2013 PLP 224 (CLD)

SHAHID WAHEED, J.

The appellants have brought this appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 against the order dated 13-10-2011 passed by the learned Banking Court-I, Multan whereby appellants' objection petition under section 19 of the above said Ordinance for setting aside auction proceedings dated 13-5-2011 was dismissed.

2. Briefly, the facts of the case are that the appellants obtained financial facility of Rs.2,500,000 from the respondent No.1 and as a surety thereto got mortgaged a house No.4245/40 measuring 12 Marlas situated in Shamsabad Colony, Multan. The appellants could not fulfill their contractual obligations and as a result thereof the respondent No.1 instituted a suit for recovery of Rs.29,49,342.50 which was decreed on 9-2-2010. Consequent upon the decree, the suit was converted into execution proceedings. In execution of the decree the mortgaged property was put to auction and the respondent No.2, being the highest bidder, purchased the said property in auction allegedly held on 13-5-2011. The respondent No.2 made a bid of Rs.4,400,000 which amount had been duly deposited with the Banking Court. The appellants feeling aggrieved moved objection petition under section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for setting aside the auction proceedings and one of the objections raised in the petition was, that no auction at all was conducted at the spot on 13-5-2011 and the entire proceedings in this regard are fake and fraudulent. Besides above, some other objections about the irregularities in the proclamation, determination of reserve price and conduct of sale were also taken. The learned Banking Court, however, dismissed the objection petition and confirmed the sale in favour of respondent No.2 through order dated 13-10-2011. Hence this appeal.

3. Learned counsel for the appellants contends that as the very conduct of the auction on the date was disputed by the appellants and, therefore, in these circumstances, factual controversy could only be resolved by the learned Banking Court after framing issues, enabling the parties to produce evidence but the same was not done; submitted the learned Banking Court committed material irregularity as auction was allowed at the reduced reserve price of Rs.3,500,000 without deciding the appellants' application for determination of reserve price. Conversely, learned counsel for respondent No.1 contends that non- compliance of provisions of Civil Procedure Code, 1908 with regard to proclamation of sale, its publication and conduct of sale in execution are not material and cannot be termed as illegalities thereby rendering sale as nullity; and, that where third party is bona fide auction purchaser then his interest in sale of auction should be protected. In this regard he placed reliance on the case of MUMTAZ-UD-DIN FEROZE v. SH. IFTIKHAR ADIL and others (PLD 2009 SC 207) and Messrs BRITISH BISCUITS CO. (PVT.) LTD. v. Messers ATLAS INVESTMENT BANK LIMITED (2005 CLD 674).

4. We have heard the learned counsel for the parties and perused the record. The appellants in his objection petition under section 19 of the Financial Institution (Recovery of Finances) Ordinance, 2001 took a specific plea that no auction was held at the spot on 13-5-2011 and in this regard the appellants placed on record the affidavits of Zulfiqar Ali, Naeem Aslam and Kamran. This contention was also recorded by the learned Banking Court in its impugned order. In view of above, if the auction has not taken place as alleged then there is no valid sale in favour of respondent No.2 and, therefore, cannot be confirmed. The issue whether the auction at all was conducted at the spot on 13-5-2011 can only be resolved by the learned Banking Court, after framing of issues and enabling the parties to lead evidence. In this regard we find fortification from the judgment rendered by this Court in the case of Mrs. SALMA JAVED v. DEUTSCHE BANK A.G., LAHORE through Attorney and 4 others (2004 CLD 1560).

5. Question for determination of reserve price is another important factor which was to be decided by the learned Executing Court but was not properly addressed. The appellant made application under Order XXI, Rule 66 of the Code of Civil Procedure, 1908 on 4-5-2011 to re-consider the question of reserve price contending that the learned Executing Court reduced the reserve price without any material available on record. Though there was report of court-auctioneer to reduce the reserve price but there was nothing to substantiate the stance of court-auctioneer in this regard. It is not disputed that previously the decree-holder-bank submitted reserve price to the tune of Rs.5.100 (Million) but later on made application on 12-11-2010 for reduction of reserve price from Rs.5,100 Million to Rs. 4.00 Million in order to complete the auction process. However, vide order dated 21-12-2010 it was fixed at Rs.3.50 Million. Duty was cast upon the learned Banking Court to decide the question of reserve price by associating appellants particularly in view of their stance taken in the application made on 3-5-2011. We are conscious about the offer made at the instance of respondent No. I not only before the learned Executing Court but also before this Court, upon the strength of which premium was granted to the appellants to get the property sold at their stated price which was not maintained. However, inability of appellants by itself is not sufficient to conclude that the reduced reserve price was properly fixed. At least some material such as status of intended purchasers, fresh evaluation report or yardstick of market value of property in the vicinity fixed by the Revenue Department should have been before the Court to reach the conclusion arrived at. Mere inability of the appellants in this regard who even otherwise were not associated at the time of making order for reduction of reserve price was not sufficient to absolve executing court to determine the moot point on justified material.

6. In view of above, this appeal is allowed and the impugned order dated 13-10-2011, passed by the learned Banking Court is set aside with a direction to decide the matter afresh in the light of dictum laid down in "Mrs. SALMA JAVED" (supra) within a period of four months. The parties are directed to appear before the learned Banking Court on 18-7-2012. KMZ/A-121/L Appeal allowe