MUHAMMAD ATTIQUE vs JAMI LIMITED and others

KHILJI ARIF HUSSAIN, J.---Through this appeal, the appellant impugns the judgment dated 21-4- 2005 passed in E.F.A. No, 110 of 2003 by the Lahore High Court, Lahore, whereby order of the Banking Court-II, Lahore, dated 18-10-2002 dismissing objection petition of respondent No,1, judgment- debtor, and application of respondent No, 8, decree-holder Bank, for setting aside the auction of the property in question was set aside and the matter was remanded to decide the objection petition filed by respondent No,1 afresh in accordance with law.

2. Brief facts necessary to decide the appeal are that to enforce the mortgage-decree the respondent-Bank filed an execution application with the prayer to sell the mortgaged properties including the property bearing Khasra No, 222, Khewat No, 79 admeasuring 2 Kanals 10 Marlas along with structure on it, situated at village Boghiwal Tehsil and District Lahore, (hereinafter referred as "the property in question"). The property in question was put for auction more than once, but no bidder came forward to participate in the auction held by the Court Auctioneer. The bid of Rs,855,000 offered by the appellant being the highest in the auction held on 28-2-2002 was submitted before the Executing Court on 9-3-2002 for consideration. Respondent No, 1 filed objection petition under Order XXI, Rule 90, C.P.C. As well as decree-holder Bank i,e, respondent No, 8, filed an application under section 19 of the Financial Institutions (Recovery of Finances)

Ordinance, 2001, for setting aside the auction of the property in question, objecting to the auction on various grounds including that no notice under Order XXI, Rule 66, C.P.C. Was served upon respondent No, 1, the proclamation of sale did not contain the true facts regarding repayment of the amounts by the judgment-debtor, no wide publicity was conducted by the Court Auctioneer, value of the property even according to the official rate of the Deputy Commissioner, Lahore, is much more than the bid amount and that the property was sold at a throwaway price of Rs, 855,000 thus fraud has been committed on Court by the Court Auctioneer in collusion with the alleged purchaser/appellant.

3. After hearing the parties, the Banking Court vide its order dated 18-10-2002, dismissed the objection petition field by the judgment-debtor, respondent No,1, as well as the application of the decree-holder Bank. The decree-holder Bank and the judgment-debtor, respondent No,1, filed appeals against the order passed by the Banking Court. The appeal filed by the decree-holder Bank was dismissed for non-prosecution, however, after hearing respondent No, 1 and the appellant, the order of the Banking Com t, Lahore-II dated 18-10-2002 was set aside and the matter was remanded to the Banking Court to decide the objection petition afresh in accordance with law, by learned High Court through judgment impugned herein.

4. Heard P r. Hamid Khan, Senior Advocate Supreme Court for the appellant and Sheikh Zamir Hussain, Senior Advocate Supreme Court for the respondent No, 1.

5. Learned counsel for the appellant vehemently argued that the auction was held after substantial compliance of Rule 66 of Order XXI, C.P.C., the objection petition filed by the judgment-debtor was barred by time. Learned counsel submitted that under Article 166 of the Limitation Act, the respondent had to file objection petition within 30 days from the date of the sale of the property in question, which was held on 28-2-2002, whereas, the objection petition was filed on 16-4-2002. To substantiate the contention, he relied upon the case of Ghulam Abbas v. Zohra Bibi and another; (PLD 1972 SC 337), Mst. Hamida v. Muhammad Zaman and another, (1991 SCM R 109), Muhammad Ikhlaq Memon v. Zakria Ghani and others, (PLD 2005 SC 819), Messrs Chawla International v. Habib Bank Limited and others, (2003 CLD 956), Messrs Chaudhary Weaving Factory and 2 others through Partner v. National Bank of Pakistan through VicePresident/General Attorney and another, (2005 CLD 1445), Messrs East Yarn Trading Company and 2 others v. United Bank Limited and 2 others, (2007 CLD 1555) and Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. And another (1981 SCM R 108).

6. On the other hand, learned counsel for respondent No,1 contended that Article 166 of the Limitation Act does not attract where the sale by itself is a fraud upon the Court and mandatory provisions of Order XXI, Rule 66, C.P.C., have not been complied with. The salecertificate issued during the pendency of the proceedings has no impediment of setting aside the sale, which otherwise, is void. Learned counsel further contented that impugned order is only a remand order and scope of interference with the same is very limited. It was further argued that notice in respect of sale of property in question was not published in any newspaper to conceal the intended purchase, to avoid participation of the bidders who may have offered best price of the property in question and to avoid transparency in the same proceedings. In support of his contentions, he relied upon the cases of Md. Umar v. Moti Chand and others (AIR 1952 Patna 244), Rehmat Ali through Legal Heirs and 10 others v. Allah Bachayo (2004 SCMR 1957) and Mst. Nur Begum and another v. Settlement and Rehabilitation Commissioner, Multan and 2 others (2003 SCM R 501).

7. We have taken into consideration the arguments advanced by the learnc 1 counsel and perused the record.

8. In the present matter, it is explicitly clear from the record that at no point of time the property in question was ever offered for sale by public auction through its publication in the newspapers as required under section 19(4) of the Financial Institutions (Recovery of Finance) Ordinance, 2001 or in terms of the order passed by the Banking Court under the provisions of Order XXI, Rule 67(2) C.P.C.

9. On 9-3-2002, the Court Auctioneers submitted the report about the sale of the property in question held on 28-2-2002 and the matter was adjourned for filing of objections. On 16-4-2002 objections were filed but on that date Presiding Officer was on leave and the matter was adjourned to 6-5-2002. On 6-5-2002, matter was adjourned for arguments on the application filed by the parties.

10. On 27-5-2002 Banking Court directed the respondent No,1, judgment-debtor as well as the decree-holder, who filed the objection against the sale of the property in question, to deposit a sum of Rs,171,000 (one lac seventy one thousand) in the Court being 20% of the sale auction price, failing which their application would be deemed to have been dismissed.

11. Admittedly said amount has been deposited not only by the respondent No,1/judgment-debtor but also by the decree-holder Bank.

12. On 26-7-2002, the decree-holder Bank filed an application to purchase the mortgage property in a sum of Rs,10,00000 (ten lacs). The matter thereafter was adjourned time and again and vide order dated 18-10-2002 applications filed by the judgment-debtor and decree-holder were dismissed.

13. On 23rd October 2002, the Banking Court confirmed the auction and ordered to issue sale certificate.

14. The Financial Institution Ordinance, 2001, is a special law, therefore, every provision contained therein has to be strictly construed and meticulously adhered to.

15. Reliance placed by Mr. Hamid Khan, learned Senior ASC on Ghulam Abbas v. Zohra Bibi and another (PLD 1972 SC 337), Muhammad Ikhlaq Memon v. Zakaria Ghani and others (PLD 2005 SC 819) and Messrs East Yarn Trading Company and 2 others v. United Bank Limited and 2 others (2007 CLD 1555), cannot be said to have any application herein whatsoever.

16. In the case of Ghulam Abbas v. Zohra Bibi and another (PLD 1972 SC 337), the sale was not set aside for want of beat of drum and was held that it was a mere irregularity. However, notice of sale was published in 4 newspapers (English,Urdu and Gujrati) as well as copies of the notices were affixed on the notice board of the Karachi Municipal Corporation, Office of Chief Assessor, Municipal Corporation and the Commissioner. The copies of the notices were also affixed on the notice board of District Court and the nearest Police Station, which is not a case herein.

17. In the case of Hudaybia Textile Mills Ltd and others v. Allied Bank of Pakistan Ltd. And others, (PLD 1987 SC 512), sale was not set aside after its confirmation merely because decree had been satisfied thereafter.

18. In the case of Muhammad Ikhlaq v. Zakaria Ghani and others (PLD 2005 SC 819), sale was not set aside only because time was extended to deposit the balance amount.

19. In the case of Messrs East Yarn Trading Company and 2 others v. United Bank Limited and 2 others (2007 CLD 1555), the High Court of Sindh, had not set aside the sale as the objections questioned the sale only on the ground that the property was sold at a nominal price, after due publication of notice of sale in the newspapers.

20. To appreciate the question whether non-publication of notice of sale in the newspaper and non service of proclamation of sale upon the judgment debtor vitiate sale as void ab initio, we would like to reproduce here-in-below the relevant provisions of the C.P.C.:-- "Order XXI, Rules 54, 66-67, C.P.C.

54. Attachment of immovable property.--(1) Where the property is immovable, the attachment shall be made by an order prohibiting the judgment-debtor from transferring or charging the property in any way, and all persons from taking any benefit from such transfer or charge.

(2) The order shall be proclaimed at some place on or adjacent to such property by beat of drum or other customary mode and a copy of the order shall be affixed on a conspicuous part of the Court-house and also, where the property is land paying revenue to the Government, in the office of the Collector of the district in which the land is situate.

66. Proclamation of sales by public auction.-(1) Where any property is ordered to be sold by public auction in execution of a decree, the Court shall cause a proclamation of the intended sale to be made in the language of such Court.

(2). Such proclamation shall be drawn up after notice to the decree-holder and the judgment- debtor and shall state the time and place of sale and specify as fairly and accurately as possible.- -

(a) the property to be sold;

(b) the revenue assessed upon the estate or part of the estate where the property to be sold is an interest in an estate or in part of an estate paying revenue to the Government;

(c) any encumbrance to which the property is liable;

(d) the amount for the recovery of which the sale is ordered; and

(e) every other thing which the Court considers material for a purchaser to know in order to judge of the nature and value of the property.

(3) Every application for an order for sale under this rule shall be accompanied by a statement signed and verified in the manner hereinafter prescribed for the signing and verification of pleadings and containing, so far as they are known to or can be ascertained by the person making the verification, the matters required by sub-rule (2) to be specified in the proclamation.

(4) For the purpose of ascertaining the matters to be specified in the proclamation, the Court may summon any person whom it thinks necessary to summon and may examine him in respect to any such matters and require him to produce any document in his possession or power relating thereto.

(67) Mode of -making proclamation.

(2) Where the Court so directs such proclamation shall also be published in the (official Gazette) or in a local newspaper or in both and the costs of such publication shall be deemed to be costs of the sale.

(3) Where property is divided into lots for the purpose of being sold separately it shall not be necessary to make a separate proclamation for each lot unless proper notice of the sale cannot in the opinion of the Court, otherwise be given.

21. The Executing Court while passing the order to sell the mortgage property of the judgment- debtor/respondent No,1, through an open auction, ordered to issue notice to judgment-debtor under Order XXI, Rule 66, C.P.C., with a further direction to publish the schedule of sale of the mortgage properties.

22. We would like to observe here that in terms of section 19(2) of Financial Institution Recovery Ordinance, 2001, the Executing Court has to choose the mode of execution in accordance with the provisions of the Civil Procedure Code or any other law for the time being in force or in such manner as the Banking Court may at the request of the decree-holder considers appropriate, but once it has chosen the mode as provided in the Civil Procedure Code, then it cannot be permitted to divert that mode at subsequent stage without conscious application of mind.

23. From the proceedings in hand, it is apparent that not only requirements of Order XXI, Rule 66, C.P.C, were not complied with, but also schedule of sale of mortgage properties was not published in any newspaper, as required under Order XXI, Rule 67 (2) C.P.C.

24. From the perusal of the record, it appears that though the Banking Court/Executing Court ordered for sale through publication but admittedly notice of sale was not published in any newspaper and further notice of proclamation of sale was also not served upon the judgment debtor.

25. The Banking Court without satisfying itself whether such notices were published in any newspaper in a mechanical manner accepted the bid of the appellant without realizing that its preceding order was not complied with and no notice was issued to the judgment-debtor. We feel that it was the duty of the executing Court to have satisfied itself that its previous order had been implemented and the mandatory notices had been issued to the judgment-debtors and published in the newspapers.

26. In the case of Captain-PQ Chemical Industries (Pvt.) Ltd, v. Messrs A.W. Brothers and others (2004 SCM R 1956), this Court held that auction proceedings have to be transparent and every possible effort be made to fetch the maximum price closer to market value.

27. We cannot overlook the admitted facts that not only notice of auction was published in any newspaper but also that the decree-holder as well as the judgment-debtor deposited a sum of Rs,171,000 being 20% of sale price to be paid to the appellant within two to three months from the date of auction, from which, it appears that due to non-publication of the notice, general public had not participated in the auction and as such the chosen person purchased the property at the price of his choice.

28. We are of the view that having not satisfied about the issuance of the notices under the above referred provisions of law, the Banking Court had committed glaring irregularity thereby vitiated the ultimate sale.

29. The sale in question is also liable to be declared void ab initio due to violation of the mandatory requirements of Order XXI, Rule 68, C.P.C. That no sale could take place till expiration of at least 30 days in the case of immovable properties, calculated from the date on which copy of proclamation was affixed on the Court House of the Judge ordering sale.

30. In the instant case, copy of sale notice was affixed on the Court's notice board on 6-2-2002, whereas the auction was held on 28-2-2002, much before the expiry of 30 days.

31. Now coming to the question of Article 166 of the Limitation Act, as we have come to the conclusion that sale appears to be the outcome of the collusion between the Court Auctioneers and the appellant and further mandatory provisions of Order XXI, Rules 66, 67 and 68, C.P.C. And section 19(4) of the Ordinance 2001, have not been complied with. In the circumstances, Article 181 of the Limitation Act is attracted and the application to set aside the sale as void, was filed in time.

32. The matter can be looked into from another angle. It is well settled that a bid made at an auction is in the nature of an offer which does not mature into a contract till its acceptance. The auctioneer acts as an agent of the seller to accept the bid, a concluded contract comes into being the moment the bid is accepted either by a word of mouth or in any other customary method like fall of hammer at public auction. If, however, the auctioneer is not vested with the power to accept the bid and said power is with another authority (i,e, the Court in a matter), the contract/sale comes into being when the bid is accepted by that authority, therefore, for the purpose of Article 166 of the Limitation Act, time starts to run from the date of the highest offer is accepted by the Court, and the objection petition filed by respondent No,1 was well in time.

33. In the case of Murugappa Naicker v. Thayammal (AIR 1923 Madras 82), a house was put for sale by the Government and the auction was held by the Tehsildar and the highest bid was forwarded to the Collector for confirmation on 15-7-1915. The Government declined to confirm the sale whereas bidder claimed that sale was completed. It was held that there was no complete contract and that the transaction before the Tehsildar amounted to merely an offer as contract was not concluded on 15-7-1915, when the auction took place.

34. In the case of Union of India and others v. M/s. Bhimsen Walaiti Ram (AIR 1971 SC 2295), where one of the conditions of auction was that the final bid would be made subject to the confirmation of the Chief Commissioner, it was held that the contract of sale was not completed till the bid was so confirmed and till ,such confirmation, the person whose hid had keen provisionally accepted was entitled to withdraw his bid and when the bid was so withdrawn before the confirmation of the Chief Commissioner the bidder would not be liable for damages on account of any breach of contract or for shortfall on the resale.

35. Word 'sale' has been defined in Black's Law Dictionary (Seventh Edition), as under:- "(1) The transfer of property or title for a price.

(2) The agreement by which such a transfer takes place. The four elements are(1) parties competent to contract, (2)mutual assent, (3) a thing capable of being transferred, and (4) a price in money paid or promised.

36. Term 'sale' has also been defined in section 45 of the Transfer of Property Act, 1882 as "the transfer of ownership of immovable property for a price paid or promised". In an auction proceedings title in the property not transferred in favour of the highest bidder, at the time when auction was held and offer was forwarded to the Court for acceptance, the Court sale for immovable property under Order XXI, Rule 84 is subject to proceedings under Orders XXI, Rules 89, 90 and 91, as result of which sale may either be set aside or confirmed. Once the sale is confirmed, section 65 C.P.C. Provides that ownership right in the immovable property will be deemed to have vested in the succeeding bidder retrospectively from the date when action was held.

37. For the foregoing reasons, the listed appeal has no merit and is accordingly dismissed.

However, no order as to costs.