' YAHYA AFRIDI, J.---Through this single judgment, we intend to decide the two Intra Court Appeals filed by Messrs Spinghar Textile Mills Limited titled Messrs Spinghar Textile Mills Limited and another v. UBL and another (I.C.A. No,1 of 2011) and Messrs Spinghar Textile Mills Limited v. UBL and another (I.C.A. No,2 of 2011) as both the appeals arise out of a common judgment and that there are common questions of law and facts involved therein.
2. Both the Intra Court Appeals have impugned the common judgment and order dated 31-1-2011 passed by the Banking Judge, Peshawar High Court, Peshawar ("Banking Judge") on the two separate objection petitions filed by the present appellants against the acceptance of the bid of Arif Mehmood in the open auction ordered in execution of the decree passed in favour of United Bank Limited ("UBL").
3. The brief and essential facts leading to the present appeals are that UBL instituted a suit for.
Recovery against Messrs Spinghar Textile Mills Limited ("Company") and its guarantors for recovery of Rs,501.907 million as outstanding dues for the finance facilities availed by the Company. Apart from other collateral securities, the Company had provided to UBL, twelve different immoveable properties including plot Nos.33, 54, 55, 57, 58 and 59 measuring 10 Acres situated in Industrial Estate Hattar, Haripur ("mortgaged property").
4. During the pendency of the-recovery suit, State Bank of Pakistan ("SBP") issued Circular No,29 dated 15-10-2002 ("Circular No,29"), whereby certain concessions were provided, inter alia, to defaulting companies for easier terms of repayment of outstanding liabilities. Under Circular No,29, a committee ("SBP Committee") was constituted to verify the liability and determine the amount due from defaulting companies, who applied for the concessions so provided under Circular No,29.
The Company applied and their application was also placed before the SBP Committee. The SBP committee in its 97th meeting held on 29-12-2004, finally reduced the total liability of the Company to Rs,92.410 million to be payable under certain conditions stated therein ("settlement"). This was duly communicated to the Company by UBL vide its letter dated 26-1-2005.
5. The Company was unable to fulfil the terms of settlement, which constrained UBL to seek its legal recourse. The matter finally came up for hearing before this Court in FAB No,33 of 2005, wherein it was decided vide judgment dated 7-12-2006 that; "Resultantly, we allow the appeal in hand, set aside the impugned judgment and decree dated 24-1-2005 and grant decree for recovery of Rs,29.41 million in favour of appellant Bank against the respondents in terms of settlement dated 7-9-2004. The respondent shall be liable to pay the remaining settled amount within of period of three years starting from today. However, first installment shall be payable after a period of three months. In case the respondent-judgment debtor failed to pay two installments consecutively, the appellant shall file execution petition for recovery of the entire outstanding settled amount. There shall be no order as to costs."
6. UBL in order to execute the decree passed in its favour filed an execution petition on 24-6-2008 (Execution Petition No,! Of 2008), wherein it sought, inter alia, the sale through open auction of twelve properties, including the mortgaged property. Thereafter, proposals, commitments and at times down payments were made by the Company but at each instance, the same did not materialize.
7. The Banking Judge vide order dated 10-5-2010 directed, for the second time, the auction of the mortgaged property. This time it was to be held on 14-6-2010 and Messrs Hafeez Iftekhar Ahmad Khan was appointed as the auctioneer. It would be pertinent to note that the Banking Court, inter alia, authorized the auctioneer to; "The auctioneer as per circumstances at the spot could make a decision for separate auction of machinery, plant and landed property."
8. The Company vide an application (C.M. No,9 of 2010) approached the Banking Judge praying for the deferment of the auction set for 14-6-2010, as it had negotiated the sale of machinery with a third party for an amount of Rs,30.000 million and a cheque of rupees one million, as down payment, was also submitted therewith. The Banking Judge, considering the offer made by the Company, deferred the auction to be held on 14-6-2010 vide order dated 11-6-2010.
9. The offer so made by the Company was rejected by UBL and its letter dated 21-6-2010, wherein, inter alia, the reason for refusing the offer of Company was that; "Since we have not received the order PHC dated 21-6-2010 and that the proposed amount and schedule of payment for purchase of textile machinery of Messrs Spin Ghar Textile Mills Limited is not acceptable to the Bank in view of the following:
1. The project assets have been evaluated by ICML (vide valuation report dated 15-4-2010) showing market value of land building and machinery at Rs,135 M with FSV of Rs,105 M, whereas the Textile Machinery shows MV of Rs,55 M with FSV of Rs,39 million approx. The offer is too low and that too in piecemeal.
' Therefore the cheque "in original" of Mr. Imamuddin Chaudhri is being returned herewith for onward delivery to him or his constituted attorney;
10. On the refusal of the UBL to accept the offer made by the Company, the Banking Judge vide order dated 28-6-2010,- again put the mortgaged property to open auction to be held on 16-8- 2010. It would be pertinent to note that the Banking Judge not only appointed the same auctioneer but also ordered that the directions so rendered vide order dated 10-5-2010 be applied for the auctions of 16-8-2010. This was followed by proclamation of the said auction published in the dailies and the notices were issued by the auctioneer.
11. The auctioneer's report of the auction proceedings of 16-8-2010 reflects that there were six bidders, who participated in the open auction and Arif Mehmood son of All Muhammad resident of Rawalpindi ("auction purchaser") was declared the highest bidder with a final bid of Rs,71.000 million. Behind him was Khalid Mehmood son of Qurban Hussain resident of Jehlum, who came up, to Rs,70.500 million. It would also be pertinent to note that signatures of all the bidders, the statement of the auction purchaser, duly witnessed by four witnesses were also obtained. However, Malik Abdul Waheed, a representative of the Company, submitted his hand written objection to the auctioneer at the auction site, which stated that; "Sir, ' Auction cannot take place below the reserve price. The Bank intimated in their letter that the reserved price would be 11 crores. The Manager brought in bidders and in collusion has tried to sell of the property at through away price for personal gains.
' Malik Abdul Waheed (JD) 16th August, 2010"
12. The auction of 16-8-2010 was challenged by the present appellants by filling two objection petitions before the Banking Judge. The said objection petitions were rigorously opposed by the auction purchaser and UBL.
13. Finally, the Banking Judge was pleased to dismiss the objection petitions of the present appellants and confirmed the auction sale in favour of the auction purchaser vide impugned order and judgment dated 31-1-2011, in the following terms; "So, by keeping in view, what has been discussed above, both the objection petitions are hereby dismissed. The report of auction is accepted. The offer of sale of Rs, 70 million made by Mr. Arif Mehmood is hereby accepted and confirmed in his favour. A sale certificate be also issued in his name and he be put into possession of the premises. The sale price deposited in this Court should be paid to the DH Bank. The DH Bank is directed to submit statement of account showing the atnount recovered in all and the balance outstanding amount. He is further directed to submit/provide the rate of costs of funds issued by the State Bank of Pakistan. To come up for further proceedings on 28-3-2011."
14. Aggrieved thereof; the present appellants impugned the said judgment and order of the Banking Judge through the instant two Intra Court Appeals. It would be pertinent to note that the UBL has not impugned in appeal the confirmation of auction by the Banking Judge.
15. I.C.A. No,1 of 2011 has been filed by the Company through its Chief Executive, Malik Abdul Waheed, authorized by a resolution of the Board of Directors of the Company A dated 5-1-2009 and Malik Abdul Waheed, in his personal capacity, as director of Company. The learned counsel representing the said appellants vehemently contended that no "reserve" price of the mortgaged property was stated in the proclamation as provided for under Order XXI, Rule 66 of Code of Civil Procedure, 1908 ("CPC"); that as the auction amount was paid through cheque and so it violated the provision of Order XXI, Rule 84 of C.P.C.; that the final payment of 75% of the auction amount was not made by the auction purchaser but was in fact made by another person, hence the entire auction was vitiated; and that auction amount was paid beyond the period permissible under the law and hence it violated the provisions of Order XXI, Rule 85 of C.P.C.; and that there was fraud and collusion between the auction purchaser and the management of UBL, which had seriously prejudiced the rights of the Company. Reliance was placed on 1999 MLD 2127 and PLD 1993 Lahore 706.
16. I.C.A. No,2 of 2011 was filed by the Company through eight persons. It would be pertinent to note that the said appeal was not supported by any board resolution of the Company authorizing the said persons to file the instant appeal. Moreover; there was no information rendered in the B memo of appeal about the authority or interest of the said eight persons purporting to be representing the Company. The learned counsel representing the appellant adopted the arguments of the learned counsel for the Company in I.C.A. No,1 of 2011.
17. In rebuttal, the learned counsel for UBL ably supported by the learned counsel for the auction purchaser, aggressively disputed the assertions placed forth by the appellants in questioning the auction proceedings and the confirmation of the sale ordered by the Banking Judge vide the impugned decision. The learned counsel vehemently contended that the board resolution filed by the Company in I.C.A. No,1 of 2011 was vague and in I.C.A. No,2 of 2011 there was none authorizing the eight persons to impugn the decision in appeal on behalf of the Company and thus the two appeals were not maintainable in the eyes of law; that the present appeals were not maintainable as the other judgment-debtors had not been impleaded as parties in the appeals, thereby liable to be dismissed in view of Order XLI, Rule 20 of C.P.C.; that appeal under section 22 of Ordinance No,XLVI of 2001 clearly provided for a provision for appeal, which was not availed; that no deposit of 5% of auction amount with objection petitions were filed by the appellants and thereby violating Order XXI, Rule 89 of C.P.C.; that merely low price was no ground for non-confirmation of an auction proceedings; that there was no need for mentioning the reserved price in an open auction; that cheque was a 'good' tender, especially when the amount involved was high and that there was no element of any fraud. Reliance was placed on 2003 CLD 1157, 2003 CLD 956, 2002 CLD 1071, 2005 CLD 1511, 2007 CLD 712.
18. The valuable arguments of the learned counsel for the parties heard and the available record of the case thoroughly considered.
19. We shall first address the preliminary objection regarding the maintainability of the appeals on the ground that board resolution of the Company was not available (I.C.A. No,2 of 2011) or was too vague (I.C.A. No,1 of 2011) to be considered a valid authority to the persons who had filed the appeals. In this regard, 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, while 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."
' The "ratio decedenti" of the above judgment of the apex Court has been consistently followed by the superior Courts of our jurisdiction. In Hibro Instruments (Pvt.) Ltd. v. Mst. Sikandar Begun (2007 MLD 1270), wherein the basic judgment of the Supreme Court in Mamdot's case (supra) 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.
20.
20. Keeping the "ratio decedenti" of the judgments, discussed hereinabove, as are guiding principle, this Court finds that in I.C.A. No,1 of 2011 there is an extract of the minutes of the meeting of the board of directors of Company dated 5-1-2009 attached therewith. It would also be pertinent to note that the said extract of the resolution had a seal of the Company affixed thereon. The said resolution authorized, inter alia, Malik Abdul Waheed, the Chief Executive of the Company, to represent the Company and defend the Company in the execution petition No,1 of 2008 titled UBL v.
Messrs Spinghar Textile. Mills Ltd. and all others proceedings filed or to be filed by or against the Companu." (Emphasis provided)
' The aforementioned authority appears to be sufficient authorization to Malik Abdul Waheed to institute the present appeal on behalf of the Company. Thus I.C.A. No,1 of 2011 is maintainable in its present form and authority.
21. However, in regard to I.C.A. No,2 of 2011, there is no resolution of the Company authorizing the eight persons named therein to represent the Company and to file the said appeal. Furthermore, the memo of appeal is silent about their interest in mortgaged property. Thus, the I.C.A. No,2 of 2011 is not maintainable on this legal score, alone.
22. The second preliminary objection raised by the learned counsel for UBL and the auction purchaser was that maintainability of the present appeals under the provisions of the Code of Civil Procedure, 1908 ("CPC") when a clear provision of appeal has been provided under section 22 of the Ordinance No, XLVI of 2001 ("Ordinance'7.
' Canvassing the provisions of the Ordinance, this Court finds that sections 4, 7(1)(a)(2), 9(4) and (5), 19(2)(7) and 22 mainly relate to powers and authority of the banking courts, the procedure to be adopted in executing decrees, filing appeals and most importantly the over riding effect of the provisions contained therein over all other laws. These provisions of the Ordinance, when read with sections 4(1) and 141 of the C.P.C. Would cumulatively render the general provisions provided in C.P.C. Subservient to the special provisions provided for the said matter in the Ordinance. Reliance in this regard may also be placed on the authoritative judgment of the august Supreme Court in Hudaybia Textile Mills Ltd. v. Allied Bank of Pakistan Ltd. (PLD 1987 SC 512).
' I.C.A. No,1 of 2011 purports to have been filed under section 96 of C.P.C. The said provision, we are afraid, does not relate to the facts of the present case, as the same relates to an appeal against a decree. In the present case, the Company is aggrieved of an order of the Banking Judge, confirming the sale of auction and the rejection on of objection made thereon by the Company.
The relevant provision for an appeal against such an order in C.P.C. Is provided for in section 104 read with Rule 1(j) of Order )(LIU of C.P.C. Surely, when there is a clear provision of appeal provided in the Ordinance, and then appeal provided therein would prevail and over ride the provisions of appeal provided in C.P.C. However, when we compare the provisions of appeal against an order provided in the two statutes. Both have a common forum; the High Court. Furthermore, there is no special condition precedent provided under section 22 of the Ordinance, so as to render the appeal filed by the Company incompetent. In fact, quoting a wrong provision of law in the appeal, but before a correct forum, would not render the appeal in competent and liable to dismissal, as argued by the learned counsel for UBL and the auction purchaser. Thus we deem the present appeal to be an appeal filed under section 22 of the Ordinance and the preliminary objection raised by the learned counsel for UBL is rejected; as merit and substance are to govern and not technicalities. Reference, if required, may be made to the Land Acquisition Collector, Rawalpindi v.
Lieutenant-General Wajid Ali Khan Burki (PLD 1961 Lahore 1028), Saiid Hussain Shah v. Ghulam Rukkia (PLD 2004 Lahore 475) and Sikandar Trading Company v. Habib Bank Ltd. (2008 CLD 326).
24(sic.). We will now consider the preliminary objection regarding the non-deposit of the 5% of the auction price and the amount specified in the proclamation of sale along with the objection petitions rendering the same to be not maintainable under the provisions of Order XXI, Rules 89 of the C.P.C. This Court finds that the said objection is misplaced. The regime provided under Rules 89 and 90 of Order XXI of C.P.C. Cater 'to different and distinct circumstances. In cases, where the judgment debtor or the mortgagor does not want to contest the 'bona fide' of the auction or its propriety and merely wants to release his property from the interest created in favour of the auction purchaser, he then has to apply under Rule 89 of Order XXI of C.P.C. However, on the other hand, where the judgment debtor or the mortgagor having an interest in the auction property is aggrieved of any 'fraud' or `irregularity' committed in the auction proceedings or its confirmation, he need not deposit the amount so stated in Rule 89 of Order XXI of C.P.C. In such circumstances, he may invoke the provisions of Rule 90 of Order XXI of C.P.C. Reliance may be sought from the full Bench judgment of the apex Court titled Mir Wali Khan v. Manager Agricultural Development Bank of Pakistan (PLD 2003 SC 500), wherein it was clearly held that; "....A judgment-debtor is well within his right to seek annulment of a sale through an application under Rule 89 or an application under Rule 90 which have different connotations and parameteRs, If he elects to file an application under Rule 90 it has to be decided within the parameters thereof and not on the basis of his refusal to deposit the decretal amount or accept the offer to purchase the property over an above the price at which it was auctioned or procure a buyer who could offer an amount over and above the auction price. Similarly, no adverse inference can be drawn with regard to his credentials and conduct. .... Needless to mention that disposal of an application under Order XXI, Rule 90, C.P.C. Involves holding of an investigation and recording of findings based on evidence adduced by the parties."
' Thus it may safely be stated that as the appellants in I.C.A. No,1 of 2011 had alleged fraud' and 'irregularity' in the very auction proceedings, their case would fall under Rule 90 and not Rule 89 of Order XXI of C.P.C. Accordingly, there was no requirement under the law for the appellants to deposit any amount, with their objection petitions, as was asserted by the learned counsel for the UBL and auction purchaser. Hence, the said objection is over ruled.
25. Now moving on to the-grounds of challenge thrown by the Company to the auction and its confirmation by the Banking Judge, the learned counsel for the Company had contended that as the auction purchaser had made the payment through cheque, the same offended the provision of Rule 85 of Order XXI of C.P.C. And thereby vitiating the entire sale and its confirmation.
' In the present day law and order situation, it would be unfair, if not impossible, for a prospective bidder to carry with him a huge amount of funds running into million in cash in order to fulfil the requirement of Rules 84 and 85 of Order XXI of C.P.C. This should not be taken as amendment of the said Rule. In fact, the Banking Judge, while settling the terms of the proclamation, ought to taken into account all aspects of the case and depending of the peculiar circumstances of each case determine the mode of payment. In this regard, the site of auction, time of auction and the value of property being auctioned would be relevant factors for determining the said mode of payment. The paramount consideration being that the auction proceedings were validly carried out and no prejudice was caused to any party, then in that case, the entire auction proceedings cannot be brought to a halt merely for the reason that the initial payment was made through cheque. In this regard, we seek guidance from the judgments of the august Supreme Court of Pakistan in Muhammad Ikhlaq Meman v. Zakria Ghani (2005 CLD 1589) and Shaukat Ali Mini v. Trust Leasing Corporation (2002 CLD 1071).
' Our attention was also invited to the judgment rendered by this Court in Messrs All Match Industries Limited v. IDBP (1999 MLD 2127), wherein this Court had set at naught impugned the auction, inter alia, as the initial 1/4th payment of the auction money was made through cheque and not through cash or demand draft. As explained in Shaukat All Mina's case (supra); "In taking the aforesaid view the learned Peshawar High Court was persuaded by the fact that cheque could be dishonoured. The provisions of Rule 71 of Order XXI of Code of Civil Procedure, 1908 ("CPC") duly take care of the situation. According to the said rule if the resale is to be directed on account of "purchaser's default", any deficiency in the sale price and all expenses attending resale are recoverable from the defaulting purchaser under the provisions relating to the execution of a decree for payment of money. Therefore, if resale was to be directed on account of non- encashment of the cheque the auction purchaser was liable to pay deficiency in the sale price and all expenses in case of resale of property."
' In the present case, the record reveals that not only was the cheque deposited with the auctioneer and before the Banking Judge, but in fact the same were duly honoured and the funds duly realized. Hence, this ground of challenge made by the Company is not sustainable, in the circumstances of the present case.
26. The second ground of appeal agitated by the learned counsel for the Company was that there was a fraud' committed by the officials of UBL and the auction purchaser, whereby mortgaged property had in fact been sold at a very nominal price. As far as the allegations of fraud' are concerned, the auction report and the accompanying statements recorded by the auctioneer do not support such serious allegations made by the Company. The record of the auction proceedings reveal that the bidders were from different parts of Pakistan, the bids so made had been clearly stated in respect of each bidder and the contest between the two highest bidders was also very close. Moreover, this was not the ground of protest and complaint made by the representative of the Company submitted to the auctioneer, at the site of auction. It can be safely stated that there was no concrete evidence placed on the record, which could sway our attention to the alleged fraud'. Hence, this ground of challenge does not prevail.
27. Now moving on to the third challenge thrown by the Company to the auction and its confirmation by the Banking Judge was that as the "reserve" price had not been mentioned in the proclamation and thus the entire auction proceedings was liable to be set aside. It is but most fundamental that once the Banking Judge had decided to opt for executing the decree by public auction of the mortgaged property under the provision of CPC. Then prior to the actual auction, the terms of the auction had been settled and thereafter the same were duly incorporated in the proclamation, as ordained under the provisions of Rules 64, 65 and 66 of Order XXI of C.P.C.
' In this regard, it may be kept in mind that the provisions of Rule 66 of Order XXI of C.P.C. Have been amended by the different High Courts in Pakistan, each considering the peculiar prevalent circumstances. As far as Khyber Pukhtunkhwa is concerned, the provisions of Rule 66 of Order XXI of C.P.C., as it stood, when the auction proceedings commenced and sale confirmed by the Banking Judge, are as follows: -- "66. Proclamation of sales bz? 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, whereas 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 the nature and value of the property.
"Provided that it shall not be necessary for the Court itself to give its own estimate of the value of the property; but the proclamation shall include the estimate, if any, given by either or both of the parties."
(Emphasis provided to highlight the amendment so provided in Khyber Pukhtunkhwa).
' The bare reading of the aforementioned provision of Rule 66 (supra) would reveal that it is not mandatory for the Banking Judge to state its own value of the property being auctioned in the proclamation, which is more commonly referred to as the "reserve price". However, it is mandatory that the value so determined by the parties, i.e. The decree holder and the judgment debtor, is to be stated in the proclamation, as the word "shall" has been stated therein.
' The rationale behind stating the said value in the proclamation is to ensure full disclosure to the prospective bidders, intending to participate in the proposed auction. They are to be aware of all the necessary facts regarding the property they are intending to purchase. It may also be added that this crucial information, if known to the prospective bidders, would render then with information to decide the final bid to be made by them. It would most certainly avoid further complications and multiplicity of litigation, as the bidders would anticipate, the objections that they are to face from the judgment-debtor or the decree-holder, at a subsequent stage of confirmation of the sale. The regime so envisaged is designed to safeguard all parties, including the third party interest. In this regard, reference if needed, may be sought from MRs, Shahida Saleem v. Habib Credit and Exchange Bank Ltd. (2001 CLC 126) and Muhammad Hassan v. Messrs Muslim Commercial Bank Ltd. (2003 CLD 1693).
' In the Indian jurisdiction, the need for full disclosure to the prospective bidders in the proclamations has also been held paramount. In this regard, the Supreme Court of India in Jadhar Prasad and others v. Babu Bakhta Ratan and others (AIR 1973 SC 2593) when faced with varying decisions of the different High Courts in India, regarding the extent to which information regarding the value of the property proposed to be auctioned was to be stated in the proclamation under the provisions of Rule 66(e) of Order XXI of C.P.C., the august Court held that; "Moreover, Rule 66(2)(e) requires the Court to state only the facts it considers material for a purchaser to judge the value and nature of the property himself. Hence, the purchaser should be left to judge the value for himself But. Essential facts which have a bearing on the very material question of value of the property and which would assist the purchaser in forming his own opinion must be stated. That is, after all, the whole object of Order XXI, Rule 66(2)(e), Civil Procedure Code. The Court has only to decide what all these material particulars are in each case. We think that this is an obligation imposed by Rule 66(2)(e). In discharging it, the Court should normally state the valuation given by both the decree-holder as well as the judgment debtor where they have both valued the propertu; and these do not appear fantastic. It may usefully state other material facts, such as the area of land, nature of rights in it, municipal assessment, actual rents realized, which could reasonably be expected to effect valuation.
What could be reasonably and usefully stated succinctly in a sale proclamation has to be determined on the facts of each particular case. Inflexible rules are not desirable on such a question...." (emphasis provided).
' For guidance, it may be noted that in case the value of the property to be auctioned, so determined by the parties, are so varied in amount that they are irreconcilable and thereby to surely confuse the prospective buyers, if so stated in the proclamation, the executing Court then has to carry out a summary inquiry and to reconcile the two values, after providing opportunity of hearing to both the parties.
' In Jadhar Prasad's case (supra), the Indian Supreme Court has also commented on the said issue in the terms that; "....The order should show that it considered the objections, if any, of the decree-holders or the judgment debtors, as the case may be. It should not merely accept unhesitatingly the ipse dixit of one side. We think that the execution Court had not performed the duty fairly and reasonably in this case."
' Earlier, in the full Bench judgment of the Patna High Court in Raghunath Singh v. Hazari Sahu (AIR 1917 Patna 381) it was held after extensively reviewing the then precedents on the issue, that; "Their lordships of the Privy Council (Saadatmant Khan v. Phul Kuar. 1898) 20 All 412) were of the opinion that a gross misstatement of the value was something more grave than an ordinary irregularity of the procedure and that the value of the property was a very material fact and must be considered one of those things which the court considers material for the purchaser to know and they observed that it had been enacted in terms that those things should be stated as fairly and accurately as possible. It seems to mean that in view of the decision of their lordships it is not open to ant, court in India to hold that it is not the duty of a Court preparing a proclamation to state as ,fairly and accurately as possible in the proclamation the value of the propertu. It was suggested that this view of the law laid a very heavy burden on the Court. In the first place, that would be no reason for not enforcing the law. Next, it has never been suggested that the Court should hold an elaborate inquiry and ascertain the exact value of the property....
In my opinion it is absurd that a court to enter in the sale proclamation a statement that the property to be sold is valued by one person at Rs,7,000 and by another at 7,000.... The value must be stated as fairly and accurately as possible." (emphasis provided).
' The principle so laid down in the aforementioned full Bench decision of the Patna High Court has been consistently followed, thereafter, by other High Courts in the Indian jurisdiction. The cases in point are Barkat Ram v. Baghwan Singh (AIR 1940 Lahore 394), Ban Behari Chattar Ji v. Bhukhan Lal Chaoudhurm (AIR 1933 Calcutta 511), Suhrawardu and Graham, JJ. (Kumar) Pashupati Nath Maliah and another v. Bank of Behar (AIR 1932 Calcutta 141) and Suhrawardv and Graham, JJ, Lachira v.
Rameswa r Singh and others (AIR 1930 Calcutta 781).
28. Reviewing the record of the present case, we note that prior to issuing the proclamation of the intended sale, learned Banking Judge did not settle the terms of the auction, as envisaged under the provisions of Rule 66 of Order XXI of C.P.C. In addition thereto, the estimate 'value' of H mortgaged property as considered by the parties was also not mentioned in the said proclamation. Furthermore, the directions rendered by the Banking Judge to the auctioneer, regarding the decision for separate auction of machinery, plant and landed property was also not incorporated in the proclamation.
' In view of the above mentioned crucial deficiencies in the proclamation of the impugned auction, the essential information mandatory for a full disclosure to the prospective bidders about not only the nature and value of the mortgaged property to be auctioned but also the manner in which the auctioneer was to proceed in the auction was not made public. In addition thereto, we are also alive to the prejudice that would be caused to the parties, in particular, the decree holder. Thus not only the clear letter but the spirit behind the provisions contained in Rule 66 of Order XXI of C.P.C.
Was violated.
' This takes us to the final threshold of the present case; whether the above mentioned violations of the provisions contained in Rule 66 of Order XXI of C.P.C. Would bring the same within the purview of "irregularities" as provided under Rule 90 of Order XXI of C.P.C. And thereby vitiate the entire auction proceedings or otherwise. For reference, Rule 90 of Order XXI of C.P.C. Reads as under: "90. Application to "set aside on ground of irregularity or fraud.--- Where any immovable property has been sold in execution of a decree, the decree-holder, or any person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it: ' Provided that no sale shall be set aside on the ground of irregularity or fraud unless upon the facts proved the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud: ' Provided further that no such application shall be entertained unless the applicant deposits such amount not exceeding twenty percent of the sum realized at the sale, or furnishes such security, as the Court may direct."
' The judicial consensus on this issue is that violation of the provisions of Rule 66 (supra) and in particular the non-mentioning of the "value" of the intended property, as I deter by the parties, in the proclamation would bring the same within the mischief of the term "irregularity" provided in Rule 90 of Order XXI of C.P.C., and thus the consequences thereof would follow.
' In this regard, reference may be made to Muhammad Hussain v. Muslim Commercial Bank Ltd.
(2003 CLD 1693), wherein in similar circumstances, the entire auction and its confirmation was 'declared a nullity in the eyes of law. The Divisional Bench of the Lahore High Court had held that; "The provisions of Rule 66 are mandatory in nature and without settling and causing a proclamation of the intended sale in terms of the said rule by the Court itself, no sale shall be considered to have been lawfully made. The word "cause" appearing in Rule 66 requires a specific order of the Court, which produces the effect of drawing the proclamation envisaging the terms and conditions of the sale. This includes the settlement of the conditions etc. By the Court itself or to approve those filed by the parties, after hearing them. In the case in hand as has been conceded by the learned counsel for the decree-holder and also seen from the record that though a notice was issued to the judgment-debtor on 27-6-2001 for causing of the proclamation but as the Court was on leave on said day, no order in that behalf was passed....
Thus the question which arises for determination is whether in the absence of an order by the Court, according to Rule 66, any sale made is void or nullity in the eyes of law? The answer is provided in the judgment reported as Brio. (Rtd.) Mazharul Haq and another v. Messrs Muslim Commercial Bank Ltd. Islamabad and another (PLD 1993 Lahore 706), when the Divisional Bench of this Court has ruled so far as the rule of proclamation under Order XXI Rule 66, is concerned, it appears to be mandatory. Resultantly, due to contravention of the provision the same is rendered a- s a nullity'."
' The said judgment went on to comment upon the rights of the auction purchaser and stated that; ' it is settled law that no superstructure or legal right can be based upon the foundation, which is void in nature, consequently, the sale conducted by the Court auctioneer on 13-10-2001 was void ab initio and, therefore, on account of the principle of avoiding technicalities or that act of Court shall not prejudice any party, the impugned sale cannot be protected. The sale in favour of respondent No, 4, therefore, was liable to be set aside and could not have been confirmed by the Court, which has been so erroneously and illegally done through the impugned order."
' This Court concurs with the views rendered by Divisional Bench of the Lahore High Court in Muhammad Hussain's case (supra) and holds that the provisions provided under Rule 66 of Order XXI of C.P.C. Are mandatory and violation thereof would result in committing "irregularity" as envisaged under Rule 90 of Order XXI of C.P.C. Resulting in setting aside the impugned auction and all the steps taken in pursuance thereof.
29. Accordingly, for the reasons stated hereinabove, this Court holds that; I. I.C.A. No,1 of 2011 titled Messrs Spinghar Textile Mills Limited and another v. UBL and another is accepted and impugned judgment and order of Banking Judge dated 31-1-2011 is set aside.
' The auction proceedings, the sale of the mortgaged property in favour of Arif Mehmood being the highest bidder in open auction held on 16-10-2010 is also set aside being based on a proclamation, which was not in accordance with law.
' It is further held that the Banking Judge is to carry out fresh auction of the mortgaged property in accordance with the provisions provided under Rule 66 of Order XXI of C.P.C., as discussed herein above, for satisfaction of the decree passed in favour of UBL.
II. I.C.A. No,2 of 2011 titled Messrs Spinghar Textile Mills Limited v. UBL and another is dismissed being not filed by the competent persons and thus not maintainable in the eyes of law.
' No order as to costs.