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Petitioner: ZAKARIA GHANI and 4 others VS Respondent: MUHAMMAD IKHLAQ MEMON and 8 others
Court Name: Supreme Court of Pakistan Judge(s): Mian Saqib Nisar, Sh. Azmat Saeed, Maqbool Baqar Title: ZAKARIA GHANI and 4 others vs MUHAMMAD IKHLAQ MEMON and 8 others Case No.:Civil Review Petition No. 383 of 2005Civil Appeal No. 670 of 2002Civil Appeal
JUDGMENT
Reported As: 2016 CLD 480 Result: Order confirm Judgment JUDGMENT MIAN SAQIB NISAR, J.---This Review Petition seeks to impugn the judgment of this Court dated 27.6.2005 in terms whereof Civil Appeal No.670 of 2002 filed by the Respondent No.1, Muhammad Ikhlaq Memon, against the judgment of a Division Bench of the High Court of Sindh was allowed. The essential facts of the case, as set out in the judgment under appeal, are that United Bank Limited obtained a decree from the Banking Tribunal constituted under the Banking Tribunals Ordinance, 1984. Thereafter, the Bank filed execution proceedings for recovery of the decretal amount of Rs.103,789,753.00. A learned single judge of the High Court of Sindh, acting as a judge of the Banking Court, passed an order 8.10.1988 directing the sale of three properties belonging to the Petitioners by the Nazir of the Court. It is material to note, for purposes of deciding the present Review Petition, that the original court order clearly stated that the sale was to be effected by means of sealed bids (i.e. not a public auction) after issuing advertisements in different newspapers. These were widely circulated newspapers, namely, Jang, Dawn and Millat. 2. A sale proclamation was issued for the first time on 15.5.1999. Despite the fact that the papers enjoyed a wide circulation no offer was forthcoming and this is a matter which we will revert to in a later part of this judgment. The process was repeated on 24.7.2000 and once again no offers came forth. A third endeavor was made by sale proclamation issued on 24.10.2000 but yet again the Nazir did not receive any offer. The Nazir was directed to make a fourth attempt and accordingly a sale proclamation was issued on 26.1.2001. By now about 1-1/2 years had elapsed since the issuance of the first proclamation. It was this sale proclamation which bore fruit and the Respondent No.1 came
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forward with offers for all three of the properties in the sum of Rs.1,19,78,600, Rs.55,53,900, and Rs.57,47,700 respectively. He attached pay orders of Rs.11,97,860, Rs.2,55,390 and Rs.5,74,770, along with his offer. The matter was put up before the learned single judge and the Respondent No.1 was requested to enhance the offer which he duly did. Thus the original total of the three offers which came to Rs.2,32,80,280 was enhanced to Rs.2,41,00,000. He was directed by the Court to deposit the price within one month. It is pertinent and relevant for purposes of present case to note that on 15.3.2001 (i.e. within the stipulated period of 30 days) he submitted an application bearing C.M.A. No.619 of 2001 to the Banking Court seeking a direction from the Court that he should be given vacant possession of the properties. To establish his bona fides he attached therewith photocopies of three pay orders for the balance amount of the sale consideration. Thus it is clear that he had made the financial arrangements for paying the money within 30 days. The Banking Court by an order dated 26.2.2001 directed the Respondent No.1 to take steps in terms of Order XXI, Rule 85, C.P.C. It may be noted that this was for the first time an order was passed in terms of the C.P.C. The original order, which required sealed tenders instead of a public auction, was obviously not passed under the C.P.C. but in terms of the powers conferred on the Banking Court under the Banking law to adopt any procedure deemed appropriate by it for purposes of execution of the decree. Though Order XXI, Rule 85, C.P.C. contemplates a time frame of 15 days commencing from the relevant date as mentioned in the said provision of law, in this particular case the order was passed obviously conferring additional time on the Respondent No.1 and, in fact, he deposited the balance amount three days later on 30.3.2001. The Banking Court had directed that the case should be heard on the next date namely 31.3.2001. The Banking Court by means of an order dated 9.4.2001 noted that the Respondent No.1 had deposited the balance amount of the sale and directed the Nazir to take steps for confirmation of the sale. Thus the bid was accepted by the court. 3. At this point of time it is necessary to examine the conduct of the Petitioner. Although the Petitioner had been served he did not raise any objection whatsoever, despite entering appearance, to the original order passed for the sale of the property through sealed tenders and not by way of public auction under the C.P.C. He also did not raise any objections whatsoever in relation to the framing of the four sale proclamations. Specifically, he did not raise any objection, either at that stage or at any later stage, in the ensuing litigation all the way upto this court to the text of sale proclamation. He, however, preferred special H.C.A. No. 94 of 2001 against the said order dated 26.2.2001. It is important to note that he had a clear cut legal right to challenge the order passed in relation to the sale of properties by means of two alternative methods. One was to file an application under Order 21, Rule 89 and the other was to file an application under Order XXI, Rule 90. 4. There is a great deal of difference between these two provisions of law. Under Order XXI, Rule 89 a judgment debtor is not obligated to show any legal infirmity in the order of sale. He has an unqualified right to have the sale set aside provided he complies with the conditions laid down therein, namely, that he should deposit the full decretal amount in court plus 5% to be paid to the auction purchaser. The time period for making such an application is 30 days. Admittedly he failed to do so and accordingly, it follows, by necessary implication of law that a vested right accrued in favour of the auction purchaser. The second provision, namely, Order XXI, Rule 90, C.P.C. proceeds on a different basis. In order to succeed it is mandatory for the judgment debtor to satisfy the court, on the merits, that the sale should be set aside on the ground of a material irregularity, or fraud, in publishing or conducting it. Yet another condition is prescribed by means of the proviso thereto which stipulates that no sale shall be set aside on the ground of irregularity or fraud unless, upon the facts proved before the Court, it is established that the judgment debtor has sustained substantial injury by reason of such irregularity or fraud. Yet another condition is prescribed by the second proviso which states that no application shall be entertained in terms of this provision of law unless and until the judgment debtor deposits an amount equal to 20% of the sum realized at
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the sale or furnish such security as the court may direct. These are stringent conditions which make the policy of the law crystal clear. A mere allegation is not sufficient. It has to be established that not merely an irregularity but a material irregularity has taken place, or, in the alternative, that fraud has been perpetrated in the process of carrying out the sale. Then is super added the requirement that even if these conditions are complied with the judgment debtor must satisfy the court that he has sustained a substantial injury by reason thereof. Finally, in order to discourage frivolous applications intended to delay the execution of the decree it is mandatory on the judgment debtor to deposit 20% of the sale amount or furnish such security as the court may direct. It is also material to note that once again a time frame of 30 days has been specified under Article 166 of the Limitation Act in this behalf. Failing compliance with the provisions of Order XXI, Rule 90 once again the inevitable consequence is that the judgment debtor is precluded from making any such allegation in order to challenge the validity of the sale at a subsequent stage. The above is further clarified by the provisions of Order XXI, Rule 92, C.P.C. which lays down explicitly the consequences of a failure to make an application under Order XXI, Rule 89 or Order XXI, Rule 90. The said provision states that where no such application has been made under the above mentioned rules, or where such application has been made and disallowed, it becomes mandatory on the court to make an ing the sale and thereupon the sale becomes absolute. These provisions leave no doubt for any ambiguity in the matter. The plaintiff has not merely a legal right flowing from the contract between the parties but a statutory right crystallized in the form of a decree passed by a court of competent jurisdiction. The law has laid down the only methods available in order to challenge such a crystallized right vesting in a plaintiff. If a judgment debtor chooses not to take advantage of the opportunities afforded to him by the law the matter comes to an end (In a later part of this judgment we will consider the case law which discusses whether an application under section 151, C.P.C. seeking to circumvent the failure to apply under Order XXI, Rule 89 or Rule 90, C.P.C. is maintainable or not). 5. By means of the Review Petition a number of arguments were advanced on behalf of the Petitioner. It was stated that the approximate value of the three properties was Rs.13,95,00,000. It was claimed in the Review Petition that this value was supported by means of a sworn affidavit. The contention raised was that the properties were sold for a sum of only Rs.2,41,00,000 which was completely out of proportion and out of line with the actual value. Now it is indeed true that there is a very great difference between an estimated price of Rs. 13,95,00,000 and the amount which was actually recovered. However, when we examine the statement under Order XXI, Rule 66, C.P.C. filed before the Banking Court we find that the total figure includes the price of two other properties other than the three which are in dispute. Admittedly these properties do not form the subject matter of the present proceedings. Accordingly, if we confine ourselves to the three properties which are in question we find that the total value as estimated in terms of the statement under Order XXI, Rule 66, C.P.C. amounts to Rs.29.5 million. This is not very far different from the actual figure at which the properties were sold which was Rs.24.1 million. Accordingly the first submission made by the learned counsel cannot be accepted. 6. Another major submission made on behalf of the Petitioner was that the first order passed by the Banking Court directed that the sale should be made pursuant to Order XXI, Rule 66, C.P.C. It was contended that the C.P.C. requires sales to be by public auction and accordingly it was not open to the learned court to subsequently invite tenders by means of sealed bid. It was submitted that this was a fundamental illegality which went to the root of the case. In support of this contention our attention was drawn to the first order dated 8.10.1998 and paragraph 3 of the said order was read out before us. A perusal of the above paragraph would show however that it does not support the contention advanced by the Petitioner. It is indeed true that the request made was for the sale of the properties and a further reference was made to the statement filed under Order XXI, Rule 66,
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C.P.C. by the counsel appearing in the case. However, the actual order passed by the court which follows in the very next statement makes no reference at all to Order XXI, Rule 66. On the contrary, it categorically states that the sale is to be effected by the Nazir of the Court by inviting sealed bids through advertisement in the daily newspapers. There can be no doubt about the fact that the Banking Court was entitled in terms of the then banking law applicable, and indeed, in terms of the present banking laws as well, to follow any procedure deemed appropriate by it. Thus no objection can be taken to the order of sale. It was clearly not passed under the C.P.C. This finding is also sufficient to dispose of the accompanying submission which was to the effect that once an order has been passed stipulating that the sale is to be made under the C.P.C. it is not open to the court to switch over to any alternative procedure. Although the correctness of this assertion is even otherwise doubtful in view of the case law including several judgments by this court, to which reference is made in a subsequent part herein, the contention is ill founded on the factual plane. 7. A further criticism which has been advanced on behalf of the Petitioner against the judgment in appeal of this Court is relatable to the observation that it was a "negotiated sale". It is contended that this observation is not justified. However, we find from the record that the total amount of the sealed bids amounted to Rs.2,32,00,000. This was subsequently as a result of the proceedings which took place in open court, enhanced to Rs.2,41,00,000. Thus this criticism also falls to the ground. Exception has also been taken to the observation made in paragraph 12 of the judgment of this Court in which it was stated "it was for the first time through order dated 27.3.2001 that the Banking Court by making a reference to Order XXI, Rule 85 had decided to follow the procedure as laid down by C.P.C.". However, as has been clarified in the above the factual position is the exact opposite since right at the inception the Banking Court had passed an order for the sale of the properties through sealed bids which by no stretch of the imagination can be called an order passed under the C.P.C. This argument therefore accordingly equally fails. 8. We now turn to the next argument advanced on behalf of the Petitioner which was that the payment was made belatedly. Now we have already taken note of the fact that the learned judge had right at the inception decided not to follow the time frame laid down in the C.P.C. Accordingly, he had fixed the time of one month within his own discretion. This he was entitled to do. Within that period of one month, as pointed out earlier, the Respondent applied by means of C.M.A. No.619 of 2001 for an order that when the property would be transferred to him he should obtain vacant possession. With that application he attached photocopies of pay orders issued by the bank for the balance amount of the sale consideration. It is therefore clear that he had made arrangements for making payment well within the period of 30 days. On this the banking court on 27.3.2001 directed the Appellant to take further steps in terms of Order XXI, Rule 85, C.P.C. which contemplates a period of 15 days from the inception. The Respondent deposited the amount within 3 days on 30th of March, 2001 and this amount was accepted by the banking court which, by means of the order dated 9.4.2001, directed the Nazir to take steps for confirmation of the sale. All these steps were well within the discretion of the Banking Court and no criticism can be attached in relation thereto. This argument therefore can also not succeed. 9. A major grievance which was made by the learned counsel of the Petitioner was that the Respondent No.1 withdrew the money deposited in Court by him within 60 days and hence it was unfair to allow him the benefit of the sale in his favour. We have noticed that no such ground has been raised either in the Review Petition or in the certificate filed by the learned counsel in support thereof. However, we have nevertheless examined it carefully. The facts are set out in the order passed by the Court on 31.5.2001. By a perusal of this order we find that the hearing of the case was being delayed at the request of the counsel for the Petitioner. It was by reason thereof that the learned counsel appearing for the Respondent contended, as is evident from the order, that the existing state of affairs was operating to his prejudice inasmuch as although he had deposited the
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entire sale consideration the matter was being held up indefinitely. He further stated that he did not believe in interest on Islamic grounds and hence the suggestion that the money deposited be kept in a profit bearing account was not acceptable to him. ' His proposal therefore was that, without prejudice to his claim, he should be allowed to withdraw 90% of the amount deposited by him which, in case he succeeded, would be redeposited by him. The order records the fact that the counsel for the Petitioner gave his consent to this proposal. The Court thereafter, after recording the consent, observed that in the circumstances the Respondent would be entitled to withdraw the amount of 90% without prejudice to his legal rights and in case he succeeded he would redeposit the same in court. In the event of his failure to deposit the said amount the 10% would be forfeited. This was a consent order and we do not see how, in the presence of this order, it is now open to the Petitioner to raise an objection thereto. The balance amount of 90% was of course re-deposited in Court once the appeal had been allowed in favour of the Respondent and no further objection in this regard has been raised. It should be added, however, that when the present Review Petition was filed a stay order was granted so in consequence, although the appeal was decided in favour of the Respondent as far back as 7.6.2005, for the ensuing period of 10 years the Respondent has been denied the possession of the property which he had acquired through payment of the full amount in court. The Petitioner has thus enjoyed the benefit of the property for an additional 10 years while the Respondent has been out of pocket. In these circumstances the grievance of the Petitioner that the Respondent only deposited the money for a period of 60 days and is claiming title on the basis thereof is not justified and cannot be accepted. 10. It was also contended that a higher offer had been made by a company known as Star Cotton Corporation Ltd and this offer was disregarded without any justification. This question is discussed in paragraph 17 of the judgment of this court which refers to a so called higher bid of Rs.28 million by Star Cotton. Corporation (Pvt.) Ltd. Karachi and it has been noted that there is nothing on the record to show that it was actually made to the Court at the relevant time. It also does not find any mention in the court's order dated 9.4.2001. This finding is supported by the documentary evidence on the record. An undated offer by Star Cotton Corporation is available on the record and that too is addressed to the Nazir of the Sindh High Court. There is nothing whatsoever on the record which indicates that it was brought to the notice of the court. Certainly there is no question of our conducting an independent enquiry into the matter in review proceedings. It was the duty of the Petitioner to have brought on record any evidence which indicated that the offer was placed before the court on or before the date on which the operative orders were passed. This plea therefore cannot be entertained. In this connection, it may also be noted that again this is a point which is not raised either in the review petition or the certificate in support thereof. It appears, on the face of it, to be an afterthought. 11. Although the above is sufficient to dispose off the case, in view of the fact, that important questions of law have been raised in relation to the mode of execution of banking decree we have considered, the case law in relation to this subject in some depth and we now turn to an examination of the same. 12. A convenient point to start with is the landmark judgment of this court in the case of Hudaybia Textile Mills Limited v. Allied Bank of Pakistan Ltd. (PLD 1987 SC 512) which has been relied upon by both sides. The facts of the case, in brief, are that the Bank obtained a decree against the judgment debtor pursuant to which an order was passed for the auction of the attached property. It is important to note that no objection was taken by the judgment debtor to the proposed terms and conditions of the auction proclamation. After the auction had been carried out, but prior to the confirmation thereof, an application was filed by the judgment debtor under section 151, C.P.C. for holding it in abeyance on the ground of negotiations being carried on between the judgment
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debtor and the Bank. It appears that thereafter a settlement was arrived at between them. The question however arose about the rights of the Auction Purchaser which, as pointed out above, had yet to be confirmed. The executing court passed an order to the effect that since the judgment debtor had paid up the agreed amount to the decree holder the auction was to be set aside and the property would be restored to him. Insofar as the Auction Purchaser was concerned it was ordered that he was entitled to 5% of the amount in terms of Order XXI, Rule 89, C.P.C. which should be paid to him. It should however be noted that no application had been filed under Order XXI, Rule 89, C.P.C. and indeed, by that time, it was already barred by limitation. Thus the judgment debtor's request was made under section 151, C.P.C. and the important question was whether this request could be allowed under law. 13. To continue with the narration of events thereafter the Auction Purchaser filed an application under Order XXI, Rule 89/92 stating that the auction should be confirmed in the above facts and circumstances. On that application the executing court passed an order stating that an objection petition had been filed in time under section 151, C.P.C., and since the negotiations were proceeding which ultimately succeeded the fact that there was a violation of the provisions of Order XXI, Rule 89 inasmuch as neither the sum of 5% had been deposited and nor had the decretal amount been paid, this was not essential. Accordingly the application of the Auction Purchaser was dismissed with the observation that he would be entitled to 5%. Against this an appeal was filed before a division bench of the Lahore High Court which accepted the contention of the Auction Purchaser. The relevant passage of the division bench order is reproduced below: "An objection to the sale of immovable property in execution of decree could be taken either under rule 89 or rule 90 of Order XXI, C.P.C. It is conceded that Hudaybia Mills before filing application dated 18th September, 1985 (C.M. No.103-B/1985) did not deposit in Court firstly, for payment to the purchaser, a sum equal to 5 per cent of the purchase money; and secondly, for payment to the decree-holder the amount of which the sale was ordered. Rule 89 of Order XXI, C.P.C. makes it a condition precedent that the above said two deposits be made in the Court before applying for setting aside of the sale. The sale could not be permitted to be challenged through an application under section 151, C.P.C. It was held in Nanhelal and another v. Umrao Singh (AIR 1931 P.C. 33) that when once a sale had been effected, a third party's interest intervene and there is nothing to suggest that the provisions of Order XXI, Rule 2 or 89 are to be disregarded. It was further held that after a sale is duly held, the Court cannot refuse to confirm sale on the ground that the decree- holder and judgment debtor say that the decree has been satisfied." 14. Insofar as of the objection of the judgment debtor which was filed under section 151, C.P.C. is concerned the finding is reproduced below:- "As such, Hudaybia Mills, one of the judgment-debtors whose property was sold by the Court auctioneer having failed to make requisite deposit under rule 89 of Order XXI, C.P.C., the Court was left with no choice except to confirm the sale. It was argued by the learned counsel that application dated 18th September, 1985, was filed under section 151, C.P.C. and as such, no deposit was required to be made by the judgment-debtor. In alternate, the learned counsel contended that the said application could be treated as an application under Order XXI, rule 90, C.P.C. This argument is without any force and cannot be given any credit. The inherent powers under the Code of Civil Procedure can be exercised only where no specific provision of law is available. In the instant case, as held above the sale of attached property in execution of decree could be challenged either under rule 89 or under rule 90 of Order XXI, C.P.C. The argument that the said application be treated as an application under Order XXI, rule 90, C.P.C. cannot be accepted because the judgment debtor, in the said application did not allege any material irregularity or fraud in publishing or conduction of sale by the Court auctioneer. Secondly, the allegation of material irregularity and fraud by the…
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