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Petitioner: NATIONAL BANK OF PAKISTAN. KARACHI VS Respondent: DAWOOD YOUSUF MITHANI AND 2 JUDGMENT
Court Name: Sindh High Court Judge(s): Zaffar Hussain Mirza Title:NATIONAL BANK OF PAKISTAN. KARACHI vs DAWOOD YOUSUF MITHANI AND 2
JUDGMENT
Reported As: PLD 1978 Karachi 42 Result: Suits partly decreed Judgment JUDGMENT This judgment will dispose of Suit No. 20 of 1966 and Suit No. 310 of 1966 as both suits are between the same parties and have been ordered to be heard together. 2. Suit No. 20 of 1966 has been filed by the National Bang of Pakistan. Defendant No. 3 who was the mother of Defendant No. 1 died during the pendency of the suit and consequently her L Re. Were brought on record as defendants Nos. 3 (a) to (f ). Defendant No. 2 Mst. Hajrabai is the wife of defendant No. 1. 3. The case of the plaintiff-Bank is that defendant No. 1 is the sole proprietor of the business concern known as United Fleet Ways. It is further alleged that the first defendant had purchased 14 Truck Chasis of F-600-194 W. B. Diesel Chassis make from Messrs A.I Automobiles Limited. According to the arrangement with the said dealers the first defendant bad to pay the price of the vehicles at the rate of Re. 39,100 per unit in 12 monthly instalments. For one lot of six chassis a total mum of Re. 2,49,369.89 inclusive of interest was payable. As stated, in 12 equal monthly instalments of Rs. 20,780.83 commencing from 1-3-1965. For the other lot of 8 chasis a total sum of Re. 3,26,254.17 inclusive of interest was payable in 12 equal monthly instalments commencing from 1-1- 1965. 4. It is alleged that at the request of defendants, the plaintiff issued two guarantees for Re. 2,49,369.89 and Re. 3,26,254.17 to cover the payments towards the sale price and interest for the two transactions respectively. It is then avered that in order to secure the liability incurred by the plaintiff under the two guarantees, if any, defendant No. 1 endorsed in favour of the plaintiff a
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Promissory No a executed in his favour by defendants Nos. 2 and 3 dated 2-1'-1964 for Re. 5,76,000 payable on demand with interest at 3 % above the Bank rate with minimum 7 per annum, 5. The plaintiffs go on to allege that by way of further counter --guarantee for the repayment of the plaintiff--' dues, defendant No. I hypothecated the trucks built on the chassis purchased by him and also got the trucks registered with Excise & Taxation Authority jointly in the name of the plaintiff and himself. The defendant No. 1 having failed to make payments of the sale price to Messrs A.I Automobiles Limited., the plaintiffs were called upon to pay in terms of the guarantee the following amounts (i) 11 instalments under the first guarantee amounting to Re. 2,28,589.06. (ii) Full amount in respect of the two guarantees amounting to Rs. 3,26,254.17. At the date of suit a sum of Rs. 20,780.83 still remained payable and outstanding towards the future instalments of the price of the chasis to Messrs A.I Automobiles Limited. The defendant No. 1 paid some amounts to the plaintiffs. After adjusting the payments received by the plaintiffs they claimed on account an amount of Rs. 5,14,124.77 as due and payable by the defendants inclusive of remaining instalments and interest at 7 per cent. Per annum with monthly rests as on 20-1-1966. 6. Defendant No. 1 resisted the suit and contended that Mr. Fakhruddin Burney, the Superintendent of Branches, National Bank of Pakistan being a close friend of his had persuaded him (defendant No. 1) to launch transport business in 196 --, promising to get him 8 chassis for the trucks from Messrs A.I Automobiles Limited, the price of which would be paid by instal--ments by the said defendant to the National Bank of Pakistan. This defendant denied defendants Nos. 2 and 3 having given security for the repayment of the amount or that any Promissory Note was given to the plaintiffs to secure the price of the said trucks chassis. He also denied the execution of Hypothecation Deed. He, however, admits that the plaintiff issued a guarantee for Rs. 3,26,000 with his consent. Further his plea is that in the last week of December 1964 Mr. Fakhruddin Burney again booked another 10 chassis without his consent and knowledge for which a guarantee was given by the plaintiffs on their own. It is then alleged that only 6 chassis were delivered and that Mr. Fakhruddin Burney cancelled the previous guarantee substituting it with a fresh guarantee for 6 chassis only. It was at this stage that defendant No. 1 came to know that the said chassis were obtained in his name and asked Mr. Fakhruddin Burney to return the same. After sometime, however, Mr. Fakhruddin Burney informed him that the dealers were not prepared to take back the chasis and persuaded this defendant to take delivery of the chassis, with an overdraft facility for investment in the business. According to this defendant Mr. Fakhruddin Burney promised to adjust the cost of these chassis after the trucks were disposed of. Therefore, the case of this defendant is that he agreed to carry on the business with the trucks on behalf of the plaintiffs who were owners thereof. 7. Defendant No. 1 goes on to plead that after some time when the higher officers of the plaintiffs came to know about the transaction with regard to the purchase of the chassis, they took Mr. Fakhruddin Burney to task who in turn requested temporary deposit of title deeds of some property to save him from disciplinary action until the trucks could be sold. It was on these assurances that this defendant handed over the file containing the title documents of defendants Nos. 2 and 3 without their knowledge and permission. 8. Thus in short the defendant No. 1 admits his liability as regard the first transaction relating to 8 chassis and the guarantee given by the plaintiffs. But he denies his liability for the rest of the chassis purchased. Further he claims credit for a sum of Rs. 80,000 allegedly spent over the building of the trucks on the chassis as no account for this sum has so far been settled. This defendant has also disputed the correctness of the statement of account relied upon by the plaintiffs for their claim.
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9. Defendants Nos. 2 and 3 also resisted the suit. They denied having ever requested the plaintiffs to furnish the alleged two guarantees. They also denied having executed Promissory Note. It is their case that they are illiterate and pardanashin ladies and that they did riot sign or execute any documents, either for guarantee or Hypothecation. They totally denied knowledge about the transaction. Between the plaintiffs and the defendant No. 1. These defendants further alleged that defendant No. 1 had obtained their signatures on several blank papers and also fraudulently obtained the title deeds of their properties. In this connection they alleged teat they were presented before the District Registrar Karachi for registration of some document but they refused to admit having executed any document in favour of the plaintiffs in consequence whereof the document was returned. 10. On the pleadings of the parties the following issues were framed : (1) Whether the defendants did not execute and endorse the Promissory Note in favour of the plaintiff? If so, its effect ? (2) Whether the defendants Nos. 2 and 3 are not the guarantors of the defendant No. 1? If so, its effect? (3) Whether the defendants Nos. 2 and 3 were not aware about the transaction which took place between the plaintiff and the defendant No. I ? If so, its effect ? (4) Whether the plaintiff is liable to return the title deeds to the defen--dants Nos. 2 and 3? If so, its effect? (5) Whether the defendants Nos. 2 and 3 are illiterate pardanashin ladies and the signatures on the documents were obtained by defendant No. I on plain papers ? If so, its effect ? (6) Whether Mr. Burney of the plaintiff played any fraud against the defendant No. 1 ? (1) Whether the entries of the Statement of Account are not correct ? (7-A) Whether any of the truck belong exclusively to the plaintiffs ? (8) Whether the suit is premature ? (9) To what relief, if any, the plaintiff is entitled ? 11. The defendant No. 1 opened his evidence first. In his evidence three witnesses were examined- (1) Dawood Yousif defendant No. 1 himself (Exh. 8). (2) Mr. Fakhruddin Burney the Superintendent of Branches in the plaintiffs Principal Office at the relevant time (Exh. 9). (3) Mr. Iqbal Hussain Siddiqui the Manager of the plaintiffs Lawrence Road Branch at the relevant time (Exh. 10). 12. On behalf of defendant No. 2 two witnesses were produced (i) Mst. Hajra Hai defendant herself (Bib. 11) and (ii) Muhammad a cousin of this defendant (Exh. 12). 13. On behalf of defendant No. 3's L. Rs. One of the L. Rs., namely, Abdul Kadar Exh 13 appeared as their witness. 14. On behalf of the plaintiffs only one witness Muhammad Abdul Haq Kureshi (Exh. 14) the Head Cashier of the plaintiffs was examined. 15. Issues Nos. 1, 2 and 3.-It will be convenient to consider these issues together. 16. There are five documents on which the plaintiffs case rests for proof in support of their allegations that defendants Nos. 2 and 3 are liable as guarantors or sureties for Defendant No. 1. As stated above the case *f the plaintiffs is that the plaintiffs furnished guarantees to Messrs A.I Automobiles Limited, on behalf of the defendant No. 1 at the request of the defendants. In proof of this fact the plaintiffs rely on two letters of request both dated 12-1-1965 Exhs. 8/21 and 8/22 signed by the defendants Nos. 2 and 3 respectively. Produced through defendant No. 1. The plaintiffs further sought to prove the liability of these defendants as guarantors on the basis of Promissory Note Exh. 8/8 for Rs. 5,76,000 purporting to be executed by them in favour of defendant No. 1 who in turn endorsed it in favour of the plaintiffs. This Promissory Note is said to have been delivered to the
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plaintiffs with a D. P. Note delivery letter dated 2-11-1964 (Exh. 8/19) purport--ing to be signed by all the three defendants. 16-A. The next taco documents relied upon in this connection are an unregistered agreement of mortgage dated i2-1-1965 (Exh. 8/17 and as agreement for Hypothecation of goods also tearing the same date (Exh. 8/18). By the first agreement the defendants Nos. 2 and 3 purported to have agreed to mortgage their immovable property by way of counter guarantee to indemnify the Bank against the two guarantees. 17. The plaintiffs only witness Muhammad Abdul Haq Kureshi (Exh. 14) testified that at the relevant time he was Head Cashier in flu Garden Road Branch of the plaintiffs-Bank and had personal knowledge oaf the transaction in suit. He further said that the pronote was signed in his presence by the defendants Nos. 2 and 3, the first having done so in the premises of the Banta and the second at her residence. He further stated that the mortgage and hypothecation agreements were similarly signed in his presence by both these defendants He also stated that the pro-note delivery letter was signed by ail the defendants in his presence and further that the two letters of request Exhs. 8/21 and 8/22 by defendants Nos. 2 and 3 were both signed by them in his presence. The last mentioned document was also signed by him. The witness went on to starts that the plaintiff-Bank has in its custody title deeds of the property of defendants Nos. 2 and 3 which were deposited with the Bank to secure the guarantees. 18. The defendant No. 1 in his statement, as a witness, has testified to the pleas raised by him in his written-statement as reproduced in the earlier part of this judgments In substance he has admitted that he was advanced loans by the plaintiffs through overdraft facility but without security initially. But later on he says, as the Overdraft limit was increased he secured it with the pro-notes in the sum of the limit allowed by the plaintiffs from time to time. He says all of his dealings were with the Liaquat Bazar Branch of the plaintiffs. According to this defendant it was when the first guarantee was given in 1964 that he went to the Lawrence Road Branch at the instance of Mr. Fakhruddin Burney. The defendant has then given the details of his dealings relating to Mr. Fakhruddin Burney's alleged association with him in the business venture involving the trucks. 19. Touching the documents, defendant No. 1 testified that he had obtained the signatures of his wife defendant No. 2., on plain papers on the pretext that they were required in connection with reduction of the property taxes. He has denied the signature of defendants Nos. 2 and 3 on the Promissory Note. He denies the defendant Nos. 2 having executed the Promissory Note. He, however, admits his own signature on it on the reverse under the endorsement in favour of the plaintiffs. In this connection he states that when he signed the pronoto it was blank. He further states that the documents of title of his wife's property were deposited by him with Mr. Fakhruddin Burney in January 1965, after the discovery of the irregularity by the Bank authority. But he asserted that this was without the knowledge of his wife. Explaining this be says that he had obtained those documents on the pretext of getting taxes reduced on the property. He goes on to state that when the ladies were taken to the Registrar's Office they .Declined to execute the mortgage. He, however, admits his own signature on the mortgage agreement. (Exh. No. 8/17) Agreement of Hypothecation of goods (Exh. 8/18) Pronote &livery letter (Exh. 8/19) and letter of request for guarantee (Exh. 8/20). But he denies the other signature to be those of defendants Nos. 2 and 3. He says that these documents were blank when he signed them. He also denies the signatures on letters of request (Exh. 8/21) and (Exh. 8/22) to be those of defendants Nos. 2 and 3 respectively. 20. Defendant No. 2 has also entered the witness-box and has asserted that she did not stand surety for the repayment of the loans raised by the defendant No. 1. She has denied her signature on the document. She has further testified that she was taken to the office of the Registrar by her
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husband to execute the mortgage but she and defendant No. 3 declined to do so in the presence of the Registrar. She has then testified to all her pleas in her written statement. 21. Abdul Kadar Defendant No. 3 (d) the son of deceased Defendant No. 3 also testified that the documents purporting to bear the signatures of his mother do not in fact bear her signatures with which he was conversant. 22. Mr. Mansoorul Arfin the learned counsel for the plaintiffs argued that the evidence on record amply established that the defendants Nos. 2 and 3 had agreed to secure the Bank against the payment under the guarantees and are, therefore, liable jointly with defendant No. 1 for the amounts paid by the plaintiffs under the guarantees. Mr. S. H. Rizvi, learned counsel for the defendant No. 2, however, contended that defendants Nos. 2 and 3 being pardanashin ladies the plaintiffs were under the obligation not only to prove the execution of the documents supporting the claim but further that the two ladies were duly informed and understand the true nature of the transaction they were subscribing to. The learned counsel therefore urged that the burden of proof lay strongly upon the plaintiffs in this behalf. 22-A. Learned counsel for the plaintiffs however, contended that the proof of signature on a document has the effect of proving execution of the document. In this connection, learned counsel referred to section 2 (12) of the Stamp Act, 1899 and section 35 of the Registration Act, 1908. He cited some judgments in support of the proposition, on the interpretation of the said two sections, that execution of a document means signing of the document. On this premise learned counsel contended that since the two ladies did not deny their signatures on the various documents produced in support of the claim of the plaintiffs, the execution of these documents stands proved and established. Section 2 (12) of the Stamp Act provides .As under " "executed "and "execution". Used with reference to instruments mean "signed" and "signature"." Section 35 of the Registration Act lays down that if person executing the document appear personally before the registering officer and if they admit execution of the document the registering officer shall register the document. I, however, find no force in this contention fez the Simple reason that these provisions relate to execution of documents for the purpose of the two enactments, namely the Stamp Act and the Registration Act. That is to say that if an instrument is signed by the executant, for the purpose of the Stamp Act it has the affect of an executed instrument and if such signature is admitted before registering authority ho is required to register it. It is no doubt true that the ordinary meaning of executing a document is signing of document as a consenting party thereto. Where the document is required by law to he attested execution designates the whole operation including both the signature by the executant and the attestation thereof by the subscribing witnesses. But it is well settled .That execution of a document must still mean some thing more than the mere signing by the party. It must certainly include delivery and it also Includes signing before witnesses where witnesses are necessary. Therefore, there is no reason why proof of execution as distinct from mere proof of the signature of the attesting witnesses, should not be necessary when the document is not required by law to be attested. 23. Be that as it may the question here that arises for consideration, is not the execution of a document by an ordinary person in ordinary circumstances. In this case the precise question is whether in the facts and circumstances of the present case defendants Nos. 2 and 3 who are Muslim ladies not used to appearing in public are entitled to the protection of any special rule of evidence so far as the proof of execution of the document in question is concerned. It is well settled that in the sub-continent pardanaahin ladies have been given a special protection in view of the special conditions of the times ; they are presumed to have imperfect knowledge of ~ho world, as by the pardah system they are practically excluded from the social intercourse or communion with the outside world. Thus a rule has been evolved for the protection of pardanashin ladies whereby a duty has beers cast upon a person claiming under an instrument signed by a pardahnashin lady
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not only to prove the execution of the document butt also that the nature of the transaction contained in the document was fully' understood by such executing pardahnashin woman. In Mst. Faridunnisa v. Mukhtar Ahmed (AIR 1925 P C 204) Lord Sumner traced the origin of the custom and observed as follows : "In this it is only given the special development, which Indian social usages make necessary to the general rules of English Law which protect persons, whose disability make them dependent upon or subject them to the influence of others, even though nothing in the nature of deception or coercion may have occurred. This is part of the law relating to personal capacity to make binding transfers or settlements of property of any kind." This rule has consistently been followed in Pakistan, In Mst. Haws v. Muhammad Yousuf and others (PLD 1969 Kar. 324) it was observed as under : "The judicial pronouncements have woven a cloak of protection foe pardanashin ladies, who because of their ignorance, inexperience of business matters and social conditions are not able to understand the nature of business transactions. The Privy Council defined a pardanashin lady as a woman of rank living in seclusion but the law regarding pardartashin ladies equally applies to illiterate and ignorant women." And again commenting upon the effect of the rule their Lordships observed as follows : "The onus is always on the person who takes advantage of a transaction to show that the transaction was actually conceived and put into practice by the disposer herself. The party taking advantage must show to the Court that the deed was explained and understood by the execu-- tant and she adopted it with full knowledge and comprehension . . . . . The fact whether independent advice was available to a pardanashin lady at the tine when she entered into a transaction can be taken into consideration in order to determine whether she thoroughly compre- -hended and had deliberately of her own free will, carried out the transaction. If it is found that the document was conceived and executed by her free will, it shall be upheld notwithstanding the tact that the executant is a pardanashin lady. The legal protection given to a pardanashin woman or to an illiterate woman, cannot be transmu ted into a legal disability." 24. In the face of the aforesaid authoritative judicial pronouncements, it is too late in the day for the learned counsel for the plaintiffs to contend that mere proof of signatures is sufficient to establish execution of the documents in question as the act of duly understanding mind. I also find no force in the contention of the learned counsel for plaintiffs that the cases of pardanashin ladies in which the special protection, stated above, was extended were cases which fell under the purview of section 16 of the Contract Act. It was in this connection that the learned counsel had argued that the two ladies did not stand in relationship of confidence via-a-via the plaintiffs and that no fraud was alleged by the two ladies against the plaintiffs. Section 16 of the Contract Act defines what contracts are said to be induced by undue influence and section 19 of the same Act provides that when consent to an agreement is caused, inter alia, by fraud the contract would be voidable at the option of the party whose consent was so caused. Similarly section 19-A of the Contract Act makes a contract voidable if the consent thereto is caused by undue influence. In the case of Mst. Haws v. Muhammad Yousuf referred to above, it was observed as under : "The question of fraud is quite separate from the doctrine that governs the transactions entered into by pardanashin or illiterate women. This rule shall apply even if there is nothing in the nature of coercion or deception in the transaction. In Farid-un-Nisa v. Mukhtar Ahmed the Privy Council restated the rule and observed that the whole doctrine involves the view that mere execution by such a person, although unaccompanied by duress, protest or obvious signs of mis-- understanding or want of comprehension, is in itself no real proof of a true understanding mind in the execution"
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It is, therefore, clear that the rule laid down under the doctrine postulated regarding pardanashin ladies mentioned above, would be attracted irrespective of allegation of fraud and undue influence or coercion. 25. Learned counsel for the plaintiffs next contended that the two ladies are not entitled to invoke the special rule enunciated under the doctrine as they are not proved to be pardanashin ladies. In this connection he referred to the rejection of the application for commission on behalf of one of the ladies made on the ground that she was pardanashin. He also referred to the fact that the ladies admittedly visited the Registrar's Office in connection with the registration of a document, that defendant No. 2 gave evidence in Court and finally that she admittedly collects rents of her - property himself. On the basis of these facts the learned counsel contended that the two ladies did not qualify as pardanashin ladies. Suffice it to refer again to the case of Mst. Haws v. Muhammad Yousuf, referred to above, in which at page 337 of the report their Lordships observed that the law regarding pardanashin ladies equally applies to illiterate and ignorant women. In Tajuddin v. Abdur Rehman PLD 1963 Kar. 825 the rule was extended even to an illiterate, .Male person. In that case where an illiterate man denied execution of a .Document written in English their Lordships observed that the appellant is an illiterate person and the onus was on the respondent to establish beyond doubt that the signature of the appellant was obtained on that document after it was properly explained to him. In this case also all the documents relied upon by the plaintiffs are in English and the signatures of the defendants Nos. 2 and 3 appearing on them are in Gujrati. It is not the case of the plaintiffs that the two ladies were conversant with English language. I am accordingly of the view that defendants Nos. 2 and 3 are entitled to the protection available to pardanashin ladles and the onus of proof lies squarely upon the shoulders of the plaintiffs to prove and establish that the said documents were executed by them after they were explained and were understood by them with…
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