1. ' NASIR ASLAM ZAHID, J.--The respondent, an employee of the appellant-Bank, had taken a house building loan from the bank and deposited title deeds of his property situated in Korangi Township, Karachi, as, security for repayment of the loan and had also executed a promissory note. For reasons which are not relevant for the decision of this appeal, services of the respondent were terminated and, after such termination, respondent was repeatedly asked to repay the house building loan but as there was no response, a mortgage suit for the recovery of the amount was filed by the bank against the respondent in the Special Court of Banking for Sindh, Karachi. The suit proceeded ex parte as in spite of service respondent made no appearance before the Special Court. No application for leave to defend was filed on behalf of respondent. However, by the impugned judgment dated 4-12-1986 and decree dated 18-4-1987, the learned Special Court dismissed the suit on the ground that the property could not have been mortgaged by the respondent in favour of the bank in view of clause 17 of the lease deed executed by KDA as lessor in favour of the respondent in respect of the property mortgaged with the bank, which clause reads as follows:-- "The Lessee shall have the right to transfer his/her rights under the lease with the previous written consent of the Lessor subject to the condition that the proposed transferee or transferees also agree in writing to abide by all the terms and conditions of this lease and subject further to the payment by the Lessee to. The Lessor a transfer fee at Rs,3.00 per sq. Yds."
2. ' Being aggrieved, this first appeal has been filed by the bank. No appearance has been made by the respondent who has been served by publication. Respondent Mohammad Majeed has been called absent. We have heard Mr. Haider Raza Naqvi, learned counsel for the appellant-Bank.
3. ' It is submitted by learned counsel for the appellant that the aforesaid clause in the lease deed does not invalidate the equitable mortgage created by the respondent in favour of the appellant- Bank by deposit of title deeds of the property. Learned counsel has relied upon a decision of the Supreme Court in the case of Nawab Bibi v. Rafiq Bano (P.L.D. 1971 SC 481). In that case, a similar point had arisen. That case related to a lease executed by Lahore Improvement Trust in favour of the appellant. The relevant clause in the lease deed in the case read as follows:-- "That the lessee shall not during the period of the lease, without first obtaining the consent of the lessor in writing, sub-divide the said land or part with the possession or transfer or sub-lease the land or any part thereof."
4. ' The Supreme Court, after referring to three decisions from the Indian Jurisdiction, namely AIR 1920 Mad. 1006, AIR 1945 Born. 399 and (1909) 36 Cal. 745 and a case from the English jurisdiction, namely, William v. Erle (1868) 3 Q.B. 739, held that the sale-deed executed by the appellant in that case in favour of the respondent without the consent of. Lahore Improvement Trust was not invalid.
5. Late Mr. Justice Waheeduddin who authored that judgment held as follows:- "I am, therefore, of the view that the transfer is valid so far as the appellant and the respondent is concerned and it cannot be declared as void between them. It may be that the Lahore Improvement Trust may be entitled to enforce the conditions of the lease against the respondent and for that reason the title of respondent may be imperfect but that is no ground to set aside the sale-deed."
6. ' In the present case, the averment of the appellant-Bank that the house building finance loan taken by the respondent was secured by equitable mortgage of the property of respondent, that is, by deposit of title deeds of the said property with the bank, had not been controverted as neither any written statement was filed nor any application for leave to defend had been filed by the respondent. The case of the plaintiff-Bank that the loan was secured through mortgage of the said property of respondent, therefore, stood established.
7. ' As regards the reason for dismissal of the suit on the basis that clause 17 restrained the respondent from transferring his rights under the lease without the previous written consent of KDA and also subject to the condition that the proposed transferee also agrees in writing to abide by all the terms and conditions of the lease. Learned counsel for the appellant is correct in his submission that the aforesaid judgment of the Supreme Court reported in PLD 1971 SC 481 supports the case of the appellant-Bank and the suit filed by the appellant Bank was not liable to be dismissed on the ground that prior consent in writing had not been obtained from K D A before the mortgage and the other conditions contained in clause 17 of the lease deed had not been complied with. Clause 17 of the lease deed did not invalidate the mortage created by the respondent in favour of the appellant-Bank by deposit of title deeds of the property. The transaction of mortgage;between the respondent and appellant-Bank is not void on account of the conditions mentioned in clause 17.
8. Under clause 18 of the lase deed, KDA has a right of re-entry on the property in certain, situations, but such right of re- entry does not invalidate the mortgage in question. In our view, therefore, the learned Special Court was not right in dismissing the suit on the aforesaid ground. It has been pointed out by Mr. Haider Raza Naqvi that apparently the Supreme Court decision was not cited before the learned Special Court as in another suit filed later on the same Special Court has decreed the suit in favour of the appellant-Bank in similar situation.
9. ' The appellant-Bank had established its case in the suit filed by the bank before the Special Court and the suit ought to have been decreed. In the circumstances, this appeal is allowed, the judgment and decree of the Special. Court in Suit No, 627/86 is set aside and the suit filed by the appellant-Bank is decreed as prayed with costs. .Pld