Legal Principle & Question Decided

Ruling Summary: This decision was rendered by the Lahore High Court (Honorable Mr. Justice Hassan Nawaz Makhdoom), officially reported as 2026 LHC 4533. In this matter between Ms Faran Maize Industries (Pvt) Limited and ZTBL ., the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.

Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.

Full Judgment Text & Judicial Ruling

COURT: Lahore High Court (Honorable Mr. Justice Hassan Nawaz Makhdoom) DECISION DATE: 11-06-2026 TAGLINE: Execution of Decree?Judicial Auction?Maintainability of Objections?Finality of Earlier Adjudication?An issue finally determined between the parties cannot be permitted to be reopened in subsequent execution proceedings merely on the basis of a later judicial exposition of law. Order XXI Rule 90, C.P.C.?PLD 2024 SC 873 (Mst. Samrana Nawaz)?Prospective Operation of Judicial Pronouncements?Subsequent declaration of law does not automatically unsettle judicial determinations that have already attained finality inter se the parties. Doctrine of Finality of Litigation?Binding Effect of Earlier Judicial Orders?Where an order regarding maintainability of objections has attained finality after exhaustion of remedies, the same cannot be circumvented through collateral proceedings. Execution Proceedings?Judicial Discipline?Execution cannot be converted into endless litigation by repeatedly raising controversies already concluded by competent Courts. Speaking Order?Validity?A judicial order is to be assessed by the substance and quality of its reasoning, not by its length or elaboration?Mere brevity does not render an order non-speaking. Judicial Sale?Order XXI Rules 84 & 85, C.P.C.?Material Irregularity?Substantial Injury?Every procedural deviation does not ipso facto vitiate a judicial sale?Interference is justified only where material irregularity is coupled with proof of substantial prejudice. Judicial Auction?Deposit of Auction Money?Banking Instruments?Deposit through demand drafts/pay orders accepted by Court Auctioneers under authority of the executing Court constitutes valid compliance in the absence of statutory violation or demonstrable prejudice. Substantial Injury?Essential Ingredient?A challenge to a concluded judicial sale cannot succeed unless the objector establishes both material irregularity and consequential substantial injury. Court Auction?Competing Bidder?Higher Offer?Absence of any rival bidder, superior offer or demonstrable financial loss strongly negatives the plea of prejudice or inadequacy of sale. Judicial Sale?Reserve Price?Undervaluation?Valuation Report?A subsequent valuation report represents only an expert opinion and cannot, by itself, invalidate a concluded auction or establish inadequacy of price. Judicial Sale?Mere Inadequacy of Price?Not a Ground for Setting Aside Sale?Unless directly attributable to fraud, material irregularity or illegality resulting in substantial injury. Valuation Evidence?Contemporaneous Challenge?Failure to challenge valuation before the executing Court precludes reopening the issue on the basis of subsequently procured valuation reports. Fraud and Collusion?Standard of Proof?Fraud must be specifically pleaded and proved through clear, cogent and legally admissible evidence?Suspicion, however grave, cannot substitute proof. Unproved Documents?No Evidentiary Value?Findings of fraud or collusion cannot be founded upon disputed or unproved material. Jurisdiction of Executing Court?Transfer Application?Section 12(2), C.P.C.?Pendency of collateral proceedings, in the absence of an express stay order, does not divest the executing Court of jurisdiction to proceed with execution. Execution Proceedings?Statutory Jurisdiction?Banking Court?Section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001?Executing Court remains competent to supervise execution and determine objections unless specifically restrained. Bona Fide Auction Purchaser?Protection of Vested Rights?Rights acquired through a court-supervised auction deserve protection and cannot be unsettled except upon proof of fraud, fundamental illegality or substantial injury. Judicial Auctions?Public Confidence?Sanctity and Finality?Frequent interference with concluded judicial sales on speculative or technical objections would erode public confidence and discourage genuine participation in court auctions. Appellate Jurisdiction?Section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001?Interference is unwarranted in the absence of illegality, jurisdictional defect, material irregularity, or misreading or non-reading of evidence. Execution First Appeals?Dismissal?Auction Sale Upheld?Where objections stand barred by finality and otherwise fail on merits for want of proof of fraud, illegality, material irregularity or substantial injury, confirmation of sale and issuance of sale certificate call for no interference. CASE DETAILS: Execution First Appeals (E.F.A.) (Against Interim Order) 253599/18 ============================================================ Stereo. H C J D A 38. JUDGMENT SHEET THE LAHORE HIGH COURT, LAHORE JUDICIAL DEPARTMENT

Execution First Appeal No.253599 of 2018 M/s Faran Maize Industries (Pvt.) Ltd. and others Vs. Zarai Taraqiati Bank Limited and others J U D G M E N T Date of Hearing 11.06.2026 For Appellants: M/s Barrister Khurram Raza, Barrister Abdullah Jehangir and Barrister Amber Niaz. Advocates for appellants. Rana Muhammad Arshad Khan, Advocate for appellant in connected EFA No.255956/2018. For Respondents: M/s Muhammad Khalil Rana and Mian Abdul Sattar, Advocates for respondent bank in both the appeals. M/s Hafeez Saeed Akhtar, Basharat Ali, Ghulam Ali Raz and Hafiz M. Nauman Zafar, Advocates for a uction purchaser /respondent No.4. M/s Amjad Butt and Firdous Imtiaz, Court Auctioneers. Hassan Nawaz Makhdoom, J.- Through this common judgment, we intend to dispose of the instant Execution First Appeals No.253599 and 255956 of 2018 (Rana Shahzad Akhtar v. Judge Banking Court, etc.), which arise out of the same execution proceedings and call in question the legality and propriety of the order dated 15.11.2018 (the “Impugned Order”) passed by the learned Judge, Banking Court No.1, Lahore in Execution Petition No.4-B of 2011, arising out of COS No.06 of 2004. By virtue of the impugned order, the learned Banking Court dismissed the objections preferred against the auction proceedings conducted on 24.05.2016, while confirming the auction /sale of the mortgaged properties and consequentially, directed the issuance of sale certificate in favour of the auction purchaser. 2. The essential facts for the disposal of these appeal are that, Zarai Taraqiati Bank Limited, formerly Agricultural Develo pment Bank of Pakistan, instituted Civil Original Suit No.06 of 2004 against M/s Faran Maize Industries (Pvt.) Ltd. and others for recovery of outstanding EFA No.253599 of 2018 -:2:-

finance secured through various mortgages and guarantees. The suit was initially decreed through an i nterim decree dated 04.05.2010 and subsequently a final decree dated 03.06.2015 was also passed, whereby an amount of approximately Rs.75.425 million was held recoverable from the defendants. Pursuant thereto, execution proceedings commenced before the learned Banking Court for enforcement of the decree and realization of the outstanding liability through auction of the secured assets. The record shows that although six properties formed part of the mortgaged assets, but four thereof were ultimately auctioned on 24.05.2016. The highest bid was offered by Farrukh Sana (Respondent No.4 in EFA No.253599 of 2018), who was declared the successful purchaser against a total bid amount of approximately Rs.82.04 million. The auction proceedings were, however, challenged through a series of objection petitions filed by the judgment-debtors and their legal heirs , wherein the legality of the auction, non-compliance with the provisions of the Code of Civil Procedure, 1908 (“C.P.C.”) and the validity of the sale process were questioned. The learned Banking Court, through the Impugned Order, dismissed all such objections, while holding the application under Order XXI Rule 90, C.P.C. as not maintainable. Resultantly, the auction/sale was confirmed. 3. Learned counsel appearing on behalf of the appellants in EFA No.253599 of 2018 assailed the impugned order on both procedural and substantive grounds. It was contended that the learned Banking Court failed to meaningfully examine the objections raised before it and disposed of the matter through a non-speaking order without addressing the material controversies arising from the record. According to learned counsel, the auction proceedings dated 24.05.2016 suffered from fundamental legal infirmities rendering the subsequent confirmation of sale unsustainable. The principal challenge was directed towards the alleged non-compliance of the provisions contained in Order XXI Rules 84 and 85, C.P.C. Learned counsel submitted that the statutory requirement regarding immediate deposit of twenty -five percent of the purchase money was not fulfilled, as the auction record allegedly reflected that additional time was granted to the successful bidder after EFA No.253599 of 2018 -:3:-

the fall of hammer for arranging the requisite amount. It was argued that such relaxation is not in consonance with the law a s the mandatory requirements governing judicial sales could not be diluted by the Court Auctioneers. Similar objection was raised with regard to the deposit of balance seventy-five percent of the sale consideration, which, according to the appellants, was neither deposited directly in Court nor within the period prescribed by law. It was further maintained that the Court Auctioneers had no authority to receive or retain the auction proceeds after completion of the auction proceedings and any such deposit could not be treated as compliance with the statutory manda te. Learned counsel further argued that the circumstances surrounding the auction proceedings gave rise to serious doubts regarding its transparency and genuineness. It was pointed out that four separate properties were allegedly auctioned within an exceptionally short span of time and that the record did not contain the usual supporting material expected from a public auction, including complete bid sheets and identification particulars of the participants. Reference was also made to certain banking transa ctions and documentary material which, per learned counsel for appellants , disclosed inconsistencies regarding the procurement of demand drafts and movement of funds immediately after the auction. The appellants also questioned the legality of the sale proclamation and publication process. It was contended that no fresh publication was issued for the auction conducted on 24.05.2016 and that valuable industrial assets, including plant and machinery, were either inadequately described or omitted altogether fr om the sale process. According to the appellants, such deficiencies materially impaired public participation and ultimately resulted in sale of the assets at a grossly inadequate price. It was emphasized that properties and industrial assets allegedly worth several hundred million of rupees were sold for approximately Rs.82 million, thereby causing substantial prejudice to the judgment -debtors. In support of the submissions, reliance was placed upon various precedents dealing with the mandatory nature of Order XXI Rules 84 and 85, C.P.C., the legal consequences of non-compliance therewith and the standards governing judicial scrutiny of court-conducted auctions. EFA No.253599 of 2018 -:4:-

4. Learned counsel appearing on behalf of the appellant in EFA No.255956 of 2018 supplemented the challenge to the impugned order by advancing certain jurisdictional and procedural objections. It was argued that dismissal of the objection petition on account of non-deposit of the amount contemplated under Section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the “Ordinance”) and Order XXI Rule 90, C.P.C. did not constitute an adjudication of the substantive objections on merits and, therefore, could not operate as a bar to subsequent examination of the legality of the auction proceedings. Per learned counsel, the earlier proceedings before this Court and the Honourable Supreme Court of Pakistan remained confined to the question of deposit of the statutory amount and did not culminate in any final determination regarding the validity of the auction itself. It was further submitted that the legal position governing the requirement of deposit under Section 19(7) of the Ordinance was itself undergoing judicial scrutiny during the relevant period and, therefore, the earlier dismissal of the objections could not be construed as conclusively determining the rights of the parties. Learned counsel maintained that the Banking Court was under an obligation to afford the objectors a meaningful opportunity to substantiate their objections and that the summary nature of proceedings under Section 19 of the Ordinance did not dispense with the requirement of fair adjudication through a reasoned order. The appellants also questioned the propriety of the Banking Court proceeding with the matter despite pendency of Transfer Application No.227645 of 2018 before this Court concerning issues of jurisdiction and consolidation of proceedings. Particular reliance was placed u pon the Banking Court ’s own order dated 10.09.2018, whereby it had considered it appropriate to await the outcome of the proceedings pending before this Court. It was contended that the subsequent passing of the Impugned order was inconsistent with the said course adopted by the Banking Court. Reference was also made to proceedings pending under Section 12(2), C.P.C. challenging the underlying judgment and EFA No.253599 of 2018 -:5:-

decree, and it was argued that confirmation of the auction sale during pendency of such proceedings warranted careful judicial scrutiny. 5. Learned counsel appearing on behalf of respondent No.1/Decree- holder Bank opposed both the appeals and supported the impugned order. It was contended that the objections raised by the appellants were either devoid of merit or had already been examined and settled in earlier round of proceedings, including orders passed by this Court prior to the auction. Per learned counsel, the judgment -debtors had consistently obstructed the execution process, resulting in failure of previous attempts to auction the mortgaged properties, and could not now be permitted to derive advantage from delays and impediments attributable to their own conduct. Learned counsel further submitted that the auction was conducted pursuant to valuations obtained through the process approved by the executing Court and that the properties ultimately fetched consideration exceeding the reserve price fixed for the purposes of sale. It was argued that neither any independent valuation nor any bona fide higher offer was ever produced by the judgment -debtors to demonstrate that the properties had been sold at an undervalue / inadequate price or that any prejudice had been occasioned to them on account of the auction. Referring to the objections regarding deposit of the purchase money, learned counsel maintained that the law does not insist upon physical cash transactions and that payment through demand drafts or pay orders has consistently been recognized as a valid mode of compliance with the requirements governi ng judicial sales. It was submitted that, having regard to the substantial amount involved, procurement of demand drafts on the date of auction constituted reasonable and lawful compliance with the statutory requirements, and that the auction proceeds were duly transmitted through the Court Auctioneers to the office of the Deputy Registrar (Judicial). It was further argued that no illegality, material irregularity or jurisdictional defect had been established so as to warrant interference with the impugned order in exercise of appellate jurisdiction by this Court. 6. Learned counsel appearing on behalf of respondent No.4, the Auction Purchaser, also supported the impugned order and opposed the EFA No.253599 of 2018 -:6:-

appeals. At the very outset, it was contended that the challenge to the auction proceedings, insofar as it pertained to certain properties, is not sustainable as the matter had already attained finality. The reference was specifically made to the property owned by Late Fazal -ur-Rehman, whose objections to the auction had been dismissed by the learned Banking Court and who had not chosen to assail the said determination before any superior forum. Per learned counsel, the subsequent attempt by M/s Faran Maize Industries (Pvt.) Ltd. to assert an independent claim over the said property was an afterthought and, in any event, any transfer allegedly effected after institution of the ban king suit was hit by the provisions of Section 23 of the Ordinance. Learned counsel further submitted that the controversy raised by the legal heirs of late Rana Buland Iqbal Khan stood conclusively determined after availing remedies before the superior Courts and, thus, could not be reopened. Learned counsel submitted that the objections filed by the said judgment-debtor against the auction proceedings were dismissed by the learned Banking Court vide order dated 08.10.2018 on account of non-compliance with the mandatory requirement of deposit envisaged under Order XXI Rule 90, C.P.C. The said order was assailed before this Court through EFA No.243815 of 2018, which was dismissed by a learned Division Bench vide judgment dated 29.10.2018. Thereafter, the challenge was laid before the Honourable Supreme Court of Pakistan through Civil Petition No.4363 of 2018; however, the said petition was ultimately dismissed as withdrawn vide order dated 04.03.2020. It was, thus, argued that the order dated 08.10.2018, having remained undisturbed by the superior fora, attained finality inter se the parties and the objections relating to the auction proceedings could not be permitted to be resurrected or re-agitated through the present appeals under the guise of a fresh challenge. On merits, learned counsel contended that the Auction Purchaser had fully complied with the requirements governing judicial sales. It was submitted that the prescribed twenty-five percent of the purchase money had been deposited through demand drafts on the date of auction and that the remaining amount was duly deposited within the period EFA No.253599 of 2018 -:7:-

contemplated by law. Reliance was placed upon judicial precedents recognizing payment through demand drafts and pay ord ers as valid modes of compliance with the statutory requirements relating to deposit of purchase money in auction proceedings. The allegations of fraud, collusion, manipulation of record and lack of transparency were emphatically denied. Learned counsel ar gued that the auction proceedings had been conducted under the supervision of Court Auctioneers appointed by the executing Court and that the auction record did not disclose any circumstance suggestive of mala fides or illegality. It was further submitted that no independent valuation, higher offer or other tangible material had been produced by the appellants to demonstrate either substantial injury or gross inadequacy of consideration sufficient to invalidate a completed judicial sale. Lastly, learned cou nsel invoked equitable considerations, submitting that the Auction Purchaser had participated in the auction bona fidely, paid the entire sale consideration and had remained deprived of the fruits of the transaction for several years owing to protracted litigation. According to learned counsel, settled principles governing judicial sales require due regard to the rights of a bona fide purchaser and militate against unsettling concluded transactions in the absence of clear proof of fraud or fundamental illegality. It was also objected that certain documents subsequently brought on record by the appellants through miscellaneous applications constituted fresh evidence introduced without leave of the Court and, therefore, could not lawfully be relied upon while deciding the present appeals. 7. Arguments heard. Record perused. 8. The principal question arising in these appeals is whether the appellants can be permitted to reopen the validity of the auction proceedings despite the fact that the issue relating to the maintainability of their objections already stands conclusively determined inter se the parties. The controversy, in i ts true perspective, is not confined to the maintainability of the objections under Order XXI Rule 90, C.P.C.; it is whether an issue conclusively adjudicated and having attained finality inter se the parties can lawfully be permitted to be re -agitated on the EFA No.253599 of 2018 -:8:-

basis of a subsequent exposition of the law. A careful examination of the record reveals that Rana Shahzad Akhtar and the other judgment-debtors filed objections challenging the auction proceedings without depositing the amount contemplated by the second proviso to Order XXI Rule 90, C.P.C. When the maintainability of the objections was questioned, they moved a subsequent application seeking permission to deposit the requisite amount after the institution of the objections. The learned Banking Court, vide order dated 08.10.2018, dismissed the said application and held that the objections were not maintainable for want of compliance with the statutory requirement. The said order was challenged before this Court through E.F.A. No.243815 of 2018, which was dismissed on 29.10.2018. The said orders were thereafter assailed before the Honourable Supreme Court of Pakistan through Civil Petition No.4363 of 2018, but the petition was dismissed as withdrawn on 04.03.2020. Consequently, the order dated 08.10.2018 atta ined finality inter se parties and has never been set aside, modified or recalled by any competent forum. 9. Learned counsel for the appellants has, however, relied upon the judgment of the Honourable Supreme Court in Mst. Samrana Nawaz and others v. MCB B ank Ltd. and others (PLD 2024 SC 873) to contend that the second proviso to Order XXI Rule 90, C.P.C. does not oblige an objector to deposit twenty percent of the sale consideration simultaneously with the filing of objections and that such deposit becomes payable only upon a prior direction of the executing Court. There can be no cavil with the proposition that the Hon’ble Larger Bench of the Supreme Court of Pakistan vide the said judgment has authoritatively interpreted the second proviso to hold that the executing Court must first determine the amount, not exceeding twenty percent of the sale price, or the nature of security to be furnished, and thereafter afford the applicant an opportunity to comply before declining to entertain the objections. The earlier view taken in Habib and Company v. MCB Bank Ltd. (PLD 2020 SC 227) was expressly overruled. 10. The aforesaid pronouncement, however, does not materially advance the appellants’ case. The controversy before us is not one where EFA No.253599 of 2018 -:9:-

the question regarding the interpretation of the second proviso to Order XXI Rule 90, C.P.C. falls for determination for the first time. The maintainability of the objections on account of non -deposit already stood adjudicated between the very parties through the order dated 08.10.2018 passed by the learned Banking Court , which was affirmed by this Court on 29.10.2018 and thereafter allowed to attain finality when Civil Petition No.4363 of 2018 was dismissed as withdrawn on 04.03.2020 by the Hon ’ble Supreme Court of Pakistan . The binding effect of that adjudication cannot now be avoided merely because the legal position has subsequently been explained differently by the Hon’ble Larger Bench in Mst. Samrana Nawaz’s case (supra). The said judgment neither declares that all earlier decisions, which had attained finality shall automatically stand reopened nor does it confer a fresh cause of action upon parties whose rights had already crystallized by virtue of final judicial determinations. 11. It is a settled principle that a subsequ ent declaration or clarification of law does not, by itself, obliterate or unsettle judgments that have already attained finality between the parties unless such final adjudication is displaced through a legally recognised procedure. The doctrine of finality of litigation is founded upon considerations of public policy and judicial discipline. Once a controversy has travelled through the hierarchy of Courts and culminated in a binding determination, the parties are precluded from reopening the same issue in collateral proceedings merely because the legal position has thereafter undergone judicial reconsideration. Any contrary approach would seriously undermine certainty in the administration of justice and render concluded litigation perpetually vulnerable to reopening. 12. In the peculiar facts of the present case, the issue requiring determination is not whether the law subsequently declared in Mst. Samrana Nawaz ’s case (supra) departs from the legal position prevailing at the relevant time. The…

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