A mortgage of land in favor of a company which is not a permanent resident of the State is invalid and cannot be enforced.

(1) A division bench of this court composed of Honble Bhat J and Honble Mukerjee) has referred this case to the full bench as in its opinion it raised important questions of law of far reaching importance.

(2) The fact material for the purpose of and leading to this reference are i -

On 28-12-1963 the Jammu and Kashmir Bank Ltd. the applicant herein, brought a suit, being suit No, 43 of 1963 against Lal Mahammed Bangroo, the respondent herein, on the original side of the court, for recovery of Rs 59, 166.14 by sale of an orchard measuring 76 Kanals and 9 Marias and house etc described in para No. 3 of the plaint which were mortgaged in favour of the former by the latter as also by sale of the movable properties hypothecated in favour of the former by the latter. In the petition of plaint, it was averred by the plaintiff that a sum of Rs. 60,000/- on each credit system was advanced to the defendant on the basis of a pronote executed on 17-9-1962 by the latter on behalf of himself and Aerosound, whose sole proprietor he was, that in order to secure the loan the defendant conveyed by way of simple mortgage on the same day, the aforesaid orchard measuring 76 Kanals and 9 Marlas and other imovable property described in para No. 3 of the plaint, that the payment on loan was further secured by means of a deed of hypothecation of goods mentioned in the Schedule annexed here to which was also executed on the same day bv the defendant, that the defendant had only paid Rs. 15000/- towards the aforesaid loan account and in-spite-of several demands, he failed to liquidate the balance and hence the suit.

(3) The suit was resisted by the defendant contending inter-alia, that though cash credit limit of Rs. 60.000/- was sanctioned in his favour and several deeds were executed but no amount was paid to him on 17-2-1963, that pronote was without consideration, that the documents got executed by him were in English language with which he was not familiar, that the mortgage and the hypothecation deeds were invalid and in enforceable in law and c mid not be availed of by the plaintiff and that the interest charged was excessive.

(4) On the pleadings of the parties, the following issues were framed by the learned trial Judge :-

(1) Whether the pronote dated 17 2-1962 was duly executed and signed by the defendant and if so was it for consideration ? O. P. Pltf.

(2) (a) Was the mortgage deed and hypothecation. The cation deed dated 17*2-1962 duly executed and signed by the defendant and were they for consideration ? O P. Pltf.[(b) If the Execution of these documents is proved by the plaintiff, whether the documents were invalid in law ?

O. P. Pltf.

(3) Was the affidavit dated 17-2-1962 signed and sworn by the defendant ? O. P. P.

(4) To what amount is the plaintiff entitled by way of principal and interest and

insurance charges ? O. P. Pltf.

(5) Is the rate of interest exhorbitant ?

(6) Had the defendant made any part payments over and above those admitted by the plaintiff, if so to what extent ?

O. P. D.

(7) To what relief if any, is the plaintiff entitled ? O. P. P.

Honble Ali J (as his Lordship then was) after recording the evidence adduced by the parties and hearing their counsel found all the issues in favour of the plaintiff excepting that the mortgage in question in so far as it related to the land (Orchard) was invalid as the plaintiff Bank was not a permanent resident of the State, In the result, the learned Judge granted a preliminary decree for Rs. 50,894.13 paise in favour of the plaintiff Bank by sale of the mortgaged and hypothecated properties (except the orchard measuring 76 Kanals and 9 Marlas mentioned at item No, 1 of the mortgage deed) in terms of Order 34 Rule of the code of Civil Procedure and the defendant was given six months time to pay the decretal amount failing which the plaintiff was held entitled to apply to the court for passing final decree.

(5) Aggrieved by the judgment and decr