioned other charges. From the ex parte judgment given by Mr. Justice Naimuddin in this very case on 19-2-1980 (though subsequently set aside on an application filed by the defendant) I find that Mr. Tahir Hussain the learned Advocate for the plaintiff had then agreed that a decree in Form 5 in Appendix 'D' to the First Schedule to the Code of Civil Procedure, 1908 may be passed and a Commissioner be appointed to go into the accounts for the period after 18th April, 1975 which is the date of the pronote (Exh. 6) and confirmation of amount their due (Exh. 9). I do not find any reason riot to follow the same procedure. The directions are given below in paras. 11.

9. As regards Issue No. 9 it may be observed that the defendant has not shown anything as to how the suit is not maintainable. The defendants are absent. I do not find anything wrong with the suit and accordingly answer this issue in the negative.

10. As regards Issue No. 10 the suit is based upon riot only promissory note (Exh.6) but also on equitable mortgage. The memorandum of deposit of title deed executed on 18th April, 1975 has been proved and produced as Exh.8. The period of limitation for filing the suit is the latter case would be governed by Article 132 of the Limitation Act. The suit is, therefore, within time.

11. Regarding Issue No.1l. For tire aforementioned reasons while declaring that the property described in para 7(f) of the plaint is subject to mortgage arid charge arid liable to be sold. I pass a preliminary decree in Form 5 in Appendix 'D' to the First Schedule to the Code of Civil Procedure, 1908 arid declare that as on 17th April, 1975 the amount outstanding against the defendant was Rs.4,82,155.10 and that subsequent liability shall be determined after going into the accounts as to other charges namely on account of enhanced interest, conveyance charges, legal notice charges and various other charges, for which purpose Mr. Salik Rasool, Advocate is appointed as a Commissioner.

The Commissioner shall submit his report within three months. The plaintiff shall pay Rs. 2,000 to the Commissioner towards his fee. The liability was to which of the parties shall bear the costs and in what proportion will be determined after the report is submitted by the Commissioner.

A.A. Preliminary decree granted.

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