ORDER SHEET
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Date Order with signature of Judge
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DATE OF HEARING 16.01.2014
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Ms. Syeda Sara Kanwal
Advocate for Appellant.
Mr. Sultan A. Alana Advocate
for Respondent No.1.
Mr. S.M. Kazim Advocate for
Respondent No.5.
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Syed Hasan Azhar
Rizvi J; This First Appeal is
filed under Section 22 of Ordinance XLVI of 2001 of Financial Institution
Recovery of Finance against the orders dated 20.11.2013 passed in Execution
No.195/2010 of Suit No.2359/2009 by the Banking Court No.1, Karachi, whereby application
under section 151 CPC filed by the Appellant to accept the offer in respect of
Flat No.D-805, 8th Floor, Chappal Ocean Centre, Block-4, KDA Scheme
No.5, Clifton, Karachi was dismissed while the bid submitted by Abbas Hayat
Respondent No.5 was confirmed by the Trial Court.
The brief facts of the case
are that the Respondent No.1 filed a suit bearing No.2359/2009 against
Respondents No.2 and 3 before Banking Court No.1 at Karachi, which was decreed
in favour of Respondent No.1 by judgment dated 10.03.2010 and decree dated
13.03.2010. Copies of the same are enclosed as Annexures “A/3 and A/4” with the
memo of Appeal. Through Execution Application the mortgaged property was
attached on 03.12.2011 and put to open auction vide order dated 18.04.2012 by
the Trial Court through Nazir of the Court. Notices under Order 21 Rule 64 CPC
for 3rd October, 2013 were duly published in two leading newspapers
i.e., daily “Jang” Urdu and daily “Dawn” English both dated 28.08.2013. Forced
sale value of subject mortgaged property was mentioned as Rs.29,60,000/- in sale proclamation notice. Auction was held on
03.10.2013 at 11:00 A.M. Only one bidder Abbas Hayat Respondent No.5 was
present at the time of auction and offered bid of Rs.30,00,000/- and had paid
Rs.7,50,000/- being 25% of the bid amount to the Nazir through pay-order. On
the same date Nazir submitted report of the auction proceeding before the
Banking Court. Subsequently, in terms of the sale proclamation notices
Respondent No.5 deposited entire amount of bid with the Nazir within fifteen
days’ time. Respondent No.1/Decree Holder filed no objection certificate for
sale of the subject property in the Banking Court in favour of highest bidder
i.e., Respondent No.1.
Thereafter, on 08.11.2013 after
one month and eight days from the date of auction when the matter was fixed for
consideration of bid, present Appellant filed an application under section 151
CPC and offered bid of Rs.32,00,000/- of the subject property and prayed to
accept the same. By order dated 20.11.2013 the Banking Court dismissed the said
application of the Appellant and by another order on the same date the Trial
Court confirmed the sale in favour of the Respondent No.5 being highest bidder
as none had appeared for the Judgment Debtors throughout execution proceedings.
Trial Court issued direction to the Nazir to issue sale certificate, release
documents and hand over peaceful possession of the subject property to the
Respondent No.5.
Learned Counsel for the
Appellant argued that the impugned order is illegal, unlawful, against the
equity & natural justice, therefore, not sustainable under the law and is
liable to be set-aside. She further submitted that the Trial Court did not
consider the bid of the Appellant for Rs.32,00,000/-
and the Appellant is ready to enhance his bid upto Rs.35,00,000/-. Learned
Counsel has relied upon PLD 2005 SC 470 and 2007 CLC 1409.
Learned Counsel for the
Respondent No.1/Bank/Decree Holder confirmed that after no objection of the
decree holder, the sale of the subject property was confirmed in favour of the
auction purchaser/Respondent No.5 by the Trial Court. Learned Counsel for the
Respondent No.5 has contended that personal affidavit in support of memo of
Appeal has neither been filed by the Appellant nor by her Attorney but the same
has been filed by her Counsel. Nothing has been said in the application filed
on 08.11.2013 by the Appellant before the Trial Court that on 03.10.2013 she appeared
before the Trial Court or the Nazir of the Banking Court to participate in the auction
proceedings. Learned Counsel has relied upon PLD 2004 Supreme Court 489 (Barkat
Ali versus Muhammad Nawaz), 2006 CLD 832 (Messrs Irisma International versus
United Bank Limited, Karachi), 2008 CLD 800 (Askari Commercial Bank Limited
versus Zafar Ahmed), 2001 CLC 1267 (Investment Corporation Limited versus
Shahdin Limited), PLD 2005 Supreme Court 819 (Muhammad Ikhlaq Memon versus
Zakaria Ghani), 2004 CLD 1452 (Messrs Unicom Enterprises versus Banking Court
No.5 and others), 2013 CLC 702 (Mst. Noor Khatoon versus Messrs Habib Bank Ltd), AIR 1940 Madras
42 (S. Soundararajan and others versus Khaka Mahomed Ismail Saheb of Messrs.
Roshan and co. and PLD 2004 Lahore 21 (Muhammad Nawaz versus Barkat Ali).
Learned Counsel for the
auction purchaser has supported impugned orders passed on 20.11.2013 and stated
that the order of the Trial Court has been passed after fulfilment and
completion of all legal formalities/requirements under the law. No illegality or
irregularity has been committed by the Trial Court in confirmation of the sale.
He urged that as per averments of the memo of Appeal date of auction was fully within
the knowledge of the Appellant but the Application was filed under section 151
CPC on 08.11.2013 after more than a month, which is not maintainable and liable
to be dismissed.
We have heard learned
Counsel for the parties, perused the material available on record and citations
referred to by the learned Counsel for the parties with their assistance.
It is admitted position that
the Appellant failed to participate in auction proceeding held on 03.10.2013.
An application under section 151 CPC enclosed with the memo of Appeal as
Annexure P/8 was filed with supporting affidavit of Attorney of the Appellant,
who is also her husband but nothing has been mentioned in that application and
supporting affidavit that the Appellant or any of her representative appeared
to participate in auction proceedings on 03.10.2013. Nothing has been stated in
that application or affidavit for commission of any fraud, irregularity,
inadvertence, error or mistake on the part of the Trial Court or procedure
adopted by the Trail Court.
It is also an admitted
position that the Appellant was neither a party to the suit/execution nor
participated in the auction proceeding held on 03.10.2013 and after one month
and eight days of auction proceedings, for the first time the Appellant filed
an Application under section 151 CPC before the Trial Court for acceptance of
his offer, which she never made at the time of auction and only offered Rs.32,00,000/- by increasing Rs.2,00,000/- in her application
filed on 8.11.2013. The Trial Court has confirmed the bid in favour of the
Respondent No.5, adopted the procedure and mechanism laid down by the law
therefore, the Appellant has no locus standi to raise any objection in auction
proceedings. Nothing should be left on the sweet will of any individual to by
pass such legal procedure on the pretext that he/she is ready to offer or pay
more money than the highest bid made during the auction, after following all
legal procedure and time frame provided by the law and proclaimed by the
Banking Court.
Mere increase of offer made
by an stranger after more than one month and eight days to the fall of hammer
during auction proceeding could not be accepted by the Executing Court as valid
ground for setting aside the valid sale through open auction with intervention
of the court, unless proceedings of auction were shown to be collusive,
fraudulent or lacking transparency. Even some mutual understanding, consent or
compromise between the decree holder and the judgment debtor or any third party
will not affect the right of the auction purchaser, which the Court is bound to
honour and protect in order to maintain sanctity of such transaction, as per its
order. If any case law is needed to fortified this view the reference may be
made to the case of Hudaybia Textile Mills Ltd. Versus A.B.P.L. reported in PLD
1987 SC 512).
In the case of Messrs Irisma
International supra, it has been held that:-
“It is now settled
proposition of law that once a bid has been accepted, and no objections are
filed within given time, as held in 2005 SCMR 1237 the auction is to be deemed
to have been confirmed under Order 21, rule 65 C.P.C. It is also settled that
the Courts cannot be turned into auction house. Procedure adopted by the
Banking Court, in our humble estimation, did not suffer from any illegality or
perversity of the nature as urged in the instant appeal”.
In the case of Muhammad
Ikhlaq Memon reported in PLD 2005 SC 819, it has been held that:
“Negotiated offer made by the auction purchaser having been accepted by
the Banking court, auction purchaser had acquired legal rights and interests in
the properties purchased by him. Once payment of the sale price by the auction
purchaser, in compliance with the orders of the Court, had been made, it was
the duty of the Court to confirm the sale as required by Order XXI, Rl.92 CPC.
Even where the Court had failed to pass an order of confirmation of the sale
that would not lead to depriviation of right of auction purchaser or cause
prejudice to him and in such a case, it would be deemed that the sale stood
confirmed and purchaser would be deemed to have become absolute in his title by
virtue of S.65 CPC, which would relate back to the date of sale.
In the case of Askari
Commercial Bank Limited reported in 2008 CLD 800 it has been held that:-
“In
this matter the sale was conducted on 3.3.2008 and the reference for
confirmation of sale was filed in Court on 6.3.2008 which was first time taken
up in Court on 7.5.2008
and was confirmed. The applicant has not participated in the
auction and has not assigned any reason for not doing so. The bid which was
presented to the Nazir after the close of the Auction has no legal value and
cannot be considered as the same is violative of the right acquired by auction
purchaser. Frequently entertaining such request after closing of the sale is
seriously affecting the working as well as sanctity of the auction by Court and
it will not be possible to conclude sale through Court and the order of the
Court will loose its sanctity and the people will distance themselves from
auction/sale conducted by Court.”
In the present case
the procedure adopted by the Banking Court for auction of the subject property was
legal and proper and no illegality and irregularity was committed in the said
auction and after about one month and eight days a person, who was stranger in
whole episode, filed an application under section 151 CPC at a belated stage
and offered higher bid and prayed for acceptance of said offer, which cannot be
accepted as the whole episode had been concluded and the auction purchaser has
acquired right over the subject property through the orders of the Court.
For the reasons and
grounds discussed above, We do not find any merit in
the instant First Appeal, which is dismissed in limine.
J U D G E
J U D G E
Karachi
Dated __________