AQEEL AHM ED ABBASI, J. Instant Appeal has been filed by the appellant Bank against two orders of same date i.e. 05.03.2019 passed by the learned Banking Court No. II, at Karachi in Execution Application No.154 of 2014 (in Suit No.107 of 2010), whereby, an application under Order XVI, Rule 1(2) read with section 151, C.P.C. filed by the decree holder/appellant has been dismissed, whereas, another application under section 19(7) of the Financial Institutions (Recovery of Finances)
Ordinance, 2001 read with Order XXI, Rules 58, 59 and 60 and section 151, C.P.C. filed on behalf of the applicants/proposed interveners has been allowed.
2. The appellant Bank, being the Decree-Holder in the aforesaid execution, has assailed both the aforesaid orders through instant appeal. As regards the dismissal of the application filed under Order XVI, Rule 1(2) read with section 151, C.P.C. by the appellant Bank before the learned Banking Court, it has been argued by the learned counsel for the appellant that in the aforementioned application, the appellant prayed that Sub-Registrar, Liaquatabad Town, Karachi may be summoned to lead evidence in the matter for the purposes of verification, as to whether the property bearing Plot No.4, Row No.2, Sub-Block "C" in Block-III (III-C, 2/4), measuring 216 square yards situated at Nazimabad, Karachi along with construction thereon, was the ownership of proposed interveners, however, such request of the appellant has been declined without assigning any cogent reason, therefore, the impugned order passed by the learned Banking Court on the aforementioned application is erroneous, hence liable to be set aside. As regards the order passed by the learned Banking Court on the application under section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with Order XXI, Rules 58, 59 and 60 and section 151, C.P.C. filed on behalf of the proposed interveners/respondents Nos.2 to 5 learned counsel for the appellant argued that the learned Banking Court was not justified to allow such application while holding that the applicants/proposed interveners are the ostensible owner of the subject property, whereas, the judgment-debtor, namely, Iqbal Ahmed, who is respondent No.1 in the instant case, was not the owner of the property in question, either on the day of mortgage or on the day of attachment of the said property, therefore, was pleased to direct the Sub-Registrar, Liaquatabad Town, Karachi to de-attach the property in question. It has been contended by the learned counsel that the learned Banking Court has erred in facts and law while allowing the aforesaid application directing for release and de-attachment of the subject property, which was duly mortgaged before the decree-holder's Bank at the time of availing of finance facility by executing Memorandum of Deposit of Title Documents dated 21.07.2007 and Mortgage to create registered mortgage on the same date so also to deposit all the original title documents of the mortgaged property with the Decree-Holder Bank. According to the learned counsel for appellant, the sanction and availment of the finance facility has not been disputed, whereas, in view of default on the part of the respondents to make payment of outstanding liabilities the subject suit was filed under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 by the appellant before the learned Banking Court, whereafter, summons were issued to the respondents, who filed application under section 10 of the 'Financial Institutions (Recovery of Finances) Ordinance, 2001 for leave to defend the suit. However, the appellant filed replication thereto and consequently the said application for leave to defend the suit was dismissed vide order dated 08.04.2013 and subsequently the suit of the decree-holder/appellant was decreed in the sum of Rs.6,554,448.99 with inclusion of markup till the date of default viz. 12.11.2009 along with cost of fund till realization of the entire decretal amount, vide judgment dated 16.7.2013 and decree dated 5.8.2013. Per learned counsel, since the judgment-debtor failed to pay the decretal amount, the decree-holder Bank filed Execution Application bearing No.154/2014 before the learned Banking Court on 27.11.2014, upon which, notices were issued vide order. dated 27.01.2015, in response thereto, judgment-debtor also appeared and filed application, whereby, it was intimated that an Appeal No.48/2013 has been filed before the learned Divisional Bench of this Court at Karachi against the aforesaid judgment and decree passed by the learned Banking Court, wherein, it was requested that in view of the pendency of such appeal the execution application may be adjourned sine die. However, the execution application was reopened vide order dated 17.02.2015, when judgment-debtor 'appeared and filed objection to the statement under Order XXI, Rule 66, C.P.C. as well on the execution application on 13.03.2015, but the judgment-debtor was directed to first comply with order passed on the statement under Order XXI, Rule 66, C.P.C. within fifteen days vide order dated 28.05.2015.
However, according to learned counsel, the judgment-debtor failed to deposit decretal amount and, thereafter, Mr. lmran Ahmed Advocate filed vakalatnama and application under section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with Order XXI, Rules 58, 59 and 60 and section 151, C.P.C. dated 28.04.2015 on behalf of the applicants/proposed interveners and in terms of order dated 11.4.2017 passed on the above application, the parties were directed to adduce evidence on the following issue:- "Whether at the time of attachment of the mortgaged property, it was in the name of the judgment debtor Iqbal Ahmed or he had already sold out the same to the applicants/objectors.
3. Learned counsel for the appellant further submitted that in compliance to the order dated 11.4.2017 passed by the learned Banking Court, the applicant No.1 Mrs. Shabana. Begum filed her affidavit-in-evidence and produced documents viz. Sale Deed dated 12.12.2013, Conveyance Deed dated 19.04.2006, Mutation Letter dated 29.07.2006, Indenture of Sub-Lease Deed dated 17.02.2007 and General Power of Attorney dated 01.10.2007. Whereas, applicant No.2, namely, Mrs. Mehmooda Shaikh Abdul Majeed, filed her affidavit-in-evidence and produced documents viz. Indenture of Sub-Lease Deed dated 17.02.2007, Sale Deed dated 12.12.2013, Conveyance Deed dated 19.04.2006, Mutation Letter dated 29.07.2006. According to learned counsel, applicant No.3, namely, Muhammad Ali also filed affidavit-in-evidence and produced documents viz. General Power of Attorney dated 09.06.2007, Conveyance Deed dated 19.04.2006. Mutation Letter dated 29.07.2006 and indenture of Sub-Lease dated 17.02.2007, whereas, Shaikh Muhammad Zubair, the applicant No.4 also filed affidavit-in-evidence and produced documents viz. two General Power of Attorneys dated 07.06.2008, Conveyance Deed dated 19.04.2006, Mutation Letter dated 29.07.2006 and Indenture of Sub-Lease dated 17.02.2007. Thereafter, according to learned counsel, Shaikh Muhammad Zubair, the applicant No.4, filed an application under section 151, C.P.C. with prayer for permission to file amended affidavit-in-evidence and the said application was allowed to the extent of filing of documents of his property with the directions to file amended affidavit-in- evidence within one week vide order dated 09.02.2018, whereafter, amended affidavit-in-evidence was filed and produced two Registered General Power of Attorney(s), Conveyance Deed dated 19.04.2006 and mutation letter dated 29.07.2006 respectively. Thereafter, decree-holder bank filed affidavit-in-evidence of its Attorney Mr. Jameel Hussain, who produced documents viz. Power of Attorney in his favour and Search Certificate dated 28.05.2015 respectively. According to learned counsel, applicants' side was closed vide statement dated 23.05.2018 and learned counsel for decree holder closed his side vide statement dated 15.10.2018. It has been submitted by learned counsel for the appellant that since the appellant had produced the relevant documents relating to right and title of the appellant on the subject property pursuant to registered mortgage in its favour, the learned Banking Court was not justified to hold that the applicants/respondents Nos.2 to 5 are the ostensible owners and have title in attached property viz. all that piece and parcel of land viz. Plot No.4, Row No.2, Sub-Block 'C' in Block No. III, (III-C, 2/4), measuring 216 square yards, situated at Nazimabad, Karachi, with construction thereon and thus, ordered for release of both the properties from attachment. It has been prayed that the impugned orders may be set aside.
4. Conversely, the learned counsel for the respondents Nos.2 to 5 has vehemently opposed the contention of the learned counsel for the appellant, supported both the impugned orders of even date passed by the learned Banking Court in the instant case and submitted that the application under section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with Order XXI, Rules 58, 59 and 60 and section 151 C.P.C. filed on behalf of the respondents in the above execution proceedings, has been rightly allowed by the learned Banking Court, as according to learned counsel, the mortgage and attachment of the subject property i.e. Plot No.4, Row No.2, Sub- Block "C" in Block-III (III-C, 2/4), measuring 216 square yards situated at Nazimabad, Karachi along with construction thereon, in the above execution proceedings was illegal and based on misrepresentation of facts. According to learned counsel for the respondents Nos.2 to 5, the respondent No.1 was not the owner of the subject property at the time of creation of mortgage, as it was sold out by the respondent No.1 on 17.02.2007 to the respondent No.3, whereas, the purported mortgage was created on 21.07.2009. Per learned counsel, the possession of the subject property along with title documents are with the respondents No.2 to 5, whereas, official of the appellant Bank did not pay a single visit to the subject property for the purposes of verification of title and possession, therefore, the purported mortgage by the judgment-debtor in favour of the appellant Bank was collusive in nature and is of no legal effect, as the judgment-debtor has no authority to mortgage the subject property, which was not owned by him at the time of mortgage. It has been further contended by the learned counsel for the respondents Nos.2 to 5 that the respondents have placed on record relevant title documents of the subject mortgaged property, including Indenture of Sub-Leave and confirmation letters issued by the concerned Sub-Registrar, Liaquatabad Town, in support of their claim relating to ownership of the subject property, which documents remained un-rebutted, therefore, the claim of the appellant regarding purported mortgage of the subject property in favour of the appellant Bank stands falsified on the face of record. It has been further contended by the learned counsel that the appellant Bank did not observe due care and caution, nor complied with legal requirements, while accepting the property as mortgage property, without ascertaining its title and even possession, whereas, at the time of such mortgage, the property already stood transferred in the name of the respondents Nos.2 to 5, therefore, could not be accepted for the purposes of mortgage by the respondent No.1. According to the learned counsel, the subject property was out of purview of any proceedings before the learned Banking Court in the above execution proceedings for the reason that at the time when mortgage was created, the subject property was not owned by the judgment debtor and was already sold out to respondents Nos.2 to 5 through registered Indenture of Conveyance deed, therefore, the same could not be attached for recovering the outstanding liability against the judgment-debtor. Per learned counsel, it was wrongly attached by the learned Banking Court on account of misrepresentation and concealment of facts by the judgment-debtor/respondent No. 1. It has been prayed by the learned counsel for the respondents Nos.2 to 5 that under the facts and circumstances of the instant case, learned Banking Court was justified to pass impugned orders which do not suffer from any factual error or legal infirmity, therefore, instant High Court Appeal is liable to be dismissed.
5. We have heard the learned counsel for the parties, perused the record and have also gone through both the orders dated 05.03.2019 passed by the learned Banking Court No. II, at Karachi, in Execution Application No.154 of 2014 (Suit No.107 of 2010), whereby, application under Order XVI, Rule 1(2) read with section 151, C.P.C. filed by the appellant/decree holder has been dismissed, whereas, other application under section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with Order XXI, Rules 58, 59, 60 and section 151, C.P.C. filed on behalf of the proposed Interveners/respondents No.2 to 5 has been allowed. As regards application under Order XVI, Rule 1(2) read with section 151, C.P.C. filed by the appellant/decree holder in the aforesaid execution proceedings with the prayer to summon the Sub-Registrar, Liaquatabad Town, Karachi, to lead evidence in the matter, has been dismissed by the learned Banking Court while observing that since the decree holder has not produced search certificate dated 23.07.2007 upon which reliance is being placed, at any stage of the proceedings, even while leading - evidence in the matter, whereas, parties have already closed their sides by filing statement dated 23.05.2018 and 15.10.2018 respectively, therefore, request for summoning the Sub-Registrar, Liaquatabad Town, Karachi, for the purposes of further verification of the entries in the record of Sub-Registrar relating to subject mortgaged property, on the basis of search certificate as referred to hereinabove was not justified.
The learned Banking Court has been further pleased to observe that since the Sub-Registrar, Liaquatabad Town, Karachi, has already placed on record two (02) reports dated 11.01.2017 and 17.01.2019 respectively along with attested copies of T.I. Register, Day Book and Index, whereby, the Sub-Registrar has verified the execution of indenture of sub-leases on 17.02.2007 by the judgment debtor in favour of the applicant and/or in favour of predecessor-in-interest of the applicant, therefore, to summon the Sub-Registrar again when the evidence of the parties has already been recorded and their sides have been closed, would not be justified. We do not find any error or infirmity in the above finding as recorded by the learned Banking Court as it depicts correct factual and legal position. Moreover, the appellant has failed to make out a prima-facie case for invoking the provision of Order XVI, Rule 1(2), C.P.C. as neither the said application was filed at appropriate time nor any good cause has been shown to summon the Sub-Registrar, Liaquatabad Town, Karachi, after the evidence of parties has already been concluded and sides of both the parties has been closed through their respective statements, whereas, the record relating to title of the mortgaged property has already come on record. It appears that appellant through above application attempted to improve its case and to fill in the deficiency in their evidence without any just cause or valid reasons. Accordingly, we do not find any substance in the argument of the learned counsel for the appellant requiring this Court to set-aside the order passed by the learned Banking Court on the aforesaid application and therefore, uphold the above order passed by the learned Banking Court on such application.
6. As regards the order passed by the learned Banking Court No.II, Karachi, in the aforesaid execution proceedings on an application under section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, read with Order XXI, Rules 58, 59 and 60, C.P.C. filed on behalf of the proposed interveners/respondents Nos.2 to 5, the learned Banking Court No.II at Karachi, after having taken stock of the relevant facts and the documents produced along with aforesaid application filed by the proposed interveners, the official record relating to title of the mortgaged property i.e. Plot No.4, Row No. 2, Sub-Block `C' in Block No. III, (III-C, 2/4), admeasuring 216, situated at Nazimabad, Karachi, available with the Sub-Registrar, Liaquatabad Town, Karachi, as well as subsequent execution of indenture of sub-lease registered No.703, Book 1, dated 17.02.2007, in favour of one Mr. Muhammad Naseem, indenture of sub-lease registered No.701, Book 1 dated 17.02.2007 in favour of one Mrs. Mehmooda Sheikh Abdul Aziz wife of Shaikh Abdul Majeed, indenture of sub-lease registered No.704, Book 1, in favour of one Mr. Muhammad Naseem, indenture of sub- lease registered No.702, Book 1, in favour of one Mr. Muhammad Naseem, has been pleased to record detailed finding regarding title of mortgaged property in the following terms:- "I have examined agreement to Create Registered Mortgage and Memorandum of Deposit of Title Deeds which are attached with plaint as annexures P-11 and P-12 and find that both the said documents are dated 21.07.2007. It is apparent from the record that Mr. Iqbal Ahmed son of Mukhtar Ahmed the defendant purchased property viz. being all that piece and parcel of Plot No.4, Row No.2, Sub-Block 'C' in Block No.III, (III-C, 2/4), measuring 216, situated at Nazimabad, Karachi from one Mr. Zafar-ul-Islam Siddiqui vide Conveyance Deed Registered No.1585, Book-I, dated 19.04.2006 registered before Sub-Registrar, Liaquatabad Town, Karachi. It is also available on record that Karachi Building Control Authority approved Building Plan (Ground+3) vide its letter No.KBCA/DCB (Liaquatabad Town)/Prop/06/77/73 dated 06.06.2006. The record further reveals that after obtaining approved Building Plan, Mr. Iqbal Ahmed son of Mukhtar Ahmed the defendant executed Indenture of Sub-Lease Registered No.703, Book-I dated 17.02.2007 in favour of one Mr. Muhammad Naseem son of Muhammad Mukhtar in respect of Flat No.G-1, Ground Floor, Yusra Homes (Ex:Int:3), Indenture of Sub-Lease Registered No.701, Book-I dated 17.02.2007 in favour of one Mrs. Mehmooda Sheikh Abdul Aziz wife of Shaikh Abdul Majeed in respect of Flat No.S-3, Second Floor, Yusra Homes (Ex:6), Indenture of Sub-Lease Registered No. 704, Book-I dated 17.02.2007 in favour of one Mr. Muhammad Naseem son of Muhammad Mukhtar in respect of Flat No.F-2, First Floor, Yusra Homes (Ex:13), Indenture of Sub-Lease Registered No.702, Book-I dated 17.02.2007 in favour of one Mr. Muhammad Naseem son of Muhammad Mukhtar in respect of Flat No.T-4, Third Floor, Yusra Homes(Ex:l8) and finally said Mr. Muhammad Naseem executed General Power of Attorney Registered No.256, Book-IV dated 07.06.2008 in favour of one Mr. Sheikh Muhammad Zubair son of Sheikh Abdul Majeed in respect of Flat No.P-5, Fourth Floor, Yusra Homes(Ex:18). In compliance of Court Orders, Sub-Registrar Liaquatabad Town, Karachi has submitted two reports dated 11.01.2017 and 17.01.2019 respectively. The said Sub-Registrar has also filed attested copies of T.I. Register, Day Book and Index whereby the said Sub-Registrar has verified the execution of Indenture of Sub-Leases on 17.02.2007 which are produced by the applicants/interveners. It is proved beyond any shadow of doubt that the judgment debtor after transfer of Plot No.4, Row No.2, Sub-Block 'C' in Block No.III, (III-C, 2/4), admeasuring 216, situated at Nazimabad, Karachi in his favour vide Conveyance Deed Registered No.1585, Book-I, dated 19.04.2006 registered before Sub- Registrar Liaquatabad Town Karachi got approved Building Plan (Ground+3) vide its letter No. KBCA/DCB (Liaquatabad Town)/Prop/06/77/13 dated 06.06.2006 from Karachi Building Control Authority and thereafter executed three Indentures of Sub-Lease in favour of Mr. Muhammad Naseem son of Muhammad Mukhtar and one Indenture of Sub Lease in favour of Mrs. Mehmooda Sheikh Abdul Aziz wife of Shaikh Abdul Majeed all dated 17.02.2007 much prior to execution of agreement to Create Registered Mortgage dated 21.07.2007 and Memorandum of Deposit of Title Deeds dated 21.07.2007 in favour of the decree holder bank. Since the indentures of lease were executed by the defendant much prior to alleged mortgage thus the rights of the interveners are protected under section 41 of the Transfer of Property Act (IV of 1882), as on the relevant date the transferor was ostensible owner of the property in question and the interveners have purchased the property in good faith against consideration. The alleged mortgage so created by the defendant/judgment debtor in favour of decree holder was not a validly created, as on the date of alleged, mortgage viz 21.07.2007, the judgment debtor was not competent/ostenble owner of the property in question for reason that the judgment debtor prior to mortgage executed three Registered Indentures of Lease all dated 12.02.2007 in respect of Flat Nos.G-1, F-2 and T-4 in favour of Mr. Muhammad Naseem son of Muhammad Mukhtar and one Indenture of Lease of Lease dated 12:02.2017 in favour of Mrs. Mehmooda Sheikh Abdul Aziz wife of Shaikh Abdul Majeed. It is also available on record that Mr. Muhammad Naseem son of Muhammad Mukhtar transferred his title and/or interest by virtue of registered General Power of Attorney and/or Conveyance Deed/Sale Deed in favour of his successor-in-interest and/or, applicants and the above-named applicants including Mrs. Mehmooda Sheikh Abdul Aziz wife of Shaikh Abdul Majeed are in possession of Flats No.G-1, F-2, S-3, P-5 and T-4 constructed on Plot No.4, Row No.2, Sub-Block 'C' in Block No.III, (III-C, 2/4), admeasuring 216, situated at Nazimabad, Karachi.
9. Under the law no mortgage can be created in respect of property, the title whereof does not vest in the mortgager or the mortgager does not have an explicit authority to create a charge upon such property. Under the principle based on maxim Nemo dat qui non-habet, a person cannot transfer to another a title or a right greater than what he himself possesses and/or the vendor could not transfer better and larger title regarding property in question to vendee except that he himself had owned. The decree holder on its sweet will and in gross negligence, by-pass the legal procedure of mortgage and did not take due care and caution in this regard. In view of above discussion, it is proved that judgment debtor Iqbal Ahmed was not owner of the property in question either on the day of mortgage or on the day of attachment of the property in question, therefore I am satisfied that the applicants are ostensible owners and have title in attached property viz: all that piece and parcel of land bearing Plot No.4, Row No.2, Sub-Block 'C' in Block No.III, (III-C, 2/4), admeasuring 216, situated at Nazimabad. Karachi, with constructions there on and hereby release the whole property from attachment. The office is directed to intimate the Sub- Registrar Liaquatabad Town Karachi to de-attach the property in question."
7. Perusal of hereinabove finding as recorded by the learned Banking Court No. II, Karachi, shows that at the time when mortgage was being created, the subject property was not owned by the mortgager/judgment debtor, and the same was already sold out to respondents pursuant to Indenture of Sub-Lease duly registered with the Sub-Registrar, Liaquatabad Town, Karachi, as referred to hereinabove, therefore, the same could not be considered for the purposes of creating a mortgage nor the same could be attached for recovery of outstanding liability against the judgment debtor, whereas, the proposed interveners, were neither the borrowers nor guarantors in respect of finance advanced by the appellant bank to respondent No.1 i.e. judgment debtor. It is settled legal position that no mortgage can be created in respect of a property, the title where of does not vest in the mortgager. Similarly, a person cannot transfer a right or title to another better than what he himself possesses. In the instant case, it appears that either with the collusion of decree holder and the judgment debtor, or on account of gross negligence by the bank officials, who failed to observe the legal procedure and due care while accepting the subject property for the purpose of mortgage failed to appreciate that at the time of subject property was not owned by the mortgager as the same was already sold out to respondents through registered Indenture of Sub-Lease. It further appears that even site inspection was not conducted by the bank officials so that the possession and true of subject property could have been ascertained at the relevant time In view of hereinabove facts and circumstances of the case, we are of the opinion that the provisions of Order 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, are fully attracted in the instant case, therefore; the learned Banking Court No. II, Karachi, was justified to pass the impugned order and to issue direction for release of the subject property from attachment. Accordingly, the above appeal was dismissed along with listed applications vide our short order dated 03.03.2022 and above are the reasons for such short order.