' AZIZ-UR-REHMAN, J.---This is a suit filed by the plaintiff Bank against defendants for recovery of Rs,56,101,449 under section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 [Ordinance No,XLVI of 2001] with the following prayers:--
(a) A decree for payment of sum of Rs,56,101,449 with cost of funds at the rate fixed by the State Bank of Pakistan from the date of default till realization;
(b) Attachment and sale of .The Hypothecated properties and Assets of the defendant No,] as specified in paragraph 5 above and annexures "C" and "C-2".
(c) Cost of suit may also be awarded;
(d) Any other relief that this Hon'ble Court may deem fit and proper in the circumstances of the case.
2. The facts in the backgrounds are:
3. Per averments made in the plaint the plaintiff (Successor in interest of PICIC Commercial Bank Ltd.), a Company incorporated under the Corporate laws of the Islamic P.Epublic of Pakistan, is a banking company within the meaning of Financial Institutions (Recovery of Finances)Ordinance, 2001 having it's registered office at Muhammadi House I:I. Chandigarh Road Karachi and one of its branches known as Abdali. Road Branch at Multan.
4. The defendant No,1, per assertion, is the principle debtor and have availed various financial facilities from the plaintiff Bank. The defendants Nos.2, 3 and 4 are directors/guarantors and all of them are 'Customers' within meaning of section 2(c) of the Financial Institutions (Recovery of Finances) Ordinance, 2001.
5. The plaintiff Bank, at the request of defendant No,1 , provided to and the defendant No,1 availed from the plaintiff Bank various Finances Facilities pursuant to their offer letter dated November 11, 2006 including Finance Against Packing Credit (FAPC-II) of Rs,40 Million. En the agreed terms and conditions as to securities, repayment, markup etc. Per averments in the plaint the offer letter has been duly acknowledged and accepted by the defendant No,1.
6. According to the plaintiffs averment, in consideration of the FAPC-II, the defendant No,1, inter alia executed the following financing documents:--
(i) Demand Promissory Note for Rs, 60 Million dated 11-11-2006;
(ii) Irrecoverable Authority to recover Accrued Mark-up;
(iii) Letters of Hypothecation of receivables dated 11-1 1-2006;
(iv) Packing Credit Letter dated 11-11-2006.
7. Per averments, in considering of aforesaid financial facility, allowed/agreed to be allowed, the defendant No,1, provided continuing collateral security on its moveable assets/receivables by executing a Letter of Hypothecation of Movables and Letter of Hypothecation of receivables respectively both dated 14-11-2006. Hypothecation charges were duly registered with the Securities and Exchange Commission of Pakistan (SECP).
8. Plaintiff Bank, at the request of defendant No,1, renewed the aforesaid Finance Facility and in consideration thereof, the defendant No,1 inter alia executed 'another set of documents as below:--
(i) Agreement of Financing dated 1-10-2007.
(ii) Demand Promissory Note for Rs, 48 Million dated 1-10-2007.
(iii) Packing Credit Letter dated 1-10-2007.
9. On further request of defendant No,1, the facility granted to availed by the defendant No,1 was again renewed and in consideration thereof, the defendant No,1, inter alia executed the following financing documents:--
(i) Agreement of Financing dated 18-1-2008.
(ii) Demand Promissory Note for Rs,47,620,822 dated 18-1-2008;
(iii) Irrecoverable Authority to recover Accrued Mark-up dated 18-1-2008;
(iv) Letter of Disbursement for Rs, 40 Million dated 18-1-2008;
(v) Letter of continuity for Rs, 47,620,822 dated 18-1-2008;
(vi) Confirmation and undertaking dated 18-1-2008;
(vii) Packing Credit Letter dated 18-1-2008.
10. Defendant No,1, in further consideration of aforesaid financial facility(ies), also provided continuing collateral security by executing a Letter of Hypothecation of Movables and Letter of Hypothecation of Receivables dated 11-6-2008 creating first pari pussu charge over its present and future current assets, lying at plot measuring 5 acres, located at 10-A, industrial Estate, Multan or any other premises directly or indirectly belonging to the defendant No,1 along with book debts and receivables *the defendant No,1 fully described in the schedule to the joint Letter of Hypothecation.
The said joint Letter of Hypothecation was duly registered with the Securities and Exchange Commission of Pakistan.
11. The plaintiff at the request of defendant No,1 renewed the aforesaid Financial Facilities and in consideration thereof, the following financing documents inter alia were executed by defendant No, 1.
(i) Agreement of Financing dated 13-4-2009.
(ii) Demand Promissory Note for Rs,48,400,000 dated 13-4-2009;
(iii) Irrecoverable Authority to recover Accrued Mark-up dated 13-4-2009;
(iv) Letter of Disbursement for Rs,48,400,000 dated 13-4-2009;
(v) Letter of Arrangement for Rs, 40 Million dated 13-4-2009;
(vi) Letter of Continuity for Rs, 48,400,000 dated 13-4-2009;
(vii) Confirmation and Undertaking dated 13-4-2009:
(viii) Packing Credit Letter dated 13-4-2009.
12. Besides, defendants Nos.2 to 4 also executed their personal guarantees in favour of the plaintiff Bank undertaking and guaranteeing the repayment of all the outstanding dues payable to the plaintiff.
13. Per assertions of the plaintiff, the defendant No,1 have fully availed and utilized the Financial Facilities but failed and/or neglected to make payment of the outstanding dues and thus committed 'wilful default' despite of several requests and reminders by the plaintiff to the defendants from time to time.
14. Resultantly, a legal notice dated June 24th, 2009 was issued to defendants but no positive response and/or payment of the outstanding dues was made by the defendants to the plaintiff Bank.
15. The particulars of the Financial Facilities granted to and availed by the defendant No,1 and the outstanding principle and financial charges, as required under section 9(3) of the Financial Institutions (Recoveries of Finances) Ordinance, 2001 are as below:-- Amount outstanding and payable by the Defendants to the Plaintiff as on 31-12-2009 FAPC II (a)Principle amount availed Rs. 40,000,000.00 (b)Principle amount repaid Rs. Nil (c)Principle Outstanding Rs. 40,000,000.00 (a-b)
(d)Mark-up payable till [31-12-2009] Rs. 6,751,207.81 (e)Amount of mark-up repaid Rs. Nil (f)Mark-up outstanding Rs. 6,751,207.81 (d-e) Rs. 46,751,207.81 Outstanding Amount (c+f) Liquidated damages Charged @ 20% On total outstanding as per Clause # 7 of Financial Agreement's. 9,350,241.56 Total Outstanding Amount for All Facilities. Rs. 9,350,241,56 Rs. 56,101,449.00 Rounded to a rupee
16. Per averments the cause of action arose on various dates, when various documents were executed, financial facilities were availed, charges were created and finally when default in the repayment of the outstanding amounts/dues was committed by the defendants jointly and severally.
17. Upon filing of the above suit, on 15-2-2010, process under section 9(5) of the F.I.O., 2001 were issued to the defendants by all prescribed modes including publications in newspapers i,e, Daily "Dawn" English Karachi dated 17-3-2010 and Daily "Jang" Karachi dated 27-3-2010. In response of service, the defendants filed leave to defend application under section 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 with a prayer for grant of unconditional leave to defend the suit. This application for leave to defend was assigned C.M.A. No,4033 of 2010.
18. On 7-12-2010, when the leave to defend application bearing C.M.A. No,4033 of 2010 came up for hearing, none was present for the defendants however, in the interest of justice, the matter was adjourned with direction to the office to issue fresh notice for the next date. According to office note, through TCS notice was issued for 18-1-2011. On 18-1-2011 however, request was made on behalf of the learned counsel for the defendants, on the ground that defendants counsel reportedly was busy before Hon'ble Supreme Court of Pakistan. Consequently, by consent, the case was adjourned to 11-2-2011 with a note of caution, that no further adjournment would be granted.
On 11-2-2011 when again, the above application for leave to defend bearing C.M.A. No,4033 of 2010, came up for hearing, on account ofnobody presence for and on behalf of the defendants, the following order was passed:-- "On the last date of hearing I have passed an order that no further adjournment would be granted, as a request for adjournment was made on behalf of the defendants. Since nobody has put in appearance on behalf of the defendants, nor a request for adjournment has been made, C.M.A. No,4033 of 2010 is dismissed for non-prosecution."
19. On dismissal of the leave to defend application, an application under Order IX, Rule 13, C.P.C.
Bearing C.M.A. No,2127 of 2011, was filed on 17-2-2011 with a prayer for restoration of the application for leave to defend bearing C.M.A. No,4033 of 2010. (PLA) and setting aside of order dated 11-2-2011.
On 19-5-2011, the aforesaid application bearing C.M.A. No,2127 of 2011 [Application under Order IX, Rule 13, C.P.C.[ was allowed and leave to defend application was restored to its original position and by consent, the case was adjourned to come up on 3-6-2011. Thereafter, and lastly leave to defend application bearing C.M.A. No,4033 of 2010, came up for hearing on 31-8-2012 when again no one bothered to appear and proceed with the leave to defendant application (C.M.A. No,4033 of 2010. Consequently the following order was passed:- "Learned counsel pointed out that vide order dated 11-2-2011 the same application (C.M.A.
No,4033 of 2010) was dismissed for non-prosecution, however, when the matter was fixed for final disposal, the plaintiffs' counsel conceded his no objection and the application was restored, but again neither the defendant is present nor their counsel and nor any intimation is received.
This application is dismissed for non-prosecution. Office is directed to fix this case for final disposal according to roster."
19. 'On 23-10-2012, when the case came up for final disposal I heard, Mr: Abdul Sattar Lakhani learned counsel for the Plaintiff Bank and also scanned the record available before me.
20. Mr. Abdul Sattar Lakhani, learned counsel for the plaintiff Bank in the first instance made a reference to the finance agreement dated 13-4-2009 [Annexure 'G' page 117] and submitted that per the said agreement, the sale price and purchase price fixed are 40.00 Million (Forty Million only) and Rs,48,400,000 (Rupees Forty eight million four hundred thousand only) respectively. The purchase price under this agreement for finance on mark-up basis, [Annexure 'G' page 117] is/was payable on or before 30-9-2009. Per learned counsel the mark-up amount comes to Rs,8,400,000 on subtracting the sale price from the purchase price [i,e, Rs,48,400,000 (-) Rs,40,000,000].
22. Contrary to this, as far as the amount of Mark-up is concerned, in the summary of statement of account available [Annexure J/4' page 179], the mark-up amount has been shown as Rs,6,751,207.81. For ready and convenience purposes the same is reproduced as under:- SUMMARY OF STATEMENT OF ACCOUNTS BORROWER: THREE STAR HOSIERY MILLS
(PVT) LTD TYPE OF FACILITY: FAPC-II CUSTOMER NO,: 414973 CLAIM AMOUNT AS ON: DECEMBER 31, 2009 DESCRIPTION Amount in Rupees DESCRIPTION Amount in Rupees Principle 40,000,000.00 Mark-up 6,751,207,81 Total Outstanding 46,751,207,81 Liquidated Damages charged @20% on total outstanding amount as per Article VIII of Finance Agreement dated. 13-4-20099 9,350,241,56 TOTAL CLAIM AMOUNT 56,101,449,37
23. The difference in the mark-up thus comes to Rs, 1,648,792.19 [i,e, Rs,8,400,000 - Rs,6,751,207.81].
Since both the AGREEMENT' FOR FINANCING ON MARK-UP BASIS' [Annexure 'G' page 117] and 'SUMMARY OF STATEMENT OF ACCOUNT' reproduced hereinabove have come on record from the plaintiff Bank itself, therefore, I extend the benefit of 'doubt' in favour of the Customers/Defendants and treat the amount of Rs,6,751,207.81 as shown in the 'SUMMARY OF STATEMENT OF ACCOUNT' as genuine, correct and binding upon the plaintiff Bank. Now if, this amount of mark-up of Rs,6,751,207.81 is added with sale price of Rs,40,000,000 then total comes to Rs,46,751,207.81 and this is the actual amount which in my view, remains truly and genuinely outstanding against the defendants jointly and severally plus cost of funds thereon in terms of section 3 of Financial Institutions (Recovery of Finances) Ordinance, 2001 [Ordinance XLVI of 20011 from the date of default till realization.
24. In the Banking matters, it is worth to note that when defendant(s), despite service 'in terms of section 9(5), did not come forward and file leave to defend application or otherwise fails to obtain from Banking leave for defending the suit then in such eventuality, the allegations of fact in the plaint are deemed to be admitted. Resultantly the Banking Court, may pass a decree in favour. Of the Bank. In this regard section 10(1) of F.I.O., 2001 being relevant is reproduced as under:-- "Leave to defend.---(1) In any case in which the summons has been served on the defendant as provided for in subsection (5) of section 9, the defendant shall not be entitled to defend the suit unless he obtains from the Banking Court as hereinafter provided to defend the same; and, in default of his doing so, the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff on the basis thereof or such other material as the Banking Court may require in the interests of justice."
24. Per Mr. Abdul Sattar Lakhani learned counsel for the plaintiff, in absence of leave to defend application, the assertions made in the plaint are deemed to be admitted and the plaintiff Bank, deserves to have a decree in its favour as prayed. Per learned counsel, plaintiff Bank is entitled for cost of fund from the 'date of default till realization'. In my view, the Bank indeed, is entitled to claim 'cost of fund from the date of default till realization' but for such entitlement it is obligatory on the Bank to firstly establish the date of default' from the 'repayment schedule' and/or from the Agreement of finance vis-a-vis statement of account. In my view the 'Repayment Schedule' is an inseparable part of the Finance Agreement. In the case in hand 'Clause 1.3' of the Finance Agreement [Exh.5/7] reads as under:- "1.3. The purchase price shall be paid by the customer to the Bank in such instalments and at such times (each a 30-9-2009) as the Bank prescribe."
26. Along with the Finance agreement dated 13-4-2009 [Annexure 'G' page 117] neither the 'Repayment Schedule' has been annexed nor in the Finance Agreement [Annexure 'G' page 117] itself there is any mention of the dates of installments on which it become due. Even the number of installments has not been mentioned. Under circumstances, I am of the considered opinion, that the Bank is only entitled to claim 'cost of fund' from 30-9-2009 being expiry date of finance agreement [Annexure 'G.' page 117] onwards till realization.
27. Mr. Abdul Sattar Lakhani learned counsel for the plaintiff Bank further submitted that in consideration of and in acknowledgment of availing of financial facilities and as security, apart from finance agreements, personal letter of guarantees, letters of Hypothecation, defendant(s) also signed and executed from time to time, Demand Promissory notes, letter of irrecoverable, authority to recovery accrued mark-up, packing credit letters, letter of Disbursement, letters of Continuity, Confirmation-cum-Undertakings in favour of the plaintiff Bank. All these documents, per learned counsel, have been duly signed and executed, indeed voluntarily and without any coercion therefore binding upon the defendants. He vehemently urged that it is obligatory upon the defendants not only to perform the undertakings but also to fulfill their promises regarding repayment of the outstanding dues. At this juncture being relevant it would be appropriate to reproduce herein clause (e) of section 2 of F.I.O., 2001:-- (a)
(b)
(c)
(d)
"(e) "obligation' includes:-
(i) any agreement for the repayment or extension of time in repayment of a finance or for its restructuring or renewal or for payment or extension of time in payment of any other amounts relating to a finance or liquidated damages; and
(ii) any and all representations, warranties and covenants made by or on behalf of the customer to a financial institution at any stage, including representation, warranties and covenants with regard to the ownership, mortgage, pledge, hypothecation or assignment of, or other charge on assets or properties or repayment of a finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfillment of a promise; and
(iii) all duties imposed on the customer under this Ordinance; and
(f) "rules" means rules made under this Ordinance.
A bare perusal of the above shows that besides performance of undertakings and/or of promises it is the bounden duty of the defendants to fulfill their obligations strictly inter alia in accordance with clause (e) of section 2 of F.I.O., 2001 and/or under the terms and conditions of the documents executed by the customeRs,
28. Mr. Abdul Sattar Lakhani learned counsel for the plaintiff, further contended that defendants Nos.2, 3 and 4, in terms of letter of guarantees duly signed and executed by them, are also jointly and severally liable and/or under legal obligations to pay the outstanding amounts of plaintiff Bank. The letters of guarantees (i,e, Annexure 'H', 'H/1' and 'H/2') besides being continuing guarantees also permit renewals, composition, variations and/or concessions given to the customer(s) or even to third party by the Bank. The guarantees are not dischargeable until all monies and liabilities due from and/or incurred by the customers, are fully repaid to the Bank.
Learned counsel for the plaintiff with vehemence contended the all letter of guarantees and all other documents are genuine and enforceable and have been executed without any coercion.
29. I have examined the contents of the letter of guarantees and have also gone through sections 126 and 128 of the Contract Act 1872 [IX of 18721 and have reached the un-escapable conclusion, that defendants Nos.2, 3 and 4 in their capacity as sureties, not only liable to discharge the outstanding liabilities based on authentic documents but their liabilities under law are also co- extensive with that of the principal debtor/defendant No,1.
30. Mr. Abdul Sattar Lakhani, learned counsel for the defendants further contended that plaintiff Bank is also entitled for attachment and sale of the Hypothecated goods and assets/properties specified in Annexures 'C' & C/2' at pages 45 to 55 of the court file. In this regard he focused the court's attention towards page 53 of the court file and submitted that the brief particulars of the good/assets are available at column 9 of Form 10. Per learned counsel, the amount secured under Annexure `C/1' at pages 45 is upto Rs,50.00 Million plus cost and service charges etc. Per charge Registration Certificate of 20-11-2006, the charge registered under section 127 of the Companies Ordinance, 1984 [XLVII of 19841, is for Rs, 50.00 Million only. However, from perusal of Charge Registration Certificate dated 11-6-2008 [Annexure 'F' page 1051, it appears that there are other Banks also whose charge to the extent of amounts mentioned therein have been registered under Charge Registration Certificate No,K-8312/2008/98277 dated 11-6-2008 issued by SECP. Since the Bank's charge is also registered in the sum of Rs,50.00 Million, the plaintiff Bank in my view is thus' entitled to have a decree in its favour for sale of the hypothecated goods/assets.
31. Insofar as the claim of liquidated damages is concerned, under law the plaintiff Bank is not entitled for any liquidated damages in absence of any positive evidence. Liquidated damages in any event require evidence muchless to the effect of actual loss suffered. As a rule even fixed amount of liquidated damages cannot be awarded unless the quantum of actual loss is proved.
Under the circumstances, the plaintiffs claim in the sum of Rs,9,350,241.56 is disallowed.
32. After having heard Mr. Abdul Sattar Lakhani learned counsel for the plaintiff Bank as above and having perused the record available before me, I am of the considered opinion that the Bank is entitled to have a decree in its favour. For and in view of the aforesaid circumstances, the above suit is decreed in the sum of Rs,46,751,207.81 [Four crore sixty seven lacs fifty one thousand two hundred seven, eighty one paisa only] against the defendants jointly and severally with cost of funds in terms of section 3(2) of F.I.O., 2001 from 30-9-2009 till realization of the decrial amount.
Besides prayer clause (b), a final decree for sale of the hypothecated assets/goods as specified in annexures 'C' & C/2' and described in paragraph 5 of the plaint is also passed for recovery of the decrial amount including cost of fund and cost of the suit.
The suit stands decreed.
Suit decreed.
2013 0 L D 546 [Lahore] Before Muhammad Khalid Mehmood Khan and Muhammad Farrukh Irfan Khan, JJ Rao MUHAMMAD SADAQAT ALI and another---Appellants versus Messrs RANA JAMAL AKBAR ICE FACTORY, RAJAN PUR through Muhammad Akbar Arif and another---Respondents F.A.O. No,156 of 2010, heard on 7th November, 2012.
Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)- ----Ss. 15, 19 & 22--Auction of mortgaged property by Bank under S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Objection petition by judgment-debtor alleging such auction to be fraudulent and without notice to him---Banking Court accepted such objection petition and set aside the auction---Pleas of auction purchaser were that objection petition was time-barred; that Banking Court had set aside auction after four years without considering huge amount incurred by him on renovation and construction of suit property-- Validity--Decision of Full Bench of Lahore High Court' in Muhammad Umar Rathore v. Federation of Pakistan 2009 CLD 257 which had declared S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 as ultra vires to Constitution on 23-12-2008, would not apply to suit property auctioned on 8-11-2006--Bank had not proved publicizing of proposed auction in two daily newspapers as required by S.15(4) of the Ordinance---Bank had not submitted accounts of auction to Banking Court within thirty days-Auction report showed that Bank had conducted auction at its office and sent its report to its Head Office, but approval was not available on record---Bank had sold suit property at less than the reserve price--Bank had not informed Banking Court or local authorities while handing over possession of suit property to auction purchaser, without preparing its inventory-Bank along with auction report had not placed on record list of bidders that participated in the auction and other proceedings conducted at the spot---Collusion between Bank and auction purchaser was apparent on face of record-Auction purchaser had not provided any details for alleged amount incurred by him-High Court modified impugned order by directing judgment debtor to pay 20% instead of 5% to auction purchaser on price of auction and also directed Banking Court to appoint local commission for preparing quantum of machinery added and ascertaining its price and expenses incurred by auction purchaser. [pp. 548, 549, 5501 A, B, C, D & E Muhammad Umar Rathore v. Federation of Pakistan 2009 CLD 257 mentioned. Sardar Riaz Karim and Shahid Mumtaz Piracha for Appellants.
Raja Naveed Azam for Respondents. Date of hearing: 7th November, 2012.
' MUHAMMAD KHALID MEHMOOD KHAN, J.---The appellants filed objection petition under section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as the "F.1.0., 2001") for setting aside the auction dated 8-11-2006 conducted by respondent No,2 under section 15 of F.I.O., 2001. The learned Banking Court accepted the said objection petition vide order dated 12-10-2010, hence, the present appeal.
2. Respondent No,1 availed finance facility of Rs,3,00,000 from respondent. No,2 on 24-4-2004 and mortgaged his property for securing the said finance facility. Respondent No,2 by exercising powers under section 15 of F.I.O., 2001 auctioned the property of respondent No,1 by sitting in there, office and the property of respondent No,1 by sitting in their office and declared the appellants the highest bidder respondent No,1 on coming to know about the private sale of mortgage property filed objection petition against the said sale claiming that the act of respondent. No,2 is fraudulent; section 15 of the F.I.O., 2001 has been declared as without lawful authority by the learned Full Bench of this Court and as such the entire auction proceedings are sham, the auction of mortgage property is without notice to respondent. The learned Banking Court allowed the said application through the impugned order dated 12-10-2010.
3. Learned counsel for the appellants submits that the appellants invested the huge amount for renovation and construction of the mortgaged property purchased through the open auction; the objection petition was barred by time; the learned Banking Court has failed to consider the expenses incurred by the appellants for construction and revamping of the suit property; the learned Banking Court has set aside the auction after four years without any reason.
4. Learned counsel for the respondents submits that respondent No,1 was never informed about the sale of ' auction; the possession was forcibly taken over by respondent No,2 and the appellants in collision with each other; the respondent No,2 was not within his rights to auction the property as section 15 of the F.I.O., 2001 was declared ultra vires to the Constitution of Islamic Republic of Pakistan, 1973 by the learned Full Bench of this Court.
5. We have heard the arguments of learned counsel for the parties and perused the record.
6. It Is an admitted fact that the suit property was auctioned on 8-11-2006 and the learned Full Bench of this Court in W.P.No,18196 of 2002 (Muhammad Umar Rathore v. Federation of Pakistan 2009 CLD 257) has declared the A provisions of section 15 of the F.I.O., 2001 as ultra vires to the Constitution of Islamic Republic of Pakistan, 1973 on 23-12-2008 and as such the declaration by the learned Full Bench of this Court is not applicable on the facts of the IA present cae.
7. Under section 15(4) of the F.I.O., 2001 the mortgagee bank is bound to publicize the proposed auction in two daily newspapeRs, .The respondent bank claims that the auction publicized in daily "Express" and daily "The Post" but the news agent of Rajanpur has tendered a certificate which reads as under:-- {{URDU TEXT}} The fact strengthens the argument of learned counsel for respondent mortgagee that no publication was issued and if issued that was manipulated.
8. Under section 15(10) of the F.I.O., 2001 the mortgagee bank has to submit the, accounts to banking court within thirty days. Learned counsel for the appellant and mortgagee bank has failed to point out any accounts submitted to court. Further, the auction report itself shows that after conducting the auction the local office of respondent No,2 sent the report to their head office for approval but the said approval is also not available on record. It seems that the said approval was not ever granted by the competent authority.
9. It is also an alarming fact available on record which shows that the property was sold on less than the reserve price. The collusion of the appellant and respondent No,2 is floating on the surface of the record. The possession of the property was taken over by the respondent No,2 without informing the court or even without informing the local authorities. The possession of the property was handed over to the appellants by respondent No,2 without preparing inventory. The report of the auction submitted with the court shows that no list of bidders who participated in the bid is annexed with the said report. Even the other proceedings conducted at the site were not placed on the court record.
10. The argument of learned counsel for the appellants is that they invested huge amount and as such they are entitled for the return of the said amount which the learned Banking Court failed to ascertain. The appellants have not provided any details for the expenses incurred. However, good sense prevails between the parties and it is settled that the order of Banking Court dated 12-10-2010 be maintained with the modification that instead of 5 % the respondent No,1 will pay 20 % amount on the price of auction to the appellants. In case the appellants have invested any amount or revamping the machinery the learned Banking Court will appoint a local commission who will prepare the list and will fix the amount of machinery installed. The outstanding liability as to the electricity bills etc. Will be paid by respondent No,1 before the date of taking over the possession of the auctioned property by the appellants. The appellants will file application with Banking Court for the appointment of the local commission for preparing the quantum of machinery added by the appellants and the expenses incurred and also the liability as to the electricity connection etc paid by the appellants which was outstanding against respondent No, 1.
11. This appeal is, thus, allowed with the said modification.