2021 PLP 1400 (CLD)

This appeal is filed under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) to lay a challenge to order dated 30.05.2014 passed by the banking court in dismissing the application filed by the appellants objecting to the attachment of his property.

2. The relevant facts for determination of the controversy in this appeal may be stated as under Respondent No.2 being an employee of the respondent bank availed a finance facility and as security for repayment of the finance mortgaged his property measuring 1 Kanal 70 Sq. feet falling in Khasra Nos.3128 and 3129 purchased through sale, deed 25.05.1989. In consequence of his default in repayment of the finance, the respondent bank filed a recovery suit against him in which a decree was passed on 14.03.2001. The respondent bank filed the execution application and got the mortgaged property attached on 26.09.2001. The appellants filed an objection application before the banking court on 07.11.2001 claiming to be owner of land measuring 5 Marla purchased through sale deed dated 29.09.1997 from respondent No.2. It was averred that land measuring 5 Marla was a different property having no nexus with land measuring 1 Kanal 70 Sq. feet mortgaged with the respondent bank. A reply was filed by the respondent bank to the objection application stating that the 5 Marla plot under the occupation of the appellants was part of the mortgaged property.

3. The banking court on 12.07.2002 farmed the following issues:- 1) Whether the objectors are bona fide purchasers to the extent of 5-Marlas of the mortgaged property of the judgment debtor. If so, since what date with what effect? 2) Whether the objectors have come to this court with unclean hands and are in collusion with the judgment debtor? 3) Relief

4. Appellant No.1 entered the witness box as OW-1 on 24.09.2003 and tendered in evidence the sale deed in his favour as Exh.OW.1 when he was cross-examined by the respondent bank. The banking court on 24.09.2003 passed the order that the right of the respondent to lead evidence had already been closed on 10.09.2002 and accordingly fixed the case for arguments on the objection application of the appellants.

5. The record reflects that the respondent bank on 26.02.2005 stated before the banking court that it has approached the revenue authorities for demarcation of the property in dispute whereupon the matter lingered on for quite some time. During the course of arguments on the objection application, the banking court on 20.06.2009 at the request of both the parties directed the concerned Tehsildar to submit a report of demarcation in respect of the properties comprised in the two sale deeds. The report was submitted on 14.07.2011 before the banking court. The appellants thereafter filed their objections on the report of the Tehsildar and reply thereto was also submitted by the respondent bank.

6. The banking court through order dated 30.05.2014 (impugned herein) rendered its findings on issue No.1 against the appellants by placing reliance on the report of the Tehsildar which reported that respondent No.1 sold portions from his property mortgaged with the respondent bank to various persons including the appellants. It was accordingly held by the banking court that the "....decree holder bank has every right to get the mortgaged property auctioned for realization of decretal amount." Having arrived at this conclusion, the banking court paradoxically stated as under: The objectors should seek proper remedy against the judgment debtor from competent forum. Under the law, a summary procedure is adopted by Banking Court for determination of objections and claims of the parties. Whether the piece of 5-Marla land purchased by the objectors is different from the mortgaged property, is a complicated question and Civil Court would be the ultimate and competent forum for its determination. Therefore, it cannot be held that objectors are bona fide purchasers as they failed to take the proper care and caution in purchasing the property from the judgment debtor at relevant time. Hence the issue is decided accordingly against the objections.

7. The order passed by the banking court is not sustainable for the reason that it relied solely on the report of Tehsildar whereas he never appeared in the witness box. The said report was thus not proved in accordance with law. The banking court also failed to consider that the respondent bank did not tender any evidence, oral or documentary to rebut the evidence of the appellants. The order sheet shows that the banking court on 10.09.2002 framed the issues without fixing the onus to proof thereon and adjourned the case for evidence of the parties to 10.09.2002. On the basis of the allegations leveled in the objection petition, the appellants being the objectors were required to initiate the evidence. Be that as it may, the banking court on the adjourned date of hearing i.e. 10.09.2002 closed the right of the parties to produce evidence. On an application filed by the appellants, only they were allowed to produce one witness by the banking court on 09.01.2003. The order was a material irregularity on the part of the banking court as the respondent bank ought to be given opportunity to produce evidence. It may be pointed out that the respondent bank has now filed an application bearing C.M. No. 1-C of 2020 before us under Order XLI, Rule 27, C.P.C. for producing additional evidence in shape of certified copies of sale deed registered on 31.05.1989 in respect of land measuring 1 Kanal 70 sq. feet in favour of respondent No. 2 and mortgage deed registered on 16.03.1995.

8. The issues were also wrongly framed by the banking court. The precise allegation of the appellants was that their plot of 5 Marla was not part of the mortgaged property whereas the respondent bank asserted that it was so. On this disputed question of fact, the banking court did not frame any issue. It was not the case of the appellants that they were bona fide purchasers for valuable consideration without notice of the mortgage charge of the respondent bank. Such an allegation would imply that the appellants do not deny that the land under their occupation is part of the mortgaged property. Had this been the case, the respondent bank would only be required to prove the registration of the mortgage deed in its favour to repel the stance of the appellants. The banking court also wrongly concluded that the appellants were required to approach the civil court for determination of their objections. The executing court under section 47, C.P.C. has the necessary powers to adjudicate upon all questions for the execution, discharge and satisfaction of the decree without putting the parties to the trouble of filing a separate suit.

9. In view of what has been stated above, we allow this appeal and set aside order dated 30.05.2014 with the result that the objection application filed by' the appellants shall be deemed to be pending adjudication before the banking court. The banking court shall provide an opportunity to the respondent bank to adduce evidence, oral as well as documentary. The banking court shall also summon the concerned Tehsildar who submitted the report as court witness. In case, he is not available, the banking court shall order for a fresh demarcation report from the concerned Tehsildar to be prepared in accordance with the High Court Rules and Orders before proceeding in the matter. We also recast Issue No.1 as follows:

1. Whether plot measuring 5 Marla purchased by the objectors through sale deed registered on 29.09.1997 forms part of land measuring I Kanal 70 Sq. feet mortgaged with the respondent bank? OP Parties.

10. Since it is an old matter, it is expected that the banking court shall decide the objection application expeditiously within a period of three months from the date of the appearance of the parties. The parties are directed to appear before the banking court on 02.11.2021.

11. C.M. No. 1-C of 2020 stands disposed of. KMZ/D-8/L Appeal allowed.