PLJ 2023 Lahore 165 (DB)
Financial Institution (Recovery of Finances) Ordinance, 2001 (XLVI of 2001)--
----Ss. 9 & 22--Civil Procedure Code, (V of 1908), O.XXI, Rr. 54(2), 66 & 67--Suit for recovery--Decreed--Auction of suit property--Execution proceedings--Filing of objection petition--Dismissed--Appeal case was remanded--Objection petition was dismissed after post remand proceedings--Ex-parte decree--Change of address of petitioner--Change of date and venue for auction without permission of Court--Delegation of powers--Illegalities and irregularities were committed-- Entire venue of auction has been changed without intimation to Banking Court or taking appellant into confidence--If venue was required to be changed under any compelling circumstances it was imperative to make adequate circulation of such change, to ensure transparency of proceedings--Gross illegalities and infirmities have rendered in entire auction nullity--Findings of Banking Court regarding purported delay in filing this objection petition are devoid of cogent reasons and contrary to law--Banking Court has overlooked contentions and material available on record--When auction is challenged on ground of fraud in publication and conduct of sale, time can only run against victim upon gaining a clear and definite knowledge of facts which constitutes fraud--Plea of bona fide is adopted on behalf of subsequent purchasers, who have opted to purchase Property during pendency of objections and disputes, they shall sink or swim with auction-purchaser of Property--Appeal allowed.
[Pp. 169, 171 & 172] A, C, D, E, F & H
2011 CLD 1517, 2018 CLD 233, PLD 1996 SC 375, PLD 1961 Dacca 589 and PLD 1993 Lahore 706 ref.
Civil Procedure Code, 1908 (V of 1908)--
----O.XXI, R. 66--Duty of Court--Order XXI, Rule 66 of the, CPC imposes duty upon Court to ensure that proclamation of sale is in language of Court, when Property is to be sold by public auction, which at same time should be drawn after notice to concerned Judgment Debtor and provision of Order XXI, Rule 66 of the, CPC have been held mandatory in nature--Unbridled delegation of such powers to Court-auctioneer is not permissible in law. [P. 169] B
Mr. Muhammad Tayyab Zameer Khan, Advocate for Appellant.
Syed Waseem Ahmad, Advocate for Respondent No. 1/Bank and Mr. Nadeem Iqbal Ch. Advocate for Respondents No. 8 to 11.
Respondents No. 3,4,7 Ex-parte.
Date of hearing: 26.1.2022.
PLJ 2023 Lahore 165 (DB)
[Bahawalpur Bench, Bahawalpur]
Present: Muzamil Akhtar Shabir and Sultan Tanvir Ahmad, JJ.
Mst. ALIA SHAMEEM--Appellant
versus
NATIONAL BANK OF PAKISTAN etc.--Respondents
E.F.A. No. 5 of 2016/BWP, heard on 26.1.2022.
Judgment
Sultan Tanvir Ahmad, J.--Present Execution First Appeal, filed under Section 22 of Financial Institution (Recovery of Finance) Ordinance, 2001 (‘FIO, 2001’) is directed against Judgment dated 05.04.2016 passed by learned Banking Court, Bahawalpur.
2. Facts, necessary for the disposal of the present Appeal are, that on 26.06.1999 property No. 1065-A, measuring 14 Kanals 10 Marlas, situated in Mouza Hakra, Tehsil Khanpur District Rahim Yar Khan, as further detailed in the pleadings (hereinafter called as the ‘Property’) was auctioned in execution of Judgment and Decree dated 30.07.1995 passed against M/s. Roshan Din Textile Mills and others. The auction/sale was set aside on 25.11.2009 as a result of the instant objection petition, however, the case was remanded by this Court vide Judgment dated 17.11.2015 passed in appeals bearing E.F.A. No. 01 of 2010 titled “Muhammad Arshad etc. vs. National Bank of Pakistan, E.F.A. No. 02 of 2010 titled “Mst. Maria Javed etc. vs. National Bank of Pakistan and E.F.A. No. 03 of 2010 titled “Muhammad Azhar etc. vs. National Bank of Pakistan”. Upon aforesaid remand order, the learned Banking Court dismissed the objection petition of the appellant vide Judgment dated 05.04.2016.
3. Aggrieved from the same, present Appeal has been filed.
4. Mr. Muhammad Tayyab Zameer Khan, learned counsel for the appellant has submitted that whole proceedings, right from inception to the end, are replete with gross irregularities which are coupled with element of fraud staged by auction-purchaser and the learned Court-auctioneer; later this stage of fraud was joined by Respondents No. 8 & 9 etc. (the ‘subsequent purchasers’), who have opted to purchase the Property despite knowledge of the dispute, to deprive the appellant-lady from her lawful rights. It is further contended by the learned counsel that a bungalow built on more than 14-Kanals, located in the heart of the City, which was worth more than Rs. 15 million in the year 1999, has been thrown away at paltry amount of Rs. 850,000/-, without any survey or assessment of fair value or forced sale value of the Property; that Order 21 Rules 66, 67 & 54(2) of the Code of Civil Procedure, 1908 (the ‘Code’) as well as several others substantive provisions of law have been violated; that the decree-holder bank was fully aware of the fact that the appellate-lady shifted to her residence at Mohan Pura, Tehsil and District Rawalpindi due to her disputes with Shamim-ud-Din (husband of appellant), as reflected from the pleadings; that the knowledge of the decree-holder Bank regarding change of address is abundantly evident from the execution petition which only has the address of appellant at Rawalpindi but without disclosing the correct house number and other particulars; that no valid service was ever effected at the aforesaid address; that appellant-lady remained unaware of the Judgment and Decree dated 30.07.1995 (which is ex-parte to her extent) and she was deliberately kept in dark about the proceedings in execution and auction in question, which came to her knowledge 2 to 3 days prior to filing of the objections, in the manners that are narrated in paragraphs No. 8 & 9 of the objections Petition.
5. Conversely, Mr. Nadeem Iqbal Ch., learned advocate has submitted that the delay in filing of objection is fatal in this case and subsequent purchasers being bona-fide buyers for the value of the Property cannot be deprived of their rights. It is further argued that the interest of the auction-purchaser as well as the subsequent purchaser are required to be protected; that earlier a petition, filed by the husband of the appellant was dismissed, hence the present objection petition is not maintainable, which even otherwise is result of afterthought to frustrate the order dated 01.09.1999; that the grounds taken by the appellant-lady are flimsy in nature. Syed Waseem Ahmad, learned counsel for National Bank has also opposed the Appeal and adopted the arguments of Mr. Nadeem Iqbal Ch., Advocate.
6. We have heard the arguments of the learned counsel for the parties and with their able assistance, record has been perused carefully.
7. Order sheet pertaining to the year 1997 to 1999 reflects that instead of settling down the terms and conditions of the auction in the language of the Court or granting specific approval regarding the same, as required under Order 21 Rule 66(1) of the Code, the same was left at the complete discretion of the learned Court-auctioneer leading to manifold and major mistakes. The proclamation was published in newspapers “Daily Rehber” and “Daily Maghrabi-Pakistan” on 30.04.1999, without fixing any reserved price of the Property. The said publication reflects the date of auction as 19.06.1999 at 10:00 a.m. and stipulates the venue of auction at the site. However, the report of auction shows that the auction was adjourned to 26-06-1999, when instead of holding the auction at site the venue was abruptly changed to the office of the decree-holder without fresh publication or proper circulation of change of date and venue. The learned auctioneer has not even bothered to take any permission in this regard from the learned Banking Court. Though, the adjournment is not for the period longer than seven days but the learned counsel for the respondents have failed to show us from the record that change of venue and date was sufficiently brought in the knowledge of the possible and prospective bidders.
8. It is not the case where merely an adjournment, for less than a period of seven days, has been granted in terms of Order XXI Rule 69(2) of the Code rather the entire venue of the auction has been changed without intimation to the learned Banking Court or taking the appellant into confidence, who is concerned judgment-debtor and owner of the Property.
9. The position of law, prior to the amendment through Notification No. 237/Legis/XI-Y-26 dated 15th August, 2018 (published in the Punjab Gazette No. 08 on 22nd August, 2018), is amply clarified by this Court in cases titled “Brig. (Retd.) Mazhar-ul-Haq and another vs. M/s. Muslim Commercial Bank Limited,
10. There is hardly any explanation given for change of venue of the auction. If the venue was required to be changed under any compelling circumstances it was imperative to make adequate circulation of such change, to ensure transparency of the proceedings. Such change of venue is in utter disregard of the law laid down by the Honourable Supreme Court of Pakistan in case titled “Mst. Nadia Malik vs. Messers Makki Chemical Industries Pvt. Ltd. through
Chief Executive and others (2011 CLD 1517) and case titled “Siraj Ahmad through L.Rs vs. Faysal Bank Limited and others” (2018 CLD 233), which by itself makes the impugned proceedings highly suspicious.
11. These violations are further added by the absolute failure of fixation of reserved price. The situation could have been little different, had it been plainly a case of fixing reserve price at lower side and provided the remaining proceedings were in accordance with law as well as if from record it could have been reflected that people interested in auction and prospective or potential buyer of the Property were attracted through suitable circulation of the invitation to treat. In the present case, nothing appears to have taken place in regular and normal course, hence, failure to give reserved price in proclamation is significant, rather this omission is fatal in the given circumstances. We are fortified in our view by the law laid down by Honourable Supreme Court of Pakistan in case titled “National Bank of Pakistan and 117 others vs. SAF Textile Mills Ltd. and another” (PLD 2014 SC 283) and case titled “Zakaria Ghani and 4 others vs. Muhammad Ikhlaq Memon and 8 others” (PLD 2016 SC 229).
12. In National Bank of Pakistan and 117 others (Supra), the Honourable Supreme Court of Pakistan while dealing with the then Section 15(4) of FIO, 2001 observed the absence of stipulation as to reserve price is fatal for the entire provision of law. We would like to reproduce here the following observations of the Honourable Supreme Court:--
“40. As a supplement to the aforesaid, it may be noted that no doubt, some rudimentary procedure for conducting such sales is provided in sub-section (4) of Section 15 of the Ordinance of 2001 but yet again the time honoured and well entrenched principle of fixation of a “reserve price” is conspicuous by its absence. It is now well settled law that even where the sale is conducted by the Court a “reserve price” is essential and the absence thereof may be fatal. In this behalf, it may be advantageous to refer to the majority judgment in the case reported as Messrs Lanvin Traders, Karachi v. Presiding Officer, Banking Court No. 2, Karachi and others (2013 SCMR 1419), the relevant observations thereof are reproduced hereunder:
“Agreed that the expression “reserve price” does not find mention in the relevant rule but the words used in the rule pointedly hint thereto. A sale, in its absence, is apt to give walkover to maneuvers to fix any price of their choice. A sale thus effected is no sale in the eye of law especially when the number of bidders is meager, which, indeed is close to nill. A superstructure of sale built on such a shaky infrastructure cannot sustain itself. Neither the buttress of limitation nor the ministerial nature of the rule can prevent it from a fall.”
41. The conscious exclusion of remedies and deliberate omissions provide for a due process of conduct of sale including the absence of the necessity to fix a reserve price becomes even more significant, as the Financial Institution has been clothed with the right to purchase the property put by it to public auction at the highest bid. No permission, in this behalf, is required from any Court, as is in the normal course in terms of C.P.C. Thus, in fact, it is a Financial Institution, which is the seller, buyer, the auctioneer and the beneficiary, hence enabled to take full advantage of the misfortune of the mortgagor/debtor thereby facilitating predatory and exploitative behaviour which perhaps would not sit well with Article 3 of the Constitution”.
(Emphasis Supplied)
13. The Honourable Supreme Court of Pakistan in the case
of “Zakaria Ghani and 4 others (Supra) stressed upon the need
to reaffirm the sanctity of judicial sales, authoritatively and definitively, to preserve the interest of decree-holders, judgment debtors, purchasers and public in general by avoiding setting aside
the sales merely on the basis of technicalities or mere irregularity,
at the same time observed that such sales are to be set-aside in the cases of clearly established frauds to protect this sanctity of judicial sales. The following extract of the said the Judgment is highly relevant:-
“…The sanctity of judicial sales needs to be reaffirmed authoritatively and definitively in the public interest as well as in the interest of decree holders and judgment debtors. This can only be done if judicial sales are only set aside if it is clearly established that there has been fraud. A mere irregularity, even if material, should not suffice unless it can be shown that material loss has been caused. It is also important to note that where the irregularity consists of errors by the Court, or by Court officials such as the Nazir, no party should be made to suffer by reason thereof…”
14. Material irregularities are committed at every step of the proceedings and fraud in publication as well as conduct of auction is leaping out of the record of at hand case. There is nothing showing that one fourth of the auction price was deposited on the date of the sale which is though written in the report but the draft is prepared on subsequent dates. In our opinion, the gross illegalities and infirmities have rendered in the entire auction nullity.
15. We have also noticed that the findings of the learned Banking Court regarding purported delay in filing this objection petition are devoid of cogent reasons and contrary to the law laid down in cases titled “Mst. Manzoor Jahan Begum and others vs. Haji Hussain Bakhsh” (PLD 1966 Supreme Court 375), “Nur Ahmed Chowdhury vs. Ruhul Amin Chowdhury” (PLD 1961 Dacca 589) and “Brig. (Retd.) Mazhar-ul-Haq and another vs. M/s. Muslim Commercial Bank Limited,
While presuming the same, learned Banking Court has overlooked the contentions and material available on record clearly establishing that both of them (appellant and her husband) separated much prior to the impugned auction. It is settled preposition of law that when auction is challenged on the ground of fraud in publication and the conduct of sale, the time can only run against the victim upon gaining a clear and definite knowledge of the facts which constitutes the fraud. The following extracts of the Judgment in case titled Nur Ahmed Chowdhury (Supra) is highly relevant:-
“In a case to have the sale set aside under Order XXI, rule 90 of the Civil Procedure Code on the ground of fraud in the publication and conduct of the sale, the judgment-debtor must have knowledge not merely of the fact of sale but a clear and definite knowledge of the facts which constitute the fraud before time can run against him. It is not sufficient to know about some hints and clues which, if vigorously and actively followed up, might have led to a complete knowledge of the fraud. This is supported by the case of Bhusan Mani Dasi v. Profullo Kristo Deb and the case of Biman Chandra Datta v. Promotha Nath Ghose”.
16. As a last resort, plea of bona fide is adopted on behalf of the subsequent purchasers, who have opted to purchase the Property during the pendency of the objections and disputes, hence they shall sink or swim with the auction-purchaser of Property.
17. For what have been discussed above, the objection petition of the appellant is accepted and impugned auction as well as the sale certificate are declared illegal. This execution appeal is allowed and impugned Judgment passed by learned Judge Banking Court is set aside. No order as to costs.
(Y.A.) Appeal allowed
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