1. ' MRS. QAISER IQBAL, J.---The appellant has challenged the impugned order passed by the learned Banking Court No,1, Karachi in Execution Application No,73 of 2004, arising out of Suit No,694 of 1996, whereby an application preferred by the appellant under section 63, C.P.C. Read with Order XXI, rule 90 and section 151, C.P.C. Was dismissed refusing to recall the auction of the property.
2. ' Brief facts leading to the case are that the appellant being a private limited company filed Mortgage Suit No,694 of 1996, before this Court for sale of mortgaged property owned by respondent No,5 bearing No,A/488, Block-L, North Nazimabad Karachi, measuring 286.75 square yards together with the building constructed thereon, (hereinafter called as disputed property) for the sake of brevity.
3. ' On 16-12-1998, above suit was proceeded, a preliminary decree was passed followed by a final decree on 19-8-2000 consequent there upon appellant filed Execution Application No,39 of 2001, on account of the change of the pecuniary jurisdiction, it was transferred to the District Judge, Central Karachi and was assigned to the Court of VIth Senior Civil Judge, Central, Karachi, renumbered as (Execution Application No,16 of 2002), the respondents Nos.1, 2 and 4 contested the Execution Application, filed objections, consequently attachment and sale of the mortgaged property was allowed, Nazir took over the vacant possession of the mortgaged property by dispossessing the respondents Nos.2 and 5 and put the disputed property to auction, submitted its report on 27-1- 2005, that the auction could not be materialized on account of the acts of the auction-purchaser, on 13-6-2005, Nazir of District Court submitted inspection report. On 21-6-2004, the respondent No,1 in Suit No,42 of 1995, filed against the respondents Nos.2 to 5 obtained mortgage judgment and decree, consequently Execution Application No,73 of 2004 was preferred before the Banking Court- I, Karachi seeking attachment of sale of disputed property, which was already under attachment in possession of the Nazir of District Court Central Karachi. The learned Banking Court ordered the attachment of the disputed property, therefore, appellant preferred an application to the effect that on account of the prior order in favour of the appellant, they were entitled to relatable share in sale proceeds. The impugned order was passed by the learned Banking Judge after the satisfaction of the decree virtually allowed the Execution Application No,73 of 2004, ultimately the appellant's application was dismissed through impugned order.
4. ' We have heard Mr. Nazar Akbar, learned counsel for the appellant and Mr. Aziz-ur-Rehman, learned counsel for the respondent-Bank, perused the record of the case.
5. ' Mr. Nazar Akbar, learned counsel for the appellant has contended that the remedy available to the appellant under section 63, C.P.C. Read with Order XXI, rule 90, C.P.C. Was brushed aside by the learned Banking Judge by confirming the sale of mortgaged property without adhering to the above provision of law, mandatory in nature, therefore, objection raised by the appellant prior to the confirmation of the sale of the disputed property by way of auction were required to be disposed of at the first instance. Even after the sale proceeds was deposited by the auction- purchaser, the Banking Court ought not to have confirmed the sale in the presence of the objection raised by the appellant and would have proceeded to distribute the auction price on prorate basis as the appellant being claimant was entitled to the benefit of section 73 of C.P.C. For relatable distribution of sale proceeds amongst the decree holders. It is next urged that the learned Banking Court has erred in law as the respondent No,5 had also mortgaged Property bearing No,2/166-E (Survey Sheet No,35-8/1) measuring 600 Sq-yards P.E.C.H.S. Karachi, therefore, the decree against the respondent No,5, could be satisfied from the sale of the other property, which admittedly stands released after the sale proceeds of the disputed property were delivered to the Bank and the balance amount was deposited by the respondent No,5 to satisfy the mortgage decree in favour of the Bank. In support of his contention, learned counsel has relied on a Division Bench Judgment of Lahore High Court reported as Trust Modarba through its Trust Management Services v. Trust Leasing Corporation Limited and others, PLD 2005 Lah. 5 (DB), and Pakistan Industrial Credit and Investment Corporation Limited, Peshawar Cantt. And others v. Government of Pakistan and others, 2002 SCMR 496.
6. ' Mr. Aziz-ur-Rehman, learned counsel for the respondent has contested arguments raised on behalf of the appellant on the premises that the disputed property was not mortgaged by the respondent No,5 in favour of the appellant, therefore, under Order XXXIV, rule 13, C.P.C. In the even sale proceeds brought into Court could be applied as follows:-- "First, in payment of all expenses incident to the sale properly incurred in any attempted sale; ' Secondly, in payment of whatever is due to the prior mortgagee, on account of the prior mortgage, and of costs property incurred in connection therewith; ' Thirdly, in payment of all interest due on account of the mortgage in consequence whereof the sale was directed and of the cost of the suit in which the decree directing the sale was made; ' Fourthly, in payment of the principal money due on account of that mortgage; and ' Lastly, the residue {if any} shall be paid to the person proving himself to be interested in the property sold, or if there are more such persons than one, then to such persons according to their respective interest therein or upon their joint receipt.
7. (2)
8. ' Mr. Aziz-ur-Rehman, learned counsel for the respondent has contended that the respondent being the prior mortgagee, was liable to the sale proceeds, the appellant did not claim money decree against the respondent No,5, the sale was confirmed on 13-5-2006, which was not challenged the disputed property was enough to meet the decree passed in favour of the respondent/Bank, therefore, the question of connivance and relatable distribution as suggested by the learned counsel for the appellant would not come into play.
9. ' We have considered the arguments advanced at bar.
10. Adverting to the provision of Order XXXIV, rule 13, C.P.C., provides a procedure for an encumbrancer not a party to the suit for protection of his right and claim as held in case of Messrs Industrial Development Bank of Pakistan v. Messrs Maida Limited and others ,1994 SCMR 2248, an encumberancer is entitled to apply to be joined as a party to the sale, who can be made party in the proceedings for protection of his claim. At that stage the claimant can press his claim and also claim priority, if any. None of the claimant had taken steps nor joined the proceedings of sale, therefore, the chance was lost. It is further held that inter se priority amongst the claimants in appropriation of decretal amount can be claimed either on the basis of law or contract, as presently no claim is based on act, contract can only be the aspect of the case, the claimant succeeds in claiming priority over a mortgagee/decree-holder provided such right has been conferred to them in supersession of the right of such mortgage which is enjoyed under the law.
11. ' There is no cavil to the preposition that the appellant has resorted to file application under section 63 of Code of Civil Procedure read with Order XXI, rule 90 and section 151, C.P.C. And brought all the facts to the knowledge of the learned Banking Court on 21st July, 2005 remained pending up to 30th June, 2006 when the Banking Court has proceeded to satisfy the decree in utter disregard to provisions of Order XXI, rule 90 of Code of Civil Procedure, mandatory in nature, requires that application would have been disposed of, prior to confirmation of sale thereby Order XXI, rule 92, C.P.C. Has been violated and provision of section 73, C.P.C. Were ignored prior to the recording of satisfaction of its own decree obtained by the respondent No,1 in suit No,109 of 1986.
12. ' Adverting to liberal consideration of provisions of Order XXXIV, rule 4, the appellant had undertaken to have resort to the law for protection of right and claim, in case of Pakistan Industrial Credit and Investment Corporation Limited, Peshawar Cantt. And others v. Government of Pakistan through Collector Customs, Customs House, Jamrud Road, Peshawar and others, 2002 SCMR 496, dealing with the question of rateable distribution of the assets of the judgment-debtor dictum laid down is that it is necessary that the assets must be held by the Court, there should be more than one person who have money decrees in their favour against the same judgment-debtor and application should be made before the receipt of assets by the Executing Court. The application was not looked into from these angles to ascertain as to whether the same qualified the aforesaid requirements of section 73, C.P.C. Respondents Nos.1 and 2 in both the appeals are not decree holders as no decree has been passed by any Court in their favour.
13. In the instant case the appellants were holding a decree in their favour and had applied to the Banking Court for consideration of the objections for rateable distribution having money decree in their favour against the respondent No,5 the learned Banking Court had failed to decide the fate of the pending application until the entire decree was satisfied in favour of the respondent No,1 against the respondent No,5. Prior to the recording of the satisfaction of the decree obtained by the respondent No,1 it was incumbent upon the Banking Court to decide the objections which ought to have resulted in rateable distribution of the assets of the judgment-debtor, more particularly when another property was mortgaged which was subsequently released by the respondent No,1 upon the satisfaction of the decree recorded by the learned Banking Judge. It seems that the action of the learned Banking Court by recording of the satisfaction of the decree before proceeding to dispose of the objection of the appellant was not warranted under the law as the requirements of Order XXI, rule 43, C.P.C. Were not complied with.
14. ' In view of the above discussion we have arrived at a conclusion that the impugned order is not sustainable in law hereby set aside, case is remanded back to the learned Banking Court, with the direction to the respondent No,1 to deposit the sale proceeds within 15 days to enable the Executing Court for distribution amongst the appellant and the respondent-Bank on prorata basis. However, Respondent-Bank may file a fresh execution for mortgage property. Appeal is accordingly allowed.
15. Parties are left to bear their own costs in peculiar circumstances of the case.