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Petitioner: Messrs LANVIN TRADERS, KARACHI VS Respondent: PRESIDING OFFICER, BANKING COURT JUDGMENT
Court Name: Supreme Court of Pakistan Judge(s): Anwar Zaheer Jamali, Ejaz Afzal Khan Title:Messrs LANVIN TRADERS, KARACHI vs PRESIDING OFFICER, BANKING COURT
JUDGMENT
Reported As: 2013 SCMR 1419, 2013 CLD 1581 Result: Leave refused Judgment JUDGMENT EJAZ AFZAL KHAN, J.---This petition for leave to appeal has arisen out of the judgment dated 20- 11-2002 of a Division Bench of Sindh High Court whereby it dismissed the appeal filed by the petitioner and maintained the order dated 5-6-2002 of the Judge Banking Court-II, Karachi. 2. Brief facts of the case as described in para 2 of the impugned judgment read as under:-- "The brief facts leading to this appeal are that respondent No,2 Habib Bank Limited filed a suit against the appellant and one Yaqoob Habib for recovery of Rs, 1,55,00,000 which was decreed on 29-5-2000. Execution application No,154 of 2000 was filed on 28-7-2000 for recovery of the decretal amount by sale of mortgaged property, under Order XXI, Rule 66, C.P.C. and by arrest and detention of judgment-debtors under Order XXI, R. 37, C.P.C. On the above application the Court issued sole proclamation in consequence whereof the property was ordered to be sold to respondent No,4 Muhammad Ashraf being the highest bidder in the sum of Rs,1,35,00,000. The appellant filed an application under section 151, C.P.C. on 9-3-2002 wherein he offered enhanced price of Rs,1,55,00,000 for the property in question and prayed for the order that the property be ordered to be sold to him. However, the Banking Court dismissed the said application vide order dated 4-5-2002. Appellant subsequently filed a fresh application under section 151, C.P.C. wherein he increased his previous offer from Rs,1,55,00,000 to Rs,1,67,02,106 being the amount in satisfaction of the decree and prayed that the property in question be ordered to be sold to him as he was offering Rs,32,00,000 more than the bid of respondent No,4 in whose favour the property was ordered to be sold. Appellant had also deposited a pay order equivalent to the amount of bid in the Banking Court. This application was vehemently resisted by respondent No,4 on the ground
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that he had deposited the entire sale price in Court, sale had been confirmed in his favour, sale confirmation certificate had been issued, original title documents had been handed' over to him, and therefore, the Court had no jurisdiction to set aside the sale in his favour and to order the sale of the property in question to the appellant. The Banking Court vide impugned order dated 5-6-2002 dismissed the application on the ground that a similar application filed earlier had been dismissed by Judicial Order dated 4-5-2002 after taking into 'consideration all the issues and objections raised by the appellant and the relevant provisions of law and there was no justification for filing a fresh application. The Court further observed that the appellant had failed to establish his right or title in respect of the property in question and the locus standi/ capacity in which he had moved the application under section 151, C.P.C. praying for an order of sale of property in his favour on offering higher price than the price offered by respondent No,4. Feeling aggrieved and dissatisfied with the impugned order the appellant has assailed the same by way of this appeal". 3. Learned counsel appearing on behalf of the petitioner contended that neither the salutary provisions of Rules 64, 65 and 66 of Order XXI, Code of Civil Procedure have been complied with nor the proceedings leading to the auction of the property have been held in a transparent manner which has not only resulted in miscarriage of justice but has also reduced the whole process to a farce. Though, the learned counsel added, the writ of attachment has been recorded to have been issued in as many as six orders of the learned Banking Court but the order dated 3-9-2001 would show that it had never been done. It could not be, maintained the learned counsel. when the terms of sale were not settled, therefore, the auction thus conducted could not be vested with any sanctity. The High Court, the learned counsel argued, could have undone the illegality and consequent injustice but it proceeded to decide the appeal oh absolutely irrelevant premises. Absences of reserve price, the learned counsel submitted, is yet another serious lacuna which would robe the sale and its confirmation of its worth if at all it had any. The learned counsel by winding up his arguments submitted that where the basic order is void entire superstructure raised thereon would fall to the ground. The learned counsel to support his contention placed reliance on the cases of "Messrs Majid and Sons and another v. National Bank of Pakistan through Manager and another" (2004 CLD 1616), "Messrs Magi Chemicals Industries v. Habib Bank" (2003CLD 571), "Appu alias Subramania Patter v. O. Achuta Menon and others" (AIR 1926 Madras 755), "Mir Wali Khan and another v. Manager, Agricultural Development Bank of Pakistan, Muzaffarqarh and another" (PLD 2003 SC 500). 4. As against that learned counsel appearing on behalf of the respondents contended that the entire proceedings from the point of commencement to the point of confirmation of sale are in line with the letter and spirit of the law, and that any insignificant procedural lapse creeping in at one stage or another cannot be blown out of proportion to make out a case for interference that too when no objection in this behalf has been raised in the for a below within the time prescribed by Article 166 of the Limitation Act or even thereafter. The learned counsel next contended that once an application filed by respondent No,3 under section 151 was dismissed, another application on the same grounds could not have been entertained. Though, the learned counsel added, the question of limitation has not been urged by the respondent nor discussed in any part of the impugned judgment, yet this Court on the strength of section 3 of the Limitation Act can dismiss a lis on such ground. The entire affair, the learned counsel argued, appears to be a handicraft of Younis Habib, respondent No,3 herein, who being a brother of the petitioner is dead set to circumvent the process of the Court and thereby protect his own fraud. Rule 66 of Order XXI of the Code, the learned counsel contended, nowhere requires the mention of reserve price, therefore, the proceedings culminating in auction of the property cannot be held to be faulty on account of its omission. The learned counsel next contended that though an adjustment was arrived at between
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the decree holders and the judgment debtors but it cannot dilute the validity of the sale which has since been confirmed. Learned counsel to support his contention placed reliance on the cases of "Nanhelal and another v. Umrao Singh" (AIR 1931 Privy Council 33) and "Hudaubia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others" (PLD 1987 SC 512). Even otherwise, the learned counsel submitted, sale effected cannot be challenged through.an application under section 151 Code nor could it be challenged on the ground of none compliance with the provisions of Code regulating proclamation, publication and conduct of sale in execution. Proceedings under Rule 66 of Order XXI of the Code, the learned counsel on the strength of the judgment rendered in the case of "Mst. Manzoor Jahan Beaum v. Haji Hussain Bakhsh" (PLD 1966 SC 375), submitted are ministerial rather than judicial, therefore, the petitioner cannot be allowed to draw any premium if at any stage of the proceedings it has been by Passed. The auction-purchaser, learned counsel went on to argue, cannot be punished for any of the lapses having its origin to the act of the Court, especially when the prices of the property have gone to a dizzying height. It was, in this context, the learned counsel submitted, that the Supreme Court of India in the case of "Janak Raj v. Gurdial Singh and another" (AIR 1967 SC 608), declined to undo a sale even if the decree under which it was ordered was reversed. Even otherwise, stressed the learned counsel, strict compliance with Rule 66 of Order XXI of the Code cannot be insisted when the Banking' Court in view of section 18 Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 has a discretion to adopt a mode, other than the one prescribed by the Code, for execution of decree. 5. The learned counsel appearing on behalf of respondent No,2 submitted that he would not have any objection to the re-auction of the property as the price fetched by the impugned auction is far less to satisfy the decree passed against the petitioner. 6. We have gone through the entire record carefully and considered the submissions of the learned counsel for the parties. 7. Before we proceed to discuss the merits of the case, it would be worthwhile to refer to Rule 66 of Order XXI which reads as under:-- "66. Proclamation of sales by public auction:- (1) Where any property is ordered to be sold by public auction in execution of a decree, the Court shall cause a proclamation of the intended sole to be mode in the language of such Court. (2) Such proclamation shall be drawn up offer notice to the decree-holder and the judgment- debtor and shall state the time and piece of sale, and specify as fairly and accurately as possible - (a) the property to be sold; (b) the revenue assessed upon the estate or part of the estate, where the property to be sold is an interest in an estate or in part of an estate paying revenue to the Government; (c) any encumbrance to which the property is liable; (d) the amount for the recovery of which the sale is ordered; and (e) every other thing which the Court considers material for a purchaser to know in order to judge the nature and value of the property. (3) Every application for an order for sale under this rule shall be accompanied by a statement signed and verified in the manner hereinbefore prescribed for the signing and verification of pleadings and containing, so far as they are known to or can be ascertained by the person making the verification, the matters required by sub-rule (2) to be specified in the proclamation. (4) For the purpose of ascertaining the matters to be specified in the proclamation, the Court may summon any person whom it thinks necessary to summon and may examine him in respect to any such matters and require him to produce any document in his possession or power relating thereto". 8. A look at the above quoted provision would reveal that it has provided an exhaustive procedure
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for the proclamation of sales by public auction, How the proclamation of the intended sale shall be caused to be made; how shall it be drawn up after notice to the decree holders and the judgment debtors and how would it state the time and place of sale and specify as fairly and accurately as possible (a) the property to be sold, (b) the revenue assessed upon the estate or part of the estate, where the property to be sold is an interest in an estate or in part of an estate paying revenue to the Government, (c) any encumbrance to which the property is liable, (d) the amount for the recovery of which the sale is ordered, and (e) every other thing which the Court considers material for a purchaser to know in order to Judge the nature and value of the property. In the absence of any of the particulars, listed above, the purpose of sale cannot be achieved. Once these particulars are ignored or overlooked, wild and wayward, would rule the roost. If, in this state of things, it is also ignored who suffers and who gains whether lawfully or otherwise, God knows what would become of the administration of justice. Yes, this provision which was ministerial before 1908 does not un- necessarily become judicial, according to the observations made by his lordship Mr. Justice B. Z. Kaikus, as he then was, in the Judgment rendered in the case of "Mst. Manzoor Jahan Begum v. Hag Hussain Bakhsh" (supra), but the failure to comply therewith cannot be defended under any cannons of law and propriety, when, it tends to damage the rights of the decree holders or those of judgment debtors, simply because a sale has been effected in favour of a third party. Agreed, that proceedings under the aforesaid rule do not involve any judicial determination, but at the same time it cannot be disputed that they lay a sure foundation for judicious and judicial determination of the rights and liabilities of the parties. A balance, therefore, has to be struck to protect the rights and liabilities of the parties which could either be imperiled or even extinguished by not complying with the provision which has been inserted by the legislature with design and purpose. 9. The argument, that strict compliance with Rule 66 of Order XXI of the Code cannot be insisted when the Banking Court in view of section 18 of Banking Companies (Recovery-of Loans, Advances, Credits and Finances) Act, 1997 has a discretion to adopt any mode for, the execution of decree has left us unmoved firstly because the Court has no discretion to switch over to another mode once it has chosen to proceed under the Code. And secondly because no other mode ensures that degree of transparency at least in sale as does the provision mentioned above. In no case, such matters can be left to an unfettered exercise of discretion, which tends to shroud transparency when it is heeded more in these days than ever before. 10.Getting down to the brass tacks of the case, it would be seen that it was not a single lapse which flashed by without causing harm to any. It was rather a series of ploys which appears to have been employed to harm one and benefit another. A look at the orders passed from 7th December, 2000 to 21st January, 2001 would show that things were done in a casual and cursory manner without due application of mind. When writ of attachment was issued; when was it received after being duly executed; if at all it was duly executed what was the fun to issue it again; how and when the terms of the sale were settled, and when and what the Court considered material for purchaser to know in order to judge the nature and value of the property are the questions which have neither been answered by the record nor by the learned counsel for respondent No, 4. Answers to these questions, according to the learned counsel, are not necessary, notwithstanding their absence goes to the root of the case and brings the whole proceedings under a thick cloud of doubt. What was that extraordinary which necessitated the passing of such orders at, the back of the parties is yet another question which has not been answered? Though this illegality alone, in our view, is sufficient to vitiate the whole proceedings ending in the auction of the property. Refuge is sought in the judgment rendered in the cases of "Nanhelal and another v. Umrao Singh" and "Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others" (supra) notwithstanding both the judgments are distinguishable on legal as well as factual grounds. If an argument or interpretation of this nature is accepted, we are afraid no sale under the
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Sun could be questioned even if it caused prejudice or worked havoc to either of the stake-holders. We would have accepted even this argument or interpretation had the price fetched through the sale so called, matched at least the decreetal amount. 11.Yes, the prices have gone to a dizzying height ever since the sale was confirmed in favour of the respondent but this will not deter the Court from undoing the sale when the proceedings leading thereto were marred by serious lapses causing serous prejudice to the decree holders as well as the judgment debtors whose amount, which is much greater than that of the auction purchaser, also lay in a static repose till date. The Division Bench of the High Court hearing the appeal cobalt have rectified the wrong by taking timely measures, but strange and surprising part of the episode is that even the Bench disposed of the appeal without due application of mind on the premise that the petitioners do not have the locus-standi to file an appeal before it, notwithstanding it was absolutely incorrect. 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 manoeuvrers 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 nil. 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. We, therefore, are constrained to hold that the whole proceedings from inception to the end E have not been held in accordance with law and thus cannot be blessed with any sanctity. In the case of "Mir Wali Khan and another v. Manager, Agricultural Development Bank of Pakistan, Muzaffargarh and another" (supra). This Court while dealing with an almost identical proposition focused more on substance rather than form and thus held as under:-- "The remaining grounds on which the objection petition was turned down travel beyond the scope of Rule 90 and as such are not pertinent. A judgment debtor is well within his right to seek annulment of a sale through an application under Rule 89 or an application under Rule 90 which have different connotations and parameters. If he elects to file an application under Rule 90 it has to be decided within the parameters thereof and not on the basis of his refusal to deposit the decretal amount or accept the offer to purchase the property over and above the price at which it was auctioned or procure a buyer who could offer an amount over and above the auction price. Similarly, no adverse 'inference can be drawn with regard to his credentials and conduct, Even otherwise the objection petition filed by the judgment debtors cannot be said to be tainted with mala fide in the face of the huge amount deposited by them in compliance with the orders of this Court and the High Court. As regards the contention with regard to the locus standi of the appellant, suffice it to say that he is admittedly one of the judgment debtors and there is no tangible proof on record that he has transferred his share to a third person". 12.Crux of what has been discussed above is that clever maneuvering forcing way for disposal of a property in execution of a decree for a paltry sum has to be guarded against and jealously so with all the care and circumspection so that it may go for a sum it deserves. The judgments rendered, in case of "Messrs Maiid and Sons and another v. National Bank of Pakistan through Manager and another", "Messrs Magi Chemicals Industries v. Habib Bank", "Appu alias Subramania Patter v. O. Achuta Menon and others", "Mir Wali Khan and another v. Manager, Agricultural Development Bank of Pakistan, Muzaffargarh and another" (supra) may well be referred to in this behalf. The learned counsel when faced with this situation also sought to invoke the application of section 99 of the Code by submitting that no' decree or order could be reversed or modified for an error or irregularity not affecting the merits or jurisdiction but we are afraid the argument addressed on the strength of the aforesaid provision could not be of any help to him when it is rather incontestably clear on the record that such errors and irregularities have affected the merits of the case.
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13.The arguments that none of the objections urged before this Court has been urged in any of the fora below is not based on correct perception as all these have been urged in a few, if not in high sounding words, in the respective applications as well as memorandum of appeal and revision. The argument that another application could not have been moved when the one moved earlier by respondent No, 3 was dismissed is also without substance when the subsequent application was moved by the petitioners on the grounds which are legally valid and viable. In thii background, the judgments cited by the learned counsel for the respondent would appear to be distinguishable and thus cannot support the case sought to be canvassed at the bar. 14. As a sequel, to what has been discussed above, we convert this petition into appeal, allow it, set aside the impugned judgment of the High Court and orders of the Banking Court and send the case back thereto for proceeding de novo in accordance with law. Being in disagreement, I have appended my separate Sd/- Anwar Zaheer Jamali, J. Sd/- Tariq Parvez, J. Sd/- Ejaz Afzal Khan, J. 15.I have had the opportunity of going through the judgment authored by my learned brother Ejaz Afzal Khan, J., and agreed to by my learned brother Tariq Parvez, J., which is proposed to be delivered in this petition. Although for both of my learned brother Judges, I have high regard and respect for their legal acumen and competency, however, after going through the proposed judgment, I have not been able to persuade myself with the line of reasoning and the conclusion recorded in it by them. 16.In my opinion, it is a fit case where leave is to be refused and the petition is to be dismissed. Therefore, by this short order, I dismiss this petition and refuse leave to appeal for the reasons to be recorded by me later on separately. Sd/- Anwar Zaheer Jamali, J. ORDER OF THE BENCH By majority of two to one (Justice Anwar Zaheer Jamali disagreeing with the majority view), this petition is converted into appeal and allowed in terms of para 14 (supra). Sd/- Anwar Zaheer Jamali, J. Sd/- Tariq Parvez, J. Sd/- Ejaz Afzal Khan, J. ANWAR ZAHEER JAMALI, J.---With the majority of two to one, the above titled petition was converted into appeal and allowed vide judgment dated 13-2-2013 as, with due respect and reverence to my two other learned brother judges on the Bench, I have disagreed with their view and opted to record my separate reasons. Following are the reasons for my disagreement in the instant petition:-- Briefly stated, the facts germane to the controversy are as follows:-- 19. On 7-12-1999, Habib Bank Limited (hereinafter referred to as "respondent No,2"), filed Suit No,1774 of 1999 before the High Court of Sindh, Karachi on its Banking side (original jurisdiction) against the appellant, which is a sole proprietary concern owned by Mst. Zaibunissa, and one Yaqoob Habib for recovery of Rs,58,165,053.47. This suit was decreed on 29-5-2000 in the sum of Rs,16702105.84 with
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the "no objection", of the appellant and such decree was also not challenged in appeal. Since this judgment attained finality, on 28-7-2000, respondent No,2 filed execution application No,154 of 2000 before the High Court of Sindh for the execution of decree, which, inter alia, contained prayer for attachment and sale of mortgaged property, Plot No,211, Industrial Trading Estate Lyari Quarters, Karachi, for the satisfaction of the decree. In December 2000, this execution application, due to change in the pecuniary. jurisdiction, was transferred to the Banking Court No,1, Karachi, wherefrom on 7-12-2000 for the first time notices were ordered to be issued to the appellant/judgment debtor (in short "J.D.") by all modes, for 20-12-2000, which were repeated for 1-2-200.1. All the relevant record regarding service of notice upon the J.Ds. by all modes is available in the R&Ps of execution No,154 of 2000, in the form of publication of notices in daily "Jang" (Urdu) Karachi dated 8-1-2001, daily "Dawn" Karachi dated 8-1-2001, courier receipts Nos.0003387 and 0003388, and registered post notices vide receipts Nos.1535 and 1531 dated 6-1-2001. When on 1-2-2001 the matter came up before the Banking Court No,1 for proceedings, none of the two J.Ds. bothered to appear. However, service on both J.Ds. was held good, and writ of attachment was accordingly issued against the mortgaged property for 21-2-2011. Finally, the writ of attachment was issued and returned duly executed on 22-5-2001, on which date, further order for issue of sale proclamation was accordingly passed by the Banking Court. In response to it for the first time Nazir of the Banking Court, duly authorized by the Banking Court for this purpose, fixed the auction of attached property in dispute on 31-8-2001 and the case was adjourned to 3-9-2001. For holding such open public auction for sale of mortgaged property, the sale proclamation was issued by the Banking Court on 24-7-2001, which was got published in one urdu daily newspaper "Jang" Karachi, and one English daily newspaper "Dawn" Karachi on 28-7-2001 and 27 -7-2001 respectively. However, the Nazir of the Court submitted his first report before the Banking…
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