' SABIHUDDIN AHMED, J.---This appeal is directed against a judgment and decree of the learned Banking Court No,1, Karachi decreeing the suit of the respondent No,1 as against the appellant and respondents Nos,2 to 5 jointly and severally for an amount of Rs,11,850,000 together with future mark-up at the agreed rate. By way of relevant facts, it might suffice to mention that in March, 1996, the respondent No,1 agreed to extend finance facility by way of discounting of bills/cheques up to an amount of Rs,5 millions against inter alia the security of mortgage on property comprising a house to cover the amount of the facility. Thereupon the appellant being a Director of the respondent No,2 executed an equitable mortgage in respect of his House No,53-A, New Karachi Cooperative Housing Society by way of deposit of title deeds in respect of the said property. A memorandum evidencing such deposit was stated to have been made by the appellant on 20-4- 1996 and a further declaration dated 30-4-1996 was signed by him stating that he would have no objection if the said property was mortgaged with the respondent No,1 in consideration of their agreeing to allow any discount and facility against documentary bills receivable by the respondent No,2 and that he would be fully responsible for the debts due to respondent No,2 with all mark-up and other charges on account of the facility so extended. Letters of continuing guarantee were also executed by the appellant and respondents Nos,2 to 5 on April 20, 1996. It appears that by a Board resolution dated 5th June, 1996 of the respondent No,2, the appellant and the respondent No,4 were authorized to negotiate enhancement of the facility up to Rs,10 millions with the respondent No,l.
Such enhancement was granted by the respondent No,1 by their letter dated 9th June, 1996 against several securities including the appellant's property mentioned above.
2.In 1999 the respondent No 1 riled the suit for recovery of Rs, 17, 534,2006 against the appellant and the respondents Nos, 2 to 5 which was decreed by the learned Banking Court in the amount of Rs, 11, 850, 000 with costs and future mark-up jointly and severally against all the defendants after dismissing their respective applications for leave to defend. The appellant and the respondent No, 5 applied for setting aside the decree as against them and their applications were granted on 13- 8-1999. However, on 31-10-2000 their respective applications under section 10 of the Banking Companies (Recovery of Loans, Advances, Credits and Finance) Act, 1997 for leave to defend were dismissed by the leaned Bankding Court and the suit was decreed against them as well. This judgment and decree has been impugned in this appeal.
3. Mr. Shabbir Ahmed Shaikh loearned counsel for the appellant in the first instance argued that he facility accorded to the respondent No,
2. In terms of the letter dated June, 9, 1996 was valid only up to April 30, 1997, The appellant had resigned from the Directorship of the respondent No, 2 on July 2, 1997 and had neither guaranteed nor was party to any subsequent facility granted to the respondent No,2 by the respondent No,
1. As such he was not bound to discharge any liabilities of the respondent No,2 existing at the date of filing of the suit. We regret there is little force in this contention. Admittedly the appellant had executed a continuing letter of guarantee whereby the appellant assumed full responsibility for the liabilities of the principal in terms of the facility (including mark-up) and covenanted that it would remain in full force and effect until determined as to future transactions through a prior notice from the guarantor but would remain fully effective in respect of any liabilities incurred by the principal prior to such notice. It is not denied that the suit was decreed only to the extent of the amount of the facility granted as a result of negotiations with the appellant as a Director of the respondent No,2 and one year mark-up at the agreed rate. There is nothing to indicate that the appellant served any notice upon the respondent No,1 and in any event the liability related to a period prior to his resignation.
4. Shabbir Ahmed Shaikh next argued that the mortgage could not be enforced inasmuch as no transfer of interest had taken place. He pointed out that the memorandum of deposit of title deed is written merely on a document containing stamp paper of Rs,30 and has not been duly registered. We agree with the learned counsel to the extent that a document purporting to transfer immovable property requires to be registered. Nevertheless, it is evident from section 58(f) that there is no requirement of execution of a document for the purposes of creating an equitable mortgage which can be effected by mere deposit of title deed with mortgagee. As regards the memorandum in question it needs to be noticed that it does not purport to create a mortgage but only confirms the factum of the appellant having deposited title deeds relating to his property. It is well-settled that such a memorandum confirming a deposit having made in the past does not require registration as held inter alia in Abdul Aziz Ghafoor Khan and another v. Commerce Bank Limited PLD 1978 Karachi 36 and Muhammad Farooq Khan v. Sulleman Punjwani and others PLD 1977 Karachi 88. This argument therefore, is equally untenable.
5. Learned counsel further argued that in any event the liability of the appellant could only be confined to Rs,5 millions in terms of the original facility granted and not to extent of the enhanced facility of Rs,10 millions. In support of this contention he contended that the original memorandum of deposit was executed at the time when the initial facility was granted. Subsequently when the facility was sought to be enhanced the appellant executed the declaration dated 30th April, 1996 conveying his no objection to the mortgage of the property in consideration of extension of any discounting facility by the respondent No,
1. At the time of enhancing the facility the respondent No,1 did not require the appellant to execute a fresh mortgage. Mr. Nadeem Akhtar Khan learned counsel for the respondent No,1, however, pointed out that the letter dated June 9, 1996 expressly mentions the appellant's property as a security for the facility and argued that no question of creating a fresh mortgage could arise unless the earlier one-was redeemed. In any event we are of the view that when the enhanced facility was obtained with the appellant representing the respondent No,2 company "collateral of Property No,53-A, New Karachi Cooperative Housing Saciety" being described as a security for the facility, the appellant could not be allowed to assert that the mortgage could not be , treated as security for the facility.
6. Finally Shabbir Ahmed Shaikh attacked the validity of the mortgage on the basis of the proviso to section 58(f) of the Transfer of Property Act inserted through Finance Act, 1986. To appreciate the argument it may be observed that prior to the aforesaid amendment mortgage by deposit of title deed through delivery to a creditor or his agent documents of title to immovable property with intent to create a security thereon could be made in the Town of Karachi and in any other town specified by the Provincial Government by Notification in the Official Gazette. Such forms of mortgages did not exist outside Karachi or other specified towns. Through this aforesaid amendment the words "in the town of Karachi" and "in any other town which the Provincial Government concern may by Notification in the Official Gazette specified in this behalf' were deleted from the main section 58(f) and a proviso to the following effect was added:-- "Provided that, where a mortgage by deposit of title deeds is to be created in favour of a Banking Company as defined in the Banking Tribunals Ordinance, 1984 (LVIII of 1984), the same may also be created by an entry in the record-of-right against the entry relating to such immovable property."
7. Mr. Shabbir Ahmed Shaikh argued that after enactment of the aforesaid proviso an equitable mortgage in favour of a Banking Company could only be executed if the deposit of title deeds was accompanied by an entry in the record of rights against the entry relating to such immovable property. No such entry having been made there was no completed mortgage of immovable property. Dilating upon the question whether an entry in the record of rights in terms of the proviso was a pre-condition for creating a mortgage in favour of a Bank or whether merely an additional form of creating a mortgage was envisaged, learned counsel argued that a proviso has to be treated as an exception restricting the operation of the general rule. Therefore, according to him while an equitable mortgage in favour of any other person could be created by mere deposit of title deeds, an entry in the record of rights was necessary when such mortgage was created in favour of a Bank.
8.
8. Mr. Shaikh argued that for the purpose of discerning the true meaning of statutory provision, which might be susceptible to more than one interpretation, the basic rule was to gather the intention of the Legislature by amending the law. He contended that since the practice of obtaining duplicate copies of title documents and borrow monies by creating different securities thereon was on the increase, the Legislature intended that the interests of Banking Companies be fully secured through stipulating that deposit of title deeds must also be accompanied by an entry in the record of rights.
9. Learned counsel further urged that in view of the amendment in section 58(f) of the Transfer of Property Act a mortgage in favour of a Banking Company only comes into effect upon simultaneous entries in the record of rights. Accordingly there could be no memorandum recording a mortgage through such deposit having been executed in the past but only a mortgage in presenti could be created. Consequently no such mortgage could be legally effective unless it was effected through a registered instrument. In support of his contention learned counsel relied upon United Bank of India v. Azirannessa Bewa PLD 1965 SC 274 and the recent Division Bench judgment of the Lahore High Court in Muslim Commercial Bank v. Malik & Company 2002 CLD 606.
10. Indeed there could be no serious doubt as to the correctness of the well-settled proposition that when a mortgage or other form of transfer of property is effected through an instrument in writing, the same is compulsorily registrable. However,' when a written document merely records a transfer having been made in the past no such registration is required.
11. The contention of Mr. Shabbir Ahmed Shaikh was indeed premised on the hypothesis that without a written instrument purporting to amend the record of rights no equitable mortgage in favour of a Banking Company could be created. This proposition however, was seriously disputed by both Messrs Nadim Akhtar. Khan for respondent No,1 and Kamal Azfar for respondent No,2.
12. Without demurring the general proposition that the intention of the Legislature ought to be gathered, Mr. Nadim Akhtar Khan argued that when such intention was unambiguously spelt out in the language of the amending Statute there was no justification for resorting to external aids of interpretation. He emphasized that the proviso to section 58(f) did not stipulate further condition for creating an equitable mortgage in favour of a Banking Company but merely provided that such mortgage could also be created by making an entry in the record of rights. Emphasizing on the word "also" learned counsel argued that it was unmistakably clear that merely an additional mode of creating an equitable mortgage had been provided for without affecting the existing forms of mortgages.
13. Supporting Nadeem Akhtar Khan's contention Mr. Kamal Azfar learned counsel for respondents Nos, 3 to 5 argued that the scope of the proviso ought to be considered against the entire background of the amendment brought about through Finance Act, 1986. He pointed out that initially section 58(f) was only applicable to the town of Karachi or such other towns as may be specified by the Provincial Government. It did not operate in rural areas it is only through the amendment in the main provision that the provisions have been extended to rural areas as well. At the same time one could take judicial notice of the fact that documents of title in the form of registered conveyances are not generally available in rural areas and most of the transactions are effected through mutation in the record of rights. Such entries are not documents of title but furnish strong evidence of title. Against this background learned counsel argued that after the extension of section 58 (f) to areas other than towns, it had become necessary to enable people to borrow money from Banks upon the security of equitable mortgages as was being practised in Karachi or other specified towns. To obviate the difficulties stemming from the fact that documents of title in the strict sense were not available in a large number of cases, the Legislature enabled Banks to lend money by creating enforceable mortgages through entry in the record of rights.
14. We have carefully considered the respective contentions of the learned counsel, we find it difficult to subscribe to Mr. Shabbir Ahmed Shaikh's view which would imply that on one hand the Legislature intended to enlarge the scope of section 58(f) by stipulating that mortgages through deposit of title deeds could be created anywhere' where the Act was applicable and at the same time attempted to restrict it by providing that an equitable mortgage in favour of a Bank could only be made in a particular manner. On the other hand there appears to be a great deal of weight in the opposite point of view canvassed by Messrs Kamal Azfar, Nadim Akhtar Khan and Salim Salaam Ansari. We are therefore, clearly of the view that the proviso only stipulates an additional method of creation of equitable mortgage in favour of a Banking Company without affecting the existing modes of creation of such mortgages. We are therefore, unable to agree with Mr. Shabbir Ahmed Sheikh on this score as well.
15. In view of the foregoing, we are not able to discover any illegality in the impugned judgment and decree and would therefore, dismiss this appeal with costs.