SHAMS MEHMOOD MIRZA, J. This Court on 14.06.2022 approved the auction schedule and directed the learned court auctioneers to proceed strictly in terms thereof.
2. The following property belonging to the judgment debtor company which was mortgaged with the decree holder bank was ordered to be put to auction.
All that piece and parcel of land with all present and future construction, fitting and fixtures, building and machinery of the Mills installed/to be instituted etc thereon land/property measuring 107 Kanal 15 Marlas bearing Khewat Nos.22, 23/1, 3/21, 8/2, 9/1, 10, 11, 12/1, 12/2, 13/1, 18/2 and Qilla Nos.21/2 and 22/2, situated at Mouza/Chak No.60/RB, Tehsil Jaranwala, District Faisalabad together with all structures, buildings, amenities, easements, fitting etc known as Messrs Rafi Cotton Industries (Pvt.) Limited and bounded as follows: To the North: Main Faisalabad-Sheikhupura Road.
To the South: Open land/Agri land.
To the East: Ibrahim Fiber City Housing Scheme.
To the West: Bilal Textile/Spinning Mills
3. The decree in the present case was passed on 07.03.2017 in the sum of Rs.500,857,025.28 together with cost of the suit and cost of funds.,
4. Learned counsel for the decree holder bank today has placed on record the statement of cost of funds according to which an amount of Rs. 360,747,645.80 is due in respect thereof.
5. The total amount due under the decree comes to Rs.861,604,671.08.
6. As per the terms of the auction schedule, the date of the auction was fixed on 18.07.2022. The reserve price of the property was fixed at Rs:513,000,000/-.
7. As per the auction report submitted through C.M. No.2155 of 2022, the auction was conducted on 18.07.2022 in which only one bidder namely Abid Hussain made the security deposit of Rs.1,000,000/-. He however, refused to participate in the bidding process and resultantly the proceedings were adjourned to 22.07.2022. On the adjourned date, Abid Hussain was once again present at the spot but he refused to participate in the bidding process. The learned court auctioneers in the circumstances, adjourned the auction to 12.08.2022.
8. The decree holder bank in the meantime filed C.M. No.2110 of 2022, for participating in the auction which application was allowed on 10.08.2022.
9. Three bidders participated in the auction 12.08.2022 namely Abid Hussain, Ashiq Hussain and the decree holder bank.
10. Abid Hussain made the highest bid for Rs.517,700,000/- at around 3.15 p.m. He, however, failed to deposit 25% of the bid amount in terms of Order XXI, Rule 84, C.P.C. on account of the closure of the banks, 12.08.2022 being a Friday. The learned court auctioneers adjourned the proceedings to 15.08.2022 (Monday) and granted him time till 10.30 a.m. for payment of the requisite amount.
According to the auction report, the learned court auctioneers made it clear to Abid Hussain that in case of his failure to pay the requisite deposit, the property shall be resold.
11. Abid Hussain, as per the auction report, failed to do the needful on 15.08.2022 and consequently his bid was rejected and the security deposit of Rs.1,000,000/- was forfeited.
12. The learned court auctioneers then asked Ashiq Hussain who made the second highest bid for Rs.517,600,000/- but he also failed to deposit the amount and resultantly his bid was also cancelled and his security deposit was also forfeited.
13. The learned court auctioneers accordingly declared the decree holder bank to be the successful bidder which had made the bid for Rs.513,500,000/-.
14. It was concluded by the learned court auctioneers that both Abid Hussain and Ashiq Hussain fraudulently made the bids and had no intention to make the payment of the bid amount.
15. The decree holder bank, as noted above, sought permission from this Court to participate in the auction, proceedings in terms of Order XXI, Rule 72, C.P.C. It was the case of the judgment debtors before this Court that certain conditions were required to be complied with by the decree holder bank in terms of section. 15(6) read with section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) which were not met with. This objection of the judgment debtor is of no significance as it is apparent that the decree holder bank opted to seek permission of this Court under the provisions of Order XXI, Rule 72, C.P.C., whereas section 19 of the Ordinance does not envisage any such permission. It may be stated here that the entire process in this case since inception has been conducted in accordance with the provisions of C.P.C. Section 19(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 itself provides that the decree of the banking court shall be executed in the manner provided by the C.P.C. or any other law for the time being in free or in such manner as the banking court may at the request of the decree holder considers appropriate. The objection of the judgment debtor has no merit and is accordingly repelled.
16. Order XXI, Rule 72(2), C.P.C. stipulates that where the decree holder purchases the property with permission of the court, the purchase money and the amount due on the decree may be set off against one and the other. Likewise, Order XXI, Rule 84(2) of C.P.C. states that where the decree holder is the purchaser and is entitled to set off the purchase money under section 72 the Court may dispense with the requirement of the deposit of 25% of the bid money. Since Rule 72(2) envisages set off of the entire purchase money against the decree, it would be an anomaly to require the decree holder to make the 25% statutory deposit after the sale is knocked down in its favour. The Courts by harmonious construction of both the provisions have held that the permission granted to a decree holder to make the bid in the auction would automatically indicate an implied dispensation from the 25% deposit required by Rule 84(2). There are two exceptions to this well-recognized rule. Firstly, where there is claim of another decree holder in terms of section 73, C.P.C., the decree holder bank can be asked to bring the entire money to the Court for ratable distribution. Second, where the bid amount is more than the decretal debt, the decree holder is required to submit 25% of the differential between the amount of the decree and bid money. It may be stated that the present case does not come within the purview of section 73, C.P.C. on account of the fact that property mortgaged with the decree holder bank was sold in the auction and that the decree holder bank claims charge thereon to the exclusion of all other creditors of the judgment debtor company. Habib Metropolitan Bank Limited has filed an application (C.M. No. 452 of 2022) claiming that a mortgage charge exists on the property in question of the consortium of banks and thus seeks ratable distribution as it has already obtained a decree from the banking court, Multan on 18.12.2013 in the sum of Rs.27,837,374.31. Reply to this application has been filed by the decree holder bank in which the stance of the applicant bank has been controverted. It is thus yet to be demonstrated that the applicant bank has a pari passu charge on the property which was subject matter of the auction. In any event, Mr. Muhammad Saleem Iqbal Advocate representing the said bank has no objection to the acceptance of the bid of the decree holder bank subject to submission of an undertaking by it to the effect that it shall be liable for ratable distribution in case C.M. No.452 of 2022 is allowed. Furthermore, the amount of decree together with the amount of cost of funds far exceeds the bid money of the decree holder Bank. This case, therefore, does not fall in any of the exceptions where dispensation form deposit of 25% of bid money in terms of Rule 84(2) to a decree holder can be refused.
17. We may now turn to some case law on the subject matter. A precise issue of similar nature came up before the Rajasthan High Court in the case of Kanhaiyalal v. Sansmal and another AIR 1956 Raj 18. The issue was summarized by the Court in the following terms.
4. The point raised by the present appeal is whether in view of the provisions of Order XXI, Rules 72 and 84 a decree-holder, who has been permitted to bid, must deposit 25 per cent of the purchase- money at once, and if he fails to do so, the sale can be set aside.
After citing Rules 72 and 84 of Order XXI, C.P.C., the Court went on to hold that
5. It is clear therefore that under Rule 72, a decree-holder is entitled to set-off the purchase-money against the amount of his decree. The order for set-off has naturally' to be made by the court after it is reported to the court that the decree-holder has purchased the property in pursuance of the permission granted under sub-rule (1) of Rule 72.
Similarly sub-rule (2) of Rule 84 provides that the court may dispense with the requirements of sub-rule (1) where the decree-holder is the purchaser, and is entitled to set-off.
6. Reading these two rules together, it seems to us plain common sense that where a decree- holder is permitted to bid at an auction, there is an implied dispensation also that he need not deposit 25 percent of the purchase money unless the sale price is more than the decretal amount.
Where the sale price is more than the decretal amount, the decree-holder must deposit the excess up to 25 percent, of the purchase money, depending upon the excess of the sale price over the decretal amount.
There is, in our opinion, no sense in insisting upon the decree-holder depositing 25 per cent of the purchase money, when the purchase money is less than or only equal to the decretal amount..........
7. .....In these circumstances, we are of opinion that it was not necessary for the decree-holder to deposit 25 percent of the purchase money under Rule 84(1), for the permission granted to him to bid must also be impliedly taken to dispense with the necessity of the deposit of 25 percent, of the purchase money.
8. .....The court would be in a proper position to pass a proper order regarding the set-off when, it knows the amount of the purchase-money; but from the very fact that it permits a decree-holder to bid, it must be presumed that it was impliedly permitting, him to dispense with the deposit of 25 per cent of the purchase money under the conditions which we have mentioned above.
It may be noted that sub-rule (2) of Rule 84 does not require an express order for dispensation, like sub-rule (1) of Rule 72 which requires express permission to bid. Therefore, an order for dispensation under sub-rule (2) of Rule 84 may be implied whenever a decree holder is permitted to bid subject to the conditions, which we have mentioned above; otherwise there is no sense in asking the decree-holder to deposit 25 percent of the purchase money supposing that the 'purchase money is not more than the decretal amount and then paying it back to him under Rule 72(2).
9. We may in this connection refer to -- `Mathura Das Prabhu Dayal v. Brij Rani, AIR 1929 Lah. 492
(A) in support of the view that we have taken. Learned counsel for the respondent referred to two cases in support of the view taken by the court below, namely -- 'Bhag Chand v. Mt. Najab Sultan', AIR 1934 Pesh 25 (B) and -- 'Ratanlal y. Bakhtawar Mal, AIR 1951 Ajmer 103(2) (C).
It is enough to say that, we accept the view taken by the Lahore High Court as that appears to us to be both correct and in accordance with common sense. The order of the lower court must therefore be set aside.
18. This Court in the case of Mathura Das Prabhu Dayal v. Brij Rani AIR 1929 Lah 492, which was relied upon by the Rajasthan High Court as noted above, held that under Order XXI, Rule 72(2), C.P.C. "...it is not necessary that there should be an order by the Court, prior to the sale, granting permission to the decree-holder to set off the purchase-money against the amount due on the decree." It was furthermore held that the provisions contained in Rule 72(2) and Rule 84(2), C.P.C. when read together would show that the dispensation from deposit of 25 percent in the case of decree holder may either be express or implied.
19. Similarly, the Allahabad High Court in the case of Amar Singh v. Bishwanath Singh AIR 1972 All 59 held that "Sub-rules (1) and (2) of Rule 84 have to be read in conformity with each other. If in the case of a decree holder the deposit of the 25 per cent of the purchase money is made mandatory then sub-rule (2) of Rule. 84 would become almost nugatory.... ".
20. The Andhra Pradesh High Court in judgment reported as M Suryanarayana Rao v. Bommana Chinna Konda Reddi AIR 1958 AP 472 stated that "..........It is not possible to hold on the material available before us that the Court did not dispense with the obligation cast upon the purchaser under Rule 84(1). It may be presumed, in the absence of evidence to the contrary, that the learned Judge, having given the decree-holder the requisite permission to bid and purchase, would have also dispensed with the requirement of Rule 84(1)."
21. The decree holder bank filed the application under the provisions of Order XXI, Rule 72, C.P.C. and, therefore, the permission granted by this Court on 10.08.2022 would contain an implied dispensation from the requirement of deposit under Rule 84(2) of Order XXI, C.P.C. in terms of the law laid down in the aforementioned judgments.
22. In the result, it is held that the auction proceedings were conducted by the learned court auctioneers in accordance with law and that there was no element of irregularity in conducting the sale. The objection of the judgment debtors have already been dismissed for want of deposit of 25% of the amount realized at the sale. The auction in favour of the decree holder bank is accordingly approved subject to an undertaking to be furnished by the decree holder bank on a stamp paper within a period of one week committing itself to make payment of the requisite amount to Habib Metropolitan Bank Limited or to any other bank having charge on the property in question in case C.M. No.452 of 2022 is allowed. The bid money of the decree holder bank is accordingly set off against decree dated 07.03.2017 to the extent of Rs.513,500,000/-.
23. The office shall prepare the necessary sale certificate after receiving the necessary amount of stamp 'duty from the decree holder bank whereafter the Bailiff of this Court shall immediately put the decree holder in possession of the mortgaged property. The Bailiff shall also be entitled to seek police assistance, if necessary.
25. By consent of learned counsel for the decree holder bank, the remuneration of the court auctioneers, is fixed at rupee one and half Million to each of them which they shall receive from the forfeited amount of the bidders as well as the security deposit of the decree holder bank. C.M.
No.2344 of 2022 stands disposed of.
25. Now to come up for further proceedings on 22.11.2022.