1. Order on Official Assignee's Report, dated 5-10-2003 ' The Official Assignee has submitted this reference in the background of the following facts.
2. ' Messrs Popular Group of Industries purchased the factory known as Zarak Textile Mills Ltd., Survey No,115, Deh Khanto, Tapo Landhi, Karachi, alongwith the land, building, machinery, furniture, and fixtures in the auction sale in Execution No,92 of 2001 for total sale consideration of Rs,32.25 crores.
3. The offer was accepted on 14-2-2002 and the purchaser deposited the entire sale consideration with the Official Assignee and took over the possession of the factory on 4-3-2002.
4. ' After the sale became absolute the auction-purchaser filed application being C.M.A. No,177 of 2003, on 24-1-2003. It was stated in the application that the auction-purchaser had submitted its offer to the Official Assignee on 4-9-2001 with break-up as follows:--
(a) Land, building, furniture and fixtures (20%)Rs,50 millions
(b) Machinery (80%) Rs,200 millions Total: Rs,250 million ' The offers made by the auction-purchaser and the other bidders were improved during negotiations and finally through reference, dated 4-2-2002, the highest offer of the applicant in the sum of Rs,322.50 millions was accepted. It was further stated in the application that break-up of the price remained unchanged with the difference that the price of land, building, furniture and fixtures representing 20% of the total price was enhanced from Rs,50 millions to 64 millions while 80% of the price for machinery was enhanced from Rs,200 millions to Rs,258 millions.
5. ' It was further stated that, such position was further confirmed through letter, dated 20th September, 2002 addressed to the Official Assignee. It was contented that in the order, dated 14-2- 2002, the breakup for the price of land, building, furniture and fixture does not find mention and that break-up price in terms of the bifurcation required specific permission/approval of this Court but on account of inadvertent error, the same was not mentioned in the order which requires rectification. It was alleged that the auction-purchaser did not purchase the properties as a single unit and the advertisement inviting offers, too, made reference to the machinery and other items separately. The auction-purchaser stated in the application that bifurcation of the sale amount is important for the applicant/auction-purchaser with reference to the tax returns and the valuation of assets disclosed therein. It was also stated that no prejudice shall be caused to any party to the proceedings in the event of approval of the bifurcation amount of sale consideration. The application was heard on 3-2-2003. The Official Assignee gave no objection to the bifurcation subject to the condition that it may have no bearing on the valuation for the purpose of registration. The application was allowed as follows:- "In view of the above and by consent, this application is disposed of in the terms that 20% of the approved offer be treated towards value for land, building, furniture and fixtures and remaining 80% be treated towards machinery. It is clarified that such bifurcation will have no bearing on valuation for the purpose of registration, which is to be decided in accordance with law."
6. ' Subsequently, on 5-4-2003, the auction-purchaser submitted an application under Order 21, Rule 94, C.P.C. Being C.M.A. No,739 of 2003, stating that the Auction-Purchaser is entitled to the grant of sale certificate in terms of Order 21, Rule 94, C.P.C. It was urged that the auction-purchaser desires to obtain sale certificate in the name of its subsidiary Messrs Popular Fabrics (Pvt.) Ltd., in respect of land, machinery, furniture, fixtures, spares etc. Which has been purchased for a sum of Rs,64.500 millions in order to seek mutation of records maintained by the concerned Authorities. A direction was sought for issuance of sale certificate in favour of Messrs Popular Fabrics (Pvt.) Ltd., in respect of land, building, furniture, fixtures, etc. Of Messrs Zarak Textile Mills Ltd. It was further prayed that the sale certificate, as above, may be directed to be registered upon payment of appropriate Stamp Duty in terms of the current Stamp Duty Schedule. It appears that the last prayer was made in pursuance of the ratio of the. Division Bench judgment of this Court in the case of Amin v. Haji Abdul Sattar 1998 CLC 1256: Vide order, dated 21-4-2003, this application was allowed to the extent that the sale certificate be issued in the name of Messrs Popular Fabrics (Pvt.) Ltd., who is subsidiary of the auction-purchaser. It appears, that the order, dated 21-4-2003 was made in presence of the Advocate for decree-holder and the Advocate for auction-purchaser. The Official Assignee was not present on the said date and it was not pointed out that the learned Single Judge of this Court held in the case of Industrial Development Bank of Pakistan v. Waheed Textile Mills Ltd. 1989 ALD 507 (Karachi), that the sale certificate under Order 21, Rule 94, C.P.C. Must be issued in the name of auction-purchaser unless exceptional circumstances are shown for making deviation from normal course. Similar view was taken by the learned Single Judge of Lahore High Court in the case of Mall Developers (Pvt.) Limited v. Joint Official Liquidate. s, Milly Leather Industries Ltd. PLD 1993 Lah.
688. In both the judgments reliance was placed on the judgment of Allahabad High Court in the case of Makhan Lal Kela v. Baldeo Prasad AIR 1938 All. 471, in which the following view was take -- ' "Having regard to the provisions of Rule 94, Order 21, the Court will issue the sale certificate only in the name of auction-purchaser or if he dies in the name of his legal representative. But the Court is incompetent to recognize any transfer or arrangement made by the auction-purchaser with a third person. If the auction-purchaser wants to dispose of his interest in the estate purchased by him then he can do so by executing a valid sale-deed."
7. ' Be that as it may, the request for issuance of sale certificate in the name of Messrs Popular Fabrics (Pvt.) Ltd., a subsidiary of the auction-purchaser was allowed. On 18-3-2003 the learned counsel for the auction-purchaser addressed a letter to the Official Assignee stating that an application dated 3-3-2003 was submitted for issuance of sale certificate in respect of machinery which carries the value of Rs,258 millions out of the total sale consideration of Rs,322.50 millions, while the price of land, building, furniture and fixtures etc. Is Rs,64.50 millions. It was further stated in the application that, "while it is true that sale certificate(s) has/have finally to be issued for the entire assets valuing Rs,322.50 millions, presently our clients propose to remove some part of the machinery and require Sale Certificate to that extent alone. It was further stated that Messrs Popular Fabrics (Pvt.)
8. Ltd., shall have sale certificate in respect of the remaining assets at a subsequent stage in accordance with law. It was also stated that in case there is any difficulty in issuance of sale certificate in respect of machinery purchased by Messrs Popular Fabrics (Pvt.) Ltd., the matter may be referred to the Court for orders.
9. ' The Official Assignee replied, contending that while deciding C.M.A. No,177 of 2003 vide order, dated 3-2-2003, the Court had clarified that bifurcation will have no bearing on valuation for the purpose of registration, which is to be decided in accordance with law. The Official Assignee further stated that the advertisement was made for the sale of entire assets of factory known as "Zarak Textile Mills" on "as is where is" basis and the offer for Rs,32.25 crore was accepted by the Court as per advertisement. By placing reliance on the ratio of judgment in the case of Chase Manhanttan Bank v. Messrs Firdous Spinning and Weaving Mills Ltd. 2002 CLD 145, it was informed that the machinery of the company is fixed asset and therefore, the sale certificate will be issued on entire assets amounting to Rs,32.25 crore. The exchange of correspondence pursued between the Official Assignee and the nominee of auction-purchaser. On 16-6-2003 the Advocate of auctioneer- purchaser requested for issuance of sale certificate in respect of the land, building, furniture and fixtures in the sum of Rs,64.50 millions. The Official Assignee again informed that the sale certificate/sale-deed shall be executed on entire sale consideration of Rs,32.25 crore, as the order, dated 21-4-2003 containing direction for issuance of sale certificate in the name of Messrs Popular Fabric (Pvt.) Ltd., nominee of the auction-purchaser does not show the bifurcation.
10. ' In reply to the above letter, the learned counsel for the Popular Fabric (Pvt.) Ltd. Took plea in the letter dated July 24, 2003 ,that the Court is empowered to grant bifurcation of property sold under its order against proportionate valuation of different portions and in the event of grant of.
11. Bifurcation, the law does not prohibit issuance of more than one sale certificate. It was further requested that for the time being issuance of sale certificate/sale-deed in respect of machinery for a consideration of Rs,258 millions may be deferred. It was requested that sale certificate in respect of land, building, furniture and fixtures etc. For a sale consideration of Rs,64.500 millions may be issued.
12. ' The Official Assignee has submitted in his reference that the sale of factory was advertised as a whole and was sold in its entirety for Rs,32.25 crore and that the judgment in the case of Chase Manhanttan Bank v. Messrs Firdous Spinning and Weaving Mills Ltd. 2002 CLD 145, is binding on the Official Assignee/Official Liquidator: The Official Assignee further submitted that the request for registration of land and building alone means deprivation of stamp duty with regard to machinery which is also an immovable property as fixed asset.
13. ' The auction-purchaser filed objection in which the facts already narrated were capitulated. It was contended in the objections that the bifurcation of the sale consideration has been allowed by this Court and sale certificate for the land, building, furniture, fixtures etc. Of Messrs Zarak Textile Mills for a sale consideration of Rs,64.500 millions has to be issued. It was contended that the ratio of the judgment in the case of Chase Manhanttan Bank was not attracted for the reason that in the cited case, bifurcation of the sale consideration had not been approved.
14. ' I have heard Mr. Ziaul Haque Makhdoom, learned counsel for the Decree-holder, Mr. Mushtaq A.
15. Memon, learned counsel for Auction-purchaser and Mr. Bashir A. Memon learned Official Assignee.
16. ' Mr. Ziaul Haque Makhdoom, learned counsel for the decree-holder has stated that the decree- holder has no concern with the issue and it is a matter between auction-purchaser and Official Assignee.
17. ' Mr. Mushtaq A. Memon, learned counsel for the auction purchaser/nominee has submitted that, vide order, dated 3-2-2003 the bifurcation of the sale consideration was allowed and vide order, dated 21-4-2003, direction was issued for issuance of sale certificate in the name of nominee of the auction-purchaser and therefore, insistence of the Official Assignee for issuance of one sale certificate for the entire property showing the total purchase price is not justified.
18. ' On the other hand, the Official Assignee has reiterated that the bifurcation sought vide C.M.A.
19. No,177 of 2003 was for the purpose of income-tax, which is specifically stated in the application. He has contended that he had given no objection to the bifurcation of total sale consideration for the limited purposes of the income-tax and had specifically stated that the bifurcation shall not be relevant for the purpose of registration of sale certificate/sale-deed and, therefore, while allowing bifurcation of the sale consideration in the ratio of 20 and 80%, it was specifically clarified by the Court that such bifurcation will have no bearing on the valuation for the purpose of registration, which is to be decided in accordance with the law. The Official Assignee has further submitted that the advertisement for sale shows that the sale of entire assets was advertised and the offers were invited for the entire project including machinery for bleaching, dying, printing, shed, spare parts, electrical goods, appliances, fittings, furniture, fixture, equipment, fixed machinery alongwith the building constructed thereon on "as is where is" basis. He invited my attention to the advertisement Annexure "X-1" (page 157) of the file which contains that pay order to the extent of 10% of the entire offer is to be forwarded to the Official Assignee and the remaining offer is to be paid within 15 days of the acceptance of offer. The offer made by the auction-purchaser vide letter, dated 4th of September, 2001 is also available on record. This was the initial offer in the sum of Rs,250 millions, which was subsequently, increased to Rs,322.5 millions. The initial offer is the basis for subsequent plea of the auction-purchaser on the point of bifurcation of the sale consideration for land, building, furniture, fixtures and machinery. In this letter the breakup for purchase of Zarak Textile Mills is given to the effect that out of total offer of Rs,250 million Rs,50 millions were for land, building, furniture and fixtures .While Rs,200 millions for machinery. However, no separate down payment for the two categories was made. The down payment of Rs,50 million was offered for the whole transaction after confirmation of bid and it was stated that the balance amount of Rs,200 millions will be paid in five equal yearly instalments and security collaterals will be provided. The earnest money of Rs,5,00,000 was also paid for the total transaction. The auction-purchaser filed objections to the claim preferred by the Customs Authorities and in the said objection it was stated as tollows:-- "(1) That the auction-purchaser had submitted its offer for purchase of Messrs Zarak Textile Mills Limited alongwith all its assets inclusive of the land, building, furnitures, fixtures, machinery, etc. On 4th September, 2001, in response to the advertisement issued by the learned Official Assignee in August, 2001. The goods offered for sale included the spare parts, electrical goods, appliances and equipment on 'as is where is basis'. The offer was specifically submitted free from all encumbrances including any dues of Government Customs, Excise, Taxation and Income Tax Department. Copies of the invitation for tenders and the offer are filed herewith marked Annexures `X-1' and `X-2' respectively.
(2) That after some negotiations, the bid amount and the mode of its payment was revised by various parties including the auction-purchaser. However all other terms of the offer had remained unchanged.
(3) That on 14.2-2002, the offer made by the auction-purchaser was accepted by this Honourable Court with consent of the learned Official Assignee and the representative of CIRC. The entire bid amount of Rs,322.500 millions was thereafter deposited well-ahead of the time fixed by this Honourable Court. Consequently, possession of the property was sought alongwith sale certificate of the land, building and all other assets of Messrs Zarak Textile Mills Limited. On 4-3-2002, the learned Official Assignee of Karachi had handed over physical possession of the factory known as Zarak Textile Mills Limited, Landhi, Karachi, with plant, machinery, equipment, accessories, furniture, fixtures, fittings etc. With building constructed thereon as per inventory prepared at site."
20. ' I specifically asked Mr. Mushtaq A. Memon, learned counsel for the auction-purchaser to address arguments on the point whether the transaction in this case was in the nature of lump-sale. The subsidiary points were also pointed out to the learned counsel to the effect, whether in the case of lump-sale the entire property of the judgment-debtor was sold as immovable property except the goods lying therein. Another aspect requiring consideration in this behalf is, as to what will be the effect of bifurcated sale certificate as requested by the auction-purchaser and whether in the wake of course sought to be adopted by the auction-purchaser, the machinery which was sold as an immovable property shall be converted into movable property and whether such course is permissible in law. The learned counsel was further asked to show if the machinery was not sold as immovable property. The learned counsel stated that he would not like to make any submissions on the above points. His sole contention was that the bifurcation of offer was specifically allowed vide order dated 3-2-2003. However, he was not able to rebut the submission of learned Official Assignee that in the concluding part of the order, dated 3-2-2003 the learned Single Judge had clarified that such bifurcation will have no bearing on valuation for the purpose of registration which is to be decided in accordance with law. The learned counsel was further unable to deny that in C.M.A. No,177 of 2003 dated 24-1-2003, it was specifically stated that bifurcation of the sale amount was required for the purpose of tax returns. When confronted with the question whether the auction-purchaser can claim a part of the property sold independent of other part, he stated that the question was premature. I am not impressed with the submission of learned counsel for the auction-purchaser, for the reason that all the queries made and the issues raised therein are to be decided in the light of advertisement inviting bids, offers made by the auction-purchaser, acceptance thereof and the terms in which the sale became absolute under Order XXI, Rule 92 read with section 65, C.P.C.
21. The term "lumping sale" has been defined in Black's Law Dictionary as under:- ' "As applied to judicial sales, this term means a sale in mass, as where several distinct parcels of real estate, or several articles of personal property, are sold together for a 'lump' or single gross sum."
22. ' On a careful examination of all the material available on record the salient features whereof have been reproduced in the earlier part of this order. I am of the considered opinion that, the entire property known as "Zarak Textile Mills Ltd." was sold as lump-sale, which was inclusive of the entire land with building thereon and all the machineries, furniture, fixtures, appliances, spare parts, electrical goods etc. This factual position has been admitted by the auction-purchaser in various documents including objection filed against claim of the Collectorate of Customs (Preventive), Karachi on 3-4-2002.
23. ' The contention of Mr. Mushtaq A. Memon that the bifurcation of the offer was specifically allowed and therefore, the sale of machinery and the sale of land, building, furniture and fixtures shall be treated separately and consequently, separate Sale Certificate be issued, is not tenable. On the request of auction-purchaser a learned Single Judge of this Court allowed the request for bifurcation of offer for the limited purpose of tax returns only, which is evident from the fact that a clarification was made that the bifurcation will have no bearing on valuation for the purpose of the machinery which is to be decided in accordance with law.
24. ' So far, the question of payment of Stamp Duty is concerned, I would not like to dwell on this point, for the reason that, the issue has already been addressed in a Division Bench judgment of this Court, in the case of Amin v. Haji Abdul Sattar 1998 CLC 1256 (Karachi) and by learned Single Judge, in the case of Chase Manhattan Bank v. Messrs Firdous Spinning and Weaving Mills Ltd., 2002 CLD 145 (Karachi). The learned Official Assignee has stated that the later judgment has been upheld by the Honourable Supreme Court.
25. ' This brings me to the question whether in the facts and circumstances of the present case and to be more specific in the case of lump-sale more than one sale certificate for separate or part of the properties sold, can be issued. For this purpose the provisions contained in section 65, C.P.C. Order XXI, Rule 92(1) and Order XXI, Rule 94, C.P.C. Are required to be considered in conjunction to each other. For the sake of convenience, the above provisions are reproduced below:-- "65. Purchaser's title.--- Where immovable property is sold in execution of a decree and such sale has become absolute, the property shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute."
26. "92. Sale when to become absolute or be set aside.--- (1) Where no application is made under Rule 89, Rule 90 or Rule 91, or where such application is made and disallowed, the Court shall make an order confirming the sale, and thereupon the sale shall become absolute."
27. "94. Certificate to purchaser.---. Where a sale of immovable property has become absolute, the Court shall grant a certificate specifying the property sold and the name of the person who at the time of sale is declared to be the purchaser. Such certificate shall bear date, the day on which the sale became absolute."
28. A bare reading of the above provisions shows that with the confirmation of sale under Order XXI, Rule 92 the sale takes effect from the date of the sale and the entire immovable property sold in the execution of a decree vests in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute. Once the executing Court confirms the sale it becomes functus officio. (see Bejoy Krishna Paik v. Montajuddi Shaikh PLD 1961 Dacca 177. Thus, after the sale becomes absolute under Order XXI, Rule 92 the entire immovable property so sold vests in the purchaser from the time when the property is sold by virtue of the provisions contained in section 65, C.P.C. And the executing Court becomes functus officio, the Court can issue only a Sale Certificate in terms of Order XXI Rule 94. A Sale Certificate is construed by reference to the decree, the order of the Court and the sale proclamation. It is specifically provided in Order XXI, Rule 94 that, where the sale of immovable property has become absolute, the Court shall grant a Certificate specifying the property sold and the name of the person who, at the time of sale, is declared to be purchaser. Thus, in the Sale Certificate issued under Order XXI, Rule 94, C.P.C., the Court has no option but to specify the property sold, meaning thereby, each and every part of the property, in its entirety. The provisions contained in Order XXI, Rule 94 do not envisage the issuance of sale Certificate in piecemeal or in respect of any part of the property so sold on the ground of convenience of the auction-purchaser or for any other reason. Thus, it is held that, after sale becomes absolute having the effect of vesting the entire property sold in auction-purchaser, only one Sale Certificate specifying the entire property sold can be issued.
29. For the foregoing reasons, the Reference submitted by the Official Assignee is disposed of in terms that, the Official Assignee shall issue the Sale Certificate under Order 21, Rule 94, C.P.C. Specifically entire immovable property sold to the auction-purchaser and vesting in him. The request of the auction-purchaser for the issuance of Sale Certificate in piecemeal for a part of immovable property sold is not in consonance with the law and is accordingly rejected.