' M. SOHAIL IQBAL BHATTI, J. --- Through this appeal the appellant has challenged the order and decree dated 16.5.2012 passed by the learned Judge Banking Court-III, Lahore, whereby the suit filed by the respondent bank ha; been decreed against the appellant.
2. The facts of the case are that the respondent bank filed a suit for recovery of Rs, 26,17,097/- on 29.3.2010 against the appellant. The appellant, in pursuance to the summons issued under Section 9(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 appeared before the learned Judge Banking Court and filed an application under Section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for leave to defend the suit. The learned Judge Banking Court, after dismissing the application for leave to defend the suit, passed the impugned order and decree for recovery of Rs, 22,99,567/- alongwith costs and cost of funds. Hence, this appeal.
3. The learned counsel for the appellant argued that the impugned order and decree are against law and facts of the case. It has been further argued that the agreement for financing, on the basis of which the impugned order and decree have been passed, was a void document. The learned counsel went on to argue that although the facility was availed by the appellant from the respondent bank but the same cannot be termed as finance and, therefore, the learned Judge Banking Court Thad not jurisdiction to adjudicate upon the matter. The learned counsel further argued that no valid mortgage had been created in favour of the respondent bank as the Transfer Letter issued by the Punjab Cooperative Housing Society Limited was not a title document.
4. On the other hand, learned counsel for the respondent vehemently supported the order and decree: The learned counsel for the respondent while advancing his arguments maintained that the application for leave to appear and defend the suit had not been drafted in accordance with the provisions of Section 10(3) & (4) of the. Financial Institutions (Recovery of Finances) Ordinance, 2001. It has been further argued that no substantial question of law and facts had been raised by the appellant in his application for leave to appear and defend the suit. The learned counsel argued that availing of finance facility and execution of charge documents has not been denied.
5. We have considered the arguments advanced by learned counsel for the parties and have gone through the record.
6. It is established from the record that the appellant applied for a finance facility for the purpose of house; this application was accepted through sanction letter dated 2.11.2007 and an amount of Rs, 23,00,000/- was allowed to be sanctioned in favour of the appellant which was repayable in 240 monthly instalments. The sanction letter has been duly accepted and thumb marked by the appellant. The appellant in consideration of the facility executed an agreement for long term financing, demand promissory note of Rs, 89,46,240/- which amount is the marked up amount mentioned in the sanction letter, undertaking, agreement to mortgage and memorandum of deposit of title deed. We have further observed that through finance provided by the respondent bank the appellant purchased House No, 77-D situated at Punjab Cooperative Housing Society Limited from one Abdul Aziz Masood and the Transfer Letter was issued in favour of the appellant on 14.11.2007 and thereafter on 4.12.2007 the charge of the respondent bank was incorporated in the record of Punjab Cooperative Housing Society Limited. As far as the contention the learned counsel for the appellant that the facility availed does not fall within the definition of finance is concerned, it would be useful to reproduce the definition of "finance", as given in Section 2(d) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, as below:--- "(d) "finance" includes:--
(I) an accommodation or facility provided on the basis of participation in profit and loss, mark-up or markdown in price, hire-purchase, equity support, lease, rent-sharing licensing charge or fee of any kind, purchase and sale of any property including commodities, patents, designs, trade marks and copy-rights, bills of exchange, promissory notes or other instruments with or without by-back arrangement by a seller, participation term certificate, mushrika, morabaha, musawama, istisnah or modaraba certificate, term finance certificate;
(ii) facility of credit or change cards;
(iii) facility of guarantees, indemnities, letters of credit or any other financial engagement which a financial institution may give, issue or undertake on behalf of a customer, with a corresponding obligation by the customer to the financial institution;
(iv) a loan, advance, cash credit, overdraft, packing credit, a bill discounted and purchased or any other financial accommodation provided by a financial institution to a customer;
(v) a benami loan or facility that is, a loan or facility the real beneficiary or recipient whereof is a person other than the person in whose name the loan or facility is advanced or granted;
(vi) any amount due from a customer to a financial institution under a decree passed by a Civil Court or an award given by an arbitrator; any amount due from a customer to a financial institution which is the subject-matter of any pending suit, appeal or revision before any Court; any other facility availed by a customer from a financial institution."
7. At this stage we would like to observe that through Section 2(e) of the Financial Institution (Recovery of Finances) Ordinance, 2001 the term "obligation" has been introduced for the first time which reads as under:--- "(e) "Obligation" includes:-
(i) any agreement for the repayment or extension of time in repayment of a finance or for its restricting or renewal or for payment or extension of time in payment of any other amounts relating to a finance or liquidated damages; and
(ii) any and all representations, warranties and covenants made by or on behalf of the customer to a financial institution at any stage, including representations, warranties and covenants with regard to the ownership, mortgage, pledge, hypothecation or assignment of, or other charge on, assets or properties or repayment of a finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfilment of a promise; and
(iii) all duties imposed on the customer under this Ordinance; and."
This takes us to Section 9(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which reads as under:--- "9. Procedure of Banking Courts.---(1) Where a customer or a financial institution commits a default in fulfilment of any obligation with regard to any finance, the financial institution or, as the case may be, the customer, may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath, in the case of a financial institution by the Branch Manager or such other office of the financial institution as may be duly authorized in this behalf by power-of attorney or otherwise."
8. The accumulative effect of the above provisions makes it clear that the customer is under an "obligation" to repay the amount/facility availed from the respondent bank and where a customer commits a default in of any obligation with regard to any finance; the financial institution may institute a suit in the Banking Court. Thus, we are not in agreement with the argument advanced by learned counsel for the appellant that the Banking Court had no jurisdiction. When the appellant applied for availing finande facility from the respondent bank; a sanction letter was issued which amounts to an offer; and when the appellant accepted that offer by singing the sanction letter a valid contract had been created between the parties. At this stage we would like to refer to Section 10 of the Contract Act which reads as under:--- "10. What agreements are contracts. ---All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
' Nothing herein contained shall affect any law in force in Pakistan, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents."
' Even if the arguments of learned counsel for the appellant is accepted that the agreement for financing was a void document, there is no cavil to this effect that by accepting the terms and conditions, laid down in the sanction letter and singing it, the appellant had entered into a valid contract.
' We have further observed that the appellant, in his application for leave to defend the suit, has admitted in preliminary objection No, (e) that the appellant made payment of 21 instalments and thereafter when the respondent bank enhanced the rate of mark-up the appellant stopped making payment to the respondent bank, meaning thereby that the appellant made payment of his monthly installments till September 2009 in pursuance to the schedule of repayment and thereafter committed default and the respondent bank filed a suit for recovery on 12.3.2010. As far the contention that the appellant had singed the blank documents is concerned, we are of the considered opinion that even denial of signatures on the charge documents is not a valid ground for grant of leave as it has become a common practice that the defendants raise these objections in their applications for leave to defend the suit whereas in the present case the appellant has not denied the execution of the charge documents and had also handed over the original Transfer Letter in respect of House No, 77-D situated at Punjab Cooperative Housing Society Limited, which was purchased through the funds provided by the respondent bank as is established from the record.
9. As far the contention of learned counsel for the appellant that the deposit of Transfer Letter did not create a valid equitable mortgage is concerned, we are of the view that Section 58(f) of the Transfer of the Property Act defines the equitable mortgage; thus, the, question would be as to whether the Transfer Letter be treated as title document. The term "document of title" will include such documents which relate to the title of person in respect of a specific property.
' It has been held in a case KLCT Chidambran Chettyar v. Aziz Mian and others (AIR 1938 Rangoon 149) as follows:--- "In our opinion the correct statement of the law is that in order to create a valid mortgage by deposit of title deed under S. 58 (f), T.P. Act, it is not necessary that the whole, or even the most material of the documents of title to the property should be deposit, nor that the documents deposited should show a complete or good title in the depositor. It is sufficient if the deeds deposited bona fide relate to the property or are material evidence of title or are shown to have been deposited with the intention of creating a security thereon."
10. In a judgment reported as State Life Insurance Corporation of Pakistan v. S.U. Durrani and another (PLD 1987 Karachi 588) the honourable Sindh High Court while deciding the same question has observed as under:- "In equitable mortgage document of title is deposited with intent to create mortgage. It is therefore, necessary that such documents should be deposited which connect the depositor with the property showing his interest or title to it. In Robert v. Croft (1857) 53 ER 343 the mortgagor deposited all the title except that under which he had obtained the property and subsequently deposited this last deed wig another person, it was held that the prior depository had valid title against the latter. It was observed as follows:--- "I am of the opinion that it would drive the Court into question which would almost be insoluble, and render (231) equitable mortgage of no value, if it should be held that no equitable mortgage was good, unless the deeds deposited showed a good title in the depositor. In that case it would be as necessary for the lender to go through the title, in the case of an equitable as in that of a legal mortgage, and the difficulties would be greater, for a legal mortgagee may accept what title he pleases, but if the deposit do not constitute an equitable mortgage unless a good title be shown by the deeds deposited, the Court, and not the lender, must judge of the sufficiency of the title. If it is shown that the deeds deposited bona fide relate to the property that constitute a good equitable mortgage. "
11. In the present case the Transfer Letter issued by Punjab Cooperative Housing Society Limited has been deposited by the appellant with the respondent bank which proves the interest of the appellant in the property. Thus, we are of the considered opinion that a valid equitable mortgage had been created in favour of the respondent/decree-holder bank.
12. We have further observed that the learned Judge Banking Court while passing the impugned order and decree has disallowed the amount of mark-up of Rs, 3,17,530/- charged after the date of default.
13. For what has been discussed above, we are not inclined to interfere with the impugned order and decree. Resultantly, this appal is dismissed.