' SYED SAEEDUDDIN NASIR, J.--- This 1st Appeal is directed against order dated 19-3-2014 passed by the learned Judge; Banking Court No.IV at Karachi who while sitting as the Executing Judge in the Execution Applications Nos.148 of 2012 dismissed the application of the Appellants under Order XXI, Rules 66 and 67 and also confirmed the sale of the mortgaged property belonging to the Appellants through the same order.
1. Brief facts of the case are that the appellants are the Judgment-Debtors of the respondent No.1 against whom the respondent No.1 earlier filed the Execution Application No.281 of 2010 in Suit No.566 of 2009 for recovery of the total decretal amount of Rs.14,803,090.88, and the cost of funds and inter alia sought from the executing Banking Court No.IV at Karachi the sale of the mortgaged property bearing Bungalow No.1-B/II, 22nd Street, Phase-V, measuring 500 Square Yards, situated in Pakistan Defence Officers Housing Authority, Karachi together with all present and future construction, fixture and fittings raised thereon (the "SUBJECT PROPERTY").
2. The Appellants received the notices of the said Execution when the Decree-Holder got the sale proclamation issued in the light of statement under Order XXI, Rules 66, C.P.C. Was filed by it on 2- 3-2011. Along with the statement, the Decree Holder also filed the valuation report with respect to the subject property from the Valuator namely International Design Group. The said Valuator, declared the total market value of the subject property at Rs.14,000,000 and forced/quick sale value at Rs.11,200,000. The learned Judge of Banking Court No.IV through proclamation of sale put the subject property for public auction on 20-3-2011. Three bidders participated in the auction proceedings and one Mrs. Majida Zafar Ahmed declared highest bidder who submitted the bid amount of Rs.14,125,000. Before confirmation of sale with respect to the property, the Judgment- Debtor and the Decree-Holder entered into an amicable settlement. The Decree-Holder required the Judgment-Debtor to pay total settlement amount of Rs.14,200,000.
3. The above referred compromise was placed before the Court and the same was accepted on the basis of which, the Decree-Holder vide letter instructed its counsel to withdraw the Execution Application No.281/2010 on account of settlement arrived between the parties as per letter dated April 30, 2012. The counsel appearing for the Decree-Holder filed application for withdrawal of the Execution Application on 31-5-2012. The learned Judge of the Banking Court No.IV, Karachi vide Order dated 31-5-2012 allowed the withdrawal of the Execution Application and imposed penalty of Rs.100,000 on the Appellants for payment of the same to the higher bidder. The appellants accordingly deposited the said amount of the penalty before the learned Judge of the Banking Court No.IV and thus the said Execution Application stood satisfied and was withdrawn accordingly.
4. In compliance of the settlement dated 30-4-2012, the appellants paid the amount of two cheques mentioned at Sr. Nos.1 and 2 the settlement letter dated 30-4-2012 amounting to Rs.8,000,000.00 (Rupees eight million only). The third cheque of Rs.6,200,000 (Rupees six million two hundred thousand only) was dishonoured upon presentation as the appellants were facing shortage of funds on the date mentioned in the said cheque. The appellants requested the Decree-Holder to extend a reasonable time so that the appellants could make an arrangement for the funds against the said cheque. However, the Decree-Holder did not pay any heed to the request made by the Judgment-Debtor and presented the . Cheque on the date mentioned therein for encashment and upon the same being dishonoured, required the respondent to make the payment of the entire mark up with effect from the alleged date of default as claimed in the subsequent Execution Application.
5. That upon failure of the parties to mutually settle the default with regard to non-payment of Rs.6,200,000 on the date mentioned in the compromise, the Decree-Holder again approached to the Banking Court No.IV at Karachi and filed second Execution Application on 13-10-2012' which was numbered as Execution Application No.148/2012. The learned Judge of the Banking Court No.IV admitted the same in a routine manner and ordered for issuance of writ of attachment with respect to the mortgaged property and for filing statement under Order XXI, Rule 66, C.P.C. By the Decree-Holder. The learned Judge of the Banking Court No.IV issued proclamation for sale of property to be held on .12-9-2013. The Judgment-Debtor filed an application seeking the suspension of the auction proceedings to be held on 12-9-2013 on the ground that the forced sale value fixed by the Court is not in accordance with prevailing market value of the same and cannot be treated as realistic. Further, the Judgment-Debtor submitted that no notice as required under Order XXI, Rule 66 has been issued to the Judgment-Debtor.
6. The fresh valuation was received by the Court on 7-10-2013 and sale proclamation was ordered to be issued on 11-11-2013 on the basis of fresh valuation. No notice of proclamation of sale as required under Order XXI, Rule 66, C.P.C. With respect to the fresh proclamation issued by the Court as per order dated 11-11-2013 was given to the Appellants.
7. It is inter alia contended by the learned counsel for the appellant that the proclamation of sale contains the figures of the alleged decretal amount which was based on misrepresentation and fraudulent acts on the part of the respondent No.
1. The basic requirement to issue the notice under Order XXI, Rule 66, C.P.C. Has not been met nor has any notice with respect to the same been issued to the appellants. The non-drawing of the proclamation of sale in consultation with the appellants and non issuance of notice under Order XXI, Rule 66, C.P.C., which is mandatory in nature requires the Hon'ble Court to set aside the sale as the basic structure itself is illegal as such, the superstructure cannot be declared legal.
8. Learned counsel for respondent No.2 auction purchaser controverting the arguments of the appellants has inter alia submitted that the auction/sale in favour of the respondent No.2, which has been confirmed by the Banking Court No.IV, Karachi, after providing full opportunity to the appellant/judgment debtor vide order dated 19-3-2014 cannot be set aside at this stage as neither any application under Order XXI, Rules 89 and 90, C.P.C. Was ever preferred by the appellant/judgment-debtor for setting aside the auction sale nor the proceedings regarding auction/sale were ever challenged by the appellant/judgment-debtor. Hence, since no application under the aforesaid provisions was made by the appellant/judgment debtor; therefore, the auction sale also stood confirmed by virtue of Order XXI, Rule 92 read with section 65 of C.P.C.
9. Learned counsel submitted that the respondent No.2/auction purchaser has acquired valuable legal rights with respect to the sale property as the forced sale value of the property was determined as Rs.18,400,000; whereas, the auction purchaser purchased the said property for Rs.19,000,000 (i.e. Rs.18,400,000 above the forced sale value). Additionally, in compliance to order dated 19-3-2012, the auction purchaser has also paid 10% withholding tax under section 236-A of the Income Tax Ordinance, 2001.
10. He submitted that no interference whatsoever is required at this stage by this Hon'ble Court, as it will seriously prejudice the rights of the auction purchaser, which have been acquired with due process in accordance with law. However, upon being confronted with the question by the Court as to whether .Or not notice under Order XXI, Rule 66 was ever issued to the judgment debtor of Execution Application No.148/2012, the learned counsel for the respondents Nos.1 and 2 candidly admitted that no such notice was indeed served upon the judgment-debtor.
11. In order to substantiate his arguments he relied upon the following case-law:---
(1) PLD 1987 SC 512 Hudaybia Textile Mills Ltd. And others v. Allied Bank of Pakistan Ltd. And others.
(2) PLD 2005 SC 819 Muhammad lkhlaq Memon v. Zakaria Ghani and others.
(3) 2000 CLC 1438 [Karachi] United Bank Limited v. M/s. A.Z. Hashmi (Pvt.) Limited and 8 others.
(4) 2007 CLD 1511 [Karachi] Mr. Yasmin Yaqoob v. M/s. Allied Bank of Pakistan Ltd and 3 others.
(5) 2013 CLD 841 [Sindh] Mukhtar Ahmed v. M/s. United Bank Limited.
(6) 2004 SCM R 1084 Zulqarnain and 2 others v. Surbuland Khan and another.
(7) 1990. MLD 857 [Karachi] M/s. Jugotekstile Impex, 61001, Lubijana Yugosalavia v. M/s. Shams Textile Mills Ltd.
(8) PLD 1965 (W.P.) Karachi 460 Balagamwalla Cotton Ginners and Pressing Factory v. M/s. Akber Oil Mills.
12. The case-law cited by the counsel for the respondent No.2 as aforesaid is in respect of execution of decree in regard to sale by auction and revolve around the proposition that Court cannot disregard the interest of the auction purchaser before confirmation of sale merely on the ground that an arrangement/amicable settlement has been arrived at between the decree holder and the judgment-debtor about the satisfaction of the decree.
13. We have heard the learned counsel for the parties, perused the record and examined the case- law cited by the learned counsel for the parties. From perusal of record; it appears that when the second Execution Application No.148 of 2012 was filed in the instant matter, the proclamation of sale was ordered by the learned Judge of Banking Court No.IV, however, without issuance of notice as contemplated by Order XXI, Rule 66 of the Code of Civil Procedure, 1908, which fact is also admitted by the learned counsel for the respondents Nos.1 and 2. In fact, the notice as required under Order XXI, Rule 66, C.P.C. Was never served upon the appellants by the Court for settling the terms of the sale as per order dated 11-11-2013. The learned Judge of the Banking Court No.IV, Karachi, straight away, upon the receipt of valuation report in compliance of order dated 11-9-2013 published the notice in newspaper on 22-11-2013. When the counsel for the respondents Nos.1 and 2 were confronted with the question as to whether or not the aforesaid provision of law as contemplated by Order XXI, rule 66 was complied with before drawing up the sale proclamation of the mortgaged property by issuance of mandatory notice to the judgment debtor, they candidly admitted that in the second sale proclamation, no prior notice was served upon the appellants before drawing up the sale proclamation.
14. The case-law cited by the counsel for the respondent No.2 as aforesaid is in respect of execution of decree in regard to sale by auction and revolve around the proposition that Court cannot disregard the ground that an arrangement/amicable settlement has been arrived at between the decree holder and the judgment debtor about the satisfaction of the decree.
However, the case law cited above by the counsel for the Auction-Purchaser is not relevant for the reason that in those cases the aforesaid provision of law with regard to issuance of notice to the judgment debtor as contemplated by Order XXI, rule 66 was complied with before drawing up the sale proclamation of the mortgaged property by issuance of mandatory notice to the judgment debtor. For the sake of convenience the provisions of Order XXI, Rule 66 are reproduced as under:- [0. XXI, R.66] "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-- -"
15. It is therefore, an admitted position that in the second Execution Application bearing No.148 of 2012, no notice under Order XXI, Rule 66 of the Code of Civil Procedure, 1908 was served upon the judgment debtor before drawing up as well as publishing the sale proclamation of the mortgaged property in question, which in our view is a material irregularity in issuing the sale proclamation, on account of which the entire auction proceedings have been vitiated. Inasmuch as the provision contemplated by Order XXI, Rule 66, C.P.C. With regard to preparation and issuance of sale proclamation after serving notice upon the appellants being mandatory in nature, and if not complied with in letter and spirit are fatal to the sale proclamation.
' Therefore, we allow the instant appeal and set aside the impugned order dated 19-3-2014 as well as the auction sale in favour of the respondent No.2, and direct the learned Judge of the Banking Court No.IV, Karachi to put up the mortgage property for re-auction after proper compliance of Order XXI, Rule 66, C.P.C. After service of due notice upon the appellant. However, if the appellant has already entered into a compromise with respondent No.1 by fully satisfying the decretal amount, the mortgaged property shall not be sold and the Banking Court No.IV shall record satisfaction of the decree.
' Instant appeal stands allowed in the aforesaid terms.