IJAZ UL AHSAN, J. Through the instant Appeal, the Appellants have challenged the order of the Lahore High Court dated 25.02.2009 (hereinafter referred to as the "Impugned Order") whereby the Appellants appeal against the order of the Banking Court-IV, Lahore dated 26.01.2009 was dismissed
2. The necessary facts giving rise to this lis are that a suit for recovery was filed by Platinum Bank in 1998. Platinum Bank later went on to become KASB Bank (hereinafter referred to as the "Respondent-Bank"). The suit was decreed by the Banking Court vide judgment and decree dated 08.02.1999. Through the said judgment and decree, the judgment-debtors were directed to pay the Respondent-Bank's predecessor a sum of Rs.23,040,356.69/-. In order to satisfy the decree, properties that had been mortgaged by the judgment-debtors to the Responding Bank were auctioned off in pursuance of the Banking Court's order dated 16.11.2001. One of the mortgaged properties that was auctioned off in pursuance of the order dated 16.11.2001 was House No.6, Street 12, Karim Street, Mohallahj Kachupura, Lahore (hereinafter referred to as the "Suit Property"). The Suit Property was auctioned on 26.04.2002 in favour of Mr. Muhammad Gulzar who, admittedly gave the highest bid (hereinafter referred to as the "Auction Purchaser"). The auction sale of the Suit Property was subsequently confirmed by the Banking Court vide its order dated 01.08.2002.
After the execution petition of the Responding Bank was dismissed as withdrawn, the Auction Purchaser moved an application for issuance of a sale certificate of the Suit Property. It was after this application was moved by the Auction Purchaser that an Objection Petition was filed by Mst.
Kauser Parveen (hereinafter referred to as "Appellant No. 1"). This Objection Petition was dismissed and a sale certificate for the Suit Property was issued in favour of the Purchaser vide its order dated 26.01.2003. After the dismissal of Appellant No. 1's objection petition, Muhammad Salman (hereinafter referred to as "Appellant No.2") filed an appeal against the order dated 26.01.2009 along with Appellant No. 1 . Both these appeals were dismissed by the Honourable Lahore High Court, Lahore vide order dated 25.05.2009. Aggrieved, both the Appellants have approached this Court.
3. Leave to appeal was granted by this Court vide order dated 20.04.2010 which is reproduced below for ease of reference: "The Petitioners in these two cases are statedly neither defendants in the suit filed by the respondent, KASB Bank nor are they mortgagors to secure facilities obtained by the defendants judgment debtors. It is contended that notwithstanding this position the property belonging to the petitioners has been sold in execution of decree dated 08.02.1999 obtained by the respondent- Bank.
2. Pursuant, to the previous order passed by this Court, Muhammad Salman-Petitioner has deposited a sum of Rs.1,500,000/- (One Million, Five Hundred Thousand only)) in Court to defray the costs of the auction and to cover the amount at which the property was auctioned. On this basis, it was argued that the petitioners even though they may be co-owners of the undivided property, which has been autioned cannot be deprived of their proprietary rights therein.
3. In addition to the above, it is contended that the auction sale otherwise is vitiated because the auction purchaser had failed to make payment of the balance amount of Rs.956,000/- (nine lacs fifty six thousand) within the stipulated period of 15 days.
4. Leave to appeal is granted to consider the above aspects of the case. Since a short question is involved, the office is directed to fix the appeals for hearing during the month of September 2010."
4. The learned counsel for the Appellants submits that the Appellants were not judgment-debtors in the original decree and therefore the Suit Property could not be sold in execution of the decree dated 08.02.1999. Order XXI, Rule 85 prescribes a period of 15 days from the date of property for the balance amount which was equivalent to 75% of the sale price was to be deposited by the Auction Purchaser. The auction therefore could not have been confirmed by the Banking Court because the Auction Purchaser had not deposited the required 75% balance within time. Even otherwise, no sale certificate had been issued to the Auction Purchaser before the filing of Appellant No. 1's Objection Petition. It is further contended that Appellant No.1 was not, in any capacity whatsoever, a signatory of any document with the Responding Bank for the purpose of creating a security interest and that she was kept unaware of the proceedings concerning the Suit Property. She was not a party to the original proceedings nor was she ever served any notice whatsoever by the Banking Court at any stage of the case. She was residing in the Suit Property since the death of her father and according to her knowledge, no auction proceedings were ever held concerning the Suit Property. Even otherwise, as co-owner, Appellant No.1 had a preferential right to buy the property in light of Order XXI, Rule 88 of the C.P.C. The learned ASC for Appellant No.1 also contended that the Auction Purchaser was actually appointed by the judgment-debtors to negotiate with the Respondent- Bank with respect to the Suit Property as well as other liabilities with respect to the decree dated 08.02.1999. Instead of negotiating on behalf of the judgment-debtors and Appellant No.1, he purchased the Suit Property and therefore was in breach of fiduciary duty that he owed to the judgment-debtors and Appellant No. 1. The findings of the Banking Court were therefore erroneous and unsupported by the record to the extent that the it held that objections of the Appellants could not be entertained when the auction had already been confirmed in favour of the Auction Purchaser.
5. The learned counsel for the Respondents on the other hand has argued in favour of the impugned order of the High Court. As far as the matter of the dues owed to the Respondent-Bank were concerned, the Respondent-Bank had received all of its dues from the sale of the property and to that extent, the decree stood satisfied.
6. We have heard the learned counsel for the parties at length and gone through the case record with their assistance. The following questions fall for the determination of this Court: i. Whether Appellants, being co-owners in the Suit Property, could be deprived of the proprietary rights vested in them by virtue of sale of the property through a court auction?. ii. Was the auction vitiated due to failure of the Auction Purchaser in making the payment of the balance amount within the stipulated 15 days period?
Before dilating upon the crux of the matter, the legal position must be laid out clearly. Section 19 subsections (1), (2), (3) and (4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred as the "2001 Ordinance") are relevant to the appeal at hand. Relevant provisions of Section 19 are reproduced for reference:
19. Execution of decree and sale with or without intervention of Banking Court
(1) Upon pronouncement of judgment and decree by a Banking Court, the suit shall automatically stand converted into execution proceedings without the need to file a separate application and no fresh notice need be issued to the judgment-debtor in this regard. Particulars of the mortgaged, pledged or hypothecated property and other assets of the judgment-debtor shall be filed by the decree-holder for consideration of the Banking Court and the case will be heard by the Banking.
Court for execution of its decree on the expiry of 30 days from the date of pronouncement of judgment and decree: Provided that if the record of the suit is summoned at any stage by the High Court for purposes of hearing an appeal under section 22 or otherwise, copies of the decree and other property documents shall be retained by the Banking Court for purposes of continuing the execution proceedings.
(2) The decree of the Banking Court shall be executed in accordance with the provisions of the Code of Civil Procedure, 1908 (Act V of 1908) or any other law for the time being in force or in such manner as the Banking Court may at the request of the decree-holder consider appropriate, including recovery as arrears of land revenue.
Explanation - The term assets or properties in subsection shall include any assets and properties acquired benami in the name of an ostensible owner.
(3) In cases of mortgaged, pledged or hypothecated property, the financial institution may sell or cause the same to be sold with or without the intervention of the Banking Court either by public auction or by inviting sealed tenders and appropriate the proceeds towards total or partial satisfaction of the decree. The decree passed by a Banking Court shall constitute and confer sufficient power and authority for the financial institution to sell or cause the sale of the mortgaged, pledged or hypothecated property together with transfer of marketable title and no further order of the Banking Court shall be required for this purpose.
(4) Where a financial institution wishes to sell mortgaged, pledged or hypothecated property by inviting sealed tenders, it shall invite offers through advertisement in one English and one Urdu newspaper which are circulated widely in the city in which the sale is to take place giving not less than thirty days time for submitting offers. The sealed tenders shall be opened in the presence of the tenderers or their representatives or such of them as attend: Provided that the financial institution shall be entitled in. its discretion, to purchase the property at the highest bid received. (Underlining is ours)
7. A bare perusal of the above provisions shows that once the decree dated 08.02.1999 was passed in favour of the Respondent-Bank, the decree by itself constituted and conferred sufficient power and authority on the Respondent-Bank to sell or cause to be sold any and all mortgaged properties of the judgment-debtors along with their marketable titles. However, the execution of the decree is to be undertaken in accordance with the provisions of the Civil Procedure Code, 1908 (hereinafter referred to as the "C.P.C."). Appellant No.1 filed her Objection Petition under section 19 of the 2001 Ordinance read with section 12(2) of the C.P.C.; section 12(2) is reproduced for below for ease of reference: Section 12(2) - Where a person challenges the validity of a judgment, decree or order on the plea of fraud, mis-representation or want of jurisdiction, he shall seek his remedy by making an application to the Court which passed the final judgment, decree or order and not by a separate suit. (Underlining is ours)
A bare perusal of section 12(2) clearly shows that when a person challenges the validity of a judgment, decree or order, it can only be done if one of the three grounds provided in the section ibid are proved.
8. We shall first look at the case of Appellant No.2. At no point has Appellant No.2 taken the stance in his petition before us that the decree dated 08.02.1999 was obtained fraudulently nor has he taken the plea that the Auction Purchaser had purchased the Suit Property fraudulently by abusing the process of the Banking Court. His only ground is that his proprietary right in the Suit Property being co-owner could not be taken away by the Auction Purchaser's right vested in him by the Banking Court's sale certificate. This Court has time and again held that a party is not allowed to improve its case beyond what was originally setup in the pleadings. Reliance is placed on Muhammad Yaqoob v. Mst. Sardaran (PLD 2020 SC 338) and Muhammad Iqbal v. Mehboob Alam (2015 SCMR 21). Since Appellant No.2 never took the ground that the decree was obtained fraudulently or that the Auction Purchaser had obtained the Suit Property fraudulently, he cannot travel beyond his pleas taken before the lower fora and rely on the arguments raised by Appellant No. 1. Even otherwise, Appellant No.2 cannot agitate the questions at this stage for the first time since he was not a party in the execution proceedings before the Banking Court. Appellant No.1, in her Objection Petition admitted the fact that the Suit Property was mortgaged to the Respondent- Bank. She did not raise any plea before the lower fora that the sale certificate should not be issued to defeat her proprietary interest in the Suit Property as well as the ground that she was unaware that the Suit Property had been auctioned off and sold in favour of the Auction Purchaser. Appellant No.1 therefore cannot, at this stage, raise a ground which she had not taken before the Banking Court. In a judgment of this Court titled Mujahid Karim and others v. National Bank of Pakistan and others (2016 SCMR 66), it was held that: The learned ASC has pointed out that the order for auctioning the mortgaged property was passed by the Banking Court on 07.07.2004 which too apparently was not challenged rather in the year 2009 the petitioners filed the above application. The decree having nor been challenged nor the order dated 07.07.2004 apparently show that the petitioners were having the knowledge of filing of the suit, execution proceedings and sale of mortgaged property but took no steps for stopping the auction of the mortgaged property rather respondent No.5 namely Shahid Kareem, brother of petitioner No.1, has filed an objection in the Banking Court against auction of mortgaged property, which objection was dismissed by the Banking Court on 29.11.2008. The petitioners, therefore, cannot be said to have no knowledge of the auction of mortgaged property. Even the Banking Court in its order dated 03.03.2010 has specifically noted that notices under Order XXI, Rule 66, C.P.C. were issued to the judgment-debtors. (Underlining is ours)
It does not appeal to reason that the Appellant was unaware of the fact that the. Suit Property was mortgaged; that a suit for recovery was pending against the Suit Property, and that her own father, brothers and sisters were judgment-debtors in the said suit. Putting the appeal at hand in juxtaposition to Mujahid Karim's case supra, the Petitioner in Muhajid's case claimed that by virtue of the fact that he was living abroad, he was unaware of any suit proceedings whereas Appellant No.1 herself admits she had been residing in Suit Property since 1990. As such, we find that the case of Appellant No.1 is on a much weaker footing.
9. We shall now look at the case of Appellant No.1 from another angle. In the judgment of this Court titled Nice 'N' Easy Fashion (Ltd.) and others v. Allied Bank of Pakistan and another (2014 SCMR 1662) it was held that:
12. The Ordinance is a special law and section 19(7) contains a non obstante clause, excluding the application of Civil Procedure Code or any other law for the time being in force, therefore, once the Banking Court adopts summary procedure provided under section 19 of the Ordinance, it is not bound to follow the procedure provided under Order XXI in execution proceedings and the contention of the learned Counsel for the appellant is without force. (Underlining is ours)
This dictum, read with section 19(1) of the 2001 Ordinance, clearly explains that the Banking Court was not bound to follow the procedure laid down in Order XXI of the C.P.C. It could adopt any procedure in order to satisfy and execute the decree passed in favour of the Respondent-Bank.
Even otherwise, the auction was advertised and the bid of the Auction Purchaser for the Suit Property being the highest was accepted vide the Banking Court's order dated 01.08.2002. Since Appellant No.1 never challenged the veracity of the auction itself, in the absence of any objection to the contrary, it is presumed to have been conducted in a manner to the satisfaction of the Banking Court. Even otherwise, the order dated 01.08.2002 was a part of judicial record and. even though other Darts of the record relating to the auction were missing from the file, the judicial order carried with it a presumption of truth that endorsed the fact that the auction had actually been held and rightfully confirmed in the absence of any valid or sustainable objection. This presumption has never been challenged by the Appellant.No.1 and therefore the auction sale is deemed to be valid.
As far as the issue of depriving the rights of both the Appellants is concerned, we refer to a judgment of this Court in the case of Habib and Company and others v. Muslim Commercial Bank Ltd. and others (2019 SCMR 1453). The relevant portion is reproduced: The argument of the learned counsel for the petitioners that in view of the fact that R.F.A. No. 213 of 2003 had been allowed which would have the effect of nullifying the sale in favor of Respondent No.2 is misconceived. The record indicates that the sale had already taken place, had become absolute and sale certificate had already been issued before the R.F.A. was allowed. It is by now settled that with the holding of sale, third party to interests intervene which cannot be disregarded and a valid sale in execution would not become invalid to the prejudice of the auction purchaser because the decree has been wiped out or reversed in the meantime. These judgments proceed on the basis of the language of Rule 92, Order XXI, C.P.C. which stipulates that the sale would become absolute once the order for its confirmation had been made by the Executing Court. This principle was reiterated in a judgment of this Court reported as Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others (PLD 1987 Supreme Court 512). We are in no manner of doubt that a sale which had already been confirmed in favour of the auction purchaser could not in the facts and circumstances of the case be set aside even if the decree in favour of the Bank had been set aside by the learned High Court in the R.F.A. (Underlining is ours)
The sale certificate for the Suit Properties was issued to the Auction Purchaser vide the Banking Court's order dated 25.01.2009. Keeping in view the dicta laid down in Habib and Company supra, since the sale certificate had been issued by the Banking Court after the objection petition of Appellant No.1 was dismissed, the sale certificate could not be set aside on the ground that both the Appellants' proprietary right in the Suit Property would be affected. The Auction Purchaser's right in the Suit Property which was vested in him by the sale certificate issued by the Banking Court could not be defeated on the basis of grounds raised by the Appellant through this appeal which in any event have not found favour with us. The Objections of the Appellants that the auction was improper qua non-payment of the balance amount within the stipulated 15 days is misconceived and is not supported by the record insofar as the actual auction had already been approved by 01.08.2002 and Appellant No.1 only moved her Objection Petition after the Auction Purchaser moved his Application for issuance of sale certificate and after the Respondent-Bank withdrew the execution petition on 24.06.2003.
10. The order of the High Court dated 25.05.2009 therefore has correctly observed that there was no jurisdictional defect or legal infirmity with the order dated 26.01.2009 passed by the Banking Court.
The impugned order of the High Court proceeds on correct factual and legal grounds and applies the relevant law to the instant matter. The learned Counsel for the Appellants has not been able to convince us to take a view different from the one taken by the High Court.
11. In light of what has been discussed above, both these appeals are dismissed. The Impugned Order dated 25.05.2009 passed by the Lahore High Court is affirmed and upheld.
12. Above are the reasons for our short order dated 22.02.2022 which for ease of reference is reproduced below:- "We have heard the learned counsel for the parties at length and gone through the record. For detailed reasons to be recorded later, these appeals are dismissed. The amount of Rs.1.5 million which was deposited pursuant to our order dated 04.02.2021 shall be released to the appellants after due verification of their antecedents, identity and fulfilment of all codal formalities together with any profit/markup that may have accrued."