Mst. SAEEDA FATIMA vs G. NIZAMUDDIN JAMI and 3 others

1. ' This appeal has been filed assailing judgment and decree, dated 9-3-1980, passed by the then Ist Senior Civil Judge and Assistant Sessions Judge, Karachi in Suit No, 1820/1973.

2. The aforesaid suit was filed by the appellant stating that she was registered holder of shares issued by respondents Nos. 3 and 4, of the face value of Rs,28,950. Her husband was in need of money. Respondent No,1, who was friend of her husband, promised to arrange overdraft facility for him from respondent No,2, Habib Bank Ltd., Nursery Branch, as the Manager of the said Branch was his personal friend. The appellant accordingly opened an account in the said Bank and handed over the aforesaid share certificates along with transfer documents duly attested by respondents Nos. 3 and 4 to respondent No,1 on 26-11-1971. The appellant came to know thereafter that overdraft facility was not granted. She approached respondent No,1 for return of the said share certificates.

2. Respondent No,1 sent a letter to respondent No,2, copy whereof was endorsed to the appellant, in which he had asked respondent No,2 to treat the application for overdraft facility as cancelled and return all the shares along with the blank transfer deeds to the appellant. On the same date the appellant also addressed a letter to respondent No,2 for return of share certificates and also enclosed a copy of respondent No,1's letter. The respondent No,2 in reply informed the appellant that it had given overdraft facility to M/s. Nana Brothers, the proprietary concern of respondent No,1, against the security of appellant's shares and a sum of Rs,8,996.73 was, outstanding against the said respondent and that the shares would be returned only when the said loan was cleared. The case of the appellant is that respondent No,1 utilised the aforesaid shares and transfer deeds against the loan outstanding against respondent No,1 without her permission. On 15-8-1973, the appellant received a letter from respondent No,3 informing her that the shares issued to her had been placed before them for transfer and the appellant should get appropriate orders from the Court to stop the transfer of the said shares, if she had any objection thereto. The appellant, therefore, lodged report against respondent No,1 and the Manager of the said branch for an offence of misappropriation and consequently the said respondent was arrested. The case of the appellant was that the Manager of respondent No,2 in collusion with respondent No,1 had dishonestly misappropriated her share certificates. In the suit the appellant prayed for delivery of the aforesaid share certificates or judgment and decree in the sum of Rs,28,950.00, i,e, face value of the shares. Perpetual injunction was also sought against respondents Nos. 3 and 4 restraining them from transferring the above shares to any person.

3. ' Respondent No,1 in his written statement stated that the appellant through her husband had sold out all the shares to him and thus ceased to be the owner thereof. It is further pleaded by him that the appellant's husband was in need of loan and he approached respondent No,1 for loan, but the said respondent being himself indebted to the Bank, was not in a position to advance any loan to him. However, at the request of plaintiffs husband, he agreed to arrange the loan and her husband agreed to offer as security the aforesaid shares belonging to the appellant. The said respondent accordingly negotiated with the Nursery Branch of respondent No,2 where he had an account in the name of Nana Brothers. It was further stated that the appellant himself delivered the share certificate to Nursery Branch of respondent No,2 where she appeared to sign the document in presence of the officer of the Bank. A loan of Rs,20,000 was sanctioned to respondent No,1's aforesaid firm. Respondent No,2 decided to adjust the overdraft of Rs,8,996.73 outstanding against respondent No,1 in his personal account at the Metropole Branch of respondent No,2. It was not acceptable to respondent No,1, he therefore, decided not to avail loan at all. Respondent No,1 accordingly addressed a letter to Nursery Branch of respondent No,2, requesting to cancel the loan and return the shares to the appellant. The request of respondent No,1 was not conceded by respondent No,2 as it was found convenient by the said respondent to recover the loan outstanding against him in his account with the Metropole Branch of respondent No,1. It is alleged by him that he did not receive the remaining amount of Rs,11,000 from respondent No,2. According to respondent No,1, he suggested to the appellant's husband on various occasions either to wait till such time, he could afford to. Pay outstanding amount to respondent No,2 or pay directly the amount of Rs,8,996.73 to respondent No,2 for return of the share certificates, but her husband did not agree to that. In the last week of January, 1972, respondent No,1 was in a position to refund loan to respondent No,2 and get back the said shares, but in the meanwhile due to Indo-Pak War of 1971, the share market remained closed from 3-12-1971 to 24-12-1972 and the value of the shares had gone low and remained uncertain. Appellant's husband proposed to respondent No,1 that instead of clearing the debt and getting the certificates released, respondent No,1 should Frchase the share certificates from the appellant and he accordingly of chased all the shares for a sum of Rs,9,000.00, which amount was paid by him to appellant's husband and thus the appellant ceased to be the owner of the said shares. With regard to the account opened by the appellant, it was pleaded that the said action was taken only for the purpose of identification of the appellant. It was not denied that the report was lodged against him. He pleaded ignorance with regard to appellant's letter dated 28-8-1973 written to respondent and the reply dated 30-8-1973 sent by the bank and so also in respect of reply dated 4-9-1973 sent by the advocate of the appellant. He denied his liability to the claim in the suit and the allegation of collusion.

4. ' Respondent No,2 in its written statement alleged that the appellant had pledged her shares and sent documents for allowing credit facility to Nana Brothers. It was claimed that the Bank had every right to recover the loan of overdraft facility granted to respondent No,1 by disposal of the shares of the appellant which were pledged in lieu of grant of overdraft facility to respondent No,1. It was further pleaded that since respondent No,1 failed to pay the loan outstanding against him, the Bank disposed of 1,200 shares issued by respondent No,3. The allegation of complicity and collusion between the Manager of respondent No,2 and respondent No,1 was denied. It was stated that respondent No,2 under letter dated 24-12-1971, asked the appellant for payment of the outstanding debt of Rs,8,996.73 which was due against respondent No,1 and informed her that all the shares could be returned after payment of the aforesaid amount as she was a guarantor. Then reference has been made to letters dated 10-12-1971, 24-12-1971, 12-01-1.972 and 24-9-1972. It is stated that respondent No,1 by his letter dated 1-11-1972 instructed respondent No,2 to dispose of the said shares, whereupon respondent No,2 by letter dated 25-11-1972, informed respondent No,1 that 1,200 shares were sold for adjustment of loan and the remaining shares were returned to respondent No,1 at his request.

5. ' Respondents Nos.3 and 4 admitted that the appellant was the owner of the said shares and so also the correspondence referred to in the plaint.

6. ' It was also admitted that the said certificates were transferred in favour of various parties on the basis of the instruments of transfer duly signed by the appellant.

7. ' The plaintiff in support of her case examined her husband. Respondents Nos.2, 3 and 4, each examined one witness. Respondent No,1 did not produce any evidence whatsoever.

8. ' The learned trial Court Judge reached the conclusion that the appellant had delivered the share certificates to respondent No,1 for obtaining overdraft facility for her husband and that she had not pledged the shares to secure the loan for the proprietary firm of respondent No,1. The Court also reached the conclusion that respondent No,1 had no concern whatsoever with the said shares and the appellant had nothing to do with the loan borrowed by respondent No,1. The learned trial Court Judge also observed that it was the duty of respondent No,2 to return back the share certificates to the appellant. It was also held that respondent No,2 had no right to dispose of the shares.

9. Nonetheless the learned Judge reached the conclusion that the entire mischief was played by respondent No,1 and other respondents had no concern whatsoever with the dispute. He accordingly decreed the suit with costs against respondent No,1 only and dismissed the suit against rest of the respondents.

10. ' This appeal has been filed for modification of the decree, praying the suit be decreed against respondents Nos.2, 3 and 4 as well with costs and interest.

11. ' I have heard the learned Advocates, Mr. Khalil-ul -Rehman for the appellant and Mr. Shamsul Arfin and Mr. S.I.H. Zaidi for respondents Nos.3 and 4. None appeared for respondents Nos.1 and 2.

12. ' The learned Advocate for the appellant at the very outset stated that the appellant does not press this appeal against respondents Nos.3 and 4.

13. ' The case of respondent No,2, as set up in the written statement, reflects that the appellant had stood guarantor for repayment of the loan borrowed by respondent No,1. It is an admitted fact that in the year 1971, when the appellant had sent the share certificates and the transfer deeds to the Nursery Branch of respondent No,1, no loan was due and payable by respondent No,1 to respondent No,2 at the aforesaid Branch. It is an admitted fact that respondent No,1 had borrowed loan from the Metropole Branch of respondent No,2 quite a long time ago and certain amount was said to be due when husband of the appellant approached for overdraft facility for himself. Under these circumstances it is not possible to believe that the appellant was the guarantor for repayment of loan outstanding against respondent No,1. The witness of respondent No,2 did not produce any document whatsoever to establish that the appellant had pledged the share certificates belonging to her for repayment against the loan borrowed by respondent No,1. The appellant at the very initial stage had asked respondent No,2 to return the aforesaid share certificates and the blank transfer deeds as she no longer required the loan. The Manager of Nursery Branch took up baseless stand that she had signed the loan documents for credit facility to M/s. Nana Brothers, the firm of respondent No,1. It has been admitted by respondent No,2 in the correspondence placed by them on record that they had adjusted 1,200 share certificates against the loan of respondent No,1 and had returned the remaining certificates to respondent No,1. There was no justification whatsoever for encashment or sale of the share certificates for satisfaction of the loan outstanding against respondent No,1 and delivery of the share certificates together with blank transfer documents to respondent No,1.

14. ' The witness of respondent No,2 had deposed that respondent No,1 had approached for grant of overdraft facility to M/s. Nana Brothers which was allowed after obtaining sanction from the Head Office but subsequently respondent No,1 approached for cancellation of loan facility as it was no more required. He further stated that along with the application for the aforesaid loan he had submitted 2,245 shares of respondent No,3 company and 65 shares of respondent No,4 company standing in the name of the appellant, along with the transfer deeds duly signed by her and attested by the said companies. But, however, no documents were placed on record to show that any such loan facility was requested for by respondent No,1 or was granted by the Bank or that the said documents were presented as security towards the loan intended to be borrowed. It may be observed that the said witness was not the Manager of respondent No,2 at the relevant time and in cross-examination he disclosed that he had no personal knowledge about the facts of the case and had given evidence on the basis of the documents. No document was produced by him to establish the allegation that respondent No,1 had applied for overdraft facility in the name of his aforesaid firm and had submitted the share certificates together with blank transfer deeds in the name of the appellant as security for repayment of the said loan. He also did not produce any document to prove that the said certificates were pledged with the Bank. It is not understood on what basis the witness had given evidence in respect of the above facts. In view of the above, the evidence of the aforesaid witness cannot be believed, who appears to have given the evidence not on the basis of the documents but on the basis of written statement and the letter then written by the Manager of respondent No,2. He specifically admitted that the appellant had not written any letter to the Bank pledging the aforesaid certificates for grant of loan to respondent No,1.

15. In the above view of the matter, respondent No,2 had no right whatsoever to utilise the share certificates of the appellant for adjustment of the loan advanced to respondent No,1. Respondent No,1 had no authority whatsoever to collect the remaining share certificates and the transfer deeds from respondent No,2. The Manager of Nursery Branch of respondent No,2 had illegally handed over the remaining share certificates together with blank transfer deeds to respondent No,1. Respondent No,2 was duty bound to return the said certificates and the transfer documents to the appellant.

16. Since respondent No,2 is equally responsible for having deprived the appellant of her valuable shares, the learned trial Court Judge in view of the findings given by him ought to have decreed the suit against respondent No,2 also. I, therefore, allow this appeal and decree the suit against respondent No,2 also with costs.