RAHEEL KAMRAN, J. This single judgment shall deal with the instant appeal (F.A.O. No. 51/2021) along with F.A.O. No. 67 and E.F.A. No.25 of 2021 as all these three appeals have arisen out of same order dated 23.4.2021 passed by the learned Judge Banking Court, Rawalpindi whereby objection petition filed by the appellant herein, under Order XXI, rule 89 of the Code of Civil Procedure (V of 1908) (hereinafter referred to as the "Code") has been dismissed as being barred by time while her other objection petition, filed under section 47 read with section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as the "Ordinance") has been disposed of with some observations, confirming the sale in favour of the auction purchaser.
2. F.A.O. No. 51/2021 calls in question vires of the impugned order dated 23.4.2021 to the extent of dismissal of objection petition of the appellant filed under Order XXI, rule 89 of the Code as well as confirmation of sale in favour of the Auction Purchaser. The appellant in F.A.O. No.67 of 2021 has also prayed for setting aside order of confirmation of sale in favour of the Auction Purchaser. The third appeal bearing E.F.A. No.25 of 2021 tiled by the decree-holder Bank impugns the same order of the learned Judge Banking Court, to the extent of directing it to charge 14% mark-up upon the principal outstanding amount and not on the total decretal amount.
3. Undisputed facts of the case as averred in F.A.O. No. 51 of 2021 are that respondent No. 1/Allied Bank of Pakistan (Ltd.) (hereinafter referred to as the "Bank") instituted Suit No.268 of 2001, for recovery of outstanding principal amount of Rs.20 million along with mark-up against respondent No.3/Messrs General Rice Traders Associates through its partners, namely, Mian Abdul Rehman Uppal/ respondent No.4 and Syed Zille Ali Shah Naqvi/respondent No.5 in the Banking Court No.1, Karachi (hereinafter referred to as the "suit"). The suit was decreed in favour of the Bank, vide judgment dated 9.1.2002, passed by the learned Banking Court No.1, Karachi in the sum of Rs.18,200,000/- jointly and severally against the defendants with costs and future markup at the rate of 14 per cent from the date of institution of the suit till realization. The decree-holder Bank submitted application for satisfaction of the decree by way of auction of the mortgaged property i.e. land measuring 308 kanals (share of the judgment debtor in common land/Shamilat), situated at Mouza Shahpur, Tehsil and District Rawalpindi (hereinafter referred to as the "mortgaged property"). The aforementioned decree was thus transferred to the learned Banking Court at Rawalpindi on 2.8.2007 for execution thereof under rule 6 of Order XXI of the Code. On 23.12.2020, the learned Banking Court, Rawalpindi directed sale of mortgaged land by public auction at the spot through Mr. Abdul Hameed Baloch, Advocate for holding auction on 15.2.2021 at 1.00 p.m. for the sale of mortgaged property. The auction was held as per schedule by the learned Court Auctioneer.
Raja Hafeez-ur-Rehman, Auction Purchaser (respondent No.2) was declared the highest bidder who offered bid of Rs.15,52,00,000/- for the purchase of mortgaged property and gave banker's cheque equivalent to 25 per cent of the purchase price to the Court Auctioneer. The auction purchaser filed an application before the learned Banking Court, Rawalpindi on 2.3.2021 seeking permission for deposit of the remaining 75% of the sale price, which was allowed on the same day and accordingly the auction purchaser deposited the remaining price of Rs. 11,640,000/- through pay order. On the said date an objection petition under section 19(7) of the Ordinance was also filed by Mrs. Shagufta Abdul Rehman (appellant in F.A.O. No.67/2021) daughter of the judgment- debtor No.2 for setting aside the sale in auction on the ground of fraud and material irregularity in the publishing and conducting of sale, which was contested by the decree holder who filed his reply on 17.3.2021. On 26.3.2021, the decree holder-bank filed the calculation of the decretal amount and claimed an amount of Rs.70,626,911/- which included Rs.51,028,186/- as mark-up at the rate of 14% with effect from 21.3.2001 to 26.4.2021; Rs.18,200,000/- being decretal amount; Rs.31725/- as cost of suit and Rs.1,367,000/- as costs of execution. On 5.4.2021, appellant (Ayesha Rahman) filled an objection petition under rule 89 of Order XXI of the Code for setting aside sale of the mortgaged property through auction along with pay order of Rs.7,750,000/- being 5% of the purchase price for the successful bidder and Rs.40 million for payment of decree-holder, as the sale proclamation mentioned only decretal amount of Rs.18,200,000/- with costs of funds. The appellant (Ayesha Rahman) also filed application under section 5 of the Limitation Act,1908 seeking condonation of delay of 13 days in filing her objection petition. On 13.4.2021, the appellant (Ayesha Rahman) filed an objection petition under section 47 of the Code to challenge the calculation of the decree holder and prayed to the Banking Court for reduction of the bank's claim to Rs.53,238,325/- wherein she claimed that an amount of Rs.12,500,000/- was the principal amount (allowed as per decree); Rs.35,000,000/- was the amount of mark up at the rate of 14% recoverable w.e.f 1.4.2001 to 1.4.2021 (20 years Rs.1,750,000/- per year); Rs. 3,543,000/- being mark-up allowed as per decree; Rs.2,163,600/- being penalty imposed by the State Bank of Pakistan (allowed as per decree)
Rs.31725/- being cost of suit (allowed as per decree). Mrs. Shagufta Rahman (appellant in F.A.O.
No.67/2021) withdrew her objection petition under a bona fide impression that since the appellant (Ayesha Rahman) has paid the entire decretal amount along with 5% to the auction purchaser, therefore, there was no need left to press the objection petition filed by her. The learned Judge Banking Court, Rawalpindi after hearing the parties passed the order dated 23.4.2021, which has been assailed in the aforementioned three appeals.
F.A.O. No. 51 of 2021
4. Raja Zaheer-ud-Din Babar, Advocate, who represents the appellant in the titled appeal, contended that the learned Judge Banking Court while holding the objection petition filed by the appellant as being barred by time misconstrued and misapplied the provisions of Article 166 of the Limitation Act, 1908. In this respect he submitted that Article 166 of the Act ibid provides thirty (30) days period df limitation for filing application seeking setting aside of sale in execution of a decree which begins to run from the date of the sale. In order to substantiate his argument that the learned Banking Court has misapplied and misconstrued Article 166 of the Act ibid he while reading out the said provision of law has made much emphasis on the words "the date of sale". He while referring the definition of the word "sale" given in the Black's Law Dictionary (Eleventh edition) as well as in section 45 of the Transfer of Property Act, 1882 submitted that sale of the mortgaged property completed on 23.4.2021 when the Banking Court accepted/approved the bid offered by the Auction Purchaser and not from the date of auction for the obvious reason and settled law that an offer made at an auction is in the nature of an offer which does not mature into a contract till its acceptance. He tried to explain that mere an offer made by the Auction Purchaser and its acceptance by the Court Auctioneer by no stretch of imagination could be termed as "sale" unless and until the same is approved by the Court, a mandate given in the terms of the auction. On the strength of this interpretation of the word "sale" he developed the argument that the learned Banking Court has illegally and unlawfully dismissed the appellant's objection petition being barred by limitation. In support of these arguments learned counsel has placed reliance on the cases of Muhammad Attique v. Jami Ltd and others (PLD 2019 SC 993) and Muhammad Jawed v. First Women Bank Ltd and others (2021 CLD 39 Supreme Court). He submitted that the objection petition was filed within the prescribed period of limitation, however, it was accompanied by an application under section 5 of the Limitation Act, 1908 as a precautionary measure. He next submitted that the learned Judge Banking Court has erred in law while holding that section 5 of the V Limitation Act, 1908 does not apply to objection petition filed under Order XXI rule 89 of the Code.
In order to supplement his contention, he has referred to section 24 of the Ordinance to submit that the provisions of the Limitation Act, 1908 (Act IX of 1908) are applicable to all cases instituted or filed in a Banking Court. He added that bona fide of the appellant to satisfy the decree is evident from the fact that in compliance of the mandatory requirement of Order XXI, rule 89 of the Code she had deposited Rs.7,750,000/- being 5% of purchase money for the Auction Purchaser and Rs.40,000,000/- for payment to the decree-holder/bank as against the decretal amount of Rs.18,200,000/- mentioned in the proclamation of sale, however, this aspect of the case has been ignored while passing the impugned order. During his arguments he emphasized that fundamental rights to life and property of the citizens of this country have been safeguarded under Articles 4 and 24 of the Constitution of Islamic Republic of Pakistan, 1973 application whereof has not been taken care of while passing the impugned order which has resulted in depriving the appellant of her valuable right to hold and protect her property.
5. Conversely, learned counsel for the respondent-bank while supporting the impugned order to the extent of dismissal of the objection petition filed by the appellant under Order XXI, rule 89 of the Code submitted that the objection petition was manifestly barred by time and the interpretation of the provision of Order XXI, rule 89 of the Code as made by learned counsel for the appellant does not appeal to any prudent mind; that there is a distinction between "ordinary sale" and "sale" by way of process of auction; that an auction-sale completes at the fall of the hammer in pursuance of an offer made by the Court Auctioneer and its acceptance by the Auction Purchaser; that the appellant-judgment debtor was very much in knowledge of the auction proceedings and the objection petition was filed just to prolong the execution proceedings for one pretext or the other; that the application filed under section 5 of the Limitation Act, 1908 did not contain any lawful reason or ground or to furnish "sufficient cause" to substantiate cause of delay in filing the objection petition beyond the period of 30 days as provided under the law.
6. Sardar Umer Aslam, Advocate, while appearing on behalf of respondent No.2 (auction purchaser) supported the arguments advanced by learned counsel for the decree-holder bank.
He, however, added that the objection petition filed by the appellant/judgment debtor could not be entertained as she had failed to deposit full amount of 5% of the decretal amount as per the mandatory requirement of Order XXI, rule 89(1)(b) of the C.P.C. In this regard, he pointed out that 5% of the decretal amount comes to Rs.7,760,000/- whereas the appellant deposited Rs.7,750,000/-. He further added that though the amount deposited by the appellant was short by only Rs.10,000/- but in any case, it did not fulfill the requirement of the law. He finally submitted that the auction purchaser has deposited with the Banking Court full purchase price of the auctioned property i.e. Rs. 15,52,00,000/- and the appellant had made the objection petition just to frustrate the auction proceedings.
7. Arguments heard. Record perused.
8. The main stance of the Appellant Ayesha Rahman in F.A.O. No.51 of 2021 is that even though the auction took place on 15.2.2021 and she filed her application under rule 89 of Order XXI of the Code on 5.4.2021, however, the same was not time barred, as held in the impugned order. Article 166 of the Limitation Act, 1908 provides 30 days period for seeking setting aside of sale in execution proceedings of a decree. The period of limitation under the said Article, according to counsel for the appellant, begins to run from the date of the sale. Her case is that in such matters, time runs from the date when the sale was confirmed by the executing court and not from the date when the highest bid was made in the auction of the property. If the time started running from 15.2.2021, the application was barred by time in terms of Article 166 of the First Schedule to the Limitation Act, 1908 under which the time for filing the application has been prescribed to be 30 days from the date of sale. However, the sale in this case was confirmed by the Banking Court on 23.4.2021 and if that is to be taken as the date of sale, obviously there could be no question of the application being time barred since it had already been filed earlier.
9. In order to properly appreciate the appellant's stance, it would be advantageous to reproduce relevant provisions of the Code i.e. Rules 89 to 92 of Order XXI.
"89. Application to set aside sale on deposit.---(1) Where immovable property has been sold in execution of a decree, any person, either owning such property or holding an interest therein by virtue of a title acquired before such sale, may apply to have the sale set aside on his depositing in Court,--
(a) for payment to the purchaser, a sum equal to five per cent of the purchase-money, and
(b) for payment to the decree-holder, the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, less any amount which may, since the date of such proclamation of sale, have been received by the decree-holder.
(2) Where a person applies under rule 90 to set aside the sale of his immovable property, he shall not, unless he withdraws his application, be entitled to make or prosecute an application under this rule.
(3) Nothing in this rule shall relieve the judgment-debtor from any liability he may be under in respect of costs and interest not covered by the proclamation of sale."
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 per cent of the sum realized at the sale, or furnishes such security, as the Court may direct.
91. Application by purchaser to set aside sale on ground of judgment-debtor having no saleable interest.---The purchaser at any such sale in execution of a decree may apply to the Court to set aside the sale, on the ground that the judgment-debtor had no saleable interest in the property sold.
92. Sale when to become absolute or be set-aside.---(1) Where no application is made under rule 89, rule 90 or rule 91, or where such application is made and disallowed, the Court shall make an order confirming the sale, and thereupon the sale shall become absolute.
(2) Where such application is made and allowed, and where, in the case of an application under rule 89, the deposit required by that rule is made within thirty days from the date of sale, the Court shall make an order setting aside the sale: Provided that no order shall be made unless notice of the application has been given to all persons affected thereby.
(3) No suit to set aside an order made under this rule shall be brought by any person against whom such order is made."
10. We have gone through the scheme of above rules of Order XXI of the Code. Rule 89 of Order XXI of the Code envisages that an application may be made under the said provision to set aside the sale for redemption of the property subject to the conditions specified therein. Likewise, an application under rule 90 of Order XXI of the Code to set aside the sale on the ground of irregularity or fraud and an application also lies under rule 91 of Order XXI of the Code, by the purchaser to set aside the sale on the ground that judgment debtor has no saleable interest. All these provisions apparently impart impression that sale had already taken place which could possibly be defeated if an application under rules 89, 90 or 91 of Order XXI of the Code succeeded. Similarly, section 65 of the Code states that the title to an immoveable property sold in execution of a decree, shall be deemed to have. "vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute". In such scheme of interpretation, chronologically the event of sale of the property is taken to have preceded the event when the sale becomes absolute under the Code.
11. Learned counsel for the appellant has relied upon judgments of the apex Court in the case of Muhammad Attique v. Jami Limited and others (PLD 2010 SC 993) wherein, while dismissing appeal of an auction purchaser against the judgment of this Court whereby the order of the Banking Court rejecting objection petition of the judgment debtor therein was set aside and the matter was remanded to the Banking Court for decision afresh on the objection petition, it was held as under:- "32. The matter can be looked into from another angle. It is well settled that a bid made at an auction is in the nature of an offer which does not mature into a contract till its acceptance. The auctioneer acts as an agent of the seller to accept the bid, a concluded contract comes into being the moment the bid is accepted either by a word of mouth or in any other customary method like fall of hammer at public auction. If, however, the auctioneer is not vested with the power to accept the bid and said power is with another authority (i.e. the Court in a matter), the contract/sale comes into being when the bid is accepted by the authority, therefore, for the purpose of Article 166 of the Limitation Act, time starts to run from the date of the highest offer is accepted by the Court, and the objection petition filed by respondent No.1 was well in time.
36. Term 'sale' has also been defined in section 45 of the Transfer of Property Act, 1882, as "the transfer of ownership of immovable property for a price or promised". In an auction proceedings title in the property not transferred in favour of the highest bidder, at the time when auction was held and offer was forwarded to the Court for acceptance, the Court sale for immovable property under Order XXI, Rule 84 is subject to proceedings under Orders XXI, Rules 89, 90 and 91, as result of which sale may either be set aside or confirmed. Once the sale is confirmed, section 65, C.P.C. provides that ownership right in the immovable property will be deemed to have vested in the succeeding bidder retrospectively from the date when action was held". [emphasis supplied by this Court] Likewise, reliance has been placed by the appellant on another case reported as Muhammad Jawed v. First Women Bank Ltd and others (2021 CLD 39). The Hon'ble Supreme Court of Pakistan has held as under:- Acceptance of the Bid vis-a-vis Vested Rights
10. The issue as to when vested rights are created in favour of a bidder in such proceedings has been previously addressed in three pronouncements of this Court. In Hudaybia Textile Mills Ltd. v.
Allied Bank of Pakistan Ltd. (PLD 1987 SC 512) this Court held that "once a sale has been effected, a third-party interest intervenes which cannot be disregarded." The question as to when sale is effected in execution proceedings involving auction of immovable property was considered in the Muhammad Attique case, wherein this Court held that in cases involving court auctions of immovable properties "the contract/sale comes into being when the bid is accepted by the Court". This position was reiterated in Muhammad Khalil v. Messrs Faisal M.B. Corporation (2019 SCMR 321) albeit in slightly different terms, wherein this Court held that "it needs no reiteration that an auction is always subject to confirmation by the Court." This Court then held that "since the executing court never confirmed the auction. Therefore, no vested right had accrued in favour of the auction purchaser."
10A. A holistic reading of these judgments, along with the provisions of Order XXI, reveals that in execution proceedings involving court auction of immovable property, so-called vested/third party rights accrae in favour of a bidder when the auction-sale becomes complete, i.e. when a bid is accepted by the Court and thereafter the full purchase-money is deposited in terms of Order XXI, Rule 85, C.P.C. However, such vested rights again are defeatable and would not take away the right of the mortgagor to redeem his/her property if she brings his/her case within the parameters of Order XXI, Rule 89, Rule 90 or Rule 91, C.P.C. If, however, no application under these provisions is made within the time limit prescribed by law or the same is rejected, the Court mandatorily confirms the qualified sale and makes it absolute under Order XXI, Rule 92, C.P.C., transferring the title of the property in the name of the successful bidder/purchaser, unless a delayed application to set aside the sale is entertained. The property is then deemed to have been vested in the purchaser, per section 65 of the C.P.C., since the time when sale became complete. It is a known fact that the Court sale is a forced sale and, therefore, contain certain elements of risk with a chance of litigation and for this very reason properties auctioned by the Courts do not fetch the price which, it would in sale between two private persons. This, inter alia, is for the reason that the law provides maximum opportunities to the mortgagor to redeem the property and discourages any clog against the equity of redemption and as a last recourse when the mortgagor fails to avail all the opportunities provided under the law extinguishes the right of redemption. However, this does not, by any stretch of imagination, would mean to provide undue favour by prolonging the execution or auction proceedings. The auction once conducted successfully then the Auctioneer's report must be taken up in Court for orders at the earliest if not on the next day accepting or rejecting the sale. To prolong the proceedings or to keep the Auctioneer report pending for months altogether as was in this case not only discourages the public in general to participate in Court sale but affects the sanctity of the proceedings and also cause loss to financial institutions and recovery of public money". [emphasis supplied by this Court]
12. Admittedly, the auction in this case was held on 15.2.2021 and the application under Rule 89 of Order XXI of the Code was filed on 05.04.2021 whereas the "sale" was confirmed by the Banking Court on 23.4.2021. Learned counsel for respondents could not refer to any order passed by the learned Banking Court before 23.04.2021 whereby the bid of Raja Hafeez-ur-Rahman (respondent No.2) was expressly accepted by the Court. In the impugned order dated 23.04.2021, for the purpose of limitation, the learned Executing Court has held the "sale" in this case to have taken place on 15.02.021 i.e. date of fall of hammer and not acceptance of the offer, which is contrary to the above mentioned legal position. Thus, following the law laid down by the Hon'ble Supreme Court of Pakistan in the cases of Muhammad Jawed and Muhammad Attique (supra), the F.A.O.
No.51 of 2021 is hereby allowed in terms that the impugned order dated 23.4.2021 whereby application of the appellant under Rule 89 of Order XXI of the Code was dismissed for being barred by limitation is set-aside as the period of 30 days limitation prescribed under Article 166 of the First Schedule to the Limitation Act, 1908 would run in this case from the date of sale i.e. 23.4.2021 and resultantly application of the appellant shall be deemed to be pending before the learned Banking Court, Rawalpindi to be decided on merit in accordance with law.
F.A.O. No. 67 of 2021
13. As regards F.A.O. No.67 of 2021, it has been contended that the appellant's counsel withdrew her petition under rule 90 of Order XXI of the Code under a bona fide impression that her sister, Ayesha Rehman (appellant in F.A.O. No.51 of 2021) has paid the entire decretal amount along with 5% to auction purchaser, therefore, there was no need left to press the objection petition filed by the appellant. Accordingly, the appellant's petition was dismissed as withdrawn. Learned counsel for the appellant contends that despite withdrawal of petition under rule 90 of Order XXI of the Code, learned Banking Court had the power to look into illegalities, material irregularities and propriety of the collusive and fraudulent auction proceedings in this case. In support of such contention, he has placed reliance on judgment of the Hon'ble Supreme Court in the ease of Muhammad Ashra v.
UBL and others (2019 SCMR 1004) wherein the following observations were made in Paragraph No.8:- "We are constrained to observe that there can be no escape from the fact that even in the absence of an Objection Petition, learned Executing Court is not required to automatically confirm an auction mechanically and without application of mind by not even considering the law applicable. Such is the law laid down by this Court in the case reported as National Bank of Pakistan and 117 others v. SAF Textile Mills Ltd. and another (PLD 2014 SC 283)."
14. Learned counsel for the appellant added that the learned Banking Court failed to note that the mortgaged property was sold by the learned court auctioneer at throw away price of Rs.
155,200,000/- contrary to Rs.1,219,6180,000/- as approved DC rate of Mouza Shahpur and Rs.
1,540,000,000/- being the actual market value of the said property. Learned counsel for the appellant has produced the following table in support of his argument:- Sr .No.Area Nature Off/On road Rate per Marla 2112Shahpur (Off Road)ResidentialOff Road Rs.110,000/- 2113Shahpur Residential'Link road Phase 7 and 8 Rs.336,743/- 2114Shahpur ResidentialOn road Rs.198,000/- 2115Shahpur ResidentialLink Road Phase 7 and 8 Rs.385,000/- In the light of the aforesaid valuation table, the value of the Mortgaged Property i.e. 6160 Marlas (308 Kanals) of land comes to Rs.677,600,000/- if the lowest amongst the aforesaid is applied, whereas the property has been sold at Rs. 15,520,000/- which is four times lesser than the DC approved valuation, which clearly indicates that the mortgaged property has been sold at a throw away price to the Auction purchaser by the learned Court auctioneer, which has been accepted by the learned banking Court in violation of law. Learned Banking Court, it is contended, did not look into that merits of the sale and thus failed to follow the settled law. In support of his contention, learned counsel for the appellant has placed reliance on judgment of the Hon'ble Supreme Court in the case of Muhammad Khalil v. Messrs Faisal M.B. Corporation and others (2019 SCMR 321) wherein, it has been observed in Paragraph No.6:- "It is clear and obvious to us that land measuring 25 acres situated at Mouza Marakka, Tehsil and District Lahore was sold for a paltry sum of Rs. 2,6 Million which translates into Rs.96,635 per acre.
This amount was not only much less than the actual market value of the land, but was also substantially less than the DC rate which was in the sum of Rs.6,06,400/- per acre. Calculated as per this criteria and not considering the real market value of the land, the value of 25 acres calculated at the DC rate came to Rs. 15,160,000/, We are therefore in no manner of doubt that the land in question was indeed sold at a throw away price causing substantial injury and loss to the Judgment Debtor. There was a huge gulf between the value represented by the auction price and the real market value and there is no plausible or reasonable explanation for such difference.
Further, there is evidence on record that the auction proceedings were not conducted at the spot.
This fact casts serious doubts upon the sanctity of the auction and the entire process which led to such auction. It is now well settled that the Court has the power to set aside any auction if the same is proved to have been sold at a throw away price. We are unable to agree with the assertion of the learned counsel for the petitioner that inadequacy of the sale price cannot constitute basis for setting aside a sale."
15. Learned counsel for the appellant lastly contended that it is evident from the execution proceedings particularly from report of the Assistant Commissioner dated 01.10.2016 that the concerned revenue staff could not make identification of the mortgage property at the spot. There was a specific order of the Banking Court to hold the auction at the spot, yet the learned court auctioneer did not take any bona fide effort in this regard and in the absence of property identification of the mortgage land, hold an auction at an open place clearly in breach of the Banking Court's order as well as the terms and conditions of sale, rendering the sale liable to be set aside.
16. Learned counsel for respondents, on the other hand, contended that after withdrawal of her objection petition on 13.04.2021, the appellant was estopped from filing the instant appeal, therefore, the same was not maintainable. No objection, as far as the appellant's case is concerned, was before the learned Banking Court and that she took refuge behind the case of Mst.
Ayesha Rehman, who independently filed her objections under rule 89 of Order XXI of the Code. It has been further emphasized that in F.A.O. No.51 of 2021, no objection has been raised regarding reserve price nor any challenge has been made to the price at which ultimately the property was auctioned. The mere filing of F.A.O. No.67 of 2021 was on account of failure of the appellant in F.A.O.
No.51 of 2021 to obtain an interim relief. Even otherwise, it has been asserted by the learned counsel for the decree holder, since the appellant herself participated in the auction, marked her attendance and submitted bid offer, therefore, she is estopped from questioning the auction; that the auction proceedings have been conducted at the spot as per order of the Banking Court after widely publishing the auction of the mortgaged land in consequence whereof a number of people of locality and bidders were available on the spot; that as the mortgaged land consists of Shamlat and not the ownership thus value of the same cannot be equated to the DC rates; and that the auction proceedings have been held in accordance with law and there is no legal infirmity warranting interference by this Court.
17. In support of his arguments, learned counsel for respondent No.2 has relied upon judgment of the Hon'ble Supreme Court in the case of Messrs Habib and Company and others v. Muslim Commercial Bank Limited and others (PLD 2020 SC 227), wherein it has been observed in Paragraph No.11:- "We find no merit in the arguments advanced by the learned counsel for the petitioners that the order of the High Court dated 17.04.2017 should be set aside on the basis that even in the absence of an objection petition the Banking Court should have applied its own mind and set aside the sale of property. Learned counsel for has been unable to substantiate this contention by providing evidence of any irregularity or fraud in the sale order or, auction proceedings."
18. We may observe here that in the case of Messrs Habib and Company (supra), the Hon'ble Supreme Court has not overruled its judgment in the case of Muhanimad Ashraf (supra) but only qualified the challenge to be substantiated by providing evidence of any irregularity or fraud in the sale order or auction proceedings. There is no estoppel against the law. Since we have already allowed F.A.O. No.51 of 2021 and set aside the order dated 23.04.2021 for consideration and decision of the Objection Petition filed by Mst. Ayesha Rehman under rule 89 of Order XXI on merit, therefore, it would be appropriate to leave it to the learned Banking Court to consider if any material irregularity or fraud in the sale or auction proceedings has been established before confirmation of sale of the Mortgaged Property in question.
E.F.A. 21 of 2021
19. As regards E.F.A. No. 25 of 2021, the same has been preferred by the Allied Bank Limited under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 [herein after referred to the "Ordinance") against order dated 23.04.2021 whereby Objection Petition filed by the objector Mst. Ayesha Rehman has been disposed of by the learned Executing Court while holding that 14 % future mark-up decreed on 09.01.2002 by the learned Banking Court is chargeable on the principal outstanding amount of Rs.1,25,00,000/- and not on the total decretal amount of Rs.1,82,00,000/- which includes mark up and penalty.
20. Learned counsel for the decree holder Bank contends that the executing court could not go beyond the decree dated 09.01.2002 in terms whereof the appellant has been held entitled to 14% future mark up on the total decretal amount of rupees 1,82,00,000/- as the same was determined to be outstanding liability of the judgment debtors. He adds that the appellant/decree holder bank has not levied any penalty on its own rather the same was imposed by the State Bank of Pakistan and the appellant has paid it on behalf of the customers/judgment debtors, therefore, the same was recoverable along with mark-up thereon. He finally states that the learned executing court failed to take into account section 10(1) of the Act whereunder the Banking Court was obliged to grant the mark up over the decretal amount. In support of his arguments, he has placed reliance on judgments in the cases of Azam Wazir Khan v. Messrs Industrial Development Bank of Pakistan (2013 SCMR 678); Nand Lal and Another v. Askari Commercial Bank Limited and another (2018 CLD 1320); United Bank Limited v. Messrs Blessed International Pvt. Limited and 6 others (2003 CLD 39); United Bank Limited v. Messrs Usman Textiles and 6 others (2007 CLD 435) and A.M. Rice Corporation v. Bank of Punjab (2005 CLD 1569).
21. Learned counsel for the objector Mst. Ayesha Rehman has supported the impugned order of the learned Banking Court to the extent of decision on her application while contending that in terms of the decree dated 09.01.2002 neither the appellant was held entitled to mark-up at the rate of 14% on the entire decretal amount nor the learned Banking Court could pass a decree for the recovery of mark-up on the decretal amount which included mark-up inasmuch as charging of the mark- up on mark-up is unlawful in terms of BCD Circular No. 13 dated 13.06.1984 and BCD Circular No.32 dated 26.11.1984 issued by the State Bank of Pakistan. He adds that the Financial Institutions, (Recovery of Finances) Ordinance, 2001 was promulgated on 30.08.2001 which came into force at once and repealed the Banking Companies (Recovery of Loans, Advances, Credits and Finances)
Act, 1997 (herein after referred to as the "Act") while saving application of section 15 in cases relating to interest bearing loans and, in terms of section 3(2) thereof, the appellant was entitled to the decree of cost of funds instead of 14% mark-up which has been passed in violation of section 3(3) of the Ordinance. Even otherwise, he maintains, the plea of the learned counsel for the appellant is based on misconstruction of section 10(1) of the Act which does not permit charging of mark up on mark up. He lastly contends that the executing Court can question the executability of the decree if satisfied that the decree has been passed in violation of law. In support of above arguments, reliance has been placed on judgments in the cases of Habib Bank Limited v. Mst.
Parveen Qasim Jan and others (2014 SCMR 322); Mst. Shaista Bibi and another v.
Superintendent, Central Jail Mach and 2 others (PLD 2015 SC 15); Messrs Fazal Sons and 3 others v. Muslim Commercial Bank (2015 CLD 1699); Habib Bank Limited v. Karachi Pipe Mills Ltd. (2006 CLD 842) and Tristar Industries (Pvt.) Limited v. State Bank of Pakistan (2004 CLD 257).
22. The question as to whether in the execution proceedings, an Executing Court can travel beyond the decree was considered by the august Supreme Court of Pakistan in the case of Habib Bank Limited v. Mst. Parveen Qasim Jan and others (2014 SCMR 322), wherein after a survey of various judgments, it was been held in paragraph No. 8: 'From a perusal of the above judgments, it becomes clear that in the proceedings of the execution of a decree, the executing Court while exercising jurisdiction under section 47, C.P.C. can question the executability of a decree if it is satisfied that the decree is a nullity in the eyes of law or it has been passed by a Court having no jurisdiction or the non-execution of the decree would not infringe the legal rights of the decree-holder or the decree has been passed in violation of any provision of law, on then the executing Court can refuse to execute the decree."
23. The plea of learned counsel for the objector Mst. Ayesha Rehman to the effect that the Ordinance was promulgated on 30.08.2001 which came into force at once and repealed the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, therefore, the appellant was entitled to the decree of cost of funds instead of 14% mark-up has no force in view of the judgment of learned Division Bench of this Court in the case of A.M. Rice Corporation v. Bank of Punjab (2005 CLD 1569) wherein it was held by a learned Division Bench of this Court that when a suit has been brought by the Bank under the provisions of the Act, in which the Court had ample powers to grant mark up from the date of institution of the suit till realization of the amount, the provisions of section 3 of the Ordinance, which is a subsequent legislation, were inapplicable.
24. In her objections, the objection petitioner/judgment debtor essentially challenged the amount to which the mark up decreed was applicable and not the legality of the rate of mark-up i.e. 14%.
Section 10 of the Act mandates that in case of finance under a system the decree shall provide for mark-up on the judgment debt from the date of institution of suit to payment at the rate higher of the two namely the contracted rate or at the latest rate of the banking company for similar finance. The decree of 14% mark-up from the date of filing of the suit till realization in the instant case has been passed apparently in view of the mandate of section 10(1) of the Act. "Judgment debt", in contradistinction to "finance" and "loan" as defined in section 2 of the Act is the value to which the legislature has envisaged application of mark-up upon the decree. The phrase "judgment debt" has not been defined in the Act itself, therefore, the same has to be construed according to its ordinary dictionary meaning. According to the Cambridge dictionary, "judgment debt" is a sum of money that a court of law has ordered a company or person to pay. Collins English dictionary defines "judgment debt" to mean a debt established or confirmed by decree of a court of law. In other words, "judgment debt" is the decretal amount. Therefore, the mark up visualized under section 10 if the Act is applicable to the decretal amount and the decree dated 09.01.2002 in the instant case has been passed accordingly.
As regards applicability of BCD Circular No.13 dated 20.06.1984 and BCD Circular No. 32 are concerned, it has been held by the august Supreme Court of Pakistan in the case of Azam Wazir Khan v. Messrs Industrial Development Bank of Pakistan (2013 SCMR 678): "Upon a review of BCD Circulars it is quite apparent that the State Bank of Pakistan in that capacity as a premier regulatory Authority of the government of Pakistan in the financial sector acts as a watchdog over the same in order to secure monetary stability and soundness of the financial system in the country as is readily apparent from section 9-A of the State Bank of Pakistan Act, 1956. In such capacity the State Bank from time to time issues guidelines and devices in the shape of BCD circulars and consequently it would be safe to conclude that the main function of the State Bank is to ensure and secure stability of the financial system in the country. Such powers and functions given to the State Bank are entirely divorced from the laws enacted from time to time for recovery of outstanding loans by the banks and the other development financial institutions. Hence it cannot be said that after first of January, 1985 no loans previously given by any company/DFI on the old interest building system could not be recovered as such. This is readily apparent from a perusal of section 15 of the 1997 act which does provide that broad interest Markup going to be recovered and the same is reflected in section 29 of the 2001 Act. There is no gainsaying the fact that BCD Circulars/instructions issued by the State Bank of Pakistan from time to time are binding upon all concerned in terms of section 25 of the Banking Companies Ordinance, 1962. However as stated above the functions of the of the State Bank of Pakistan are to regulate the finance and banking sector in the country which is entirely different from the mode and method of recovery of loans which is provided for in the various Acta/instruments of Parliament. Hence, we cannot agree with Mr. Akhtar Hussain that after 1st January 1985 in terms of any of the circulars including BCD Circular No. 13, the banks were obliged to convert interest bearing loans into non-interest bearing modes of finance. As observed above recovery of interest bearing loans continued to be provided for under the various laws pertaining to recovery of loans which are still extant. In any event, BCD Circulars issued by the State Bank which can be termed as delegated legislation/directives/orders cannot displace legislative instruments such as the 1997 or 2001 Act."
The decree-holder bank has not levied any penalty on its own rather the same was imposed by the State Bank of Pakistan and the decree-holder has paid it on behalf of the customers/judgment debtors, therefore, the same was recoverable in the decree along with mark-up thereon. Reliance in this regard has been rightly placed by the learned counsel for the decree holder on the cases of United Bank Limited v. Messrs Blessed International (Pvt.) Limited and 6 others (2003 CLD 39); United Bank Limited v. Messrs Usman Textiles and 6 others (2007 CLD 435) and Nand Lal and another v. Askari Commercial Bank Limited and another (2018 CLD 1320).
25. It is thus manifest that the learned Executing Court acted in oblivion to section 10(1) of the Act as well as judgment of the Hon'ble Supreme Court of Pakistan in the case of Azam Wazir Khan v.
Messrs Industrial Development Bank of Pakistan (2013 SCMR 678) in disposing of application under section 47 of the Code filed by Mst. Ayesha Rehman of the Objection Petitioner/judgment debtor while holding that 14% mark-up shall be charged on the principal amount and not the decretal amount which includes accrued mark up and penalty. Accordingly, the instant appeal of the decree-holder Bank is allowed and the impugned order dated 23.04.2021 is reversed.
26. Resultantly, F.A.O. No.51 of 2021 is allowed in terms that the order dated 23.04.2021 is set aside for consideration and decision of the Objection Petition filed by Mst. Ayesha Rehman under rule 89 of Order XXI on merit and F.A.O. No. 67 of 2021 is disposed of with the observation that the learned Banking Court shall consider if any material irregularity or fraud in the sale or auction proceedings has been established before confirmation of sale of the mortgaged property in question. E.F.A.
No.25 of 2021 is also allowed and the impugned order dated 23.04.2021 is hereby reversed and application of respondent No.2 under section 47 of the Code shall be deemed to have been dismissed. There shall be no order as to costs. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.