2005 PLP 711 (CLD)

Scheme of Distribution A number of winding up petitions were filed against the company by unsecured creditors, which were dismissed on 22-3-2004. Pursuant to the order dated 13-4-2004, passed by this Court, the Court Auctioneers have submitted a distribution scheme. According to the detail submitted, Rs.422,701,070 are lying in the Court Auctioneer s account, a sum of Rs.1,730,651 is being claimed as expenses by CIRC and Rs.8,419,408 are being claimed as Court Auctioneer s remunerations to be paid by CIRC being 2 per cent of the total sale proceeds.

2. Learned counsel for B.E.L. raised an objection that CIRC is not entitled to Rs.8,419,408 as Court Auctioneer s remunerations. Learned counsel relied upon Lahore High Court (Rules and orders), Volume-I, Chapter-12-L, rule 21, to contend that if the sale proceeds exceed rupees five thousand, the amount chargeable is two and a half per centum, provided the maximum amount of commission deductable according to the aforesaid rates shall not exceed rupees five thousand.

3. Conversely, learned counsel for CIRC/Court Auctioneer submitted that this is too meagre amount and no Court Auctioneer will work for the same.

4. I have considered the arguments of the learned counsel and gone through the relevant provisions of the law.

5. C.M. No.427-B of 2002 was made by CIRC under section 6(5) of the Non-Performing Assets and Rehabilitation of Industrial Undertaking (Legal Proceeding) Ordinance, 2000, seeking replacement of the existing Court Auctioneers with the nominees of CIRC. Mr. Adeel K. Bajwa, Advocate and Mr. Mujeeb Anwar, Advocate, were appointed Joint Court Auctioneers in place of Mian Muhammad Iqbal, vide order dated 24-6-2002. CIRC made another application (C.M. No.426-B of 2002) for appointment of the nominees of CIRC as Court Auctioneers. Vide order dated 30-10-2002, my learned brother Jawwad S. Khawaja, J., appointed Mr. Adil Nisar Khan and Mr. Farid Alam as Court Auctioneers. Under section 6(5) of the Non-Performing Assets and Rehabilitation of Industrial Undertaking (Legal Proceedings) Ordinance, 2000, in cases transferred to High Court, in which a Liquidator or a Court Auctioneer or a Receiver has already been appointed, the Corporation may apply to the High Court for replacement of the existing Liquidator or a Court Auctioneer or a Receiver, as the case may be and the High Court shall thereupon appoint the Chief Executive of the Corporation or his nominees in place of the Liquidator or Court Auctioneer or a Receiver as the case may be . Under section 10 of the aforementioned Legal Proceedings, Ordinance, 2000, procedure for execution of the decree has been laid down. Under section 10(5) of the said Ordinance, 2000, the sale of the collateral or any part thereof by the Corporation pursuant to subsection (3) shall be either by Public Auctioneer or inviting sealed tenders subject to the orders of confirmation by the High Court. Under section 25(2) of the Corporate and Industrial Restructuring Corporation Ordinance, 2000, corporation fund consists of among others the recovery fee collected by the Corporation from financial institutions (in the instant case UBL). Under Rule 3.2 of the Corporate and Industrial Restructuring Corporation Rules, 2001, corporation is entitled to recover a fee equal to two per cent of the gross recoveries as compensation for its services.

6. In my view, where the CIRC or its nominee is appointed as Court Auctioneer on its own application, it is not entitled to any fee as Court Auctioneer. It has already received 2% of the gross recoveries for the services rendered. In the circumstances, 2 per cent of the total recoveries as Court Auctioneer s remunerations are disallowed. The Court Auctioneers are further directed to make the payment of the said amount to the secured creditors in the ratio already determined. To come up on 7-10-2004 for final report. M.B.A./B-79/L Order accordingly.