2025 PLP 615 (CLD)

ASIM HAFEEZ, J.

This appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the 'Ordinance'), is cause and effect of order dated 04.09.2013, whereby objection to alleged auction dated 25.06.2012 was dismissed and said auction was confirmed in favour of respondent No.2.

2. Brief background facts are that respondent No.1 opted to adopt mechanism provided in terms of section 15 of the Ordinance for sale of mortgaged property, offered as security for repayment of amounts secured thereunder. Evidently notices were issued claiming payment of mortgage money and upon default proceedings were initiated for sale of the property, without the intervention of the Court. Auction was conducted, allegedly upon following the procedure provided under section 15 of the Ordinance. Objections filed were dismissed and auction as confirmed. Hence, this appeal.

3. On previous date of hearing, respondents were cautioned that no request for adjournment would be entertained and in case of failure, dictum laid in the case of "Moon Enterpriser CNG Station, Rawalpindi v. Sui Northern Gas Pipelines Limited through General Manager, Rawalpindi and another" (2020 SCMR 300) would be followed. An associate counsel made request for adjournment, which is declined.

4. Learned counsel for appellant submits that auction sale under reference was carried out in terms of originally framed section 15 of the Ordinance - before section 15 was re-enacted pursuant to the decision of Supreme Court in the case of National Bank of Pakistan v. SAF Textile Mills Ltd. and another' (PLD 2014 Supreme Court 283) - which provision of law was held ultra vires to the Constitution of Islamic Republic of Pakistan 1973. And auction under reference is not immune from the effect of the decision since auction, for all intent and purposes was subject of challenge and proceedings in this behalf remained sub-judice. Adds that, even on merits, auction is not sustainable as single bid was received, accepted and confirmed without appreciating per se illegality.

5. This appeal is pending since 2013. And frequently sought adjournments are cause of delay(s) / cases backlog, which is primarily and directly affecting the efficiency of judicial system. We therefore have declined the request for adjournment and proceed to decide the appeal on merits.

6. Auction under reference was carried out under the originally framed section 15 of the Ordinance, which was declared ultra vires vide decision in the case of SAF Textile Mills Ltd. and another (supra). It is evident that Apex Court had neither invoked nor applied the doctrine of prospective overruling - protecting past and closed transactions [auctions conducted in terms of section 15 of the Ordinance] while declaring the law unconstitutional. Even otherwise auction conducted did not became a past and closed transaction in wake of pendency of this appeal, against the order of dismissal of objections and confirmation of sale. Another glaring illegality is factum of confirmation of sale against single bid. In terms of the dictum laid in the case of Al-Hadi Rice Mills (Pvt.) Ltd. v. MCB Bank Limited' (2023 CLD 85), wherein acceptance of single bid in auction sale, without any competitive bid, was declared antithesis to the claim and concept of public auction(s). Question worth considering is that whether alleged auction sale could claim protection in terms of re-enacted section 15 of the Ordinance - section 15 of the Ordinance was amended through Financial Institutions (Recovery of Finances) Amendment Act 2016, which also promulgated Financial Institutions (Recovery of Finances) Rules, 2018 (Rules), which, in terms of Rule 3(c) (iv), permits considering single bids, subject to certain conditions. That Rule extends no protection to alleged auction, which Rule was declared ultra vires in terms of the majority decision larger Bench in the case of Muhammad Shoaib Arshad and another v. Federation of Pakistan through Secretary, Ministry of Law, Justice Human Rights and Parliamentary Affairs and 4 others (2020 CLD 638).

7. In view of the aforesaid, we hold that order of confirmation of auction sale dated 04.09.2013 is not sustainable, hence, same is declared illegal and accordingly set-aside upon allowing instant appeal. Appellant is at liberty to initiate proceedings seeking restitution / reversal of the actions enforced and steps taken pursuant to the order of confirmation of auction sale. No order as to the costs. MQ/B-3/L Appeal allowed.