RASAAL HASAN SYED, J. This appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the "Ordinance") calls into question order dated 13.11.2019 of learned Judge Banking Court, No I, Gujranwala in execution proceedings.
2. Respondent bank instituted a recovery suit under section 9 of the Ordinance in which the appellant was sued as defendant No.3. Leave was declined and suit was decreed on 11.5.2011 by the Banking Court. In execution proceedings respondent bank requested for issuance of warrants of arrest of the judgment-debtors on 27.4.2018 on the grounds that on 18.2.2010 recovery suit was filed for Rs.4,312,830.12/- wherein decree for Rs.3,407,553/- was passed, court auctioneer was appointed for auction of mortgaged property and auctions were held on 22.8.2013, 12.6.2015, 10.5.2016 and 17.11.2016 and that all four attempts were unsuccessful as judgment-debtors allegedly managed the locals not to participate and that the judgment-debtors may be proceeded under Order XXI, Rule 37, C.P.C. read with section 51, C.P.C. Warrants of arrest of the judgment-debtors including the appellant were issued by the Banking Court. Appellant filed an application for recalling of the warrants of arrest which was rejected vide order dated 13.11.2019 and the appellant as also the other judgment-debtor Rehmat Ali were ordered to be arrested and sent to prison with the rider that they shall be released on furnishing surety bonds in the sum of Rs.1,000,000/- each for a period of 15 days to provide them an opportunity to satisfy the decree; while the case was adjourned to 28.11.2019. The appellant was unable to pay the amount within the time given and non-bailable warrants of arrest were again issued. Through the instant appeal order dated 13.11.2019 along with subsequent order for arrest of the appellant have been called into question.
3. Learned counsel for the appellant submits that the orders for arrest and imprisonment of the appellant are without lawful justification, the provisions of section 51 of C.P.C. as well as Order XXI, Rules 37 and 40, C.P.C. have been overlooked, the approach of learned Judge Banking Court is legally untenable and impugned orders of arrest and imprisonment are unsustainable that require interference. The learned counsel for the respondent bank contrariwise supported the impugned order and attempted to defend the same.
4. Submissions made pro and contra have been carefully considered in the light of record and law applicable on the subject: It is observed that certain pre-requisites are prescribed in section 51, C.P.C. that regulate the powers of court to enforce execution by arrest and detention, in prison which must be satisfied before adopting process of execution by detention in prison. These include an opportunity to the judgment-debtor of showing cause why he should not be committed to prison; a probe by court to consider the existence of pre-requisites to issue the process and to record reasons in writing for the satisfaction that the judgment-debtor with the object of obstructing or delaying the execution of the decree is likely to abscond or leave the, local limits of the jurisdiction of the court or the judgment-debtor has, after the institution of suit in which decree was passed, dishonestly concealed or removed any part of property or committed any act of bad faith in relation to his property or the judgment-debtor had the means to pay the amount of decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. These questions, of course, could be determined after inquiry.
5. Examination of the provisions of Order XXI, Rules 37 and 40, C.P.C. is also instructive in this regard that reveals that where an application for the arrest and detention is made, the court instead of issuing warrant for arrest, may issue a notice calling upon the judgment-debtor to appear on' a date specified in the notice and show cause as to why he should not be detained in prison and where the judgment-debtor appears in the court in pursuance of the notice or is brought before the court after being arrested the court shall hear the decree-holder, take all such evidence as may be produced by him in support of his application and shall then give judgment-debtor an opportunity of showing cause why he should not be detained in prison and that pending conclusion of inquiry the court, in its discretion, order to release the judgment-debtor on furnishing of security to the satisfaction of the court for his appearance, when required, and that on conclusion of inquiry, the court can subject to the satisfaction of provisions of section 51, C.P.C., make an order in respect of detaining the judgment-debtor in prison.
6. These rules and procedure therein have been considered in number of cases and the consistent view taken is that before passing an order for arrest and detention of judgment-debtor, the court shall after due inquiry and affording opportunity of evidence to parties determine that the pre- conditions for the issuance of such directive have been satisfied by the decree-holder. In the case of "Messrs 3-A Trade Impex through Partner and 2 others v. Askari Commercial Bank. Ltd, through Branch Manager" (2005 CLD 1379) it was observed to the effect that merely on the basis of an affidavit of the decree-holder, the order of arrest and detention could not be passed unless, the affidavit was properly tendered in evidence, subjected to cross-examination; the facts stated therein are duly scrutinized, opportunity of evidence to the opposite party is allowed and that thereafter the existence or otherwise of the pre-conditions for passing order of arrest could be determined and that unless those mandatory ingredients were established on record by admissible evidence through inquiry, curtailment of liberty by arrest and detention could not be made. Reference can also be made to the case of "Abdul Basit Zahid v. Modaraba Al-Tijarah through Chief Executive and 2 others" (PLD 2000 Kar. 322) wherein a Division Bench of Sindh High Court while considering the provisions of section 51 read with Order. XXI, Rules 37 and 40, C.P.C. as also section 18 of Banking Companies (Recovery of Loans, Advances, Credits and Finance) Act, 1997 observed to the effect that section 51 of C.P.C. provides for the execution of decree through arrest and detention of judgment-debtor while proviso thereof furnishes certain safeguards against the deprivation. of liberty and that such power can only be exercised under certain given situations and that while considering the provision of section 18 of the Act ibid. the proposition was un- subscribable that the words in such other manner as it deems fit could be so broadly interpreted as to confer unbridled powers upon the Banking Courts to commit judgment-debtor to prison without fulfilling the conditions set down in C.P.C. and that these words only mean that apart from the modes prescribed in C.P.C. and other laws, the Banking Court may adopt any other method for execution provided that the same is not repugnant to or in conflict with any existing law. The consistent view taken by this Court in number of cases is also that before passing an order for the issuance of warrants for arrest and detention or passing an order for detention/arrest, the court needs to issue a .show cause notice, satisfy itself through an inquiry and by allowing opportunity of evidence and that unless the preconditions are proved the order for arrest and detention of judgment-debtor cannot be passed. Reference can be made to "Muhammad Mobeen v. A.B.N.
Amro Bank Ltd. through Manager" (2015 CLD 1904), "Dr. Rauf Ahmad Azhar v. Banking Court No.11, Lahore and 6 others" (2007 CLD 964), "Aftab Saleem Choudhary and another v. Soneri Bank Limited through Attorneys" (2005 CLD 401) and "Precision Engineering Ltd. and others v.
The Grays Leasing Limited" (PLD 2000 Lah. 290).
7. Another significant aspect in the case was that the appellant had three mortgaged properties which were taken as security for payment of the finance and for enforcement of decree through auction and sale thereof steps were taken by the executing court. It was claimed that the auction was not responded to by the buyers whereupon the respondent bank applied for the arrest and detention of judgment-debtor including the appellant. The learned Judge Banking Court was mainly persuaded in doing so by the fact that multiple attempts to auction mortgaged properties for satisfaction of the decree had remained abortive and that for a protracted span of seven years several efforts were made and that no amount had been paid by the appellant towards the decretal amount till date and as such found it convenient to order the arrest of the appellant and sending him to prison little realizing that such an order could only be passed after proper inquiry and opportunity of evidence to the parties and by recording findings, incorporating the reasons in detail to justify arriving at the conclusion that arrest and detention of the judgment-debtor was the only option.
8. We are afraid that the approach adopted by the learned Judge Banking Court does not appear to be in accordance with law. The learned Judge Banking Court as per his own observations was aware that mortgaged properties were available, for liquidation of the decretal debt yet no detail was recorded in the impugned order dated 13.11.2019 while considering the satisfaction of conditions that justified the ordering of arrest and detention in prison as neither could it be shown that the appellant was likely to abscond or leave the local limits of the jurisdiction of the court or after the institution of the suit had dishonestly transferred, cancelled or removed any part of valuable property or committed any act of bad faith in relation thereto or that he had the means to pay the amount of decree or some substantial part thereof. The process of execution through sale and auction of the mortgaged property having been commenced, substantial steps having been taken; no justification was given as to why the process ought to be given up as no legally admissible grounds for shifting to different mode of execution were articulated with any rigour in the impugned order.
9. On mere assertion that the auction of mortgaged properties failed due to the appellant, the court, in the absence of any admissible evidence and particularly without holding any inquiry could not issue order of arrest and detention, keeping in view the provision of section 51 of C.P.C.; particularly when there did not exist any proper evidence to prove that judgment-debtor was the cause of failure of the auction proceedings. As a matter of fact the court should have taken more effective measures and steps to place responsibility on decree-holder to involve the public investors and other parties interested in the purchase of property by making wide publicity about the auction so as to attract the maximum number of prospective buyers for the mortgaged properties. In the absence of any affidavit of any of the residents of locality supporting the decree- holder's plea of influence of judgment-debtor to prevent the sale and without inquiry or taking steps for ensuring success of auction, the decision to shift from auction of the mortgaged property to the arrest and detention of judgment-debtor, particularly when there was no defect in title and when it was not the case that the decretal debt could not be recovered from the sale proceeds by auction of mortgaged properties the impugned orders could not be passed which being legally untenable cannot be countenanced. In somewhat similar situation in the case of "Messrs Azhar & Co. and others v. National Bank of Pakistan" (2018 CLD 830) it was directed by a learned Division Bench of this Court to the effect that the Banking Court shall execute the decree through auction of mortgaged property and if need be it could pass fresh order of arrest and detention of judgment- debtor in accordance with law and the procedure laid down in section 51, C.P.C. read with Order XXI, Rule 37 of the said Code.
10. For the reasons above this appeal is allowed. The impugned orders of arrest and detention of the appellant/judgment-debtor are set aside. The Banking Court is directed to execute the decree firstly through auction of mortgaged properties. Decree-holder's application under Order XXI, Rule, 37 C.P.C. read with section 51 of C.P.C. shall be deemed to be pending which, if required, shall be decided by the learned Judge Banking Court on its own merits after due and proper inquiry strictly in accordance with law and keeping in view the mandatory prerequisites as explained supra and through a well-reasoned and speaking order after giving fair opportunity of evidence and hearing to all concerned. A copy of this judgment shall be transmitted for information to all the Banking Courts and Civil Courts in the Punjab.