C.M. No. 892-B of 2014 C.M. Nos. 837, 838 and C.M. No. 373 of 2014 ' SHAMS MEHMOOD MIRZA, J.---Civil Miscellaneous No.837-B of 2014 has been filed by judgment debtor No.4 under section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) challenging the auction schedule approved on 06.11.2014 by this Court whereas C.M. No.892-B of 2014 has been filed challenging the auction that was held on 03.12.2014. Civil Miscellaneous No.837-B of 2014 is a pre-auction objection application which was belatedly filed and the fate, of the auction was made, therefore, depended upon the decision of this application.
Civil Miscellaneous No.373-B of 2014 was filed challenging the pecuniary jurisdiction of this Court. All these applications shall be disposed of by this single order as facts necessary for their disposal are similar.
2. In support of C.M. No.837-B of 2014, it was stated that the property belonging to the applicant/judgment debtor No.4 i.e. residential house No.K-331, Street No.85, Sector K, Defense Housing Authority, Lahore Cantonment was not mortgaged with the decree holder bank and that notices under Order XXI, rule 66, C.P.C. were never issued to the judgment debtor prior to the settling of the terms and conditions of the auction. It was also the case of the judgment debtor No.4 that without accounting or the machinery of judgment debtor No.1 lying at the premises of Messrs Hussain Constructions, the execution proceedings cannot proceed. Objection on the valuation of the property in question has also been raised for being on the low side.
3. In regard to C.M. No.892-B of 2014, which was filed for setting aside of auction held on 03.12.2014, it was stated that the auction was held at the bank premises; that the mortgaged property owned by the principal debtor was liable to be auctioned prior to the sale of the property of judgment debtor No.4; that auction was not in fact conducted and the report of the court auctioneers is fake; that 1/4th of the bid amount was not deposited at the time of auction; that accurate description of the property was not mentioned in the proclamation of sale.
4. These applications were contested by the decree holder bank by filing its written replies in which stance of judgment debtor No.4 was controverted.
5. The arguments of learned counsel for the parties have been heard and the record has been perused.
6. It is established from the record that previously C.M. No.606-B of 2000 was filed by the judgment debtor for deletion of the property in question from the Fard Taliqa on the ground that same was not mortgaged with the decree holder bank. The said application was dismissed on 30.04.2001.
Subsequently C.M. No.531-B of 2001 was A filed through which the objection regarding the property in dispute not being mortgaged with the decree holder bank was again raised. This application was also dismissed on 11.07.2001. The aforementioned orders passed in both the applications (C.M.
No.606-B of 2000 and C.M. No.531-B of 2001) were never challenged and have since attained finality. The objection regarding the property not being mortgaged is, therefore, no longer available to judgment debtor No.4.
7. Through C.M. No.30-B of 2014, the court auctioneers filed the terms and conditions of proclamation of sale whereupon notices under Order XXI, rule 66, C.P.C. were ordered to be issued to the judgment debtors on 24.04.2014. On 13.05.2014, a new counsel for the judgment debtors entered appearance and sought time to file objections. Civil Miscellaneous No.373-B of 2014 was thereafter filed raising the objection regarding the pecuniary jurisdiction of this Court but the same was dismissed for non-prosecution on 25.07.2014. The said application was however restored on 04.09.2014. Despite taking a number of opportunities, the learned counsel for the judgment debtors failed to address arguments on the said application as a result whereof on 11.09.2014 it was ordered by this Court that the said objection shall be decided after the conclusion of the auction scheduled to be held on 19.09.2014 The said auction did not prove successful and the report of the court auctioneers showed that judgment debtor No.4 did not allow them to hold the auction in respect of the property in question. On 23.10.2014, the court auctioneers again submitted a fresh auction schedule whereupon notices were issued to the judgment debtors and decree holder bank for 06.11.2014. On 06.1 1.2014, the auction schedule was once again approved by this Court as the judgment debtors had failed to file objections thereto. In terms of the auction schedule, the auction was to be held on 03.12.2014. On 01.12.2014, judgment debtor No.4 filed C.M. No.837-B of 2014 when this Court ordered that the auction of the property shall be subject to the fate of this application.
The auction was held on 03.12.2014 wherein the property in question was sold for a sum of Rs.25 Million whereafter C.M. No.892-B of 2014 was filed challenging the same.
8. It is apparent from the record that initially the reserve price of the property in question was determined at Rs.6 Million whereupon the judgment debtors filed C.M. No.604-B of 2000 seeking enhancement in the reserve price from Rs.6 Million to Rs.9 Million, which application was dismissed on 30.04.2001. After the account was transferred to Corporate and Industrial Restructuring Corporation (CIRC), four attempts were made to put the property in question to auction at a reserve price of Rs.24 Million but the said attempts remained unsuccessful. Through C.M. No.249-B of 2007, a prayer was made for reduction of the reserve price to Rs.15.500 Million. However, on objection by the judgment debtors, the reserve price was fixed at Rs.17.5 Million but the auction held subsequently also proved to be unsuccessful.
9. Throughout the execution process, more than 10 attempts have been made for sale of the property in question, which have all proved unsuccessful. This execution application is pending since the year 2000 but till date no progress has been made in terms of recovery of amounts under the decree: Auction schedule was approved by this Court on 06.11.2014 as objections were not filed by the judgment debtors. Earlier the auction scheduled to be held on 19.09.2014 was resisted by judgment debtor No.4 as the court auctioneers were not allowed to conduct the auction at the site.
Resultantly, in the next auction schedule the site for auction was changed to the bank premises. It is clear from the record that successive notices were issued to the judgment debtors prior to settling the terms and conditions of sale but they failed to raise any objection, as a result of which auction schedules were approved from time to time. It is not the requirement of law that every time the property is put to auction, fresh notices under Order XXI, Rule 66, C.P.C. are to be issued (see Mukhtar Ahmed v. Messrs United Bank Limited and another 2013 CLD 841 and Messrs Capital Poultry Feed and Daal Mills etc. v. Atlas Bank Limited 2015 CLD 1149). It is further clear that the inadequacy of sale price as a post auction objection has no substance and is not a ground for setting aside auction. (see Muhammad Rafiq V. Federation of Pakistan through Secretary and others 2013 CLD 1667). In the circumstances, the auction schedule was rightly approved by this Court.
10. Another objection raised through C.M. No.837-B of 2014 was that the machinery of judgment debtor No.1 is in possession of Messrs Husnain Construction, the auction purchaser, the sale in 'whose favour has since been cancelled in appeal, and that without its restoration at the project site, the project assets cannot fetch adequate price. It was further stated that the profits earned by Messrs Husnain Construction from the use and had of the said machinery need to be accounted for before putting the property of the applicant .to, sale. Earlier C.M. No.174-B of 2006 was filed by the judgment debtor taking a similar objection. This application was dismissed by this Court on 17.05.2006: Through C.M. No.842-B of 2014 a similar objection was again raised by judgment debtor, which application was also dismissed by this Court on 02.12.2014. It may be added that this Court on 06.11.2014 directed the court auctioneers to recover the machinery and to install the same at the project site. In this regard, the judgment debtors were directed to pay to the court auctioneers a sum of Rs.75,000/- for bringing the machinery to the project site. On 08.12.2014, the court auctioneers informed this Court that the judgment debtors were not extending co-operation for restitution of the machinery whereupon the judgment debtor was again directed to pay the fee of the court auctioneers and to arrange for the transportation of the machinery to the factory site.
The needful has not been done till date. It is, therefore, apparent that the judgment debtors are not serious in restitution of the machinery. The objection that the machinery be recovered first before proceeding with the auction has no merit and is accordingly repelled.
11. For determining the issues raised by judgment debtor No.4 in his application (C.M. No.892-B of 2014), the report of the court auctioneers has been perused. It is clear that the judgment debtor No.4 has raised insignificant and frivolous objections regarding the conduct of auction. Although the application (C.M. No.892-B of 2014) has purportedly been filed under section 19(7) of the Ordinance, in essence it is an application under Order XXI, rule 90, C.P.C. as it challenges the conduct of the auction. Faced with a similar question, the Hon'ble Supreme Court in Messrs Nice 'N'
Easy (Pvt.) Limited and others v. Allied Bank of Pakistan 2014 SCM R 1662 held as under: ' The appellants have filed objection petition apparently on the ground that auction proceedings were irregular and the Banking Court has failed to follow the procedure provided under Order XXI, C.P.C. The appellants themselves moved the banking court under section 19(7) of the Ordinance and have not made an application under Order XXI, Rule 89 or 90, C.P.C. Even if the objection petition of the appellants is treated as an application under Order XXI, Rule 89 or 90, C.P.C., then the said Rules mandate that the objector should deposit the amounts mentioned therein along with the application. In absence of the deposit, as mandated by the Rules, the application and or objections cannot be entertained by a Banking Court. In the case in hand, the appellants have not deposited any of the amounts required under the aforesaid Rules, therefore, the objections were rightly rejected by the Banking Court.
' In the light of ratio of the above judgment, the judgment debtors are liable to pay 20% of the bid money before their application can be entertained. The present application is, therefore, liable to be dismissed on this score alone.
12. The judgment debtor has failed to provide any material particulars in the application about the irregularity or fraud in publishing and conducting the sale and has instead resorted to making general allegations. It is a settled position of law that in addition to proving material irregularity or fraud, the applicant is also to prove' substantial injury the onus of which is on the applicant. In Mst.
Asma Zafarul 'Hassan v. Messrs United Bank Limited and another 1981 SCM R 108, the Hon'ble Supreme Court cited with approval the following observations made in Ghulam Abbas v. Zohra Bibi and another PLD 1972 SC 337.
' Indeed, it would appear that the view of the Courts has consistently been that the non- compliance with the provisions of the Code of Civil Procedure, with regard to the proclamation of sale, its publication and the conduct of the sale in execution, are only material irregularities but not illegalities which render the sale in disregard of those provisions a nullity. A sale cannot be set aside unless direct evidence of substantial injury resulting from the irregularity has been given, and the onus of proving this prejudice is on the party complaining thereof.
' However, in present case, the judgment debtors have failed to make out a case falling under Order XXI, rule 90, C.P.C. It may relevantly be pointed out that judgment debtor No.4 has failed to allege or prove any substantial injury caused to him from the sale of property. The court auctioneers have specifically mentioned that 1/4th of the bid money was paid by the successful bidder on the date of auction through a pay order and a cheque. In `Shaukat Ali Mian V. Trust Leasing Corporation Limited and 4 others 2002 CLD 1071, in respect to the deposit of amounts through cheques in court auctions, it was held that: ' We may, also like to observe that the value of immovable property now runs into millions of rupees and in this case the 1/4th amount of bid money was Rs.52,50,000/-. There is merit in the contention of the learned counsel for the auction purchaser, that it was neither practicable nor desirable from the security view-point that the auction-purchaser should have carried the aforesaid amount in cash. We may further observe that an auction-purchaser cannot anticipate the exact amount which he may require for payment of 1/4th of the bid money in case he succeeds. Therefore, it does not appear to be realistic practicable and logical that an auction- purchaser should carry huge unknown amount of cash with him. Therefore, the provisions of rules 84 and 85 are to be construed in view of the changed circumstances. We, accordingly, hold that payment through cheques of 1/4th of the bid money and the remaining 3/4th of the sale price was a valid tender within the contemplation of rules 84 and 85 of Order XXI of the Code of Civil Procedure.
' It is also an admitted position that the entire bid money was deposited by the successful bidder within the time stipulated by law and he has, therefore, acquired valuable rights in the property in question.
13. The objection regarding the description of the property being incorrect is also not tenable. This Court has examined the auction schedule in which the following description of the property in question was given: ' The Residential House measuring 2-Kanal, bearing No.K-331, St. 85 Sector-K, Defense Housing Society/Lahore Cant. Co-operative Housing Society, Lahore.
' The description of the property was accurately mentioned in the auction schedule to which no exception can be taken. The further objection that the property of the principal debtor be sold in the first instance is of no value. In the present case, the decree is simultaneous and it has been passed jointly and severally against all the judgment debtors including judgment debtor No.4, who was sued in the suit in his capacity as the guarantor/mortgagor. It appears that judgment debtor No.4 did not take any plea in his defence in the suit that his liability is contingent upon and subject to the exhaustion of remedies by the plaintiff against the principal debtor and his failure to satisfy the dues under the decree. The judgment and decree on the face of it does not contain any findings of the Court in favour of judgment debtor No.4 to this effect. In the present case, the decree, which has become final, cannot be construed otherwise. It is settled position of law that the executing court cannot go behind the decree. Any plea that the liability of the principal debtor has to be satisfied ahead of the guarantor/mortgagor has to be taken during the suit and not after the decree when execution is being levied. Unless anything contrary is contained in the decree, where the creditor has obtained a decree against the surety and the principal debtor, the surety/mortgagor has no right to restraint execution against him until the creditor has exhausted his remedies against the principal debtor. It may be noted that section 128 of the Contract Act itself provides that the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. The decree in the present case is a decree for money simpliciter against the judgment debtors including judgment debtor No.4 and is in no way subject to the execution of the decree against judgment debtor No.1. It may furthermore be some importance to mention that the expressions "guarantor", "principal debtor" and "mortgagor" are only used in the suit for the'purposes of adjudicating upon their rights as such. Once the decree is passed, it has to be executed by its terms and not in accordance with the relationship inter se the parties, prior to the passing of the decree.
14. This execution application is pending since the year 2000 without yielding any result. As stated earlier, more than 10 attempts were made to put the property in question to auction but all such, attempts proved unsuccessful. The judgment debtors have been filing meaningless and frivolous applications which have all been dismissed. After 15 years the court auctioneers have finally been able to successfully conduct the auction, which cannot be set aside merely on general allegations leveled by judgment debtors which have otherwise no substance.
15. In the result, the applications (C.M. Nos.892-B-2014, 837 and 838-B of 2014) being devoid of any merit are dismissed.
16. Civil Miscellaneous No.373,B of 2014 was filed by judgment debtor No.4 challenging the pecuniary jurisdiction of this Court on the ground that the decree in question involved an amount of Rs.35 Million. Learned counsel for the decree holder, however, pointed out to section 5 of the Corporate and Industrial Restructuring Corporation (Dissolution) Order, 2006 according to which all cases pertaining to CIRC shall be continued, prosecuted, defended, enforced and executed by or against CIRC in the same manner and to the same extent as provided in Non performing Assets and Rehabilitation of Industrial Undertaking (Legal Proceedings) Ordinance, 2000. Under the latter Ordinance, the jurisdiction vests in the High Court with regard to the accounts of the Financial Institution taken over by the CIRC. This application is, therefore, misconceived and is accordingly dismissed.
Main case.
17. As the objection applications filed by the judgment debtors have been dismissed, the sale in favour of Sheikh Tariq Nazir in respect of the property in question is approved and made absolute.
Office is directed to prepare the sale certificate, in the name of Sheikh Tariq Nazir after obtaining from him the requisite stamp duty.
18. Now to come up for hearing on 26.01.2016.