1. ' These two appeals will be disposed of by this judgment as parties are common and they arise out of the suit filed by the appellant. The appellant filed a suit for recovery of Rs, 19,587.53 under Order XXXIV, C. P. C. The suit was originally filed against M. Abdullah and after his death during the pendency of these appeals, the present respondents were brought on record as his legal heirs. The appellant filed the suit on the allegation that Abdullah had taken a loan of Rs, 20,000 on 17th July, 1963 and executed a promissory note for the said amount. It was further pleaded that Abdullah on the same day subsequent to the said loan deposited with the appellant at Karachi several documents of title pertaining to his property creating an equitable mortgage on the surety of his property. This loan was advanced on the terms and conditions mentioned in appellant's letter dated 17th July, 1963. As he defaulted in repayment of loan, legal notice dated 14th March, 1966 was issued calling upon him to pay the loan but Abdullah refused to accept it. In spite of several notices he failed to clear the dues and ultimately after adjusting amount of Rs, 6,635.60 paid by him the total amount as on 28th February, 1967 was found due at Rs, 19,587.53 and suit was filed for its recovery. The respondent filed his written statement in which objection was taken that suit as framed was not maintainable and that the letter dated 17th July, 1963 addressed by the appellant and its confirmation on the same date constituted a bargain and a contract between the parties which is not registered as required by the Registration Act and as such the suit was liable to be dismissed. It was admitted that the loan was advanced to him, but it was denied that notice was issued to him. He further stated that he has paid more than Rs, 1,400. He also stated that he had objected to the inaccuracy of the appellant's account and prayed that the suit should be dismissed.
2. ' The learned Civil Judge who tried the suit held that the document purported to be a transaction of mortgage was liable to be registered, but he refused to dismiss the suit and instead granted a money decree. Both the parties filed appeal against this judgment and decree. The appellant challenged the finding that suit under Order XXXIV was not maintainable while the respondent challenged the decree passed against him. The learned 1st Appellate Court by the impugned judgment dismissed the appellant's appeal. The appeal filed by the respondent was allowed and the case was remanded with direction to the trial Court that it should frame an issue regarding limitation and decide the suit afresh.
3. ' The appellant has challenged both the judgments by these two separate appeals.
4. ' Mr. Nasrullah Awan, the learned counsel for the appellant has contended that suit under Order XXXIV, C. P. C. Was maintainable. In that regard he has referred to two letters one by the appellant and the other by deceased Abdullah. The first letter Exh. 9 was addressed to M. Abdullah, the opening part of which runs as follows :- "This is to inform you that the Company has approved your application for a loan on the mortgage of your property No, 42/41 Firdous Cooperative Housing Society Limited, Karachi, for an amount of Rs, 20,000 to be paid on deposit of title deeds by way of equitable mortgage and as first mortgage."
5. ' The terms and conditions of the loan have been set out as Exh.
9. On 17th July, 1963 by Exh. 10 deceased Abdullah replied as follows :- "I thank you for sanctioning me a loan of Rs, 20,000 and that in respect of the loan of Rs, 20,000 taken by me from you on 17th July, 1963 as per Demand Promissory Note already passed in your favour I confirm that I have already deposited with you my title deeds in respect of my property bearing No, 42/41, Survey Sheet No, K-28 at Firdous Co-operative Housing Society Limited, Karachi, by way of equitable mortgage and as the first mortgage."
6. ' The learned counsel for the applicant has contended that from the letter (Exh. 10) it is clear that Abdullah had deposited the title deed earlier when the application for grant of loan was made. This contention does not seem to be correct because in Exh. 9 nothing has been mentioned about it except a reference to the application and further it does not recite that the amount will be paid on depositing title deed by way of equitable mortgage. This shows that the equitable mortgage had not been created earlier. The appellant's witness Ashiq Hussain also did not clarify this situation except that he has produced the documents. On the other hand Abdullah has stated that Exhs. 9 and 10 were executed on the same date. This has not been challenged in cross-examination. From the evidence it seems that the entire transaction of advancing the loan and obtaining security by way of equitable mortgage and promissory note were carried out simultaneously on the same date i. e. 17th July, 1963. This is also borne out by the allegation made in the plaint. The equitable mortgage was created by Exhs. 9 and 10 at the time when the loan was granted. These two documents create a bargain and also a mortgage. This writings operate to create the relationship of mortgagor and mortgagee between the parties in praesenti. The documend (Exh. 10) is not a record of previous or completed transaction. The writing created equitable mortgage and in the words of Chief Justice in Kedarnath Datt's case (1) "can be treated as a contract for the mortgage and what the parties considered to be the only repository and appropriate evidence of
(1) (1973) 11 B L R 405 ' their agreement." The question is, whether such a document is required to be registered or not.
7. This question was considered in Eagle Star Insurance Co. Ltd. v. Usman Sons Ltd. And others (1). In that case loan was advanced to the defendants on 16th March, 1964 and on the same date three memoranda evidencing deposit with the creditor/plaintiff of extracts from record of rights and sale deeds were executed by the defendant and their attornies On 26th April, 1964 another loan was granted to the defendants and on the same day similar documents were executed. The question arose whether these documents are inadmissible for want of registration. After an exhaustive review of a large number of authorities Noorul Arfin, J made the following observations :- "These writings operate in praesenti to create the relationship of mortgagor and mortgagee between the parties. The writings make the properties in dispute answerable for the claims of the plaintiffs, who are also empowered to recover their dues from the said properties and, further, the writings contain the undertakings that the properties shall not be alienated or encumbered in any manner until the plaintiff's loans are repaid. In my view, these documents are in effect contracts of mortgage and purport to create in praesenti an interest in the properties in the plaintiff's favour. It being so, the documents were compulsorily registrable under the Registration Act, 1908, and not having been registered, it has to be held that not only these documents are inadmissible in evidence, but also that these documents do not create any mortgage in the plaintiff's favour. Since the deposits of the documents of title are not independent of the memorandums, the deposits also would not create any right or interest in the plaintiffs in the disputed properties."
8. This judgment is fully applicable to the present case and therefore, the documents creating mortgage are inadmissible in evidence for want of registration and the suit under Order XXXIV is not maintainable.
9. ' The learned counsel for the appellant contended that the order for remand of the case is improper and the learned Appellate Court should have decided the issue of limitation. The admitted position is that this issue of limitation was not raised by the respondent in the written statement and consequently no issue was framed, nor the learned trial Court addressed itself on such an issue. This issue seems to have been raised for the first time before the learned Appellate Court. The loan was advanced on 17th July, 1963 and suit was filed on 4th April, 1967. Unless there is an admission of liability by the respondent or payments have been made during this period which may extend the period of limitation a money suit prima facie would be time-barred. This issue will therefore require some evidence, if desired by the parties.
10. ' Mr. Nasrullah Awan the learned counsel for the appellant submitted that in para. 5 of the plaint it was alleged that notice dated 7th May, 1967 was issued to Abdullah who personally received it and paid only Rs, 1,400 against the outstanding shown in the said notice. The learned counsel contended that the respondent had admitted it in the written statement, therefore, it was not necessary to remand the case, and the issue of limitation should have been decided on that basis.
11. In reply to the aforestated allegation in the plaint the deceased respondent Abdullah had
(1) PLD 1969 Kar. 123 ' denied it and further stated that the defendant has paid more than Rs, 1,400. This reply cannot be treated as an admission that Rs, 1,400 were paid on 7th May, 1968 or upto 17th July, 1968. No date has been given in para. 5 stating when the payment was made by the respondent nor any such material has been placed on record in the evidence oral or documentary, therefore, there was hardly any material on record, on which the Appellate Court could have decided the issue of limitation. There can be no two opinions about the fact that issue of limitation is a legal issue which can be raised at any stage of the proceeding muchless before the First appellate Court. In the facts and circumstances of the case it was not possible for the First appellate Court to decide it. It was, therefore, justified in remanding the case which will me the interest of justice. In the result both the appeals are dismissed with no order as to costs.