NOOR BADSHAH vs HOUSE BUILDING FINANCE CORPORATION through District

' MIAN HAMID FAROOQ, J.---Present appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, proceeds against order dated 6-2-2003, whereby the learned Judge Banking Court, dismissed appellant's objection petition and confirmed the sale, qua the auctioned property, favoring Ghulam Rasool son of Khuda Bakhsh.

2. Precisely stated facts, as discernible from the available record, are that pursuant to decree dated 21-9-1995, for recovery of Rs,92,637 along with costs, passed by the then learned Banking Tribunal (since defunct), favoring the respondent corporation and against the appellant, the decree holder corporation initiated execution proceedings. The learned Executing Court appointed the Court auctioneer to conduct sale of mortgaged property, comprising of a house, however, in the first attempt the property could not be sold. Ultimately, the questioned house was auctioned, respondent No,2's bid of Rs,1,15,000 was accepted and he was declared as successful. Pursuant thereto, the court auctioneer submitted the report, thereby stating that Ghulam Rasool is the highest bidder and he has paid 1/4th of the auction price. The appellant, then, filed the application for cancellation of the auction proceedings, whereupon the learned Executing Court directed him to deposit 20% of the amount realized from the sale, which amount was, reportedly, deposited by the appellant. In the meantime, Ghulam Rasool, the auction purchaser, filed the application for confirmation of sale. Appellant's objection petition was opposed by the respondents and ultimately the learned Judge Banking Court, after finding that no objection regarding proceedings of the sale has been raised, proceeded to dismiss the said application and confirmed the sale in favour of respondent No,2, vide composite order dated 6-2-2003, hence the present appeal.

3. Learned counsel for the appellant contends that although markup was not allowed in the judgment dated 21-9-1995, yet the decree sheet erroneously shows that markup was also granted to the respondent corporation. He adds that future markup cannot be recovered under the law, as the Banking Tribunal had no jurisdiction and authority to allow mark up under the Banking Tribunals Ordinance, 1984. He further submits that the appellant has liquidated the decretal amount, inasmuch as a sum of Rs,5,000 had excessively been paid. He further adds that the impugned order is not sustainable in law, inasmuch as the objections of the appellant were not considered.

Conversely, the learned counsel for the respondents have supported the impugned order and asserted that the respondent Corporation was entitled to recover mark up as per the terms of the decree.

4. We have heard the learned counsel and examined the available record. Admittedly, respondent No,2 gave highest bid of Rs,1,15,000, he was declared as successful bidder and on that basis sale in his favour was confirmed. We have perused the proclamation of sale, qua the mortgaged property, held on 19-10-2002, and find that reserve price of the property was fixed at Rs,1,50,000. It flows therefrom that the bid had to start from Rs,1,50,000 and the Court auctioneer has no authority either to reduce the reserve price or to accept any bid below the reserve price, which has the sanctity of the Court, who fixes the reserve price. The purpose of fixing reserve price in the proclamation is that the Court safeguards the rights of judgment debtor and the bid starts from that figure. Reference can be made to Brig. (Retd.) Mazhar ul Haq and another v. M/s. Muslim Commercial Bank Limited, Islamabad and another (PLD 1993 Lahore 706). It has been held in the case reported as Mrs. Aziz Fatima and 3 others v. Mrs. Rehana Chughtai and 3 others (2000 CLC 863), while relying upon the case of Brig. (Retd.) Mazharul-Haq (ibid), that non-disclosure of reserve price of the property in the proclamation would render the sale liable to be struck down. It appears from the available record that although reserve price of the property was fixed at Rs,1,50,000, yet the property was sold at a low price of Rs,1,15,000 in complete violation of the proclamation of sale. Unfortunately, neither the Court auctioneer nor the learned Executing Court attended to this glaring illegality which, to our mind, vitiated the sale. It has been held in Mrs. Shahida Saleem and another v. Habib Credit and Exchange Bank Limited and 4 others (2001 CLC 126) that where property was sold in complete disregard of rules and in questionable circumstances, even suo motu action for setting aside the sale would be justified. We find that the Court auctioneer committed material irregularity while conducting the sale and accepting the bid of respondent No,2 below the reserve price, inasmuch as the order of the Court, fixing the reserve price, was completely ignored. It may be noted that appellant in his objection petition took the objection that although the property is worth Rs,5,00,000, yet the same was sold to some interested person at a very low price of Rs,1,15,000. The learned Executing Court did not, at all, advert to the said aspect of the case and proceeded to dismiss appellant's objection petition in a mechanical manner, while holding that no provision of law finds mentioned in the caption of the application.

This shows that the learned Executing Court failed to apply its judicial mind and completely misdirected itself.

5. The sale in this case has been declared to be illegal on account of material irregularity, therefore, we are persuaded to set aside the sale. In the normal circumstances, after confirmation of sale it is not set aside, but if the sale itself becomes invalid its confirmation would also be invalid. Reference can be made to Afzal Maqsood Butt v. Banking Court No,2, Lahore and 8 others (2005 CLD 967).

6. In the above perspective, we have examined the impugned order and find that the same is not sustainable in law and we are persuaded to set it aside.

7. In the above backdrop, the appeal is decided in the following terms:--

(i) The appeal is allowed and the impugned order dated 6-2-2003 is set aside.

(ii) Sale in favour of Ghulam Rasool, in respect of questioned house, is also declared illegal and set aside.

(iii) Appellant's objection petition and execution petition shall be deemed to be pending before the learned Executing Court.

(iv) The learned Executing Court shall, firstly, decide the objection petition and thereafter proceed with the execution petition, if need arises, of course in accordance with law.

(v) No order as to costs.