Law: Contract, Act, 1872

Section: IX,58(f)

Law: Financial Institutions (Recovery of Finances) Ordinance, 2001

Section: XLVI,19

Contract Act (IX of 1872)-------S. 58(f)---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 19---Equitable mortgage, creation of---Deposit of title---Scope---Case of the appellants was that their liability was limited only to the extent of a cap provided by the registered mortgage deed and nothing more could be recovered under the registered instrument; that there was no document attached with the plaint to show that the deposit of title in fact was for creating equitable mortgage under S. 58 of the Contract Act---Validity---Language of S. 58(f) of the Contract Act, 1872, was not understood properly by the appellants as there was no requirement of any attached document apart from the fact that title was deposited for securing the loan extended to borrower---Deposit of title itself was sufficient to reveal the intent of an applicant depositing title document with the mortgagee---There was just one intention, that it, to secure the outstanding loan of the borrower---Mortgage by deposit of title deed gave his/ her intent that where a title document in relation to an immoveable property was deposited, the intent was to provide a security in relation to a transaction between main borrower and Bank/mortgagee---Contentions of the appellants were misconceived that the amount to the extent of cap provided under registered deed could only be recovered and nothing more, as this deposit of title document was enough to create equitable mortgage to cover entire outstanding amount---Registered mortgage is only a token mortgage to overcome any impediment that may come in the way---Requirement for equitable mortgage is the existence of debt, delivery of title document and the intention that the document of title shall be the security for the debt, and the same are sufficient to establish the intent---Additional mortgage deed cannot eclipse the fact of equitable mortgage under S. 58(f) of Contract Act---High Court maintained judgment passed by the Banking Court---Appeal, being meritless was dismissed, in circumstances .Mst. Zubeda Khanum v. Presiding Officer, Special Court (Banking), Karachi and others 1994 CLC 2150 and National Bank of Pakistan through…