Auction Proclamation

P L D 2010 Supreme Court 993
P re s e n t : Muhammad Sair Ali, Anwar Zaheer Jamali and Khilji Arif Hussain,
JJ
MUHAMMAD ATTIQUE---Appellant
Versus
JAMI LIMITED and others---Respondents
Civil Appeal No.772 of 2005, decided on 4th June, 2010.
(On appeal from the judgment dated 21-4-2005 of the Lahore High Court, Lahore passed
in E.F.A. No.110 of 2003).
(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----Preamble---Special Law---Scope---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.
(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 19(2)---Execution of decree---Procedure---Executing Court, under S.19(2) of

Financial Institutions (Recovery of Finances) Ordinance, 2001, has to choose mode of
execution in accordance with the provisions of Civil Procedure Code, 1908, or any
other law for the time being in f o r c e or in such manner as the Banking Court may at
the request of decree holder considers appropriate----Once the Executing Court has
chosen the mode provided in Civil Procedure Code, 1908, then it cannot be permitted
to divert that mode at subsequent stage without conscious application of mind.
(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 19---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 67 (2)---Execution of

decree---Schedule of sale (auction of property), non-issuance of---Failure to publish
notices in newspapers---Judgment debtor assailed auction proceedings on the ground
that the same were conducted in violation of mandatory requirements of O.XXI,
Rr.66 and 67(2), C.P. C.---Judgment debtor filed objections against auction of
mortgaged property which objections were rejected by Executing Court---High Court
remanded the matter to Executing Court for deciding objections afresh---Validity---Not
only requirements of O.XXI, R.66, C.P.C. were not complied with but also schedule of
sale of mortgaged properties was not published in any newspaper, as required under
O.XXI, R.67 (2), C.P.C.---Though Banking Court/Executing Court ordered for sale
through publication but notice of sale was not published in any newspaper and further
notice of proclamation of sale was also not served upon the judgment debtor---Banking
Court without satisfying itself whether such notices were published in any newspaper in a
mechanical manner accepted the bid of auction purchaser without realizing that its
preceding order was not complied with and no notice was issued to judgment debtor---
Executing Court was duty bound to have satisfied itself that its previous order had been
implemented and mandatory notices had been issued to judgment debtors and published
in newspapers---Supreme Court declined to interfere in the remand order passed by High
Court---Appeal was dismissed.
Ghulam Abbas v. Zohra Bibi and another PLD 1972 SC 337; Muhammad Ikhlaq Memon
v. Zakaria Ghani and others PLD 2005 SC 819; Messrs East Yarn Trading Company and
2 others v. United Bank Limited and 2 others 2007 CLD 1555; Hudaybia Textile Mills
Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512
distinguished.
Mst. Hamida v. Muhammad Zaman and another 1991 SCMR 109; Messrs Chawla
International v. Habib Bank Limited and others 2003 CLD 956; Messrs Chaudhary
Weaving Factory and 2 others through Partner v. National Bank of Pakistan through Vice-
Page No. 1 of 8
President/General Attorney and another 2005 CLD 1445; Mst. Asma Zafarul Hassan v.
Messrs United Bank Ltd. and another 1981 SCMR 108; Md. Umar v. Moti Chand and
others; AIR 1952 Pat. 244; Rehmat Ali through Legal Heirs and 10 others v. Allah
Bachayo 2004 SCMR 1957; Mst. Nur Begum and another v. Settlement and
Rehabilitation Commissioner, Multan and 2 others 2003 SCMR 50.1; Hudaybia Textile
Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512;
Captain PQ Chemical Industries (Pvt.) Ltd. v. Messrs A.W. Brothers and others 2004
SCMR 1956; Murugappa Naicker v. Thayammal AIR 1923 Mad. 82 and Union of India
and others v. M/s. Bhimsen Walaiti Ram AIR 1971 SC 2295 ref.
(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.68---Execution of decree---

Auction of immovable property---Mandatory period of 30 days---Auction was assailed on
the ground that it was held before expiry of 30 days from the date when notice was
affixed on Court House---Validity---Sale in question was liable to be declared void ab
inito due to violation of mandatory requirements of O.XXI, R.68 C.P. C. that no sale
could take place till expiration of at least 30 days in the case of immovable properties,
calculated from the date on which copy of proclamation was affixed on Court House of
the Judge ordering the sale---Copy of sale notice was affixed on Court's Notice Board on
6-2-2002, whereas the auction was held on 28-2-2002, much before expiry of 30 days---
Sale was set aside in circumstances.
(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 19(4)---Civil Procedure Code (V of 1908), O.XXI, Rr. 66, 67 & 68---Limitation
Act (IX of 1908), Arts. 166 & 181---Execution of decree---Court sale by auction---
Objection petition---Limitation---Judgment debtor assailed execution proceedings on the
ground of collusion between Court Auctioneers and auction purchaser and also on the
ground that mandatory provisions of O.XXI, Rr.66, 67 and 68 C.P.C. and S.19 (4) of
Financial Institutions (Recovery of Finances) Ordinance, 2001, were not complied with---
Plea raised by auction purchaser was that objection petition was barred by limitation---
Validity---Application to set aside the sale as void, was filed in time as provision of Art.
181 of Limitation Act, 1908, was attracted---Application was rightly filed in
circumstances.
(f) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 19(4)---Civil Procedure Code (V of 1908), O.XXI, Rr.66, 67 & 68---Limitation Act
(IX of 1908), Art.166---Sale through court auction-Execution of decree---Objection
petition---Limitation---Computation of period of limitation---Principle---Bid in auction is
in the nature of offer which does not mature into a contract till its acceptance---
Auctioneer acts as an agent of seller to accept the bid, a concluded contract comes into
being the moment bid is accepted either by a word of mouth or in any other customary
method like fall of hammer at public auction---If auctioneer is not vested with power to
accept bid and that power is with another authority (i.e. court in a matter), the
contract/sale comes into being when bid is accepted by that authority---For the purpose
of Art. 166 of Limitation Act, 1908, time starts to run from the date of the highest offer is
accepted by the court.
(g) Civil Procedure Code (V of 1908)---
----O. XXI, Rr.84, 89, 90, 91 & S.65---Sale through court auction---Transfer of title---
Principle---In auction proceedings title in property is not transferred in favour of the
highest bidder at the time when auction is held and offer is forwarded to court for
acceptance---Court sale for immovable property under O.XXI, R.84, C.P.C. is subject to
proceedings under O.XXI, Rr.89, 90 and 91 C.P.C., as a result of which sale may either
be set aside or confirmed---Once sale is confirmed, S.65 C.P.C. provides that ownership
right in immovable property is deemed to have vested in succeeding bidder
retrospectively from the date when auction was held.
Hamid Khan, Senior Advocate Supreme Court for Appellant.
Page No. 2 of 8
Sh. Zamir Hussain, Senior Advocate Supreme Court for Respondents.
Date of hearing: 10th May, 2010.
JUDGMENT
KHILJI ARIF HUSSAIN, J.---Through this appeal, the appellant impugns the judgment
dated 21-4-2005 passed in E.F.A. No. 110 of 2003 by the Lahore High Court, Lahore,
whereby order of the Banking Court-II, Lahore, dated 18-10-2002 dismissing objection
petition of respondent No.1, judgment-debtor, and application of respondent No. 8,
decree-holder Bank, for setting aside the auction of the property in question was set aside
and the matter was remanded to decide the objection petition filed by respondent No.1
afresh in accordance with law.
2. Brief facts necessary to decide the appeal are that to enforce the mortgage-decree the
respondent-Bank filed an execution application with the prayer to sell the mortgaged
properties including the property bearing Khasra No. 222, Khewat No. 79 admeasuring 2
Kanals 10 Marlas along with structure on it, situated at village Boghiwal Tehsil and
District Lahore, (hereinafter referred as "the property in question"). The property in
question was put for auction more than once, but no bidder came forward to participate in
the auction held by the Court Auctioneer. The bid of Rs.855,000 offered by the appellant
being the highest in the auction held on 28-2-2002 was submitted before the Executing
Court on 9-3-2002 for consideration. Respondent No. 1 filed objection petition under
Order XXI, Rule 90, C.P.C. as well as decree-holder Bank i.e. respondent No. 8, filed an
application under section 19 of the Financial Institutions (Recovery of Finances)
Ordinance, 2001, for setting aside the auction of the property in question, objecting to the
auction on various grounds including that no notice under Order XXI,, Rule 66, C.P.C.
was served upon respondent No. 1, the proclamation of sale did not contain the true facts
regarding repayment of the amounts by the judgment-debtor, no wide publicity was
conducted by the Court Auctioneer, value of the property even according to the official
rate of the Deputy Commissioner, Lahore, is much more than the bid amount and that the
property was sold at a throwaway price of Rs. 855,000 thus fraud has been committed on
Court by the Court Auctioneer in collusion with the alleged purchaser/appellant.
3. After hearing the parties, the Banking Court vide its order dated 18-10-2002, dismissed
the objection petition field by the judgment-debtor, respondent No.1, as well as the
application of the decree-holder Bank. The decree-holder Bank and the judgment-debtor,
respondent No.1, filed appeals against the order passed by the Banking Court. The appeal
filed by the decree-holder Bank was dismissed for non-prosecution, however, after
hearing respondent No. 1 and the appellant, the order of the Banking Court, Lahore-II
dated 18-10-2002 was set aside and the matter was remanded to the Banking Court to
decide the objection petition afresh in accordance with law, by learned High Court
through judgment impugned herein.
4. Heard Mr. Hamid Khan, Senior Advocate Supreme Court for the appellant and Sheikh
Zamir Hussain, Senior Advocate Supreme Court for the respondent No. 1.
5. Learned counsel for the appellant vehemently argued that the auction was held after
substantial compliance of Rule 66 of Order XXI, C.P.C., the objection petition filed by
the judgment-debtor was barred by time. Learned counsel submitted that under Article
166 of the Limitation Act, the respondent had to file objection petition within 30 days
from the date of the sale of the property in question, which was held on 28-2-2002,
whereas, the objection petition was filed on 16-4-2002. To substantiate the contention, he
relied upon the case of Ghulam Abbas v. Zohra Bibi and another, (PLD 1972 SC 337),
Mst. Hamida v. Muhammad Zaman and another, (1991 SCMR 109), Muhammad Ikhlaq
Memon v. Zakria Ghani and others, (PLD 2005 SC 819), Messrs Chawla International v.
Habib Bank Limited and others, (2003 CLD 956), Messrs Chaudhary Weaving Factory
and 2 others through Partner v. National Bank of Pakistan through Vice-
President/General Attorney and another, (2005 CLD 1445), Messrs East Yarn Trading
Company and 2 others v. United Bank Limited and 2 others, (2007 CLD 1555) and Mst.
Asma Zafarul Hassan v. Messrs United Bank Ltd. and another (1981 SCMR 108).
Page No. 3 of 8
6. On the other hand, learned counsel for respondent No.1 contended that Article 166 of
the Limitation Act does not attract where the sale by itself is a fraud upon the Court and
mandatory provisions of Order XXI, Rule 66, C.P.C., have not been complied with. The
sale certificate issued during the pendency of the proceedings has no impediment of
setting aside the sale, which otherwise, is void. Learned counsel further contented that
impugned order is only a remand order and scope of interference with the same is very
limited. It was further argued that notice in respect of sale of property in question was not
published in any newspaper to conceal the intended purchase, to avoid participation of
the bidders who may have offered best price of the property in question and to avoid
transparency in the same proceedings. In support of his contentions, he relied upon the
cases of Md. Umar v. Moti Chand and others (AIR 1952 Patna 244), Rehmat Ali through
Legal Heirs and 10 others v. Allah Bachayo (2004 SCMR 1957) and Mst. Nur Begum
and another v. Settlement and Rehabilitation Commissioner, Multan and 2 others (2003
SCMR 501).
7. We have taken into consideration the arguments advanced by the learned counsel and
perused the record.
8. In the present matter, it is explicitly clear from the record that at no point of time the
property in question was ever offered for sale by public auction through its publication in
the newspapers as required under section 19(4) of the Financial Institutions (Recovery of
Finance) Ordinance, 2001 or in terms of the order passed by the Banking Court under the
provisions of Order XXI, Rule 67(2) C.P.C.
9. On 9-3-2002, the Court Auctioneers submitted the report about the sale of the property
in question held on 28-2-2002 and the matter was adjourned for filing of objections. On
16-4-2002 objections were filed but on that date Presiding Officer was on leave and the
matter was adjourned to 6-5-2002. On 6-5-2002, matter was adjourned for arguments on
the application filed by the parties.
10. On 27-5-2002 Banking Court directed the respondent No.1, judgment-debtor as well
as the decree-holder, who filed the objection against the sale of the property in question,
to deposit a sum of Rs.171,000 (one lac seventy one thousand) in the Court being 20% of
the sale auction price, failing which their application would be deemed to have been
dismissed.
11. Admittedly said amount has been deposited not only by the respondent
No.1/judgment-debtor but also by the decree-holder Bank.
12. On 26-7-2002, the decree-holder Bank filed an application to purchase the mortgage
property in a sum of Rs.10,00000 (ten lacs). The matter thereafter was adjourned time
and again and vide order dated 1840-2002 applications filed by the judgment-debtor and
decree-holder were dismissed.
13. On 23rd October 2002, the Banking Court confirmed the auction and ordered to issue
sale certificate.
14. The Financial Institution Ordinance, 2001, is a special law, therefore, every provision
contained therein has to be strictly construed and meticulously adhered to.
15. Reliance placed by Mr. Hamid Khan, learned Senior ASC on Ghulam Abbas v. Zohra
Bibi and another (PLD 1972 SC 337), Muhammad Ikhlaq Memon v. Zakaria Ghani and
others (PLD 2005 SC 819) and Messrs East Yarn Trading Company and 2 others v.
United Bank Limited and 2 others (2007 CLD 1555), cannot be said to have any
application herein whatsoever.
16. In the case of Ghulam Abbas v. Zohra Bibi and another (PLD 1972 SC 337), the sale
was not set aside for want of beat of drum and was held that it was a mere irregularity.
However, notice of sale was published in 4 newspapers (English, Urdu and Gujrati) as
well as copies .of the notices were affixed on the notice board of the Karachi Municipal
Corporation, Office of Chief Assessor, Municipal Corporation and the Commissioner.
The copies of the notices were also affixed on the notice board of District Court and the
nearest Police Station, which is not a case herein.
Page No. 4 of 8
17. In the case of Hudaybia Textile Mills Ltd and others v. Allied Bank of Pakistan Ltd.
and others, (PLD 1987 SC 512), sale was not set aside after its confirmation merely
because decree had been satisfied thereafter.
18. In the case of Muhammad Ikhlaq v. Zakaria Ghani and others (PLD 2005 SC 819),
sale was not set aside only because time was extended to deposit the balance amount.
19. In the case of Messrs East Yarn Trading Company and 2 others v. United Bank
Limited and 2 others (2007 CLD 1555), the High Court of Sindh, had not set aside the
sale as the objections questioned the sale only on the ground that the property was sold at
a nominal price, after due publication of notice of sale in the newspapers.
20. To appreciate the question whether non-publication of notice of sale in the newspaper
and non service of proclamation of sale upon the judgment debtor vitiate sale as void ab
initio, we would like to reproduce here-in-below the relevant provisions of the C.P.C.:--
"Order XXI, Rules 54, 66-67, C.P.C.
54. Attachment of immovable property.--(1) Where the property is immovable, the

attachment shall be made by an order prohibiting the judgment-debtor from transferring
or charging the property in any way, and all persons from taking any benefit from such
transfer or charge.
(2) The order shall be proclaimed at some place on or adjacent to such property by
beat of drum or other customary mode and a copy of the order shall be affixed on
a conspicuous part of the Court-house and also, where the property is land paying
revenue to the Government, in the office of the Collector of the district in which
the land is situate.
66. Proclamation of sales by public auction.--(1) Where any property is ordered to

be sold by public auction in execution of a decree, the Court shall cause a
proclamation of the intended sale to be made in the language of such Court.
(2) Such proclamation shall be drawn up after notice to the decree-holder and the
judgment-debtor and shall state the time and place of sale and specify as fairly
and accurately as possible,
a) the property to be sold;
b) the revenue assessed upon the estate or part of the estate where the property to be
sold is an interest in an estate or in part of an estate paying revenue to the
Government;
c) any encumbrance to which the property is liable;
d) the amount for the recovery of which the sale is ordered; and
e) every other thing which the Court considers material for a purchaser to know in
order to judge of the nature and value of the property.
(3) Every application for an order for sale under this rule shall be accompanied by
a statement signed and verified in the manner hereinafter prescribed for the
signing and verification of pleadings and containing, so far as they are known to
or can be ascertained by the person making the verification, the matters required
by sub-rule (2) to be specified in the proclamation.
(4) For the purpose of ascertaining the matters to be specified in the proclamation,
the Court may summon any person whom it thinks necessary to summon and
may examine him in respect to any such matters and require him to produce any
document in his possession or power relating thereto:
Page No. 5 of 8
(67) Mode of making proclamation.---(1) Every proclamation shall be made and
published, as nearly as may be, in the manner prescribed by rule 54.sub-rule (2).
(2) Where the Court so directs such proclamation shall also be published in the
(official Gazette) or in a local newspaper or in both and the costs of such
publication shall be deemed to be costs of the sale.
(3) Where property is divided into lots for the purpose of being sold separately it
shall not be necessary to make a separate proclamation for each lot unless proper
notice of the sale cannot in the opinion of the Court, otherwise be given.
21. The Executing Court while passing the order to sell the mortgage property of the
judgment-debtor/respondent No.1, through an open auction; ordered to issue notice to
judgment-debtor under Order XXI, Rule 66, C.P.C., with a further direction to publish the
schedule of sale of the mortgage properties.
22. We would like to observe here that in terms of section 19(2) of Financial Institution
Recovery Ordinance, 2001, the Executing Court has to choose the mode of execution in
accordance with the provisions of the Civil Procedure Code 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 considers appropriate, but once it has chosen the mode as provided in the Civil
Procedure Code, then it cannot be permitted to divert that mode at subsequent stage
without conscious application of mind.
23. From the proceedings in hand, it is apparent that not only requirements of Order XXI,
Rule 66, C.P.C, were not complied with, but also schedule of sale of mortgage. properties
was not published in any newspaper, as required under Order XXI, Rule 67 (2) C.P.C.
24. From the perusal of the record, it appears that though the Banking Court/Executing
Court ordered for sale through publication but admittedly notice of sale was not
published in any newspaper and further notice of proclamation of sale was also not
served upon the judgment debtor.
25. The Banking Court without satisfying itself whether such notices were published in
any newspaper in a mechanical manner accepted the bid of the appellant without
realizing that its preceding order was not complied with and no notice was issued to the
judgment-debtor. We feel that it was the duty of the executing Court to have satisfied
itself that its previous order had been implemented and the mandatory notices had been
issued to the judgment-debtors and published in the newspapers.
26. In the case of Captain-PQ Chemical Industries (Pvt.) Ltd, v. Messrs A.W. Brothers
and others (2004 SCMR 1956), this Court held that auction proceedings have to be
transparent and every possible effort be made to fetch the maximum price closer to
market value.
27. We cannot overlook the admitted facts that not only notice of auction was
published in any newspaper but also that the decree-holder as well as the judgment-
debtor deposited a sum of Rs.171,000 being 20% of sale price to be paid to the
appellant within two to three months from the date of auction, from which, it
appears that due to non-publication of the notice, general public had not participated
in the auction and as such the chosen person purchased the property at the price of
his choice.
28. We are of the view that having not satisfied about the issuance of the notices
under the above referred provisions of law, the Banking Court had committed
glaring irregularity thereby vitiated the ultimate sale.
29. The sale in question is also liable to be declared void ab initio due to violation
of the mandatory requirements of Order XXI, Rule 68, C.P.C. that no sale could take
place till expiration of at least 30 days in the case of immovable properties,
calculated from the date on which copy of proclamation was affixed on the Court
House of the Judge ordering sale.
Page No. 6 of 8
30. In the instant case, copy of sale notice was affixed on the Court's notice board
on 6-2-2002, whereas the auction was held on 28-2-2002, much before the expiry of
30 days.
31. Now coming to the question of Article 166 of the Limitation Act, as we have
come to the conclusion that sale appears to be the outcome of the collusion between
the Court Auctioneers and the appellant and further mandatory provisions of Order
XXI, Rules 66, 67 and 68, C.P.C. and section 19(4) of the Ordinance 2001, have not
been complied with. In the circumstances, Article 181 of the Limitation Act is
attracted and the application to set aside the sale as void, was filed in time.
32. The matter can be looked into from another angle. It is well settled that a bid
made at an auction is in the nature of an offer which does not mature into a contract
till its acceptance. The auctioneer acts as an agent of the seller to accept the bid, a
concluded contract comes into being the moment the bid is accepted either by a
word of mouth or in any other customary method like fall of hammer at public
auction. If, however, the auctioneer is not vested with the power to accept the bid
and said power is with another authority (i.e. the Court in a matter), the contract/sale
comes into being when the bid is accepted by that authority, therefore, for the
purpose of Article 166 of the Limitation Act, time starts to run from the date of the
highest offer is accepted by the Court, and the objection petition filed by respondent
No.1 was well in time.
33. In the case of Murugappa Naicker v. Thayammal (AIR 1923 Madras 82), a house
was put for sale by the Government and the auction was held by the Tehsildar and
the highest bid was forwarded to the Collector for confirmation on 15-7-1915. The
Government declined to confirm the sale whereas bidder claimed that sale was
completed. It was held that there was no complete contract and that the transaction
before the Tehsildar amounted to merely an offer as contract was not concluded on
15-7-1915, when the auction took place.
34. In the case of Union of India and others v. M/s. Bhimsen Walaiti Ram (AIR 1971
SC 2295), where one of the conditions of auction was that the final bid would be
made subject to the confirmation of the Chief Commissioner, it was held that the
contract of sale was not completed till the bid was so confirmed and till such
confirmation, the person whose hid had been provisionally accepted was entitled to
withdraw his bid and when the bid was so withdrawn before the confirmation of the
Chief Commissioner the bidder would not be liable for damages on account of any
breach of contract or for shortfall on the resale.
35. Word `sale' has been defined in Black's Law Dictionary (Seventh Edition), as
under:-
"(1) The transfer of property or title for a price.
(2) The agreement by which such a transfer takes place. The four elements
are(1) parties competent to contract, (2)mutual assent, (3) a thing capable of
being transferred, and (4) a price in money paid or promised.
36. Term `sale' has also been defined in section 45 of the Transfer of Property Act,
1882 as "the transfer of ownership of immovable property for a price paid or
promised". In an auction proceedings title in the property not transferred in favour
of the highest bidder, at the time when auction was held and offer was forwarded to
the Court for acceptance, the Court sale for immovable property under Order XXI,
Rule 84 is subject to proceedings under Orders XXI, Rules 89, 90 and 91, as result
of which sale may either be set aside or confirmed. Once the sale is confirmed,
section 65 C.P.C. provides that ownership right in the immovable property will be
deemed to have vested in the succeeding bidder retrospectively from the date when
action was held.
37. For the foregoing reasons, the listed appeal has no merit and is accordingly
dismissed. However, no order as to costs.
Page No. 7 of 8
M.H./M-63/S Appeal dismissed.
Page No. 8 of 8
P L D 2010 Supreme Court 993
P re s e n t : Muhammad Sair Ali, Anwar Zaheer Jamali and Khilji Arif Hussain,
JJ
MUHAMMAD ATTIQUE---Appellant
Versus
JAMI LIMITED and others---Respondents
Civil Appeal No.772 of 2005, decided on 4th June, 2010.
(On appeal from the judgment dated 21-4-2005 of the Lahore High Court, Lahore passed
in E.F.A. No.110 of 2003).
----Preamble---Special Law---Scope---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.
----S. 19(2)---Execution of decree---Procedure---Executing Court, under S.19(2) of

Financial Institutions (Recovery of Finances) Ordinance, 2001, has to choose mode of
execution in accordance with the provisions of Civil Procedure Code, 1908, or any
other law for the time being in f o r c e or in such manner as the Banking Court may at
the request of decree holder considers appropriate----Once the Executing Court has
chosen the mode provided in Civil Procedure Code, 1908, then it cannot be permitted
to divert that mode at subsequent stage without conscious application of mind.
----S. 19---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 67 (2)---Execution of

decree---Schedule of sale (auction of property), non-issuance of---Failure to publish
notices in newspapers---Judgment debtor assailed auction proceedings on the ground
that the same were conducted in violation of mandatory requirements of O.XXI,
Rr.66 and 67(2), C.P. C.---Judgment debtor filed objections against auction of
mortgaged property which objections were rejected by Executing Court---High Court
remanded the matter to Executing Court for deciding objections afresh---Validity---Not
only requirements of O.XXI, R.66, C.P.C. were not complied with but also schedule of
sale of mortgaged properties was not published in any newspaper, as required under
O.XXI, R.67 (2), C.P.C.---Though Banking Court/Executing Court ordered for sale
through publication but notice of sale was not published in any newspaper and further
notice of proclamation of sale was also not served upon the judgment debtor---Banking
Court without satisfying itself whether such notices were published in any newspaper in a
mechanical manner accepted the bid of auction purchaser without realizing that its
preceding order was not complied with and no notice was issued to judgment debtor---
Executing Court was duty bound to have satisfied itself that its previous order had been
implemented and mandatory notices had been issued to judgment debtors and published
in newspapers---Supreme Court declined to interfere in the remand order passed by High
Court---Appeal was dismissed.
Ghulam Abbas v. Zohra Bibi and another PLD 1972 SC 337; Muhammad Ikhlaq Memon
v. Zakaria Ghani and others PLD 2005 SC 819; Messrs East Yarn Trading Company and
2 others v. United Bank Limited and 2 others 2007 CLD 1555; Hudaybia Textile Mills
Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512
distinguished.
Mst. Hamida v. Muhammad Zaman and another 1991 SCMR 109; Messrs Chawla
International v. Habib Bank Limited and others 2003 CLD 956; Messrs Chaudhary
Weaving Factory and 2 others through Partner v. National Bank of Pakistan through Vice-
Page No. 1 of 8
President/General Attorney and another 2005 CLD 1445; Mst. Asma Zafarul Hassan v.
Messrs United Bank Ltd. and another 1981 SCMR 108; Md. Umar v. Moti Chand and
others; AIR 1952 Pat. 244; Rehmat Ali through Legal Heirs and 10 others v. Allah
Bachayo 2004 SCMR 1957; Mst. Nur Begum and another v. Settlement and
Rehabilitation Commissioner, Multan and 2 others 2003 SCMR 50.1; Hudaybia Textile
Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512;
Captain PQ Chemical Industries (Pvt.) Ltd. v. Messrs A.W. Brothers and others 2004
SCMR 1956; Murugappa Naicker v. Thayammal AIR 1923 Mad. 82 and Union of India
and others v. M/s. Bhimsen Walaiti Ram AIR 1971 SC 2295 ref.
----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.68---Execution of decree---

Auction of immovable property---Mandatory period of 30 days---Auction was assailed on
the ground that it was held before expiry of 30 days from the date when notice was
affixed on Court House---Validity---Sale in question was liable to be declared void ab
inito due to violation of mandatory requirements of O.XXI, R.68 C.P. C. that no sale
could take place till expiration of at least 30 days in the case of immovable properties,
calculated from the date on which copy of proclamation was affixed on Court House of
the Judge ordering the sale---Copy of sale notice was affixed on Court's Notice Board on
6-2-2002, whereas the auction was held on 28-2-2002, much before expiry of 30 days---
Sale was set aside in circumstances.
----S. 19(4)---Civil Procedure Code (V of 1908), O.XXI, Rr. 66, 67 & 68---Limitation
Act (IX of 1908), Arts. 166 & 181---Execution of decree---Court sale by auction---
Objection petition---Limitation---Judgment debtor assailed execution proceedings on the
ground of collusion between Court Auctioneers and auction purchaser and also on the
ground that mandatory provisions of O.XXI, Rr.66, 67 and 68 C.P.C. and S.19 (4) of
Financial Institutions (Recovery of Finances) Ordinance, 2001, were not complied with---
Plea raised by auction purchaser was that objection petition was barred by limitation---
Validity---Application to set aside the sale as void, was filed in time as provision of Art.
181 of Limitation Act, 1908, was attracted---Application was rightly filed in
circumstances.
----S. 19(4)---Civil Procedure Code (V of 1908), O.XXI, Rr.66, 67 & 68---Limitation Act
(IX of 1908), Art.166---Sale through court auction-Execution of decree---Objection
petition---Limitation---Computation of period of limitation---Principle---Bid in auction is
in the nature of offer which does not mature into a contract till its acceptance---
Auctioneer acts as an agent of seller to accept the bid, a concluded contract comes into
being the moment bid is accepted either by a word of mouth or in any other customary
method like fall of hammer at public auction---If auctioneer is not vested with power to
accept bid and that power is with another authority (i.e. court in a matter), the
contract/sale comes into being when bid is accepted by that authority---For the purpose
of Art. 166 of Limitation Act, 1908, time starts to run from the date of the highest offer is
accepted by the court.
(g) Civil Procedure Code (V of 1908)---
----O. XXI, Rr.84, 89, 90, 91 & S.65---Sale through court auction---Transfer of title---
Principle---In auction proceedings title in property is not transferred in favour of the
highest bidder at the time when auction is held and offer is forwarded to court for
acceptance---Court sale for immovable property under O.XXI, R.84, C.P.C. is subject to
proceedings under O.XXI, Rr.89, 90 and 91 C.P.C., as a result of which sale may either
be set aside or confirmed---Once sale is confirmed, S.65 C.P.C. provides that ownership
right in immovable property is deemed to have vested in succeeding bidder
retrospectively from the date when auction was held.
Hamid Khan, Senior Advocate Supreme Court for Appellant.
Page No. 2 of 8
Sh. Zamir Hussain, Senior Advocate Supreme Court for Respondents.
JUDGMENT
KHILJI ARIF HUSSAIN, J.---Through this appeal, the appellant impugns the judgment
dated 21-4-2005 passed in E.F.A. No. 110 of 2003 by the Lahore High Court, Lahore,
whereby order of the Banking Court-II, Lahore, dated 18-10-2002 dismissing objection
petition of respondent No.1, judgment-debtor, and application of respondent No. 8,
decree-holder Bank, for setting aside the auction of the property in question was set aside
and the matter was remanded to decide the objection petition filed by respondent No.1
afresh in accordance with law.
2. Brief facts necessary to decide the appeal are that to enforce the mortgage-decree the
respondent-Bank filed an execution application with the prayer to sell the mortgaged
properties including the property bearing Khasra No. 222, Khewat No. 79 admeasuring 2
Kanals 10 Marlas along with structure on it, situated at village Boghiwal Tehsil and
District Lahore, (hereinafter referred as "the property in question"). The property in
question was put for auction more than once, but no bidder came forward to participate in
the auction held by the Court Auctioneer. The bid of Rs.855,000 offered by the appellant
being the highest in the auction held on 28-2-2002 was submitted before the Executing
Court on 9-3-2002 for consideration. Respondent No. 1 filed objection petition under
Order XXI, Rule 90, C.P.C. as well as decree-holder Bank i.e. respondent No. 8, filed an
application under section 19 of the Financial Institutions (Recovery of Finances)
Ordinance, 2001, for setting aside the auction of the property in question, objecting to the
auction on various grounds including that no notice under Order XXI,, Rule 66, C.P.C.
was served upon respondent No. 1, the proclamation of sale did not contain the true facts
regarding repayment of the amounts by the judgment-debtor, no wide publicity was
conducted by the Court Auctioneer, value of the property even according to the official
rate of the Deputy Commissioner, Lahore, is much more than the bid amount and that the
property was sold at a throwaway price of Rs. 855,000 thus fraud has been committed on
Court by the Court Auctioneer in collusion with the alleged purchaser/appellant.
3. After hearing the parties, the Banking Court vide its order dated 18-10-2002, dismissed
the objection petition field by the judgment-debtor, respondent No.1, as well as the
application of the decree-holder Bank. The decree-holder Bank and the judgment-debtor,
respondent No.1, filed appeals against the order passed by the Banking Court. The appeal
filed by the decree-holder Bank was dismissed for non-prosecution, however, after
hearing respondent No. 1 and the appellant, the order of the Banking Court, Lahore-II
dated 18-10-2002 was set aside and the matter was remanded to the Banking Court to
decide the objection petition afresh in accordance with law, by learned High Court
through judgment impugned herein.
4. Heard Mr. Hamid Khan, Senior Advocate Supreme Court for the appellant and Sheikh
Zamir Hussain, Senior Advocate Supreme Court for the respondent No. 1.
5. Learned counsel for the appellant vehemently argued that the auction was held after
substantial compliance of Rule 66 of Order XXI, C.P.C., the objection petition filed by
the judgment-debtor was barred by time. Learned counsel submitted that under Article
166 of the Limitation Act, the respondent had to file objection petition within 30 days
from the date of the sale of the property in question, which was held on 28-2-2002,
whereas, the objection petition was filed on 16-4-2002. To substantiate the contention, he
relied upon the case of Ghulam Abbas v. Zohra Bibi and another, (PLD 1972 SC 337),
Mst. Hamida v. Muhammad Zaman and another, (1991 SCMR 109), Muhammad Ikhlaq
Memon v. Zakria Ghani and others, (PLD 2005 SC 819), Messrs Chawla International v.
Habib Bank Limited and others, (2003 CLD 956), Messrs Chaudhary Weaving Factory
and 2 others through Partner v. National Bank of Pakistan through Vice-
President/General Attorney and another, (2005 CLD 1445), Messrs East Yarn Trading
Company and 2 others v. United Bank Limited and 2 others, (2007 CLD 1555) and Mst.
Asma Zafarul Hassan v. Messrs United Bank Ltd. and another (1981 SCMR 108).
Page No. 3 of 8
6. On the other hand, learned counsel for respondent No.1 contended that Article 166 of
the Limitation Act does not attract where the sale by itself is a fraud upon the Court and
mandatory provisions of Order XXI, Rule 66, C.P.C., have not been complied with. The
sale certificate issued during the pendency of the proceedings has no impediment of
setting aside the sale, which otherwise, is void. Learned counsel further contented that
impugned order is only a remand order and scope of interference with the same is very
limited. It was further argued that notice in respect of sale of property in question was not
published in any newspaper to conceal the intended purchase, to avoid participation of
the bidders who may have offered best price of the property in question and to avoid
transparency in the same proceedings. In support of his contentions, he relied upon the
cases of Md. Umar v. Moti Chand and others (AIR 1952 Patna 244), Rehmat Ali through
Legal Heirs and 10 others v. Allah Bachayo (2004 SCMR 1957) and Mst. Nur Begum
and another v. Settlement and Rehabilitation Commissioner, Multan and 2 others (2003
SCMR 501).
7. We have taken into consideration the arguments advanced by the learned counsel and
perused the record.
8. In the present matter, it is explicitly clear from the record that at no point of time the
property in question was ever offered for sale by public auction through its publication in
the newspapers as required under section 19(4) of the Financial Institutions (Recovery of
Finance) Ordinance, 2001 or in terms of the order passed by the Banking Court under the
provisions of Order XXI, Rule 67(2) C.P.C.
9. On 9-3-2002, the Court Auctioneers submitted the report about the sale of the property
in question held on 28-2-2002 and the matter was adjourned for filing of objections. On
16-4-2002 objections were filed but on that date Presiding Officer was on leave and the
matter was adjourned to 6-5-2002. On 6-5-2002, matter was adjourned for arguments on
the application filed by the parties.
10. On 27-5-2002 Banking Court directed the respondent No.1, judgment-debtor as well
as the decree-holder, who filed the objection against the sale of the property in question,
to deposit a sum of Rs.171,000 (one lac seventy one thousand) in the Court being 20% of
the sale auction price, failing which their application would be deemed to have been
dismissed.
11. Admittedly said amount has been deposited not only by the respondent
No.1/judgment-debtor but also by the decree-holder Bank.
12. On 26-7-2002, the decree-holder Bank filed an application to purchase the mortgage
property in a sum of Rs.10,00000 (ten lacs). The matter thereafter was adjourned time
and again and vide order dated 1840-2002 applications filed by the judgment-debtor and
decree-holder were dismissed.
13. On 23rd October 2002, the Banking Court confirmed the auction and ordered to issue
sale certificate.
14. The Financial Institution Ordinance, 2001, is a special law, therefore, every provision
contained therein has to be strictly construed and meticulously adhered to.
15. Reliance placed by Mr. Hamid Khan, learned Senior ASC on Ghulam Abbas v. Zohra
Bibi and another (PLD 1972 SC 337), Muhammad Ikhlaq Memon v. Zakaria Ghani and
others (PLD 2005 SC 819) and Messrs East Yarn Trading Company and 2 others v.
United Bank Limited and 2 others (2007 CLD 1555), cannot be said to have any
application herein whatsoever.
16. In the case of Ghulam Abbas v. Zohra Bibi and another (PLD 1972 SC 337), the sale
was not set aside for want of beat of drum and was held that it was a mere irregularity.
However, notice of sale was published in 4 newspapers (English, Urdu and Gujrati) as
well as copies .of the notices were affixed on the notice board of the Karachi Municipal
Corporation, Office of Chief Assessor, Municipal Corporation and the Commissioner.
The copies of the notices were also affixed on the notice board of District Court and the
nearest Police Station, which is not a case herein.
Page No. 4 of 8
17. In the case of Hudaybia Textile Mills Ltd and others v. Allied Bank of Pakistan Ltd.
and others, (PLD 1987 SC 512), sale was not set aside after its confirmation merely
because decree had been satisfied thereafter.
18. In the case of Muhammad Ikhlaq v. Zakaria Ghani and others (PLD 2005 SC 819),
sale was not set aside only because time was extended to deposit the balance amount.
19. In the case of Messrs East Yarn Trading Company and 2 others v. United Bank
Limited and 2 others (2007 CLD 1555), the High Court of Sindh, had not set aside the
sale as the objections questioned the sale only on the ground that the property was sold at
a nominal price, after due publication of notice of sale in the newspapers.
20. To appreciate the question whether non-publication of notice of sale in the newspaper
and non service of proclamation of sale upon the judgment debtor vitiate sale as void ab
initio, we would like to reproduce here-in-below the relevant provisions of the C.P.C.:--
"Order XXI, Rules 54, 66-67, C.P.C.
54. Attachment of immovable property.--(1) Where the property is immovable, the

attachment shall be made by an order prohibiting the judgment-debtor from transferring
or charging the property in any way, and all persons from taking any benefit from such
transfer or charge.
(2) The order shall be proclaimed at some place on or adjacent to such property by
beat of drum or other customary mode and a copy of the order shall be affixed on
a conspicuous part of the Court-house and also, where the property is land paying
revenue to the Government, in the office of the Collector of the district in which
the land is situate.
66. Proclamation of sales by public auction.--(1) Where any property is ordered to

be sold by public auction in execution of a decree, the Court shall cause a
proclamation of the intended sale to be made in the language of such Court.
(2) Such proclamation shall be drawn up after notice to the decree-holder and the
judgment-debtor and shall state the time and place of sale and specify as fairly
and accurately as possible,
a) the property to be sold;
b) the revenue assessed upon the estate or part of the estate where the property to be
sold is an interest in an estate or in part of an estate paying revenue to the
Government;
c) any encumbrance to which the property is liable;
d) the amount for the recovery of which the sale is ordered; and
e) every other thing which the Court considers material for a purchaser to know in
order to judge of the nature and value of the property.
(3) Every application for an order for sale under this rule shall be accompanied by
a statement signed and verified in the manner hereinafter prescribed for the
signing and verification of pleadings and containing, so far as they are known to
or can be ascertained by the person making the verification, the matters required
by sub-rule (2) to be specified in the proclamation.
(4) For the purpose of ascertaining the matters to be specified in the proclamation,
the Court may summon any person whom it thinks necessary to summon and
may examine him in respect to any such matters and require him to produce any
document in his possession or power relating thereto:
Page No. 5 of 8
(67) Mode of making proclamation.---(1) Every proclamation shall be made and
published, as nearly as may be, in the manner prescribed by rule 54.sub-rule (2).
(2) Where the Court so directs such proclamation shall also be published in the
(official Gazette) or in a local newspaper or in both and the costs of such
publication shall be deemed to be costs of the sale.
(3) Where property is divided into lots for the purpose of being sold separately it
shall not be necessary to make a separate proclamation for each lot unless proper
notice of the sale cannot in the opinion of the Court, otherwise be given.
21. The Executing Court while passing the order to sell the mortgage property of the
judgment-debtor/respondent No.1, through an open auction; ordered to issue notice to
judgment-debtor under Order XXI, Rule 66, C.P.C., with a further direction to publish the
schedule of sale of the mortgage properties.
22. We would like to observe here that in terms of section 19(2) of Financial Institution
Recovery Ordinance, 2001, the Executing Court has to choose the mode of execution in
accordance with the provisions of the Civil Procedure Code 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 considers appropriate, but once it has chosen the mode as provided in the Civil
Procedure Code, then it cannot be permitted to divert that mode at subsequent stage
without conscious application of mind.
23. From the proceedings in hand, it is apparent that not only requirements of Order XXI,
Rule 66, C.P.C, were not complied with, but also schedule of sale of mortgage. properties
was not published in any newspaper, as required under Order XXI, Rule 67 (2) C.P.C.
24. From the perusal of the record, it appears that though the Banking Court/Executing
Court ordered for sale through publication but admittedly notice of sale was not
published in any newspaper and further notice of proclamation of sale was also not
served upon the judgment debtor.
25. The Banking Court without satisfying itself whether such notices were published in
any newspaper in a mechanical manner accepted the bid of the appellant without
realizing that its preceding order was not complied with and no notice was issued to the
judgment-debtor. We feel that it was the duty of the executing Court to have satisfied
itself that its previous order had been implemented and the mandatory notices had been
issued to the judgment-debtors and published in the newspapers.
26. In the case of Captain-PQ Chemical Industries (Pvt.) Ltd, v. Messrs A.W. Brothers
and others (2004 SCMR 1956), this Court held that auction proceedings have to be
transparent and every possible effort be made to fetch the maximum price closer to
market value.
27. We cannot overlook the admitted facts that not only notice of auction was
published in any newspaper but also that the decree-holder as well as the judgment-
debtor deposited a sum of Rs.171,000 being 20% of sale price to be paid to the
appellant within two to three months from the date of auction, from which, it
appears that due to non-publication of the notice, general public had not participated
in the auction and as such the chosen person purchased the property at the price of
his choice.
28. We are of the view that having not satisfied about the issuance of the notices
under the above referred provisions of law, the Banking Court had committed
glaring irregularity thereby vitiated the ultimate sale.
29. The sale in question is also liable to be declared void ab initio due to violation
of the mandatory requirements of Order XXI, Rule 68, C.P.C. that no sale could take
place till expiration of at least 30 days in the case of immovable properties,
calculated from the date on which copy of proclamation was affixed on the Court
House of the Judge ordering sale.
Page No. 6 of 8
30. In the instant case, copy of sale notice was affixed on the Court's notice board
on 6-2-2002, whereas the auction was held on 28-2-2002, much before the expiry of
30 days.
31. Now coming to the question of Article 166 of the Limitation Act, as we have
come to the conclusion that sale appears to be the outcome of the collusion between
the Court Auctioneers and the appellant and further mandatory provisions of Order
XXI, Rules 66, 67 and 68, C.P.C. and section 19(4) of the Ordinance 2001, have not
been complied with. In the circumstances, Article 181 of the Limitation Act is
attracted and the application to set aside the sale as void, was filed in time.
32. The matter can be looked into from another angle. It is well settled that a bid
made at an auction is in the nature of an offer which does not mature into a contract
till its acceptance. The auctioneer acts as an agent of the seller to accept the bid, a
concluded contract comes into being the moment the bid is accepted either by a
word of mouth or in any other customary method like fall of hammer at public
auction. If, however, the auctioneer is not vested with the power to accept the bid
and said power is with another authority (i.e. the Court in a matter), the contract/sale
comes into being when the bid is accepted by that authority, therefore, for the
purpose of Article 166 of the Limitation Act, time starts to run from the date of the
highest offer is accepted by the Court, and the objection petition filed by respondent
No.1 was well in time.
33. In the case of Murugappa Naicker v. Thayammal (AIR 1923 Madras 82), a house
was put for sale by the Government and the auction was held by the Tehsildar and
the highest bid was forwarded to the Collector for confirmation on 15-7-1915. The
Government declined to confirm the sale whereas bidder claimed that sale was
completed. It was held that there was no complete contract and that the transaction
before the Tehsildar amounted to merely an offer as contract was not concluded on
15-7-1915, when the auction took place.
34. In the case of Union of India and others v. M/s. Bhimsen Walaiti Ram (AIR 1971
SC 2295), where one of the conditions of auction was that the final bid would be
made subject to the confirmation of the Chief Commissioner, it was held that the
contract of sale was not completed till the bid was so confirmed and till such
confirmation, the person whose hid had been provisionally accepted was entitled to
withdraw his bid and when the bid was so withdrawn before the confirmation of the
Chief Commissioner the bidder would not be liable for damages on account of any
breach of contract or for shortfall on the resale.
35. Word `sale' has been defined in Black's Law Dictionary (Seventh Edition), as
under:-
"(1) The transfer of property or title for a price.
(2) The agreement by which such a transfer takes place. The four elements
are(1) parties competent to contract, (2)mutual assent, (3) a thing capable of
being transferred, and (4) a price in money paid or promised.
36. Term `sale' has also been defined in section 45 of the Transfer of Property Act,
1882 as "the transfer of ownership of immovable property for a price paid or
promised". In an auction proceedings title in the property not transferred in favour
of the highest bidder, at the time when auction was held and offer was forwarded to
the Court for acceptance, the Court sale for immovable property under Order XXI,
Rule 84 is subject to proceedings under Orders XXI, Rules 89, 90 and 91, as result
of which sale may either be set aside or confirmed. Once the sale is confirmed,
section 65 C.P.C. provides that ownership right in the immovable property will be
deemed to have vested in the succeeding bidder retrospectively from the date when
action was held.
37. For the foregoing reasons, the listed appeal has no merit and is accordingly
dismissed. However, no order as to costs.
Page No. 7 of 8
M.H./M-63/S Appeal dismissed.
Page No. 8 of 8
2007 C L D 726
[Karachi]
Before Maqbool Baqar, J
HABIB BANK LIMITED---Plaintiff
Versus
Messrs KIRAN SUGAR MILLS (PUBLIC) through Managing Director----

Respondent
Executions Applications Nos.88 of 1999 and 42 of 2002, decided on 17th December,

2005.
----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.65, 66 & 67---Sindh Chief Court
Rules (OS), R.351--Auction sale of mortgaged property in execution of decree in a suit for
recovery of loan by Bank---Contentions of judgment-debtor and one of the bidders in
auction were that publication and conduct of the sale was violative of the mandate of
O.XXI, Rr.65, 66 & 67, C.P.C., as reserved price was not mentioned in the sale
proclamation and the Banking Court having rejected the earlier bids as being inadequate,
ought to have ordered re-auction, and by not doing so, and instead, allowing the Official
Assignee to negotiate enhancement of the bid amount not only with the original bidders
but also with any party who may be interested in purchasing the property, had not only
violated the mandate of law but had committed a jurisdictional error by abdicating its
authority to the Official Assignee---Validity---Judgment-debtors, in the present case, were
duly served before the appointment of Official Assignee as Commissioner to sell the
property, and appearance had been entered on behalf of the judgment-debtor company,
before passing of such order; neither the company submitted valuation of its assets nor it
objected to non-disclosure of reserved price of its property in the sale proclamation; it
was at least on two occasions that the Court rejected the offers made by various bidders
and directed the Official Assignee to seek improvement in the bid amounts, but no
objection was then raised by the judgment-debtors, or by the bidder; they also did not
object to the order whereby the Official Assignee was directed to negotiate the sale of the
property with bidders or any other party interested in buying the property, although the
order was passed in presence of their counsel; bidder had not only submitted its bid in
response to the sale proclamation in question without any reservation and/or raising any
objection with regard to the sale proclamation or otherwise but also participated in the
meetings held by the Official Assignee and had enhanced its bid/offer; bidder however,
failed to enhance its offer in yet another meeting of bidders for enhancement of bids, and
in the said meeting counsel of the bidder, for the first time objected to offer made by the
highest bidder being considered and thus the judgment-debtor and bidder having
acquiesced in the proceedings conducted and exercise undertaken in relation to the sale of
the property, were estopped from raising any objection to that extent---No prejudice had
been caused to the judgment-debtor company as the sale proclamation under objection,
contained adequate description and particulars regarding the property and as a result of
the various orders passed by the Banking Court and efforts made ,by the Official
Assignee by holding negotiation with the original bidders and the subsequent entrants
including the successful bidder---Offer for the purchase of the property had been
enhanced from Rs.17.50 crores of the objecting bidder to Rs.46 crores, ultimately offered
by the successful bidder and accepted by the Court---Objecting bidder failed to match the
offer made by the successful bidder---Held, in circumstances, it did not lie in the mouth
of objecting bidder that the property had been sold at an inadequate price, even otherwise
inadequacy of price per se was no ground for setting aside a sale---By floating of bid no
legal right whatsoever had accrued in favour of the objecting bidder---Provisions of
O.XXI, R.65, C.P.C. and Rule 351, Sindh Chief Court Rules (O.S) did prescribe the mode
of disposal by public auction but neither of said provisions expressly or by necessary
implication had prohibited any other mode of disposal---If the Court had deviated from
the prescribed mode of disposal to serve the ends of justice, no exception could be taken
to it---Court was competent, under its inherent powers, to accept, after due notice to
Page No. 1 of 20
party, when satisfied as to offer being reasonable and that the Court was competent to
take all steps to execute its own mandate and orders---Court, in such-like eventualities
was required to safeguard primarily the interest of judgment-debtor and further to see that
auction proceedings had been conducted in fair and transparent manner and no bar
whatsoever had been imposed on the Court if some beneficial devices were evolved to
get maximum price and to achieve the said purpose---Court may make any amendment,
deletion, insertion or change in the advertisement qua auction---Requirements which
were not complied with in the case when settling the sale proclamation were intended for
the benefit of judgment-debtor and could be waived by him, as those were not matters
which went to the root of the Court's jurisdiction or constituted the foundation or
authority for the proceedings nor involved public interest; clearly those were
irregularities and could not be described as errors which rendered the sale void---
Objections, both by judgment-debtor and the bidder having no force were repelled.
Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. and another 1981 SCMR 108;
Captain-PQ Chemical Industries (Pvt.)' Ltd. v. Messrs A.W. Brothers and others 2004
SCMR 1956 and S.A. Sundararajan v. A.P.V. Rajendran 1982 PSC 1293 rel.
Messrs. SPRL Rehman Brothers v. Banking Court No.II Lahore 2000 MLD 1957; Messrs
Naqi Chemical Industries (Pvt.) Ltd. v. Habib Bank Limited 2003 CLD 571; Muhammad
Hassan v. Messrs Muslim Commercial Bank Ltd. 2003 CLD 1693; Hydaybia Textile
Mills Ltd. v. Allied Bank of Pakistan Ltd. PLD 1987 SC 512; Ch. Abdul Majeed v.
Sadaqat Seed Malik 2002 CLD 463; Messrs Shandia Saleem and another v. Habib Credit
and Exchange Limited and 4 others 2001 CLC 126; Brig. (Retd.) Maqbool Haq v. Messrs
Muslim Commercial Bank Ltd. PLD 1993 Lah. 706; Mst. Asma Zafarul Hassan v. Messrs
United Bank Ltd. and another 1981 SCMR 108; Ghulam Abbas v. Zuhra Bibi and another
PLD 1972 SC 337; Captain-PQ Chemical Industries (Pvt.) Ltd. v. Messrs A.W. Brothers
and others 2004 SCMR 1956; S.A. Sundararajan v. A.P.V. Rajendran 1982 PSC 1293;
Messrs United Bank Ltd. Karachi v. Mst. Asma Zafarul Hassan 1980 CLC 565; Rasheed
Ehsan and others v. Bashir Ahmed and another PLD 1989 SC 146 and UBL v. Zahid
Hamid Chaudhry in Execution No.7-B of 2003 distinguished.
Ghulam Abbas v. Zuhra Bibi and another PLD 1972 SC 337; Brig. (Retd.) Maqbool Haq
v. M/s Muslim Commercial Bank Ltd. PLD 1993 Lah.706; AIR 1973 SC 2593; 2000
CLC 63; Manilal Mohanlal Sha and others v. Sardar Sayed Ahmed Sayed Mahmad and
another AIR 1954 SC 349; Sayed Brothers, Lahore v. District Council, Layallpur and
another PLD 1953 Lah.83; PLD 1977 Lah. 542 and National Bank of Pakistan v. Messrs
Nasir Industries, Karachi and others 1982 CLC 388 ref.
----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.84---Auction sale of mortgaged

property in execution of decree in a suit for recovery of loan by the Bank---Objection was
that successful bidders had failed to deposit 10% of their bid of Rs.30 crores, along with
their bid, as required in terms of the sale proclamation, and they had further failed to
deposit 25% of the sale price immediately upon acceptance of their offer and the
remaining 75% within 15 days, thereafter---Bidders' offer thus had been rendered
nullity---Validity---Court had accepted two deposits made by the bidders and approved a
further deposit to be made within time prescribed by the Court---Bidders having
faithfully complied with Court's order, they could not be penalised for the violation of
R.84, O.XXI, C.P.C., maxim Actus Curiae neminem gravabit' will come to their rescue.
Rasheed Ehsan and others v. Bashir Ahmed and another PLD 1989 SC 146 rel.
----S. 19--Civil Procedure Code (V of 1908), O.XXI, Rr.85 & 86--Auction sale of
mortgaged property in execution of a decree in suit for recovery of loan by the Bank---
Provisions with regard to the payment of 75% of balance purchase money contained in
O.XXI, R.85, C.P.C. are mandatory and not merely directory---Non-compliance of said
provisions renders the sale void and in such circumstances the Court is under obligation
to resale the property in terms of R.86, 4.XXI, C.P.C.---Principles.
Page No. 2 of 20
Feroze Din Faiz v. Chaman Lal and others PLD 1953 Lah. 83; National Bank of Pakistan
v. Messrs Nasir Industries, Karachi and others 1982 CLC 388; Sayed Brothers, Lahore v.
District Council, Lyallpur and another PLD 1977 Lah. 542; Balram v. 11am Singh AIR
1996 SC 2781 and Manilal Mohanlal Sha and others v. Sardar Sayed Ahmed Sayed
Mahmad and another AIR 1954 SC 349 rel.
Al-Hassan Feeds v. United Bank Ltd. and 6 others 2004 CLD 275 distinguished.
----S. 19---State Bank of Pakistan BPD Circular No.29---Auction sale of mortgaged

property in execution of a decree in suit for recovery of loan by the Bank was set aside by
the High Court---Judgment-debtor could approach the decree-holder Bank and CIRC for
settlement of their respective dues in terms as envisaged in State Bank of Pakistan BPD
Circular No.29 and CIRC Scheme and in case such settlement was reached, binding and
collusive agreements shall be executed between the judgment-debtor company and the
decree-holder, within fifteen days---In case either no settlement was reached, or
agreements were not executed, the Official Assignee shall issue fresh proclamation for
the sale of the property, after seeking approval of the proposed proclamation from the
Court-Official Assignee was directed to refund the amount deposited by bidder in the
execution of decree.
Tasawar Ali Hashimi for Decree-holder, Habib Bank Ltd.
Abu Baker Ismail Chundngar for Decree-holder, CIRC.
Messrs Aitzaz Ahsan and Abid S. Zuberi for Judgment-debtor Company.
Abdul Hafeez Pirzada and Afzal Siddiqui for Messrs Chawala International.
Ali Bin Adam Jafri for Auction-Purchaser.
Official Assignee in Person.
ORDER
MAQBOOL BAQAR, J.---Through the present order I propose to dispose of the various
objections raised by Messrs Kiran Sugar Mills, the judgment-debtor in the above two
execution applications, and by Messrs' Chawla International inter alia against the
publication and the conduct of sale of the judgment-debtor's Sugar Mill's and acceptance
of the offer of Messrs Euro-Plus (Mons-Belgium) in the said execution proceedings filed
by Habib Bank Limited and United Bank Limited respectively, for recovery of the
amounts, in respect of the decrees passed in favour of the said two banks, against Messrs
Kiran Sugar Mills Limited and its guarantors.
The relevant facts of the case, in brief, are that by order dated 8-5-2000 a learned Single
Judge of this Court exercising Banking Court jurisdiction in the above proceedings
appointed official assignee as Commissioner to attach and sale the judgment-debtor's
Sugar Mills. The official assignee in compliance of the said order invited sealed tenders
for the purchase of the said Mills, through publication in various daily newspapers of
English and Urdu languages. Such publication was made on 26-7-2002. In terms of the
publication sealed tenders were to be submitted before the official assignee on 27-8-2002.
In response the official assignee received the following offers on 27-8-2002:--
Sr. No. Name of Bidder Previous Offer

(i) Messrs Chawla International Rs. 17.50 Crore
(ii) Messrs Ellahi Electronic Rs.15.00 Crore
(iii) Messrs Regent Services (Pvt.) Ltd. Rs. 15.00 Crore
(iv) Messrs Indus Sugar Mills Ltd. Rs.80.00 Crore
The offer at Sr. No.(iv) was subject to
the following conditions: -
Page No. 3 of 20
(i) Rs.5.00 Crore shall be deposited after
acceptance of the offer with a grace
period of two years.
(ii) Balance payment shall he made in 8
years.
In his endeavour to seek improvements in the aforesaid offers the official assignee held
meeting/negotiations with the aforesaid bidders on 2-9-2002, 5-9-2002, 7-9-2002 and 10-
9-2002 which resulted in the following improvements:
Sr.No. Name of Bidder Previous Offer Improved Offer

(i) Messrs Chawla International. Rs.17.50 Crore Rs.25.30 Crore
(ii) Messrs Ellahi Electronics Rs. 15.00 Crore Rs.25.25 Crore
(iii) Messrs Regent Services(Pvt.) Ltd. Rs.15.00 Crore Rs.18.00 Crore
(iv) Messrs Indus Sugar Mills Ltd. Rs.80.00 Crore No improvement and
no variation in the
mode of payment.
Through reference dated 17-9-2002, the official assignee submitted the offers of Messrs
Chawla International in the sum of Rs.25.30 crores (Cash within 30-days) and that of
Indus sugar Mills Limited of Rs.80 Crores with the afore-noted conditions, for decision
by the Court. The offers were however not accepted by the learned Banking Judge, who
by order dated 23-9-2002 directed the official assignee to negotiate with Messrs Chawla
International or any other party interested in buying the property and to submit a fresh
reference. On 21-9-2002 the learned official assignee received an offer of Rs.30 Crores
from Messrs Euro Plus (Mons-Belgium). On 1-10-2002 the official assignee called a
meeting of the original bidders wherein he also invited the representative of Messrs Euro
Plus to persuade the bidders to improve their offer. The meeting was also attended by a
fresh entrant, namely, Bhittai Traders. The aforesaid meeting resulted in the following
improvements.

(i) Messrs Euro-Plus (Mons Rs.30.00 Crore Rs.40.00 Crore
Belgium)
(ii) Messrs Bhittai Traders Rs.30.10 Crore Rs.39.55 Crore
(iii) Messrs. Chawla International. Rs.25.30 Crore No improvement
(iv) Messrs Regent Services(Pvt.) Rs.25.00 Absent
Ltd.
(v) Messrs Indus Sugar Mills Ltd. Rs.80.00 Crore Rs.80 Crore plus Rs.15.90
Crore towards settlement
of certain liabilities of the
Judgment-debtor company.
Messrs Indus Sugar Mills had however agreed to pay the amount in instalments staggered
for a period of eight years.
Subsequently Indus Sugar Mills Ltd. through their Advocate submitted a revised offer of
Rs.100.00 Crores, as detailed hereinafter.
Through reference dated 7-10-2002 the official assignee sought orders of the learned
Banking Judge for acceptance or otherwise of the following bids/offers.
(i) Messrs Euro Plus (Mons Belgium) which Rs.40.00 Crore

offer includes dues of WAPDA
Rs.15,15,300 and PTCL for Rs.4,14,704
(ii) Messrs Indus Sugar Mills Ltd. Rs.100.00 Crore (on instalments basis)
plus Rs.15.90 Crore (on Instalments
basis).
Page No. 4 of 20
The amount of Rs.100 Crore to be paid in the following instalments:
(a) Rs.5.00 Crore after acceptance of offer.
(b) Balance amount in the yearly instalments as under:
1st year Rs.2.00 Crore

2nd year Rs.2.00 Crore
3rd year Rs.3.00 Crore
4th year Rs.4.00 Crore
(c) Rs.2.2 Crore out of the amount of Rs.15.90 Crore to be paid to growers and
Rs:13.7 Crore towards Government dues within 3 years.
(d) Security for the above mentioned amount in the shape of agricultural land
approx. valuing Rs.10.00 Crore only.
By order dated 14-10-2002 the learned Banking Judge sought further improvements in
the offers, in compliance whereof the official assignee held a meeting with the
prospective buyers which resulted in the following improvements:--

(i) Messrs Euro-Plus(Mons Rs.40.00 Crore Rs.45.75 Crore
Belgium).
(ii) Messrs Bhittai Traders Rs.41.00 Crore Rs.45.50 Crore
(iii) Messrs. Chawla International. Rs.25.30 Crore Absent
(iv) Messrs Indus Sugar Mills Ltd. Rs. 100.00 Crore No improvement.
No variations in the
mode of payment.
The official assignee through his reference dated 15-10-2005 submitted the above
position before the" learned Banking Judge for acceptance or otherwise of the aforenoted
offers of Messrs Euro Plus (Mons-Belgium) and Indus Sugar Mills Limited. On 15-10-
2002 the judgment-debtor filed objections to the aforesaid reference. By order dated 6-
11-2002 the Learned Banking Judge rejected the said objections and with the consent of
the decree-holder bank and of CIRC, (which corporation has taken over the non-
performing assets of United Bank Limited), accepted the offer of Messrs Euro Plus
(Mons-Belgium) in the sum of Rs.46.00 crores. The aforesaid order was assailed by the
judgment-debtor anti Messrs Indus Sugar Mills Limited, before a Division Bench of this
Court through HCA No.284 of 2002 and HCA 295 of 2002, respectively. Whereas Messrs
Chawla International also assailed the said order through HCA No.292 of 2002. The first
two appeals were dismissed by judgment dated 29-11-2002 whereas HCA No.292 of
2002 was dismissed vide judgment dated 13-12-2002. Against the aforesaid judgments
separate C.P.L.As. bearing Nos.1113-K of 2002 and 29 of 2003 were filed by the
Judgment-debtor and Messrs Chawla International before the Honourable Supreme Court
of Pakistan.
Mr. Abid Zuberi, Advocate who appeared for the judgment-debtors, in the above C.P.L.A.
made the following submissions before the Honourable Supreme Court:--
Page No. 5 of 20
(1) Learned Banking Judge got the assets of the petitioner-company auctioned
without fixing upset price (reserved price), in violation of the provisions of Order
XXI, Rule 66(e), C.P.C., rendering the whole process of the auction illegal.
Reliance was placed by him on the judgments reported as PLD 1972 SC 337;
PLD 1993 Lahore 706; AIR 1973 SC 2593; 2000 CLC 63.
(2) That the offer of Euro-plus (Mons Belgium), in the sum of Rs.46 Crore, was
not liable to be accepted, being very low as the property under sale was evaluated
by the evaluators, approved by the State Bank and appointed by BEL, at Rs.796
million and its forced sale value was so determined at Rs.606 million.
15. Mr. Abdul Hafeez Pirzada, appearing for Messrs Chawla International in Civil
Petition No.29 of 2003, urged the following grounds before the Honourable Supreme
Court:--
(a) The petitioner was the highest bidder in the auction held in pursuance of the
proclamation of sale, therefore, it had a legitimate expectation of the acceptance
of its bid by the Court which has been denied to it illegally, in violation of law and
consistence practice of the Court as such impugned order, calls for interference by
this Court.
(b) In the second round, in deference to the wishes of the Court, the petitioner
increased its bid and was again the highest bidder amongst the bidders in the
auction, therefore, legitimate expectations was reinforced for acceptance of its
bid.
(c) Assuming, without conceding, that if petitioner's bid ought to have been
rejected by the Honourable High Court, it could have been done by passing a
speaking order and then it was mandatory upon the Court to issue fresh
proclamation and order re-auction of the property in view of the judgments
reported in (PLD 1993 Lahore 706 and 2000 CLC 863), but the learned High
Court had not adhered to the principles noted in these judgments as a result
whereof injustice has been caused to petitioner.
(d) That respondent Euro-Plus (Mons-Belgium) did not participate in the auction
and only after the recommendation of the official assignee for consideration and
acceptance of the bid, it made oral offer on telephone that it was willing to offer
30 Crores. Such offer could not be even considered by the learned Single Judge.
(e) The learned High Court committed jurisdictional error in abdicating its
authority and inviting the official assignee to sell the property by negotiation, not
confining to bidders but to all ensnares, as such this action on the part of the High
Court is totally illegal.
(f) Assuming, without conceding, that the Euro-plus (Mons Belgium) could make
an offer then it was mandatory for it to deposit 25% of the offer immediately
under the bidding conditions, and as per the requirement of Order XXI, rule 84,
C.P.C., and the balance was payable within the 15 days of the acceptance of the
offer as per the mandate of Order XXI, rule 85, C.P.C. Unless these provisions
have been complied with, the offer made by Euro-plus is null and void. AIR 1954
SC 349; PLD 1953 Lahore 83; PLD 1977 Lahore 542 and 1982 CLC 388
Karachi.
(g) The original Court/learned Single Judge acted illegally in accepting the offer
of Euro-Plus (Mons-Belgium) and confirming the sale on the same day and also
in directing handing over of the property to the offer or, ahead of the payment of
the full price in violation of Rule 351 of the Sindh Chief Court Rules.
(h) Petitioner being the highest bidder in the auction and without prejudice to the
rights as contended above, had the right to match the offer made by Euro-Plus
(Mons-Belgium). Such offer was made before the Division Bench of the High
Court, rather it was improved but the High Court declined to exercise jurisdiction.
Page No. 6 of 20
In reply of above arguments, Messrs Malik Muhammad Qayyum, and Mushtaq Memon,
the learned counsel appearing for Messrs Euro-Plus (Mons-Belgium) contended before
the Honourable Supreme Court as under:--
(i) Neither the proclamation was issued by the Court nor sale was made under the
C.P.C., therefore, all arguments raised by the learned counsel for petitioner are
irrelevant.
(ii) Respondent Euro-Plus (Mons-Belgium) faithfully abided by the terms of the

public notice published in the Newspapers dated 26th July, 2002.
(iii) Petitioner having acquiesced the procedure and having participated in the
proceedings for sale is estopped to say that sale should be made in another manner
or some additional provisions should be added in the sale publication.
(iv) Even assuming that C.P.C. apply, there is no prohibition in the C.P.C. or in
any other law requiring that if an auction was held, no subsequent negotiation can
take place.
(v) Condition relating to deposit of 10% of the offer before making bid and 25%
of the offer after the bid are all procedural matters and deviation therefrom do not
render the proceedings of sale illegal or void. Euro-Plus had deposited 10% along
with offer. 25% additionally was deposited within the time allowed by the
executing Court and the remaining amount could not be deposited on account of
stay order issued firstly by the Sindh High Court and then by the Honourable
Supreme Court.
(vi) Euro-Plus had not made any offer on telephone but given his offer in writing
on 21st September 2002, which fact finds mention in the order passed by the
learned Single Judge.
(vii) The date fixed for receipt of sealed bids is extendable by the Court and it was
done, vide order dated 23rd September 2002, therefore, it is incorrect to say that
offer made by the respondent Euro-Plus (Mons-Belgium) was belated.
(viii) The Court was under no obligation as per law and as per the terms of
proclamation inviting bids to accept the highest offer, therefore, even if the offer
made by petitioner (Messrs Chawla International) was highest, it does not acquire
any right to be agitating before any Court.
(ix) All efforts made by the Court are permissible under the law and also it is
required by the Court to make all efforts to have the bid price enhanced, therefore,
any order passed or proceedings taken by the Court for achieving this object,
would not be interfered by this Court.
(x) That ample time and opportunity was given to Messrs Chawla International to
match their bid with that of Euro-Plus (Mons-Belgium)'s bid but they failed,
rather refused to do so, therefore, the offer made by Messrs Chawla, before the
Honourable Supreme Court, cannot be accepted.
(xi) That in any case, these petitions are premature inasmuch as the learned
Division Bench of the High Court in the impugned order has observed that the
sale in favour of respondent Euro-Plus (Mons-Belgium) has not been- confirmed
and matter is still open before the learned executing Court where all such pleas
can be raised.
(xii) The property under sale was a mortgaged property for which special
procedure has been provided under the Banking Laws."
The above two petitions were disposed of by the Honourable Supreme Court, through a
common order, passed with the consent of the counsel for the parties on 9-9-2004,
Page No. 7 of 20
thereby permitting the parties to raise before the Banking Judge the aforenoted
objections/contentions or any other question, in accordance with law.
Pursuant to the aforesaid order of the Honourable Supreme Court, the aforenoted
execution applications were taken up for hearing of the various objections/submissions of
the parties.
During the course of arguments Mr. Aitzaz Ahsan, the learned counsel for the judgment-
debtors submitted that in terms or Order XXI, Rule 66(e), C.P.C. it was imperative upon
the Banking Court to have determined reserved price of the judgment-debtor's property
and indicated the same in the sale proclamation however; in violation of the said
mandatory provision, no reserve price was either determined or mentioned in the sale
proclamation, thus rendering the whole exercise illegal. He further contended that as a
result of non-determination and non-declaration of the reserve price the judgment-debtor
has .been gravely prejudiced as the price of Rs.46 Crore offered by Euro Plus is grossly
inadequate. He submitted that even the evaluators appointed by Bankers Equity Ltd. who
are the lead Banker of the consortium that granted finances to the judgment-debtor have
evaluated the value of the property in question at Rs.796,836,611 and has declared the
forced sale value thereof to be Rs.6,045,788 which is far in excess of the offer made by
Euro-Plus. The learned counsel submitted that the judgment-debtor is genuinely
interested, and has a right that his assets are sold at a realistic price so that the major
amount of his liability may be paid off. The learned counsel further submitted that the
offer made by Euro-Plus was not liable even to be considered, firstly for the reason that
Euro did not submit their bids within the time as prescribed by the sale proclamation
dated 26-7-2002 and made their offer as late as on 21-9-2002, and that too without
depositing 10% per cent of their offer, as they, along with their offer of Rs.30 Crores,
only deposited Euros 52725, which amount is equivalent to Pak Rupees 30,00,000 which
is merely one per cent of the amount offered. He further contended that since the highest
offer obtained by the official assignee in pursuance of the sale proclamation was
inadequate and was rejected by the Banking Court, the Court ought to have ordered re-
auction of the property, and by allowing the official assignee to negotiate with the
original bidders and also with Euro-Plus for enhancement of the price the Banking Court
has committed gross illegality. He submitted that at best negotiations could have been
allowed with the bidders who had submitted their bids in conformity with the sale
proclamation. He submitted that the Banking Judge has committed jurisdictional error in
abdicating his authority by permitting the official assignee to sale the property through
negotiations not confining to the, bidder but all ensnares. The learned counsel submitted
that Euro-Plus not only failed to deposit 10% of the bid amount as prescribed by the sale
proclamation but has also failed to deposit the balance 75% of the bid amount as directed
by the Court and also mandated by Rule 85 of Order XXI, C.P.C., thereby nullifying the
entire transaction, and thus it was imperative for the Court to have ordered re-auction of
the property as mandated by Rule 86 of Order XXI, C.P.C. Mr. Ehsan contended that
even otherwise, the Court should not have accepted the offer and ought to have provided
an opportunity to the judgment-debtor to resolve the issues pertaining to settlement of its
debts with the decree-holder and other banks under the State Bank, BPD Circular No.29,
as the Judgment-debtor has applied to the banks, within the prescribed time and not only
the matter was pending before the State Bank Committee constituted under the said
scheme/circular for resolution of cases pertaining thereto, but the judgment-debtor
company fully meats the eligibility criteria for availing the incentives under the said
circular. He further contended that it is now well-settled that State Bank of Pakistan, BCD
Circular 29, has a statutory force and the judgment-debtor company having been declared
eligible to avail the same and having applied thereunder within the prescribed time, the
mandate as contained in the circular ought to have been honoured in favour of the
judgment-debtor company, the Company having acquired a legal and vested right for
settlement of its liabilities in terms of the circular. In support of his contention the learned
counsel relied on the judgments in the following cases:-
Messrs SPRL Rehman Brothers v. Banking Court No.II Lahore 2000 MLD 1957,
whereby a learned Single Judge of the Lahore High Court proceeded to set aside
the sale conducted and confirmed by a Banking Court, even after issuance of sale
certificate to the auction-purchaser, on the ground that the auction was conducted
in a hasty manner and without following the legal requirement in letter and spirit.
It was observed that property of more than crores was sold away for an amount of
Page No. 8 of 20
Rs.40 Lacs and that the auction-purchaser did not deposit 1/4th of the bid money
at the spot as required under the law and that even the auction proceedings as well
as " auction report submitted by the Court's auctioneer did not inspire confidence.
In the case of Messrs Naqi Chemical Industries (Pvt.) Ltd. v. Habib Bank Limited 2003
CLD 571 a Division Bench of the Lahore High Court proceeded to .set aside the sale
conducted by a Banking Court, as being violative of the mandatory provision of Order
XXI C.P.C. as the auction was not conducted by the Court auctioneer at site and on the
prescribed date. It was held- that in terms of Rule 69 of Order XXI, C.P.C. the date of
auction fixed by the Court can either be adjourned by the Court or the Court auctioneer
conducting the sale and then the Court auctioneer can only adjourn the sale when he is
physically present at the site. It was further held that the failure of auction-purchaser to
deposit 3/4th of the amount within 15 days as per terms and conditions of sale and the
extension of time in that regard by the Banking Court, without giving notice to the
judgment-debtor, by completely ignoring the mandatory provision of Order XXI, rule 68,
C.P.C., was absolutely illegal and without jurisdiction, as extension of time under section
148, C.P.C. can only be granted by the Court where such time had been fixed by the
Court itself but when time for doing an act had been determined and fixed by law the
Court had no power or authority to extend such time and that Order XXI, rule 85, C.P.C.,
compliance whereof is mandatory` provides that full payment of the auction price by the
purchaser shall be made before the close of 15th day from the sale of the property such
being a mandate of law Court had no jurisdiction to enlarge the time. It was further held
that the rule that no one shall be prejudiced on account of an act of Court would only be
applicable in the cases where Court had authority to pass the order but the order was
erroneous. However, where the Court lacked the authority to extend the time beyond such
limit as prescribed by Rule 85, notwithstanding such extension by the Court, a party
cannot put a premium on a void order.
In the case of Muhammad Hassan v. Messrs Muslim Commercial Bank Ltd. 2003 CLD
1693 a Division Bench of the Lahore High Court held that a Court cannot delegate the
powers to settle the terms and conditions of sale and to draw the sale proclamation to an
officer appointed by it for conducting the sale and that the settlement and drawing of sale
proclamation should be done after notice to the judgment debtor. It was further held that
the notice to sale without disclosing the accurate and adequate description of property
was materially irregular. With regard to the mode of execution of a decree it was held that
under section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 the
Banking Court has power to execute a decree in any manner as the Banking Court
considers fit but such power can be exercised where there is a request by the decree-
holder and the Court by application of conscious mind comes to the conclusion that the
decree cannot be executed by applying general rules as provided in the C.P.C., and further
where there was no speaking order passed in terms of section 19 of the above Ordinance
and the Court issued notice to the judgment-debtor under Order XXI, Rule 66, C.P.C.
then it would be deemed that the Court had intended to execute the decree according to
the provisions of Civil Procedure Code rather than under special law.
In the case of Hydaybia Textile Mills Ltd. v. Allied Bank of Pakistan Ltd. PLD 1987 SC
512 the Honourable Supreme Court held, that the Banking Court in the matter of judicial
sale, is vested with vide discretion to choose any mode of execution of the decree, it
cannot however, refuse confirmation of sale on any ground which it chooses. It was
further held that once a Court had made up its mind to execute a decree by attachment
and sale by public auction, as long as the order so directing is in the field, the discretion
vested in it under section 8(3) of the Ordinance stood exhausted and a particular course of
proceedings was brought into motion which had to culminate in a result contemplated by
legal principles, and this course could not be diverted on the assumption that the
executing Court had discretion to choose any mode of execution. In the premises the
question of confirmation was to be regulated either by Civil Procedure Code or equitable
principles under the provisions thereof or on general principles. With regard to the judicial
discretion it was held that such discretion vested by statutory provision cannot be construed
in such a manner as it will arm the Court with arbitrary powers and would inevitably
destroy the public confidence in the stability in the judicial arrangements. Similar view was
expressed by a Division Bench of the Lahore High Court in the case of Ch. Abdul Majeed v.
Sadaqat Seed Malik 2002 CLD 463, where sale had been confirmed and sale certificate had
been ordered to be issued, in the following words: "Once the Banking Court had opted to
Page No. 9 of 20
execute decree in the manner prescribed in Civil Procedure Code, 1908 more particularly in
accordance with the provisions of Order XXI, C.P.C. thereof the discretion vested in the
Banking Court by virtue of section 8(3) of the Banking Companies (Recovery of Loans)
Ordinance, 1979 to adopt any mode or procedure for execution of ,its decree stood
exhausted.
In the case of Messrs Shandia Saleem and another v. Habib Credit and Exchange Limited
and 4 others 2001 CLC 126, where no reserve price of the property .was fixed and the same
was auctioned at much lower price without issuing the requisite notice to the judgment-
debtor it was held that the provisions of Order XXI, rule 66, C.P.C. were violated. The
property was sold at throw away price without making serious efforts to sale the same at
the prevailing market price and the auction proceedings were set aside with the direction to
re-auction the mortgaged property strictly under the rules.
In the case of Brig. (Retd.) Maqbool Haq v. Messrs Muslim Commercial Bank Ltd. PLD
1993 Lahore 706. A Division Bench of the Lahore High Court proceeded to set aside an ex
parte decree and orders passed in the execution of such decree, including sale of
immovable property, and confirmation of such sale, as having been effected through fraud
and misrepresentation. The decree was set aside on the ground that the same was obtained
by the plaintiff-Bank by suppressing the correct address of the defendants, whereas the
execution proceedings were declared a nullity, inter alia for the reasons that no preliminary
decree as required by Order XXXIV, Rule 2, G.P.C., was passed by the Court and it instead
treated the impugned decree as a final decree and the defendant was thus deprived the
opportunity to pay of the decretal amount and to avoid the Court sale. In addition to the
foregoing the Court auctioneer, instead of auctioning the immovable property of the
defendant/Judgment-debtor as was directed by the Court, auctioned a very valuable
commercial property situated in the heart of the capital city, at a throwaway price, and
such sale was affected without any notice to the defendant/Judgment-debtor. It was in the
above background, that the Court held that it is the duty of the executing Court to conduct
the auction in accordance with law which had not been done. It was further held that in
case of conflict between the provisions of Civil Procedure Code 1908 and the Banking
Companies (Recovery of Loans) Ordinance, 1984 the latter would prevail and that where
the Special Banking Court chooses to adopt provisions of Civil Procedure Code 1908 for
sale of immovable property in execution of a decree, correctness of orders passed by such
Court in conducting sale of the property in question would have to be necessarily
adjudged on the touchstone of the Civil Procedure Code, 1908 and that the Special
Banking Court could not pick and choose the provisions of Civil Procedure Code, 1908
and that where gross violation of provisions of Civil Procedure Code, 1908 was identified
by the aggrieved party the Special Banking Court could not take refuge in the provisions
of Banking Companies (Recovery of Loans) Ordinance, 1984, to say that it was not
bound to follow provisions of C.P.C. It was further held that non-compliance with the
provisions of Order XXI, rules, 66, 67 and 68, C.P.C. would render the sale a nullity and
that 3/4th of the sale price should have been deposited by the auction-purchaser in Court
within 15 days of sale and that non-deposit of such amount within the requisite time
would render sale void.
Messrs Abdul Hafeez Pirzada and Afzal Siddiqui, Counsel for the Messrs Chawla
International submitted that since their client was the highest bidder in the auction held in
pursuance of the proclamation of sale, they, therefore, had legitimate expectation of the
acceptance of their bid by the Court, which has been denied to them illegally in violation
of law. They submitted that even in the second round, in deference to the Court direction,
Messrs Chawla increased their bid and were again the highest bidders amongst the
bidders in the auction, therefore, their legitimate expectation were reinforced for
acceptance of their bid. The learned' counsel submitted that the order accepting Euro's bid
by the Court was violative of the mandatory requirements of rules 65, 66 and 67 as well
as rules 84 and 85 of Order XXI, C.P.C. The learned counsel submitted that rule 65
contemplates that, unless otherwise prescribed, every sale made in execution of a decree
is to be made through public auction. They submitted that admittedly, the procedure of
sale by way of public auction had commenced when sealed bids were invited and
thereafter the Court or the official assignee could not resort to the method of sale through
the private negotiation and even in case the Court was not satisfied with the offer received,
it ought to have ordered re-auction and if at all, negotiation could only be held with the
original bidders and not through inviting fresh offers. They contended that non-disclosure of
Page No. 10 of 20
reserved price in the sale proclamation is violative of Rule 66 of Order XXI, C.P.C. and
such illegality by itself vitiates the sale. It was contended that failure of Euro Plus to
deposit 25 per cent of the sale price immediately upon acceptance of their offer and the
balance 75 per cent within fifteen days thereafter rendered the sale void. Mr. Pirzada further
contended that once the Banking Court has decided to follow the method provided by Civil
Procedure Code in the execution proceedings it could not pick and choose certain
provisions and ignore the other. In support of his arguments, learned counsel placed
reliance upon a Division Bench judgment of the Lahore High Court in Brigadier (Retd.)
Mazharul Haq and others v. Muslim Commercial Bank Ltd. (supra). He referred to Rule 85
and in support of his contentions that the failure of Euro Plus to deposit 25 per cent of the
sale consideration immediately upon acceptance of the bid and subsequent failure to
deposit the remaining amount within fifteen days of such acceptance completely vitiated
the purported sale, relied upon the judgments in the cases of National Bank of Pakistan v.
Nasir Industries (supra), Sayed Brothers v. District Council Lyallpur (supra) and Manilal
Mohanlal Sha v. Sardar Sayed Ahmed (supra).
On the other hand Mr. Adam Bin Jaffri, learned counsel for the auction-purchaser, Messrs
Euro-Plus (Mons Belgium) submitted that neither the proclamation, issued by the Court,
nor the sale was made under the Civil Procedure Code and therefore, reliance of Mr. Aitzaz
Ahsan on the various provisions of C.P.C. is wholly irrelevant and inconsequential. He
submitted that in the first place none compliance of the various Rule including Rule 66 of
Order XXI, C.P.C., per se does not vitiate a sale and moreso in case of a Banking Court's
decree secondly, absolutely no prejudice has been caused to the judgment-debtor on
account of non-disclosure of the reserved price in the sale proclamation as the bid submitted
by the Messrs Euro-Plus is more than the forced sale value of the property in question, as
its, forced sale value as determined by an evaluators approved by the State Bank of
Pakistan, in October 2002 was Rs.6,060,457, 88 and BPRD Circular No.9 issued by the
State Bank of Pakistan, specifying prudential regulations/ guidelines for banks and NBIs,
stipulates that where a sick mill remained closed for more than one year after its valuation,
the forced sale value shall be reduced by 50 per cent whereas the judgment-debtor's Mill
has remained closed since last about seven years and thus its forced sale value comes to
Rs.303 million only. The learned counsel further submitted that although in terms of
C.P.C. and the provisions of Financial Institutions (Recovery of Finances) Ordinance,
2001, no notice of the execution application was required to be served on the judgment-
debtor and moreso for the reason that the execution applications have been filed within
one year from the passing of the decrees, however, all efforts were made by the Banking
Court to have the judgment-debtors served and they were ultimately served through
publication in the Daily Dawn on 14th April, 2000 and appearance was entered on their
behalf by Mr. Nadeem Asghar Siddiqui, Advocate on 6-5-2002, i.e. two days before the
date when official assignee was appointed by this Court to sell the judgment-debtor
company's Sugar Mill and about more than two and a half months before the official
assignee caused the sale proclamation to be published in the newspapers on 26-7-2002
but the judgment-debtor neither submitted their valuation or the terms of sale, nor
objected to the contents of the proclamation or the manner and mode of the sale
conducted by the official assignee, any time before filing objections to the reference
dated 15-10-2002, whereby the official assignee submitted the ultimate offer of Euro-Plus
and Indus Sugar Mills for approval, before the Court and it was despite the fact that the
order dated 23-9-2002, whereby the learned Banking Judge authorized the official
assignee to negotiate with Messrs Chawla International and Messrs Indus Sugar Mills
Ltd. or with any other party interested in buying the property, was passed in presence of
Mr. Abid Zuberi Advocate who was then appearing for the judgment-debtors. He also
referred to the order dated 25-10-2002 whereby the learned Banking Judge allowed the
judgment-debtor to bring a better offer for the purchase of the property and submitted that
even a Division Bench of this Court, while hearing the appeals filed by the judgment-
debtor and Messrs Indus Sugar Mills Ltd. provided an opportunity to the judgment-debtor
even to match the offer of Messrs Euro Plus but the judgment-debtor showed their
inability to do so. He submitted that the price of Rs.46 Crores offered by Euro-Plus and
accepted by the Banking Court was achieved/obtained by the official assignee after
vigorous and relentless efforts, as initially the highest offer received by the official
assignee in pursuance of the proclamation was merely in the sum of Rs.17.50 Crores. Mr.
Jafri submitted that the judgment-debtors having acquiesced with the impugned
proceedings/exercise and having failed even to match the price offered by Euro-Plus are
now estopped from raising any objections to the acceptance of such offer. He contended
Page No. 11 of 20
that in terms of the Banking Law, the Banking Court, in the interest of the parties and in
order to obtain the maximum price of the assets being sold, can adopt any procedure and
the law does not require the Court' to adhere to various Rules prescribed under Order
XXI, C.P.C. With regard to the deposit of the bid amount, Mr. Jafri submitted that along
with their bid, submitted on 21-9-2002, Euro-Plus, deposited a sum of 52,725 Euros
equivalent to Pak Rupees 30,58,050 and on 25-9-2002 deposited a further amount of
4,75,170 Euros equivalent to Pak Rupees 27, 559, 860 and in compliance of the order
dated 6-11-2002, whereby the Court accepted Euro's bid of Rs.46 Crores, and directed it
to deposit 25% of the total bid amount within one week of the date of the said order and
the balance amount within fifteen days of the order, it deposited an amount of Rs.
10,80,00,000 on 12-11-2002 and insofar as the question of deposit of the balance amount
is concerned the same could not be deposited because of order dated 15-11.2005, passed
on H.C.A. No.284 of.2002, whereby a Division Bench of this Court restrained the
Official Assignee from proceeding any further in the matter, which order remained in
force upto 29-11-2002, on which date the Division Bench dismissed the above High
Court Appeal, but on the request of the judgment-debtor ordered status quo in the matter
for one week, as the judgment-debtors proposed to approach the Honourable Supreme
Court and by order dated 4-12-2002, passed in the petitions, filed by the judgment-debtor
and on behalf of Indus Sugar Mills, the Honourable Supreme Court directed the Official
Assignee to maintain status quo in the matter, which order continued upto 9-9-2004, on
which date the Honourable Supreme Court was pleased to remand the matter to this Court
for hearing the objection/contention of the parties, and as such, according to Mr. Adam
Jafri there has been no default on the part of Euro. Mr. Adam Jafri strongly controverted
the assertion of Mr. Aitzaz Ahsan that the judgment-debtor is eligible to avail the
incentive scheme under State Bank, BPD Circular 29, and/or that they, ought to have
been allowed to avail the same. He contended that the Scheme had expired long back,
even otherwise, the said Circular/Scheme is not applicable to CIRC, who have taken over
the non-performing assets of the Decree-holder Bank in Execution No.42 of 2002 and the
incentive scheme launched by CIRC also expired on 30-6-2003. The learned counsel in
support of his contentions relied on judgment in the following cases.
In the case of Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. and another 1981
SCMR 108 the Honourable Supreme Court held as follows:-
"9. In the light of these observations the High Court was correct in holding that
the petitioner had failed to prove substantial loss in case there was violation in the
publication of the proclamation such as the failure to publicise it by the beat of the
drum and the other irregularities, if at all they were committed.
10. The learned counsel next contended that there was no order of the Court for
inviting private offers for sale but this contention looses sight of the fact that the
Court, by accepting the reference of the Nazir had given its tacit consent to it,
which eminently reflects that the mode of public auction had become
impracticable and, therefore, in the ends of justice this was the only course open
for the sale of the property in execution of the decree. The objection thus being
technical has no substance. Further, if the petitioner had any objection to this
mode of sale then she should have objected to it, but having remained absent she
must he deemed to have waived her right to do so.
11. The learned counsel vehemently urged that the property could not be sold
otherwise than by auction. For this proposition, he placed reliance on rule 65,
Order XXI, C.P.C. and rule 351 of the Chief Court Rules (Original Side). These
provisions do prescribe the mode of disposal by public auction but neither of them
expressly or by necessary implication prohibit any other mode of disposal.
Therefore, if the Court had deviated from this mode of disposal to serve the ends
of justice, no exception can be taken to it. In Narsing Das v. Mangal Dnbey
(1883) 5 All, 163 Mahmood, J. observed:---
"Courts are not to act upon the principle that every procedure is to be taken as
prohibited unless it is expressly provided for by the Code but on the converse
principle that every procedure is to be understood as permissible till it is shown to
be prohibited by the law. As a matter of general principle prohibition cannot be
presumed."
Page No. 12 of 20
12. This principle is now well accepted and as the prime object of the procedural
law is to advance the cause of justice, the Court can, under its inherent power,
adopt a different mode in the absence of any prohibition to that effect. This
contention is also without substance."
In the case of Ghulam Abbas v. Zuhra Bibi and another PLD 1972 SC 337, the Honourable
Supreme Court held as follows:--
"No doubt, this gives the judgment-debtor a valuable right, but there is no evidence
at all to show that the judgment-debtor in the present case, ever tendered any
amount to the officer conducting the sale, or paid any amount into the Court which
ordered the sale, or asked for the postponement of the sale for this purpose. This
complaint of the violation of his right could have been lodged, if it was genuine, at
the time of the auction but this was not done even when the appellant on the first
postponement of the sale waived the issuance of a fresh proclamation. He must
have been aware of its contents then. Before a violation of a right can be alleged it
must be shown that the right was asserted and denied. To assert this right, at least,
the amount which the judgment-debtor considered to be the correct amount, should
have been tendered to the officer conducting the sale. This was never done, nor is
there any evidence on the record to show that the judgment-debtor was ever in a
position to procure this amount. No violation of the right has, therefore, taken place,
about which any legitimate complaint can be made at this stage. This is clearly an
afterthought.
In the case of Captain-PQ Chemical Industries (Pvt.) Ltd. v. Messrs A.W. Brothers and
others 2004 SCMR 1956 it was held as under:--
"There is no cavil with the proposition that auction proceedings should be

transparent and every possible effort be made to fetch the maxim price closer to
market value. The prime object of inviting tender is to provide equal opportunity to
all the prospective bidders which was never frustrated by accepting the highest bid.
It is worth-mentioning here at this juncture that the offer was also given to the
petitioner by the Court concerned to purchase the property in question by giving a
matching offer, which was, not responded. The learned Advocate Supreme Court on
behalf of petitioner was asked pointedly as to whether he was prepared to purchase
the properties "A" and "B" in equivalent amount paid by the respondents but the
offer was not accepted for the reason that it was beyond their financial
competency. The petitioner was only interested to purchase the property and
shown inclination to do so but the bifurcation of property "B" from, "A" would
cause serious prejudice against the respondents by whom an amount of Rs.36
Crore was paid and would have also detrimental effect on the interest of
judgment-debtor and the question of satisfaction of decree would have not arisen.
It cannot be done at this stage merely for the reason that a bid was floated by the
petitioner. As mentioned hereinabove by floating of bid no legal right whatsoever
accrued in favour of petitioner. The Court in such-like eventualities is required to
safeguard preliminarily the interest of judgment-debtor and further to see that
auction proceedings have been conducted in a fair and transparent manner and no
bar whatsoever has been imposed on the Court if some beneficial devices evolved
to get maximum price and to achieve the said purpose. The Court may make any
amendment, deletion, insertion or change in the advertisement qua auction."
In the case of S.A. Sundararajan v. A.P.V. Rajendran 1982 PSC 1293, the Honourable
Supreme Court of India held that the requirements which were not complied with in the
case when settling the sale proclamation were intended for the benefit of the appellant
and could be waived by him. They were not matters which went to the root of the Court's
jurisdiction nor constituted the foundation or authority for the proceeding nor involved
public interest. Clearly, they were mere irregularities and cannot be described as errors
which render the sale void.
In the case of Messrs United Bank Ltd. Karachi v. Mst. Asma Zafarul Hassan 1980 CLC
565, it was held that in a fit case the Court is competent under its inherent powers to
accept a private offer after due notice to parties when satisfied as to offer being
Page No. 13 of 20
reasonable and that the Court is competent to take all steps to execute its own mandate
and orders and such powers flows from its jurisdiction. It was further held that the Court
is not competent to set aside a sale under Order XXI, rule 92, on the ground of
inadequacy of sale price.
In the case of Rasheed Ehsan and others v. Bashir
Ahmed and another PLD 1989 SC 146, where it was held:
"-Maxim: "Actus Curiae neminem gravabit" (an act of the Court shall prejudice
no man)---Failure of Court to specify in its auction notices period within which
balance of the sale price had to be paid-non-compliance of provisions of O.XXI,
R.85 by the party will attract the principle that an act of Court shall prejudice no
man.
Thus, where a non-compliance with the mandatory provisions of a law occurs by

complying with the direction of the Court, which is not in conformity with the
law, the party complying therewith is not to be penalized. Indeed the law becomes
flexible to absorb such abnormalities and treat the infractions as harmless. Where
the directions issued while administering the law have been followed, but it is
found that the authority itself had acted in deviation of the law in some
particulars, the party acting in accordance with such directions is not held to be
blame worthy."
Mr. A.I. Chundrigar, learned counsel appearing for CIRC submitted that the judgment-
debtor cannot seeks settlement of its liabilities towards CIRC under the State Bank
Circular 29 as the same has been issued in respect of banks and non banking financial
institutions and does not relate to CIRC which even otherwise, not being a Banking
Company, does not fall under the Regulatory domain of the State Bank of Pakistan. He
further submitted that the incentive scheme launched by CIRC which provided a one time
opportunity for amicable settlement of non-performing assets in line with SBP, BPD
Circular 29 dated 15-10-2002 has expired on 30-6-2003 and as such the
concessions/incentive as provided thereunder are no more available to the judgment
debtors.
He submitted that in terms of para-12 of BPD Circular 29 the borrower has to make at
least 10 per cent cash down payment and the remaining amount may be paid in
instalments on quarterly basis within a maximum period of three years whereas under
section 35 of the CIRC Ordinance, 2000 the corporation shall have the life of six years
from the date of commencement of the said Ordinance which may be extended further by
the Federal Government by law. The corporation may be wound up by the order of the
Federal Government in such manner as it may direct or under the orders of the competent
Court. The learned counsel submits that in view of section 35 CIRC has only one year left
out of six years of its life as prescribed by law and it is not possible to grant three years to
the judgment-debtor to pay is debts. The learned counsel in support of his contention that
BPD Circular 29 is not applicable to CIRC has relied on an unreported order of the
Lahore High Court passed in UBL v. Zahid Hamid Chaudhry in Execution No.7-B of
2003.
On the other hand in a judgment passed by a learned Single Judge of this Court in the
case of Tanya Knitwear (Pvt.) Ltd. v. UBL and another' 2005 CLD 114 and relied upon
by Mr. Aitzaz Ahsan, it was held as follows:--
"The contention of Mr. Rizwan Ahmed Siddiqui that the State Bank Circulars are
not applicable to the defendant, in view of the provisions of section 19 of the
CIRC Ordinance, has no merit as the same have been specifically made applicable
by virtue of section 10(1) and other provisions of the Ordinance. The law is to be
interpreted harmoniously. Section 19 is not an isolated section it is incorporated in
the CIRC Ordinance which is to be read in conjunction with the other sections in
a manner that the other provisions are not rendered redundant or ineffective. The
conclusion is that while the CIRC may not act as Banking Company for carrying
on its business, the provisions applicable to the borrowers from the respective
banks continue to remain in force. The language of the statute being plain and
Page No. 14 of 20
unambiguous and dealing with the assets in the specified manner has to be
interpreted in a manner so as to give effect to section 19 as well as other sections
of the statute including section 10(1) of the Ordinance as held in the case of
Muhammad Haroon v. The Crown PLD 1951 FC 118 and Inspector-General of
Police v. Mushtaq Ahmed Warriach PLD 1985 SC 159.
It is manifestly clear that the CIRC has invited for settlement against the non-
performing assets in the line with State Bank of Pakistan Circular No.29 dated 15-
10-2002. Once the policy is announced and this fact is advertised through public
notice all subsequent matters have to be dealt inline with the circular. The
question of pick and choose does not arise with regard to the respective clauses of
the circular is to be applied in its entirety. Mr. Rizwan Ahmed Siddiqui on being
pointed out candidly conceded to this position. He pointed out that the only
controversy that now remains to be thrashed out is the entitlement of plaintiff to
avail the benefit under the scheme of CIRC and the reference to valuer. This
brings the matter to the second point as to the appointment of the valuer. In view
of the above discussion this matter does not call for any further examination. It
has also been admitted that there are valuers on the panel of CIRC who are also
listed on the panel of vlauers maintained by Pakistan Banks Association (PBA).
BPD Circular No.29 specifically provides for the manner of selection of vlauers.
Accordingly for the aforesaid' reasons order dated 17-9-2003 is modified to this
extent.
It was further held that:--
"The time for approaching and availing benefit under the "CIRC Settlement
Scheme" has already expired, however, such controversy is not attached in the
present matter as the plaintiff has taken the steps necessary to avail the benefit
under Circular No.29 within time prior to expiry of the date for availing such
facility. The plaintiff has shown his bona fide intention by placing sufficient
matter on record and by depositing 10% amount with the Nazir of this Court. The
scheme framed by the CIRC specifically refers to action in line with the said
Circular No.29. This being the position the case of the delay is not attributable to
the plaintiff who is to be dealt with in similar manner and in accordance with the
same guidelines whether the application is made to the bank or CIRC both parties
to the present suit. For these reasons the plaintiff cannot be deprived of the benefit
under the Scheme framed by CIRC."
I have heard the learned counsel extensively, and have given anxious consideration to
their arguments. With regard to the contention of the counsel for the judgment-debtor
company and Messrs Chawla International that the publication and conduct of the
impugned sale was violative of the mandate of rules 65, 66 and 67 of Order XXI, C.P.C.,
as reserved price was not mentioned in the sale proclamation 'and the Banking Court
having rejected the earlier bids as being inadequate, ought to have ordered re-auction, and
by not doing so, and-:-instead, allowing the Official Assignee to negotiate, enhancement
of the bid amount not only with the original bidders but also with any party who may be
interested in purchasing the Mills, has not only violated the mandate of law but has
committed a jurisdictional error by abdicating its authority to the Official Assignee. It is
crucial to note that, although the judgment-debtors were duly served before the
appointment of Official Assignee as Commissioner to sell the property, and appearance
had been entered on behalf of the judgment-debtor company, before passing of such
order, neither the company submitted valuation of its assets nor it objected to non-
disclosure of reserved price of its Mills in the sale proclamation. It was at least on two
occasions that the Court rejected the offers made by various bidders and directed the
Official Assignee to seek improvement in the bid amounts, but no objection was then
raised by the judgment-debtors, or by Messrs Chawla. They also did not object to the
order dated 23-9-2002 whereby the Official Assignee was directed to negotiate the sale of
the property with Messrs Chawla International and Indus Sugar Mills or any other party
interested in buying the property, although the order was passed in presence of the
learned counsel for the judgment-debtor company and Messrs Chawla International.
Similarly, Messrs Chawla International has not only submitted its bid in response to the
sale proclamation in question without any reservation and/or raising any objection with
regard to the sale proclamation or otherwise but also participated in the meetings held by
Page No. 15 of 20
the Official Assignee on 2-9-2002, 5 9-2002, 7-9-2002 and 10-9-2002 and enhanced their
bid of Rs.17.50 Crores to Rs.25.30, Crores. Messrs Chawla International in pursuance of
the order dated 23-9-2002 again participated in the meeting held by the Official Assignee
for enhancement of the offers. They however, failed to enhance their offer and it was only
on 14-10-2002 that the counsel for Messrs Chawla International, for the first time
objected to the offer made by Messrs Euro-Plus being considered and thus the judgment-
debtor company and Messrs Chawla International having acquiesced to the proceedings
conducted and exercise undertaken in relation to the sale of the property are estopped
from raising any objection to that extent. Furthermore, absolutely no prejudice has been
caused to the judgment-debtor company as the sale proclamation under objection,
contained adequate description and particulars regarding the property and as a result of
the various orders passed by the Court and efforts made by the official Assignee by
holding negotiation with the original bidders and the .subsequent entrant including
Messrs Euro Plus. The offer for the purchase of the property has been enhanced from
Rs.17.50 Crores, offered by Messrs Chawla International to Rs.46 Crores, ultimately
offered by Messrs Euro-Plus, and accepted by the Court. The offer of Messrs Euro-Plus,
was accepted by the Court only after Messrs Chawla International failed to match the
same, they rather legged far behind and the judgment-debtor company despite, being
allowed by the Court, through order dated 25-10-2002, to bring a better offer failed to do
so. They even failed to match the bid/offer of Messrs Euro-Plus, when so allowed by a
Division Bench of this Court, while hearing their appeal against the acceptance of Euro's
bid/offer and therefore, it does not lie in their mouth to say that the Mill has been sold at
an inadequate price. Even otherwise, it is now well-settled that the inadequacy of price,
per se is no ground for setting aside a sale.
In the case of Mst. Asma Zafarul Hassan (supra), the Honourable Supreme Court while
dealing with the objection that the property could not be sold otherwise' than by auction
as prescribed by rule 65 of Order XXI, C.P.C. and Rule 351 of the Chief Court Rules
(O.S), held that these provisions do prescribe the mode of disposal by public auction but
neither of them expressly or by necessary implication prohibit any other mode of
disposal. Therefore, if the Court had deviated from this mode of disposal to serve the
ends of justice, no exception can be taken to it. It was further held that the Court is
competent, under its inherent powers, to accept after due notice to party, when satisfied as
to offer being reasonable and that the Court is competent to take all steps to execute its
own mandate and orders.
In the case of Captain-PQ Chemical Industries (supra) our Honourable Supreme Court
held that by floating of bid no legal right whatsoever accrued in favour of petitioner. The
Court in such like eventualities is required to safeguard preliminarily the interest of
judgment-debtor and further to see that auction proceedings have been conducted in a
'fair and transparent manner and no bar whatsoever has been imposed on the Court if
some beneficial devices evolved to get maximum price and to achieve the said purpose.
The Court may make any amendment, deletion, insertion or change in the advertisement
qua auction.
In the case of S.A. Sundararajan (supra), the Honourable Supreme Court of India has held
that the requirements which were not complied with in the case when settling the sale
proclamation were intended for the benefit of the appellant and could be waived by him.
They were not matters which went to the root of the Court's jurisdiction nor constituted
the foundation or authority for the proceeding nor involved public interest. Clearly, they
were mere irregularities and cannot be described as errors which render the sale void.
Whereas the judgments relied upon by Mr. Aitzaz Ahsan and Messrs Abdul Hafeez
Pirzada and Afzal Siddiqui have been passed in the circumstances which were clearly
distinguishable from the facts of the present case and more importantly the Supreme
Court judgments referred above were not noticed in the said judgment and are therefore,
of no avail to the judgment-debtor company or Messrs Chawla International in this case.
In view of the foregoing and following the principle laid down by the Honourable
Supreme Court, I do not find any force in the above noted objections raised on behalf of
the judgment-debtor company and Messrs Chawla International.
Page No. 16 of 20
Having rejected, the objections based on rules 65, 66 and 67 of Order XXI, C.P.C. 1 shall
now deal with the question of violation of Rules 84 and 85 of Order XXI, C.P.C. It was
contended that Messrs Euro-Plus having failed to deposit 10% of their bid of Rs.30
Crores, along with their bid submitted on 21-9-2002, as required in terms of the sale
proclamation, and having further failed to deposit 25% of the sale price immediately
upon acceptance of their offer and the remaining 75% within 15 days. Thereafter, Euro's
offer has been rendered a nullity. Insofar as the question of deposit of the 10% of the bid
amount along with the bid is concerned, it is true that instead of depositing such amount
Messrs Euro-Plus had only deposited a sum of Euro's 52725, equivalent to Pak
Rs.3058050, which come to only 10% of their bid amount of Rs.30 Crores. They have
however, on 25-9-2002 deposited a further amount of Euro's 4,75,170, equivalent to Pak
Rs.27,55,98,60 on 25-9-2002, and by order dated 6-11-2002 the Court while accepting
their bid of Rs.46 Crores, directed them to deposit 25% of the total bid within one week
and the balance within 15 days from date of the order. The order was partly complied by
Euro-Plus by depositing a sum of Rs.108S000,000 on 12-11-2002, which is slightly
above 25% of the bid amount. However Euro-Plus failed to deposit the balance amount.
The earlier two deposits made by Euro-Plus on 21-9-2002 and 25-9-2002 in the sum of
equivalent to Pak Rs.30,58050 and Rs.27559860, having been accepted by the Court
while accepting/approving their offer and Euro-plus having deposited a further amount of
Rs.10,80,00,000 on 12-11-2002 i.e. within the time prescribed by the Court, they cannot
now be penalized for the violation of the mandate of Rule 84, as they have faithfully
complied with the Court's order, and as laid down by the Honourable Supreme Court in
the case of Rasheed Ehsan (supra), the Maxim: "Actus Curiae neminem gravabit", will
came to their rescue.
Regarding the non-deposit of the balance amount within 15 days, from the date their offer
was accepted by the Court, Mr. All Bin Adam Jafri submitted that Europlus would have
deposited he balance amount within the time prescribed by the Court, however, they
could not do so as a Division Bench of this Court, by order dated 15-11-2002, passed in
the appeal filed by the judgment-debtor company, restrained the Official Assignee from
proceedings further in the matter, which order continued up to 29-11-2002, when the
above appeal was dismissed, with a direction to maintain status quo in the matter for one
week, as the judgment-debtor company proposed to approach the Honourable Supreme
Court in the matter, and by order dated 4-12-2002 passed by the Honourable Supreme
Court in the petition filed by the judgment-debtor company, the 1ionourable Supreme
Court directed the Official Assignee to maintain status quo which order continued till the
disposal of the petition by the Honourable Supreme Court on 9-9-2004. However, Mr. Ali
Bin Adam Jafri could not submit any justification for non-deposit of the balance amount
after the disposal of the above petitions on 9-9-2004. Neither did Euro-Plus deposit any
amount after 9-9-2004, nor did they apply for extension of time for depositing the
amount, although the judgment-debtor company and Messrs Chawla International have
throughout been raising objections regarding Euro's non-compliance of the mandate of
Rules 84 and 85.
It is now well-settled that the provisions with regard to the payment of 75% of balance
purchase money contained in rule 85 is mandatory and not merely directory and that non-
compliance of such provisions renders the sale void and in such circumstances the Court
is under obligation to re-sale the property in terms of Rule 86.
In the case of Feroze Din Faiz v. Chaman Lal and others PLD 1953 Lahore 83, it was
held that the sale in execution of a decree does not require to be set aside if the purchaser
fails to pay the full amount of purchase-money within fifteen days. It is void and the
Court is required to re-sell the property. The only option which the Court can exercise
relates to the forfeiture of the one-fourth deposit and that Rule 86 does not say that there
should be an application for a re-sale. If the execution is pending, it is the duty of the
Court to hold another sale.
In the National Bank of Pakistan v. Messrs Nasir Industries, Karachi and others 1982
CLC 388 Karachi, it was held that provision with regard to payment of 75% of balance
purchase money contained in R.85 is mandatory and not merely directory. That non-
compliance of such provision renders. the sale void and further that the Court is under
obligation in such circumstances to order resale of property in terms of R.86: Non-
payment of balance of purchase money is not an irregularity in connection with
Page No. 17 of 20
publishing and conducting of the sale so as to attract provisions of R.90 and Court is
itself bound to order for resale and is not empowered under section 148 or 151 of Civil
Procedure Code, 1908 to extend time fixed under rules for payment of balance of sale
price.
In the case of Sayed Brothers, Lahore v. District Council, Lyallpur and another PLD 1977
Lahore 542, it was held that provisions of Rules 85 and 86 a e mandatory and waiver of
such provisions is possible only when decree-holder and judgment-debtor both agreed to
extension of time and that waiver in such case amounts to agreeing to old sale being
treated as a new sale.
It was further held that Order passed by Court without notice to judgment-debtor and
decree-holder, without giving them opportunity of being heard and contrary to provisions
of rules 85 and 86 cannot bind judgment-debtor and decree-holder nor can attract
principle that party should not be prejudiced for acts of Court nor can question of waiver
arise in circumstances.
And that, even on supposition that Court could pass order deferring deposit till after
decision of objection petition of another claimant or that auction-purchaser could not be
penalized for action of Court, such order is hit by principle of reasonable time and
auction-purchaser is clearly duty bound to make deposit of purchase money within
reasonable time.
In the case of Balram v. Ilam Singh AIR 1996 SC 2781, it was held as follows:--
"The requirement of rule 85 of Order XXI that full amount of purchase money
must be paid by the purchaser at execution sale within fifteen days from the date
of the sale, is mandatory. Its non-compliance renders the sale proceedings a
complete nullity requiring the executing Court to proceed under rule 86 and
property has to be resold unless the judgment-debtor satisfies the decree by
making the payment before the resale. Failure to deposit purchase money as per
rule 85 is not a mere material irregularity in the sale so as to attract rule 90 of
Order XXI. The consequence of the execution sale becoming nullity on failure to
deposit full sale price as per Rule 85 cannot be averted on plea that the shortfall in
the deposit was occasioned by a mistake of the Court in the calculation of the
amount, of which the purchaser-decree-holder was entitled to claim set off under
rule 72.
In the case of Manilal Mohanlal Sha and others v. Sardar Sayed Ahmed Sayed Mahmad
and another AIR 1954 SC 349, it was held that:
"The provision of Order XXI, rules 84, 85 and 86 requiring the deposit of 25 per
cent of the purchase-money immediately, on the person being declared as a
purchaser, such person not being a decree-holder and the payment of the balance
within fifteen days of the sale, are 'mandatory aria upon non-compliance with
these provisions there is no sale at all. The rules do not contemplate that there can
be any sale in favour of a stranger purchaser without depositing 25 per cent of the
purchase-money in the first instance and the balance within fifteen days. When
there is no sale within the contemplation of these rules, there can be no question
of material irregularity in the conduct of the sale. Non-payment of the price on the
part of the defaulting purchaser renders the sale proceedings as a complete nullity.
The very effect that the Court is bound to resell the property (rule 86) in the event
of a default shows that the previous proceedings for sale are completely wiped
out. As if they do not exist in the eye of law. 16 Cal.33 Overruled; Remark in AIR
1931 Lahore 15, not approved."
The judgment of the Honourable Supreme Court relied by Mr. Jafri in the case of Al-
Hassan Feeds v. United Bank Ltd. and 6 others 2004 CLD 275, is clearly distinguishable
from the facts and circumstances of the present case. In the above cited case leave to
appeal was refused to the judgment-debtor against the order of the executing Court
confirming the sale, as the auction-purchaser, after having initially depositing 25% of the
auction money in Court, had deposited 75% within the time extended by the Court. Such
extension was granted to the auction-purchaser subject to the consideration of the
Page No. 18 of 20
judgment-debtor/petitioners' objections regarding the auction-purchaser's failure to
deposit the amount as directed by the Court earlier, and upon being proposed that if the
petitioner was willing to deposit the decretal amount along with 5% of the auction price
to the auction-purchaser, the decree-holder Bank as well as the auction-purchaser will
have no objection to the auction proceedings being set aside. The judgment-
debtor/petitioner, though agreed to pay such amount, but only failed to do so but within
the time sought by him for the purpose, but neither the judgment-debtor/petitioner nor his
counsel appeared before the Court on the subsequent dates as such the Court dismissed
the objection petition and confirmed the sale. The Honourable Supreme Court held that
the sale was properly confirmed and dismissed the petition.
In view of the above discussion, and the mandatory requirements of rules 85 and 86 of
Order XXI, C.P.C. I have no other choice but to set aside the impugned sale .proceedings.
Now reverting to the question as to whether the judgment debtors are entitled to avail the
incentive scheme launched under State Bank PBD Circular 29, or the CIRC Scheme
launched and announced, by the said corporation through a public notice/advertisement in
the newspaper. The decree-holder in Execution No.88 of 1999, Messrs Habib Bank Ltd.
has not controverted or objected to the judgment-debtor company's claim in that regard.
Habib Bank Ltd. has in fact concurred with the other lender banks for a settlement with
the Judgment-debtor as envisaged in the said circular, The State Bank Committee has also
declared the company to be eligible to avail the incentive scheme. In fact, as would be
evident from the review of the relevant correspondence between the parties in that regard,
CIRC not only invited the judgment-debtor company for a settlement under the incentive
scheme launched by the corporation, but the judgment-debtor's case for such settlement
was under active consideration of the CIRC and CIRC had shown reluctance to such
settlement only on account of pendency of the dispute regarding the acceptance of Euro-
Plus's bid, before the Honourable Supreme Court of Pakistan. I have perused the
correspondence between the judgment-debtor company and CIRC brought on record and
reference to a few letters would be relevant to the present issues.
In pursuance of the incentive scheme launched by CIRC in line with BPD Circular 29,
CIRC, through letter dated 29-5-2003, offered to the judgment-debtor company to avail
the benefits provided thereunder. In response whereof the judgment-debtor company has,
through their counsel, vide letter dated 29-5-2003, expressed their keenness to settle their
liability with CIRC in line with BPD Circular No.29 and requested CIRC to provide to
them a copy for the forced sale valuation carried out by the banks to enable them to avail
the benefits under the scheme. CIRC by letter dated 6-6-2003 scheduled a meeting with
the Managing Director of the respondent-Company on 19-6-2003, and by letter dated 6-
6-2003 the judgment-debtor company communicated its acceptance of the offer made by
CIRC. By letter dated 17-9-2003 National Accountability Bureau in response to a letter
from CIRC, conveyed to the corporation that the bureau has no objection if the judgment-
debtor company settles its liability with the consortium of lender banks under Circular
No.29 or with CIRC under its scheme. CIRC by letter dated 15-8-2003 addressed to the
Chief Executive of Bankers Equity Limited, has expressed its concurrence with the
instance of BEL, that since the controversy regarding the acceptance of Euro's bid is
pending adjudication before the Honourable Supreme Court, the creditors should not
consider any proposal floated by the judgment-debtor company till such time the question
is resolved by the Honourable Supreme Court. Such opinion was expressed by BEL in its
letter dated 11-8-2003 addressed to CIRC.
Similar view was expressed by the Creditor Banks and CIRC in their meeting held on 25-
8-2003, and through their letter dated 9-11-2003, the State Bank Committee for
resolution of cases, declared that the judgment-debtor company meets eligibility criteria
for availing the benefits under the aforesaid circular, but stated that since the case is
pending before the Honourable Supreme Court the committee has decided not to
intervene in the matter so that the law may take its own course.
From the above, it is clear that the judgment-debtor company has promptly responded to
CIRC's offer for settlement in line with the BPD Circular No.29 and the matter was under
L process, however, it was because of the pendency of the petitions filed by the
judgment-debtor company and Messrs Chawla International before the Honourable
Supreme Court that .the CIRC, and the other bankers, including Habib Bank Limited
Page No. 19 of 20
decided not to proceed in the matter any further, till decision of the petition by the
Honourable Supreme Court. Insofar as Habib Bank Limited and other creditors are
concerned, as noted earlier, they have no objection to the judgment-debtor company
settling its liabilities towards them in terms of the circular. CIRC being a statutory
corporation is also bound to honour its scheme and to allow the judgment-debtor
company for settlement in terms thereof, moreso for the reason that it has earlier deferred
the matter till decision of the petitions by the Honourable Supreme Court.
With regard to the contention of Mr. Chundrigar that only less than one year is left before
the corporation would be wound up, it may be noted that, as rightly held by the Lahore
High Court in the aforenoted unreported order passed in Execution No.7-B of 2003, the
expression "remaining amount may be paid in instalments within a maximum period of
three years" contained in para.12 of BPD Circular No.29 clearly shows that the period of
three years is discretionary with the Bank and is not mandatory and even otherwise the
period of three years is the out limit and not a minimum limit and therefore, unless the
life of CIRC is extended as provided by section 35 of the Corporate and Industrial
Restructuring Ordinance, 2000, a settlement can be arrived at between the parties
providing for payment within the time, left with the corporation.
In view of the foregoing discussion, the impugned sale is set aside. The judgment-debtor
company may approach the decree-holder Bank and CIRC for settlement of their
respective dues in ,terms as envisaged in SBP BPD Circular 29 and the CIRC Scheme
and in case such settlement is reached, binding and conclusive agreement(s) shall be
executed between the judgment-debtor company and the decree holders, within fifteen
days, in case either no settlement is reached, or agreement (s) is/are executed, the Official
Assignee shall issue fresh proclamation for the sale of the judgment-debtor, company's
mills, after seeking approval of the proposed proclamation from the Court. The learned
Official Assignee is directed to refund to Messrs Euro-Plus (Mons-Belgium), the amount
it deposited in the above two execution applications.
M.B.A./H-7/K Order accordingly.
Page No. 20 of 20
2006 C L D 242
[Lahore]
Before Nazir Ahmad Siddiqui and Muhammad Nawaz Bhatti, JJ
Messrs NOOR HAYAT INDUSTRIES (PVT) LTD. through Chief Executive---

Appellant
Versus
BANK OF PUNJAB through Manager and 4 others---Respondents
F.A.O. No.167 of 2005, heard on 24th November, 2005.
Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.66, 67, 90, 92 & 93---Execution
of decree---Sale by auction, setting aside of---Return of money deposited by auction-
purchaser---Despite being unsuccessful on two dates, bank was successful in auctioning
the mortgaged property on the third date---Before putting mortgaged property to auction
neither publicity was made nor the reasons were brought on the Court file as to why
auction proceedings on two dates could not be held---Executing Court confirmed the sale
through auction but judgment-debtor filed objection application which was dismissed by
Executing Court---Validity---Such auction was not conducted by bank in accordance with
the settled principles of law, justice and equity, hence confirmation of sale by Executing
Court could not be blessed with sanctity and the same was set aside---Bank was directed
to return the auction price already deposited by him along with 20% of the same or the
due mark-up (whichever was higher)---High Court directed the judgment-debtor to
deposit decretal amount within one month, failing which bank would be at liberty to sell
mortgaged property with or without intervention of Court with reference to S.19 of
Financial Institutions (Recovery of Finances) Ordinance, 2001---Appeal was allowed
accordingly.
Sardar Riaz Karim for Appellant.
Shahid Mumtaz Piracha for Respondent No.1.
Ch. Ehsan Ahmad Sindhu for Respondents Nos.2 and 4.
Maulvi Sultan Alam Ansari for Respondent No.5.
Date of hearing: 24th November, 2005.
JUDGMENT
MUHAMMAD NAWAZ BHATTI, J.-----The Bank of Punjab, Nusrat Road Branch,

Multan Cantt. (hereinafter called respondent No.1/decree-holder) instituted a suit through
its Manager against the appellant and respondents Nos.2 to 4 (Judgment-debtors) for
recovery of Rs.51,42,276.50. and the same was decreed by the learned Judge Banking
Court, Multan, vide judgment and decree dated 21-11-2001. Respondent No.1 sought
permission to sell the mortgaged factory through auction. This prayer was granted by the
learned Judge Banking Court, Multan/Executing Court vide order dated 13-6-2002.
Thereafter said mortgaged property was put to auction on 17-7-2002 but no person
appeared to participate in the auction, therefore, next date for auction was fixed as 9-9-
2002, on which date needful could not be done and next date for auction was fixed as 16-
9-2002 on which date respondent No.5 alone (allegedly participated in the auction) and
offered Rs.32,00,000 for the purchase of the said mortgaged property and the Manager of
the respondent-Bank requested for confirmation of the sale at this price. In the meanwhile
appellant moved an objection petition resisting the confirmation of the said sale but the
learned Judge Banking Court vide its order dated 28-7-2004 dismissed the same and the
auction report with reference to the said sale was confirmed and "the bank was allowed to
conduct the proceedings incidental to the auction of the property".
Page No. 1 of 2
2. This F.A.O. calls in question the aforesaid order.
3. Arguments heard. Record perused.
4. On a Court question as to whether any publicity (in any form) was made for auction of
the said mortgaged property on 16-9-2002, the learned counsel for the respondent-Bank
concedes that no publicity whatsoever was made in this regard. On a further Court
question as to what for the proceedings of auction dated 17-7-2002 and 9-9-2002 were
not brought on the file of the learned executing Court as well as this Court to show that
auction on these two dates could not be held for some cogent reasons/justification,
learned counsel remained unable to respond. We further asked as to whether the same
could be produced even today, learned counsel replied in negative and the said learned
counsel also could not deny that the reserve price for the said mortgaged property was
Rs.40,00,000.
5. For what has been stated above, we are of the view that the alleged auction dated 16-9-
2002 was not conducted by the respondent-Bank in accordance with the settled principles
of law, justice and equity, hence confirmation of the same vide the impugned order of the
learned executing Court/Banking Court cannot be blessed with sanctity and the same is
hereby set aside.
6. We have also noticed that respondent No.5 (Auction-Purchaser of the property in

question) had already deposited Rs.32,00,000 (amount of his bid) in September, 2002. He
claims to have purchased the said property in good faith and he remained deprived of
fruits of the said amount till today and he had repeatedly asked respondent No.1 to return
this amount along with the profit thereon but no response was made by the respondent-
Bank (this position is also acknowledged by the learned counsel for the respondent-
Bank). This being so respondent-Bank does not appear to have acted in a bona fide
manner in the matter in hand, therefore, we direct that respondent No.5/Auction-
purchaser shall be paid back Rs.32,00,000 plus 20% of the same or the due mark-up/
interest thereupon till today (whichever is higher) within one month from today. The
appellant/judgment-debtors are also directed to deposit the decretal amount in the context
of the decree dated 21-11-2001, passed by the learned trial Court within one month from
today, failing which respondent-Bank shall be at liberty to sell mortgaged property with
or without intervention of the Court with reference to section 19 of the Financial
Institutions (Recovery of Finances) Ordinance, 2001.
7. The instant appeal stands accepted in the above terms, leaving the parties to bear their
own costs.
M.H./N-2/L Appeal allowed.
Page No. 2 of 2
2006 C L D 1099
[Karachi]
Before Sabihuddin Ahmed, C.J. and Ali Sain Dino Metlo, J
Messrs EURO-PLUS MONS BELGIUM through Country Chief---Appellant
Versus
Messrs KIRAN SUGAR MILLS LTD. through Nauman Shaikh and 8 others---
Respondents
H.C.As. Nos. 1 and 2 of 2006, decided on 25th May, 2006.
Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----Ss. 19(2) & 22---Civil Procedure Code (V of 1908), O.XXI, Rr.85, 89, 65, 66 & 67---
State B a n k o f Pakistan
2002---High Court appeal---Decree for sale of property by auction with order of the
Court---Execution of decree---Award of compensation to purchaser of judgment-debtor's
property---Order of Single Judge of High Court, exercising Banking jurisdiction in
execution proceedings setting aside sale of judgment-debtor's assets to appellant on the
ground that appellant had failed to deposit the balance 75% amount of the purchase
money within time and that the parties i.e. the creditors (including the decree holders) and
the judgment-debtor were interested to settle their dispute under the State Bank of
Pakistan BPD Circular No.29--Validity-Held, order providing for the deposit of money
within 15 days was suspended before the expiry of the period and continued to remain so
till it was set aside by the Supreme Court and, therefore, the appellant could not be said to
have violated the order and committed default in making the payment---Court was also
competent to extend the time prescribed by it particularly when matter was still pending
before it---Sale, in circumstances was not liable to be set aside on the ground for non-
deposit of balance amount---State Bank of Pakistan BPD Circular No.29 of 2002 had a
statutory force and when the decree-holders were also willing for a settlement with the
judgment-debtor (and on being given a chance they had reportedly settled the matter), it
was fair to afford them a chance to do so---Purchaser/appellant at the same time also
needed to be compensated and it would be highly unjust to push the appellant out without
any fault on its part---If the judgment-debtor wanted to save his property from being sold,
it must compensate the purchaser/appellant---Order XXI, R.89, C.P.C. also provided for
compensation for the purchaser at the rate of 5% of the amount deposited by it---
Judgment-debtor accordingly was directed by the High Court to deposit 5% of the
amount deposited by the appellant, within one month from the date of present judgment,
to be paid to the appellant---Amount deposited by the appellant (25% of the negotiated
price) had been invested by the official Assignee, which shall also be returned to it along
with the profit---If the judgment-debtor failed to deposit the amount within the stipulated
period of one month, the appellant/purchaser shall deposit the balance amount of the
purchase mow 'ii within 15 days thereof and the sale shall be confirmed in its name---
Principles.
S. Ali Bin Adam Jafri for Appellant.
Aitezaz Ahsan along with Uzair Bin Adam and Abid S. Zubairi for Respondent
No.1.
Tasawwar Ali Hashmi for Respondent No.2.
Aziz-ur-Rehman for Respondent No.4.
Izhar Muhammad for Respondent No.5.
Rana Ikramullah for Respondent No.7.
Date of hearing: 1st March, 2006.

Page No. 1 of 5
JUDGMENT
ALI SAIN DINO METLO, J.---Impugned in these appeals is the order dated 17-12-
2005 passed by a learned single Judge of this Court exercising banking jurisdiction in
execution proceedings bearing Nos.88 of 1999 and 42 of 2002, setting aside sale of
judgment-debtor's assets to the appellant on 6-11-2002, on the ground that the appellant
had failed to deposit the balance 75% amount of the purchase money within time and that
the parties i.e. the creditors (including the decree-holders) and the judgment-debtor were
interested to settle their dispute under the State Bank of Pakistan's BPD Circular No.29.
2. Briefly, the facts are that Messrs. Kiran Sugar Mills, a limited company,
persistently failed to repay its loans obtained from various lenders, including Bankers
Equity Ltd., Zarai Tarqiati Bank, Allied Bank, Habib Bank Ltd., and United Bank Ltd.,
on account of which they (lenders) filed suits for recovery, which were decreed, and some
were still pending. In Execution Applications Nos.88 and 139 of 1999 (new No.42 of
2002) filed by Habib Bank Ltd. and United Bank Ltd. for the execution of decrees passed
in their favour, sealed tenders were invited, through press, for the sale of judgment-
debtor's assets. Only four tenders were received, which were opened on 27-8-2002, but
the offers of Rs.175.00 million made by Messrs. Chawla International, Rs. 150.00 million
each made by Messrs. Elahi Electronics and Messrs. Regent Services (Pvt.) Ltd., and
Rs.800.00 million (on condition of payment in instalments extending over a period of 10
years) of Messrs. Indus Sugar Mills Ltd., being inadequate, were not accepted and with
the object of fetching more price, the Official Assignee, who was authorized to conduct
the sale, was directed to hold negotiations with the tenderers or any other person
interested in buying. After a good deal of negotiations, extending over a period of more
than one and a half month, he finally succeeded to have the highest offer of Rs.457.50
million from appellant Euro-Plus Mons-Belgium (a foreign company), which, at the time
of its acceptance by the Court on 6-11-2002, was raised to Rs.460.00 million. The other
offers, which were not accepted, were of Messrs Bhitai Traders for Rs.455.00 million,
Chawla International for Rs.253.00 million, Regent Services for Rs.250.00 million, and
Indus Sugar Mills for Rs.1,000.00 million (on condition of payment in instalments
extending over a period of 16 years). The offer of Indus Sugar Mills, though highest for
rupees one billion, was not accepted because of the condition of payment in instalments
extending over a very long period of 16 years. The appellant was directed to deposit 25%
of the amount within one week, which was deposited, and the remainder 75% within 15
days, which could not be deposited as the order was stayed before the due date and the
stay continued till the matter was remanded by the Honourable Supreme Court for fresh
decision.
3. The acceptance of appellant's offer was challenged by the judgment-debtor, as

well as by two of the unsuccessful offers, viz.; Messrs Indus Sugar Mills (through their
Managing Director Bashir Ahmed), and Messrs Chawla International in intra-Court
appeals bearing H.C.As. Nos.284, 295 and 292 of 2002, respectively. The appeals were,
however, dismissed the first two on 29-11-2002 by a common judgment and the third one
on 13-12-2002.
4. The judgment-debtor and only one of the offerers, namely Messrs Chawla
International challenged the judgments, passed in the intra-Court appeals, by way of
filing Civil Petitions for Leave to Appeal bearing Nos. 1113-K of 2002 and 29 of 2003 in
the Honourable Supreme Court of Pakistan, which, by its order dated 9-9-2004, was
pleased, with the consent of the parties, to remand the matter to the Banking Court for
fresh decision leaving the parties free to raise all such objections and contentions which
they had taken before the apex Court and 'any other question in accordance with law
before the Banking Judge.' As mentioned above the learned Single Judge (exercising
banking jurisdiction), under the impugned order, while overruling judgment-debtor's
objections about non-fixation of upset price in the alleged violation of rule 66(e) of Order
XXI of the Code of Civil Procedure, 1908 (hereinafter referred to as the Code) and
inadequacy of consideration and that of Messrs Chawla International, regarding
appellant's non-participation in the process of sealed tenders as well as regarding the
mode of sale by negotiation, set aside the sale on the grounds:--
Page No. 2 of 5
(a) that the appellant had failed to deposit the 75% of the purchase money within
the period prescribed by rule 85 of Order XXI of the Code; and
(b) that the decree-holders were willing to settle' the matter with the judgment-
debtor under State Bank's Circular No.29.
5. While setting aside the sale made to the appellant, the offer of Messrs Chawla
International, was also not accepted but it (Chawla International) has not filed appeal and
thus not challenged the decision and in this way all the other purchasers, who had taken
part in the sealed tenders and the negotiations, have left the arena.
6. Mr. S. Ali Bin Adam Jafri, learned counsel- for the appellant, argued that there
was no default. on the part of the appellant in the payment of purchase' money as an
amount more than its 25% was deposited within one week and the remainder 75% could
not be deposited due to the stay granted by this Court before the due date, which.
continued till the stay was granted by the Honourable Supreme Court, which continued
till the matter was remanded for fresh decision. He further argued that appellant's offer,
being the highest, was rightly accepted and that after the acceptance of offer, the parties
i.e. the decree-holders and the judgment-debtor could not be allowed to settle their
dispute and thereby deprive he appellant of his right to purchase the property, particularly
when the appellant had deposited a substantial amount equal to 25% of the purchase
money under the order of the Court.
7. Mr. Itizaz Ahsan, learned counsel for the judgment-debtor, supported the
impugned order on the grounds mentioned in it and further contended that violation of
mandatory provisions of rules 65, 66(e) and 67 of Order XXI of the Code by not
mentioning the upset price in the notice inviting tenders vitiated the entire proceedings.
According to him, appellant's offer, being very low, was not acceptable.
8. The objections regarding non-mention of upset price in the notice:- the mode of
sale, and the inadequacy of consideration were rightly overruled by the learned single
Judge and we entirely agree with him that the Court, in its endeavour to fetch maximum
price, ,had wade all possible efforts and was right in cancelling the tenders and adopting
the procedure of negotiations as a result of which a reasonable offer of Rs:460.00 million
was finally received from the appellant as against the highest tender of Messrs Chawla
International for Rs.175.00 million. However, we are unable to subscribe to his view that
the appellant, by not depositing the remainder 75% of the purchase money within 15
days, had violated the mandatory provisions of rule 85 of Order XXI of the Code, and
that the sale was liable to be set aside on that ground. In this regard it may be mentioned
that strictly speaking rule 85 ibid, which pertains to sale by way of public auction, is not
applicable in the present case which is of sale by negotiations. There is lot of difference
between sale by public auction and sale by negotiations or by inviting sealed tenders. The
atmosphere of public competition created on spot in public auction tempting bidders to
raise bids is lacking in other modes. Nevertheless, the Court, as held in the case of Asma
Zafar-ul-Hassan v. United Bank Ltd. and another 1981 SCMR 108, may deviate from
such mode (of public auction) and adopt any other procedure to serve the ends of justice.
Besides, the very statute i.e. .the Financial Institutions (Recovery of Finances) Ordinance,
2001, under its section 19(2), provided that the Banking Court shall sell judgment-
debtor's property in accordance with the provisions of the Code 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. Therefore, the provisions of the Code, which are for
sale by public auction, cannot be applied to other modes of sale so as to entail penal
consequences of their non-compliance.
9. In absence of statutory provisions regulating sale by negotiation or by inviting

sealed tenders, the Court may adopt any fair procedure which may be akin to the
equitable principles underlying the provisions of the Code, but that would not make the
provision of the Code applicable in the strict sense inasmuch as adoption of a principle
underlying a statutory provision and applicability of the statutory provisions cannot be
placed at same footing. The former is by choice, while the latter involves an element of
compulsion. One is adopted by Court in its discretion and the other is followed by the
force of the statute itself.
Page No. 3 of 5
10. The procedure adopted by the Court in cancelling the tenders and selling the
property by negotiations cannot be treated as unfair. Firstly, none of the parties including
the judgment-debtor had raised any objection before the Official Assignee, an officer
authorized to conduct the proceedings of sale. Secondly, good efforts were made to
achieve the object of fetching the maximum price. The tenders were rightly cancelled as
the highest tender of Messrs Chawla International for Rs. 175.00 million in cash down
was too inadequate and the tender of Messrs Indus Sugar Mills for Rs.800.00 million
with condition of making payment in instalments extending over a very long period of 10
years and that too without adequate security was not feasible. After cancelling the
tenders, the Court, by way of negotiations, succeeded to fetch Rs.460.00 million' as
against the highest tender of Rs. 175.00 million. It was a reasonably fair price and the
Court had done no wrong in accepting it. The record shows that during the hearing of
Intra-Court appeal filed by the judgment-debtor i.e. H.C.A. A No.284 of 2002, the
judgment-debtor, on being specifically asked, had shown its inability to bring any
matching offer. We are informed that the settlement between the parties i.e. the judgment-
debtor and the creditors, including the decree-holders, under the State Bank's Circular
No.29 is also arrived at Rs.460.00 million to be paid by the judgment-debtor in
instalments. In such circumstances, it cannot be said that proper efforts were not made or
that the procedure adopted was not fair.
11. At the time of accepting the offer of the appellants on 6-11-2002, a direction
was given for making payment equal to 25% of the offer within one week thereof and the
remainder 75% within 15 days without specifying the consequences of default so as to
make the appellant cautious of treating the condition as mandatory. Moreover, the
appellant paid Rs. 108.00 million on 12-11-2002 in addition to Euros 52,725 and Euros
475,170 already deposited on 21-9-2002 and 25-9-2002, and in this way the total amount
deposited by the appellants up to 12-11-2002 was equal to a little more than 25% of the
offer. As regards the balance, the order was stayed on 15-11-2002 in H.C.A. No.295 of
2002, and despite dismissal of appeals on 29-11-2002 the order was allowed to remain
suspended for a period of one week during which petitions for leave to appeal were filed
in the Honourable Supreme Court and on 4-12-2002 an order was passed for maintaining
status quo which continued till 9-9-2004 when the order of accepting appellant's offer
was set aside and the matter was remanded to the Banking Court for fresh decision. It is,
thus, clear that the order providing for the deposit of money within 15 days was
suspended before the expiry of the period and continued to remain so till it was set aside
by the Honourable Supreme Court and, therefore, the appellant cannot be said to have
violated the order and committed default in making the payment. Besides, the Court was
also competent to extend the time prescribed by it particularly when matter was still
pending before it. For all these reasons, we are of clear view that the sale was not liable to
be set aside on ground (a) supra.
12. The contention of Messrs Chawla International that the appellant, who had not
filed sealed tender within the advertised due date, could not be allowed to compete, is not
acceptable inasmuch as the Court, finding the tenders inadequate, was B fully competent
to cancel them and make efforts to fetch maximum price. The offer did not create any
right in its favour particularly when the same, on account of being inadequate was not
accepted.
13. Learned counsel for the decree-holders and CIRC, while admitting the
settlement under State Bank's Circular No.29, contended that they had no objection if the
assets of the judgment-debtor were sold to the appellant because the sale proceeds would
then be utilized for fulfilment of the settlement.
14. Reverting to the ground of willingness of the parties i.e. the judgment-debtor
and the decree-holders for settlement in the light of State Bank's Circular No.29, it may
be mentioned that firstly, the circular had a statutory force and secondly, when the decree-
holders were also willing for a settlement with the judgment-debtor (and on being given a
chance they have reportedly settled the matter) it was fair to afford them a chance to do
so. But at the same time the purchaser i.e. the appellant also needed to be compensated. It
will be highly unjust to push the appellant out without any fault on its part. In case the
judgment-debtor wants to save its property from being sold, it must compensate the
purchaser. Order XXI, rule 89 of the Code also provides for compensation fbr the
purchaser at the rate of 5% of the purchase money. Since the appellant had not deposited
Page No. 4 of 5
the entire purchase money, it will be just and fair to compensate the appellant at the rate
of 5% of the amount deposited by it. Accordingly, the judgment-debtor (respondent No.1)
is directed to deposit 5% of the amount deposited by the appellant, within one month
hereof to be paid to the appellant. The amount deposited by the appellant was invested by
the Official Assignee, which shall also be returned to it along with the profit. In case the
judgment-debtor fails to deposit the amount within the above mentioned period of one
month, the appellant shall deposit the balance amount of the purchase money within 15
days thereof and the sale shall be confirmed in its name. In view of the divided success of
the parties, they are left to bear their own costs and the appeals are disposed of in the
above terms.
M.B.A./E-16/K Order accordingly.
Page No. 5 of 5
2006 C L D 1347
[Lahore]
Before Syed Hamid Ali Shah, J
Messrs PAKISTAN INDUSTRIAL LEASING

CCRPORATION LTD.---Petitioner
Versus
Messrs SUNRISE TEXTILES LTD. through
Chief Executive---Respondent
C.O. No. 10 of 1995 and C.M. No.519 of 2004, decided on 28th April, 2006.
(a) Companies Ordinance (XLVII of 1984)---
--Ss. 297, 309, 311 & 321---Companies (Court) Rules, 1947, Rr.236 & 237---Civil Procedure Code (V of
1908), O.XXT, Rr.64-73 & 89-92---Winding up of company---Liquidation proceedings---Company was
ordered to be wound up and official liquidators were appointed to carry winding up proceedings under
Companies Ordinance, 1984---Assets of company in Liquidation were being sold in liquidation
proceedings, provisions of Companies Ordinance, 1984, would govern such sale---Companies Ordinance,
I984 being a special statute, its provisions would supersede the general law---Relevant provisions of Civil
Procedure Code, 1908 pertaining to Court's sales contained in Rules 64 to 73 and 89 to 92 of O.XXI,
C.P.C. would have no application to the sales conducted under the provision of Companies Ordinance,
1984---Such sales were to be governed under the terms and conditions as settled and approved by
Company Court---Auction conducted in the present case being on the terms and conditions as approved by
the Court, sale was not liable to be set aside, merely on the pretext that the provisions of relevant rules of
O.XXI, C.P.C. governing sale through Court auction, were not adhered to---Provisions of O.XXJ, Rr.64 to
73 & 89 to 92, C.P.C., had no application in the case.
Mrs. Aziz Fatima and 3 others v. Mrs. Rehana Chughtai and 3 others 2000 CLC 863; Brig. (Retd.)
Mazhar-ul-Haq and another v. Messrs Muslim Commercial Bank Limited, Islamabad and another PLD
1993 Lah. 706; Mohib Textile Mills Ltd. v. National Bank of Pakistan, Karachi and others 2005 SCMR
1237; Specialty Traders v. Ferdous Textile Mills Limited 1987 CLC 2109; Syed Matloob Hassan v. Brook
Bond Pakistan Limited Lahore 1992 SCMR 227 and Golden Oraphies (Pvt.) Ltd. and 12 others v. Director
of Vigilance, Central Excise, 'Customs and Sales Tax and others 1993 SCMR 1635 ref.
(b) Companies Ordinance (XLVII of 1984)---
----Ss. 297, 309, 311 & 321---Companies (Court) Rules, 1947, Rr.236 & 237---Winding up of
company---Liquidation proceedings---Sale of assets of company---Decree-holder in the case, with the
permission of the Court participated in bid and was declared successful bidder---Court was to ensure that
highest bid would be obtained and decree holder's participation would not work to the disadvantage to the
judgment-debtor---Rights of the judgment-debtors or of the company in liquidation could be protected in
such circumstances by fixing a reserve price---Valuation of assets, subject matter of sale, was appraised as
far back as in 1994---Such appraisal, would not depict current position of those assets---Flesh
appraisal/evaluation was necessary, specially in the circumstances when decree-holder opted to participate
in the bid---Sale though could not be set aside on the basis of objection of the applicant that provisions of
C.P. C. as contained in Rules 64 to 73 of O.XXI, C.P.C. were not adhered to in the conduct of impugned
sale, and thus same could not be confirmed/approved in terms of R.236 Companies (Court) Rules, 1947---
Reserve price was necessary in circumstances to persuade the creditor to buy property at a market
competitive price---Participation of the decree-holder in the auction was disadvantageous to the rights of
judgment-debtor---Fresh sale was ordered to be conducted with a reserve price on the basis of fresh
appraisal/evaluation of the assets by the High Court.
Mian Saadat Nisar for Petitioner.
Hamid Khan, Advocate.
Shakeel-ur-Rehman Khan Advocate/Official Liquidator.
Mian Sultan Tanvir Ahmad for PILC Ltd.
Page No. 1 of 3
ORDER
SYED HAMID ALI SHAH, J.---Sunrise Textile Mills Ltd. was ordered to be wound up on 3-7-1997.
Consequently joint official liquidators were appointed to carry the winding up proceedings under
Ordinance, 1984. Crescent Commercial Bank (decree-holder in C.O.S. No.4 of 2000) sought permission to
participate in the bid, as decree-holder, which was accorded vide order dated 17-11-2003. The auction of
the assets of the company (in liquidation) was held on 29-5-2004, after publishing the proclamation of sale
in daily "Business Recorder" Karachi in its print dated 6-5-2004 and daily "Nawa-e-Waqt " Multan, in its
print dated 6-5-2004. Crescent Commercial Bank was declared as successful bidder, having offered the
highest bid of Rs.58 millions of the assets.
2. Applicants are the ex-directors and share-holders of the company in liquidation, who have filed
the instant application. Applicants seek setting aside the sale on the grounds that (i) assets have been
auctioned without fixing any reserve price Iii) project has been sold for inadequate price (iii) proclamation
of sale does not meet the requirement of Order XXI, Rules 66 and 67 and (iv) the property has been sold
without first attaching it under the law.
3. Respondents, on the other hand, have resisted the application, filed reply and controverted the
averments made in the application.
4. Learned counsel for the applicants while referring to the cases of "Mrs. Aziz Fatima and 3 others
v. Mrs. Rehana Chughtai and 3 others" 2000 CLC 863; "Brig. (Retd.) Mazhar ul Haq and another v.
Messrs Muslim Commercial Bank Limited, Islamabad and another " PLD 1993 Lahore 706 and "Mohib
Textile Mills Ltd. v. National Bank of Pakistan, Karachi and others" 2005 SCMR 1237, has contended that
the assets have been sold without fixing the reserve price for throw away price. Assets were sold for Rs.58
millions, while decree passed against the company is for Rs. 122 millions. It was then contended that the
assets were evaluated through Haseeb Associates, who assessed the value of the assets on 8-9-1994, to the
tune of Rs.417,648,339 for weaving unit and Rs.366,831,750 for spinning unit.
5. Learned counsel for the respondent on the other hand

has submitted that the applicants have filed objection under Order XXI, Rule 90, without depositing 20% of
the amount which is mandatory requirement of law. The application merits dismissal on this score alone. It
was contended that the machinery of the project has become obsolete and evaluation report does not depict
true picture. Learned counsel added that various attempts were made but no serious buyer came forward to
purchase the assets. Rule 237 of the Companies (Court) Rules, 1947 was referred to contend that reserve
price in every sale is not necessary. Company Judge has vast powers under the above-referred rule, to allow
the sale of the property subject to such terms and conditions including fixation of the reserve price, if any, as
the Court may approve. Learned counsel has then referred to section 333(f) of the Companies Ordinance,
1984 wherein Official Liquidator is empowered to sell moveable and immovable property of the company
by public auction or private contract with the power to transfer the whole thereof to any person or company
or to sell the same in parcels. Learned counsel has referred to the case of "Specialty Traders v. Ferdous
Textile Mills Limited" 1987 CLC 2109 to contend that provisions of Order XXI, Rules 64 to 73 are not
applicable to the sale of assets of the company in the liquidation proceedings.
6. Heard counsel for the parties and perused the record.
7. The assets of the company (in liquidation) are being sold in the liquidation proceedings. The
provisions of Companies Ordinance, (XLVII of 1984) govern such sales. Company law being a special
statute and provisions thereunder will supersede the general law. The reference in this respect can be made
to the cases of "Syed Matloob Hassan v. Brook Bond Pakistan Limited Lahore" 1992 SCMR 227 and
"Golden Oraphies (Pvt.) Ltd. and 12 others v. Director of Vigilance, Central Excise, 'Customs and Sales Tax
and others" 1993 SCMR 1635. The relevant provisions of C.P.C. pertaining to the Court's sales contained in
Rules 64 to 73 and 89 to 92 of Order XXI, C.P.C. have no application to the sales conducted under the
provisions of Companies Ordinance, 1984. Such sales are governed under the terms and conditions as
settled and approved by the Company Court. Rule 237 of Companies (Court Rules, 1997) reads as under:
"Procedure at Sale.---(l) Every sale shall be held by the official liquidator, or, if the Judge so directs,
by an agent or an auctioneer approved by the Court and subject to such terms and conditions
including fixation of a reserve price if any, as may be approved by the Court.
(2) All sales shall be made by public auction or by inviting sealed tenders or in such manner as the
Judge may direct."
Page No. 2 of 3
8. The auction conducted in the instant case was on the terms and conditions as approved by the
Court, therefore, the sale is not liable to be set aside, merely on the pretext that the provisions of relevant
rules of Order XXI governing the sale through Court auction, were not adhered to. Provisions of Order XXI,
Rules 64 to 73 and 89 to 92, C.P.C. have no application in the instant case. The case of Specialty Traders
(supra) can be referred in this context. Official Liquidator with the sanction of the Court has the power, by
virtue of section 333(f) to sell movable and immovable property either through public auction or through a
private contract. While conducting the sale through public auction, the terms and conditions for the sale are
settled not in terms of Order XXI, Rule 66, C.P.C. but under Rule 237 of the Companies (Court) Rules,
1997.
9. There is another aspect of the impugned sale. The decree holder with the leave of the Court was
declared successful bidder. In the sale where the decree-holder participates as a bidder, it is the duty of the
Court to ensure that highest bid will be obtained and decree-holder 's participation will not work
disadvantageous to the judgment-debtor. The rights of the judgment-debtors or of the company (in
liquidation) can be protected in such circumstances by fixing a reserve price. The valuation of the assets,
subject-matter of the sale, was appraised as far back as in the year, 1994. Such appraisal does not depict
current position of these assets. Fresh appraisal/evaluation was necessary, specially in the circumstances
when decree-holder opted to participate in the bid. I am not persuaded to set aside the sale on the basis of the
objection of the applicant that provisions of C.P.C. as contained in Rules 64 to 73 of Order XXI were not
adhered to in the conduct of impugned sale. The impugned sale, however, at the same time cannot be
confirmed/approved in terms of Rule 236 (ibid). Reserved price was necessity in the circumstances to
persuade to the creditor to buy the property at a market competitive price. The participation of the decree-
holder in the auction had worked disadvantageous to the rights of judgment-debtors. It is thus in the interest
of justice that fresh sale be conducted with a reserve price, on the basis of fresh appraisal/evaluation of the
assets. Petitioner will get fresh appraisal of the assets subject-matter of sale through auction. Dr. Sarshar
Syed, Advocate, Al-Khair Chambers, Ist Floor, 1-Turner Road, Lahore is appointed to make inventory and
appraise the value of the assets and thereafter a reserve price shall be fixed for the auction of these assets.
His fee will be Rs.50,000. The applicant as well as the petitioner are directed to submit proposed terms of
auction within a period of two weeks from today.
10. The other objections of the applicant raised through this application that Rules 66 and 67 have
not been complied with and property is being sold without proper attachment, have no force and are as such
rejected.
11 To come up for further proceedings on 22-5-2006.
H.B.T./P-19/L Order accordingly.
Page No. 3 of 3
2005 C L C 1827
[Lahore]
B efore Muhammad Jehangir Arshad, J
MUSHTAQ AHMAD and others---Petitioners
Versus
MEHMOOD AHMAD and others---Respondents
Civil Revision No. 306/D of 2004 and C. M. No. 1002 of 2005, decided on 1st June,
2005.
Civil Procedure Code (V of 1908)---
----O. XXXVII, Rr. 2, 3; O.XXXVIII, Rr.4, 5, Ss.47, 48, 145 & O.XXI, Rr.64, 66,
67, 69, 92 & 94---Suit for recovery of amount on basis of cheques---Attachment of
property of defendants before decree---Execution of decree, objection against---Suit
was filed along with application under O. XXXVIII, R. 4, C.P.C. for attachment of
property of defendants before decree---Defendants had filed application for grant of
leave to appear and defend suit---Plaintiff had stated in his statement that if
defendants would submit surety bond equal to suit amours they could be allowed to
appear and defend suit---Trial Court dismissed plaintiff's application filed under
O.XXXVIII, R.4, C.P.C. as withdrawn and granted leave to appear and defend suit
to defendant subject to their furnishing security accordingly---Defendants, who
could not arrange for surety, filed application that property mentioned in their
application for leave to appear and defend suit be attached as security for grant of
leave to appear and defend suit; Court ordered accordingly and adjourned the suit for
recording evidence of parties---Trial Court, after completion of evidence of parties,
decreed spit against one defendant only and dismissed suit to the extent of remaining
defendants and five defendants were ordered to be deleted from the suit---Executing
Court, on filing execution petition by decree-holder, directed that property detailed in
application of defendants for leave to appear and defend suit, be sold through public
auction, against which objection petition was filed by defendants seeking annulment of
order of auction---Defendants had contended that by dismissal of suit to their extent, they
were not liable for performance of decree passed against one defendant only---Validity---
Defendants did stand surety and gave undertaking for performance of decree irrespective
of their being defendants/judgment-debtors, their status as surety neither did come to an
end nor they could avoid any liability by taking benefit of deletion of their names from
suit---Executing Court before proceeding with property of said defendants, did not issue
any notice to them and straightaway proceeded to order auction of their property after
giving notice to judgment-debtor only which was violation of S.145, C.P.C. which had
provided that while proceeding against property of surety, Court was bound to give notice
to him---Order of Executing Court directing auction of property of defendants through
Court Auctioneer, was declared to be without lawful authority and of no legal effect and
was set aside.
Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs Muslim Commercial Bank Limited,
Islamabad and another PLD 1993 Lah. 706; Muhammad Hussain v. Muslim Commercial
Bank Ltd. 2003 CLD 1693; Messrs S.P.R.L. Rehman Brothers v. Judge, Banking Court
No.II, Lahore and another 2000 MLD 1957; Sheikh Rahim-ud-Din v: Murli Dhar and
others AIR 1938 Lah. 593; Maula Bakhsh v. Allah Ditta AIR 1935 Lah. 145; Karimbhai
v. Hatimbhai PLD 1994 Kar. 311; Ghulam Abbas v. Zohra Bibi and others PLD 1972 SC
337; Messrs Masoom Industreis and others v. Habib Bank Limited and another 2005
SCMR 746; Refique Hazquel Masih v. Bank Alfalah Ltd. and others 2005 SCMR 72 and
Firm Nanak Chand Ramji Das v. Ibrahim and another AIR 1937 Lah. 772 ref.
Haji Muhammad Asghar and Aziz-ur-Rehman Khan for Petitioners.
Ijaz Ahmad Ansari for Respondent No.l. Ch. Ijaz Ahmad for Respondent No.2.
Page No. 1 of 8
M.A. Farazi for Muhammad Afzal judgment-debtor (though not party).
Sh. Faisal Munir for Applicant (in C.M. No. 1002 of 2005).
JUDGMENT
This civil revision has been filed to challenge the order, dated 27-5-2004 whereby
objection petition filed by the petitioners under Order XXI, read with sections 47/48,
C.P.C. filed in execution proceedings qua a decree for recovery of Rs. 11,37,069 dated 2-
1-2003 passed by learned Additional District Judge, Chishtian, was dismissed in the
following terms:--
"The property sold in the open auction against Rs. 15,00,000 and all the
proceedings conducted by the Court auctioneer have been looked into and found
conducted properly and in accordance with law as such auction sale and auction
proceedings are confirmed under Order XXI, rule 92, C.P.C. A certificate to
purchaser Mahmood Ahmad Bhatti specifying the property sold is granted. The
amount against which the property has been sold by way of auction Rs. 15,00,000
have been deposited with the Court as provided under Order XXI, rule 94, C.P.C.
and a delivery certificate is also to be issued. The amount decreed in the judgment
is to be paid to the decree-holder subject to receipt and identification."
2. The facts relevant for the decision of this civil revision are that Al-Faisal Corporation
respondent No.2 filed a suit for recovery of Rs. 11,37,069 on the basis of cheques in
summary jurisdiction under Order XXXVII, C.P.C. against the petitioners, respondent
No.3, and Muhammad Afzal and Muhammad Saleem in the Court of learned Additional
District Judge, Chishtian on 21-11-2001. Along with plaint, an application under Order
XXXVIII, rule 4, C.P.C. for attachment of defendant's property before decree was also
filed. On 6-12-2001 on behalf of respondent No.3 (defendant No.1) and Muhammad
Afzal (defendant No.4 before the trial Court), an application for grant of leave appear and
defend the suit was made which came up on 11-12-2001 and the learned trial Court
directed that reply to said application be filed and the remaining defendants be also
summoned for 21-1-2002. On 21-1-2002 as the learned Presiding Officer was on leave,
hence the matter was adjourned to 24-1-2002, on which date due to non-service of
defendants Nos.2, 3, 5 and 6 they were ordered to be served through affixation for 6-2-
2002. On 6-2-2002 although defendants Nos.2, 3, 5 and 6 were reported to be served
through affixation but the Court in order to satisfy itself about the service of these
defendants, directed that they be served through publication in daily "Hairat", Multan for
18-2-2002.
On 18-2-2002 defendants Nos.1 and 4 appeared through their counsel whereas answering
defendants Nos.3, 5, 6 were also represented through their counsel Ch. Muhammad Azhar
Khalid, Advocate and application for leave to appear and defend the suit was also filed on
their behalf. However, on 18-2-2002 as the learned Presiding Officer was on leave the
matter was adjourned to 28-2-2002, on which date the learned trial Court after recording
the presence of defendants Nos. 1, 3, 4, 5 and 6 ordered that as respondent No.2 despite
service through proclamation had not turned up, hence he be proceeded against ex parte.
On the same day i.e. 28-2-2002 learned counsel for the plaintiff got recorded the
following statement: --
Keeping in view the above mentioned statement of the learned counsel, the learned trial
Court vide order dated 28-2-2002 dismissed plaintiff's application under Order XXXVIII,
rule 4, C.P.C. as withdrawn and granted leave to appear and defend the suit to the
Page No. 2 of 8
defendants present in Court subject to their furnishing security equal to the value of the
suit amount and adjourned the case to 7-3-2002 for submission of the surety bond. In
terms of order, dated 28-2-2002 one Muhammad Ashraf son of Fazal Muhammad Caste
Arain resident of Chak No. 132-M Tehsil Chishtian submitted surety bond on behalf of
above mentioned defendants before the learned trial Court which was received and
accepted by the learned trial Court on 6-3-2002 after proper verification. However, later
on said Muhammad Ashraf moved an application on 18-3-2002 before the trial Court
submitting that as Muhammad Afzal, Manzoor Ahmad, Sharif and Salim had got the
surety bond submitted in Court from him by misrepresentation and fraud, he therefore,
did not want to continue as surety and thus., he be allowed to withdraw his surety bond.
This application filed by Muhammad Ashraf was allowed by the learned trial Court on
18-3-2002 whereby he was discharged as surety and the defendants were directed to
furnish fresh surety bond. On 27-3-2002 defendants sought further extension for
complying with the order, dated 18-3-2002 and as said application was not contested by
'the plaintiff, hence defendants were allowed further time for filing of surety bonds in
terms of earlier order. On 3-4-2002 on behalf of defendants Nos. 1, 2, 3, 5 and 6 an
application was moved through their learned counsel Ch. Muhammad Azhar Khalid,
Advocate with the request that as they could not arrange for fresh surety, hence the
property detail of which was mentioned in para.4 of the said application, be attached as a
security for grant of leave to appear and defend the suit and the learned trial Court in the
presence of learned counsel for the plaintiff as well as defendants allowed the said
application after giving full detail of the property in. the said order and directed
attachment of the same to be considered as surety for leave to appear and defend in terms
of Order XXXVIII, rule 5, C.P.C. and it was further directed that necessary intimation be
sent to the Revenue Authorities for entries to this effect to be made in the relevant Khata
Jaat of the Jamabandi and defendants were directed to file written statements on the next
date of hearing i.e. 10-4-2002. On this date the defendants filed their written statements,
issues were framed and the suit was adjourned for recording, of plaintiff's evidence which
ultimately concluded on 12-6-2002 and the suit was then adjourned for recording of the
defendants. After completion of evidence of the parties the learned trial Court vide
judgment dated 2-1-2003 decreed the plaintiff's suit against Al-Miraj Sultan Cotton
Ginning and Pressing Factory defendant No.1 only and dismissed the suit to the extent of
remaining defendants in terms of its findings on Issue No.1 ; by which the defendants
Nos.2 to 6 were ordered to be deleted from the suit. It appears that no appeal was filed
against the above mentioned judgment and decree, which therefore, attained finality.
3. Consequently, execution petition was filed by Al-Faisal Corporation against Al-Miraj

Sultan Cotton Ginning and Pressing Factory present respondent No.3 on 13-572003.
Since vide order, dated 3-4-2002 passed by the learned trial Court during pendency of the
suit, the property fully detailed in the, said order already stood attached under Order
XXXVIII, rule 5, C.P.C. hence, the learned Executing Court vide order dated 22-7-2003
directed that the same be sold through public auction in terms of Order XXI, rule 64,
C.P.C. and for effecting sale Mr: Muhammad Yousaf Ramay, Advocate was appointed as
Court Auctioneer who was directed to proceed in accordance with law by taking steps
including proclamation in the newspaper as well as through notice at the spot and pasting
of notice on Court premises on or before 24-3-2003. The said Court Auctioneer was
further directed to hold auction and submit his report on 26-9-2003. Pursuant to the above
mentioned order, the auction ass conducted and report by the Court Auctioneer was
submitted in Court on 26-9-2003 but in the meanwhile some party had approached this
Court by, way of filing Civil Revision No.231 of 2003 and obtained stay order, hence, the
auction could not be confirmed by the Court and matter was postponed to 21-10-2003 for
awaiting the order by this Court and as the matter could not be decided by this Court
hence, the Executing Court kept on adjourning the proceedings on different dates till 27-
3-2004 when the Executing Court directed that as the stay order issued by this Court
stood vacated hence, the matter be fixed on 9-4-2004 for further proceedings. In the
meanwhile, an objection petition was filed by present respondent No.3 through
Muhammad Afzal on 15-10-2003 seeking annulment of execution proceedings dated 20-
9-2003. This objection petition was contested by the decree-holder but was dismissed on
27-5-2004, against' which no appeal/revision was filed. However, the matter did not end
here, another objection petition was filed by one Abdul Hamid on 6-9-2003 seeking
annulment of order of auction. Yet third objection petition was also filed by Mushtaq,
Manzoor Saleem and Sharif present petitioners on 16-10-2003 under Order XXI read
with sections 47/48, C.P.C. against the said auction. Both these objection petitions were
Page No. 3 of 8
contested by the decree-holder namely Al-Faisal Corporation respondent No.2 as well as
by the successful bidder respondent No.1 and the learned Executing Court through single
order, dated 27-5-2004 dismissed both these objection petitions in terms mentioned
above. Against the order of C rejection of both these objection petitions, Abdul Hameed,
objector has not filed any appeal/revision, etc. but Mushtaq and others have come up in
this civil revision to call in question the legality and validity of the said order.
4. Messrs Haji Muhammad Asghar and Aziz-ur-Rehman Khan, Advocates appearing on

behalf of the petitioners have assailed the validity and legality of the order, dated 27-5-
2004 passed by learned Additional District Judge/Executing Court by raising the
following questions of law and facts:--
(i) That the learned Executing Court has given no specific findings about the status of the
petitioners i.e. whether their property was sold either as judgment-debtor or surety;
(ii) That after dismissal of the suit by the trial Court against the petitioners in terms of its
findings on Issue No. 1, the undertaking given by the petitioners by way of application
dated 3-4-2002 made through Ch. Muhammad Azhar Khalid, Advocate in terms of order,
dated 3-4-2002 did not enure for the benefit of judgment-debtor and in consequence
thereof the property got attached by the petitioners could not be sold for the satisfaction
of decree as surety and the order, dated 3-4-2002 stood automatically terminated/recalled
with the dismissal of the suit by the trial Court to the extent of the petitioners in terms of
its findings on Issue No. 1;
(iii) That in case if the liability of the petitioners for the purposes of satisfaction of decree
was to be considered as surety, it was mandatory for the Executing Court to have issued
notice to the petitioners in terms of proviso to section 145, C.P.C.;
(iv) That before putting the property of the petitioners to auction, mandatory requirements
of Order XXI, rule 66, C.P.C. were not complied with; and
(v) That above illegality was sufficient to vitiate the entire proceedings conducted by the
Executing Court as well as the Court Auctioneer while conducting auction proceedings.
In support of their above contentions, Darned counsel have placed reliance on Order
XXI, Order XXVIII, rule 4 and 5, section 145, C.P.C. and the case-law Brig. (Retd.)
Mazhar-ul-Haq and another v. Messrs Muslim Commercial Bank. Limited, Islamabad and
another PLD 1998 Lah. 706 (D.B.); Muhammad Hussain v. Muslim Commercial Bank
Ltd. 2003 CLD 1693 (Lahore D.B.); Messrs S.P.R.L. Rehman Brothers v. Judge, Banking
Court No.II, Lahore and another 2000 MLD 1957; Sheikh Rahim-ud-Din v. Murli Dhar
and others AIR 1938 Lah. 593; Maula Bakhsh v. Allah Ditta AIR 1935 Lah. 145 and
Karimbhai v. Hatimbhai PLD 1994 Kar. 311.
5. On the other hand, Mr. Ijaz Ahmad Ansari, Advocate appearing on behalf of
respondent No.1/successful bidder, while strongly refuting the above mentioned
contentions of the learned counsel for the petitioners and supporting the impugned order,
argued:--
(i) That it is abundantly proved from the record that vide application dated 34-2004
and in terms of the order of the Executing Court of the same date, the petitioners
gave their undertaking in unequivocal terms to stand surety unconditionally for
the performance of the decree to be passed by the Court, hence, the said decree
issued by the learned trial Court against the petitioners could be and was validly
executed against them and their property was validly sold through open auction in
terms of section 145, C.P.C.
(ii) That dismissal of the suit to the extent of the petitioners did not absolve them
from the undertaking given by them on 3-4-2004 and accepted by the learned trial
Court vide order dated 3-4-2004 as the said application was moved by all the
defendants jointly including the petitioners through their learned counsel namely
Ch. Muhammad Azhar Khalid, Advocate, who throughout had been their counsel
and had not only signed the said application but also the written statement along
with Manzoor, Sharif etc. petitioners;
Page No. 4 of 8
(iii) That the petitioners after dismissal of the suit against them never moved the
learned trial Court or agitated for the release of their property attached earlier by
the order of the trial Court dated 3-4-2004 and thus, after its sale in favour of the
successful bidder the respondent No. 1, the petitioners were estopped from
claiming that they were owners of the property in dispute and same could neither
be subject to execution nor could be sold in execution of the said decree;
(iv) That if any irregularity/non-fulfilment of requirement of Order XXI, Rule 66,

C.P.C. was committed either by the Executing Court or by the Court Autioneer,
the same being not mandatory was not fatal to the sale and on this score alone the
sale in favour of respondent No.1 could neither be challenged nor set aside,
especially when on similar grounds earlier objection petitions filed by
Muhammad Afzal one of the brothers of the petitioners and also the judgment-
debtor Abdul Hamid were dismissed by the learned Executing Court on 27-5-
2004.
In support of his contentions the learned counsel for respondent No.1 has placed reliance
on the case of Ghulam Abbas v. Zohra Bibi and others PLD 1972 SC 337; Messrs
Masoom Industries and others v. Habib Bank Limited and another 2005 SCMR 746 and
also Rafique Hazquel Masih v. Bank Alfalah Ltd, and others 2005 SCMR 72.
6. Ch. Ijaz Ahmad, Advocate representing the decree-holder/ respondent No.2 besides
adopting the arguments of learned counsel for the successful bidder, submitted that entire
execution proceedings were conducted legally, properly and do not suffer from any
jurisdictional defect, hence, the objection petition of the petitioners was rightly dismissed
by the learned Executing Court.
7. The record has been perused and the above mentioned arguments of the learned
counsel for the parties have been considered in minute details with reference to the case-
law cited by the respective parties.
8. A perusal of record, consideration of arguments and also the case-law lead me to

conclude that decision of this Civil Revision hinges upon the determination of following
two important points:--
(A) After decision of the suit especially in the light of findings of learned trial Court
on issue No.1 deleting the name of the petitioner, what was the status of
petitioner's property they offered in terms of the Court order, dated 3-4-2003 read
with their application of the same date whether they were liable to satisfy the
decree as judgment-debtors or sureties?
(B) Whether the Executing Court as well as the Court Auctioneer conducted the
auction proceedings properly and in accordance with provisions of Order XXI,
rules 66, 67 and 69, C.P.C.?
9. The answer to point No.A is not difficult. With the passage of decree against Al-Miraj
Cotton Ginning and Pressing Factory and dismissal of suit to the extent of remaining
defendants including the petitioners in terms of its findings on Issue No. 1, the petitioners
were no more liable as the judgment-debtors and this status of the petitioners is almost
not disputed at all. However, in terms of Court order dated 3-4-2002 as well as
application moved by the petitioners on 3-4-2002 through Ch. Muhammad Azhar Javed,
Advocate, it is abundantly clear that petitioners stood surety for the performance of the
decree to be passed in the suit and in that capacity they got the property attached. Perusal
of order dated 3-4-2002 as well as the said application leave no doubt about the liability
of the petitioners as surety and this order is binding on them because on the basis of this
order all the defendants were granted leave to appear and defend the suit. There is
therefore, no force in the contention of learned counsel for the petitioners that through
applications dated 3-4-2002 the petitioners offered their property as defendants only for
leave to appear and defend it and the said order was also to this effect and by the
dismissal of the suit to their extent not only the said application but also the order of the
trial Court dated 3-4-2002 lost its legal effect and they were no more .liable for the
performance of decree passed against respondents No.3/defendant No.1 only. Learned
Page No. 5 of 8
counsel for the petitioners while arguing so, lost sight of the legal effect of order, dated 3-
4-2002 in the light of provisions of section 128 of the Contract Act. In the case Rafique
Hazquel Masih v. Bank Alfalah Ltd. and others 2005 SCMR 72 the Honourable Supreme
Court in unequivocal terms held that:--
(I) The Guarantor having given undertaking regarding guarantee, he could not
wriggle out of the same and avoid his liability;
(II) Unless it is provided otherwise by the contract, liability or the surety under
section 128 of the Contract Act is co-extensive with that of the principle debtor.
I am, therefore, satisfied that petitioners did stand surety and gave undertaking for the
performance of the decree irrespective of their being defendants/judgment-debtors in
terms of Court order dated 3-4-2002 read with application moved by them and by the
passing of the decree their status as surety neither did come to an end nor they could
avoid any liability either by taking benefit of deletion of their name by the learned trial
Court in terms of its findings on Issue No.1 or by taking the plea that their liability as
surety in terms of Order XXVIII, rule 5, C.P.C. stood automatically terminated with the
decision of the suit. While arguing so, the learned counsel for the petitioners has ignored
the language of section 145, C.P.C., which clearly talks of the liability of the surety to
continue till the decree is performed or satisfied.
10. However, there is another very important aspect with regard to the liability of the
petitioners. It is provided in expressed terms by proviso to section 145, C.P.C. that while
proceeding against the property of the surety the Court is bound to give notice to the
surety but in the instant case, learned Executing Court before proceeding with the
property of the petitioners being surety did not opt to issue any notice to them and
straightaway proceeded to order auction of their property after giving notice to the
judgment-debtor only, which is violative of the above mentioned provisions of section
145, C.P.C. It was held by this Court in Maula Bakhsh v. Allah Ditta AIR 1935 Lah. 145;
Firm Nanak Chand Ramji Das v. Ibrahim and another AIR 1937 Lah. 772 and Sheikh
Rahim-ud-Din v. Murli Dhar and others AIR 1938 Lah. 593 that before proceeding
further with the property of the surety; he, is entitled to be given notice in terms of
section 145, C.P.C. The file of the execution proceedings indicates that the decree-holder
filed execution petition on 13-5-2003, on which date the learned Executing Court
directed that notice for 30-5-2003 be issued to the judgment-debtor for the payment of the
decretal amount and on 30-5-2003 it was ordered that as the judgment-debtor had not
appeared, hence notice for 21-6-2003 be issued to Halqa Patwari. On 21-6-2003 as the
Patwari could not be served due to non-issuance of notice, the matter was adjourned to
15-7-2003 and then to 19-7-2003 when the learned Presiding Officer/Executing Court
was on leave hence the matter was adjourned to 22-7-2003. The order-sheet of the
learned Executing Court dated 22-7-2003 is silent about the presence of Halga Patwari on
the said date and the learned Executing Court directed auction of the property by
appointing Court Auctioneer directing him to make proclamation in the newspaper, flash
of notice at the spot and on Court premises on or before 24-8-2003. The Auctioneer was
further directed to submit his report on 26-9-2003. Nowhere, from the date of institution
of the execution proceedings till the 24-8-2003 it was directed that petitioners/surety be
also given notice. The learned counsel for decree-holder or the successful bidder have not
been able to controvert the above mentioned proceedings conducted by the learned F
Executing Court and I am, therefore, satisfied that all the proceedings against
petitioners/surety were conducted without any notice as well as in violation of provisions
of section 145, C.P.C. Resultantly, the order of the Executing Court dated 22-7-2003
directing auction of the property through Court Auctioneer is declared to be without
lawful authority and of no legal effect.
11. After declaring the order of the Executing Court dated 22-7-2003 as without lawful
authority and of no legal effect, I do not think there is any necessity to dilate upon the
above mentioned point (B) as the matter can easily be remanded to the Executing Court
for proceedings with the execution proceedings afresh. However, in order to avoid
multiplicity of proceedings I proceed to decide the second point as well in the light of
record, the contentions of the parties and the case-law relied upon by the learned counsel
for the parties. Learned counsel for the petitioners raised voice against the manner in
which the auction was conducted by referring to the provisions of Order XXI, rules 66,
Page No. 6 of 8
67 and 69, C.P.C. and has vehemently argued that as all the auction proceedings were
conducted in violation of above mentioned provisions of law, hence, the impugned order,
dated 27-5-2004 confirming the auction proceedings and issuing certificate of sale is not
sustainable at all. Further argues that as provisions of Order XXI, rule 66, C.P.C. are
mandatory in nature, hence it was obligatory for the Court as well as Court Auctioneer to
strictly adhere to these provisions and violation of same could neither be condoned nor
ignored while confirming the auction. Their contention is that in terms of Order XXI, rule
66, C.P.C. although the Court Auctioneer had to make proclamation and he did make such
proclamation but in an essence, the said proclamation must have some object or knowing
the same to the public-at-large. In the instant case the proclamation was made in some
unknown newspapers namely "Hairat, Multan" which has neither any circulation in
public nor its place of publication is known to anybody. It is further contended that even
neither the Court determined the reserve price nor the Court Auctioneer determined and
published the salve in the proclamation and that valuable property comprising of 66
Kanals, 16 Marlas agricultural land with residential Ihata of 7 Marlas, 7 Sarsai was put to
auction at a nominal price of Rs. 15 lacs. Learned counsel therefore, argued that neither
the learned Executing Court nor the Court Auctioneer caused the said proclamation
drawn after notice to the petitioners and also after including the particulars required by
Order XXI, rule 66, C.P.C. It is concluded by the learned counsel that entire proceedings
conducted by the Court Auctioneer were not sustainable being violative or mandatory
provisions of law mentioned above. To strengthen their arguments, learned counsel have
placed reliance on Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs Muslim
Commercial Bank Limited, Islamabad and another PLD 1998 Lah. 706 (D.B.) and
Muhammad Hussain v. Muslim Commercial Bank Ltd. 2003 CLD 1693 (Lahore D.B.).
12. On the other hand, learned counsel appearing on behalf of successful bidder has
argued that as the property of the petitioners already stood attached, hence they were not
entitled to any notice for the same of property in terms of section 145, C.P.C. Learned
counsel further argued that as held by the Honourable Supreme Court of Pakistan in
Ghulam Abbas v. Zohra Bibi and others PLD 1972 SC 337 and Messrs Masoom
Industries and others v. Habib Bank Limited and another 2005 SCMR 746, any
irregularity in holding of auction or violation of any provision of Order XXI, C.P.C.
would neither vitiate the auction proceedings nor render the sale certificate defective. I
am afraid this contention of the learned counsel has any force, for the simple reason that
in the instant case non-compliance of provisions of Order XXI, rules 66, 67 and 68,
C.P.C. have caused substantial injury to the petitioners, inasmuch as without disclosing
the reserve price valuable property has been auctioned for a nominal price of Rs.15 lass.
True the Honourable Supreme Court in Ghulam Abbas v. Zohra Bibi and others PLD
1972 SC 337 held that non-compliance with the provisions of Orders of C.P.C. with
regard to proclamation for sale; its publication and the conduct of sale in execution
proceedings are only material irregularities but not illegalities which render the sale in
disregard of those provisions a nullity. However, in the same judgment the Honourable
Supreme Court held that if the sale has caused substantial injury because of the
irregularities then the Court can look into its validity and set aside the same. Similarly the
judgment of Honourable Supreme Court in 2005 SCMR 746 relied upon by the learned
counsel does not support his case because before the Honourable Supreme Court in this
judgment, the question was with regard to only date of proclamation and not the
fulfilment of requirement of Order XXI, rule 66, C.P.C. I am, therefore, satisfied that not
only the order dated 22-7-2003 was illegal and without lawful authority having been
passed without notices to the petitioner but also all the subsequent proceedings taken by
the Court as well as the Court Auctioneer are not sustainable having been conducted in
violation of provisions of Order XXI, rules, 66, 67 and 68, C.P.C. and also the case-law
declared by this Court in Muhammad Hussain v. Muslim Commercial Bank Ltd. 2003
CLD 1693 (Lahore D.B.) as well as Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs
Muslim Commercial Bank Limited, Islamabad and another PLD 1998 Lah. 706 (D.B.).
13. The crux of above discussion is that this civil revision is accepted, the impugned
order dated 27-5-2004 is set aside and the order dated 22-7-2003 and all subsequent
proceedings conducted by the Executing Court as well as Court Auctioneer are declared
as without lawful authority and of no legal effect including the issuance of sale
certificate. The case is, therefore, remanded to the learned Executing Court for
proceeding with execution proceedings filed by the decree-holder by treating the
petitioners as surety in terms of order., dated 3-4-2002 and application submitted by them
Page No. 7 of 8
on the same date. The Executing Court shall proceed with the matter after issuing notice
to the petitioners under section 145, C.P.C. and then will proceed with the sale of the
property of the petitioners as surety, strictly in accordance with law.
14. Before parting with this judgment, I would like to point out that one Abdul Latif filed
C.M. No.1002 of 2005 praying that he be impleaded as party in the civil revision, as the
learned Executing Court had kept objection petition filed by him in abeyance. Since the
matter is being remanded to the learned trial Court, hence, no order is called for in the
said C.M. filed by Abdul Latif and it is directed that if any objection petition filed by
Abdul Latif applicant is pending before the Executing Court the same shall also be
decided along with objection petitions of the petitioners. Record be returned immediately.
H.B.T./M-1127/L Revision accepted.
Page No. 8 of 8
2004 C L D 1560
[Lahore]
Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ
Mrs. SALMA JAVAID----Appellant

Versus
DEUTSCHE BANK A.G., LAHORE through Attorney and 4 others----Respondents
F.A.O. No.207 of 2001, decided on 30th April, 2003.

-----S.19(7)---Civil Procedure Code (V of 1908), O.XXI, Rr. 66, 67, 73 & 90---Execution
of decree---Auction of property---Objection petition of appellant that no auction at all
was conducted and there were irregularities in proclamation and conduct of sale was
dismissed by Banking Court without framing issues and calling evidence---Held, where it
was alleged that auction had not taken place, there would be no valid sale that could be
confirmed and such matter could only be resolved by the Banking Court after framing of
issues and enabling the parties to lead evidence.
(b) Civil Procedure Code (V of 1908)---

-----O.XXI, Rr. 66, 67, 73 & 90--- Financial Institutions (Recovery of Finances)
Ordinance (XLVI of 2001), S.19(7)---Where it was alleged by the appellant that auction
had not taken place, there would be no valid sale that could be confirmed by the Court
until and unless the matter was resolved by the Court after framing of issues and enabling
the parties to lead evidence.
Messrs Javaid Shaukat Malik and Nawab Saeed Ullah for Appellant.
Pervaiz Ahmad Barki for Respondents.
Iftikhar Ahmad Malik for Auction-purchaser.
ORDER
The respondent-Bank, brought a suit for recovery against the appellant, which was
decreed. In execution of the decree, the property in question (shops and office), which
were mortgaged with the bank, were put to auction and the respondent No.4, being the
highest bidder, purchased the said property in auction, allegedly held on 23-2-2000; his
bid was to the tune of Rs.8,50,000, which amount has been duly deposited by the
respondent No.4 with the Court. The appellant, moved an application under Order 21,
rules 66, 67, 73 and 90, C.P.C. and one of the objections raised in the petition is, that no
auction at all was conducted at the spot on 23-2-2000; the entire proceedings in this
regard are fake and fraudulent; besides some other objections about the irregularity in the
proclamation and conduct of sale, have also been taken. The learned Banking Court,
dismissed the application and confirmed the sale in favour of the respondent through the
order dated 9-7-2001, hence this appeal.
2. Learned counsel for the appellant contents, that as the very conduct of the auction on
the date given above, was disputed by the appellant, thus, in such situation, this factual
controversy could only be resolved by the Court, after framing of issues and enabling the
parties to produce evidence.
3. We have heard the learned counsel for the parties and find force in the argument of the
learned counsel for the appellant. Obviously, if the auction has not taken place as alleged;
there is no valid sale in favour of respondent No.4, which could be confirmed. Thus, this
aspect of the matter could only be resolved by the learned Banking Court, after framing
of issues and enabling the parties to lead evidence. Resultantly, the impugned order is set
aside. The learned Banking Court is directed to frame the issues, arising out of the
pleadings of the parties on the date on which, the parties are directed to appear before the
Court, and decide the matter within a period of three months thereafter. The parties are
directed to appear before the Banking Court on 15-5-2003.
Page No. 1 of 2
This appeal is accordingly allowed.
M.A.W./S-664/L Appeal allowed.
Page No. 2 of 2
2003 C L D 956
[Karachi]
Before Sabihuddin Ahmed and Amir Hani Muslim, JJ
Messrs CHAWLA INTERNATIONAL---Appellant

Versus
HABIB BANK LIMITED and others---Respondents
High Court Appeal No.292 of 2002, heard on 12th December, 2002.
(a) Civil Procedure Code (V of 1908)---

----O.XXI, R.65---Sale in execution of decree ---Mode--Contention that sale could only
be made through public auction and in no other manner, held, not correct.
Brig. (Retd.) Mazhar ul Haq and another v. Messrs Muslim Commercial Bank Limited
PLD 1993 Lah.706 ref.
Asma Zafarul Hassan v. United Bank Ltd. and another 1981 SCMR 108 fol.
(b) Administration of justice---

---- Courts are not to act upon the principle that every procedure is to be taken as
prohibited, unless it is expressly provided for by the Code, but they are to act on the
converse principle that every, procedure' is to be understood as permissible till it is shown
to be-prohibited by the law--Prohibition, as a matter of general principle, cannot be
presumed.
Narsing Das v. Mangal Dnbey (1883) 5 All. 163 fol.
(c) Civil Procedure Code (V of 1908)---

----O.XXI, Rr.66, 67, 68 & 69---Proclamation, publication and conduct of sale---Non-
compliance with provisions of C.P.C. is only a material irregularity, but not illegality
rendering the sale in disregard of such provisions a nullity.
Manilal Mohanlal Shah v. Sardar Sayed Ahmed AIR 1954 SC 349 fol.
National Bank of Pakistan v. Nasir Industries 1982 CLC 388 and Syed Brothers v.
District Council, Lyallpur PLD 1977 Lah. 542 ref.
(d) Civil Procedure Code (V of 1908)---

----O.XXI, R.84---Deposit of 25% of purchase money immediately was a strict
requirement of O.XXI, R.84, C.P.C.---Omission to deposit, however, could only be
treated as a material irregularity, but would not render the sale as nullity.
Rashad Ahsan v. Bashir Ahmed PLD 1989 SC 146 fol.

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.84--Sale in execution of decree---
Deposit of 25% of purchase money---Executing Court granted one week's time to
purchaser to make such deposit---Validity---Purchaser could not be penalized for mistake
of Court---Deposit within such period and not immediately could not vitiate sale.

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.85--Sale in execution of decree---
Executing Court granted one week's time to deposit 25% of purchase money---Purchaser
failed to deposit entire amount of purchase money within 15 days of passing of such
order due to passing of interim order in appeal---Effect---Requiring purchaser to fulfill a
condition entirely beyond his control would be highly inequitable---Penalizing purchaser
for an act of Court would neither be fair nor equitable.
(g) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

Page No. 1 of 6
----S.19---Civil Procedure Code (V of 1908), O.XXI, R.85—Sale in execution of
decree---Court did not accept highest bid offered by appellant and directed official
assignee to negotiate apart from bidders with any other party interested in buying
property---Offer received from outsider in subsequent reference was highest, but
appellant did not make improvement in his earlier bid---Court accepted offer of outsider
---Contention of appellant was that negotiations could, only be held, with bidders, but not
through inviting fresh offers from outsider---Validity---Sale could be set aside, if same
had 'caused prejudice to any of the parties-- Decree-holder had not objected to acceptance
of outsider's bid, whereas appellant duly represented at the time of hearing had expressed
his unwillingness to match such bid---No ground for interfering with impugned order was
found---High Court dismissed appeal in circumstances.
Abdul Hafeez Pirzada for Appellant.
Tasawar Ali Hashmi for Habib Bank Limited.
Ali Bin Adam Jafri for Respondent No.5.
Rizwan Ahmed Siddiqui and Izhar Muhammad for C.I.R.C.
Bashir Ahmed Official Assignee.
Dates of hearing: 11th and 12th December, 2002.
JUDGMENT
SABIHUDDIN AHMED, J.---This appeal is directed against an order of learned Single

Judge of this Court exercising Banking Court's jurisdiction whereby, upon a reference
from the Official Assignee, the auction bid of the respondent No.5 was accepted.' At the
outset, it may be stated that we had already dismissed the appeals preferred by respondent
No.4 and the Chief Executive of respondent No.6 vide our short order dated 29-11-2002
and reasons thereof have also been recorded. Mr. Abdul Hafeez Pirzada learned counsel
for the appellant however, argued that his case was somewhat different and on a much
stronger pedestal and needed to be heard and decided on its own merits. Consequently,
we proceeded to commence hearing of this appeal.
2. By way of necessary factual background it may be stated that the respondent No.4 had
been granted certain finance facilities by the respondents Nos.1 to 3, it defaulted in
payment of its liabilities. The respondents Nos. 1 to 3 filed suit for recovery of money
which was decreed. Upon an application for execution being made the Court by orders
dated 8-5-2002 and 15-8-2002 for Execution Applications Nos.88 and 99 and 42 of 2002
directed the Official Assignee (respondent No.8) to attach and sell the sugar mills
belonging to the respondent No.4. The respondent No. 8 submitted a reference dated 18-
9-2002 stated that he had invited sealed tenders and out of the offers received by him the
appellant appeared to be the highest bidder ready to make lump sum payment of Rs.175
Millions in cash. He attempted to negotiate improvement in the offers from all the four
bidders and the appellant agreed to pay Rs.253 Millions as purchase price and his offer
continued to remain the highest. However, pursuant to the reference dated 17-9-2002, the
Court did not accept and on 23-9-2002 observed as follows:
"Official Assignee may negotiate with M/s. Chawla International, M/s. Indus
Sugar Mill Limited or any other party interested for buying the properties of the
judgment-debtors and submit his fresh reference by the next date."
3. In his subsequent reference dated 7-10-2002, the respondent No.8 reported that on 21-
9-2002 he received the offer for Rs.300 Millions from the respondent No.5 whereafter he
called a meeting of the bidders on 1-10-2002 which was inter alia attended by the
appellant and the respondent No.5. While the respondent No.5 came to raise his offer to
Rs.400 Millions. The appellant did not appear to be willing to make any improvement in
his earlier offer of Rs.253 Millions. Apparently this reference was also not accepted by
the Court and the respondent No.8 was directed to seek further improvements. Pursuant
to the above another meeting was called by the respondent No.8 and the respondent N0.5
was willing to raise it to Rs.457.5 Millions but the appellant did not participate in the
Page No. 2 of 6
meeting. Consequently a reference was made to the Court whereupon the offer of the
respondent No.5 was accepted. This order has been assailed in this appeal.
4. Mr. Abdul Hafeez Pirzada learned counsel for appellant argued that the impugned
order was passed in violation of the mandatory requirements .of Rules 65, 66 and 67 as
well as Rules 84 and 85 of Order 21, C.P.C. He contended that Rule 65 contemplated that
unless otherwise prescribed every sale made in execution of a decree was to be made
through public auction. He argued that admittedly the procedure for sale by way of public
auction had been commenced when sealed bids were invited and thereafter the Court or
the respondent No.1 could not resort to the method of sale through private negotiations.
Consequently if the Court was not satisfied with the offers received, the only option
available to it was to order re-auction. He further contended that even if improvement of
offers was sought negotiations could only be held with the bidders and not through
inviting fresh offers from rank outsiders like respondent No.5. As such the order dated
23-9-2002 authorizing the respondent No.8 to negotiate, apart from the bidders with "any
other party interested in buying the properties" was a nullity in law and the sale
conducted pursuant thereto was of no legal effect. With reference to Rule 66 learned
counsel argued that, no reserve price was mentioned in the sale proclamation and this by
itself vitiates the sale. Moreover he contended that failure of the respondent No.5 to
deposit 25% of the sale price immediately upon acceptance of his offer and the remaining
75% within fifteen days thereafter rendered the sale void.
5. It is not disputed that the sale proclamation did not refer to any reserve price. However,
we are constrained to observe with profound respects that this question was also raised in
H.C.As. Nos.284 and 295 of 2002 preferred by respondents Nos.4 and 6 respectively and
we had repelled the same. We are, for reasons recorded therein, not persuaded to take a
contrary view.
6. Mr. Pirzada then argued that Order 21, Rule 65, C.P.C. contemplated that unless
otherwise prescribed every sale in execution of a decree was to be made by public
auction and therefore, even if the learned Single Judge found the offer received to be
unacceptable he could only direct a fresh sale through public offers, but could not
authorize sale through negotiations. Mr. Rizwan Ahmed Siddiqui learned counsel for
respondent No.3 however contended that the learned Single Judge in the instant case was
exercising the jurisdiction of a Banking Court under Financial Institutions (Recovery of
Finances) Ordinance, 2001 and not that of a Civil Court under the C.P.C. He pointed out
that the provisions of the aforesaid Ordinance were to prevail over any law inconsistent
therewith and section 19 provided mode of execution of decrees of a Banking Court.
Under section 19(2), such decrees could be executed either according to provisions of the
C.P.C. or any other law in force or in such manner as it considered appropriate upon the
request of the decree-holder. He therefore, argued that the provisions of C.P.C. were not
strictly applicable to execution of decrees of a Banking Court.
7. Responding to the above Mr. Pirzada raised a twofold contentions. In the first instance,
he contended that the Banking Court could resort to execution in a manner other than that
prescribed by C.P.C. only upon the request of the decree-holder and there was nothing on
record to indicate that such request was ever made by the decree-holder. Secondly he
argued that even if execution under "any other mode" was permissible, once the Banking
Court had decided to follow the method provided for by the C.P.C., it could not pick and
choose certain provisions and ignore the rest. In support of his argument learned counsel
placed reliance upon a Division Bench Judgment of the Lahore, High Court in Brig.
(Retd.) Mazhar ul Haq and another v. M/s. Muslim Commercial Bank Limited (PLD
1993 Lahore 706), which apparently supports his point of view.
8. Indeed there seems to be some force in Mr. Pirzada's contention. Nevertheless, with
profound respects to his learning and experience, and assuming that the provisions of
C.P.C. were applicable, we find ourselves unable to uphold the contention that sale could
only be made through public auction and in no other manner in view of the explicit
pronouncement of the Honourable Supreme Court in Asma Zafarul Hassan v. United
Bank Ltd. and another (1981 SCMR 108) to the following effect:--
"These provisions do prescribe the mode of disposal by public auction but neither
of them expressly or by necessary implication prohibit any other mode of
Page No. 3 of 6
disposal. Therefore if the Court had deviated from this mode of disposal to serve
the ends of justice, no exception can be taken to it. In Narsing Das v. Mangal
Dnbey ((1883) 5 All. 163) Mahmood, J. observed:--
"Courts are not to act upon the principle that every procedure is to be taken as
prohibited unless it is expressly provided for by the Code but on the converse
principle that every procedure is to be understood as permissible till it is shown to
be prohibited by the law. As a matter of general principle prohibition cannot be
presumed."
9. The main thrust of Mr. Pirzada's contention however, was that Rule 84 of Order 21,
C.P.C. required that on every sale of immovable property the person declared to be
purchaser shall pay immediately after such declaration a deposit of 25% of the purchase
money and in default of such deposit the property was required to be resold. Similarly
rule 85 submitted that the remaining amount of purchase money was to be paid within 15
days of such sale and according to rule 86 in the event of such default the property was to
be resold. Learned counsel argued that both these conditions were not met by the
respondent No.5 and therefore the sale had to be held as a nullity. To ascertain the
relevant factual matrix, we requested the respondent No.8 to provide necessary details
regarding payments made by the respondent No.5. He stated that after the passing of the
impugned order the respondent No.5 deposited slightly more than 25% of the purchase
money on 11-11-2002 i.e. within one week time granted by the learned Single Judge.
Admittedly the remaining sale consideration was never deposited but Mr. Ali Bin Adam
Jafery learned counsel for respondent No.5 argued that while the aforesaid respondent
was ready and willing to make the deposit, he was prevented from doing so by an order
of this Bench dated 15-11-2002 passed in H.C.A. No.284 of 2602 restraining the
respondent No.8 from proceeding further in the matter. While we had dismissed the
aforesaid appeal alongwith H.C.A. No.295 of 2002 by a short order dated 29-11-2002,
the order was allowed to remain suspended for a period of one week during which
apparently the respondent No.4 judgment-debtor moved the Honourable Supreme Court
and obtained a restraining order. It was also brought to our notice that on 12-11-2002 the
respondent No.5 submitted C.M.A. No.2956 of 2002 under section 151, C.P.C. praying
that they may be allowed to enter the factory to start maintaining/renovation of the
machinery installed within its premises which was in possession of the Official Assignee.
On 13-11-2002 after notice being waived by the respondent No.8, but without notice to
any other party, the application was granted subject to the condition that the respondent
No.5 would furnish comprehensive insurance coverage so as to cover loss of each and
every type to the extent of the balance 70% of the sale consideration and deposit a sum of
Rs.30,000 to enable the respondent No.8 to post his representative during the period of
the process.
10. Mr. Pirzada argued that the failure of the respondent No.5 to deposit 25% of the sale
consideration immediately upon the acceptance of bid and the subsequent failure to
deposit the remainder within 15 days of such acceptance completely vitiated the so-called
sale. He relied upon a number of reported cases to substantiate his contention. In National
Bank of Pakistan v. Nasir Industries (1982 CLC 388) decided by a very eminent Judge of
this Court (Saeeduzzaman Siddiqui, J.) an order of learned Single Judge extending time
for deposit of 75% of sale consideration in terms of Order 21, Rule 85 was sought to be
set aside. It was held that the relevant provisions regarding payment of sale price under
Order 21, were mandatory and the Court had no jurisdiction to grant any extension in
terms of sections 148 and 151, C.P.C. In Syed Brothers v. District Council, Lyallpur (PLD
1977 Lahore 542) Aftab Hussain, J., was also of the view that the period of time for
depositing the remaining sale consideration under rules 84 and 85 were mandatory and an
order confirming sale without such deposit was without jurisdiction unless extension of
time for deposit was made by mutual consent of decree-holder and auction-purchaser. In
such cases the sale would be treated as a fresh sale. Similarly the Supreme Court of India
in Manilal Mohanlal Shah v. Sardar Sayed Ahmed (AIR 1954 SC 349) also held that
failure to deposit 25% of the sale price immediately when auction-purchaser is not the
decree-holder to some other person, wipes out the sale and is liable to be treated as
nullity.
11. Indeed all these precedents emanating from the judgments of some very eminent
Judges are entitled to the highest respects. Surprisingly however, in none of these cases
Page No. 4 of 6
the principles of law laid down by the Honourable Supreme Court in Ghulam Abbas v.
Zohra Bibi (PLD 1972 SC 337) were noticed. In this case Hamoodur Rehman, C.J.
observed:
"Indeed, it would appear that the view of the Courts has consistently been that the
non-compliance with the provisions of the Code of Civil Procedure, with regard
to the proclamation of sale, its publication and the conduct of the sale in
execution, are only material irregularities but not illegalities which render, the sale
in disregard of those provisions a nullity."
12. In yet another case of Rashad Ahsan v. Bashir Ahmed (PLD 1989 SC 146) a sale was
sought to be set aside on the ground of non-compliance with Order 21, Rule 85 and the
defence of the auction-purchaser was that the Court had failed td specify the time by
which payment was to be made. Their lordships extended the principle of "Actus curiae
neminem gravabit" (no one should be prejudiced by the act of the Court) to such matters
and proceeded to hold that since the error was committed by an officer authorized to
conduct the sale, penalizing the auction-purchaser was neither fair nor equitable.
13. Keeping the above position in view, we may now examine the effect of non-
compliance with the provisions of rules 84 and 85 separately. No doubt Mr. Pirzada
seems to be correct in ascertaining that 25% of the sale consideration is required to be
paid immediately in terms of the strict requirement of rule 84. Nevertheless, in view of
the pronouncement of the Honourable Supreme Court in Ghulam Abbas's case, such
omission could only be treated as a material irregularity but would not render the sale a
nullity. Moreover, it is evident from the impugned order that one week's time was granted
by the learned Single Judge to the respondent No.5 to make the aforesaid deposit and the
deposit during this period. This would clearly attract the principles laid down in Rashad
Ahsan's and the respondent No.5 could not be penalized for mistake of the Court.
Therefore, deposit within the aforesaid period and not immediately could not vitiate the
sale.
14. As regards the failure to make the entire payment within 15 days of the passing of the
order, the respondent No.5 has contended that they were precluded from making
payments on account of the interim order passed in H.C.A. No.284 of 2002 and this has
not been disputed by the respondent No.8. In these circumstances it would be highly
inequitable to require them to fulfil a condition for reasons entirely beyond their control
and the principle of law laid down in Rashad Ahsan's case would apply with equal force.
15. Finally Mr. Pirzada argued that the impugned order could only be treated as one of
acceptance of bid and not confirmation of the same in terms of rule 92, Order 21, C.P.C.
He contended that such confirmation could take place only after the entire sale
consideration had been paid in terms of rule 85 and objections if any under rules 89 and
90 had been disposed of. None of the learned counsel for the respondents was able to
effectively rebut this contention. Mr. Ali Bin Adam Jafery attempted to question the
maintainability of this appeal on the ground that only an order under rule 92 could be
questioned in terms of Order 43, rule 1(j), C.P.C. The above argument, however pre
supposes that the impugned order was not covered by the aforesaid provisions and could
not be treated as one confirming the bid of the respondent' No.5. We have also gathered
from the case-law examined by us that Courts have proceeded to set aside sales when
they have caused prejudice to any of the parties. In the instant case it appears that neither
of decree-holder objected to the acceptance of the bid of the respondent No.5 and the
appellant who was duly represented at the time of hearing also express his unwillingness
to match the bid. In these circumstances, we find no ground for interfering with the order
accepting the bid submitted by the respondent No.5.
16. Mr. Abdul Hafeez Pirzada learned counsel for the appellant however, during the
course of his arguments offered that -his client was ready and willing to match the offer
of the respondent No. 5. We are not sure whether such course is permissible during the
period intervening the acceptance and confirmation of sale and though we had granted
time to learned counsel for the parties to address us on this aspect of the matter, we did
not have the benefit of their assistance. In these circumstances we would observe that this
question may be examined by the learned Single Judge when the matter comes up for
confirmation of the bid.
Page No. 5 of 6
17. Since the Official Assignee was restrained from proceeding further in the matter on
15-11-2002 and the controversy is already before the Honourable Supreme Court, we
would not like to pass any order relating to deposit of remaining sale consideration.
Nevertheless, we may observe that the order passed on C.M.A. No.2256 of 2002 on 13-
11-2002 has been overtaken by events and we are therefore of the view that possession of
the premises may be delivered to the respondent No.5 only after the sale is made absolute
in terms of rule 92 subject to any orders passed by the Honourable Supreme Court. With
these observations the appeal is dismissed.
S.A.K./C-64/K Appeal dismissed.
Page No. 6 of 6
2002 C L D 622
[Lahore]
Before Jawwad S. Khawaja and Abdul Shakoor Paracha, JJ
Messrs RADIEUX (PRIVATE) LIMITED through Chief

Executive and 6 others---Appellants
Versus
INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN and

another---Respondents
E.F.A. No.558 of 2001, heard on 23rd January, 2002.
Banking Companies (Recovery of Loans, Advances, Credits

and Finances) Act (XV of 1997)-
----Ss. 18 & 21---Civil Procedure Code (V of 1908), O. X36,
Rr.66, 67 & 90---Execution of decree---Appellants filed objection
petition under O. Off, Rr.66,67 & 90 for setting aside the auction
of property---Executing Court directed appellants to deposit 2096
of auction price within one month-- Appellants failed to comply
with such order even within the extended time, thus, objection
petition was dismissed---Validity---Order dismissing objection
petition was not open to exception in such circumstances---Appeal
was dismissed being without merits.
Ch. Farooq Mahmood Khokhar for Appellant No.1.
Sultan Mahmood for Respondent No.1.
Khalid Saleem and Adil Aqil Mirza for the Auction Purchasers.
Date of hearing: 23rd January, 2002.
JUDGMENT
JAWWAD S. KHAWAJA, J.---This appeal impugns the order,

dated 30-6-2001 passed by the learned Banking Court No.II,
Lahore. The facts of this case are very simple. The
respondent-Bank obtained a decree against the appellants, dated
14-11-2000 from Banking Court No.II, Lahore. In execution of
the said decree the property, which is subjectmatter of the present
appeal, was put to auction on 17-5-2001. At the said auction the
property was purchased by the auction purchaser respondent No.2.
The appellants filed an objection petition under Order XXI, rules
66, 67 and 90, C.P.C. for setting aside the auction. The learned
executing Court required the appellants to deposit 20% of the
auction price in Court within a period of one month. This order
was not complied with. Instead an extension of time was applied
for. The learned Banking Court extended the period for deposit of
the amount by one week. This also was not complied with. In the
circumstances, the objection petition filed by the appellants was
dismissed.
2. We find that the order dismissing the objection petition of the

appellants is not open to exception considering the facts narrated
above. In this view of the matter, this appeal being without merit
is dismissed.
S.A.K./R-107/L
Appeal dismissed.
Page No. 1 of 1
P L D 1993 Lahore 706
Before Sh. Ijaz Nisar and Raja Afrasiab Khan, JJ
Brig. (Retd.) MAZHAR-UL-HAQ and another --- Appellants
versus
M/s. MUSLIM COMMERCIAL BANK LIMITED, ISLAMABAD

and another --- Respondents
FA.Os. Nos. 45 and 46 of 1989, heard on 10th May, 1993.
(a) Banking Companies (Recovery of Loans) Ordinance (XIX of 1984)---
---- S.4 --- Civil Procedure Code (V of 1908), OXXXVII, RA & O.IX, R.13--
Setting aside ex-parte decree under special circumstances --- Defendants' plea was that
they were not residing at the address given in plaint and on which summons and notices
were issued --- When suit for recovery of amount was filed, defendants admittedly were
not residing at the address on which process was issued --- Plaintiff was under obligation
to have given in the plaint the latest and accurate address of the defendants but such
obligation was not discharged --- Record showed that plaintiff had been making
correspondence with the defendants not only at V where defendants had a private
residence but also on the official address of one of the defendants at the time of
institution of the suit --- Plaintiff would, thus, be presumed to have knowledge of the
address of the defendants but it failed to give correct address of the defendants ---
Plaintiff thus, failed to perform its legal obligation which amounted to mala fides in law
--- Principal defendant being officer of the Army could have been served through G.H.Q.,
but no such effort was made --- Ex-parte decree against, defendants being not in
conformity with law, could not be, sustained and was set aside in circumstances.
Syed Muhammad Anwar w Sheikh Abdul Haq 1985 SCMR 1228 ref,
M Civil Procedure Code (V of 1908)---
S. 20 --- Principle : "Debtor seeks the credit6r"---ApplicabiIity--- . Said principle

could not be stretched to the detriment of debtors (defendants) for they had not lost their
whereabouts but were in contact with each other on the same cause at a different address
--- Principle could be applied only in a case where creditor had no liaison with the debtor
and the latter would be under obligation to keep the former abreast of his address ---
Where the creditor kept on pressing his demand and also supplied to the debtor the
statement of accounts on an address different from the one originally recorded, debtor
would be absolved of his duty of notifying, to the creditor the change in his address, for
the change was already known to the creditor.
Ahmad Autos V. Allied Bank of Pakistan PLD 1990 SC 497 ref.
(c) Banking Companies (Recovery of Loans) Ordinance (XIX of 1984)---

---- S.6 --- Civil Procedure Code (V of 1908), 0. V, R. 20 --- Banking Court while
exercising civil jurisdiction and hearing a case has all the powers vested in Civil Court
under Civil Procedure Code, 1908 --- Banking Court, although was competent to order
service by substituted measures in the form of publication, yet it was not divested of its
authority and duty to look into the relevant circumstances ---Where defendants' address
was patently insufficient or incomplete or material defect in such address had come to the
notice of the Court; it was not bound to take steps for the service of defendants especially
by affixation or publication unless correct address was given or the defect was removed.
(d) Banking Companies (Recovery of Loans) Ordinance (XIX of 1984)---

---- S.6 --- Civil Procedure Code. (V of 1908), - OXXXVII, R. 4, 0. IX, R. 13,
O.VlI, R. 1 & 0. V, R. 20 --- Ex-parte decree in summary jurisdiction --- Setting aside of
--- Where reports of process-server and postman indicated that defendants were not
residing at the given address, proper course in such case would be to ask plaintiff to
supply correct particulars of defendants' address -- Plaintiff would either comply with the
direction or show to the satisfaction of the Court that he had no other address of the
Page No. 1 of 18
defendants --- Where, however, plaintiff in spite of being in a position to provide other
address had not provided or had suppressed the same intentionally or through
inefficiency, subsequent ex-parte proceedings would be nullity in the eyes of law.
(e) Banking Companies (Recovery of Loans) Rules, 1980---

R. 8 --- Civil Procedure Code (V of 1908), O.V, R.20 --- Suit for recovery of bank loan
--- Service through publication --- Essentials --- Order for service by publication was not
made simultaneously with the order for issue of summons in ordinary course--Principles
underlying the provision of 0. V, R. 20, C.P.C. would be attracted and publication was not
to be ordered mechanically without adverting to reports of process-server and the
postman---Court before, granting service through publication was bound to have applied
its mind to facts of case to ascertain whether in spite of the best efforts of plaintiff,
defendants could not be served for the reason that they were avoiding service with the
object of obstructing disposal of suit.
United Bank Ltd. v. Nishat Chemical Industries Ltd. 1986 CLC 1985
(f) Administration of justice—
---- Court, Judicial Tribunal or even a quasi-judicial Tribunal, entrusted with the duty to
determine valuable rights of the parties arraigned before them were required to act
deliberately and after proper application of mind to the matter before them.
(g) Civil Procedure Code (V of 1908)—
---- 0. XXXVII, RA & O.IX, R.13 --- Limitation Act (IX of 1908), Art.164--
Setting aside ex parte decree --- Period of limitation --- Defendants had admittedly not
been served at their changed address which was within the knowledge of plaintiff---
Period of limitation for setting aside ex parte decree would start from the date of
knowledge --- Applications for setting aside ex: parte decree and for grant of leave to
defend suit filed from the date of knowledge of defendants were not barred by time and
were maintainable.
(h) Civil Procedure Code (V of 1908)--

0. XXXVII, RA, O.IX, R.13 & OXXI, R.90 --- Setting aside ex parte decree and sale of
immovable property in execution of decree --- Mere inadequacy of price by itself was not
a sufficient ground for interference by Court---Where however, inadequacy of price was
by reason of fraud and material irregularity it would provide a ground for setting aside ex
parte decree as also the sale in execution of such decree.
(1) Banking Companies (Recovery of Loans) Ordinance (XIX'of 1984)...
---- S. 2(b)(ii) --- Civil Procedure Code (V of 1908), OXMV, R.2 & OXXI, R.90 ---
Preliminary decree --- Sale in execution of decree --- Validity --- Special Banking Court
was required to pass a preliminary decree in suit founded on mortgage --- Special
Banking Court, however, failed to pass a preliminary decree; in impugned judgment
Court stated that ex parte decree was the final decree --- Defendants were, thus deprived
of the opportunity to pay into Court the amount due from them and avoid the Court-sale
--- Non-compliance with provision of OXXXIV, R.2, Civil Procedure Code, 1908, would
provide sufficient reason for setting aside impugned decree --- Existence of valid decree
was a condition precedent for sustenance of auction proceedings and the orders passed in
such proceedings --- In absence of valid decree entire superstructure (sale in execution of
decree) would fall to the ground.
0) Banking Companies (Recovery of Loans) Ordinance (XIX of 1984)-- ---- Ss. 3 & 6 ---
Civil Procedure Code (V of 1908), Ss. 4(l), 141 & OXXI, R.90 --- Conflict between
provisions of Civil Procedure Code, 1908 and Banking Companies (Recovery of Loans)
Ordinance, 1984 --- Remedy --- Special Banking Court while exercising civil jurisdiction
has to follow the procedure laid down in Civil Procedure Code, 1908 and for purpose of
execution of decree provisions of OXXI, Civil Procedure Code, 1908, could be resorted
to --- In case of conflict between the pro-visions of Civil Procedure Code, 1908 and the
Banking Companies (Recovery of Loans) Ordinance, 1984, latter would prevail.
Page No. 2 of 18
Ganapathia Pillai v. Malaipernumal Chettiar and another AIR 1925 Mad. 202 and
Alhamdi Begum v. National Bank of Pakistan PLD 1976 Kar. 723 and M. Sharique Shah
and others v. Mst. Irshad Begum. and others 1981 CLC 369 ref,
(k) Banking Companies (Recovery of Loans) Ordinance (XIX of 1984)

---- Ss. 3 & 6 --- Civil Procedure Code (V of 1908), O.XXI, Rr.90 & 92 --- Special
Banking Court choosing to adopt provisions of Civil Procedure Code, 1908, for sale of
immovable property in execution of decree --- Correctness of orders passed by such
Court in conducting sale of property in question, would have to be necessarily adjudged
on the touchstone of Civil Procedure Code, 1908--Special Banking Court could not pick
and choose the provisions of Civil Procedure Code, 1908 --- Where gross violation of
provisions of Civil Procedure Code, 1908 was identified by the aggrieved party, Special
Banking Court could not take refuge in provisions of Banking Companies (Recovery of
Loans) Ordinance, 1984, to say that it was not bound to follow provisions of Civil
Procedure Code, 1908 strictly.
(1) Banking Companies (Recovery of Loans) Ordinance (XIX of 1984)--

---- Ss. 3 & 6 --- Civil Procedure Code (V of 1908), OXXI, Rr.90 & 92-- Material
irregularities and fraud in publishing and conducting sale --- Effect-- Special Banking
Court in the "Robkar" sent to Court auctioneer directed him to auction the property
according to "Fard Talika", which related to movables --- Auction of property in question
viz. immovable property, thus, did not have lawful backing of Special Banking Court ---
Material irregularities and fraud in publishing and conducting sale in question, having
been effected, sale in question could not be sustained.
(m) Civil Procedure Code (V of 1908)--

XI, Rr.66, 67, 68, 69 & 54(2) -Proclamation of sale in execution of decree by public
auction --- Court would cause proclamation of intended sale to be made in the language
of such Court --- Essentials for making proclamation by public auction---Non-compliance
with provisions of OXXI, Rr.66, 67 & 68, Civil Procedure Code, 1908 --- Effect ---
Contravention of provision of OYJU, R.66, Civil Procedure Code, 1908---Sale would be
rendered a nullity.
Under Order XXI, Rule 66, Civil Procedure Code, 1908, it was duty of the Court to cause
' to be made a proclamation of sale in the language of the Court, where the property was
to be sold by public auction. Such proclamation had to be drawn after notice to the
judgment-debtor. Under sub-rule (3) of Rule 66, OXXI, Civil Procedure Code for such a
sale, an application had to be made to the Court. Further, the proclamation should include
everything considered as material by the Court, to enable a purchaser to know the nature
and value of the property. According to Order XXI, Rule 67 read with Rule 54(2), C.P.C.
such proclamation had to be made by the beat of the drum and a copy thereof affixed on
the property as well as the Court House. Under Order XXI, Rule 68, there should be an
interval of 30 days between the date of the sale and the date of the proclamation. Rule 69
lays down that where the sale through auction was adjourned for more than 7 days, a
fresh proclamation should be issued unless waived off by the judgment-debtor.
The non-issuance of the proclamation was not disputed. The noncompliance with the
provisions of Rules 66, 67 and 68 of Order XXI, Civil Procedure Code had also not been
seriously controverted. Non-publication of sale proclamation by beat of drum, had caused
a serious injury to the aggrieved persons. The effect of such omission needs to be
measured in combination with other illegalities, with which the record was replete and
had been pin-pointed in the succeeding paragraphs of impugned judgment. There was
thus, no substantial compliance with the provisions of law, and the lacuna did not stand
removed by publication. So far as issuance of proclamation under Order XXI, Rule 66
was concerned, it appears to be mandatory. Due to the contravention of Order XXI, Rule
66, Civil Procedure Code, 1908, the sale was rendered a nullity.
The purpose of fixing the reserve price under the proclamation is that the Court
safeguards the rights of the judgment-debtor and the bid starts from that figure. Such
price had to be fixed after objective consideration of the relevant material which the
Court could procure by holding a summary inquiry and summoning and examining any
person possessed of necessary information as provided by clause (4) of Rule 66, C.P.C.
The omission to issue a proclamation resulting in non-disclosure of the reserve price of
Page No. 3 of 18
property, had a very strong bearing on the allegation as to the commission of the fraud;
inasmuch as a -very valuable commercial property situate in the heart of the Capital City
was shown to have been auctioned at a throw away price. As no notice was issued to the
judgment-debtors, they had no intimation regarding the sale of their property and thus
could not protect their rights.
National Bank of Pakistan v. Nasir Industries 1982 CLC 388 and Manilal Mohanlal Shah
v. Sardar Sayed Ahmad AIR 1954 SC 349 ref
(n) Civil Procedure Code (V of 1908)--

---- 0. XXI, Rr. 84 & 85 --- Non-deposit of specific amount by auction purchaser --Effect
--- 3/4th of sale price should have been deposited by auction purchaser in Court within
fifteen days of sale --- Non-deposit of such amount within the requisite time would render
the sale void.
(o) Fraud--
---- Fraud is a multidimensional concept --- Deceitful act exposing some one to actual
loss or risk of possible loss; and an active concealment of fact by any one having
knowledge of the same would constitute fraud --- Quantum of evidence for establishing
fraud. Fraud is a multidimensional concept. Broadly speaking, it is a deceitful act which
exposes someone to actual loss or risk of possible loss. An active concealment of fact by
anyone having knowledge of the same is another fact of the fraud. A distinction has to be
drawn between mere suspicion and the actual commission of fraud. It is not easy to
unearth a fraud because a person who embarks upon such an exercise usually defaces all
traces leading to his deceitful act. Law does not provide a particular quantum of evidence
for establishing a fraud. It is for the Court called upon to decide such an issue to be
satisfied by the material brought before it, as to the practicing of fraud, on it or on one of
the litigating parties by the other. From evidential point of view, a finding of fraud would
be an inference arising in relation to certain facts established on the record. But in order
to determine whether the affected persons had succeeded in establishing the allegation of
fraud, the effect of the facts proved on the record, must be assessed in totality. The
material on the record would have to be evaluated in the light of such accepted principles.
(p) Civil Procedure Code (v or 1908) –
---- 0. XXI, Rr.89, 90, 91 & 92 --- Limitation Act (IX of 1908), S.18--Confirmation of
sale in execution of ex parte decree --- Application by judgment-debtor for setting aside
ex parte decree and non-confirmation of sale --- Court had no power to confirm the sale
during dependency of such application or when the time for making such application had
not expired--Where a party was kept away from the knowledge of their right to sue or rile
an application, because of fraud of other party, for purpose of limitation, time 'Would be
computed from the date of discovery of fraud --- No one could be expected to seek
removal of an order, of which he had no knowledge—Judgment debtor having been kept
in dark regarding ex: parte decree, subsequent auction proceedings (in execution of such
decree) and the confirmation of sale of immovable property by practicing fraud and
misconduct, limitation would start from the date when fraud had come to the knowledge
of the affected party --- Period of limitation, in such a case, would be deemed not to have
run out and confirmation of sale by Court made during such interregnum, in ignorance of
true facts, would be considered as without lawful authority, a nullity in law, incapable of
creating rights in favour of auction-purchaser.
(q) Civil Procedure Code (V of 1908)---
0. Y_XI, R.92 --- Confirmation of sale got through fraud --- Objection could be raised
even after confirmation and confirmation could not be used as a shield for the fraud by
which sale had been effected.
Janak Raj v. Gurdial Singh and another AIR 1967 SC 608; Hudaybia Textile Mills
v. Allied Bank of Pakistan PLD 1987 SC 512; Degapudi Pulla Peddi v. Rabla
Rattabhrami Reddi and others ILR 56 Mad. 734; Phoolchand v. Bader Prasad AIR 1953
Raj. 51 and Ganapathy Muddian v. Krishna Muhakiat AIR 1917 PC 121 ref,
(r) Banking Companies (Recovery of Loans) Ordinance (XIX of 1984)---

Page No. 4 of 18
---- S. 2---Civil Procedure Code (V of 1908), OXXXVII, Rr.3, 4 & OXXI, Rr.90 & 92---
Ex parte decree and orders in execution of such decree including sale of immovable
property and confirmation of such sale having been effected through fraud and
misrepresentation were set aside-- Defendants' application for grant of permission to
defend suit would be treated as within time and disposed of afresh according to law ---
Suit would be decided afresh.
Ch. Khurshid Ahmad with M.S. Mahboob for Appellants.

Sh. Imtiaz'Ahmad for Respondent No.1
Kh. Muhammad Farooq for Respondent No.2.
Dates of hearing: 8th, 9th and 10th May, 1993.
JUDGMENT
SH. IJAZ NISAR, J.---We process to decide FA.Os. Nos. 45-89 and 46-89 by this
single ju dgment as common questions of law and facts are involved.
The facts in brief are that a suit brought by' the Muslim Commercial Bank
Limited, Aabpara, Islamabad Branch on 5-3-1981 against Col. Noor-ul-Haq, his father
Ghulam Hussain and his son Ahmad Mahmood for the recovery of a sum of
Rs.1,87,216.73 by the sale of mortgaged property was decreed ex parte on 23-7-1981 by
the Special Court Banking-I, Lahore, Camp at Rawalpindi. Ghulam Hussain died in
October, 1987 and was survived by his son Mazhar-ul-Haq, as his sole heir. The decree,
therefore, stands against the present appellants, namely Mazhar-ul-Haq and Ahmad
'Mehmood. While passing the decree, the Court directed the defendants appellants to
make the payment of the decretal amount within a period of six months and in case of
their failure to do so the decree-holder was entitled to realise the suit amount through
auction of the mortgaged property. As it would have been, the amount was not paid by the
appellants. On 21-12-1984P the mortgaged property was auctioned in favour of
respondent No.2, for a sum of Rs.5,10,000, and a report in that behalf was submitted to
the Court by the Court auctioneer.
2. On 17-9-1986, the appellants. moved before the trial Court, an application under
Order XY-XVII, Rule 4 read with Order IX, Rule 13 and section 151, C.P.C. for setting
aside the ex parte decree and for permission to defend the suit.
The appellants also moved another application under Order XXI Rule 90 of C.P.C. for
setting aside the sale. Each application was accompanied by an application for
condonation of delay.
The two applications viz. application for setting aside ex parte decree and
application for setting aside the sale, were tried jointly and ultimately dismissed by the
learned trial Court by the impugned order, dated 13-11-1989.
F.A.0. No. 45/89 impugnes the validity of the order in so far as it relates to the
dismissal of application for setting aside the ex parte decree while F.A.O. No.46/89
questions that part of the order which relates to application for setting aside the sale.
3. The contention of the appellants was that they had no knowledge of the institution
of the suit; and that they were not duty served with summon or notice and the decree was
passed behind their back; the learned trial Court violated the relevant provisions of law in
taking the ex parte proceedings. Similarly, it was also alleged that the sale was vitiated by
fraud and various other material irregularities. According to the appellants, the auction
price was ridiculously low as compared to the- price, the property put on auction could
fetch in the market. The decree-holder as also the Court auctioneer and the auction-
purchaser opposed the application in relation' to their respective interests., They referred
to the proceedings of the suit and contended that all necessary measures were adopted for
the service of the defendants-appellants and, ex parte proceedings were taken after the
substituted service when service was not possible through ordinary means. The decree-
holder stated that the judgment-debtors were well aware of the decree as thereafter they
have been negotiating with the I Bank on the mode of payment.
Page No. 5 of 18
4. The grave men of the appellants is that they were not residing at the address given in
the plaint and on which the summons and subsequent proclamation were issued. They
also agitated against, the mode of service-of summons and the subsequent order of the
Court for taking ex parte proceedings. This controversy is covered by issues No. I and 2
reproduced below.---
(1) Whether the plaintiff-Bank acted mala fide and fraudulently in deliberately giving
false address of the defendants in order to secure an ex parte decree against them?
OPP.
(2) Whether the defendants were duly served in the first instance before the ex parte
decree was passed? If so, with what effect. OPR.
There is no dispute to the fact that the appellants were never served personally and their
service was effected through proclamation in the newspaper. A reference to the record of
proceedings reveals that on 8-3-1981, the date on which the suit came up for hearing
before the Court, summons were directed to be issued to the defendants for 2-4-1981
through ordinary process as well as through registered post. It was further observed that
the service might be effected by affixation if the defendants could not be served in
ordinary manner. The summons and the registered letter was dispatched at the address of
the defendants as given in the plaint, namely 462/13, 6th Road, Satellite Town,
Rawalpindi. Both the processes were responded by an identical report of the concerned
officials. The Process-Server reported that Bungalow No.462/D was in possession of its
owner, namely Haji Fazal Hussain for the last 3 years; prior to that, it was rented out by
him and that none of the defendants mentioned in the summons resided in it. To the same
effect, was the report of the official of the Postal Department on the registered letter, sent
back to the Court as undelivered. Presumably for that reason service was not effected
through a fixture. However, when on 2-4-1981 the case came up before the learned
Special Judge Banking, without adverting to the reports of the Process-Server and the
postal official, seemingly in routine, he ordered service through publication for 27-5-1981
in "Afaq", Rawalpindi. The publication could not be made for that date and was issued
for 25-6-1981 which was the next date of hearing. The appellants' address disclosed
therein was the same as given in the plaint. On that date the case was adjourned to 23-7-
1981 for ex parte evidence. On 23-7-1981, the learned trial Court recorded the statement
of Tariq Saeed, Officer Incharge Advances, and as already stated passed the ex parte
decree for suit amount. The learned Special Judge Banking answered both the issues
against the appellants. According to the impugned order, the factors which influenced his
decision in this behalf are that though while appearing as his own witness Brig. (Retd.)
Mazhar-ul-Haq stated that he vacated house No.462/D in the middle of the year 1974, yet
in the documents comprising deed of power of attorney (Exh.DH/1) executed by Ghulam
Hussain in favour of the appellants, Bank's letter, dated 24-12-1974 (Exh.DH/3), the
mortgage deed executed in January, 1975 (Exh.P.1) and the NOC, dated 25-10-1976
(Exh.DH/2) issued by the Bank to the appellants, their address given was 462/13,
Satellite Town, Rawalpindi. It was observed that the appellants never gave any intimation
to the Bank regarding their permanent address or change of the address. The learned trial
Court also referred to the principle that debtor should follow the creditor.
5. From the impugned order, it is also evident from the appellants' side, in order to
assail the validity of service through publication, apart from reliance on other
submissions, on the authority of Syed Muhammad Anwar v. Sheikh Abdul Haq 1985
SCMR 1228 it was pointed out to the learned Special Judge Banking that service through
publication could not be sustained unless there was material before the Court for
formulation of opinion that it was not possible to serve the defendants in ordinary way
and further a finding was recorded that they kept out of the way to avoid service. The
appellants' case was that once through the report of the concerned agencies it was
established that the appellants no longer resided in Property No.462/D, it was incumbent
upon the trial Court to have required the respondent -Bank, to furnish the correct address
of the appellants and then make an effort to serve them by ordinary means, without which
resort to service, in routine through publication was illegal. But this argument did not
carry weight with the learned Special Judge Banking. He referred to Rule 8 of the
Banking Companies Rules, 1980, while casts an obligation on the Reader of the Court to
"issue summons and notices to the defendant simultaneously through the Bailiff of the
Page No. 6 of 18
Court, by registered post acknowledgment due and by publication" and expressed the
view:---
"The order regarding substituted service through publication also had to be passed in
routine, without keeping in view the circumstances which were required to be considered
for substituted service, under the ordinary law, as contained in the Civil Procedure Code.
In fact in the cases of recovery of loans no substituted service is provided and i is one of
the ' modes to be adopted by the Court simultaneously along with the others."
in view of these findings the trial Court held that the appellants were duly served;
consequently their assertion that the Bank, mala fide and deliberately gave their false
address to procure ex parte decree, particularly when the Bank officials did not have any
animosity against the appellants, was found to have remained unproved.
6. It is admitted between the parties that at the time when the loan for the suit amount
was raised, appellant No.1 namely Mazhar-ul-Haq was a serving personnel as Colonel in
the Pakistan Army. He was posted at Rawalpindi and in that capacity resided in the
aforesaid House No. 462/13, a private property owned by Mian Muhammad Afzal
(A.W.3) which had been requisitioned by the Government. It has been established on
record that subsequently appellant No.1 was posted at Karachi and the house was also
derequisitioned.
7. It is the burden of this judgment to examine as to how far these findings of the
Special Court Banking are in conformity with the facts proved on the record and the law
on the subject. It is on the record that house No.462/13 belonged to Mian Muhammad
Afzal, who deposed that it was requisitioned by GHQ and remained in occupation of
Brig. Mazhar-ul-Haq, who in March 1974 was transferred to Karachi and he sold away
the property and handed over its possession to the vendee. Appellant No.1 has deposed
that at the time of grant of loan he was posted at Karachi but his family was residing in
Rawalpindi and they vacated house No'. 462/D in the middle of 1974. According to his
statement in October 1975 he was transferred from Karachi to Lahore Cantt. from where
in 1979 he was sent to Army Medical College, Rawalpindi but towards the end of that
year, he was re-transferred to Lahore; he was retired from Army from that station on 18th
October 1981 and shifted to his house No.46-B-1, Gulberg III, Lahore,. permanently. It is
in his statement that during this period he has been corresponding with the Bank. In this
respect he has tendered in evidence letters Exhs. D.1 to D.2. It has already been stated
that the suit was instituted against the appellants on 5-3-1981. It is evident from the
statement of appellant No.1 that at that time, he was posted at Lahore, which rinds ample
support from the letters aforesaid. In the letters, dated 21-9-1977,13-3-1978 addressed by
the Bank to appellant No.1 (Exhs.D-1 and D-2) his official address of Lahore Cantt. is
mentioned. The same address appears in letters, dated 25-2-1976 and 2-10-1976 (Exhs.D-
6 and D-7) sent to the Bank by the appellant. The address of appellant No.1 given in
letters, dated 2-4-1984 and 12-7-1984 (Exhs.D-4 and D-5) issued to him by the Bank is
"46B/1 Gulberg 111, Lahore". It is to be noticed that the factum of residence of appellant
No.1 or for that matter of his family in house No-462/13, Rawalpindi, and its
derequisitioning pertain to the year 1974 or so. It was 13 years thereafter that in the year
1987, appellant No.1 and his witness Mian Muhammad Afzal entered the witness-box.
Even if there are some variations in their depositions, these are not of any significance
and would not militate against the creditibility of these witnesses. The fact that in the
deed of power of attorney, mortgage deed and N.O.C. relating to the years 1974, 1975
and 1976 respectively the appellants' address was shown as 462/13, Rawalpindi, in the
context of the controversy before us pales into insignificance. What is significant is that
what was the correct address of the appellants at the time of institution of the suit and was
its disclosure made in the plaint by the respondent-Bank. Technically, it might be
considered as a little unfair on the part of appellant No.1 not to have specifically
conveyed to the Bank the change of his address. But the fact remains 'that the latter had
been in correspondence with appellant No.1, and as borne out from the said letters, was
not unaware of his address and at least one thing is quite obvious that when the suit was
filed the borrowers were no longer residing in Rawalpindi particularly when the Process-
Server and the postal official had also submitted identical reports that none of the
defendants was in occupation of the house in question. It was the obligation of the
respondent-Bank to have given in the plaint the latest and accurate address of the
appellants. But it failed to discharge this obligation.
Page No. 7 of 18
8. Ordinarily house No. 462/13, Satellite Town, Rawalpindi, could be treated as the
appellants' last address and service including the substituted service validly effected on
the same address. But it is established from the plaintiff-respondent's own' record that the
Bank had been making correspondence with the appellants not only at Lahore where the
appellants had a private residence but also on the official address of appellant No.l. It is
clear to us that the appellants had actually moved away from 462/13, Satellite Town,
Rawalpindi and the address originally incorporated in the loan seeking documents was no
more their place of abode, temporary or permanent, at the time of institution of the suit.
The maxim "debtor seeks the creditor" cannot be stretched to the detriment of the
appellants for the obvious reason that they had not lost their whereabouts and the parties
were in contact with each other on the same cause at a different address. The principle of
the maxim could be applied only in a case where the creditor had no liaison with the
debtor and the latter would be under an obligation to keep the former abreast of his
place--address. When the creditor keeps on pressing his demand and also supplies to the
debtor the statement of accounts as has been in this case on an address different from the
one originally recorded, the debtor shall be absolved of his duty of notifying to the
creditor the change in his address, for the change is already known to the creditor. In such
circumstances, the debtor shall rather be deemed to have chased his creditor. After going
through the record including the statements of appellant No.1 and Mian Muhammad
Afzal. we are firmly of the view that these have been grossly misread and wholly
unwarranted and hypothetical conclusions drawn therefrom by the learned Special Judge
Banking.
1 9. We may now examine the relevant provisions of law governing the service of
summons issued to defendant in a suit filed under the Banking Companies (Recovery of
Loans) Ordinance, 1979. A reference has already been made to Rule 8 of the Rules made
under section 15 of the Ordinance, as it stood at the time of institution of suit against the
appellants. Subsequently on 31-1-1988 An amendment was introduced in this rule to the
effect that service by any of the aforesaid modes shall be deemed proper and valid service
for the purpose of the Ordinance. The effect of the amendment is obvious but as observed
by their Lordships of the Supreme Court in Ahmad Autos v. Allied Bank of Pakistan PLD
1990 SC 497 even under the unamended provision, service was to be held good service if
it Was effected by any one or more of the modes of service provided for in Rule 8. Hence,
for the purposes of the present case, the unamended provision had the same effect as was
intended to be given to it through the said amendment.
10. There is thus -no doubt that a Banking Court is competent to order service by
substituted measures in the form of publication but the provision does not divest the
Court of its authority and duty to look into the relevant circumstances. This provision in
fact presumes the correctness of the address of the defendant as given in the plaint. If the
address is patently insufficient or incomplete or it comes to the notice of the Court that
there is such a material defect in the given address as may obviate proper service, the
Court will not be bound to take steps for the service of the defendant especially by
affixation or publication unless correct address is given or the defect is removed. We may
observe, that in exercising, civil jurisdiction and hearing a suit against a i borrower, under
section 6 of the Ordinance, a Special Court has "all the I powers vested in Civil Court,
under the Code of Civil Procedure, 1908". Rule 8 is not in derogation of the powers
vested in the Special Court under the provisions of C.P.C. Reference in this connection
may also be made to section 3 of the Ordinance. In the present case, it has already been
noticed that there were two identical reports, one from the Bailiff of the Court and the
other from the post, office that the defendants were not residing at the given address. In
such circumstances, a straight away order for substituted service through publication
could not be justified unless it was shown to the satisfaction of the Court that the
defendants' whereabouts were not known and they could not be served except at their last
known address. We may even go to the extent of saying that even if the Court had ordered
service through publication simultaneously with other modes and it transpired from the
reports of Bailiff and postman that the defendant was not residing at the given address.
the Court was not bound to accept the publication as a good and sufficient service. In
such a case as already observed proper course would be to ask the plaintiff to supply
correct particulars of defendants' address. The plaintiff would either comply with the
direction or show to the satisfaction of the Court that he had no other address of the
defendants. But if the plaintiff in spite of being in a position to provide other address does
Page No. 8 of 18
not provide, or suppresses the same intentionally or through inefficiency, the subsequent
ex parte proceedings will be a nullity in the eyes of law.
11. In the case in hand, the principles underlying provisions of Order V, Rule 20 of
C.P.C. shall also be attracted in that the order for service by publication was not made
simultaneously with the order for issue of summons in ordinary manner. Thus, it was a
case identical to the one contemplated by Order V, Rule 20, C.P.C. When all the three
modes had not been adopted simultaneously and service had not been effected through
the two processes, publication was not to be ordered mechanically without adverting to
the reports. Before granting service through publication it was incumbent up . on the
Court to have applied its mind to the facts of the case and found out that whether in spite
of the best efforts on the part of the plaintiff, the defendant could not be served for the
reason that he was avoiding service with the object of obstructing the disposal of suit.
The case of the principal defendant who was, not residing at the given address and had
changed police of abode to the knowledge of the plaintiff, was all the more decipherable.
We may refer here" with advantage to the following observations appearing rendered by
Saleem Akhtar, J. (now Judge of the Supreme Court) Bank Ltd. v. Nishat Chemical
Industries Ltd. 1986 CLC 1985:---
"The third situation may arise where the summons has been published in a newspaper but
the summonses issued through bailiff and by registered post A/D, have not been served or
not issued at all. In such circumstances mere publication of summons cannot be treated as
proper and valid service. Rule 8precribes mode of issuing summons but the provisions of
Ordinance ~r Rules are silent over the effect of publication of summons. in these
circumstances in view of section 3 of the Ordinance the provisions of C.P.C. which are
not inconsistent with the Ordinance can be pressed in service. In my view the summons
published under Rule 8 can be held to be due and proper service if it is established that
the defendant is avoiding the service through bailiff and by post or his whereabouts are
not known."
Before ordering publication the Court should have therefore, satisfied itself that all the
essential conditions for resorting to this mode of service and to proceed ex parte against
the appellants existed. The view taken by the Special Court, that the publication had to be
made in routine, divorced from the circumstances of the case is wholly untenable. A
Court, Judicial Tribunal or even a quasi-judicial Tribunal, interested with the duty to
determine the valuable rights of the parties arraigned before them are required to ad
deliberately and after proper application of mind to the matter before them.
12. Be that as it may, during the trial of the applications under appeal it became crystal
clear that the appellants were not residing at the address given in the plaint and their
subsequent place of living was known to the plaintiff Bank. Much emphasis has been laid
on behalf of the respondent that the Bank had no mala rides to sue the appellants on a
wrong address that for this reason alone the impugned order should be maintained.
13. Let the question of mala rides for the sake of arguments be presently I, I excluded
from consideration. The point - for determination then would be whether the appellants
were lawfully served or not. It is a mixed question on fact and law which is to be
answered independent of the intention of any party. The defendants-appellants had a
right. to defend their cause and for that L purpose, the plaintiff-Bank was under a legal
obligation to make best efforts in 'i effecting the service on the defendants through the
process of Court. It could J provide to the Court alternate and correct address for the
service of the e defendants; the address where the Bank had itself been corresponding
with the defendants. The claim that the Bank had no mala fides regarding the address s
f9r service, therefore, for the purpose of adjudication of the limited point under
consideration, has no relevancy. It may be added that from jurisprudential angle ,what is
done without due care and caution cannot be considered to have been done in good faith.
It is clear to us that the plaintiff- Bank failed to perform its legal obligation, which
amounts to mala fides in law. Appellant No.1 could have well been served through GHQ,
but no effort was made. We, therefore, have no hesitation in holding that the respondents
were not duly served; consequently the ex parte decree is not in conformity with law and
cannot be sustained. The findings on issues Nos.1 and 2 are, therefore, reversed.
Page No. 9 of 18
14. It has been contended by the respondent decree-holder that the judgment-
debtors were aware of the proceedings of the suit and ex parte decree. This brings us to
issue No.3 which has been answered by the learned Special Court against the appellants
largely for two reasons, firstly the statement of lhtasham-ud-Din, Bank Officer and
secondly, the post ex: parte decree publications got made by the Court auctioneer, in the
newspaper to effect the sale. This led the Court to conclude that the appellants'
applications for setting aside the ex parte decree ' and the sale were barred by time. Issue
No.4 framed in this behalf was thus also decided against the appellants. We are not
persuaded to uphold there findings. lhtasham-ud-Din (R.W.1) in his statement claimed
that on 15-1-1984 a meeting of the Nationalized Banks Credit Committees held in
National Bank of Pakistan, was attended by appellant No.1 and on account of his failure
to liquidate the liability; the Bank filed a suit which was decreed and orders for sale of
the property were also passed. According to the witness, appellant No.1 did not pay any
heed to him and demanded that the Bank had charged exorbitant rate of interest.
15. We may observe that the solitary statement of R.W.1 is not sufficient to prove the
contention firstly, because the alleged meeting was held under the auspices of some other
Bank namely, the National Bank of Pakistan and, secondly, as admitted by the witness,
minutes of the meeting do not get mention of the presence of appellant No.1 or of the
discussion about his case. Furthermore appellant No.1 was not cross-examined on this
point to impeach his incredibility on the question of his so-called previous acquiescence
in the ex: parte decree. There is still another reason for not believing this evidence.
Exh.D/4 one of the various letters issued to the appellants by the Bank on 2-4-1984 for
the settlement of outstanding amount, refers to a letter, dated 15-1-1984.of appellant No.1
undertaking to pay the suit amount before the end of March, 1984. This could be a very
strong and cogent evidence against the appellants but for the reasons best known to the
decree-holder it was not produced before the 'Court during the trial of the appellants'
application. Moreover, the thereof the letter Exh.D-4 belies the respondent's stand that
appellant No.1 had been informed of the ex parte decree and the order as to the sale of the
property in execution thereof. It is difficult to accept that despite such information
resulting in his, deprivation of a very valuable property, the appellant did not agitate in
the matter. As regards the publication made at the instance of the Court auctioneer, Brig.
Mazhar-ul-Haq in his deposition has categorically stated that he did not come across any
such publication. The record shows that the trial Court sent summons Exh.D-9 to
Pakistan Railway Board, which occupied a part of the mortgaged property as tenant under
appellant No.l. The Railway Department vide their letter Exh.D-8 passed on this
summons to the appellant. The latter has deposed that it was on receipt of Exh.D-8 that he
got the Court file inspected through his counsel and came to know of the ex parte decree
and the subsequent proceedings conducted on its basis. That he did not receive any notice
from the Court, or Bank etc. Keeping in view the facts and circumstances of the case, we
have no reason to doubt the veracity of statement of appellant No.l. The period of
limitation would start from the date of knowledge i.e. 14-9-1986 which is date of the file
inspection. The application for setting aside the ex: parte decree and for grant of leave to
defend the suit was not barred by time.
16. We now proceed to deal with issue No-5 to the effect as to whether special
circumstances exist for setting aside the ex: part decree and the execution. On this issue
as well the Special Court rendered a verdict against the appellants. The reasons given by
it in this behalf were that the appellants' assertion that they were not served, by itself did
not constitute a special circumstance for setting aside the ex: parte decree. That upon the
terms of the loan, the Bank had the authority to dispose of the property without
intervention of the Court. That the contents of the mortgage deed posed a bar for the
appellants to question the fairness and correctness of the sale price. In the course of its
decision on this issue, the Special Court also found justification for the commencement of
execution proceedings as the time limit mentioned in the decree for payment of decretal
amount had expired. In the opinion of the Court below, the auction proceedings did not
suffer from any *illegality. It may be stated that before the trial Court it was urged that
the property worth more than Rs.65 lacs was fraudulently auctioned away for a paltry
sum of Rs.5,10,000; its monthly rent was Rs.40,000; since the decretal amount could be
recovered through attachment of rental income of a few months, there was no need to sell
away the property. These contentions were however, turned down by the Special Court. It
was maintained that inadequacy of sale price was no ground for interference with the
sale. The learned trial Court also relied upon the application, dated 19-4-1981
Page No. 10 of 18
(Exh.R.W.3/3) addressed to United Bank Limited by appellant No.1, stating therein that
after his retirement he had no funds to clear the liability of that Bank. The fact that the
appellant had obtained loan from other Banks which he failed to re-pay also influenced
the decision of the Court, -in answering this issue against the appellants.
17. We have gone through the record to assess the correctness of the reasoning which
prevailed with the learned Court below and feel that the decision of the aforesaid issue
has been influenced by irrelevant considerations and the conclusions drawn by it are
contrary to the facts proved on the file. We have already held that the appellants' service
through publication was no service in law and the ex parte decree passed on the footing
of such service was a nullity. Where a defendant satisfies the Court that he was prevented
by sufficient cause from appearing in the Court, the decree passed against him would be
set aside and permission granted to him to contest the suit. We are firmly of the view that
the appellants' failure to appear in the Court, can fairly be attributed to sufficient reasons.
The argument founded by the Special Court on the terms of the loan and mortgage deed
and that the appellants owed debt to other Banks are hardly germane to the controversy
falling for decision under the said issue. As regards the sale price and rental value of the
property, the record before us clearly demonstrates that it is a four-storeyed building
inclusive of basement, having an area of 3,000 sq. ft. located in Supper Market,
Islamabad which is the important commercial area of the capital. The fact that Pakistan
Railway Board and Lawrencepur Woollen Textile Mills hired parcels of this building is
suggestive of the inference that the premises are somewhat prestigious ones. It is in the
statement of Haji Mumtaz who is serving as Supervisor with M/s. Royal Furniture,
Peshawar that this concern is a tenant in a shop in the building at the monthly rent of
Rs.5,500 since the year 1980. The statement of Ch. Muhammad lqbal (A.W.2) shows that
M/s. Lawrancepur Woollen and Textile Mills hired first floor of the building from 1980 to
1986 and paid rent to appellant No.1 @ Rs.8,500 p.m. The details of the tenants
occupying different tenements of the building and rent paid by them have been disclosed
by the appellant in his statement as under:-
Name of the tenant Monthly rent
Pakistan Railway Board:
(a) Basement 4400
(b)2nd Floor 9000
2. Victoria Furniture:
(a)Basement 2000
(b)3rd Shop in ground floor. 6500
.3, Progressive Traders:
(One shop in ground floor) 3500
4 Royal Furniture Peshawar: 5500
(2nd shop in ground floor)
5. Lawrenccpur Woollen & Textile Mills: 8500
(Ist Floor)
Total: Rs.
39,400
While discussing issue.No.5, the learned Special Court has not adverted to the evidence
of the appellants regarding rental value of the property and rejected their claim on the
ground that had that much rental income accrued to them, they would have cleared their
liability. This argument should carry no weight. The fact of the matter is that
unfortunately the appellants committed default in clearing the outstanding debt and,
therefore, were sued by the Bank. The evidence regarding rent is in consonance with the
appellants' claim that the value of the property which is a commercial building at the
relevant time was not less than Rs.6,50,000. The appellants' evidence in this behalf has
remained unrebutted. We are aware that mere inadequacy of sale price by itself is not a
sufficient ground for interference by the Court. But if the inadequacy of price is by reason
of fraud and material irregularity it provides a ground for setting aside the ex parte decree
as well as the sale. (See Ganapathia Pillai v. Malaipcrnumal Chettiar and another AIR
1925 Mad. 202 at 203). The question of commission of fraud has been discussed in the
later part of this judgment ~16-A). Elsewhere it has also been discussed that in exercise
of its civil jurisdiction the Special Court has to follow the procedure provided in C.P.C.,
except to the extent that a contrary provision is found in the Banking Companies
(Recovery of Loans) Ordinance, .1979. Section 7(2) of the Ordinance expressly lays
down that even in suits based on mortgage the summary procedure provided for in Order
Page No. 11 of 18
37, C.P.C. shall be followed. The combined reading of the relevant provisions of the
Ordinance will reflect that in a recovery suit before the Special Court, a defendant cannot
appear and defend the suit as a matter of right and has first to obtain the leave of the
Court to defend the suit. Thus except for this deviation, other provisions of the C.P.C. will
apply to a suit for recovery heard by the Special Court. Under Order 34, Rule 4, C.P.C. in
a suit based on mortgage a preliminary decree has to be passed necessarily, if the
defendant fails to pay the amount due from him, only then the plaintiff can apply to the
Court for final decree. It is the practice of this Court while acting as a Special Court
under section 2(b)(ii) of the Ordinance to pass a preliminary decree in suit founded on
mortgage. In the instant case, the learned Judge Banking Court failed to pass a
preliminary decree. In the impugned judgment, it is stated that ex parte decree is the final
decree. The appellants were thus deprived of the opportunity to pay into the Court the
amount due from them and avoid the Court sale, in terms of Order 34, C.P.C. The non-
compliance with Order 34, C.P.C. provides sufficient reason for setting aside the
impugned decree. It may be added that the existence of a valid decree is the condition
precedent for sustenance of the auction proceedings and the orders passed in such
proceedings. Since there was no valid decree, the entire superstructure would be knocked
down.
The learned Court's reliance on the application of appellant No.1 (Exh.R.W. 3/3) is also
misconceived. The reason is that it was never put to him as required by Article 144 of
"Qanun-e-Shahadat" which is mandatory.
For all these reasons, we find that there are special circumstances for setting aside the ex
parte decree and other proceedings, and allow the appellants to defend the suit. The
Special Court's finding on issue No.5 cannot be sustained. This issue should have been
answered in favour of the appellants.
18. An application under Order 21, Rule 90 cannot be entertained "unless the applicant
deposits such amount not exceeding twenty per cent. of the sum realised at the sale, or
furnishes such security, as the Court may direct". In the prayer clause of the appellants'
application, a specific request was made that if directed by the Court they were prepared
to deposit ' in accordance with law the requisite amount in the Court. The learned Special
Court did not give any such direction. The appellants however, moved another
application on 30-10-1986 for permission to deposit 20% of the sale price in the Court.
The permission was given on 1-11-1986 and the amount was deposited by them in the
Court. The respondents objected to the maintainability of the application under Order 21,
Rule 90, C.P.C. on the ground that it was not accompanied by the deposit at the time of its
institution. This objection which is reflected by issue No.7 has been accepted by the
learned, trial Court. It is also reiterated before us by the learned counsel for the
respondents, but we are unable to agree with the learned trial Court. We feel that under
the 2nd proviso to Rule 90 ibid the Court is duty bound to pass an order specifying the
amount not exceeding 20% of the sale price, requiring the applicant to deposit the same
or furnish security in lieu thereof. It is only when the applicant fails to comply with the
order that the application can be rejected. This view -finds support from the following
observations made by Zafar Hussain Mirza, J. (as he then was) who spoke for the D.B. in
Alhamdl'Begum v. National Bank of Pakistan PLD 1976 Kar. 723:---
"in my humble opinion, the Court had- to pass an order either to direct the deposit of a
sum up to twenty per cent. of the auction amount or to direct furnishing of security as was
deemed appropriate under the circumstances, and then give an opportunity to the
appellant to comply with such order. It was only when the appellant had failed to comply
with such an order that his application under rule 90 could be summarily dismissed."
To the same effect is the opinion expressed by this Court in M. Shafique Shah and others
v. Mst. Irshad Begunf and others 1981 CLC 369. Since the Special Court did not pass any
order regarding deposit at the initial stage, the application could not be ignored on the
ground of non-deposit. The deposit made by the appellants in pursuance of the order,
dated 1-11-1986 would -be treated as in order. Issue No.7 wag also wrongly decided and
is answered in favour of the appellants.
19. In order to show that the sale was liable to be set aside on the ground of material
irregularity and fraud in publishing and conducting sale, several points highlighting the
gross violations, of mandatory provisions of Order 21, C.P.C. and other provisions of law
Page No. 12 of 18
were pressed into service on behalf of the appellants which were rejected by the Special
Court without a detailed examination thereof on the ground that after the confirmation of
the sale in favour of a third party, the Court becomes functus officio and ceased to have
jurisdiction to examine the correctness of the objections raised by the appellants. This led
the learned Special Court to decide issues Nos.8 and 8-A against the appellants. In the
course of decision of these issues, the Court also made an observation that it has been
established under a Special Statute and is not bound to follow C.P.C. in stricto senso.
Before proceeding further, we feel it advantageous to refer to, even at the cost of
repetition, what has already been stated, regarding the procedure to be followed by the
Special Court in hearing a suit for recovery of loan. Sections 4(l), 141, C.P.C., sections 3
and 6 (a) of the Ordinance, if read together, clearly demonstrate that while exercising
civil jurisdiction the Special Court has to follow the procedure laid down in C.P.C. and
for the purpose of execution of the decree it can adopt Order 21 and allied provisions of
the said Code. Of course, if there is conflict between the provisions of C.P.C. and the
Ordinance, the latter shall prevail.
20. It is obvious from the record of the case that the Special Court did proceed under
Order 21, C.P.C. The concept of confirmation of sale by the Court and the consequences
flowing from such confirmation owe their origin to Order 21, Rule 92, C.P.C. Once the
Special Court had chosen to adopt C.P.C., the correctness of the orders passed by it in
conducting the sale of the property in dispute shall have to be necessarily adjudged on the
touchstone of C.P.C. If the appellants succeed in establishing the illegalities or material
irregularities committed in the course of auction of the property and confirmation of the
sale, these cannot be legitimately protected merely because in the opinion of the Special
Court, it may pick and choose the provisions of the C.P.C., and where gross violation of
that law is identified by the aggrieved party, express the view that it is not bound to
follow C.P.C. strictly. Such a course can hardly advance the cause of justice.
21. To begin with such illegalities, it is evident from the f e that under the execution
petition, the decree-holder sought the recovery of decretal amount by attachment and sale
of the mortgaged property but in the Fard Talika annexed with it, the property
particularized is house No. D/462, Satellite Town, Rawalpindi, and not the property in
dispute. The special Court issued the warrant of attachment on 4-3-1982 addressed to
Muzaffar Khan Bailiff, but it pertains to movable property and the mortgaged property is
nowhere mentioned in it. On the back side of this warrant appears the Bailiff's report,
dated 1-4-1982 (Exh.R.W.2/1) regarding attachment. but neither the number of the
mortgaged property is mentioned in it, nor the same is described by boundaries, to
facilitate the identification. The case of the appellants is that the Bailiff was in collusion
with the officials of the Bank and the attachment was not made at the spot. The plea finds
support from the statements of A.W.1 and A.W.2. The Bank did not examine the Bailiff
and produced one of its officials, Kaleern Raza Sherwani, to prove the Bailiff's report.
This witness categorically claimed that the warrant of attachment related to the
appellants' property in question but when confronted with the same, he had to admit that
it was only with regard to movable. This would tell upon the weight of the evidence of
this witness. The extrinsic evidence apart, the fact remains that in the absence of property
number and description of boundaries it becomes difficult to associate this report with the
mortgaged property. It is correct that a Court can order sale of a property even without its
attachment but the record does not reflect that the Special Court intended to dispose of
the property without attachment. On the other hand, it appears that it intended to attach
the property but in doing so, lamentably exhibited lack of application of mind and
attached movables. These features of the case are relevant for decision of the disputed
points as these facts constitute res gestae being incidental to and connected with the main
issue namely material irregularities and fraud in publishing and conducting the sale. It is
pertinent to mention here that in the 'Robkar' sent to the Court auctioneer by the learned
Special Judge Banking, he was required to auction the property according to Fard Talika,
which as already observed related to movables. The auction of the property in dispute,
thus, did not have lawful backing of the Special Court.
22. Under Order 21, Rule 66, it is duty of the Court to cause to be made a
proclamation of sale in the language of the Court, where the property is to be sold by
public auction. Such proclamation has to be drawn after notice to the judgment-debtor.
Under sub-rule (3) for such a sale, an application has to be made to the Court. Further as
per clause 2(c), the proclamation should include everything considered as material by the
Page No. 13 of 18
Court, to enable a purchaser to know the nature and value of the property. According to
Order 21, Rule 67 read with Rule 54(2), such proclamation has to be made by the beat of
the drum and a copy thereof affixed on the property as well as the Court House. Under
Order 21, Rule 68, there should be an interval of 30 days between the date of the sale and
the date of the proclamation. Rule 69 lays down that where the sale through auction is
adjourned for more than 7 days, a fresh proclamation shall be issued unless waived off by
the judgment-debtor.
23. The grievance of the appellants is that no such proclamation was issued and
consequently no notice was issued to them, with the result that they had no intimation
that their property was to be sold in execution of the decree. Even no intimation in
pursuance of the direction given in the impugned decree requiring the appellants to pay
the decretal amount within six months was imparted to them; without serving them with a
notice in this behalf the decree; could not be executed. The decree-holder also never
applied to the Court for sale of the property.
24. The non-issuance of the proclamation is not disputed. The non- 1 compliance with
the other provisions of Rules 66, 67 and 68 has also not been i seriously controverted.
The view taken by the Special Court in this respect is 0 that since publicity was given
through publication of notice of auction, the requirement of law stood fulfilled. The
learned counsel for the respondents in their submissions supported this view. In our
opinion, the stand of the respondents is not in consonance with law on the subject. It
seems to that us ' the non-publication of sale proclamation by beat of drum, upon the facts
of the case, has caused a serious injury to the appellants. The effect of this omission
needs to be measured in combination with other illegalities, with which the ,record is
replete and has been pin-pointed in the succeeding paragraphs of this judgment. We
are, therefore, dissuaded to accept that there was substantial N compliance with the
provisions of law, and the lacuna stood removed by publication. So far as issuance of
proclamation under Order 21, Rule 66 is concerned, it appears to be mandatory.
Resultantly due to the contravention of this provision the sale is rendered as a nullity.
25. In Narayan Pursushottan Bansod v. Ramchandra Mudgalji Choudharkar and others

AIR 1948 Nagpur 177, it is laid down that issue of notice under Order 21, Rule 66
touches the jurisdiction of the Court which effects the sale; these provisions are
mandatory and the omission to give notice cannot be treated as a curable irregularity. It
can well be stated that the power to sell property in execution, vests in the Court only
after service on the judgment-debtor and a Court sale without such notice is void.
26. We now proceed to examine the effect of omission to issue the proclamation under
Order 21, Rule 66, from the point of view that there was no disclosure to the prospective
buyers of the approximate value of the property. The purpose of fixing the reserve price,
under the proclamation is that the Court safeguards the rights of the judgment-debtor and
the bid starts from that figure. Such price has to be fixed after objective consideration of
the relevant material which the Court can procure by holding a summary inquiry and
summoning and examining any person ' possessed of necessary information as provided
by clause (4) of Rule 66. The omission to issue a proclamation resulting in non-disclosure
of the reserve price of the property, has a very strong bearing on the appellants' allegation
as to the commission of the fraud; inasmuch as a very valuable commercial property
situate in the heart of Islamabad, was shown to have been auctioned away at a throw
away price. As no notice was issued to the judgment-debtors, they had no intimation
regarding the sale of their property and thus could not protect their rights.
27. In the context of the appellants' prayer for removal of the Court sale on the ground
of fraud, the publication in the newspaper requires a scrutiny. We have seen the four
Newspaper proclamations relating to four different dates, got published by the Auctioneer
for the purpose of holding the auction. Out of these, the last proclamation for 21-12-1984
on which date the property was shown to have been auctioned is of significance. The
property is notified in it simply as Block No.18, Markaz Shalimar with construction.
Similar was the description given in the previous publications. The proper course for the
Court Auctioneer was- to the described the property as 4-storyed building commercial in
character and located in Super Market, Islamabad so that it could attract sizable number
of prospective purchasers. The contentions of the appellants are that since the property
Page No. 14 of 18
was not properly described in the proclamation, the buyers were not attracted. In this
respect, they also impute motive to the Auctioneer.
28. We have already noticed some of the material irregularities by which the
publication, dated 21-12-1984 is visited. The other point worth consideration is that the
conditions of auction were not notified in the said publication. According to the
appellants, this was a designed move. The other point brought out by them is that the
previous date of We was 26-5-1984 but the We was adjourned and 21-12-1984 was fixed
by the Court auctioneer for auctioning the property. The interlude between the two dates
being a longer period than 7 days under Rule 69 ibid a fresh proclamation was necessary
and the date of sale had to be fixed by the Court and not by the Court auctioneer. It is
argued that the latter did not place the-matter before the Court. There is no plausible
explanation for this lapse. The submission is had the auctioneer brought this issue to the
notice of the Court, and a fresh proclamation under Rule 69(2) was issued, the possibility
that the appellants might have entered appearance cannot be ruled out.
29. The appellants' next objection is directed against the bid sheet prepared by the
Court auctioneer. It is pointed out that except their names, it does not contain any other
particular of the bidders. The bids offered by them even do not bear their signatures. The
identification of the bidders was thus rendered impossible. At what time the auction
proceedings were commenced by the auctioneer and whether such time coincided with
the one given out to the public, in the proclamation? The bid sheet is silent. Then how
long the auction proceedings continued and whether the Court auctioneer waited for
considerable time to enable the prospective buyers to come to the spot to participate in
the auction? There is no answer to this question as well in the bid sheet. These are some
of the issues which emerge from the record before us. It is contended by the appellants
that the auction was never held at the spot and the entire proceedings have been
manipulated by the auctioneer in connivance with the auction-purchaser. Apart from the
inferences deducible from the record, the oral evidence in support of this assertion is to
be found in the statements of A.W.1 and A.W.2.3he auction-purchaser examined Kh.
Saleem Ahmad, who claimed to have participated in the auction and offered the bid of
Rs.4,25,000, but he admits that he neither deposited any amount with the auctioneer nor
he held the amount of the bid to his credit in the Bank. It is difficult to conceive that in
the absence of funds, how he chose to take part in the auction.
30. While confirming the sale the Court is expected to apply its judicial mind to the
nature and location of the property and the bid offered for it on its sale through auction.
The difference in the price fixed through auction and the one by private sale is not
unknown. But when the auction price is too low, the Court mechanically accords
approval to the sale, without considering that the offer is too low and the property could
clearly fetch a far more higher price, both the elements of material irregularity and injury
to the judgment debtor would be present in the case. In large towns, the annual rental
value of the property can provide a yardstick for estimation of its market value. It
appears that the Special Court confirmed the sale against Rs. 5,10,000 in routine and
none of these factors was then present to its mind. In this context, the other criticism
against the conducting of the auction is that the Court auctioneer's report should have
informed the Court as to whether or not the highest bid of Rs. 5,10,000 on which the fall
of hammer took place, keeping in view the location and condition of the property,
approximately commensurated with its market value and that despite calls none in the
assembly was prepared to offer bid higher than Rs.5,10,000. On this point too the report
is silent. This silence is categorised by the appellants as a willful suppression of facts as
in their submission five months' rental income of the property was more than enough to
meet the entire decretal amount, and there was no need to auction the building.
31. The Court auctioneer's report is dated 21-12-1984, but according to the file of the
trial Court, it was submitted to the Court on 26-1-1985. Under Order 21, Rule 84, the
auction-purchaser was bound to deposit 1/4th of the purchase money with the Court
auctioneer immediately on the fall of the hammer, failing which the property was liable to
be re-sold. As laid down in Rule 85, the remaining 3/4th amount had to be deposited with
the Court within 15 days from the date of the sale. According to the Court auctioneer's
other report, dated 13-2-1985, he received the sum of Rs.3,82,500 through cheque from
the auction-purchaser on 17-1-1985; obviously the amount was paid to him 27 days after
the sale. It is noteworthy that the particulars of the cheque are not given in the report.
Page No. 15 of 18
Even if the payment was so made to Court auctioneer, much less to deposit the amount in
the Court immediately, he did not convey information to the Court, in this respect until
expiry of 27/28 days after receipt of cheque. All these factors need to be noticed as there
are serious allegations against the Court auctioneer-and thus his conduct is under gaze. In
law 3/4th of the sale price should have been deposited by auction purchaser in the Court
within 15 days of the sale. It is well-settled that if such deposit is not made in the Court
within the time limit of 15 days, the Court is bound to set aside the sale as it is rendered
void. It was held so by Saeeduzzaman Siddiqui, J. (now Judge of the Supreme Court) in
National Bank of Pakistan v. Nasir Industries 1982 CLC 388. The Supreme Court of
India in Manilal Mohanlal Shah v. Sardar Sayed Ahmad AIR 1954 SC 349 has
maintained that Rules 84 and 85 of Order 21 are mandatory. If the auction purchaser fails
to deposit the amount as per time limit fixed therein, there would be no sale at all. These
aspects of the case were completely ignored by the Special Court and not pointed out to it
by the Court auctioneer.
32. As regards the payment of 1/4th of the sale price, to the Court auctioneer, as per
his report, dated 21-12-1984, in this behalf, a sum of Rs.1,27,500 was paid to him by the
auction-pur-haser at the spot, but the argument of the other side is that no such payment
was made to him; that had such payment been made the auctioneer would have deposited
the same in the Court on the next working day, as the retention of the State money was
unlawful. The record reveals that the Court auctioneer handed over a bank draft for
Rs.5,10,000 to the counsel for the decree-holder, on 13-3-1985. This was wholly illegal.
But, the auction-purchaser's counsel submits that the payment to the Bank's counsel was
made under the orders of the Special Court. We may observe that such an order which is
directly in contravention of the express and mandatory provisions of law, cannot cure the
illegality. However, in this respect the other plea of the appellants 'is that the auction
purchaser who was in league with the Court auctioneer had no funds; he arranged the
amount subsequently and passed on the same to the auction purchaser; that is why that it
was long after the sale that the auctioneer chose to offer the amount to the Court and then
days after such offer, transmitted it to the counsel for the decree-holder through a pay
order. Leave apart the decretal amount, although its direct payment to the decree-holder is
not countenanced by law. But the more serious question is that under which law, the
amount in excess of the decretal amount, which undoubtedly belonged to the judgment-
debtor, instead of being deposited in the Court, was passed on to the decree-holder.
33. A fraud is a multidimensional concept. Broadly speaking, it is deceitful act which

exposes someone to actual loss or risk of possible loss. An active concealment of fact by
anyone having knowledge of the -,nine is another facet of the fraud. A distinction has to
be drawn between mere suspicion and the actual commission of fraud. It is not easy to
unearth a fraud because a person who embarks upon such an exercise usually defaces all
traces leading to his deceitful act. Law does not provide a particular quantum of evidence
for establishing a fraud. It is for the Court called upon to decide such an issue to be
satisfied by the material brought before it, as the practising of fraud, on it or on one of the
litigating parties by the other. From evidential point of view, a finding of fraud is an
inference arising in relation to certain facts established on the record. But in order to
determine whether the appellants have succeeded in establishing the allegation of fraud,
the effect of the facts proved on the record, must be assessed in totality. The material on
the record shall have to be evaluated in the light of these accepted principles. We are
mindful of the laudable rule of giving protection to an innocent 3rd party succeeding at
the Court sale, but this rule cannot be stretched too far that the possibility to do justice to
a judgment-debtor deprived of his valuable property and condemned unheard, is
practically shut out. With this background, on careful examination of the record, we
irresistibly gain an impression that on the question of fraud, collusion and concealment of
information, the appellants' contentions are entitled to some weight and the facts
highlighted by them exhibit sufficient preponderance of probability in their favour. We
are satisfied that in consequence of fraud and collusion etc. they have sustained
substantial injury to justify setting aside of the sale.
34. Order 21, Rule 92, C.P.C. provides that where no application is made under Order
21, Rule 89, Rules 90 and 91, or such application having been is made is disallowed, the
Court may confirm the sale which upon confirmation becomes absolute. The necessary
corollary arising from these premises therefore, is that the Court has no power to confirm
the We during dependency of such application or when the time for making the
Page No. 16 of 18
application has not expired. Section 18 of the Limitation Act provides that where a party
is kept away from the knowledge of their right to sue or file an application, because o;
fraud of the other party, for the purpose of limitation, the time shall be computed from the
date of the discovery of the fraud. No one can be expected to seek removal of an order, of
which he has no knowledge. It thus follows that when a judgment-debtor is kept in dark
regarding the ex parte decree, subsequent auction proceedings, and the confirmation
thereof by practicing fraud and misconduct, section 18 of the Limitation Act would
clearly be attracted and the period of limitation starts from the date the fraud comes to the
knowledge of the affected party. In such a case the period of limitation shall be deemed
not to have Tun out and confirmation of sale by the Court I made during this interregnum
in ignorance of true facts, will be Considered without lawful authority, a nullity in law
and incapable of creating favour of the auction-purchaser. We have already discussed as
to how on receipt of letter Exh. D-8 from the Railway Department the appellant became
aware of the ex parte proceedings on 14-9-1986. We are of the view that as a result of
collusion and concealment discussed earlier, to which the appellants were subjected, they
had no knowledge regarding the auction and the confirmation until they received Exh. D-
8 and got the file of the case inspected through their counsel. In these circumstances, they
are entitled to benefit of section 18 ibid and the period of limitation under Article 166
would start against them from the date of their knowledge. Their application under Order
21, Rule 90, C.P.C. therefore, could not be thrown away as barred by time.
35. The main plank of the respondents' arguments is that after confirmation of the We
in favour of respondent No.2, no jurisdiction vested in the Court to set aside the sale. The
learned counsel for respondent N0.2 went to the extent that even if the ex parte decree is
set aside, the sale having become absolute cannot be disturbed. In support of these
submissions, reliance is placed by him on Janak Raj v. Gurdial Singh and another AIR
1967 SC 608 and Hudaybia Textile Mills v. Allied Bank of Pakistan PLD 1987 SC 512.
After carefully going through the two precedents, we have no hesitation in holding that
these are distinguishable and are not attracted to the instant case. In the case from Indian
jurisdiction the judgment-debtor prayed only for removal of the ex parte decree and there
was no prayer for getting aside the sale. The judgment in Hudaybia Textile Mills deals
with an application under Order 21, Rule 89, C.P.C. The demolition of a confirmed Court
sale, on the ground of fraud covered by an application under Order 21, Rule 90 C.P.C. as
is the case before us, is not in issue in these precedents.
36. It is a settled proposition that if confirmation of sale is got through fraud, an

objection can be raised even after confirmation and the confirmation of sale cannot be
used as a shield for the fraud by which it has been induced to make the sale. In Degapudi
Pufla Peddi v. Rabla Rattabhrami Reddi and others ILR 56 Mad. 734, the fraud was
attributed to auction-purcabser and section 18 of the Limitation Act applied to an
application under Order 21, Rule 90 filed by a judgment-debtor for setting aside the
confirmation of a Court sale. A Full Bench of Rajistan High Court in Phoolchand v.
Bader Prasad AIR 1953 Raj. 51, paras. 8 and 17 reviewed the case-law and relying on
Ganapathy Muddian v. Krishna Muhakiat AIX 1917 PC 121 expressed the opinion that
the sale made and confirmed by a Court having jurisdiction cannot be challenged except
on the ground of fraud. There is a consensus of opinion that the commission of fraud
furnishes a legitimate basis to set aside a sale even when it has become absolute. Since in
the instant case the judgment- U debtors have succeeded in proving that the sale and its
confirmation were obtained by fraud, and on that account a substantial injury was
inflicted on them, we hold that the sale is liable to be set aside.
In view of what has been discussed above, both the appeals are accepted; the
impugned ex parte decree; the sale, and all consequential orders are set aside. The
appellants' application for grant of permission to defend the suit shall be treated as within
time and disposed of &fresh according to law. Consequently, the suit shall be decided
afresh. The purchase money shall be V refunded to respondent No.2. The deficiency in
the purchase money, if any, of which the appellants shall be informed by the learned
Special Court, shall be made good by them within one month of receipt of such
information from the Special Court In case the appellants fail to make good the
deficiency, they will be precluded from defending the suit. The parties are left to bear
their own costs.
AA./M-1110/L ORDER ACCORDINGLY.

Page No. 17 of 18
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Auction Proclamation

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P L D 2010 Supreme Court 993

JAMI LIMITED and others---Respondents

Civil Appeal No.772 of 2005, decided on 4th June, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Preamble---Special Law---Scope---Financial Institutions (Recovery of Finances)

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19(2)---Execution of decree---Procedure---Executing Court, under S.19(2) of

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 67 (2)---Execution of

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.68---Execution of decree---

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

(f) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

(g) Civil Procedure Code (V of 1908)---

Hamid Khan, Senior Advocate Supreme Court for Appellant.

Date of hearing: 10th May, 2010.

"Order XXI, Rules 54, 66-67, C.P.C.

54. Attachment of immovable property.--(1) Where the property is immovable, the

66. Proclamation of sales by public auction.--(1) Where any property is ordered to

a) the property to be sold;

c) any encumbrance to which the property is liable;

"(1) The transfer of property or title for a price.

JAMI LIMITED and others---Respondents

Civil Appeal No.772 of 2005, decided on 4th June, 2010.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Preamble---Special Law---Scope---Financial Institutions (Recovery of Finances)

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19(2)---Execution of decree---Procedure---Executing Court, under S.19(2) of

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 67 (2)---Execution of

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.68---Execution of decree---

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

(f) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

(g) Civil Procedure Code (V of 1908)---

Hamid Khan, Senior Advocate Supreme Court for Appellant.

Date of hearing: 10th May, 2010.

"Order XXI, Rules 54, 66-67, C.P.C.

54. Attachment of immovable property.--(1) Where the property is immovable, the

66. Proclamation of sales by public auction.--(1) Where any property is ordered to

a) the property to be sold;

c) any encumbrance to which the property is liable;

"(1) The transfer of property or title for a price.

Before Maqbool Baqar, J

HABIB BANK LIMITED---Plaintiff

Messrs KIRAN SUGAR MILLS (PUBLIC) through Managing Director----

Executions Applications Nos.88 of 1999 and 42 of 2002, decided on 17th December,

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.84---Auction sale of mortgaged

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19---State Bank of Pakistan BPD Circular No.29---Auction sale of mortgaged

Tasawar Ali Hashimi for Decree-holder, Habib Bank Ltd.

Abu Baker Ismail Chundngar for Decree-holder, CIRC.

Messrs Aitzaz Ahsan and Abid S. Zuberi for Judgment-debtor Company.

Ali Bin Adam Jafri for Auction-Purchaser.

Official Assignee in Person.

Sr. No. Name of Bidder Previous Offer

Sr.No. Name of Bidder Previous Offer Improved Offer

Sr.No. Name of Bidder Previous Offer Improved Offer

(i) Messrs Euro Plus (Mons Belgium) which Rs.40.00 Crore

(a) Rs.5.00 Crore after acceptance of offer.

(b) Balance amount in the yearly instalments as under: