MIAN SAQIB NISAR, J.---By this single judgment it, we intend to dispose of the following applications and the a p Peals, as all involve common questions of law and facts:-- C.M. No.646-C of 2002 in E.F.A. No.215 of 2001. C.M. No.647-C of 2002 in E.F.A. No.216 of 2001. C.M.
No.648-C of 2002 in E.F.A. No.217 of 2001. C.M. No.649-C of 2002 in E.F.A. No.218 of 2001. C.M. No.650-C of 2002 in E.F.A. No.219 of 2001. C.M. No.651-C of 2002 in E.F.A. No.220 of 2001. C.M. No.652-C of 2002 in E.F.A. No.221 of 2001 C.M. No.653-C of 2002 in E.F.A. No.222 of 2001. C.M. No.654-C of 2002 in E.F.A. No.223 of 2001. C.M.
No.655-C of 2002 in E.F.A. No.224 of 2001.
2. Through these applications under section 12(2), C.P.C., the order dated 14-5-2001, passed by this Court, on C.M. No.3 of 2001, in the main appeals, whereby the said appeals were disposed of on the basis of a compromise, between the decree holder/bank (hereinafter called the "respondent- Bank") and respondent No.2, who was the appellant in that appeal (hereinafter called the "other respondent"), has been assailed.
3. Briefly stated the facts of the case, necessary for the disposal of these applications are, that the respondent-Bank, brought two suits for the recovery of the amount of Rs.35,312,090 and Rs.28,354,984 against Messrs Mashriq (Pvt.) Limited (applicant) and National Press Trust, which were decreed on 15-1-1994 and 16-1-1994 respectively. For the purposes of the execution and the satisfaction of the decrees, the respondent-Bank brought execution petitions on 19-3-1997, in which, the immovable property bearing No.7 Abbot Road, Lahore, commonly known as Mashriq Plaza, belonging to the judgment-debtor (applicant) was attached. For the sale of such property, notices under Order XXI, rule 66, C.P.C., were issued to them. However, before the property could be sold through Court auction, some of the occupants/tenants of the property filed objections before the learned Executing Court, claiming that the judgment-debtors/owners of the property, out of the same, have agreed to sell certain premises to him/them. And therefore, such part of the attached property, cannot be sold in execution of the above decrees.
4. These objections were not disposed of by the learned Executing Court, but the property was directed to be put to auction. Aggrieved of the above, the other respondents (objectors) filed the noted E.F.As., with the basic grievance that without the disposal of their objections, the auction of the property could not be ordered.
5. Pre-admission notices were issued to the respondents in the appeals i.e. the respondent-Bank and the judgment-debtors (the applicants). From the record, it transpires that for some earlier occasion, the service of the applicant was effected, but it neither appeared before the Court nor was proceeded ex parte. However, there is nothing on the record, to show, if any service of the applicant was effected specifically for 14-5-2001; when the respondent-Bank, as also the other respondent moved a joint application bearing C.M.
No.3 of 2001, in which it is stated that the respondent-Bank and the respondents have entered into a compromise, whereby the Bank has agreed to transfer certain premises of the attached property in his/their favour for the consideration of a specific amount, mentioned in the application. The application on behalf of the other respondent, is signed by M. Iqbal Advocate, whereas, the representative of the respondent-Bank as also Mr. Naseem Mehmood, Advocate on behalf of the Bank, have affixed their signatures. When this application came up before this Court on 14-5-2001, no request was made by the parties thereto, for the issuance of the notice to the applicant and the following order was procured from the Court:-- "The matter has been settled between the parties outside the Court. The parties have placed on record this application to dispose of appeal in terms of contents of this application. The application is duly signed by both the Advocates of appellant and respondents. The application is supported by the affidavit of applicant. The application is allowed as prayed for. Consequently, the appeal is disposed of in terms of contents of this application."
6. Aggrieved .of this order, the applicant Messrs Mashriq (Pvt.) Limited, being the owner of the property, who was respondent No.2, in the main appeal, has filed the applications under section 12(2), C.P.C., challenging the above order, on the grounds that the same has been obtained by, and is the result of fraud and misrepresentation, etc; the applicant was neither served in the case for 14-5-2001, nor was represented on the said date; the applicant is not a party to the compromise, whereas its property has been sold, otherwise than in accordance with law, by private means, without involving and associating the actual owner and without its consent.
7. These applications have been resisted - by the respondent-Bank, as also the other respondent, on the ground that the conduct of the applicant does not entitle it to the equitable relief, because not only in the executing Court, but even before this Court, the applicant has been trying to delay the execution of the decrees; the applicant was duly served, but did not put in appearance before the Court and in the circumstances, any agreement arrived at between the respondent-Bank and the other respondent for the disposal of mortgaged property is valid. It is further submitted from the respondent's side that under the provisions of section 18 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 as also under section 19 of the Financial Institutions (Recovery of Finances), Ordinance 2001, the decree holder/bank has the power and the authority to sell the mortgaged without the intervention of the Court, therefore, any agreement/compromise arrived at between the respondents in this behalf, is valid in law, especially, when it has been accepted and endorsed by this Court.
8. We have heard learned counsel for the parties. As far as the question of the service of the applicant is served, suffice it to say that even if served for any earlier date, the applicant has never been proceeded ex parte and there is nothing on the record, that any notice was issued or served upon the applicant for 14-5-2001, particularly on C.M. No.3 of 2001, which came up as an urgent matter, for the first time on the said date. Obviously, on account of the above, the applicant seems to have no notice of the- settlement between the Bank and the other respondent. Moreover, the main appeal was yet at the motion stage and only pre-admission notice was sent to the respondents of the case, when the respondents moved a joint application that a compromise has been effected and the matter must be settled on the basis thereof. While passing the order, dated 14-5-2001 this Court has not considered the validity of the compromise and also did not take into consideration, the factum, if the judgment-debtors, whose property is being sold in pursuance of the agreement, is/are also' party thereto, or otherwise. This was neither pointed out to the Court, by those present at the time of passing the order, nor this is specifically spelt out from the-contents of the C.M. No.3 of 2001. Therefore, such omission can reasonably construed, as a concealment of a material fact, on part of the parties to the compromise. Rather from the tenor of the order dated 14- 5-2001, it seems that the Court was given the impression that the settlement has been arrived at between the appellant of the case and all the respondents, which shall obviously include the applicant. The Court, therefore, passed the order being oblivious of the true position, that the applicant is not a party to the compromise.
9. Notwithstanding the above, it shall be expedient to hold that when a lis is disposed of by the Court on the basis of a compromise between the parties, the order/judgment shall not be the one passed by the Court on the merits of the case, which always is based upon the proper adjudication of the Court about the factual and legal controversy involved in the matter; such decision has altogether a different status, sanctity and legal value. But where the case is decided on account of an agreement/compromise between the parties, even if approved by the Court, the validity of the order/judgment remains dependent upon being the lawful agreement. Therefore, the agreement/compromise is challenged as being invalid and it is so adjudged by the Court, the decision of the Court based upon the agreement shall automatically sink along with the annulment of the agreement/compromise.
10. Therefore, it has become expedient for us to assess, adjudicate and determine, whether the agreement between the other respondent and the respondent-Bank envisages through C. M. No.3 of 2001 on the foundation of which the order dated 14-5-2001 is rested, is lawful or otherwise. It is settled law that the contract shall only be valid inter se the parties and no stranger thereto can be bound by the terms of the contract until and, unless such stranger has expressly or by necessary implication accepted the contract. There is neither the defence in the reply to this application, nor it has been argued that the applicant in any manner, whatsoever has ever accepted the agreement between the respondent-Bank and the other respondent. Resultantly, we are constrained to hold that the compromise between the respondent-Bank and the other respondent shall have no legal effect, upon the ownership right of the applicant and therefore, is annulled.
11. As regards the plea raised by the respondent If the mortgaged property of a judgment-debtor can be sold through private negotiation, by the decree holder, in favour of a third party, even if such party claims any prior agreement of sale with the judgment-debtor. The answer is 'No.'
Because for the purposes of the execution and satisfaction of a money decree, the mode has been clearly provided by Order XXI, rule 30, C.P.C., which reads as below:-- "Decree for payment of money:---Every decree for the payment of money, including a decree for the payment of money, as the alternative to some other relief, may be executed by the detention in prison of the judgment-debtor, or by the attachment and sale of his property, or by both."
Therefore, when the executing Court, has decided to attach and sell the property of a judgment- debtor, under Order XXI, rule 65, C.P.C., the sale has to be conducted, if it is not prescribed otherwise through a public auction. In the instant case, the executing Court, when had taken a conscious decision to sell the property by the auction and notice under Order XXI, rule 66, C.P.C., was issued to the judgment-debtor/applicant, which had neither been suspended or set aside by this Court, in the appeals of the other respondent; the respondent-Bank under the law had no authority to circumvent the authority and the mode chosen by the executing Court for the disposal of the property and to agree for selling the same in favour of the other respondent, through private means.
12. Now examining the proposition, whether the private sale could be made by the decree holder under the provisions of section 18 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 or section 19 of the Financial Institutions (Recovery of Finances), Ordinance, 2001, suffice it to say that the sale of the mortgaged property under the above law, though is permissible and can be made by the decree holder, with or without the intervention of the Court, but subject to the essential conditions that the sale should either through the sealed tender or by public auction. The purpose behind is that no room should be left to defraud and cause prejudice to the rights of the judgment-debtor, who is the owner of the property and the sale proceeds are to be appropriated to his debt and credit. Therefore, we find ourselves in disagreement with the counsel for the respondents that the sale made on the basis of the compromise between them is covered by the above laws.
13. For what has been stated above, we find that case of the applicant squarely falls within the purview of section 12(2), C.P.C., inasmu ch as the order dated 14-5-2001 has been procured from this Court by the concealment and also not putting the Court to the full facts that the private sale cannot be negotiated between the respondent-Bank and the other respondent, which agreement was unlawful and therefore, any order based thereupon shall not be within the jurisdiction of this Court, resultantly, the order dated 14-5-2001, is set aside with the result that the main appeals filed by respondent No.2, mentioned above stand restored.
14. Coming to the appeals, the main grouse/complainant in these appeals is that though the appellants have entered into an agreement of sale with the judgment-debtors/owners of the property, yet in violation of the terms under the agreement, the property is being put to auction, when they brought these objections before the executing Court the learned Court has absolutely ignored the same and directed for the auction of the property. Obviously, this tantamount to condemning the appellants unheard and therefore, such order being violative of the principle of natural justice, cannot sustain, therefore, these appeals are also accepted, the matter is sent to the learned Banking Court, where the objections of the appellant, shall be deemed pending, with the direction to decide the same in accordance with law.
Before parting it may be stated that as under the agreement dated 26-4-2001, which was made the basis of the order of this Court dated 14-5-2001, the appellants have paid certain amount to the decree holder, resultantly, when the said order is being set aside, the respondent-Bank is obliged to return that amount to the appellants, which should be done within three weeks from today without fail.