2017 PLP 447 (CLD)

Through this appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ("Ordinance") the appellants have assailed the order dated 28.07.2016 passed by learned Judge Banking Court-III, Lahore, whereby the objection petition of the appellants was dismissed.

2. Brief facts are that appellants filed objection petition under section 19(7) of the Ordinance read with Order XXI, Rule 58 and section 151 of the Civil Procedure Code, 1908 ("C.P.C.") against the auction of mortgaged property. The said objection petition was dismissed through impugned order on 28.07.2016. The appellants being aggrieved have filed this appeal.

3. Learned counsel for the appellants argued that mortgaged property could not be auctioned without its attachment under Order XXI, Rule 54, C.P.C. Reliance is placed on Messrs Ali Match Industries Ltd. through Managing Director and 3 others v. Industrial Development Bank of Pakistan through Manager and another (1999 MLD 2127). He further argued that once learned Banking Court opted to invoke provisions of Order XXI, C.P.C., then it could not later on avoid its express provisions of attachment of mortgage property before its auction. Reliance is placed on Messrs NIB Bank Limited v. Messrs Apollo Textile Mills Limited and 2 others (PLD 2013 Sindh 430) and Gopal Chandra v. Ramesh Chandra and another (PLD 1961 Dacca 492).

4. We have heard learned counsel for the appellants and perused the record. The provision of Order XXI, Rule 54, C.P.C. relates to attachment of immovable property. Section 60, C.P.C. also specifies the properties that are liable to attachment and sale in execution of a decree. The attachment of property is a protective measure taken by Court to keep property intact so as to enable the decree holder to satisfy the decree therefrom. The object of attachment is also to give notice to the judgment debtor not to alienate his property and general public not to accept any alienation from him. These precautionary and protective measures are not required regarding mortgaged properties, firstly for reason that when a mortgage decree is passed, there is adjudication on the footing that the property in question belongs to the mortgager and secondly in mortgage decree, there is a final adjudication about the rights of the judgment debtor and executing Court cannot go behind said decree. In execution of a mortgage decree, only the in-corporal right is brought to sale and not the physical property whereas in juxta position to this, in execution of a money decree the physical or the real property is brought to sale. In case of Muhammad Shahid v. Sajida Khatoon and others (2004 MLD 296) and Union Bank of the Middle East Ltd. v. Sa'ad Carpets Ltd. (1986 MLD 482), it was held that objection petition under Order XXI, Rule 58, C.P.C. is not maintainable against mortgage property as there was no requirement of attachment for mortgage property. The same view was also expressed in Indian Bank, Kovvur v. Nallam Veera Swamy and others (2014 AIR CC 2728 (AP) and Punjab and Sindh Bank v. State Bank of India 2002 (I) RCR (Civil) 273.

5. Section 15(a) of the Ordinance define "mortgage" means the transfer of an interest in specific immovable property in favour of the mortgager for the purpose of securing the payment of mortgaged money or the performance of an obligation which may give rise to pecuniary liability. The dishonest alienation or transfer of possession of mortgaged property is an offence under section 20(c) of the Ordinance. Mortgaged property being already secured, the Court was not required to adopt protective measures through attachment in respect of mortgaged properties. There is no cavil with the settled proposition that once Executing Court opted and invoked provisions of C.P.C., then it cannot avoid its express provisions. However, as already discussed above, provision of Order XXI, Rule 54 or section 60, C.P.C. does not specifically required attachment of mortgaged property, therefore, Court was not bound to attach the mortgage property before its sale in execution.

6. We have also noted that sale of mortgaged property is specifically governed under provision of sections 14 and 19 of the Ordinance. For convenience, the aforesaid provisions are re-produced hereunder:-

14. Decree in suits relating to mortgages.- Where the suit filed by a financial institution before the Banking Court is for the enforcement of a mortgage of immovable property, the Banking Court Banking Court will not be required to pass a preliminary decree as provided in Order XXXIV of the First Schedule to the Code of Civil Procedure, 1908 (Act V of 1908), but shall directly pass an interim or final decree for foreclosure or sale.

19. Execution of decree and sale with or without intervention of Banking Court:- (1) Upon pronouncement of judgment and decree by a Banking Court, the suit shall automatically stand converted into execution proceedings without the need to file a separate application and no fresh notice need be issued to the judgment-debtor in this regard. Particulars of the mortgaged, pledged or hypothecated property and other assets of the judgment-debtor shall be filed by the decree-holder for consideration of the Banking Court and the case will be heard by the Banking Court for execution of its decree on the expiry of 30 days from the date of pronouncement of judgment and decree: The perusal of aforesaid provisions show that in respect of mortgaged property, learned Banking Court will directly pass an interim or final decree for foreclosure or sale. Further on pronouncement of judgment, the decree shall automatically convert into execution proceedings. No fresh notice need to be issued to judgment debtor in this regard but only the particulars of mortgaged property be filed by the decree holder and case be heard for the execution of a decree. Even under aforesaid provisions, there is no need for attachment of mortgaged property before its sale in execution. The case law relied upon by the petitioner pertains to period prior to promulgation of the Ordinance, therefore, same is not relevant to facts and circumstances of this case.

7. In view of above discussion, we find no illegality or infirmity in the impugned order. This appeal is accordingly dismissed. KMZ/H-27/L Appeal dismissed.