MAMOON KAZI, J.-- This appeal, by leave of this Court, arises from the judgment of the learned Single Judge of the Lahore High Court, dated 26.10.1992, in First Appeal No. 137 of 1992.
2. The facts of the case giving rise to this appeal are that, respondent No. 2, Ghulam Nabi Sikan are had obtained a loan of Rs. 4,75,000/- from the appellants, Industrial Development Bank of Pakistan, against creation of equitable mortgage of his land bearing Khasra No. 4741/5.4 situated in Mauza Aroop, Tehsil and District Gujranwala vide memorandum, dated 19.2.1976. The said respondent failed to repay the loan resulting in filing of an application under section 3 of the Industrial Development Bank Ordinance (XXXI of 1961) for recovery of an outstanding amount of Rs.
20,74,098.93 and vide an interim order, dated 30.10.1988, made by the learned District Judge, the property in dispute was attached.
3. The respondent No. 1 filed petition before the learned District Judge claiming that, he had in good faith purchased the disputed land by a registered sale-deed, dated 4.8.1990, from one Tauseef Ahmad who had purchased the same by a registered sale-deed, dated 21.12.1987, from the second respondent and had also raised new construction thereon.
4. The said petition was opposed by the appellants and consequently, the learned District Judge dismissed the objections vide order dated 3.6.1992, holding that, the property in question had already been mortgaged with the Bank when the sale-deed was executed, therefore, the objector could not claim benefit under section 41 of the Transfer of Property Act.
5. However, while accepting revision of the respondent No. 1, learned Judge in the High Court set aside the said order holding that, section 41 of the Transfer of Property Act was applicable.
6. Leave was granted by this Court on the question, whether the High Court had omitted to consider one of the material requirements for enforcing section 41 of the Transfer of Property Act, that is, consent-express or implied of the person interested in the property.
7. Arguments in this case have been addressed only by Mr. M.A. Zafar, learned counsel for the appellants, as none has appeared on behalf of the respondents in spite of notice. Learned counsel for the appellants while fully supporting the judgment of the learned Appellate Court has argued that benefit of section 41 cannot be available in case of a mortgaged property. Moreover, the sale, according to the learned counsel, took place when proceedings in respect of the said property wee already pending in the Court. Therefore, rights of respondent No. 1 in the said property could only be subject to the result of the said proceedings.
8. It may be pointed out that mortgage by deposit of title deeds, which is known in English law as equitable mortgage, is accepted in the Indian Sub-Continent as equivalent to a simple mortgage.
A mortgage even by its definition, is transfer of an interest in specific immovable property as security for repayment of a debt. Therefore, the right which the mortgagor possesses after executing the mortgage, is only a right to redeem the mortgage. Section 41 of Transfer of Property Act which protects rights of a bona fide purchaser, provides that:- "41. Transfer by ostensible owner. Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorized to make it: provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith."
Therefore, before the said section can be invoked, it must be shown that; (1) the transferor is the ostensible owner; (b) he is so by the consent-express or implied of the real owner; (c) the transfer is for consideration and (d) the transferee has acted in good faith, taking reasonable care to ascertain that the transferor had power to transfer. If any one of the said conditions is not satisfied, the transferee would be ineligible To seek protection under section 41.
9. In the present case, even if it is accepted that the disputed property had been purchased by the respondent No. 1 for consideration, the remaining conditions are not satisfied. The property had been mortgaged and the documents of title had been deposited with the appellants. The respondent No. 2 having already divested himself of the rights in the property after its mortgage, was neither the ostensible owner of the property in question nor any express or implied consent of the appellants in this regard can be spelt out. As evidently the respondent No. 1 had purchased the said property without even verifying the original documents of title, which were with the appellants, he cannot be said to be a transferee in good faith. An act is said to be done in good faith when it is done with due care and attention. Therefore, section 41 does not appear to be applicable in the present case.
10. Secondly, the learned Judge in Chambers appears to have failed to notice that the alleged transaction between the respondent No. 1 and the respondent No. 2 was hit by the doctrine of /is pendens. There already were proceedings in respect of the disputed property before the Court under Section 3 of the I.D.B.P. Ordinance, as pointed out earlier and the said property was under attachment of the Court at the time of its alleged sale to the respondent No. 1 -or his predecessor- in-interest. Therefore, such transfer when litigation in respect of the said property was pending before the Court, was to be governed by the provisions of section 52 of the Transfer of Property Act, which lays down that such transaction, made during pendency of litigation, cannot affect the rights of any other party to the litigation, which may be acquired by it under the decree passed by the Court. Even a bona fide purchaser with consideration pendente life would be bound by the result of the litigation as his rights in such property would be subject to the rights of the parties to the litigation as finally determined by the Court. Thus, no protection was available to respondent No. 1 and the judgment of the learned Judge in the High Court has failed to make a correct exposition of law.
11. In the result, the appeal is allowed and the impugned judgment dated 26.10.1992 is set aside.
There will, however, be no order as to costs.