1. ' This appeal filed against the order dated 19-2-2001 passed by the Banking Court No,1, Larkana dismissing the application for settlement of payment by the appellants to the extent of sum of Rs,9,00,380 credited against respondent No,2 came up for Katcha Peshi today. Notices issued earlier to respondent No,2 could not be served as per bailiffs report on account of his absence from Larkana and the refusal of attorney to accept the notice and also stated by the learned counsel for the appellant in Court today. Mr. Abdul Khalique Bhutto appearing for the respondent No,1 Messrs Habib Bank Limited had filed his power on 12-7-2001.
2. Mr. Gulab Rai Jessrani, Advocate for the appellants states that the anxiety. Of the appellants is that this property has been placed in the auction pool after the original suit was decreed by the learned trial Court and unless some order is passed, he being purchaser of the property for valuable consideration would be seriously prejudiced. Learned counsel, on instructions makes a statement that the appellants are prepared to deposit the amount due under the decree as recoverable by respondent No,1 according to law. However, he has also invited our attention to the letter of respondent No,1 bearing No,QSM/774-01 dated 30-1-2001 and states that in view of the incentives offered by the Bank he was entitled to make payment under the scheme and the benefit may be extended to him as contained in the aforesaid letter. Mr. Abdul Khalique Bhutto, Advocate for the respondent No,1 has vehemently opposed this contention. He states that the scheme offered was only for a limited period of one month and failure to avail the offer within the stipulated time and to make payment has deprived the appellant from any benefit. He further stated that in case the scheme has been extended and any benefit is still available the same would be considered by respondent No,
1. However, no right shall accrue to the appellants in case the scheme has expired and is no longer in existence.
3. ' Learned counsel for the appellants "further" states that in addition to his anxiety regarding the auction of property the claim of respondent is subject to mark-up which continues to pile up day by day with the passage of time and as such appellants are anxious to clear this liability and get the matter of title decided by the Civil Court where the dispute between the appellants and respondent No,2 is already pending and the sale-deed of the property has been already registered in favour of the applicants. The amount paid would be recovered from respondent No,2 in case the suit is decided in favour of the appellants and in case of decision otherwise they are prepared to enter in the shoes of the mortgagor of the property in place of the bank and enjoy all the rights available to the bank with respect to the said property. He further stated that this was necessary to protect the property now owned by the appellants.
4. ' This offer is acceptable to the learned advocate for the respondent No,
1. It is further stated that in pursuance to the order of attachment the property has already been sealed and is at present in custody of the learned Banking Court.
5. The rights of the appellants, who claim to be the purchasers of the property subject to mortgage, under a registered sale-deed and thus have an interest in that property against valuable consideration are protected under sections' 91 and 92 of the Transfer of Property Act which are reproduced as follows:-- "91. Persons who may sue for redemption.---Besides the mortgagor, any of the following persons may redeem, or institute a suit for redemption of, the mortgaged property, namely--
(a) any person (other than the mortgagee of the interest sought to be redeemed) who has any interest in, or charge upon, the property mortgaged or in or upon the right to redeem the same;
(b) any surety for the payment of the mortgage-debit or any part thereof; or
(c) any creditor of the mortgagor who has in a suit for the administration of his estate obtained a decree for sale of the mortgaged property.
92. Subrogation.-Any of the persons referred to in section 91 (other than the mortgagor) and any co-mortgagor shall, on redeeming property subject to the mortgagee, have, so far as regards redemption, foreclosure or sale of such property, the same may have against the mortgagor or any other mortgagee.
6. ' The right conferred by this section is called the right of subrogation, and a person acquiring the same is said to be subrogated to the rights of the mortgagee whose mortgage he redeems.
7. ' A person who has advanced to a mortgator money with which the mortgage has been redeemed shall be subrogated to the rights of the mortgagee whose mortgage has been redeemed, if the mortgagor has by a registered instrument agreed that such persons shall be so subrogated."
8. In view of the above provisions the appellants may clear the liability and as a 'subrogagee' acquire the rights of respondent No,1 with whom the property is presently mortgaged by subrogation and by the operation of the law in such cases. The effect has been laid down by the Hon'ble Supreme Court in the case of East and West Steamship Co. v. Queensland Insurance Co. PLD 1963 SC 663 as under:-- "Under section 92 of the Transfer of Property Act provision is made for the acquisition of certain rights by a co-mortgagor and by any one falling within one of three classes enumerated in section 91, namely, a person having an interest either in the mortgaged property, or in the right of redemption, secondly a surety for the payment of the mortgage debt and thirdly a creditor of the mortgagor who has in a suit for administration of his estate obtained a decree for sale of the mortgage. Each one of these persons is entitled, a co-mortgagee by virtue of his position as such, and the other three by virtue of section 91 to redeem the mortgaged property and section 92 provides that when any such person redeems any mortgaged property he shall have "so far as regards redemption, foreclosure or sale of such property, the same property rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee". The section goes on to say that the right conferred by this section is called the right of subrogation and the person acquiring such right is subrogated to the right of the mortgagee whose mortgagee he redeems. There are other provisions in section 92 which I need not refer to, but I would like to refer to portions of the commentary in Mulla's Transfer of Property Act under this section at page 556 and to reproduce a passage therefrom which in my view are of assistance in understanding the nature and the quality of subrogation. Subrogation has been described in certain judgments as meaning substitution, since the person redeeming is substituted for the encumbrancer whom he has paid off, and one of its categories is legal subrogation or subrogation by operation of law, which arises when a person who has in the property an interest of his own to protect, discharges a prior encumbrance. Then on page 557 the learned commentator has made the following observation with reference to subrogation by operation of law.
9. "The distinguishing feature of subrogation is that the encumbrance that is paid off is not extinguished but is treated as kept alive and assigned to the person making the payment."
10. (The underlined is mine)
11. ' It was seen that in the early case of Rodick v. Gandell also, a similar expression was used. By certain actions of a debtor, a valid equitable charge was created upon certain funds not in his possession but to which he was entitled and it was held that by such action the effect was created of `an equitable assignment of the debts or funds to which the order refers."
12. ' In view of the above, the following order is passed with the consent of both the learned counsel:--
(1) Appellants agree to make payment of the entire amount due against the mortgagor with respect to the mortgaged property together with such costs which the respondent No,1 is entitled to recover according to law. However, if entitled and benefit under any scheme is available, the same may be allowed as on the date of this order.
(2) The appellants agree to make the payment of the entire amount within four weeks from the date of this order. The exact amount will be conveyed to the appellants by respondent No,1 within three days which will be forwarded at their address through T.C.S. And a copy of the same shall also be filed in this Court. The amount so specified shall be deposited by the appellants in the Banking Court in satisfaction of the decree. Respondent No,1 undertakes to hand over all the original documents in their possession with respect to the mortgaged property with the Banking Court together with the list of documents. Copy of the list will also be provided to the appellants.
(3) On receipt of the entire amount the appellants shall be entitled to obtain the original documents from the Banking Court and shall have all the rights of mortgagor as available to them within the meanings of section 92 of the Transfer of Property Act and the property mortgaged shall stand subrogated in their favour.
13. The appellants shall move a separate application before the learned trial Court where the suit is presently pending between the appellants and the respondent No,2. After hearing the parties the learned Civil Court shall decide the matter as to possession within four weeks. The possession shall be handed over to the party in pursuance to the order of learned Civil Court. This arrangement has been specifically made to afford a further opportunity to the respondent No,2 to avail the right of hearing, which, in spite of notice was not availed coupled with the fact that the property is liable to be auctioned and appellants are keen to save the property from being auctioned.
14. ' The possession of the property shall then be handed over by the Banking Court in pursuance to the order of learned trial Judge. This appeal stands disposed of in the terms of above order.