1. ' KHILJI ARIF HUSSAIN, J.---Brief facts to decide the appeal are that Appellant Bank (IDBP) granted financial assistance on 15-1-1985 to respondent No,1, respondents Nos.2 to 4 as security for the repayment of said financial assistance, has executed various documents and mortgaged the property bearing survey Nos. 111 and 112 admeasuring 4-11 acre together with building and machinery installed therein situated in Deh Ponath, Taluke Rohri, District Sukkur mortgaged by deposit of title deeds in favour of the appellant Bank. Respondent No,4 as security for the repayment of financial assistance provided by the appellant mortgaged his immovable property bearing City Survey No,2170 admeasuring 189.3 sq. Yards situated at Ward-B, Karbala Road, Rohri, District Sukkur by way of deposit of title deeds dated 15-1-1985. On default in payment of finance use and utilize by the respondents, the appellant. Bank recalled the said facility through his letter notice dated 20-2-1988 and thereafter filed Petition under section 39 of Industrial Development Bank of Pakistan Ordinance, 1961 for the recovery of outstanding dues with a prayer to sell the mortgaged properties including the property bearing No,2181/5. Ad interim order of attachment was issued on 28-12-1988 which was confirmed on 23-10-1989. On 5-4-1999 order was passed for sale of the properties and Official Assignee (OA) was appointed to take over the possession of the same. Property bearing Survey No, 2170 admeasuring 189.3 sq. Yards situated at Ward-B, Karbala Road, Rohri, District Sukkur, (hereinafter referred to as property in question) was sold in total sale consideration of Rs,300,000. After accepting the offer by this Court on 18-1-2002 possession was handed over to the purchaser on 3-2-2002 and sale certificate was issued in his favour on 9-3- 2002. Sale of remaining two mortgaged properties have not yet been affected.
2. ' On 20-4-2001 respondent No,5 National Bank of Pakistan (NBP) filed an application under section 151 C.P.C. CMA No,393 of 2006 to recall the order dated 5-4-1999 ( order for sale of the property) as petitioner obtained said order by mis-representation of facts.
3. ' After hearing the learned counsel for the parties, learned Single Judge vide order dated 25-10- 2007 while maintaining the sale conducted by the Court ordered the appellant to return the sale consideration received by him within 30 days to pay the same to respondent Bank. Appeal has been preferred against the said order.
4. ' Heard Mr. Ainuddin Khan learned Advocate for the appellant and Mr. Khaleeq Ahmed learned Advocate for respondent No,5. Respondents Nos. 1 to 4 remained absent.
5. ' Mr. Ainuddin Khan learned Advocate for the appellant argued that appellant was holding equitable mortgage charge on the property in question in respect of which ad interim attachment order was issued on 28-12-1988 which was confirmed on 23-10-1989 and thereafter order of sale was passed on 5-4-1989. Learned 0/A was appointed as Commissioner to take over possession of the property and sold the same. The learned 0/A received an offer of Rs,300,000 in respect of the property in question which was accepted on 8-1-2002. Possession was handed over, and thereafter sale certificate was issued on 9-3-2002 in favour of purchaser. Sale consideration received by the 0/A was ordered to pay to the Appellant Bank in satisfaction of his part claim. It was contended by the learned Advocate for the appellant that despite having notice of sale, which was published in newspaper, respondent No,5 failed to come forward to object the sale, to protect their mortgage interest in the property, listed application filed after a considerable period of time was liable to be dismissed.
6. ' On the other hand, Mr. Khaleeq Ahmed learned Advocate for the respondent No,5, argued that respondent No,5 is holding prior registered mortgage charge in respect of the property in question, filed suit for recovery of his outstanding dues in this Court which was decreed on 10-5-1990 by passing mortgage decree was passed. Respondent No,5 thereafter filed execution proceedings before the Banking Court at Sukkur for sale of the mortgaged property. It was argued by Mr. Khaleeq Ahmed learned counsel for respondent No,5 that being prior mortgagor respondent-Bank had first right of sale proceeds and to support his contention he relied upon case of Muhammad Saleem v. Manager, United Bank Limited, PLD 1990 (AJ&K) 29; Hoechst Pakistan and others v.
7. Maqbool Ahmad and another, 1998 CLC 134.
8. ' We have taken into consideration respective arguments advanced by the learned Advocates for the parties, perused the record. Property in question was mortgaged with the appellant Bank on 15- 1-1985 by executing memorandum of deposit of title deeds and on failure to pay the amount the appellant-Bank filed petition under section 39 of the IDBP Ordinance. Ad interim attachment order was passed on 28-12-1988 which was confirmed on 23-10-1989 and order for sale was passed on 5-4-1999.
9. ' Where by a registered mortgage deed dated 5-11-1983 property in question was mortgaged in favour of respondent-Bank. Pre-Mortgage decree was passed in respect of the property in question on 10-5-1990 and finally mortgage decree was passed on 9-6-1992. From the 0/A Report dated 5-4-1999 it appears that in compliance of Court order dated 5-4-1999 by which he was directed to take over possession of the properties and sale the same by public auction, he could not take over possession of the property in question as same was found sealed by Banking Court at Sukkur. Vide order dated 24-8- 1999 0/A was directed to inform the Banking Court at Sukkur about the proceeding pending and about the order of attachment dated 28-12-1998.
10. ' Without going in question why the property in question was sealed by banking Court and what proceeding was pending before the said Court and without any further order of de-sealing, which was sealed under an order of the Court of competent jurisdiction, it appears that 0/A just in a routine manner sent a memo. Requesting the Banking Court that no further proceedings may be taken in the matter as the property in question has been attached by this Court vide order dated 28-12-1998. No material is available on record that memo. Sent by the learned 0/A was brought to the notice of the learned Judge of Banking Court and in turn thereafter in the notice to respondent No,5 who is holding registered mortgage charge. The 0/A has not even taken care to find out under what circumstances Banking Court has attached the property and sealed the same to bring the said facts in the notice of the learned Judge passing order at the time reference was taken up for consideration. The 0/A, filed a reference after about three years of order dated 24-8-1999 that an offer of Rs,300,000 has been received by the appellant, for consideration. Since the order of sealing the property in question by the Banking Court at Sukkur was not brought to the notice of the Court, the learned Judge accepted the offer of Rs,300,000 on 18-1-2002. On 28-2-2002 order was passed to issue sale certificate in favour of the purchaser. The order to issue Sale Certificate was passed by the learned Single Judge after one month and ten days of accepting the bid was not in accordance with law.
11. After acceptance of bid under Rule 85 of Order XXI, C.P.C. Any person affected by the sale can apply to set aside sale in terms of Rules 89, 90 and 91 of Order XXI, C.P.C. The sale certificate should not be issued till period prescribed under Article 127 of the Limitation Act, for filing the objection for acceptance of bid is expired. However, since the property was purchased through the Court and bona fide purchaser had paid the entire sale consideration and a sale certificate has been issued to the' purchaser who has been put in possession of the property in question by an order of sale cannot be recalled at this stage, as none should be injured by an act of the Court.
12. ' Order XXXIV Rule 13 C.P.C. Provided about the application of sale proceeds in respect of mortgage property, which we would like to reproduce:- "Application of proceeds.--(1) Such proceeds shall be brought into Court and applied as follows:-- ' firstly, in payment of all expenses incident to the sale or property incurred in any attempt sale; ' secondly, in payment of whatever is due to the prior mortgagee, on account of the prior mortgage, and of costs properly incurred in connection therewith; ' thirdly, in payment of all interest due on account of 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 person according to their respective interests therein or upon their joint receipt.
(2) Nothing in this rule or in Rule 12 shall be deemed to affect the powers conferred by Section 57 of the Transfer of the Property Act, 1882.
13. Admittedly respondent No,5 was holding prior registered mortgage charge on the property in question whereas appellant was holding subsequent equitable mortgage charge.
14. ' In the case of Messrs Industrial Development Bank of Pakistan v. Messrs Maida Limited and others, 1994 SCMR 2248, the Honourable Supreme Court held as under:-- "According to this provision the first priority 'has been given to all expenses incurred on sale or any attempted sale. Then comes the claim of the prior mortgagee and cost incurred by him. Thereafter interest due on account of mortgage in pursuance of which decree was passed and sale was effected and cost of the suit in which such decree was passed, have to be satisfied. The principal amount of such mortgage has fourth priority. If any residue is left after satisfaction of the afore- stated claims it is to be appropriated amongst the persons who prove to be interested in the property sold according to their respective interests."
15. ' In the case of United Bank Ltd. v. Messrs Shaikh Rayon Silk Mills Ltd. 2002 CLC 696, it was held that:- - "The claim of mortgagor under the decree is to be satisfied as provided under the provision of Order XXXIV, Rule 13, C.P.C. And thereafter the remaining claims may be settled out of remaining balance amount of sale consideration."
16. It is not the case of the appellant that respondent bank acted fraudulently or in a gross-negligent manner to deprive him from his right of prior mortgage in terms of section 78 of the Transfer of Property Act, right of prior mortgagee can be postponed if due to fraud, misrepresentation or gross neglect, another person has been induced to advance money on the security of the mortgaged property and appellant has been induced to accept property as Security by way of equitable mortgage.
17. ' The term "gross negligent" define in the case of Lloyds Bank, Ltd. v. P.E. Guzdar & Co. AIR 1930 Ca1.22, as:-- "to mean failure on the part of the prior mortgagee to take such reasonable precaution against the risk of subsequent mortgagee being deceived as in the circumstances renders it unjust that prior mortgagee should retain his priority. A definition of the terms "gross neglect" in any precise words is not applicable, nor desirable and each case must depend upon its particular circumstances."
18. ' In the case of Kanigalla Prakasa Rao v. Nanduri Ramakrishna Rao and others, AIR 1982 Andhra Pradesh 272, it was held "when equitable mortgage created by depositing extracts of registration of sale deed on assurance that original was lost, the failure of mortgagee to make inquiry with person who lost it "gross neglect" therefore no equities arose in favour of subsequent mortgagee.
19. The respondent is holding registered mortgage charge on the property in question duly registered with the Sub-Registrar Sukkur on 5-11-1983 much prior in time when equitable mortgage was created in favour of the appellant. The appellant acted in a gross-negligent manner by failing to make inquiry from the Sub-Registrar of the property where the property is situated, whether the same is free from encumbrance or not and is thus not entitled to deprive the prior mortgagee from the sale proceed of mortgage property.
20. ' For the foregoing reasons, listed appeal has no merit and accordingly dismissed in limine.