Through this application under Section 12(2) C.P.C. the applicants have challenged the judgment/order of this Court dated 26.09.2018 whereby Constitutional Petition (W.P. No.3876 of 2006) filed by respondent No.3 was allowed.
2. Relevant facts forming background of the proceedings in hand are that the predecessor of the applicants namely Muhammad Safdar obtained a loan from the respondent-Bank and in lieu thereof mortgaged his property but failed to repay the same as per agreement, hence, the respondent-Bank auctioned his property under Section 15 of the Financial Institution (Recovery of Finances) Ordinance, 2001. Respondent No.3 purchased the property in auction and paid the whole bid amount. After adjustment of the loan, balance amount was also withdrawn by the predecessor of the applicants. Respondent-Bank submitted statement of accounts before the Banking Court but the report was not confirmed by the Court as the same was filed after the period specific under the law i.e. 30-days. Thereafter, respondent No.3/auction purchaser filed an application before the Banking Court for getting possession of the property which was dismissed by the Banking Court vide order dated 01.07.2006 on account of late filing of statement of accounts. Respondent No.3 challenged said order by filing a constitutional petition (W.P. No.3876 of 2006) before this Court which was allowed vide order dated 26.09.2018. Being dissatisfied, applicants who are legal heirs of Muhammad Safdar have filed instant application under Section 12(2) C.P.C. and impugned the order of this Court dated 26.09.2018 on the grounds of fraud and misrepresentation.
3. Learned counsel appearing on behalf of the applicants inter-alia contends that the impugned order has been procured by respondent No.3 through fraud and mis-representation. He adds that writ petition was not maintainable as the order dated 01.07.2006 which was under challenge in the Writ petition (referred supra) was appealable under Section 22 of the Financial Institution (Recovery of Finances) Ordinance, 2001, sub-Section (4) of which provides that the matter could only be heard by not less than two judges of the High Court but the impugned order has been passed by learned Single Judge. Further submits that predecessors of the applicants passed away on 30.09.2010 but after his death his legal heirs/applicants were not impleaded in the said petition which suggests that the impugned order has been obtained through fraud and mis- representation. He finally prayed for acceptance of instant application and setting-aside of the impugned order.
4. Contrarily, learned counsel for respondents opposed this application with vehemence and prayed for its dismissal.
5. Heard. Record perused.
6. After hearing learned counsel for the petitioner and going through the record it has been observed that through instant application under Section 12(2) C.P.C. the applicants have raised first objection that their predecessor namely Muhammad Safdar passed away on 30.09.2010 during the pendency of Writ Petition but they being the legal heirs of said deceased were not made party to the proceedings. Scanning of the record reflects that the Constitutional Petition filed by respondent No.3 was dismissed for non-prosecution on 06.04.2015. He filed an application (C.M. No.4334 of 2018) for restoration of said petition wherein the applicants being legal heirs of Muhammad Safdar were arrayed as party as respondents No.5 to 11. It is also evident that on behalf of the applicants Syed Zamurd Hussain Shah, Advocate, submitted his power of attorney. Said petition was restored on 06.09.2018 and thereafter case was fixed for arguments. On 25.09.2018 counsel for the applicants (Syed Zamird Hussain Shah Advocate) sent a written request for an adjournment and the case was adjourned to 26.09.2018 on his request by observing that being an old matter no further adjournment shall be granted. On the said date, counsel for the applicants did not attend the Court, hence, the matter was finally decided after hearing the petitioner side. In these circumstances, the ground of the applicants is misconceived as they were duly represented in the said petition. .
7. The applicants further agitated that the order under challenge in the writ petition was appealable under Section 22 of the Financial Institution (Recovery of Finances) Ordinance, 2001 but the respondent No.3 challenged the same by invoking constitutional jurisdiction of this Court, hence, the constitutional petition was not maintainable. Respondent No.3 moved an application before the learned Judge Banking Court for delivery of possession of the property purchased by him through auction. The order of dismissal of said application was assailed in the constitutional petition being interlocutory order as under Section 22 of the Ordinance, 2001, no appeal lies against an interlocutory order. This plea is beyond the scope of Section 12(2) C.P.C. The provisions of Section 12(2) C.P.C. can only be pressed into service when fraud has been practiced upon the Court during the proceedings of case and order, judgment & decree was obtained on the basis of such fraud and misrepresentation or want of jurisdiction. The scope of said provision is restricted and the applicants are obliged to prove that fraud or misrepresentation was committed by the adversary in connection with the proceedings of the Court and to prove the following aspects: i. The fraud and mis presentation was practiced during the proceedings in the Court; ii. Alleged fraud included untrue statements by respondents who did not believe to be true and has committed active concealment of facts; iii. Judgment was obtained on the basis of forged documents; iv. The order, judgment/decree was collusively obtained. v. The order/judgment/decree suffered with want of jurisdiction.
8. During the course of arguments, learned counsel for the applicants emphasized that in view of the law laid down in case 'National Bank of Pakistan and 117 others V. SAF Textile Mills Ltd and another' (PLD 2014 SC 283) confirming judgment of this Court in case 'Muhammad Umer Rathore V. Federation of Pakistan' (2009 CLD 257 Lahore) Section 15 of the Financial Institution (Recovery of Finances) Ordinance, 2001, has been declared ultra vires and only the transactions where the possession of the mortgage properties have already been delivered, sale proceeds stood adjusted towards outstanding amounts and sale deeds have been registered have been declared to be past and closed transactions, whereas, remaining transactions have been set-aside. He further submits that since possession in the instant case has also not been delivered prior to the passing of judgments (supra), hence, the sale be set-aside as per ratio of the judgments.
9. Perusal of Rathore's case reflects that Full Bench of this Court provided safety for the transactions which attained finality i.e. where the possession of the mortgage properties have already been delivered, sale proceeds stood adjusted towards outstanding amounts and sale deeds have been registered, under the impugned provision. Whereas, in the National Bank's case, the Hon'ble Supreme Court of Pakistan though maintained the Section 15 of the Ordinance, 2001, ultra vires but for totally independent reasons and the findings of this Court to the extent of past of closed transactions were neither considered nor any observation was made. Hon'ble Supreme Court of Pakistan in a case titled "Muhammad Moizuddin and others V. Mansoor Khalil and another' (2017 SCMR 1787), while keeping in view the effect of Article 10-A of the Constitution introduced through Eighteenth Amendment Act, X of 2010, observed as under: "8. The judgment of the Lahore High Court in Rathore's case (supra) along with other similar petitions on appeal came up before this Court somewhere in the year 2013 in the case of National Bank of Pakistan (supra) and by that time new Article 10A had come in the field by way of Eighteenth Amendment Act, X of 2010 and this Court, after hearing the parties and examining all relevant provisions including the effect of Article 10A of the Constitution, came to the conclusion that:- "the real intent and purpose of the aforementioned provisions of section 15 of the Ordinance of 2001 is to deprive the mortgagor/debtor of his right to object to the mode, the conduct of the mode and method of the conduct of the sale by barring all remedies thereagainst. In the instant case, such extinguishment of right occurs without any progress let alone after due process and fair trial, as envisaged by Article 10A of the Constitution. The right in property in terms of Article 24 of the Constitution also stands bruised and offended against ... In the light of aforesaid discussion and in terms thereof the provisions of section 15 of the Financial Institutions (Recovery of Finances)
Ordinance, 2001 are held to be ultra vires to the Constitution of the Islamic Republic of Pakistan, 1973."
10. In Muhammad Moizuddin's case (supra) wherein the sale was set-aside on account of non- delivery of possession before the cutoff date, Hon'ble Supreme Court of Pakistan while elaborating the past and closed transaction allowed the petition with the observations the cases where sale itself has not been challenged, or such challenge has remained unsuccessful, and the sale proceeds stood adjusted towards outstanding liability of the principal debtor, and sale deed in favour of the auction purchaser stood registered under the provisions declared ultra vires the Constitution, would be saved from the effect of such declaration being past and closed transactions. Relevant portion is reproduced as under: "10. The concept of past and closed transaction was evolved to protect and safeguard the accrued and vested rights of the parties under a statute which subsequently is found and declared ultra vires for the simple reason that such declaration is always prospective unless the Court specifically gives to such declaration, a retrospective effect, by declaring the statute as non est i.e. never existed in the eyes of law. Reference can readily be made to the judgments of this Court in the cases titled Al-Samrez Enterprise v. Federation of Pakistan (1986 SCMR 1917), Molasses Trading and Export (Pvt.) Ltd. v. Federation of Pakistan (1993 SCMR 1905), Mehram Ali v. Federation of Pakistan (PLD 1998 SC 1445), Muhammad Mubeen-us-Salam v. Federation of Pakistan (PLD 2006 SC 602), Hussain Badshah v. Akhtar Zaman (2007 PLC (C.S.) 157), Mobashir Hassan v. Federation of Pakistan (PLD 2010 SC 265) and Al-Tech Engineers and Manufacturers v. Federation of Pakistan (2017 SCMR 673). Beside the effect of past and closed transaction in cases where the statute is found to be ultra vires the Constitution, was examined by a five member Bench of this Court in the case of Shahid Pervaiz v. Ejaz Ahmed (2017 SCMR 206) and held as follows:- "119. However, when a statute (whether existing or repealed) is found to be ultra vires the Constitution, the Court is empowered - indeed, mandated - to examine whether any person continues to enjoy the benefits of the ultra vires statute, or whether any state of affairs continues to exist as a result, and if it is found so, the Court is mandated to undo the same, provided that the benefit or state of affairs in question is not a past and closed transaction. For instance, the case of an employee who had enjoyed an out of turn promotion pursuant to a law found to be ultra vires the Fundamental Rights, who now stands retired and or died, it would constitute a past and closed transaction inasmuch as it would be a futile exercise to re-open the case of such an employee.
On the other hand, employees who were so promoted under such a statute and who continue to remain in service, would be liable to be restored to the position that existed prior to the benefit conferred under the statute found inconsistent with Fundamental Rights. Indeed, once a statute has been declared as being unconstitutional for any reason, all direct benefits continuing to flow from the same are to be stopped".
(underlined to lay emphasis)
11. In the circumstances, there is no doubt in our minds that the principle of past and closed transaction is fully attracted to the subject declaration and all transactions which had taken place and finalized before such declaration are to be protected under the principles of past and closed transactions as declared in Rathore's case by the larger Bench of Lahore High Court. However, the question is as to whether in cases where the sale itself is not challenged or after having been challenged is finally set at naught in favour of auction purchaser, mere non delivery of possession would be fatal and would exclude such sale/auction from the ambit of past and closed transaction and/or in other words the delivery of possession of an immovable property is a part of sale and that the sale would not be conclusive without delivery of possession. In order to see as to whether handing over of possession of the property is a part of sale, we have to refer to section 54 of the Transfer of Property Act which defines sale and reads as under:- "54. Sale defined. 'Sale' is a transfer of ownership in exchange for a price paid or promised or part paid part promised.
'Sale how made. Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immovable property, of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.
Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. . . ."
12. A bare perusal of the above reproduced provision makes it abundantly clear that in cases where the value of the immovable property is one hundred rupees or more, the delivery of possession to finalize sale is not necessary and the only requirement is execution of a registered instrument for a price paid or promised or part paid part promised. A four member Bench of this Court in the case of Ali Muhammad v. Chief Settlement and Rehabilitation Commissioner (1984 SCMR 94) while defining sale, laid down the essential elements of sale as (i) the parties, (ii) the subject matter, (iii) the transfer or conveyance and (iv) price or consideration. Besides, subsection
(8) of declared section 15 of the Ordinance, 2001 which provided for the rights and liabilities of the parties after sale of the mortgaged property read as follows:- "15(8). Upon execution and registration of the sale deed of the mortgaged property in favour of the purchaser all rights in such mortgaged property shall vest in the purchaser free from all encumbrances and the mortgagor shall be divested of any right, title and interest in the mortgaged property".
13. Bare reading of the above provision which appears to be in line with section 54 of the Transfer of the Property Act and was declared ultra vires as being incapable and in effective on account of the declaration in respect of material provisions of section 15 of Ordinance, 2001 as ultra vires to the Constitution, also makes it abundantly clear that upon execution and registration of the sale deed, all rights in the property vest in the auction purchaser and the owner of the property viz. the mortgagor is divested of all rights, title and interest in the mortgaged property. This section of the declared Ordinance also did not provide for handing over or transferring of the possession of the immovable property. In the circumstances, we are of the view that the cases where sale itself has not been challenged, or such challenge has remained unsuccessful, and the sale proceeds stood adjusted towards outstanding liability of the principal debtor, and sale deed in favour of the auction purchaser stood registered under the provisions declared ultra vires the Constitution, would be saved from the effect of such declaration being past and closed transactions."
11. Perusal of the record reflects that respondent No.3 purchased the mortgaged property of predecessor of the applicants namely Muhammad Safdar for a consideration of Rs.885,000/-. After deposit of whole auction amount respondent No.2-Bank issued sale certificate No.KPT/2005/1798 dated 25.04.2005 and mutation was also sanctioned in his favour by the Revenue Officer on 19.05.2005. Said Muhammad Safdar never challenged the auction proceedings during his lifetime, rather he filed an application in the Bank on 13.05.2005 by contending that after auction of his property some amount is lying in his account which may be returned to him. He further contended that he has no objection on the auction proceedings. He received the remaining sale proceeds amounting to Rs.79,405/- through Credit Cash Voucher dated 13.05.2005 by putting his signatures and thumb impressions. In this way, the applicants are estopped to initiate any further proceedings to challenge the auction or subsequent events.
12. For what has been discussed above, learned counsel for the applicants have failed to substantiate any allegation of fraud, misrepresentation as per mandate of Section 12(2) C.P.C., to upset or overturn the order/judgment of this Court. Hence, instant application is dismissed being meritless and not maintainable.