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Petitioner: ANJUM RASHID and others VS Respondent: SHEHZAD and others
Court Name: Sindh High Court Judge(s): Anwar Zaheer Jamali, Maqbool Baqar Title: ANJUM RASHID and others vs SHEHZAD and others Case No.: H.C.As. Nos.67, 68, 69, 70, 71 and 670 of 2002 Date of Judgment:2006-06-28 Reported As: 2007 CLD 1210 Result: Order accordingly
JUDGMENT
JUDGMENT MAQBOOL BAQAR, J.---Through the above appeals, the appellants, have assailed order dated 1-3- 2002, whereby a learned single Judge of this court dismissed the various applications filed by the appellants in execution proceedings bearing No.19 of 1996 and ordered forfeiture of the respective amounts of security deposited by the appellants. 1. The relevant facts of the case, in brief, are that in the aforesaid execution proceedings, filed by respondent No.3 for enforcement of an ex parte money decree dated 10-1-1991, obtained by the said respondent against respondent No.2, the former obtained an order for attachment of a property, being a factory known as Messrs. Hamraaz Textile Mills (Pvt.) Ltd., Plot No.455, Site, Karachi with all the machinery, equipments, tools, fixtures, stocks etc. Fixed and stored therein. Such attachment order was passed on 29-9-1997. On 19-9-1998, a learned single Judge of this court appointed the Nazir of this court as a Commissioner to hold auction of the attached property. However, since no bid was received through such exercise, by order dated 4-10-1999, the Nazir was directed to invite sealed bids for the sale of the property. By order dated 20-12-1999, the offer of Rs.35,00,000 submitted by respondent No.1, being the highest, was accepted and the Nazir was directed to finalise the transaction in accordance with the Rules. The respondent No.1, although deposited, along with his offer an amount of Rs.3,50,000. Being ten per cent of the amount offered by him, the balance ninety per cent amount, being Rs.31,50,000, was however deposited by him in the shape of a pay order dated 13-1-2000, which pay order was encashed on 19-1-2000. 2. Upon a Nazir's reference the learned single Judge, by order dated 9-2-2000, directed the Nazir to hand over possession of the property to respondent No.
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1. In pursuance of the aforesaid order, the Nazir, with the assistance of Police force, took over possession of the property from the appellants and delivered it to respondent No.1 on 15-2-2000. Through an interim order, passed by a learned single Judge on the appellant's /intervener's applications on 16-2-2000, the Nazir was directed to post Security Guards at the property and to ensure that nothing is removed therefrom. By order dated 24-2-2000, the learned single Judge directed the, Nazir to remove the Security Guards from the premises in question and to restore the possession thereof to the appellant/intervenor upon their furnishing security in the sum of Rs.50,000 each and allowed them to conduct their business from the sheds in their occupation and to sell/dispose of their products and stock in trade. The appellants in turn were required to file an undertaking with the Nazir to the effect that they shall not remove any machinery and equipment from the premises without permission of the Court, and that any violation of the said order shalt be treated as a contempt of court. 3. On 29-5-2000, the learned single Judge appointed Official Assignee to ascertain/verify the appellant's claim regarding their ownership of the machinery lying in the premises. Through his report dated 5-7-2000, the Official Assignee verified the facts that the machinery belong to the appellants. In the 'meanwhile, the aforesaid judgment and decree was assailed by the respondent No.2, through an application under section 12(2), C.P.C. (J.M. No.7 of 2000). By order dated 20-8- 2001, a learned single Judge, granted the application and set aside the judgment and decree. 4. On 1-3-2001 the respondent No.1, filed an application under Order XXXIX, rule 7, C.P.C., inter alia, seeking forfeiture of the amounts of security furnished by the appellants, and to initiate contempt proceedings against the appellants. It was alleged that the appellants/intervenor, in violation of the order dated 24-2-2000 and the undertaking furnished by .Them in pursuance of the said order, have removed the, machinery from the factory in question, without permission of the Court. 5. Mr. Mansoorul Arfin, the learned counsel for the appellants submitted that the impugned order is illegal and erroneous and is liable to be set aside. He submitted that in the first place, the property was not liable to be attached or sold, as at no point in time it belonged to respondent No.2, the judgment-debtor, and was in fact owned by one Muhammad Yousaf, the sole proprietor of Aftab Industries. The property was, on 10-3-1990, 'sold by Muhammad Yousaf to Messrs Hamraaz Textile Mills (Pvt.) Ltd., the respondent No:4, for a consideration of Rs. 10,00,000, vide agreement dated 10- 3-1990, on which date Muhammad Yousaf delivered possession of the property to respondent No.4. The learned counsel in support of his assertion referred to the aforesaid agreement, Annexure A-12 to the memo. Of H.C.A. No.87 of 200, filed by the respondent No.4, in terms whereof Aftab Industries, the proprietary concern of Muhammad Yousaf, agreed to transfer the said property in favour of respondent No.4, against a total sale consideration of Rs.10,00,000, which payment was acknowledged, therein. It has also been recorded in the agreement that Messrs Aftab Industries has handed over vacant and peaceful physical possession of the said property to respondent No.4 after receipt of the entire sale consideration amount. The learned counsel also referred to a search certificate dated 29-5-1991, issued by Sindh Industrial Trading Estate (SITE), (Annexure-C to the memos of the present appeals) ,which shows that on the date of its issuance, the property stood in the name of Aftab Industries, a sole proprietary concern of Muhammad Yousaf and further that a request for transfer of the property in the name of respondent No.4 was pending with SITE. He also referred to letter dated 10-3-1990 from Aftab Industries to respondent No.4, (Annexure A-14 to the memo. In H.C.A. No.87 of 2002), acknowledging the fact that possession of the property has been delivered to respondent No.4 in terms of the agreement dated. 10-3-1990 and that Aftab Industries has no right and interest in the said property. He also referred to the letter dated 6-6-1990, (annexure A to the memo. In H.C.A. No.87 of 2002) whereby respondent No.4 forwarded the aforesaid agreement, to SITE and requested them to transfer the property in their name. The letter bears acknowledgement of receipt of the original agreement by SITE.
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6. Mr. Arfin submitted that the judgment debtor has obtained orders for attachment and sale of the property by fraud and misrepresentation, knowing fully well that the property was owned by respondent No.4 and was never owned by the judgment debtor. Regarding the machinery. In question, the learned counsel submitted that in order to verify the appellant's claim that the machinery attached and sold in the execution, proceedings belongs to them, a learned single Judge of this Court was pleased to appoint the Official Assignee to investigate the claim and submit his report and the Official Assignee after conducting a thorough inquiry and on the basis of title documents pertaining to the said machinery and the report of Surveyors, Messrs Joseph and Lobo, (who provided technical assistance to the Official Assignee, in pursuance of the Court order) confirmed that the machinery belongs to the appellants. The learned counsel contended that in view of the Official Assignee's report, there remains absolutely no doubt that the machinery belongs to the appellants and more so, for the reasons that none else has either claimed the machinery or submitted any documents contrary to the claim of the appellants. 7. He submitted that the fact that the factory premises/building is owned by respondent No.4 is also evident from the agreement of licence dated 8-7-1999 executed between respondent No.4 and Messrs Venus Corporation, which document was submitted by one Furrukh Saleem along with his application in the execution proceedings, (C.M.A. No.1839 of 2000), in terms of which document respondent No.4 granted licence to Messrs Venus Corporation to store their goods and to sublet the property. He also referred to the copy of the Partnership Deed dated 8-7-1999 submitted along with the aforesaid application, which shows that respondent No.2, the judgment debtor was one of the partners of Messrs Venus Corporation and submitted that the judgment debtor has been dealing with the appellants in his capacity as a partner of Messrs Venus Corporation, the tenant/licencee of respondent No.4. He submitted that in view 'of the foregoing, the position that emerged before the executing Court was that neither the property bearing No.455, SITE, Karachi nor the machinery, equipment and moveables, therein were owned by respondent No.2, the judgment debtor, and that the same belonged to respondent No.4, and the appellants respectively, and therefore, the attachment and sale of the said properties was without jurisdiction and void. In support of his above contention, Mr. Arfin relied on the judgments in the cases of S.M. Jakati and another v. S.M. Borkar and othets AIR 1959 SC 282; Kedar Nath Goenka v. Munshi Ram Narain Lal and others AIR 1935 Privy Council 139) and Chengalraya Reddy and others v. Kollapuri Reddi AIR 1930 Madras 12. 8. He submitted that even otherwise, in consequence of the order dated 20-8-2001 passed in J.M. No.7 of 2000, (whereby the judgment and decree, in pursuance whereof, the property was attached and sold, was set aside), not only the attachment of the property stood withdrawn but its sale also became a nullity and the execution proceedings came to an end and thus the Executing Court had no jurisdiction to pass any further orders, as such, the order for returning the machinery, and forfeiture of the security amount is illegal, without jurisdiction and void. 9. Mr. Arlin further contended that the impugned sale became a nullity and was completely wiped out also for the reason that respondent No.1, the auction purchaser, failed to deposit the balance 90% of the purchaser price within 15 days from the date of acceptance of his offer, as essentially required in terms of rule 85 of Order XXI, C.P.C. He submitted that the respondent No.1's offer for purchase of the property was accepted on 20-12-1999 and in terms of rule 85 he was required to deposit the balance sale consideration amount by the 4th of January, 2000, however, in default of such mandatory requirement he admittedly did not deposit the amount at least until 13-1-2000 and deposited the amount vide Pay Order dated 13-1-2000, which pay order was encashed and credited on 19-1-2000 i.e. After a lapse of at least nine days time and as such, the amount of
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Rs.3,50,000 deposited by respondent No.1 along with his offer, became liable to forfeiture, as required in terms of Rule 86. In support of his contention, the learned counsel relied on the judgments in the cases of Messrs S.P.R. L. Rehman Brother and another v. Judge, Banking Court No.II, Lahore 2000 MLD 1957; Dawood Flour Mills and other v. National Bank of Pakistan 1999 MLD 3205; Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs Muslim Commercial Bank Limited, Islamabad and another PLD 1993 Lahore 706; National Bank of Pakistan v. Messrs Nasir In,dustries and others PLD 1981 Kar. 720. 10. The learned counsel also submitted that since none of the appellants was a party, to the proceedings between the decree holder and the judgment debtor and they came to know of the impugned execution proceedings only on 15-2-2000, when they were forcefully dispossessed from their respective tenements, they approached the executing Court the very next day, through an application under Order I, Rule 10, C.P.C. (C.M.A. No.353 of 2000) for joining the proceedings in order to secure their lawful interest in the matter; whereupon the executing Court directed the Nazir to post guards at the factory premises and to ensure that nothing is removed, therefrom, and further directed him not to pay the sale proceeds to the decree holder till further orders and upon application under Order XXI, rule 90, C.P.C. Filed on behalf of the appellants on 21-2-2000 (C.M.As. Nos.411, 412 and 413 of 2000), the executing court vide order dated 24-2-2000 restored the possession of their respective tenements of the appellants till final disposal of the aforesaid applications. 11. Regarding the removal of machinery he submitted that its true that through the last mentioned order the appellants were restrained from removing the machinery from the factory premises however, since by order dated 20-2-2001, not only the judgment and decree dated 10-1-1991, was set aside but an application under Order I, rule 10, C.P.C., filed by respondent No.1 for joining the proceeding in J.M. No.7 of 2000, on the ground that any order in the said proceeding is likely to effect the rights acquired by him in relation to the property, was also dismissed on the ground that description of the property in question as mentioned by the respondent No.3, in the execution application itself shows that the property does not stand in the name of the judgment debtor but stands in the name of some other person, and since when at the time of announcement of the aforesaid order the counsel for the appellants referred to the pendency of the appellants various applications in the execution proceedings which were being fixed along with J.M. No.7 of 2000; the leanied Court observed that in view of the setting aside of the decree, natural consequences will follow and further in view of the fact that on an earlier date i.e. 1-2-2001 when J.M. No.7 of 2000 and the appellants applications in execution proceedings were fixed for hearing and the appellants counsel requested the learned Court that the said applications may be taken up first, all the parties had agreed that in the event J.M. No.7 of 2000 is granted, there would not no necessity of hearing the said applications, and more so, in view 'of the order dated 21-12-2001, whereby a Division Bench of this Court, dismissed the respondent No.l's appeal against the order dated 24-2-2001, (whereby the appellants' possession was restored), for non-prosecution, but with an observation that since during the pendency of the appeal, the decree on the basis whereof the property was put on sale has already been set aside, the appeal has become 'infructuous, the appellants were led to believe that the applications stood disposed of in their favour and the attachment stood removed and they were thus entitled to remove their machinery, the appellants did so. He submitted that the above facts pertaining to the proceedings in J.M. No.7 of 2000, were deposed by the appellants, in their counter -affidavits to the respondent No.l's application under section 51 read with Order XXXIX, rule 7, C.P.C. (C.M.A. No.1071 of 2001), however, no rejoinders were filed in rebuttal thereof. 12. Concluding his arguments, Mr. Arfin submitted that since the attachment and sale of the properties of the appellants and respondent No.4 were without jurisdiction and had even otherwise
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become a nullity as a consequence of setting aside of the judgment and decree dated 10-1-1991 and also on account of non-compliance by the respondent No.1, the auctidn purchaser, of the mandatory requirements of Rule 85 and since, on account of the above, the execution proceedings came to an end and consequently all interim orders also stood vacated, there was no justification for ordering forfeiture of the security deposited by the appellants, and that too in favour of the respondent No.4, who had no interest in/or any lawful claim over such machinery and prayed that the above appeals be allowed and the impugned order be set aside. 13. On the other hand, Mr. Mushtaq Memon, the learned counsel for the auction purchaser; the respondent No.1, submitted that the respondent No.1 being a bona fide purchaser, having paid the entire 'price of the property has acquired proprietary rights therein and the sale in his favour cannot be set aside. He submitted that at the time the property was put to sale and the respondent No. l's offer was accepted by the Court and upto the date when possession was delivered to him after making full payment of the sale price the judgment and decree dated 10-1- 1991, in pursuance whereof the property was sold, was in the field and the subsequent setting aside thereof cannot have any bearing on the sale, or the respondent No. l's right and title over the property. He submitted that the Courts have drawn a clear distinction between a bona fide purchaser for consideration in Court sale and the case where the Decree Holder has himself purchased the property. In support of his contention he relied on the judgments in the cases of:-- (1) Hudaybia Textile Mills Ltd. And others v. Allied Bank of Pakistan Ltd. And others PLD 1987 SC 512; (2) Hassan Din v. Hafiz Abdus Salam and others PLD 1991 SC 65; (3) Mian Muhammad Abdul Khaliq v. M. Abdul Jabbar Khan and others PLD 1953. Lahore 147; (4) Janak Raj v. Gurdial Singh and another AIR 1967 SC 608; (5) H.S. Siddappa v. Lakshmamma and another AIR 1965 Mysore 313; (6) Chota Nagpur Banking Association v. C.T.M. Smith and another AIR (30) 1943 Patna 325; (7) Sorimuthu Pillai and others v. Muthukrishna Pillai AIR 1933 Madras 598: (8) Jaibhadar Jha v. Matukdari Jha AIR 1923 Patna 525; (9) Muhammad Yaqoob v. P.L.R.M. Firm and others AIR 1932 Rangoon 17; (10) Piari Lal v. Hanif-un-Nissa Bibi and another ILR 38 Allahabad 240; (11) Zain-ul-Abdin Khan v. Muhammad Asghar All Khan AIR 10 Allahabad 166; (12) Nawab Zain-ul-Abdin Khan v. Muhammad Asghar Ali Khan and others 15 of A 12 (Privy Council); (13) Shivlal Bhagvan v. Shambhu Prasad Parvatishankar and another ILR 29 Bombay 435 14. Regarding the question of default and its consequence, Mr. Memon submitted that the respondent No.3 has deposited the balance amount of the purchase price within 15 days of the letter dated 29-12-1999, whereby the Nazir of this Court informed the said respondent about acceptance of his offer and requested him to deposit the balance purchase price. Such deposit was made vide pay order dated 13-1-2000, within 15 days of the said letter and thus there has been no delay on the part of the respondent No.3. He submitted that even otherwise the requirement of deposit of the balance amount of the purchase price within 15 days of the acceptance of the offer as envisaged by rules 85 of Order XXI of C.P.C. Is not mandatory and the Courts are not bereft of the power to extend time for such deposit. In support of his contention, the learned counsel relied on the judgments in the cases of Al-Hassan Feeds and another v. United Bank Ltd. And 6 others 2004 CLD 275 and Messrs Chawla International v. Habib Bank Limited 2003 CLD 956. 15. Regarding the ownership of the property, Mr. Memon submitted that contrary to the appellant's claim the property in fact belonged to respondent No.2, the Judgment Debtor, who evidently was in possession of the property and has been dealing with its affairs throughout. He referred to the photo copies of the various tenancy/lease agreements executed by the judgment-debtor in favour of the various tenants in respect of the property in question, annexed to the counter affidavit of respondent No.
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1. The learned counsel submitted that the Search Certificate relied upon by the appellants also show that the property does not stand in the name of respondent No.4 but stands in the name of Messrs Aftab Industries, which is a sole proprietary concern of one Muhammad Yousaf and that a request for transferring the property in favour of the wife and two sons of the judgment debtor was pending. The learned counsel contended that the respondent No.4 cannot claim title in the property in question merely on the basis of agreement of transfer of rights to lease (annexure A-12 to H.C.A. No.87 of 2002), which agreement; in terms of section 54 of the Transfer of Property Act, does not create any interest in the property in favour of respondent No.4 and that even otherwise respondent No.4 and the judgment debtor cannot be said to be different parties as all the three Director, of the respondent No.4 are the family members of the judgment debtor being his aforesaid wife and sons. 16. The learned counsel further submitted that the applications filed by the appellants were barred by limitation and were liable to be dismissed on that ground also. He pointed out that the impugned attachment was ordered on 29-9-1997 and was effected by way of pasting on the factory premises and the impugned sale was ordered on 20-12-1999, however, the appellants filed C.M.A. No.353 of 2000,' under Order I, rule 10, C.P.C. On 16-2-2000 and C.M.As. Nos.411, 412 and 413 of 2000, under Order XXI, rule 90 on 21-2-2000, whereas the appellants Shaukat Nadeem and S.M. Nadeem Rail, filed C.M.As. Nos.415 and 417 of 2000 under Order xxi, rule 90 and Order 'MIX, rules 1 and 2 on 22-2-2000, all much beyond the prescribed period of thirty (30) days. As regards the forfeiture of the security amounts deposited by the appellants, he submitted that since the machinery was removed by the appellants in violation of the Court order and in breach of their undertakings, the securities which were furnished to ensure faithful compliance with the Court's order and adherence to the undertaking were justly ordered to be forfeited to the auction purchaser, who in the facts and circumstances of the case are now the rightful owner thereof. 17. Heard the learned counsel for the parties at length and perused the record of the case thoroughly. It is an admitted position that the ex parte decree and judgment in pursuance whereof the property in question was sold, has been set aside vide order dated 20-2-2001 passed on respondent No.2's application under section 12(2), C.P.C. (J.M. No.7 of 2000). However, we find ourselves unable to uphold the contention that such would result in nullifying the impugned sale, in view of the explicit pronouncement of the Honourable. Supreme Court in Hassan Din v. Hafiz Abdus Salam and others to the following effect:- The upshot of the above discussion of law on the subject is that in setting aside of an ex parte decree, notice to the decree holder as on record is sufficient. Such setting aside of the decree does not affect the auction/sale of the property in execution of the ex parte decree, nor does it affect the Auction Purchaser. This general principle, however, is subordinate to another principle that where the Auction. Purchaser happens to be the decree holder himself, as in this case, then the protection available to a bona fide third party AuctionPurchaser, is not available to decree holder on the mere ground that a Court auction had taken place and necessary certificate has been issued." To the same effect is the judgment in the case of Mian Abdul Khalid v. M. Abdul .Jabbar Khan and others PLD 1953 Lahore 147,, expressed in the following words:- "Once a sale has validly taken place in execution proceedings, confirmation of the sale cannot be withheld merely on the ground that the decree has been wiped out or reversed in the meantime. A consideration of the language of section 65, C.P.C., as compared with the provisions of section 316 of the old Code, supports this proposition. In such a case, therefore, the Court is under a duty to confirm 'the sale under Order XXI, rule 92, C.P.C. Unless objections have been successfully taken under rules 89 to 91 of that Order." In the case of Janak Raj v. Gurdial' Singh and another AIR 1967 SC 608, the Supreme Court of India whilst, dealing With a similar Situation held as under:-
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"For the reasons already given and the decisions noticed, it must be held that the appellant- Auction Purchaser was entitled to a confirmation of the sale notwithstanding the fact that after the holding of the sale the decree had been set aside. The policy of the, Legislature seems to be that unless a stranger Auction Purchaser is protected against the vicissitudes of the fortunes of the suit, sales in execution would not attract customers and it would be to the detriment of the interest of the borrower and the creditor alike if sales were allowed to be impugned merely because the decree was ultimately set aside or modified." In the case of Chota Nagpur Banking Association v. C.T.M. Smith and another AIR (30) 1943. Patna 325, the Patna High Court whilst dealing with the question of restitution in an identical situation held as under:- 'Civil P.C. (1908), S.144, Rule of restitution is to be relaxed in favour of stranger purchaser. But purchaser must be bona fide…
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