Decree of Banking Court

Held, that perusal of section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 showed that once the decree of Banking Court was passed in favour of the bank, the decree by itself constituted and conferred sufficient power and authority on the bank to sell or cause to be sold any and all mortgaged properties of the judgment-debtors along with their marketable titles

Banking Court was not bound to follow the procedure laid down in Order XXI of the C.P.C.; it could adopt any procedure in order to satisfy and execute the decree passed in favour of the respondent-Bank

Even otherwise, the auction was advertised and the bid of the auction purchaser for the suit property being the highest was accepted vide the Banking Court's order

Since second co-owner never took the ground that the decree was obtained fraudulently or that the auction purchaser had obtained the suit property fraudulently, he could not travel beyond his pleas taken before the lower fora and rely on the arguments raised by first co-owner

Even otherwise, second co-owner could not agitate the questions at present stage for the first time since he was not a party in the execution proceedings before the Banking Court

First co-owner in her objection petition admitted the fact that the suit property was mortgaged to the respondent-Bank; she did not raise any plea before the lower fora that the sale certificate should not be issued to defeat her proprietary interest in the suit property as well as the ground that she was unaware that the suit property had been auctioned off and sold in favour of the auction purchaser

First co-owner therefore could not, at present stage, raise a ground which she had not taken before the Banking Court

It did not appeal to reason that the first co-owner was unaware of the fact that the suit property was mortgaged; that a suit for recovery was pending against the suit property, and that her own father, brothers and sisters were judgment-debtors in the said suit

Since the sale certificate had been issued by the Banking Court after the objection petition of first co-owner was dismissed, the sale certificate could not be set aside on the ground that both the co-owners' proprietary right in the suit property would be affected

Appeals filed by the co-owners were dismissed.

Held, that perusal of section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 showed that once the decree of Banking Court was passed in favour of the bank, the decree by itself constituted and conferred sufficient power and authority on the bank to sell or cause to be sold any and all mortgaged properties of the judgment-debtors along with their marketable titles

Banking Court was not bound to follow the procedure laid down in Order XXI of the C.P.C.; it could adopt any procedure in order to satisfy and execute the decree passed in favour of the respondent-Bank

Even otherwise, the auction was advertised and the bid of the auction purchaser for the suit property being the highest was accepted vide the Banking Court's order

Since second co-owner never took the ground that the decree was obtained fraudulently or that the auction purchaser had obtained the suit property fraudulently, he could not travel beyond his pleas taken before the lower fora and rely on the arguments raised by first co-owner

Even otherwise, second co-owner could not agitate the questions at present stage for the first time since he was not a party in the execution proceedings before the Banking Court

First co-owner in her objection petition admitted the fact that the suit property was mortgaged to the respondent-Bank; she did not raise any plea before the lower fora that the sale certificate should not be issued to defeat her proprietary interest in the suit property as well as the ground that she was unaware that the suit property had been auctioned off and sold in favour of the auction purchaser

First co-owner therefore could not, at present stage, raise a ground which she had not taken before the Banking Court

It did not appeal to reason that the first co-owner was unaware of the fact that the suit property was mortgaged; that a suit for recovery was pending against the suit property, and that her own father, brothers and sisters were judgment-debtors in the said suit

Since the sale certificate had been issued by the Banking Court after the objection petition of first co-owner was dismissed, the sale certificate could not be set aside on the ground that both the co-owners' proprietary right in the suit property would be affected

Appeals filed by the co-owners were dismissed.

Applicability of limitation on execution proceedings under the Financial Institutions (Recovery of Finances) Ordinance, 2001

Scope

Appellant decree-holder Bank impugned order of Banking Court whereby its application for revival of execution proceedings was dismissed on ground that same was barred by limitation

Validity

Under S. 19 of Financial Institutions (Recovery of Finances) Ordinance, 2001, it was clear that decree-holder was empowered to adopt any means for realization of decree, with or without intervention of court and it was not possible that if decree-holder sought to satisfy decree without intervention of court, then doors were permanently closed for it adopt satisfaction of decree through intervention of court if the decree-holder was unable to materialize satisfaction of decree without intervention of court

Appellant decree-holder Bank had filed application for revival of execution proceedings which was within limitation prescribed by Art. 181 of Schedule to Limitation Act, 1908

Under Financial Institutions (Recovery of Finances) Ordinance, 2001, there existed no requirement for a decree-holder to file separate execution petition as it was duty of Banking Court itself to convert a suit into execution proceedings after decree

Application filed by appellant in present case, at most could be pursued to trigger machinery of court and start execution proceedings for realization of decree and thus such application could not be hit by law of limitation or S. 48 of C.P.C.

In the present case, decree remained unsatisfied and mortgaged property as a result could also not be redeemed, therefore impugned order left both parties remediless which could not be allowed

Impugned order was set aside, and execution proceedings were revived before Banking Court

Appeal was allowed, accordingly.

Adding of necessary party to appellate proceedings under S. 22 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Scope

Appellant Bank sought to add name of respondent to appeal against decree of Banking Court, and said respondent was defendant in suit filed by appellant Bank

Per S. 22 of Limitation Act, 1908, limitation started to run against newly added respondent on date he was so impleaded

Appeal, in the present case, was filed in year 2014 and application under O. XLI, R. 30, C.P.C. to add respondent, was filed in the year 2020, after a delay of six years, when appeal against said respondent had become barred by limitation

Said respondent was necessary party as impugned order of Banking Court was passed in his favour with direction to appellant Bank to release said respondent's personal guarantee and property

In absence of said respondent, impugned decree of Banking Court could not be set aside as he was beneficiary of said order

Application under O. XLI, R. 20, C.P.C. and main appeal were dismissed, in circumstances.

Plaintiff Bank impugned order of Banking Court whereby, after ex parte decree, upon application of defendant for correction of decretal amount, the decretal amount was modified

Contention of plaintiff Bank, inter alia, was that such order was made without jurisdiction in terms of S. 27 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Validity

Per proviso to said S. 27 of the Ordinance, Banking Court could, either on its own accord or upon application of any party and after notice to the opposite side, could correct clerical or typographical mistake in a decree

In the present case, Banking Court, through impugned order rectified its own mistake through correction of decretal amount and same could not be termed to be a review of the ex parte judgment and decree passed by it

No illegality existed in impugned order

Appeal was dismissed, in circumstances.

Any charges which were penal in consequence, could not be claimed as a result of civil default of breach of finance agreement.

Where no amount was payable by borrower / customer or even excess amount had been paid by borrower to bank / financial institution, then Banking Court could pass decree regarding cost of funds subject to offsetting excess amount, if any, which could be determined at stage of execution of such decree.

Plaintiff Bank impugned order and decree of Banking Court on the ground that "reversal entries" in statement of account had been treated as payments made by defendants, thereby suit was decreed for lesser amount than sought by plaintiff Bank

Validity

Record showed that after expiry of finance facility, defendants had continued making deposits from time to time and same was reflected in statement of account, and after adjusting the same, Banking Court had rightly arrived at correct decretal amount, to which no exception could be taken

Appeal was dismissed, in circumstances.

Question before High Court was whether auction proceedings could be compelled to continue if during pendency of same, decretal amount was deposited by judgment-debtor

Held, that very concept of execution proceedings was to give effect to a decree and such proceedings subsisted until said decree was satisfied and an array of methods were employed to execute a decree including, without limitation, auction of property securing the debt

Realization of such security was warranted only in event that judgment-debtor was unable or unwilling to satisfy decree by other means and in event a decree was satisfied, by or on behalf of judgment-debtor, there would exist no justification to perpetuate execution proceedings for discharge of debt

No reason existed to compel continuation of execution proceedings once a judgment debtor was no longer at default.

Bid in an auction was only an offer and it conferred no benefit unless it culminated into issuance of confirmation of sale and confirmation of sale could not merely be claimed as of right

Submission of bid does not vest the bidder with any proprietary rights in a property

Where no confirmation of sale had ever been issued and consequently no sale certificate had been issued, in such a case no rights were created in favour of an auction participant with respect to a mortgaged property that was the subject-matter of auction proceedings.

Under S. 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the customer was liable to pay cost of funds from the date of default till realization of the same and it was erroneous for a Banking Court to award cost of funds in a decree to be calculated from the date of filing of suit for recovery.

Finality of decree/order of Banking Court when appeal under S. 22 of Financial Institutions (Recovery of Finances) Ordinance, 2001 was not filed within period of limitation

Scope

Judgment-debtor impugned order of Banking Court whereby his application under S. 47, C.P.C. was dismissed whereby judgment-debtor challenged quantification of decretal amount

Validity

Quantification of decretal amount was undertaken vide the order of Banking Court against which no appeal was filed and application under S. 12(2) of the judgment-debtor was also dismissed, and such findings had attained finality

Application under S. 47, C.P.C. by judgment-debtor was an effort to assail the judgment of Banking Court, which had attained finality

Role of Executing Court ordinarily did not go beyond decree itself and Banking Court had adhered to such principle in the impugned order

No illegality therefore existed in the impugned order

Appeal was dismissed, in circumstances.

Person aggrieved by a decree or order of Banking Court could prefer an appeal before the High Court within thirty days.

Section 19(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, provided that the decree of the Banking Court shall be executed in accordance with the provisions of the Code of Civil Procedure, 1908, or any other law for the time being in force or in such manner as the Banking Court may, at the request of the decree-holder, consider appropriate including recovery as arrears of land revenue

Court had the discretion to adopt any of the said modes but once the court opted to execute the decree in accordance with the provisions of the Code of Civil Procedure, 1908, it could not depart therefrom.