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Petitioner: MUHAMMAD HUSSAIN VS Respondent: INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN, HYDERABAD and another
Court Name: Sindh High Court Judge(s): Aziz-ur-Rehman, Muhammad Tasnim Title:MUHAMMAD HUSSAIN vs INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN,
HYDERABAD and another Case No.: Ist Appeal No,31 of 2011 Date of Judgment:2012-12-19 Reported As: 2013 CLD 941 Result: Appeal dismissed Judgment ORDER ' AZIZ-UR-REHMAN, J.---By means of this Ist Appeal, the appellant/highest bidder has challenged the order dated 19-5-2011 of Banking Court No,1, Hyderabad passed in Execution No,79 of 2003 arising out of Suit No,31 of 2002 [I.D.B.P. v. Messrs Zafar Rice Mills] whereby the following two applications were allowed:-- (a) Application under Order XXI, Rule 89 read with section 151, C.P.C filed by J.D. [respondent No,2 herein] some time in October, 2008 with a prayer for setting aside the sale/auction of the Mill along with plant, structure, construction etc. (b) Application under Order XXIII, Rule 3, C.P.C. Jointly filed by decree-holder Bank and J.D. [respondents Nos.1 and 2 herein] for acceptance of the compromise and disposal of execution application in terms of settlement arrived between the parties. 2. The appellant/highest bidder through the instant appeal has prayed for setting aside the impugned order dated 19-5-2011 and issuing direction to the Banking Court-I, Hyderabad for confirmation of the sale in favour of the appellant/highest bidder. 3. Succinctly the relevant facts are as under:- 4. The decree holder/I.D.B.P. [respondent No,1 herein] filed Suit No,31 of 2002 against Messrs Zafar Rice Mills through its proprietor Choudhry Muhammad Zafar son of Choudhry Noor Akbar residence of House No,92 Garibabad, Mirpurkhas, Sindh [respondent No,2 herein] for recovery of Rs,30,99,867 as on 15-8-2001 under section 9 of the Financial Institutions [Recovery of Finances] Ordinance 2001 (XLVI of 2001) with the following prayer:-
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(i) Decree the suit in favour of the plaintiff and against the defendant for Rs,30,99,867 and grant future markup from the date of institution of the suit till the final satisfaction of the decreetal amount. (ii) Order for sale of moveable and immoveable property of the defendant and the proceeds of the same be given to the plaintiff towards satisfaction of decreetal amount. (iii) Grant the cost of the suit and all other expenses thereon. (iv) Any other relief this honourable Court deems fit and proper in the circumstances of the case may please be given to the plaintiff 5. Summonses of the above suit were issued to the defendant by all prescribed modes including publication in daily 'DAWN' Karachi and daily 'JANG' Karachi both dated 15-5-2002. In response thereto the defendant however, failed and/or avoided to appear before Banking Court No,1, Hyderabad for seeking leave to defend the suit. 6. In term of section 10(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, in absence of any leave from the Banking Court to defend the suit, the allegations of fact in the plaint are deemed to be admitted. Under the aforesaid section the Banking Court is also empowered to pass a decree in favour of a plaintiff on the basis of such presumptive admission or such other materials which the Banking Court may require in the interest of justice. 7. In view of this position ultimately the suit filed by I.D.B.P. /plaintiff was decreed on 6-7-2012. Notwithstanding, passing of final decree J.D/Respondent, No,2 failed to make payment in terms of the decree. Under circumstances, D.H/Respondent No,1 was constrained to file execution application on 7-2-2003, which was numbered as Execution No,79 of 2003. 8. In the Execution Application No,79 of 2003 an application for attachment of the subject property was filed by the D.H/Respondent No,1 which was allowed however, without service of notice upon J.D./Respondent No,2. 9. From perusal of record it appears that neither notice for settling the terms and conditions of the proclamation of sale was served upon the J.D/Respondent No,2 nor any notice for 'valuation' of the subject property was issued to the J.D/Respondent No,2. 10. Nonetheless the terms and CONDITIONS of "PUBLIC AUCTION" were settled, which are reproduce herein as below:-- "(1) The person declared to be purchaser shall deposit with the undersigned immediately after such declaration 25% of the amount purchase money through demand draft/ cash/ pay order. No cheque will be accepted. (2) The balance amount of purchase money shall be like wise paid/ deposited into the court within 15 days after the auction. (3) The sale shall be subject to confirmation by the Court. (4) Successful bidder shall have to pay all the applicable taxes. (5) The Court reserves the right to cancel the auction at any time, or not to accept any bid even it is the highest one. (6) Property can be inspected during office hours with prior appointment." 11. Despite non-service and/or issuance of mandatory notices regarding attachment, settling the terms and conditions of 'public auction' and 'valuation' of the subject property, prolamation for sale of subject property bearing plots Nos.1 to 54 in R.S. 87 measuring 54625-35 sq. Feets (bout 1.25 acres) together with buildings, structures, fixtures, plants and machinery etc. Situated at Wali Town, deh 116 Old Mirpurkhas was got published in daily. "KAWISH" Hyderabad and daily "JANG" Karachi both dated 25-11-2005. The date fixed for auction was 29-12-2005 at 11-00 a.m. 12. In response, the highest bid received on 29-12-2005 was in the sum of Rs, 0.510 millions from one Sabir Ahmed. However, IDBP did not approve the highest offer of Sabir Ahmed. Resultantly, the
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learned Banking Court No,1, Hyderabad did not accept the same. The 25% bid amount thereafter was refunded to the bidder viz. Mr. Sabir Ahmed. 13. Thereafter for settling the terms of sale proclamation [Order XXI, Rule 66, C.P.C.1 notice to J.D was issued for 22-9-2006. However, per bailiff report dated 15-9-2006 J.D. Remained un-served. 14. Prior to 2nd time publication of "PUBLIC AUCTION" notice dated 10-4-2007 was issued to the Respondent No, 1/D.H. Bank for submitting the 'valuation certificate' from Mukhtiarkar, Sub-Registrar or concerned corner. Per valuation certificate of D.H/Respondent No, 1 dated 30-4-2007 submitted to Banking Court No,1, Hyderabad, the value of land, building and machinery was assessed at Rs,900,000 and forced sale value (FSV) at Rs,8.10,000. The breakup of valuation is given as below:-- Land Rs.250,000 Building Rs.3,00,000 Machinery Rs.3,50,000 Assessed Value Rs.900,000 FSV= Rs.810,000 15. Nonetheless, sale proclamation through 'PUBLIC AUCTION' on as is where is basis for sale of subject property bearing plots Nos. 1 to 54 in R.S. 87 measuring 54625-35 sq. Feet [About 1.25 acres] together with buildings, structures, fixtures, plants and machinery etc. Situated at Wali Town, deli 116 Old Mirpurkhas belonging Respondent No,2 was issued by Banking Court No,1, Hyderabad for 2-5- 2007. Notice for public auction was got published in daily Kawish' Hyderabad and daily `fang' Karachi both dated 4-4-2007. 16. Pursuant to the above, the appellant participated in the auction proceedings held on 2-5-2007 at 11-00 a.m., his highest bid was in the sum of Rs,8,15,000 [Rupees eight lacs fifteen thousand only]. Mehmood Khan was the second highest bidder in sum of Rs,8,00,000 [Rupees eight lacs only). Out of the bid amount of Rs,8,15,000, the appellant deposited 25% amounting to Rs,2,30,750 through demand draft bearing No,0499645/40/70 of Allied Bank of Pakistan Limited, M.A. Jinnah Road, Mirpurkhas with the Banking Court No,1, Hyderabad. 17. It appears on approval of D.H. Bank, the remaining balance amount of 75% amounting to Rs,6,11,250 [Rupees six lacs eleven thousand two hundred fifty only] was also deposited through D.D. No,0499677 dated 15-5-2007 drawn on A.B.L. Civic Centre, Hyderabad. For ready reference and convenience purpose the letter of the appellant/highest bidder dated 25-5-2007 is reproduced herein as under:-- "To ' The Honourable Judge, Banking Court-I, ' Hyderabad. ' Subject:- REQUEST FOR POSSESSION AND SALE CERTIFICATE OF MESSRS ZAFAR RICE MILLS MIRPURKHAS. ' Respected Sir, ' It is submitted that for the auction of above subjected my last bid was Rs,8,15,000 I have made 100% payment in the light of my bid, for which possession and sale certificate and Registry of Messrs Zafar Rice Mills Mirpur Old. ' It is, therefore, request that the Nazir may very kindly be appointed and directed to give the possession of the said Mill, issuance of sale certificate and registry of the property with Sub Registrar, Mirpurkhas. ' Thanking you sir, Your's faithfully, ' Dated. 25-5-2007. Sd/- ' (Muhammad Hussain son of Muhammad Ramzan) Purchaser Messrs Zafar Rice Mills Mirpur Old C/o Shah Latif Medical Store Chandni Chowk Mirwah Road, Mirpurkhas.
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18. On the aforesaid letter through order dated 25-5-2007, the learned Banking Court No,1, Hyderabad called report from Nazir of Banking Court. Being relevant the report submitted by Nazir of Banking Court No,1, Hyderabad is reproduced herein below:-- " As per order dated 25-5-2007 passed by this honourable Court on the application of the highest bidder. I submit my report that Mr. Muhammad Hussain son of Muhammad Ramzan highest bidder has made an application for possession, sale certificate and Registry of Messrs Zafar Rice Mills, Mirpur Old. ' The aforesaid highest bidder has offered an amount of Rs,8,15,000 and he has deposited 25% bid amount of Rs,2,03,750 on the day of auction i.e, 2-5-2007 through demand draft bearing No,0499645/44/70 dated 3-5-2007 A.B.L. M.A. Jinnah Road Mirpurkhas and subsequently he has also deposited remaining amount of 75% , which comes to an amount of Rs,6,11,250 through demand draft No,0499677 dated the 15-5-2007 drawn on A.B.L. Civic Center, Hyderabad within statutory period i.e, 15 days of total auction bid, hence the auction purchaser has deposited total amount of Rs,8,15,000 towards the property bearing plots Nos.1 to 54 R.S. No,87 measuring 54625-35 sq. Feet (1.25 acres) together with building, structures, including fixtures, plants, machinery etc. Situated at Wali Town deh 116 Old Mirpurkhas. ' That the' D.H. Bank has already submitted valuation certificate showing of sale value of such property is Rs,8,10,000, which is shown at flag-A. However, the Manager I.D.B.P/D.H. Has approved the offer to the tune of Rs,8,15,000 as a total auction bid and he has accepted such offer, which may be seen at flag-B. ' It is pointed out that the D.H. Bank has also intimated that any dues of the department of Local/ Sindh Government, Excise and Taxation etc. Against the company shall be paid by the bidder. ' It is also pointed out that S.D.O. (Operation) Sub-Division HESCO, Hirabad, Mirpurkhas had also sent an application under section 151, C.P.C. Through T.C.S. On 30-12-2005, praying therein that the electric Meter bearing No,24-3163-00736108-10 against, which an amount of Rs,55,364 is outstanding and has requested to recover/deduct the amount of bill from highest bidder such application is pending for its disposal at flag-C. ' It is also pointed out that the H.B.L. Has also made an application under section 151, C.P.C. On 17-5- 2007 praying therein that the sale proceed amounting to Rs,8,15,000 to the applicant/intervenor/ bank towards satisfaction of the amount decreed in Suit No,61/00 and the execution application arising there from bearing No, 335/02 such application is also pending before this honourable Court for its disposal at flag-D. ' In view of the above mentioned factual position and circumstances, the report is being submitted accordingly for further orders." 19. On 5-6-2007 the learned Banking Court No,1 Hyderabad, on the Nazir report dated 2-6-2007 issued notice to the parties for 27-6-2007. 20. In response to the letter No,295/2007/BC-I/ Hyderabad dated 4-10-2007 of Banking Court No,1, Hyderabad, the Mukhtiarkar (Revenue), Hussain Bux Mari Mirpurkhas also submitted his 'valuation certificate' dated 19-10-2007 [annexure-T at page-83 of the Court file]. Per his valuation report, out of S.No,87 an area of 01-16 acres is the sikni area in the name of Wali Town and value of the land only was shown about Rs,5,00,000 [Rupees five lacs]. Further in the report, the Banking Court No,1, Hyderabad was requested to appoint consultant of Engineering Department for assessing the value of machinery and fixtures etc. 21. Thereafter, it appears the matter remain pending for acceptance of the highest offer of the bidder/appellant. 22. Nonetheless, J.D./Respondent No,2, filed an application under Order XXI, Rule 89 read with section 151, C.P.C. In the Banking Court No,1, Hyderabad with a prayer for setting aside the so-called sale/auction of the Mill along with plant, structures, constructions etc. Along with the application a
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cheque No,3843151 of Bank Islami Pakistan Limited Mirpurkhas in the name of Nazir of Banking Court No,1, Hyderabad for an amount of Rs,40,750 being 5% of highest offer was enclosed. Another cheque No,38432552 of Bank Islami Pakistan, Mirpurkhas amounting to Rs,1,60,000, in the name of IDBP, Karachi was also enclosed with the aforesaid application. 23. In response to the aforesaid application filed by the Respondent No,2/J.D, the appellant/highest bidder filed his counter-affidavit. In the counter affidavit, inter alia, he contended that the application as filed on 21-2-2008 by the Respondent No,2/J.D. Is time barred in view of Article 166 of the Limitation Act [X of 1908]. In the counter-affidavit, it was further contended by the appellant that the auction proceedings held on 2-5-2007 cannot be challenged. It was further asserted by the appellant/highest bidder that the time limit of thirty days provided under Article 166 of the Limitation Act [IX of 1908] cannot be extended. Per averments of appellant/highest bidder, the interest before "confirmation" cannot be disregarded. The auction held on 2-5-2007, per averments of the appellant/ highest bidder, the bid ought to have been confirmed and "sale certificate" issued in favour of highest bidder. Per appellant/highest bidder, the decree passed by the Banking Court is to be executed in terms of section 19(2) of F.I.O., 2001 [Ordinance No, XLVI of 2001]. Lastly, it was prayed that the application filed by J.D. Under Order XXI, Rule 89 read with section 151, C.P.C. Merits no consideration and is liable to be dismissed. 24. In rebuttal, the stand taken by the highest bidder/appellant was forcefully denied by J.D./Respondent No,2. It was also vehemently denied by the D.H./Respondent No,1, that the application under Order XXI, Rule 89 read with section '151, C.P.C. Is either time barred or otherwise not maintainable. The application of J.D/Respondent No,2 for setting aside sale/auction was emphatically defended by the D.H/Respondent No, 1. On behalf of D.H/Respondent No,1 the following prayer was also sought. "It is prayed on behalf of the defendant/JD. That this honourable Court may be pleased to set aside the sale/ auction of the Mill along with plant, structure, construction etc. And further action in the matter on the consideration of the facts and grounds disclosed in the accompanied affidavit." 25. Apart from the above, the D.H/Respondent No,1 and J.D/Respondent No,2 jointly filed another application under Order XXIII, Rule 3, C.P.C. With the following prayer:- 'It is prayed on behalf of the D.H. Bank and the defendant/JD No,1 that this honourable Court may kindly be pleased to accept the compromise and dispose of the instant execution application, which is pending trial before this honourable Court, as the parties have arrived at amicable settlement and judgment debtor Ch. Muhammad Zafar has deposited post-dated cheque of Rs,1,776,000 dated 4th June, 2009 drawn at Bank Islami Pakistan Limited, Station Road Branch, Mirpurkhas towards outstanding loan liability against J.D. (s). ' It is further prayed that order of auction passed by this honourable Court which has not been confirmed may be recalled and the cheques of Rs,40, 750-00 already deposited by the J.D. With the Nazir of this honourable Court may be given to the auction purchaser as compensation. In case of dishonour of post-dated cheques, the execution application will stand restored. ' It is further submitted that the J.D. Will also adjust/ settle the liability of Habib Bank Limited himself separately for which time be extended upto 4-6-2009. ' The prayer is made in the interest of justice. ' Sd/- JC. Ch. Muhammad Zafar. ' Sd/ - Manager, IDBP, Hyd. 26. In fesponse to the aforesaid compromise application, the highest bidder filed his objections. The objections were to the effect that the provisions of under Order XXIII, Rule 3, C.P.C. Are not applicable to the execution proceedings. Nonetheless the same was/were vehemently opposed by
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both D.H. And J.D. [Respondents Nos.1 and 2 herein] and prayer for grant of both the applications was sought on their behalf. 27. On both the applications, arguments were heard on 19-5-2011 and both the applications were allowed by the learned Banking Court No,1, Hyderabad. The concluding para of the impugned order dated 19-5-2011 reads as under:-- In view of my above discussion, application under Order XXI, Rule 89 read with section 151, C.P.C. Is allowed. The highest bidder is allowed to withdraw the amount deposited by him together 5% of the sale , amount deposited by the J.D. The D.H and J.D. May settle the matter in terms arrived between them. Both the applications stand disposed of accordingly--------- 28. Being aggrieved, the instant appeal has been filed by the highest bidder/appellant whereby the impugned order dated 19-5-2011 has been challenged. 29. On 22-11-2012 arguments were heard and record perused with able assistance of the learned counsel for the parties. However, for amicable settlement the matter was adjourned to 4-12-2012. The order dated 22-11 2012 reads as under:-- "---Arguments of both the parties have been heard. Son of respondent No,2 is present. At the close of the hearing, an offer has been made to respondent No,2 to compensate the appellant in terms of money due to subsequent event which has taken place after passing of the impugned order. Son of the respondent No,2 as well as counsel for respondent No,2 are directed to seek instructions from respondent No,2 as to whether he is ready and willing to pay Rs,50,000 to the appellant as compensation for the reason that an amount of Rs,8,15,000 of the appellant is lying in the Banking Court for the last five years, but sale was not confirmed in his favour and he is being, running from pillar to post. For only seeking consent, matter is adjourned to 4-12-2012 at 11-00 a.m. Bank Officers are directed to call Chief Executive of the Bank on the next date of hearing." 30. On 4-12-2012, when again the matter came up before the Court the offer made on behalf of respondent No,2 in the sum of Rs:400,000 over and above the bid amount i.e, Rs,8,15,000 was not accepted by the appellant/highest bidder. Under the circumstances, the following order was passed:-- "The matter was heard on 22-11-2012, but since amicable settlement was negotiated by the parties, the matter was adjourned for today, but today no compromise has been reached. Parties' counsel have been finally heard and matter is reserved for orders." 31. Upon failure of amicable settlement on 4-12-2012 the matter was finally heard and record perused. 32. Mr. Aijaz All Hakro, learned counsel for the appellant vehemently contended that the impugned order dated 19-5-2011 passed by Banking Court No,1, Hyderabad, is against equity and opposed to law. He further contended that Banking Court No,1, Hyderabad has failed to apply judicial mind. Mr. Aijaz Ali Hakro, learned counsel for the appellant further contended that the learned Banking Court has wrongly held that instead of Article 166 of Limitation Act [IX of 1908], Article 181 of the Limitation Act [IX of 1908] is applicable. Per learned counsel, the auction was held on 2-5-2007 and the highest bidder [Appellant herein] on the same day deposited 25% of offer [Rs,2,30,750/- only] through demand draft bearing, No,0499645/44/70 dated 3-5-2007 A.B.L. M.A. Jinnah Road Mirpurkhas. Thereafter the balance bid amount [Rs, 6,11,250 only] was also deposited on 15-5-2007 through demand draft No,0499677 dated 15-5-2007 drawn on A.B.L. Civic Center Hyderabad with the Banking Court No,1 Hyderabad. Mr. Aijaz All Hakro further contended that the application under Order XXIII, Rule 3, C.P.C. Jointly filed by the D.H. And J.D. [Respondents herein] was illegally considered by the Bank Court No,1, Hyderabad. The compromise between the D.H/Respondent No,1 and JD/Respondent No,2, per learned counsel, is not "sufficient cause" for setting aside the sale in favour of highest bidder/appellant.
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33. Per learned counsel, the application under Order XXI, Rule 89 read with section 151, C.P.C. Having been filed beyond 30 days was time barred. No condonation of delay, per learned counsel, was sought by the Respondent No,2/J.D. Besides 20% of sum realized i.e, Rs,8,15,000 [Rupees eight lacs fifteen thousand only], per learned counsel, was not deposited. Mr. Hakro, learned counsel for the appellant further contended that the interest of the 'highest bidder under law should have been protected. By the Banking Court No, 1, Hyderabad. He further contended that sale cannot be set aside on the ground of deposit of 5% of Rs,8,15,0000 [Rs, Eight lac fifteen thousand only]. In support of his contention Mr. Aijaz All Hakro the learned counsel for the appellant/highest bidder placed reliance on PLD 1987 SC 512 [HUDAYBIA TEXTILE MILLS LTD. And others v. ALLIED BANK OF PAKISTAN and others], PLD 1975 Lahore 1393 [MUHAMMAD DIN v. ELLAHI NOOR and 4 others], 2006 CLC 1272 [U.B.L. v. HERYANA ASBESTOS CEMENT INDUSTRIES (LTD) and 20 others], 1987 CLC 1338 [MUHAMMAD SULEMAN v. ALLIED BANK OF PAKISTAN LTD. And 11 others]. 34. Conversely, Mr. Pirbhulal Goklani learned counsel for respondent No,2/J.D. Emphatically argued that proprietor of Messrs Zafar Rice Mill Limited viz. Choudhry Muhammad Zafar was in fact in serious crises. Per learned counsel due to 'political rivalry' he was falsely implicated in a murder case and his house, his agricultural land was forcibly occupied by the then Chief Minister of Sindh. Under circumstances, the proprietor of J.D/Respondent No,2 was compelled to leave the Province of Sindh. Nonetheless, after getting the bail and knowing about the auction proceedings, an application was filed before Banking Court No,1 Hyderabad, for setting aside the auction proceedings. The learned counsel for the Respondent No,2 further contended that the auction of plots Nos.1 to 54 in R.S. No,87 measuring 54625/35 sq. Feets; [about 1.25 acres] together with buildings, structures, fixtures, plants and machinery situated at Wali Town deh 116 Old Mirpurkhas for Rs,815,000 [Rs, Eight lac fifteen thousand only] besides illegal, unfair is mala fide and fraudulent. 35. Learned counsel for Respondent No,2 further submitted that the compromise of respondent No,2/J.D. With respondent No, 1 /D.H and Messrs Habib Bank Limited as 'first charge holder' is valid and lawful. Per learned counsel, both the Banks in consequence of settlement having received Rs,20,00000 [Rupees Twenty lacs only] which is significantly more than auction money of Rs,8,15,000 (Rupees eight lac fifteen thousand only]. 36. Mr. Pirbhulal, further contended that the objections raised by the appellant/highest bidder are without substance and merits no consideration. Learned counsel for the Respondent No,2 further contended that, the application under Order XXI, Rule 89 read with section 151, C.P.C. Filed by the respondent No,2 is within time. Per learned counsel, Article 181 of the Limitation Act [IX of 1908] is applicable and not Article 166 of the Limitation Act [IX of 1908] as contended by the learned counsel for the appellant because of unfairness of the auction proceedings and/or fraudulent sale of the subject property on lower price than the market value. 37. Learned counsel for the respondent No,2 further contended that the bid of appellant/highest bidder has never been 'accepted' by the Banking Court No,1, Hyderabad as such no right vests in favour of the highest bidder/appellant. Per learned counsel for the appellant/J.D, neither his bid was 'accepted' nor 'confirmed'. Per learned counsel, highest bid of Rs,8,15,000 is much lower than the market value of property which is ranging between Rs,50,00,000 to Rs,60,00,000. Per learned counsel, the valuation of the subject property besides unilateral was managed in collusive manner. Lastly, the learned counsel for the respondent No,2 contended that the objections raised by the auction purchaser besides mis-cnceived are not tenable in law. The learned counsel for the respondent No,2 supported…
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