1. ' A suit has been filed under the Banking Companies (Recovery of Loans) Ordinance, and Orders 34 and 37, C.P.C., for recovery of Rs,106,703,380,09. The suit has been filed against the defendants Nos,1 and 2. Subsequently an amended title was filed and the legal heirs of defendant No,2 were brought on record.
2. ' Briefly the facts of the case are that the defendant No,1 committed default in re-payment within the time stipulated. Certain negotiations took place and the Bank agreed to restructure the liabilities and grant of concession. In the year 1994 further request for over draft facilities was made including export finance facilities. This was granted. Certain documents were signed as acknowledgement of liability. These documents included demand promissory note, agreement of charged over found, hypothecation of goods and advance over draft agreement. As a collateral defendants Nos,1 and 2 handed over certain number of documents which are shown in detail in paragraph No,9 of the plaint. The plaintiff has pointed out that the defendant No,1 fully utilized credit and banking facilities but failed to re-pay the outstanding. As a result thereof in the year 1992 the amount claimed in suit was outstanding in the book of the plaintiff. Letters were addressed and correspondence were exchanged. The plaintiff having failed to recover the amount filed this suit for recovery. In the plaint the plaintiff prayed for a preliminary mortgaged decree. Leave to defend application was filed by the defendant No,2 which was C.M.A. No,3201 of 1994. C.M.A. No,3246 of 1994 was filed on behalf of the defendant No, 1.
3. ' By order dated 1-10-1997 C.M.A. No,3201 of 1994 which is an application for leave to defend filed by the defendant No,2 was granted unconditionally. It was observed that the defendant No,2 had separated property No,C-126 unconditionally. It was observed that the defendant No,2 had separated Property No,C-126, Block-A, North Nazimabad, Karachi by gifting it in favour of her another son namely Iqbal Haleem. This property was attached and defendant No,2 was allowed to file written statement.
4. ' As regard C.M.A. No,3246 of 1994 is concerned the decision was differed as statement of account were to be filed.
5. ' By order dated 15-12-1997 C.M.A. No,3246 of 1994 which is an application under Order 37, rule 3.
6. C.P.C. Filed by the defendant No,1 was dismissed as according to the learned Judge the admission of the liability by the defendant No,1 was there. The suit was decreed against the defendant No,1 with interest from date of institution till payment. The suit was also decreed for sale of industrial plot with all the structure including plants and machineries. The case then was to proceed against the defendant No,2.
7. ' By order dated 12-1-1998 two issues were framed:
(1) Whether any valid and subsisting equitable mortgaged was created in favour of the plaintiff- defendant No,2 in respect of property C-126, Block-A, North Nazimabad, Karachi?
(2) What should the decree be?
8. ' Evidence was recorded by filing of affidavits in evidence of Saleem Ahmed Khan Vice-President of Muslim Commercial Bank Limited. The defendant also filed an affidavit in evidence of Shaikh Iqbal Haleem who was the defendant No,2 (1). The plaintiff closed the side after examining one witness.
9. During the course of the evidence of the defendant, the defendant No,2 died i,e, in the year 1998 and therefore the legal heirs were brought on record. Then the defendant No,2(1) filed their affidavits. Once the evidence of defendant No,2(1) was recorded and completed the matter was fixed for arguments.
10. ' The plaintiff examined Saleem Ahmed Khan who stated clearly that the title documents submitted to the plaintiffs-Bank belonged to defendant No,2. They were given to the plaintiffs-Bank by Sikandar Haleem the defendant No,2(ii). Apparently the title documents were submitted alongwith a forwarding letter, sale-deed, search certificate and valuation certificate. Copies were produced by the witness who stated that the originals are in the possession of the plaintiff. The witness was cross-examined where he was confronted with restructuring agreement and limit application and agreed that both the documents are not signed by him. These documents were produced by him as Exh.5/1 and 5/2 respectively. He also was shown the forwarding letter dated 16-11-1985 with which title documents pertaining to disputed property were submitted. The forwarding letter was not signed by defendant No,2. He admitted that Sikandar Haleem was not questioned as to how he had wanted to create equitable mortgage in relation to the property owned by defendant No,2. He further admitted that the defendant was not asked as to whether she had given her consent to getting her property mortgaged. The witness also admitted no N.O.C. Was obtained from K.D.A. The witness further admitted that mortgage was not registered nor was it valued. It was however, denied that the equitable mortgage was created without her consent. The plaintiff further denied knowledge that the defendant No,2 alienated property in the year 1992 by gifting it to her son Iqbal Haleem. He also stated that no notice of admission was given to defendant No,2.
11. ' The defendant in turn has submitted an affidavit in evidence wherein they have relied on the contents of written statement. It was further stated that the defendant No,2 learnt about the pending cases when a publication appeared in the year 1994. The witness has denied that the defendant No,2 was party or privy to any loan agreement. She has denied that she was even aware that her property documents were submitted for obtaining loan. He has denied that the lady has signed any paper in connection with the mortgage.
12. ' Apparently the title documents of the property were taken by her consent and deposited with the plaintiff. She even claimed that it was fraud played between her son and Bank. The defendants had further stated that the property was purchased by the defendant No,2 from her own funds and to that extent a sale-deed was registered between previous owner and the defendant No,2. The witness further pointed out that when the gift was executed between the defendant No,2 and as Sh.
13. Iqbal Haleem under the family settlement, the original documents were searched and were not located and eventually a report with the police was registered about the loss of such documents. A public notice was issued in daily Nawa-eWaqt. No objections were received from any quarter specially the bank. Having received no objections from any quarter the gift was completed and the deed was duly registered. When the matter was taken up with Sikandar Haleem who had without her permission handed over the documents she was threatened and to that extent a complaint was also registered with the I.-G. Police and Home Secretary. Furthermore the defendants Nos,2, 2(6), 2(7) have also confirmed that the property was never mortgaged and in fact it was transferred in the name of Iqbal Haleem. Alongwith the affidavit documents have also been produced. Copy of rent case has also been produced to show that the said Iqbal Haleem had moved a rent case in his capacity as the owner of the property. The property in question is same as the property in the suit.
14. ' In cross-examination of the witness the witness has denied that the property was mortgaged. No further questions have been put to him specially as regards all the serious and grave allegations made in the affidavit.
15. ' I have seen the issue at hand and gone through the evidence provided by the plaintiff as well as the defendants. The plaintiff has failed and substantially to prove that any value and subsisting equitable mortgaged have created in favour of the plaintiff by defendant Nos,1 and 2 in respect of the property in question. It has been admitted by the plaintiff that the title documents were submitted by the son of defendant No,2 and nowhere have they shown that there was a consent of the defendant No,2 in submitting her property papers for creating the mortgage on behalf of the aefendant No, 1.
16. ' I am of the view of that the evidence so recorded and the cross-examination that has followed the plaintiff has failed to break the evidence of the defendant No,2 who have in turn succeeded in putting forward a convincing line of arguments that indeed the mortgaged had been created without the permission and knowledge of the owner. It is well-settled that even an equitable mortgage can only be created by a person who is in position to obtain loan after submission of title documents of his or her own property by way of security. It is clear that the property belonged to defendant No,2. It is also clear that the defendant No,2 has not given any documentary consent to allow her property's title papers to be handed over to the bank for creation of an equitable mortgage. The cross-examination of defendant's witness is almost nil. Most of the statements made by the defendant have gone unchallenged and unrebutted, under the circumstances I would dismiss the suit against the defendant No,2 with no order as to costs.