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Petitioner: Messrs NIB BANK LIMITED Holder VS Respondent: Messrs APOLLO TEXTILE MILLS LIMITED and 2 othersJudgmentDebtor
Court Name: Sindh High Court Judge(s): Muhammad Ali Mazhar Title:Messrs NIB BANK LIMITED Holder vs Messrs APOLLO TEXTILE MILLS LIMITED and
2 othersJudgmentDebtor Case No.: Execution Application No,84 of 2011 in Suit No,B-59 of 2008 Date of Judgment:2013-04-02 Reported As: 2013 CLD 1398, 2013 P.C.T.LR. 989, PLJ 2013 Karachi 192, PLD 2013 Sindh 430 Result: Application disposed of Judgment ORDER ' MUHAMMAD ALI MAZHAR, J.---This order will dispose of two Misc. Applications filed by the Judgment Debtor Nos.1 and 2 under Order XXI, Rule 65, 66 & 85, C.P.C. Read with section 151, C.P.C. For setting aside the auction notice published on 3-5-2012 and another application moved by the same J.Ds under Order XXXIX, Rules 1 and 2, C.P.C. For the suspension of auction proceedings. 3.The brief facts are that the Decree Holder filed a suit against the J.Ds for recovery under section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001. The suit was decreed vide judgment dated 30-7-2011. The plaintiff has filed this execution application which was placed for orders before learned Single Judge of this Court on 1-2-2012. Since the execution was found to have been filed within one year of passing decree, therefore, learned Single Judge dispensed with the notice and allowed the execution application as prayed. Learned Official Assignee of this court for execution of the decree initiated proceedings for sale/auction of land, plant and machinery of Judgment Debtor No,1 and issued public notices in the daily Jang Karachi and Lahore, Nawa- eWaqt Lahore and Dawn Karachi on 20-6-2012 with the following terms and conditions:-- ' Land with Building and Machinery ' of Apollo Textile Mills Ltd. ' at Muzaffargarh for Sale "Separate offers are invited 'As is where is basis' for the sale of following properties, for satisfaction of decrial amount of Rs,319,046,577 plus cost of fund thereon, being in Execution No,84 of 2011 (NIB Bank Limited v. Messrs Apollo Textile Mills Limited and others)
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(i) Land bearing Khata No,5, Khatoni Nos.41 to 42, admeasuring 196 kanals, 9 Marlas or thereabout, situated at Jasilwahin, Jhang Road, Tehsil and District Muzaffargarh, Punjab along with building constructed thereon. (ii) Hypothecated machinery and equipment details as under: S.No, List of Machinery & Equipment Quantity 1 2........... 20 CONDITIONS (i) Separate offers be accompanied with 10% of the offered amount in the shape of Pay Order in favor of "Official Assignee of Karachi" and copy of CNIC to reach the undersigned on 23-7-2012 at 1- 30 p.m. Which will be received (opened) immediately upon receipt in presence of the parties who wish to be present. (ii) The undersigned may cancel the offers without assigning any reason or call bidders for negotiation and improvement of offeRs, (iii) All offers are subject to confirmation of High Court of Sindh, Karachi. (iv) Balance of the purchase price shall be deposited within 15 days from the date of acceptance of offer, failing which earnest money shall stand forfeited. (v) The highest/lowest bidder cannot withdraw his offer before acceptance of bid. (vi) All dues, taxes, and outstanding on the properties shall be paid by the purchaser. (vii) Inspection of properties on 10-7-2012 from 10-00 a.m. To 2-30 P.M. Further information may be obtained from the undersigned. Telephone No, 021-99203129. OFFICIAL ASSIGNEE OF KARACHI 1ST FLOOR, OLD ANNEXE BUILDING HIGH COURT OF SINDH, KARACHI" 3The Judgment Debtor Nos.1 and 2 have impugned the public notice on the ground that the terms and conditions of auction issued by the Official Assignee are contrary and in violation of various Rules of Order XXI, C.P.C. During pendency of this application it was further prayed that the auction proceedings which were likely to be held on 23-7-2012 be stayed. 4. Mian Raza Rabbani, learned counsel for Judgment Debtor Nos.1 and 2 argued that though the suit was decreed against J.Ds. But Special H.C.A. No,144 of 2011 is pending adjudication in this court. It was further averred that the J.Ds. Have also filed the Suit No,B-77 of 2008 which is pending in this court at evidence stage. Learned counsel argued that vide order dated 1-2-2012 this court allowed the execution application without issuing any notice to the J.Ds and as a consequence thereof the attachment of sale of J.Ds. Properties were also ordered to be auctioned through Official Assignee. Learned counsel argued that while drawing up the proclamation of sale/auction and the proceedings ancillary and incidental thereto, the Official Assignee ignored Rules 64, 65, 66, 84 and 85 of Order XXI, C.P.C. Which are mandatory in nature and the same should have been complied with and its non-compliance has vitiated the entire auction notice and proceedings. The Official Assignee has committed material irregularity in drawing up the proclamation of sale and published the same in the newspapeRs, It was further contended that the powers and functions of Official Assignee described in Sindh Chief Court Rules (O.S) does not confer any power to Official Assignee to draw up the proclamation of sale. He further argued that mandatory notice was not issued to the J.Ds. For settling the terms and drawing up the proclamation of sale under Rule 66 of Order XXI, C.P.C. No reserve price was mentioned in the proclamation which was also required to be mentioned. No fresh valuation of the factory, machinery and land under auction was conducted. Learned counsel further argued that prior permission as required under law for advertising the proclamation of sale in the newspapers was not obtained from this court as envisaged under Rule 67(2) of. Order XXI, C.P.C. Read with Rule 339 of Sindh Chief Court Rules (O.S). Learned counsel also attacked proclamation on the ground that Rule 84 of Order XXI, C.P.C. Clearly stipulates 25% of the
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payment shall be made at the time when a person is declared to be purchaser, while remaining 75% amount will be deposited by the buyer in court within 15 days from the sale/auction, while according to Official Assignee the terms and conditions mentioned in clause 4 of the proclamation the time starts to run from the date of acceptance of sale, which is contrary to the mandatory provision. Learned counsel further argued that besides various other anomalies in the terms and conditions mentioned in the proclamation of sale, it also did not disclose the encumbrances of other financial institutions on the attached properties which is required to be disclosed under. Rule 66(2)(c) of Order XXI, C.P.C. In this regard learned counsel very rightly pointed out that in the very same execution application two interveners i,e, Standard Chartered Bank Ltd. And Bank of Punjab Ltd. Filed their two separate applications in which they prayed that the sale proceeds of J.Ds. Assets should be distributed amongst the financial institutions on pro rata basis in accordance with their mortgaged and current charges. These two applications i,e, C.M.As. Nos.386 and 400 of 2012 were fixed for hearing on 14-12-2012 when the learned counsel for the Decree Holder clearly stated that if these financial institutions have any claim against J.Ds. They may approach to the Official Assignee for further proceedings and in view of this statement both the applications were disposed of. 5. It was further averred that the Sindh Chief Court Rules (O.S.) defines powers and functions of Nazir, Official Liquidator and Official Assignee and the court may call them to conduct the auction but not to draw up the proclamation of sale, which can only be drawn up by the court. Under Rule 66 of Order XXI, C.P.C. The proclamation is required to be drawn up after notice to the Decree Holder and Judgment Debtors and even under Sub-Rule 4 of Rule 66 of Order XXI the court for the purposes of ascertaining the matter to be specified in the proclamation of sale may summon any person. According to learned counsel the logic entrusting functions of drawing -up proclamation by the court is that the proclamation is the essential and the basic documents on which the structure of the subsequent auction/sale is to be built upon. Learned counsel referred to Section 4 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which provides that the provisions of the Ordinance shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force. He further referred to section 19(2) of the Ordinance, 2001 which provides that decree of banking court shall be executed in accordance with C.P.C. Or in such manner as Banking Court may at the request of Decree Holder consider appropriate including recovery as arrears of land revenue. In this regard he argued that though Banking Court may exercise its discretion but once the law/procedure has been so chosen by the court then it is bound to follow it and cannot divert from one law to another in the same proceedings and since in this case the court followed the procedure provided in C.P.C. And also issued proclamation of sale in the same manner then no departure can be taken place and the basic and mandatory provisions of law while issuing proclamation should have been followed as provided under various Rules of Order XXI, C.P.C. In support of his arguments learned counsel referred to following case law:-- (1) 2011 CLD 280 (Muhammad Amin alias Jaloo v. Judge Banking Court and others). Plea raised by judgment-debtor was that valuable property was auctioned without fixing any reserve price by Executing Court---Validity---Provisions of Order XXI, Rule 66 C.P.C. Were mandatory in nature and without fulfilling basic requirements, if some auction had taken place that would not be considered to have been lawfully made. Intention of law was to fix reserve price in proclamation to safeguard rights of judgment debtor---Order passed by executing court was set-aside and auction proceedings were declared illegal and without lawful authority. (2) 2003 CLD 1693 (Muhammad Hassan v. Messrs Muslim Commercial Bank Ltd. And others). The provisions of Rule 66, Order XXI, C.P.C. Are mandatory in nature and without setting and causing a proclamation of intended sale in terms of said Rule by the Court itself, no sale shall be considered
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to have been lawfully made---The word cause' appearing in Rule 66, Order XXI, C.P.C. Requires a specific order of Court, which produces the effect of drawing the proclamation envisaging the terms and conditions of sale---Thus, includes the settlement of conditions etc. By Court itself or to approve those filed by parties after hearing them. (3) PLD 2009 552 (Khursheed Begum and others v. Inam-urRehman. Khan and others). Court auctioneer, without any authority, rather against the provision of Order XXI, Rule 85, C.P.C. Of his own had fixed 30 days' time for the payment of the balance consideration, which otherwise was required to be paid in terms of Order XXI Rule 85, C.P.C. Within a period of 15 days and court had overlooked the same without any logical reason---Sale was set aside on the ground of material irregularity and fraud in this regard. Role of the Court auctioneer had been highlighted, which was not above board---Court auctioneer was held to be bound to return the entire fee which he had received, within a period of one month. (4) PLD 2010 SC 993 (Muhammad Attique v. Jami Limited and others). Executing Court, under section 19(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, has to choose mode of execution in accordance with the provisions of C.P.C. Or any other law for the time being in force or in such manner as the Banking Court may at the request of decree holder consider appropriate. Once the -Executing Court has chosen the mode provided in C.P.C., then it cannot be permitted to divert that mode at subsequent stage without conscious application of mind. (5) PLD 1993 Lahore 706 [Brig. (Rtd.) Mazhar-ul-Haq and another v. Muslim Commercial Bank Ltd., Islamabad]. Under Order XXI, Rule 66, C.P.C., it was duty of the Court to cause to be made a proclamation of sale---Such proclamation had to be drawn after notice to the judgment debtor. Further, the proclamation should include everything considered as material by the Court, to enable a purchaser to know the nature and value of the property. (6) 1994 1 S.C.0 131 (Desh Bandhu Gupta v. N.I. Anand and Rajinder Singh). The proclamation should include the estimate if any, given by either judgment debtor or decree-holder or both the parties, service of notice on judgment debtor under Order XXI, Rule 66(2), unless waived by appearance or remained ex parte, is a fundamental step in the procedure of the court in execution. Judgment debtor should have an opportunity to give his estimate of property. In Gajandhar Prasad v. Babu Bhakta Ratan, court after noticing the conflict of judicial opinion among the High Courts, held that a review of the authorities as well as the amendments to Rule 66(2)(e) make it abundantly clear that the court, when stating the estimated value of the property to be sold, must not accept merely the ipse dixit of one side. (7) 2007 YLR 126 (Mirza Munawar Baig and others v. Bank Alfalah Limited and others). No notice was issued to the judgment-debtors before the terms of sale were drawn up---The absence of the mandatory notice to the judgment-debtors under Order XXI, Rule 66 C.P.C. Is by itself, sufficient for allowing this appeal and setting aside the Court auction---If any authority is required for this conclusion, .Reference may be made to the case titled Muhammad Hassan v. Messrs Muslim Commercial' Bank Ltd. Through Branch Manager and 3 others 2003 CLD 1693. (8) 2003 CLD 1318 (Messrs Ripple Jewellers (Pvt.) Ltd. v. First Woman Bank). Sale by public auction without issuing notices to judgment-debtoRs, Before calling upon Court Auctioneer to conduct auction, duty of Executing Court was to have satisfied itself that its order had been implemented and mandatory notice had been issued to judgment-debtors---Such contravention of provisions of Order XXI, Rule 66 C.P.C. By Executing Court had vitiated entire proceedings including sale, which was nullity in eyes of -law. (9) 2011 CLD 1683 (Messrs Spinghar Textile Mills Ltd. And another v. United Bank Ltd. And another): Rule 66 would reveal that it is not mandatory for the Banking Judge to state its own value of the property being auctioned in the proclamation, which is more commonly referred to as the "reserve price"--- However, it is mandatory that the value so determined by the parties, i,e, the decree
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holder and the judgment debtor, is to be stated in the proclamation, as the word "shall" has been stated therein---The rationale behind stating the said value in the proclamation is to ensure full disclosure to the prospective biddeRs, (10) 2000 CLC 863 (MRs,Aziz Fatima and others v. MRs,Rehana Chughtai and others). Contention by the appellants was that as no reserve price was fixed in the proclamation by the Executing Court, auction proceedings were illegal and were liable to be set aside---Validity---Such omission had rendered the proclamation to be illegal. Even if there was no objection from either side, still it was the duty of the Executing Court to conduct the auction in accordance with law, which had not been done. (11) 2001 CLC 126 (MRs,Shahida Saleem and. Another v. Habib Credit and. Exchange Bank Ltd. And others). Neither requisite notice was issued to the judgment-debtor nor the reserve price of the property was settled---Where the property was sold in complete disregard of rules and in questionable circumstances, even suo motu action for setting aside the sale would be justified. High Court directed for re-auction of mortgaged property strictly under the rules. (12) 2011 SCMR 1675 (Mst.Nadia Malik v. Messrs Makki Chemical Industries Pvt. Ltd.). Under Rules 84 and 85 an auction purchaser shall deposit 25% of the auction amount immediately on being declared as highest bidder and the balance amount of 75% shall be deposited within 15 days of the auction-In the present case, the sale was confirmed on 29-4-2002 on which date the appellant had deposited 25% of the auction amount---The default in deposit of the balance amount was violative of the mandatory conditions provided under the proclamation, which language was borrowed from the mandatory provisions of the. Order XXI of the C.P.C.---Failure to deposit the balance amount of 75% of auction money within 15 days by the appellant renders the sale/auction proceedings nullity. (13) AIR 1996 SC 2781 (Balram v. Ilam Singh and others). The requirement of Rule. 85 of Order 21 that full amount of purchase money must be paid by the purchaser at execution sale within 15 days from the date of sale, is mandatory. Failure to deposit full sale price as per rule 85 cannot be averted on plea that the shortfall in the deposit was occasioned by mistake of the Court in the calculation of the amount. (14) AIR 1954 SC 349 (Manila! Mohanlal Shah and others v. Sardar Sayed Ahmed Sayed Mahmad). The provisions of Order 21 Rules 84, 85 and 86 requiring the deposit of 25 per cent of the purchase money immediately, on the person being declared as a purchaser and balance within 15 days of the sale. Non-payment of the price on the part of the defaulting purchaser renders the sale proceedings as a complete nullity. (15) AIR 1926 (Madras) 755 (Appu v. Achuta Menon and others). It is for the court to settle the proclamation of sale and it could not delegate that power to the Commissioner appointed by it. Order 21, Rule 66 directs that when any property is ordered to be sold by public auction in execution of a decree the Court shall cause a proclamation of the intended sale to be made in the language of such Court and that such proclamation shall be drawn up after notice to the decree-holder and the judgment-debtor and shall state the time and place of sale and specify as fairly and accurately as possible the property to be sold and a number of 'other things. It was further held that if the proclamation was not settled by the Court the sale would be invalid. (16) PLD 2010 SC 38 (Shahid All v. MRs, Aziz Fatima and others). .A review of the authorities, cited at the Bar as well as study of the relevant provisions including Rule 66 of Order XXI, C.P.C, it is amply clear that in a suit when the situation to sell the property arises, the court, as a rule, must ask the parties concerned to state before it estimated price of the property which in their opinion is likely to be fetched and although it is not essential for a Court to give its own estimate in the order but in drawing publication, having regard to 'the express provision of Rule 66 of Order XXI, C.P.C. The court while passing an order must take into consideration all the material
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facts, which are necessary for a purchaser to know in forming an opinion regarding valuation of the property. (17) 2012 CLC 498 (Muhammad Ahmed Sh eikh v. J.S. Bank Limited). Cognizance of a matter taken by court under one ` procedure---Effect. Proceedings once commenced under such procedure would be finalized thereunder---No pick and choose authority would be available in law to court in law. 6. Mr.Yawar Farooqui, learned counsel for the Decree Holder argued that both the applications are misconceived. Though judgment debtors have filed appeal in this court but no stay is operating against the judgment and decree. So far as the Su it No,B-77 of 2008 is concerned the learned counsel argued that mere pendency of the appeal and above suit has no adverse effect on this execution application. He further argued that at the time of issuance of proclamation of sale all formalities as required to be fulfilled were followed by the Official Assignee. There is no violation of Rules 65, 66 and 85 of Order XXI, C.P.C. It was further averred, that the proclamation is lawful and the notice was also issued by the Official Assignee. It was further contended that the Judgment Debtors in their application have failed to disclose any irregularity or illegality in the proclamation of sale. Learned counsel further argued that since execution application was filed within one year of passing decree, therefore, this court rightly dispensed with issuance of notice and rightly allowed the application as prayed. Learned counsel further pointed out an order dated 1-6-2012 which shows that an urgent motion was moved with the prayer that C.M.A. No,299 of 2012 be fixed in court. Learned counsel further referred to C.M.A. No,299 of 2012 which was moved by the decree holder for attachment and implementation of the Order dated 1-2-2012 be carried out by the Official Assignee. Learned Single Judge of this court ordered that let this execution application also be placed before Official Assignee for execution proceedings to be carried out in the same manner as earlier done in the other execution. In the supporting affidavit of C.M.A. No,299 of 2012 the decree holder stated that this court already ordered the Official Assignee in the case of Soneri Bank Ltd. To value the assets of the Judgment Debtors, which was carried out by the Official Assignee, therefore, the sale of leased machinery of the decree holder be effected through the office of the Official Assignee to fulfill the decrial amount and remaining decrial amount if any may be recovered from sale consideration of other assets of the judgment debtors which have a pari passu charge. Learned counsel further argued that though the appeal is pending but no decrial amount was deposited in the court so there is no stay. Learned counsel also referred to section 19(2) of the Financial Institutions (Recovery of Finances) Ordinance 2001 and argued that in view of this express provision, the decree holder had already availed an option which is clearly reflecting from the order dated 1-6-2012 in which on the request of the decree holder this court ordered that let this execution be placed before Official Assignee for execution proceedings to be carried out in the same manner as earlier in the other execution application. In support of his arguments he relied upon the following case-law:-- (1) 2012 CLC 545. (Feroz Abdul Karim v. Muslim Commercial Bank Ltd.). It is settled position in law that where, special provision is applicable, general provision do not apply (see 1993 MLD 1550, 2002 YLR 3712 and PLD 2008 Karachi 25). (2) 2012 SCMR 669 (Capt. Rtd.) Nayya r Islam v. Judge, Accountability Court No,III). It is by now a settled principle of interpretation of statutes that the provisions of special law exclude the application of general law in the context in which the former provision has been enacted. (3) 1998 PTD 2809 [Commissioner of Income-Tax v. D.P.S.(L) (Pvt.) Ltd.]. When the intention of the legislator is very clear and, when there is no doubt in gathering such an intention by a clear and unambiguous reading of the provisions of law, importing extraneous considerations or giving reasons which were not wholly germane to the points involved is not permissible under the law.
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(4) 2012 YLR 805 (Ibrar Hussain v. State). Standard of proving the case under special law is different, because Special La w is read as a whole while comparing with general law, as Special Law excludes the provisions of general law. 7. Learned Official Assignee has also filed his reply in' which he stated that the execution application was allowed by this court and on 1-6-2012, the execution application was forwarded to him for further proceedings. He issued notice to the Decree Holder and the Judgment Debtors for making compliance of the order of this court. The letter sent to the Judgment Debtor Nos.1 to 3 returned unserved with report that they left their addresses two years back. It was further stated in the reply that the Executive Vice President of Decree Holder appeared and submitted draft of sale notice and also requested in writing that the same notice may be published in newspapers' without mentioning reserve price hence, Official Assignee invited offer on "as is where is basis" for the sale of mortgaged and hypothecated properties. The Official Assignee further submits in his reply that the Decree Holder and Judgment Debtors may be directed to appear before him for drawing up sale proclamation for its re-advertisement in the newspaper. 8. Heard the arguments. Since the matter directly pertains to the execution of decree and it is also a fact that appeal is pending but no stay order is operating and the objections filed by the judgment debtor through instant application may not be considered objections to the execution application as such, but they have only questioned the auction proceedings initiated in view of public notice issued by the learned Official Assignee, therefore, in order to decide the controversy, it would be most expedient and appropriate to…
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