PLJ 2012 SC 158
Financial Institutions (Recovery of Finances) Ordinance, 2001 (XLVI of 2001)--
----S. 19(2)--Civil Procedure Code, (V of 1908), O. XXI, R. 85--Execution decree--Modes of--Scope of--Question of--Whether provisions of Order XXI, Rule 85, CPC apply to Banking Court in execution proceedings--Determination of--Three modes authorizing the Banking Court to execute its decree--First mode empowered a Banking Court to execute a decree by applying the provisions of CPC--Banking Court could execute a decree in manner provided under any other law for time being in force and third mode provides that at request of decree holder, Banking Court might adopt any procedure for execution of decree which it deems appropriate--In instant case, executing Court had adopted procedure for executing decree as provided under CPC, which fact was manifested from proclamation issued, at times by it--In clause 2 of proclamations that highest bidder would deposit 25% of auction money on conclusion of auction--Remaining 75% of auction money would be deposited in Court within 15 days from date of auction failing which executing Court could forfeit the amount of auction money deposited--Such conditions were borrowed from provisions of Order XXI, Rules 84, 85 and 86, CPC--Executing Court had chosen to adopt the procedure provided under CPC for executing the decree--Decree holder had ever approached the Banking Court to execute decree in manner other than one provided under CPC--Court in its discretion could extend time to appellant for depositing of balance amount of 75% of sale price after lapse of 15 days by virtue of S. 19(2) of Ordinance did not appeal to reason--Executing Court could adopt any procedure for executing decree under banking law but such power of the count had a rider that it would be subject to written request of decree-holder which request had never been made in the case in hand. [P. 165 & 167] A, B & E
PLD 2005 SC 470, rel.
Civil Procedure Code, 1908 (V of 1908)--
----O. XXI, Rr. 84, 85 & 86--Executing Court--Auction of mortgaged property--Bid amount had been paid through cheque--Balance amount could not be paid within stipulated period--Application for extension of time for depositing of balance amount was allowed--Objects were filed--Purchaser had not deposited balance 3/4th of auction money within stipulated period--Objections were dismissed by Banking Court--Challenge to High Court--Appeal was allowed--Assailed--Question of--Whether executing Court while following provisions of Order XXI, Rules, 84 & 85, CPC was competent to extend time beyond 15 days for depositing of balance 75% amount of auction money--Validity--Time for deposited of amount was provided under Order 21, Rule 85, CPC--Under Rule 85 an auction purchaser would deposit 25% of auction amount on being declared as highest bidder and balance amount of 75% would be deposited with 15 days of auction--In the instant case, sale was confirmed on 29.4.2002 on which date the appellant had deposited 25% of auction amount--Appellant had required to deposit the balance amount--Admittedly, such amount had not been deposited by specific date--An application for extension of time was made by appellant on 13.5.2002 and on 14.5.2002 an amount of 3.00 million was deposited and for balance amount of 3 million further time of 10 days was sought--If balance amount of auction price was not paid within stipulated period of 15 days, the Court had discretion to forfeit the deposit and order re-sale of property--Defaulted purchaser forfeits all claims to property--Conditions contained in proclamation that a party who was declared as highest bidder, would immediately deposit 25% of sale price and remaining 75% of sale price would be deposited within 15 days--Violations of these conditions would not empower executing Court to extend time for depositing of balance amount unilaterally--Finding on that issue by High Court was justified in given circumstances--Sale in favour of appellant was violative of provisions of Order XXI, Rule 85 of CPC being nullity can always be challenged by any interested party irrespective of fact that it was confirmed by executing Court--Appellant had taken his time to deposit the balance sale consideration in violation of mandatory provisions of O. XXI, R. 85, CPC--Belated application for extension in time for depositing of balance amount was wrongly entertained by executing Court that too without notice--If entire liability of respondent had been satisfied, the order passed by Supreme Court or any other granting interim relief to appellant in these proceedings was recalled--Appeal was dismissed. [Pp. 166, 168 & 169] C, D, G, I & M
Financial Institutions (Recovery of Finances) Ordinance, 2001 (XLVI of 2001)--
----S. 19--Civil Procedure Code, (V of 1908), O. XXI, Rr. 52(2), 69, 85 & 86--Execution decree--Sale was confirmed and payment of entire amount was made--No right to object of such sale--Contention--Neither minutes of auction proceedings were placed on record nor attendance sheet of decree holder, judgment debtor or persons who were alleged present on site--Neither affidavit of participants in auction proceeding were filed nor notice of officer with report regarding postponement of sale--Even proclamations issued, at times, did not mention the venue for auction/sale--Illegalities coupled with non-deposit of balance sale amount of 75% within 15 days renders the sale culminating from such auction proceedings as nullity--Issue of non deposit of amount of 20% by private respondent in exceptional circumstances can be condoned when the auction had been conducted in deviation of mandatory provisions of Order XXI, Rr. 54(2), 69, 85 and 86 CPC and executing Court had erroneously confirmed the sale. [Pp. 167 & 168] F & K
Civil Procedure Code, 1908 (V of 1908)--
----O. XXI, R. 90--Executing decree--Non-deposit of amount--Filing of objections to sale--Auction purchaser must reflect transparency--Objections raised by private respondents were not only based on quantum of reserved price but were based on issues which showed that sale/auction proceedings were being conducted in manner to extend favour of appellant--All provisions of law including provisions of Rule 90, CPC are to be read with exception--Any law without exception is a bad law--Object of deposit of 20% of amount by a person objecting to sale under Rule 90 of Order XXI, CPC is meant to ensure that objections were made by bona fide person and rule is not misused to frustrate the sale however, it could not be applied to advantage of appellant to have premium over his default. [Pp. 166 & 169] H & L
Mr. Amir Alam Khan, Sr. ASC for Appellant.
Mr. Gul Zarin Kiyani, Sr. ASC for Respondent Nos. 1-4.
Nemo for Respondents No. 5-6.
Mr. Sajid Mehmood Sh. ASC and Mr. Altaf Elahi Sheikh, ASC for Respondent No. 7.
Date of hearing: 2.6.2011.
PLJ 2012 SC 158[Appellate Jurisdiction]Present: Tassaduq Hussain Jillani, Tariq Parvez & Amir Hani Muslim, JJ.Mst. NADIA MALIK--AppellantversusM/s. MAKKI CHEMICAL INDUSTRIES PVT. Ltd. through Chief Executive and others--Respondents Civil Appeal No. 1733 of 2002, decided on 2.6.2011.(On appeal from judgment dated 4.11.2002 of the Lahore High Court, Lahore
Judgment
Amir Hani Muslim, J.--Through this direct appeal, the appellant has challenged the judgment of the Lahore High Court, by which it has set aside the sale of the property in dispute confirmed in favour of the appellant, by the executing Court, accepting the objections of the private respondents.
2. Habib Bank Ltd. filed a suit against the respondents for recovery of an amount of Rs. 66,28,137/-, which suit was decreed by the
3. There is no dispute that the proclamation was accordingly affixed. The executing Court required the officer to submit the report on 26.4.2002. The report was submitted by the officer on 26.4.2002. In para 3 of the report, it was mentioned that "the auction was fixed on 22.4.2002. Because of my illness, I could not conduct the auction proceedings, therefore, the auction is postponed for one week and the next date of auction is fixed on 29.4.2002."
4. On the above report, the executing Court passed the following order:--
"Present: Counsel for the D.H and Court auctioneer.
The latter filed interim report stating that the property could not be auctioned on 22.4.2002 on account of his illness and now would conduct the auction on 29.4.2002 that is within week of the previous auction. Allowed. Report be filed on 2.5.2002. "
5. On 29.4.2006, the appellant claims, that auction was held and she gave the highest bid of Rs. 79,75,000/-. According to the appellant, 1/4th of the bid amount was paid through cheque by her attorney on the same day, however, the balance amount could not be paid by the appellant within 15 days as per the condition of auction and instead on 13.5.2002 the appellant made an application for extension of time for deposit of the balance auction amount. In her application she has stated that:--
"the reminder 3/4 was required to be deposited within 15 days but due to the prevalent circumstances of Karachi city, a heavy payment of the petitioner struck there and it has become difficult for the petitioner to make the payment of entire 3/4th remainder. In paragraph No. 4, it is stated that "the petitioner is bona fide purchaser and to show her bona fide she is depositing Rs. 3.000 million in this august Court today and undertakes to deposit the remaining amount within 10 days from today. It was thus requested to the Court to accept the payment of Rs. 3.00 million and for the remaining balance, auction money to extend the time. This application came up before the Court the same day and the Court passed the following order on this application:--
URDU
From the order dated 14.5.2002, which is not in the main order sheet, but on the side of the application, it transpires that notice was issued to the parties for 29.5.2002, however, the Court directed
case was adjourned to 29.5.2002. From the record, it seems that the respondent had made the deposit of the auction price in the following break up:--
Rs. 19,93750/- on 29.4.2002 through cheque to the Court auctioneer.
Rs. 30,000,00/- was deposited on 14.5.2002 through pay order.
Rs. 30,000,00/- on 23.5.2002.
6. On 24.5.2002 the private respondents filed objections under Section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, in which it was specifically pleaded that no auction was held on 29.4.2002; "the auction proceedings are fictitious and fraudulent. It was also stated in ground-B, that no one including the Court auctioneer, the bank staff had come to the site on 22.4.2002 and the auction was not validly postponed, entire proceedings in this behalf were fabricated; the purchaser has not deposited the balance 3/4th of the auction money within 15 days of the alleged auction dated i.e 29.4.2002, therefore, the auction proceedings stood vitiated. The decree holder and the purchaser filed replies to the objections. Reply of the respondent/decree holder Habib Bank was absolutely evasive and did not specifically meet the allegations contained in the objection petition. The appellant also in her reply, while responding to grounds B, has not specifically denied the averments made therein about the deposit of 3/4th after the lapse of the stipulated period in terms of Order XXI Rule 85 CPC. However, the learned
7. Against dismissal of the objection petition, the private respondents preferred E.F.A. No. 690 of 2002 before the learned Lahore High Court whereas Mst. Ruqqia Rahzes filed separate appeal, inter alia, on the ground that the sale, by way of auction, was violative of the provisions of Order XXI of the CPC. The learned Lahore High Court, by the impugned judgment has allowed the appeal of the private-respondents against which the present direct appeal has been preferred.
8. It is contended by the learned counsel for the appellant that the appeal preferred by the private respondents before the Lahore High Court was not competent as they did not implead Mst. Ruqqia Rahzes as party. His next contention was that the objection filed by Mst. Ruqqia Rahzes were dismissed by the executing Court against which she had preferred separate appeal before the Lahore High Court which was subsequently withdrawn by her. It is further contended that the respondents did not deposit the 20% of the amount in terms of provisions of Order XXI Rule 90, therefore, the executing Court, in addition to the reasons incorporated in the order confirming the sale, was justified to dismiss the objection petitions of the private respondents for want of deposit of the required amount, which fact was not taken note of by the learned High Court while allowing the appeals of the respondents. He lastly submitted that provisions of Order XXI Rule are not applicable to the
9. As against this, the learned counsel for the private respondents while supporting the impugned judgment has contended that the auction was fake. He submitted that the record reflects that even the appellant was not present at the time when the highest bid was given instead one Nisar was present on her behalf, who was stranger to the proceedings. His next contention was that the venue of the auction was not specified in the proclamation. He further contended that the executing Court in violation of the mandatory provisions of Rule XXI Rules 85 and 86 CPC, had extended the time for deposit of balance amount of auction money which Rule 85 of the CPC does not permit. He has placed reliance upon the judgments from Indian jurisdiction in the cases reported as Manilal Mohanlal Shah and others vs Sardar Sayed Ahmed Sayed Mahmad and others (AIR 1954 SC 349) and Balram s/o Basha Ram vs Ilam Singh and others (AIR 1996 SC 278). The learned counsel for the respondents next contended that the entire liability was paid by the respondents to the Banks and there was no outstanding liability of the banks, which could warrant continuance of execution proceedings. He has relied on the case of Afzal Maqsood Butt vs Baking Court No. 2,
10. We have heard learned counsel for the parties and have perused the record. We would like to first take up the issue as to whether provisions of Order XXI Rule 85 CPC apply to the Banking Courts in execution proceedings. The language of Section 19(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as the Ordinance), reads as follows:--
"(2) The decree of the Banking Court shall be executed in accordance with the provisions of the Code of Civil Procedure, 1908 (Act V of 1908) or any other law for the time being in force or in such manner as the Banking Court may at the request of the decree-holder consider appropriate, including recovery as arrears of land revenue."
11. The aforesaid sub-section stipulates three modes authorizing the
12. The next question before this Court is whether the executing Court while following the provisions of Order XXI Rules 84 and 85 CPC, was competent to. extend time beyond 15 days for deposit of balance 75% of the amount of the auction money. The answer in this behalf would be in negative. The time for deposit of amount is provided under Order XXI Rule 85 CPC. Under Rule 85 an auction purchaser shall deposit 25% of the auction amount immediately on being declared as highest bidder and the balance amount of 75% shall be deposited within 15 days of the auction. In the present case, the sale was confirmed on 29.4.2002 on which date the appellant had deposited 25% of the auction amount. In terms of Order XXI Rule 85 CPC, the appellant was required to deposit the balance amount of Rs. 6.00 million by 13.5.2002. Admittedly, this amount was not deposited by the said date and record reveals that an application for extension of time was made by the appellant on 13.5.2002 and on 14.5.2002 an amount of 3.00 million was deposited and for the balance amount of 3 million further time of 10 days was sought. The appellant as has already been observed earlier has deposited Rs. 19,93,750 on 29.4.2002, which was 25% of the auction price whereas Rs. 3.00 million was deposited on 14.5.2002 after a lapse of 15 days, the stipulated time, and the remaining 3.00 million on 23.5.2002. The default in deposit of the balance amount was violative of the mandatory conditions provided under the proclamation, which language was borrowed from the mandatory provisions of the Order XXI of the CPC. Failure to deposit the balance amount of 75% of auction money within 15 days by the appellant renders the sale/auction proceedings nullity. The language of Order XXI, Rules 84 and 85 CPC are mandatory in nature. If the balance amount of auction price is not paid within the stipulated period of 15 days, the Court has the discretion to forfeit the deposit and order re-sale of the property. In addition to forfeiture, the defaulted purchaser forfeits all claims to the property. The conditions contained in the proclamation provide all such details. It has provided that a party who is declared as highest bidder, shall immediately deposit 25% of the sale price and remaining 75% of the sale price would be deposited within 15 days. Violation of these conditions would not empower the executing Court to extend time for deposit of balance amount unilaterally.
13. The appellant admittedly has violated the mandatory conditions and the contention of the learned counsel for the appellant that the Court in its discretion can extend time to the appellant for deposit of balance amount of 75% of the sale price after the lapse of 15 days by virtue of sub-section (2) of Section 19 of the Ordinance, does not appeal to reason. The executing Court can adopt any procedure for executing decree under banking law but this power of the count has a rider that it would be subject to the written request of the decree-holder, which request has never been made in the case in hand. The case in hand is fully covered by the judgment of this Court in the case of Afzal Maqsood Butt vs Baking Court No. 2, Lahore and others reported as (PLD 2005 SC 470) wherein this Court has held that non-payment of 75% balance auction amount within 15 days in violation of provisions of Order XXI Rule 85 CPC would render the sale nullity and the executing Court is bound to order re-sell of the property in terms of Order XXI Rule 86 CPC. Moreover, the case of the respondents is supported by the judgments of the Indian Supreme Court in the cases reported as Manilal Mohanlal Shah and others vs Sardar Sayed Ahmed Sayed Mahmad and others (AIR 1954 SC 349) and Balram s/o Basha Ram vs Ilam Singh and others (AIR 1996 SC 278), wherein it has been held that provisions of Order XXI Rules 84, 85 and 86 CPC are mandatory in nature and violation of the same would render the sale nullity.
14. The next contention of the learned counsel for the appellant that the sale was confirmed by the Court on 29.4.2002 and payment of entire amount was made by 23.5.2002, and therefore the private respondents had no right to object to such sale. We have gone through the objections filed before the executing Court, the memo. of the appeal of the High Court and the impugned judgment of the learned High Court and have noticed that the objections raised were weighty. Their first objection was that the sale itself was fake, inter alia, on the ground that no auction was conducted by the officer at the site on 26.4.2002, proclamation was not affixed/pasted at the Court notice board and there was no proclamation for sale issued on 29.4.2002. It was further averred by the private respondents that neither the minutes of auction proceedings were placed on record nor the attendance sheet of decree holder, judgment debtor or the persons who were alleged to have been present on the site were brought on record. Neither the affidavit of the participants in the auction proceeding held on 29.4.2002 were filed nor the notice of the officer with his report regarding postponement of sale from 22.4.2002 to 29.4.2002 have been brought on record. Even the proclamations issued, at times, do not mention the venue for the auction/sale.
15. The specific objections of the respondent were not met with nor any plausible explanation has been offered by the appellant either before the learned High Court or before this Court. It appears from the record that the sale/auction proceedings were not conducted transparently and were fake. In the absence of record of sale/auction proceedings referred to herein-above, the learned High Court has rightly held that the sale in favour of the appellant was not transparent. This finding on this issue by the learned High Court was justified in the given circumstances. The very sale in favour of the appellant was violative of the provisions of Order XXI, Rule 85 CPC, being nullity can always be challenged by any interested party irrespective of the fact that it was confirmed by the executing Court.
16. The next issue is non-deposit of amount of 20% in terms of Order XXI Rule 90 CPC by the private respondents at the time of filing of the objections to the sale. The sale in favour of auction purchaser must reflect transparency. The objections raised by the private respondents were not only based on the quantum of reserved price, but were based on the issues which showed that the sale/auction proceedings were being conducted in the manner to extend favour to the appellant. All provisions of law including the provisions of Rule XXI Rule 90 CPC are to be read with exception. Any law without exception is a bad law. In the case in hand, the appellant had taken his time to deposit the balance sale consideration in violation of the mandatory provisions of Order XXI Rule 85 CPC. The belated application for extension in time for deposit of balance amount was wrongly entertained by the executing Court that too without notice. The record of the auction proceedings of 22.4.2002 and 29.4.2002 has neither produced before the executing Court nor before the learned High Court to show that the actual auction proceedings were conducted by the officer. The amount of 25% was deposited by the appellant through pay order on 29.4.2002 after the conclusion of auction proceedings, whereas the record shows that auction proceedings were concluded at
17. In the face of the afore-said illegalities coupled with the non-deposit of the balance sale amount of 75% within 15 days renders the sale culminating from such auction proceedings as nullity. The issue of non-deposit of amount of 20% by the private respondents in exceptional circumstances can be condoned when the auction has been conducted in deviation of the mandatory provisions of Order XXI, Rules 54(2), 69, 85 and 86 CPC and the executing Court, in law, has erroneously confirmed the sale. The object of deposit of 20% of amount by a person objecting to sale under Rule 90 of Order XXI is meant to ensure that the objections are made by bona fide person and the rule is not misused to frustrate the sale, however, it could not be applied to the advantage of the appellant to have premium over his default. The judgments cited by the learned counsel for the appellants are distinguishable on facts and have no application to the case in hand.
18. During arguments, we were informed by the learned counsel for the respondents that pursuant to the orders passed by this Court on 9.12.2002 and 12.12.2002, the respondents have paid to the bank their entire liability and nothing is outstanding against them. This statement has not been objected to by the learned counsel for the appellant. If the entire liability of the respondents has been paid, the execution proceedings have come to an end as the decree has been satisfied. The order passed by this Court on 12.12.2002 or any other order granting interim relief to the appellant in these proceedings is recalled.
For the aforesaid reasons, we dismiss this appeal along with all the applications including the compromise application.
(R.A.) Appeal dismissed
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