Public Auction

In public auctions it is imperative that reserve price is determined in the most transparent manner because it is in the interest of all the parties that mortgaged asset must fetch best and highest price

Before finalization of reserve price, there are two conditions precedent; first, to ensure that independent evaluators from the list of Pakistan Banks Association have been appointed who may evaluate the property according to its location, commercial value as well as assess rate compatible to DC rates' value

Executing Court instead of determining reserve price through independent source proceeded on the wishful thinking of decree holder bank

Record was bereft of sufficient material justifying that on what clue or commercial assessment bank presented reserve price

Secondly while attempting sale of property of judgment debtor for execution and satisfaction of decree, wide publicity should be given through proclamation of sale in order to fetch the highest and most handsome price for the property

Such an exercise assisted in attracting the attention of participation of public at large and compliance thereof would maintain balance and protect rights and liabilities of parties according to established norms and standards

High Court set aside order passed by Executing Court, dismissing objections filed by judgment debtor, as the same was passed in violation of law

High Court remanded the matter to Executing Court to hold auction proceedings afresh from the stage of issuance of notices under O. XXI, R. 66, C.P.C.

High Court directed Executing Court that before holding auction reserve price should be determined after receiving evaluation report for the subject matter property through an independent evaluator

Appeal was allowed accordingly.

Held, that O. XXI, Rr. 66, 67 & 68, C.P.C., outlined a comprehensive mechanism, whereby it was the duty of the Executing Court that after attaching the property, it had to direct the revenue authorities to assess the market value before referring the case to the District Revenue Officer for auction

Court was also required to instruct the Revenue Officer to include the reserved price in the auction proclamation, however, parties were not allowed time to inspect the property; the valuation and reserve price were absent

Proclamation must include all material particulars to inform potential bidders about the nature and value of the property

Non-compliance with O. XXI, Rr. 66, 67 & 68, C.P.C., vitiated the proceedings

If a decree-holder intends to participate in the auction, permission under R. 72 is mandatory, and only then can he claim a set-off of the purchase money

Decree-holder did not obtain such permission, rendering the auction proceedings violative of Rr. 66, 67, 68 & 72 of O. XXI, C.P.C., which was an illegality apparent on the record, thus, the auction was declared illegal

During litigation, the judgment-debtor produced documents proving full payment of the decretal amount, thus, the revisional court rightly set aside the auction/transfer order

No infirmity or perversity was found in the revisional court's order, rendering it immune from interference by the High Court

Constitutional petition was dismissed, in circumstances.

Petitioner was aggrieved of increase in reserve price of mining area to be leased out through public auction for excavating sand stone

Validity

Fixation of reserve price is prerogative of concerned government authorities

Any existing lessee nor any prospective bidder can seek fixation of reserve price of his own choice

While fixing reserve price, exercise of discretion by public authority must be just, fair and reasonable

Any arbitrary, whimsical and capricious exercise of such authority is amenable to judicial scrutiny

Scope of jurisdiction under Art. 199 of the Constitution in such regard is very limited

For such challenge to succeed in constitutional jurisdiction, it was imperative for petitioner to establish that the reserve price fixed by public functionaries was so unreasonable that no authority with a prudent mind could have fixed the same

This is also known as Wednesbury principle

In case auction in question failed to fetch bids for and above reserved price in question, matter would be referred to the Committee of Special Experts under directive/instruction dated 26-05-2021 for review of reserve price

Constitutional petition was dismissed, in circumstances.

Determination of the reserve price based on five years old report manifests conspicuous disregard for appreciation of real-estate prices during last five years

Determination of reserve price, based on latest valuation report arranged/conducted, ensures reasonableness, rationality, fairness, and otherwise promotes transparency, besides extending credibility to the judicial sales.

Appellant/objector was aggrieved of dismissal of its objections by Executing Court against confirming auction in favour of single bidder of one property out of total three properties put to auction

Plea raised by auction purchaser was that objection petition was not maintainable as appellant/objector did not deposit 20% of auction price

Validity

Public auction referred in S. 19 of Financial Institutions (Recovery of Finances) Ordinance, 2001 and O. XXI, Rr. 65 & 66, C.P.C. was one of the modes of sale under execution proceedings

Bid offered by single/sole bidder could not be classified as 'public auction'

Court was dealing with an invalid sale not qualified to be termed as a public auction wherein settlement of reserve price was based on five years old valuation report

Executing Court had discretion under second proviso to O. XXI, R. 90, C.P.C., to direct deposit of amount not exceeding 20% of the sum realized or to furnish such security, as the Court directed

Discretion rested with Executing Court opting for either direction to deposit in cash or a security was to be examined in the context of the facts of each case

Various properties [at serials 1, 2(i) & (ii) & 3] were put to auction sale, out of which property at serial 1 was allegedly auctioned and rest of the properties could not be auctioned

Auction purchaser offered a bid of Rs.29,525,000/-, 20% whereof had come to Rs.5,831,000/- and reserve price(s) of other properties was Rs.12,380,625, which was more than the limit of 20% of the amounts realized

Properties not auctioned could be treated as security for entertaining objections for ensuring compliance of second proviso of O. XXI, R. 90, C.P.C.

Executing Court, in the wake of gross illegalities, causing substantial injury could treat other properties as security and entertain objections against alleged auction

Sale under reference was a nullity, in the wake of the scale of lapses and illegalities in the conduct of auction and was inherently defective

High Court set aside order of Executing Court confirming auction sale and dismissal of objections

High Court declared that auction sale and confirmation thereof, including all steps taken in pursuance thereof were void and of no legal effect

Appeal was allowed, in circumstances.

Term "auction schedule" only gives indication of schedule/timing/date of auction, rather than the terms and conditions mentioned therein

Term "proclamation" is a comprehensive term as approved proclamation includes both the schedule of auction sale, as well terms and conditions of auction.

As per second proviso to O. XXI, R. 90, C.P.C. until and unless judgment debtor deposited an amount equal to 20% of sum realized at sale or had furnished such security as the Court directed, objection was not maintainable even when there was material illegality and irregularity in auction proceedings

Requirement to deposit 20% of auction price or such other security as directed by Court along with application under O. XXI, R. 90, C.P.C. was mandatory

Any application that failed to fulfill such requirement could not be entertained and was liable to be dismissed by Court

Substantial compliance of provisions of O. XXI, R. 54(2), C.P.C. was enough for the purposes of sale proclamation and attracting prospective bidders

In absence of any specific complaint in such regard, entire auction proceedings could not be vitiated by Court

Necessary for objectors to raise in objection petitions not only irregularity or fraud in auction proceedings but they also had to prove before Court that they sustained substantial injury as a result of such irregularity or fraud

High Court declined to interfere in auction proceedings

Petition was dismissed, in circumstances.

Petitioners were aggrieved of the order passed by Board of Revenue / Settlement authorities which was ordered to be disposed of through unrestricted public auction

Petitioners claimed that their predecessor-in-interest purchased land in question in year 1964 from the allottee and had been occupying possession of the land

Validity

Allotment of the allottee was cancelled and possession of subsequent purchaser had no protection of law which extended nil support to land grabbers and illegal occupants

Land in question was a public property which could not be doled upon any person through private treaty to extend favoritism, nepotism and for undue enrichment of individuals at resources of public which were meant for ultimate welfare and betterment of people

If disposal of land was desired by concerned Authority, the same should be disposed of through unrestricted public auction

Order passed by Board of Revenue was neither perverse, nor illegal and was without any jurisdictional defect

Constitutional petition was dismissed, in circumstances.

Building site could only be disposed of through an unrestricted public auction in terms of Para. 11 of the Scheme for the Management and Disposal of Urban Evacuee Trust Properties, 1977

All evacuee land vests with Provincial Government against paid consideration and attained status of public properties

Public functionaries are only trustee/custodians of public/ State land which land could only be disposed of in accordance with law

Most transparent and suitable modus operandi which better served case is putting such property to public auction.

For an objection application merely for setting aside sale where auction itself had not been questioned to be void and without jurisdiction; then limitation for such objection petition/application would be one month as prescribed by Art.166 of the Limitation Act, 1908

If the sale was questioned on the basis of being null and void and of no legal effect, then Art. 166 of the Limitation Act, 1908 would have no application

Application contending that auction was not conducted in accordance with provisions of Rr.66, 67 & 68 of O. XXI, C.P.C. would be governed by Art.181 of the Limitation which prescribed a limitation period of 3 years.

Openness and transparency in the disposal of land falling under the category of commercial and business plot was mandatory otherwise the entire proceedings would be void and thus vitiated

Transparency was mandatory at every stage i.e. planning disposal, inviting interested persons, bidding process, evaluation of bids, declaring a successful bidder and the execution of the lease or contract pursuant thereto

At the first stage the plot and its category must be clearly described in the sanctioned Scheme; second, the terms and conditions for pre-qualification or eligibility must be intelligible and free from any ambiguity and provided to the interested persons in writing; third, advertisements published in daily newspapers ought to unambiguously mention the category and description of the plot being offered and the terms and conditions; fourth, the timings, dates and venue for the bidding must be open and transparent; lastly, the terms and conditions of the proposed lease or contract must not only be strictly in conformity with the description mentioned in the published advertisements but should also have been in the knowledge of the participants prior to the submission of bids

Any deviation, at any stage, from the terms and conditions published in the advertisements would vitiate the process and render the disposal as opaque

Any doubt about whether the person who was ultimately allotted a plot had participated in the bidding process would render the disposal non-transparent unless such a person could give a plausible explanation to the satisfaction of the Capital Development Authority ("Authority") that it had actually participated in the bidding process and was declared as the successful bidder

Principles of transparency were not restricted to the description given in the advertisements

Transparency would extend to the pre-bidding process i.e. the preparation of the specifications, the approval mechanism, methods of advertisements and the entire process till the contract had been concluded with the successful bidder

Opening and evaluation of bids and formulating evaluation of the criteria were an integral part of the disposal of land under the Islamabad Land Disposal Regulations, 2005

Test of transparency was to allow the widest possible competition, which was not favourable to a selected class of bidders nor put any person, who may have been interested, at a disadvantage

Transparency was the key to ensuring that the widest possible competition was made possible so that the maximum price for the land being disposed of could be fetched

Non-transparent process in the disposal of land was not sustainable in law.

In execution proceedings the court of law must always proceed to employ the principles of 'balancing' and 'proportionality' in order to accomplish a state of affairs where the rights of both the decree-holder and those of the judgment-debtor were secured

Similarly court must be conscious of protecting a third party such as the auction purchaser

Court held the rights of every litigant equally dear

Ideal manner of sale of the judgment-debtor's property was indeed through public auction, but sale(s) of property in execution proceedings were essentially distress sales and the circumstances were far from ideal, therefore the legislature in its wisdom had allowed alternative means of sale

Court may depart from a preferred mode of sale if the circumstances warranted such departure, but when it did depart therefrom it must be through a conscious application of mind because it must itself be convinced that a less "ideal" mode of sale was necessitated by the circumstances prevailing and these must be set out in order to reassure all the parties that the sale proceedings were open and transparent and the court was conscious of its solemn duty

Executing Court should not give its "tacit consent" to a new/different mode of sale as it would not meet the standard of openness required of the executing court.

Whether having once adopted a mode of execution as set out in the Civil Procedure Code, 1908, an Executing court could deviate therefrom and adopt an alternative means of sale

Executing court may indeed adopt a different method of sale if required, the only proviso being that such change in course must be after due application of mind by assigning justifiable reasons

To hold otherwise was to shackle the court in an undesirable manner and hold it hostage to its own earlier orders. [Muhammad Attique v. Jami Limited and others PLD 2010 SC 993 held to be "correct law"

Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. and another 1981 SCMR 108 and National Bank of Pakistan v. Paradise Trading Company 2015 CLD 366 held to be "per incuriam and not correct law"].

In execution proceedings the court of law must always proceed to employ the principles of 'balancing' and 'proportionality' in order to accomplish a state of affairs where the rights of both the decree-holder and those of the judgment-debtor were secured

Similarly court must be conscious of protecting a third party such as the auction purchaser

Court held the rights of every litigant equally dear

Ideal manner of sale of the judgment-debtor's property was indeed through public auction, but sale(s) of property in execution proceedings were essentially distress sales and the circumstances were far from ideal, therefore the legislature in its wisdom had allowed alternative means of sale

Court may depart from a preferred mode of sale if the circumstances warranted such departure, but when it did depart therefrom it must be through a conscious application of mind because it must itself be convinced that a less "ideal" mode of sale was necessitated by the circumstances prevailing and these must be set out in order to reassure all the parties that the sale proceedings were open and transparent and the court was conscious of its solemn duty

Executing Court should not give its "tacit consent" to a new/different mode of sale as it would not meet the standard of openness required of the executing court.

Once bank had adopted public auction as procedure for selling mortgaged property, then no other mode or procedure was permissible for selling such property.

Once bank had adopted public auction as procedure for selling mortgaged property, then no other mode or procedure was permissible for selling such property.

Chief Minister announced establishment of lawyers' colonies in districts concerned and directed the officers in the Revenue hierarchy to allot land for the housing schemes and assess price thereof

Matter remained pending on one pretext or other

Ultimately Bar Associations concerned filed constitutional petitions before the High Court, which were allowed and Bar Associations were declared absolute owners of the State land subject to payment of price of land

Validity

Grant/allotment of State land was not the right of an individual but, in fact, was a grace

No person had any right or title in the State land until a written order had been passed and allottee/grantee had lawfully taken over possession

In the present case, neither the land was allotted to the Bar Associations nor they lawfully acquired possession thereof

Record showed that summaries regarding allotment of land to Bar Associations were declined thrice by the Chief Minister

Allotment could not be said to be an allotment unless and until it was approved by the competent authority

Provincial Government had formulated a policy for sale/allotment of State land through public auction, thus Bar Associations in question were not entitled to any allotment

No special provision existed for allotment of land for housing scheme of lawyers

High Court had not considered the fact that Provincial Government could not make any sale of State land without observing the process chalked out in the relevant policy and the Punjab Privatization Act, 2010

Impugned judgment of High Court was set aside in circumstances

Appeal was allowed accordingly.

Constitutional petition was dismissed in circumstances.

Mere technicalities or minor procedural irregularities in the proceedings of bidding Committee, the Procurement Agency and also the order of departmental Secretary may not directly or indirectly effect the validity of the order calling for interference of Supreme Appellate Court.

Scope.

Applicability.

Mala fide, unfairness, unjust, unreasonableness or bias and favouritism or improper exercise of the discretion in the public auctions and contracts by the public authorities or such other matters of public importance are valid and legal reasons for interference of courts but if no such reason is found in a transaction, the same would be deemed to have been conducted in quite transparent manner and no presumption to the contrary would be raised on the basis of mere assertion

Supreme Appellate Court, in exercise of power of judicial review is not supposed to import new facts or to allow to plead new facts which are not part of record to raise the presumption of mala fide

Courts are not supposed to frequently interfere in the administrative decisions unless there is a valid reason to show improper or illegal exercise of jurisdiction by an administrative authority.

After withdrawal of the earnest money or bid security a participant of the auction may have no locus standi to claim any right in public auction and also may not be able to challenge the auction in the extraordinary writ jurisdiction but notwithstanding the general rule and technical objection the court may entertain a petition in public interest

Ordinarily writ jurisdiction is not invokeable in the cases of public auctions and contracts involving contractual obligation and unsuccessful bidder may have no legitimate right to call interference of court in discretionary jurisdiction

Principle of locus standi is not strictly applicable in the cases of public importance and even a stranger can invoke the jurisdiction of court in such cases

Court, in a case of public importance, may ignore the technical objections and interfere in a matter in which decision was made adverse to the public interest or in an unfair, unreasonable or unjust manner.

Participation in a public auction subject to fulfilling requisite qualification is a legal right of a person and a wrong action in respect of such right in breach of the law is actionable at law; therefore a successful bidder in an public auction may on wrongful rejection of his bid by availing the legal remedy take action for enforcement of his right but an unsuccessful bidder cannot defeat the legitimate right of contract of successful bidder on the basis of claim of re-auction for technical reasons

Principles.

Such right and discretion to cancel bid/offer must be exercised fairly and equitably, but before its acceptance by competent authority

Binding contract would come into being after acceptance of bid/offer, .and then authority would have no right and discretion to reject bid/offer

Signing of formal agreement etc., would be procedural requirements

Principles.

Such right and discretion to cancel bid/offer must be exercised fairly and equitably, but before its acceptance by competent authority

Binding contract would come into being after acceptance of bid/offer, and then authority would have no right and discretion to reject bid/offer

Signing of formal agreement etc., would be procedural requirements

Principles.

Principles.

Petitioner being in possession of the land as lessee claimed to have been granted proprietary rights as per Government policy

Petitioner assailed the auction proceedings being illegal, void and ultra vines

During the proceedings of Constitutional petition before High Court the petitioner and the highest bidder started bidding and the bid was raised from Rs.16,00,000 to Rs.43,70,000 by the highest bidder

Validity

Public functionaries were bound to keep in mind the interest of the country and the nation and were bound to be above personal interest

High Court directed the Privatization Board to take into consideration the amount which had been enhanced by the efforts made by the Court

High Court also took notice of the fact that how the Government property was being sold on cheaper rates and warned the Authorities to be careful in future and not to sell the Government property on cheaper rates

Authorities were further directed to ensure that all steps would be taken by them and the properties of the Government would be sold as per market prices

Petition was disposed of accordingly.

Where public property is to be disposed of, the auction should take place publicly and public interest should be of paramount consideration

Appearance of public justice is as important as doing the justice

Nothing should be done which gives appearance of bias, jobbery or nepotism in auction of public property.

Allottee or the highest bidder in public auction acquires specific interest in the property and the same is legally enforceable.

Respondent on basis of private negotiation and having offered the highest bid was granted propriety rights of such property

Petitioner whose initial bid at public auction was not accepted being too low also offering specified amount for purchase of property in question, but his bid being lower than respondent, was rejected

Validity

Constitutional petition was not a mechanical course in every case unless it was shown that Authorities had violated law and that no other remedy was available to aggrieved person

When respondent's bid was accepted for the sale of property in question, there was no bid of petitioner before the Authorities

No legal objection could thus, be taken against impugned action of authorities when they passed resolution accepting respondent's bid

When resolution had been passed and other formalities had been undergone, High Court would decline relief to petitioner in exercise of its Constitutional jurisdiction which was essentially discretionary in nature, especially when it suffered from laches and no plausible explanation had been furnished for filing it at belated stage

Constitutional petition was dismissed in circumstances.

Public auction-Highest bid having been accepted, respondent directed to deposit balance amount by a particular date and remove goods

Auction unilaterally cancelled before specified date

Order set aside in Constitutional jurisdiction on ground that sale transaction had already been completed and could not be cancelled

Decision upheld by Supreme Court

Leave to appeal refused.