' YAHYA AFRIDI, J.---The appellant, Messrs Ali Khan Flour Mills and Allied Industries (Pvt.) Limited, through the instant appeal seek:-- "(i) That the order and judgment dated 14-7-2008 passed by the Judge Banking Court No,1, Peshawar is illegal, without lawful authority and if no legal effect.
(ii) That the auction conducted on 10-11-2006 with subsequent negotiations, events, actions, consent decree dated 20-3-2008, deeds registered, mutation No,2106 dated 29-3-2008 attested in favour of respondent No,2 orders and proceedings made are liable to be quashed being in excess of jurisdiction and unlawful.
(iii) That any other consequential relief may also be granted deemed fit in the circumstances.
(iv) That the appellant is ready to pay the lawful liabilities of respondent No,1 after rendition of accounts and/or submission of report of amicus curiae in term of subsection (8) of section 5 of "the Ordinances".
(y) Costs."
2. The brief facts leading to the present appeal date back to the year, 2003, when the appellant company availed a lease facility from the respondent company for an amount of Rs,6.2 million, returnable in five years on monthly instalment of Rs,0.141 million. The petitioner/company in turn, inter alia, provided to the respondent company collateral security of landed property measuring 13 Kanals 5 Marlas with machinery, building and fixtures etc., situated in Shergarh, Tehsil Takht Bhai, District Mardan ("mortgaged property").
3. The record of the case reveals that in November, 2005, the appellant company defaulted in the repayment of the fixed instalment of the finance facility. The respondent company in turn invoked the provisions of section 15 of the Ordinance No,XLVI of 2001 ("Ordinance") and served on the appellant company the requisite three notices on 27-5-2005, 13-6-2005 and 28-6-2005.
' Thereafter, the public auction of the mortgaged property was intimated through national dailies to be held on 23-8-2005 at the Mardan Branch of the respondent-company. The said auction was postponed twice and finally it was held on 10-11-2005.
' The said auction proceedings were conducted by Messrs Mushtaq Ali Badshah (Advocate), Mardan and his auction report stated that there were three bids offered. The highest bid was that of Messrs Khalid Khan and Company, Bank Road, Mardan (respondent No,2) for an amount of Rs,10,000 million. This was followed by the bid offered by respondent company for an amount of Rs,9,500 million. Finally, Mr. Muhammad Khalid Khan, Par Hoti, Mardan had offered a bid for an amount of Rs,7,500 million.
' Respondent No,1 vide letter dated 15-11-2005 offered to respondent No,2, the terms of the revised bid of Rs,11,500 million for the mortgaged property, which was agreed. Finally on 16-11-2005 an agreement for the sale of the mortgaged property was executed between the said parties.
4. The appellant company along with Mrs. Sani Gul, Ashfaq Ali and Sadiq Ali Khan on 18-1-2006 instituted a suit before the Civil Court, Peshawar against respondent No,1 and Haji Niaz Muhammad one of the shareholders/directors of the appellant company seeking, inter alia, a declaration challenging the statutory notices issued by respondent No,1 under section 15 of the Ordinance.
The said suit was challenged and contested by the respondent company and accordingly the trial court vide order dated 6-2-2006 ordered the return of the plaint on the ground. That all disputes relating to issues arising out of notices issued under section 15 of the Ordinance were to be adjudicated upon by the Banking Court, Peshawar. The present appellant company did not challenge the said order.
5. The respondent company on 3-7-2006 filed an application before the Banking Court, N.-W.F.P.
Peshawar under subsection (6) of section 15 of the Ordinance.
' In the said application the applicant/respondent company contended that the successful bidder/respondent No,2 of the auction of the mortgaged property had defaulted in due payment and thus the auction was cancelled and the mortgage property had to be re-auctioned. The respondent company sought the indulgence of the Banking Court for it to be put in possession of the mortgaged property to complete the process of sale of the mortgaged property.
' The Banking Court, Peshawar vide order dated 3-11-2006 was not pleased to positively consider the said application and observed that the matter required recording of evidence and directed the present respondent company to file a proper suit, if so advised.
6. Respondent No,2 on 17-6-2006 instituted a civil suit against respondent No,1 for, inter alia, specific performance of the agreement dated 16-11-2005 before the Civil Judge, Takht Bhai.
' While the said suit was pending adjudication, the parties entered into a written compromise settlement, the terms thereof essentially entailed;
(i) A cheque of Rs,7.5 million was to be presented by respondent No,2 to respondent No,
1. The payment was conditional upon the delivery of the possession of the mortgaged property.
(ii) The conditional mutation based on the final payment of the remaining sale consideration the mortgaged property was to be effected in the revenue records in favour of respondent No,2.
(iii) The parties to assist each other in obtaining and delivering the possession of the mortgaged property to respondent No,2. In this regard applying to the Banking Court N.-W.F.P. Peshawar was also a part of the settlement.
' The parties filed a joint application praying for the grant of a decree in terms of the settlement.
The trial court at Takht Bhai on 20-3-2008 passed a decree in terms of the said settlement.
7. Being armed with the compromise decree obtained from the civil court at Takht Bhai, respondent company and respondent No,2, through separate applications, approached the Banking Court, Peshawar for seeking the delivery of the possession of the mortgaged property under section 15(6) of the Ordinance.
' The appellant company contested the said applications. The Banking Court, Peshawar vide order dated 14-7-2008 accepted the applications of the present respondents and ordered that:-- " in view of the above discussion, the petition in hand and the petition filed by Khalid Khan, the petitioner bearing 15/6 of 2008 are accepted and it is directed that the possession of the property purchased by the auction purchaser be handed over to him through warrant of possession."
8. The present appellant being aggrieved of the impugned order of the Banking Court dated 17-7- 2008, has assailed the said order along with other relief through the present appeal.
9. During the pendency of the present appeal, various applications have been filed for impleadment by persons claiming to be the management of the appellant company in the present appeal.
' The record of the case reveals that there is ongoing litigation regarding the actual control of respondent/company pending before the Company Judge, Peshawar High Court, Peshawar. In the circumstances, proprietary demands that we refrain from passing any observation regarding the said matter.
10. The learned counsel of the respondent No,2 has raised a preliminary objection regarding the maintainability and competence of the present appeal. The contention of the learned counsel was that the board resolution attached with the appeal was neither signed nor contained the seal of the company. Thus he contended that there was no valid board resolution to authorize the filing of the present appeal.
' In turn the learned counsel for the appellant, when confronted with the said objection, drew our attention to the affidavits on a stamp paper dated 21-5-2002 purporting to be an authority of the present management ratifying all actions already taken by Gul Muhammad on behalf of the company, including the authorization to file the present appeal.
' He also drew our attention towards the power of attorney executed by Gul Muhammad on behalf of the company in favour of the learned counsel; the same contained the seal of the appellant/company. His contention was that substantial compliance for the authorization had been complied with.
11. On merits, the learned counsel for the appellant contended that the auction proceedings taken by the respondent/company were not in accordance with the provisions contained in section 15 of the Ordinance. He further argued that the same did not have the attributes of a bona fide public auction; in fact it was a sham. He asserted that the Messrs Khalid Khan and Company and Muhammad Khalid Khan, the two bidders of the so called auction were the same person.
' The learned counsel for the respondents vehemently argued that the procedure adopted for the public auction was in express compliance of the provisions provided under section 15 of the Ordinance. All notices, with prescribed intervals, were duly served. Thereafter, public advertisement through national dailies was also carried out. The highest bid of Rs,10 million was later enhanced through negotiations to Rs,11,500 million. The learned counsel contended that there was no mala fide or any illegal action taken by the respondents in proceeding with the matter.
12. The valuable arguments of the learned counsel of the parties duly noted and the available record thoroughly considered.
13. Addressing the preliminary objection regarding the maintainability of the appeal on the ground that there was no Board Resolution of the Company authorizing a person to file the same, we seek guidance from the principle laid down by the august Supreme Court in Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation Ltd. (PLD 1971 SC 550). The Supreme Court discussing the competency of a suit being filed by a company, without a valid sanction of the Board of Directors, held that:-- "in my opinion no valid authority was conferred on Mr. Khurshid Mehmood and, therefore, he was not competent to institute the suit. I would, therefore, hold that the trial court was perfectly justified dismissing the suit on this ground."
' In Abubakar Salim Mayet v. Abbott Laboratories (1987 CLC 367) the court after reviewing a string of decisions from the Indian and Pakistani jurisdiction came to the conclusion that:-- `The upshot of the above discussion is that the suit was instituted by a person who was not legally authorized to institute the suit and, therefore, the issue should have been decided in favour of the appellant. The finding of the trial court on this issue is set aside and decided in favour of the appellant."
' The "ratio decidendi" of the above judgment was that even if a subsequent ratification is made concerning the authority to represent the company, the same would not be considered legally valid. The court came to the conclusion that an illegal act cannot be legalized subsequently.
' This view has been further supported in Hibro Instruments (Pvt.) Ltd. v. Mst. Sikandar Begum (2007 M LD 1270) where the basic judgment of the Supreme Court in Mamdot's case was followed and an appeal filed by a company without the legal sanction of a valid resolution of the Board of Directors was declared incompetent and thus rejected.
' Admittedly, the board resolution annexed with the appeal has not been signed by any person; leave alone a competent officer of the respondents-company. Thus the same cannot be considered a valid authority on behalf of the appellant-company. The fact that subsequently, the Directors and shareholders of the appellant-company have validated the actions taken by Mr. Gul Muhammad on behalf of the company would be of no legal avail. The consistent view of the superior courts is not to recognize such subsequent ratification.
14. We have noted that the Banking Court, while passing the impugned order failed to consider and resolve crucial issues regarding the bona fide of the auction proceedings, the genuineness and legal status of the bidders participating in the said auction, the effect of not filing the proper accounts of sale as provided under section 15(10) of the Ordinance, the legal import of the present respondent-company having cancelled the auction of the mortgaged property and thereafter without repeating the process of notices as provided under section 15 entered into an agreement on the previous rate with the auction purchaser, the fact that the sale consideration of the mortgaged property was conditional and not totally paid, the legal status of respondent No,2 claiming to be a registered partnership firm and the applications filed being without any partnership deed or authority of the firm. All these issues remain to be judiciously resolved.
' In this regard, provisions contained in subsections (6), (10) and (11) of section 15 of the Ordinance are relevant and read as follows:--
(6) Where the mortgagor or his agent or servant or any person put in possession by the mortgagor or on account of the mortgagor does not voluntarily give possession of the mortgaged property sought to be sold or sought to be purchased by the financial institution, a Banking Court on application of the financial institution of purchaser shall put the financial institution of purchaser, as the case may be, in possession of the mortgaged property in any manner deemed fit by it: ' Provided that the Banking Court may not order eviction of a person who is in occupation of the mortgaged property or any part thereof under a bona fide lease, except on expiry of the period of the lease, or on payment of such compensation as may be agreed between the parties or as may be determined to be reasonable by the Banking Court.
(10)A financial institution which has sold mortgaged property in exercise of powers conferred herein shall file proper accounts of the sale proceeds in Banking Court within thirty days of the sale.
(11)All disputes relating to the sale of the mortgaged property under this section including disputes amongst mortgagers in respect of distribution of the sale proceeds shall be decided by the Banking Court."
' We note from the above that the legislature has under section 15(11) of the Ordinance, clearly provided for all disputes relating to the sale of the mortgaged property to be decided by the Banking Court.
' In the circumstances, we do not consider it appropriate to pass any order regarding the same at this appellate stage. We note that other than the first prayer of the present appeal, which is to revisit the impugned order of 14-7-2008 passed by the Banking Court the appellant/company has sought reliefs for matters which have not yet been decided by the Banking Court under section 15
(11) of the Ordinance. Hence, the same are premature.
' The honourable Supreme Court in the recent judgment titled Izhar Alam Faroqu v. Sheikh Abdus Sattar Lasi (2008 SCM R 240) while discussing the legal import of section 15 of the Ordinance held that:-- "8....The financial institution subject to the compliance of mandatory requirement of law is empowered to sell the mortgaged property under section 15(4) of the Ordinance without the intervention of Court and in addition to the furnishing of the necessary particulars of the mortgaged properties and detail of the outstanding liability of the mortgagor is also required to send notices to all concerned and file proper accounts of sale proceeds in term of section 15(10) of the Ordinance
9. The sale of mortgaged property through auction without the compliance of the requirement of law in letter and spirit certainly invalidates the transaction as a whole. The august Supreme Court has, while recognizing the authority and power of the Financial Institutions to auction mortgaged properties without intervention of the court; mandated that the conditions provided in the said section have to be strictly complied with. The two conditions precedent for a valid sale were stated to be the service of notices as provided under subsection (4) and filing of accounts as envisaged under subsection (10) of section 15 of the Ordinance. The failure in compliance of the said provisions was to result in invalidating the entire process of the sale.
15. As for respondent No,2, the party which had raised an objection to the appellant's authority to institute the present appeal, is not free from objection regarding its own legal status and authority to be represented in the present proceedings.
' The record is not clear as to its legal status. Respondent No,2 in the agreement dated 16-11-2005 represents itself as a partnership firm, yet no partnership deed or authority has been placed on the record to verify, its legal status or the authority to represent the said firm. More important is the fact that the record is silent as to the payment of the total sale consideration for the mortgaged property and that the same is conditional upon the delivery of possession of the mortgaged property.
' As we have stated hereinabove, all these issues have to be resolved by the Banking Court, Peshawar under section 15(11) of the Ordinance and any finding by this Court would surely prejudice the interest of the parties. Thus on the available record and at this stage, respondent No,2 cannot be termed as a "purchaser" and be granted the benefits as envisaged under section 15 of the Ordinance.
16. Notwithstanding the fatal legal defect in filing this appeal, this court being an appellate court and also exercising "supervisory jurisdiction" within the meaning of Article 203 of the Constitution of the Islamic Republic of Pakistan, 1973 cannot remain oblivious to illegalities committed or injustice caused to anyone during the course of proceedings before any court or Tribunal including the Banking Court, subordinate to the High Court.
' In the case of Imtiaz Ahmad v. Ghulam Ali (PLD 1863 SC 382) a guiding and binding principle has been laid down by the apex Court while dealing with the legal technicalities. It has been held that technicalities of law, whether of procedural or substantial in nature, shall not be allowed to defeat substantial justice or on that account to let unjust order to remain.
17. In the peculiar circumstances of the case, this court holds that;
(I) The appeal of the appellant/company cannot be allowed as prayed for being not competently filed.
(II) Notwithstanding the fatal legal defect in filing the present appeal, the impugned order passed by the Banking Court, Peshawar dated 14-7-2008 is legally defective and has caused unjust enrichment and grave miscarriage of justice, therefore, it does not carry judicial efficacy and legal effect of the nature, which any legal binding order ought to carry.
(III) The parties are free to agitate all the issues arising out of the auction proceedings initiated by the respondent/company under section 15 of the Ordinance before the Banking Court, being the competent forum.
' In terms of the above, the present appeal is disposed of.