' SARMAD JALAL OSMANY, J.--- Briefly stated the facts of the matter are that the petitioner-Bank had filed a petition before the learned Sindh High Court under section' 39 of the Industrial Development Bank of Pakistan Ordinance, 1961 for the recovery of outstanding dues against respondent No,1, who was the principal debtor as well as respondents Nos.2 to 4, who were the sureties having mortgaged certain properties in order to secure the debt. An ad-interim order of attachment was passed by a learned Single Judge on 28-12-1988, which was confirmed on 23-10-1989, whereafter on 5-4-1999 the mortgaged properties were ordered to be sold through the aegis of the Official Assignee. Consequently, one of the properties bearing Survey No,2170 admeasuring 189.3 square yards situated at Karbala Road Rohri, District Sukkur was sold for a total consideration of Rs,300,000 whereafter the possession was handed over to the purchaser/highest bidder on 3-2-2002 and accordingly sale certificate was issued in his favour on 9-3-2002.
2. On 20-4-2006, respondent No,5 National Bank of 'Pakistan (NBP) filed an application under section 151, C.P.C. For recalling the order dated 5-4-1999 regarding the sale of the property, as according to it, the petitioner-Bank had obtained the said order by misrepresenting the facts since it i,e, National Bank of Pakistan had a prior registered mortgage over the said property and in fact had obtained a decree for sale of the same in Suit No,586 of 1989 from the learned Sindh High Court. Thereafter, due to change of pecuniary jurisdiction, execution proceedings were filed before the Special Banking Court Sukkur, in consequence of which the property had been attached by the said Court. However, wlfen N.B.P. Approached the concerned Registrar for attachment of the said property, it was discovered that the petitioner-Bank had, obtained an order of sale of the property, which according to N.B.P was based on misrepresentation, as the former had knowledge of the prior mortgage of the latter. After hearing the learned counsel for the parties, the learned Single Judge, vide order dated 25-10-2007, while maintaining the sale conducted by the Court, ordered the petitioner-Bank to return the sale consideration received by it within 30 days to N.B.P. The petitioner questioned the legality of the said order in High Court Appeal before the learned Sindh High Court, which was dismissed vide impugned judgment and, hence this petition.
3. We have heard Mr. Ainuddin Khan, learned Advocate Supreme Court appearing for the petitioner-Bank. It would be seen that as per section 48 of the Transfer of Property Act, a later right created over any property, in the absence of a special contract or reservation binding the earlier transferee, is normally subject to the rights previously created. This self-evident proposition is expressed in the equitable maxim qui prior est tempore est jure. However, section 78 of the Transfer of Property Act creates an exception to this equitable doctrine of priority i,e, where through the fraud, misrepresentation or gross-negligence of a prior mortgagee another person has been induced to advance money on the mortgaged property, the prior mortgage shall be postponed to the subsequent mortgagee. It is not disputed before us that N.B.P. Had an earlier registered mortgage over the property in question whereas the petitioner-Bank acquired a simple mortgage by deposit of title deeds later in time over the same property. It is also not the case of the petitioner-Bank that due to the fraud, misrepresentation or gross-negligence of the National Bank of Pakistan it i,e, the petitioner-Bank had been induced to advance money to the concerned debtor on the security of the mortgaged property. In fact, when we raised this issue before the learned Advocate Supreme Court, he was unable to answer the same. In our opinion, a registered mortgage is a notice to the entire world of the factum of registration and to the contrary it is the petitioner-Bank who should have made the efforts and exercised, due care and diligence before advancing any amounts to the principal debtor on the strength of the property in question over which N.B.P. Already had a registered mortgage.
4. It would also be seen that section 50 of the Registration Act is another exception to the equitable doctrine of a prior mortgagor being superior to subsequent mortgagor. The said section provides that a registered mortgage, though created later in time, over any property takes priority over an earlier mortgage, which has not been registered. However, again this would not be applicable in the facts of the present case, as the mortgage created in favour of the Petitioner-Bank was a simple one and, hence unregistered.
5. Finally, it would be seen that as per Order XXXIV, rule 13, C.P.C., the sale proceeds are to be applied towards the satisfaction of a prior mortgagee's debt before a subsequent mortgagee can have any interest in the same.
6. For the foregoing reasons, we find no substance in this petition, which is dismissed as such and leave declined.
(Sd.) Sarmad Jalal Osmany, J (Sd.) Sabihuddin Ahmed, J ' I agree and have appended a separate concurring note stating additional reasons.
(Sd.) Sabihuddin Ahmed, J 'SABIHUDDIN AHMED, J.--- While fully concurring with the profound reasoning recorded by my learned brother I like to add that the order of sale of the property on the basis of reference of the official assignee dated 5-1-2002 was not merely illegal but also without jurisdiction. In this context it may be appropriate to reproduce the provisions of Order XXI, rule 52, C.P.C. Which read as under:-- "52. Attachment of property in custody of Court or public officer.---Where the property to be attached is in the custody of any Court or public officer, the attachment shall be made by a notice to such Court or officer requesting that such property, and any interest or dividend becoming payable thereon, may be held subject to the further orders of the Court from which the notice is issued: ' Provided that, where such property is in the custody of a Court, any question of title or priority arising between the decree-holder and any other person, not being the judgment-debtor, claiming to be interested in such property by virtue of any assignment, attachment or otherwise, shall be determined by such Court."
2. As is evident from the reference of the official assignee dated 12-6-1999 the property in question was found to be in custody of the learned Banking Court, Sukkur and therefore possession could not be taken by him. A learned single Judge vide order dated 24-8-1999 simply directed that the Banking Court may be apprised of the proceedings and the order of attachment passed by the Honourable High Court apparently with the object of proceeding according to law. As is evident from the proviso to the above quoted rule the question of priority of interest as between the petitioner and the respondent could only be determined by the aforesaid Banking Court. It is extremely unfortunate that in complete violation of the requirements of law and despite full knowledge of the fact that the property was already in the custody of another Court the petitioner never cared to find the basis of attachment by the Banking Court or approach such Court for its sale. On the contrary the petitioner started inviting purchase offers on its own and the official assignee proceeded to submit a reference and obtained an order of sale to deprive the respondent of their lawful prior claim on the property. The order of sale was also passed as a matter of routine without considering the factual background.
3. It is important particularly in view of the deference that other Civil Courts show to the High Court that Honourable Judges exercising original jurisdiction needs to be extremely cautious in ensuring that the jurisdiction of another competent Court is not impaired. Under the circumstances the impugned orders undoing the wrong were entirely appropriate and it is sad that instead of being thankful that the Honorable High Court had not annulled the sale (keeping in view third party interests) and saddled the petitioners with direction to pay heavy compensation they have chosen to prefer this frivolous petition for leave to appeal at the expense of public exchequer.