2008 PLP 186 (CLD)

The respondent No. 1 availed a loan facility for purchase of a tractor from the respondent No.2. He was required to liquidate the liability in instalments. To fulfil his obligation, he mortgaged 184 Kanals and 6 Marlas of his agricultural land with the respondent No.2. Upon default in payment of instalments, the respondent No.2 served a notice under section 15(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, on the respondent No.1, and thereafter proceeded to auction the mortgaged property as contemplated by section 15(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, without intervention of the Court. The present appellant bidded in the auction of property and succeeded, she thereafter also deposited the auction price.

2. The respondent No.2 filed report as ordained by section 15(10) of the Ordinance (ibid) in the Banking Court. The respondent No.1 filed an objection petition under section 15(1) of the Ordinance and prayed for, setting aside of the auction proceedings. An application was also filed with the Banking Court for deposit of the requisite amount, this application was allowed and the respondent No.1 deposited a sum of Rs.4,26,

000. This order was challenged before this Court in Writ Petition No.13787 of 2006, but later withdrawn. The Banking Court after considering the entire proposition, accepted the objection petition, set aside the auction proceedings, and also the report tendered by the Bank for confirmation of accounts. Hence this petition.

3. The learned counsel for the appellant contended that the matter in dispute involved factual and legal controversy, specific allegations of law and fact including limitation were alleged, therefore, the Banking Court was under a bounden duty to frame issues of law and fact, as alleged and denied by the parties, provide them, an opportunity of leading evidence and thereafter, should have decided the matter in accordance with law. This was not done. The objection petition was summarily allowed, without providing the appellant adequate opportunity to plead her cause, although she had deposited the entire auction price, thus, her valuable rights in the disputed property have been compromised.

4. We have heard the learned counsel for the appellant and perused the record.

5. The Financial Institutions (Recovery of Finances) Ordinance, 2001 is a special law, therefore, every provision contained therein has to be strictly construed and meticulously adhered to. The manner and mode of auction without intervention of Court has been clearly spelt out in. section 15 of the Ordinance, 2001. It is initiated by resorting to the provisions as contained in section 15(2) by serving notice upon the mortgagor, calling for payment. It clearly envisages service upon "customer" as defined in the Ordinance. Thereafter another notice demanding payment has to be issued within 14 days of service and lastly, in case, of contumacious default in payment, the Financial Institution is required to serve a final notice within 30 days. The proviso to section 15(4) of the Ordinance makes it imperative that before venturing upon the exercise of sale by auction of mortgaged property, a notice is required to be " published in an English and Urdu daily "Newspaper", in the Province where the mortgaged property is located: The proclamation is required to contain the name, and address of the mortgagor, the details of the mortgaged property, the amount of outstanding mortgage money and intention of sale of mortgaged property. This exercise also entails a requirement of sending notice to all .persons, who, to the knowledge of Financial Institution, have an interest' in the mortgaged property as mortgagees. After fulfilling these requirements the Financial Institution, has power to sell the mortgaged property and thereafter, file proper accounts of sale proceeds, with the Banking Court, within 30 days of sale.

6. In the present matter, it is explicitly clear from record -that the property mortgaged by the customer measured 184 Kanals and 6 Marlas, agricultural land. Whereas in the proclamation of sale, property is shown to be 114 Kanals, 3 Marlas. Therefore, there is clear misdescription, thus non-compliance of statutory requirements as contained in section 15(4) (ibid). Where not only is non-adherence to description of property, but this lapse has also impacted the other ingredients of sale, as contained in proclamation of sale Because the reserve price fixed is' Rs.5,20,000 for 114 Kanals and 3 Marlas of land. Obviously, if the area of land is more than 114 Kanals, 3 Marlas, the reserve price would correspondingly increase. Thus, the entire proceedings of sale are not in accordance with the requirements of law. The "Financial Institution" itself exercises powers of sale, .therefore, it is required to adopt a procedure, which is transparent, above-board, and also, strictly in consonance with the provisions of section 15 (ibid). Even a minor lapse or departure shall make the whole transaction questionable and vitiate entire proceedings of sale. Therefore, to safeguard the interest of "customer", the parameters prescribed by statute are mandatory and thus required to be followed as directed.

7. The objection petition filed by the respondent No. 1, indicates that the respondent No.2 faltered in these requirements by mis-describing the area of land, this lapse alone is enough to vitiate the entire process of auction and sale.

8. Therefore, the objection petition was rightly allowed and auction proceedings set aside. The impugned order therefore, is un-exceptionable.

9. Resultantly, this appeal has no merits and is therefore, dismissed in limine. M.B.A. /S-198/L Appeal dismissed.