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Petitioner: HABIB BANK LIMITED VS Respondent: Messrs KIRAN SUGAR MILLS (PUBLIC) through Managing Director
Court Name: Sindh High Court Judge(s): Maqbool Baqar Title:HABIB BANK LIMITED vs Messrs KIRAN SUGAR MILLS (PUBLIC) through
Managing Director Case No.: Executions Applications Nos.88 of 1999 and 42 of 2002 Date of Judgment:2005-12-17 Reported As: 2007 CLD 726 Result: Order accordingly Judgment ORDER MAQBOOL BAQAR, J.---Through the present order I propose to dispose of the various objections raised by Messrs Kiran Sugar Mills, the judgment-debtor in the above two execution applications, and by Messrs Chawla International inter alia against the publication and the conduct of sale of the judgment-debtor's Sugar Mill's and acceptance of the offer of Messrs Euro-Plus (Mons- Belgium) in the said execution proceedings filed by Habib Bank Limited and United Bank Limited respectively, for recovery of the amounts, in respect of the decrees passed in favour of the said two banks, against Messrs Kiran Sugar Mills Limited and its guarantors. The relevant facts of the case, in brief, are that by order dated 8-5-2000 a learned Single Judge of this Court exercising Banking Court jurisdiction in the above proceedings appointed official assignee as Commissioner to attach and sale the judgment-debtor's Sugar Mills. The official assignee in compliance of the said order invited sealed tenders for the purchase of the said Mills, through publication in various daily newspapers of English and Urdu languages. Such publication was made on 26-7-2002. In terms of the publication sealed tenders were to be submitted before the official assignee on 27-8-2002. In response the official assignee received the following offers on 27-8-2002:--- Sr. No. Name of Bidder Previous Offer (i) Messrs Chawla InternationalRs. 17.50 Crore (ii) Messrs Ellahi Electronic Rs.15.00 Crore
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(iii) Messrs Regent Services (Pvt.) Ltd.Rs. 15.00 Crore (iv) Messrs Indus Sugar Mills Ltd.Rs.80.00 Crore The offer at Sr. No.(iv) was subject to the following conditions:- (i) Rs.5.00 Crore shall be deposited after acceptance of the offer with a grace period of two years. (ii) Balance payment shall he made in 8 years. In his endeavour to seek improvements in the aforesaid offers the official assignee held meeting/negotiations with the aforesaid bidders on 2-9-2002, 5-9-2002, 7-9-2002 and 10-9-2002 which resulted in the following improvements:--- Sr.No. Name of Bidder Previous Offer Improved Offer (i) Messrs Chawla International.Rs.17.50 Crore Rs.25.30 Crore (ii) Messrs Ellahi ElectronicsRs. 15.00 Crore Rs.25.25 Crore (iii) Messrs Regent Services(Pvt.) Ltd.Rs.15.00 Crore Rs.18.00 Crore (iv) Messrs Indus Sugar Mills Ltd.Rs.80.00 Crore No improvement and no variation in the mode of payment. Through reference dated 17-9-2002, the official assignee submitted the offers pf Messrs Chawla International in the sum of Rs.25.30 crores (Cash within 30-days) and that of Indus Sugar Mills Limited of Rs.80 Crores with the afore-noted conditions, for decision by the Court. The offers were however not accepted by the learned Banking Judge, who by order dated. 23-9-2002 directed the official assignee to negotiate with Messrs Chawla International or any other party interested in buying the property and to submit a fresh reference. On 21-9-2002 the learned official assignee received an offer of Rs.30 Crores from Messrs Euro Plus (Mons-Belgium). On 1-10- 2002 the official assignee called a meeting of the original bidders wherein he also invited the representative of Messrs Euro Plus to persuade the bidders to improve their offer. The meeting was also attended by a fresh entrant, namely, Bhittai Traders. The aforesaid meeting, resulted in the following improvements. Sr.No. Name of Bidder Previous Offer Improved Offer (i) Messrs Euro-Plus (Mons Belgium)Rs.30.00 Crore Rs.40.00 Crore (ii) Messrs Bhittai Traders Rs.30.10 Crore Rs.39.55 Crore (iii) Messrs. Chawla International.Rs.25.30 Crore No improvement
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(iv) Messrs Regent Services(Pvt.) Ltd.Rs.25.00 Absent (v) Messrs Indus Sugar Mills Ltd.Rs.80.00 Crore Rs.80 Crore plus Rs.15.90 Crore towards settlement of certain liabilities of the Judgment- debtor company. Messrs Indus Sugar Mills had however agreed to pay the amount . In instalments staggered for a period of eight years. Subsequently Indus Sugar Mills Ltd. Through their Advocate submitted a revised offer of Rs.100.00 Crores, as detailed hereinafter. Through reference dated 7-10-2002 the official assignee sought orders of the learned Banking Judge for acceptance or otherwise of the following bids/offers. (i) Messrs Euro Plus (Mons Belgium) which offer includes dues of WAPDA Rs.15,15,300 and PTCL for Rs.4,14,704M Rs.40.00 Crore (ii) Messrs Indus Sugar Mills Ltd.Rs.100.00 Crore (on instalments basis) plus Rs.15.90 Crore (on Instalments basis). The amount of Rs.100 Crore to be paid in the following instalments:- (a) Rs.5.00 Crore after acceptance of offer. (o) Balance amount in the yearly instalments as under:-- 1st year Rs.2.00 Crore 2nd year Rs.2.00 Crore 3rd year Rs.3.00 Crore 4th year Rs.4.00 Crore 5th year Rs.4.00 Crore 6th year Rs.4.00 Crore 7th year Rs.5.00 Crore 8th year Rs.5.00 Crore 9th year Rs.6.00 Crore 10th year Rs.6.00 Crore 11th year Rs.7.00 Crore 12th year Rs.7.00 Crore 13th year Rs.8.00 Crore 14th year Rs.8.00 Crore 15th year Rs.12.5 Crore 16th year Rs.12.5 Crore (c) Rs.2.2 Crore out of the amount of Rs.15.90 Crore to be paid to growers and Rs.13.7 Crore towards Government dues within 3 years. (d) Security for the above mentioned amount in the shape of agricultural land approx. Valuing Rs.10.00 Crore only. By order dated 14-10-2002 the learned Banking Judge sought further improvements in the offers, in compliance whereof the official assignee held a meeting with the
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prospective buyers which resulted in the following improvements:--- Sr.No. Name of Bidder Previous Offer Improved Offer (i) Messrs Euro- Plus(Mons Belgium).Rs.40.00 Crore Rs.45.75 Crore (ii) Messrs Bhittai TradersRs.41.00 Crore Rs.45.50 Crore (iii) Messrs. Chawla International.Rs.25.30 Crore Absent (iv) Messrs Indus Sugar Mills Ltd.Rs. 100.00 Crore No improvement. No variations in the mode of payment. The official assignee through his reference dated 15-10-2005 submitted the above position before the learned Banking Judge for acceptance or otherwise of the aforenoted offers of Messrs Euro Plus (Mons-Belgium) and Indus Sugar Mills Limited. On 15-10-2002 the judgment-debtor' filed objections to the aforesaid reference. By order dated 6-11-2002 the Learned Banking Judge rejected the said objections and with the consent of the decree-holder bank and of CIRC, (which corporation has taken over the non-performing assets of United Bank Limited), accepted the offer of Messrs Euro Plus (Mons-Belgium) in the sum of Rs.46.00 crores. The aforesaid order was assailed by the judgment-debtor ant Messrs Indus Sugar Mills Limited, before a Division Bench of this Court through HCA No.284 of 2002 and HCA 295 of 2002, respectively. Whereas Messrs Chawla International also assailed the said order through HCA No.292 of 2002. The first two appeals were dismissed by judgment dated 29-11-2002 whereas HCA No.292 of 2002 was dismissed vide judgment dated 13-12-2002. Against the aforesaid judgments separate C.P.L.As. Bearing Nos.1113-K of 2002 and 29 of 2003 were filed by the Judgment-debtor and Messrs Chawla International before the Honourable Supreme Court of Pakistan. Mr. Abid Zuberi, Advocate who appeared for the judgment-debtors, in the above C.P.L.A. Made the following submissions before the Honourable Supreme Court:-- (1) Learned Banking Judge got the assets of the petitioner-company auctioned without fixing upset price (reserved price), in violation of the provisions of Order XXI, Rule 66(e), C.P.C., rendering the whole process of the auction illegal. Reliance was placed by him on the judgments reported as PLD 1972 SC 337; PLD 1993 Lahore 706; AIR 1973 SC 2593; 2000 CLC 63. (2) That the offer of Euro-plus (Mons Belgium), in the sum of Rs.46 Crore, was not liable to be accepted, being very low as the property under sale was evaluated by the evaluators, approved by the State Bank and appointed by BEL, at Rs.796 million and its forced sale value was so determined at Rs.606 million. 15. Mr. Abdul Hafeez Pirzada, appearing for Messrs Chawla International in Civil Petition No.29 of 2003, urged the following grounds before the Honourable Supreme Court:- (a) The petitioner was the highest bidder in the auction held in pursuance of the proclamation of sale, therefore, it had a legitimate expectation of the acceptance of its bid by the Court which has been denied to it illegally, in violation of law and consistence practice of the Court as such impugned order, calls for interference by this Court. (b) In the second round, in deference to the wishes of the Court, the petitioner increased its bid and was again the highest bidder amongst the bidders in the auction, therefore, legitimate expectations was reinforced for acceptance of its bid. (c) Assuming, without conceding, that if petitioner's bid ought to have been rejected by the Honourable High Court, it could have been done by passing a speaking order and then it was
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mandatory upon the Court to issue fresh proclamation and order re-auction of the property in view of the judgments reported in (PLD 1993 Lahore 706 and 2000 CLC 863), but the learned High Court had not adhered to the principles noted in these judgments as a result whereof injustice has been caused to petitioner. (d) That respondent Euro-Plus (Mons-Belgium) did not participate in the auction and only after the recommendation of the official assignee for consideration and acceptance of the bid, it made oral offer on telephone that it was willing to offer 30 Crores. Such offer could not be even considered by the learned Single Judge. (e) The learned High Court committed jurisdictional error in abdicating its authority and inviting the official assignee to sell the property by negotiation not confining to bidders but to all ensnares, as such this action on the part of the High Court is totally illegal. (f) Assuming, without conceding, that the Euro-plus (Mons Belgium) could make an offer then it was mandatory for it to deposit 25% of the offer immediately under the bidding conditions, and as per the requirement of Order XXI, rule 84, C.P.C., and the balance was payable within the 15 days of the acceptance of the offer as per the mandate of Order XXI, rule 85, C.P.C. Unless these provisions have been complied with, the offer made by Euro-plus is null and void. AIR 1954 SC 349; PLD 1953 Lahore 83; PLD 1977 Lahore 542 and 1982 CLC 388 Karachi. (g) The original Court/learned Single Judge acted illegally in accepting the offer of Euro-Plus (Mons-Belgium) and confirming the sale on the same day and also in directing handing over of the property to the offeror, ahead of the payment of the full price in violation of Rule 351 of the Sindh Chief Court Rules. (h) Petitioner being the highest bidder in the auction and without prejudice to the rights as contended above, had the right to match the offer made by Euro-Plus (Mons-Belgium). Such offer was made before the Division Bench of the High Court, rather it was improved but the High Court declined to exercise jurisdiction. In reply of above arguments, Messrs Malik Muhammad Qayyum, and Mushtaq Memon, the learned counsel appearing for Messrs Euro-Plus (Mons-Belgium) contended before the Honourable Supreme Court as under:-- (i) Neither the proclamation was issued by the Court nor sale was made under the C.P.C., therefore, all arguments raised by the learned counsel for petitioner are irrelevant. (ii) Respondent Euro-Plus (Mons-Belgium) faithfully abided by the terms of the public notice published in the Newspapers dated 26th July, 2002. (iii) Petitioner having acquiesced the procedure and having participated in the proceedings for sale is estopped to say that sale should be made in another manner or some additional provisions should be added in the sale publication. (iv) Even assuming that C.P.C. Apply, there is no prohibition in the C.P.C. Or in any other law requiring that if an auction was held, no subsequent negotiation can take place. (v) Condition relating to deposit of 10% of the, offer before making bid and 25% of the offer after the bid are all procedural matters and deviation therefrom do not render the proceedings of sale illegal or void. Euro-Plus had deposited 10% along with offer. 25% additionally was deposited within the time allowed by the executing Court and the remaining amount could not be deposited on account of stay order issued firstly by the Sindh High Court and then by the Honourable Supreme Court. (vi) Euro-Plus had not made any offer on telephone but given his offer in writing on 21st September 2002, which fact finds mention in the order passed by the learned Single Judge. (vii) The date fixed for receipt of sealed bids is extendable by the Court and it was done, vide . Order dated 23rd September 2002, therefore, it is incorrect to say that offer made by the respondent Euro-Plus (Mons-Belgium) was belated.
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(viii) The Court was under no obligation as per law and as per the terms of proclamation inviting bids to accept the highest offer, therefore, even if the offer made by petitioner (Messrs Chawla International) was highest, it does not acquire any right to be agitating before any Court. (ix) All, efforts made by the Court are permissible under the law and also it is required by the Court to make all efforts to have the bid price enhanced, therefore, any order passed or proceedings taken by the Court for achieving this object, would not be interfered by this Court. (x) That ample time and opportunity was given to Messrs Chawla International to match their bid with that of Euro-Plus (Mons-Belgium)'s bid but they failed, rather refused to do so, therefore, the offer made by Messrs Chawla, before the Honourable Supreme Court, cannot be accepted. (xi) That in any case, these petitions are premature inasmuch as the learned Division Bench of the High Court in the impugned order has observed that the sale in favour of respondent Euro-Plus (Mons-Belgium) has not been confirmed and matter is still open before the learned executing Court where all such pleas can be raised. (xii) The property under sale was a mortgaged property for which special procedure has been provided under the Banking Laws." The above two petitions were disposed of by the Honourable Supreme Court, through a common order, passed with the consent of the counsel for the parties on 9 9-2004, thereby permitting the parties to raise before the Banking Judge the aforenoted objections/contentions or any other question, in accordance with law. Pursuant to the aforesaid order of the Honourable Supreme Court, the aforenoted execution applications were taken up for hearing of the various objections/submissions of the parties. During the course of arguments Mr. Aitzaz Ahsan, the learned counsel for the judgment-debtors submitted that in terms or Order XXI, Rule 66(e), C.P.C. It was imperative upon the Banking Court to have determined reserved price of the - judgment- debtor's property and indicated the same in the sale proclamation however, in violation of the said mandatory provision, no reserve price was either determined or mentioned in the sale proclamation, thus rendering the whole exercise illegal. He further contended that as a result of non-determination and non-declaration of the reserve price the judgment-debtor has been gravely prejudiced as the price of Rs.46 Crore offered by Euro Plus is grossly inadequate. He submitted that even the evaluators appointed by Bankers Equity Ltd. Who are the lead Banker of the consortium that granted finances to the judgment-debtor have evaluated the value of the property in question at Rs.796,836,611 and has declared the forced sale value thereof to be Rs.6,045,788 which is far in excess of the offer made by Euro-Plus. The learned counsel submitted that the judgment-debtor is genuinely interested, and has a right that his assets are sold at a realistic price so that the major amount of his liability may be paid off. The learned counsel further submitted that the offer made by Euro-Plus was not liable even to be considered, firstly for the reason that Euro did not submit their bids within the time as prescribed by the sale proclamation dated 26-7-2002 and made their offer as late as on 21-9- 2002, and that too without depositing 10% per cent .Of their offer, as they, along with their offer of Rs.30 Crores, only deposited Euros 52725, which amount is equivalent to Pak Rupees 30,00,000 which is merely one per cent of the amount offered. He further contended that since the highest offer obtained by the official assignee in pursuance of the sale proclamation was inadequate and was rejected by the Banking Court, the Court ought to have ordered re-auction of the property, and by allowing the official assignee to negotiate with the original bidders and also with Euro-Plus for enhancement of the price the Banking Court has committed gross illegality. He submitted that at best negotiations could have been allowed with the bidders who had submitted their bids in conformity with the sale proclamation. He submitted that the Banking Judge has committed jurisdictional error in abdicating his authority by permitting the official assignee to sale the property through negotiations not confining to the bidder but all ensnares. The learned counsel
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submitted that Euro-Plus not only failed to deposit 10% of the bid amount as prescribed by the sale proclamation but has also failed to deposit the balance 75% of the bid amount as directed by the Court and also mandated by Rule 85 of Order )0(I, C.P.C., thereby nullifying the entire transaction, and thus it was imperative for the Court to have ordered re-auction of the property as mandated by Rule 86 of Order XXI, C.P.C. Mr. Ehsan contended that even otherwise, the Court should not have accepted the offer and ought to have provided an opportunity to the judgment-debtor to resolve the issues pertaining to settlement of its debts with the decree-holder and other banks under the State Bank, BPD Circular No.29, as the Judgment-debtor has applied to the banks, within the prescribed time and not only the matter was pending before the State Bank Committee constituted under the said scheme/circular for resolution oct cases pertaining thereto, but the judgment-debtor company fully meats the eligibility criteria for availing the incentives under the said circular. He further contended that it is now well-settled that State Bank of Pakistan, BCD Circular 29, has a statutory force and the judgment-debtor company having been declared eligible to avail the same and having applied thereunder within the prescribed time, the mandate as contained in the circular ought to have been honoured in favour of the judgment-debtor company, the Company having acquired a legal and vested right for settlement of its liabilities in terms of the circular. In support of his contention the learned counsel relied on the judgments in the following cases:-- Messrs SPRL Rehman Brothers v. Banking Court No.II Lahore 2000 MLD 1957, whereby a learned Single Judge of the Lahore High Court proceeded to set aside the sale conducted and confirmed by a Banking Court, even after issuance of sale certificate to the auction-purchaser, on the ground that the auction was conducted in a hasty manner and without following the legal requirement in letter and spirit. It was observed that property of more than crores was sold away for an amount of Rs.40 Lacs and that the auction-purchaser did not deposit 1/4th of the bid money at the spot as required under the law and that even the auction proceedings as well as auction report submitted by the Court's auctioneer did not inspire confidence. In the case of Messrs Naqi Chemical Industries (Pvt.) Ltd. v. Habib Bank Limited 2003 CLD 571 a Division Bench of the Lahore High Court proceeded to set aside the sale conducted by a Banking Court, as being violative of the mandatory provision of Order XXI C.P.C. As the auction was not conducted by the Court auctioneer at site and on the prescribed date. It was held that in terms of Rule 69 of Order XXI, C.P.C. The date of auction fixed by the Court can either be adjourned by the Court or the Court auctioneer conducting the sale and then the Court auctioneer can only adjourn the sale when he is physically present at the site. It was further held that the failure of auction-purchaser to deposit 3/4th of the amount within 15 days as per terms and conditions of sale and the extension of time in that regard by the Banking Court, without giving notice to the judgment-debtor, by Completely ignoring the mandatory provision of Order XXI, rule 68, C.P.C., was absolutely illegal and without jurisdiction, as extension of time under section 148, C.P.C. Can only be granted by the Court where such time had been fixed by the Court itself but when time for doing an act had been determined and fixed by law the Court had no power or authority to extend such time and that Order XXI, rule 85, C.P.C., compliance whereof is mandatory provides that full payment of the . Auction price by the purchaser shall be made before the close of 15th day from the sale of the property such being a mandate of law Court had no jurisdiction to enlarge the time. It was further held that the rule that no one shall be prejudiced on account of an act of Court would only be applicable in the cases where Court had authority to pass the order but the order was erroneous. However, where the Court lacked the authority to extend the time beyond such limit as prescribed by Rule 85, notwithstanding such extension by the Court, a party cannot put a premium on a void order. In the case of Muhammad Hassan v. Messrs Muslim Commercial Bank Ltd. 2003 CLD 1693 a Division Bench of the Lahore High Court held that a Court cannot delegate the powers to settle the terms and conditions of sale and
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to draw the sale proclamation to an officer appointed by it for conducting the sale and that the settlement and drawing of sale proclamation should be done after notice to the judgment-debtor. It was further held that the notice to sale without disclosing the accurate and adequate description of property was materially irregular With regard to the mode of execution of a decree it was held that under section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 the Banking Court has power to execute a decree in any manner as the Banking Court considers fit but such power can be exercised where there is a request by the decree-holder and the Court by application of conscious mind comes to the conclusion that the decree cannot be executed by applying general rules as provided in the C.P.C., and further where there was no speaking order passed in terms of section 19 of the above Ofdinance and the Court issued notice to the judgment- debtor under Order XXI, Rule 66, C.P.C. Then it would be deemed that the Court had intended to execute the decree according to the provisions of Civil Procedure Code rather than under special law. In the case of Hydaybia Textile Mills Ltd. v. Allied Bank of Pakistan Ltd. PLD 1987 SC 512 the Honourable Supreme Court held, that the Banking Court in the matter of judicial sale, is vested with vide discretion to choose any mode of execution of the decree, it cannot however, refuse confirmation of sale on any ground which it chooses. It was further held that once a Court had made up its mind to execute a decree by attachment and sale by public auction, as long as the order so directing is in the field, the discretion vested in it under section 8(3) of the Ordinance stood exhausted and a particular course of proceedings was brought into motion which had to culminate in a result contemplated by legal principles, and this course could not be diverted on the assumption that the executing Court had discretion to choose any mode of execution. In the premises the question of confirmation was to be regulated either by Civil Procedure Code or equitable principles under the provisions thereof or on general principles. With regard to the judicial discretion it was held that such discretion vested by statutory provision cannot be construed in such a manner as it will arm the Court with arbitrary powers and would inevitably destroy the public confidence in the stability in the judicial arrangements. Similar view was expressed by a Division Bench of the Lahore High Court in the case of Ch. Abdul Majeed v. Sadaqat Seed Malik 2002 CLD 463, where sale had been confirmed and sale certificate had been ordered to be issued, in the following words: "Once the Banking Court had opted to execute decree in the manner prescribed in Civil Procedure Code, 1908 more particularly…
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