Brig. (Retd.) MAZHARULHAQ and another vs M/s. MUSLIM COMMERCIAL BANK

1. SH. IJAZ NISAR, J.---We process to decide FA.Os. Nos. 45-89 and 46-89 by this single judgment as common questions of law and facts are involved.

2. The facts in brief are that a suit brought by the Muslim Commercial Bank Limited, Aabpara, Islamabad Branch on 5-3-1981 against Col. Manzoor-ul-Haq, his father Ghulam Hussain and his son Ahmad Mahmood for the recovery of a sum of Rs,1,87,216.73 by the sale of mortgaged property was decreed ex parte on 23-7-1981 by the Special Court Banking-I, Lahore, Camp at Rawalpindi.

3. Ghulam Hussain died in October, 1987 and was survived by his son Mazhar-ul-Haq, as his sole heir.

4. The decree, therefore, stands against the present appellants, namely Mazhar-ul-Haq and Ahmad Mehmood. While passing the decree, the Court directed the defendants-appellants to make the payment of the decretal amount within a period of six months and in case of their failure to do so the decree-holder was entitled to realise the suit amount through auction of the mortgaged property. As it would have been, the amount was not paid by the appellants. On 21-12-1984, the mortgaged property was auctioned in favour of respondent No,2, for a sum of Rs,5,10,000, and a report in that behalf was submitted to the Court by the Court auctioneer.

5. 2.On 17-9-1986, the appellants moved before the trial Court, an application under Order XXXVII, Rule 4 read with Order IX, Rule 13 and section 151, C.P.C. For setting aside the ex parte decree and for permission to defend the suit.

6. The appellants also moved another application under Order XXI, Rule 90 of C.P.C. For setting aside the sale. Each application was accompanied by an application for condonation of delay.

7. The two applications viz. Application for setting aside ex parte decree and application for setting aside the sale, were tried jointly and ultimately dismissed by the learned trial Court by the impugned order, dated 13-11-1989.

8. F.A.O. No, 45/89 impugnes the validity of the order in so far as it relates to the dismissal of application for setting aside the ex parte decree while FA.O. No,46/89 questions that part of the order which relates to application for setting aside the sale.

9. 3.The contention of the appellants was that they had no knowledge of the institution of the suit; and that they were not duly served with summon or notice and the decree was passed behind their back; the learned trial Court' violated the relevant provisions of law in taking the ex parte proceedings. Similarly, it was also alleged that the sale was vitiated by fraud and various other material irregularities. According to the appellants, the auction price was ridiculously low as compared to the price, the property put on auction could fetch in the market. The decree-holder as also the Court auctioneer and the auction-purchaser opposed the application in relation to their respective interests. They referred to the proceedings of the suit and contended that all necessary measures were adopted for the service of the defendants-appellants and ex parte proceedings were taken after the substituted service when service was not possible through ordinary means.

10. The decree-holder stated that the judgment-debtors were well aware of the decree as thereafter they have been negotiating with the Bank on the mode of payment.

11. 4.The gravamen of the appellants is that they were not residing at the address given in the plaint and on which the summons and subsequent proclamation were issued. They also agitated against the mode of service of summons and the subsequent order of the Court for taking ex parte proceedings. This contoversy is covered by issues No, 1 and 2 reproduced below:---

(1) Whether the plaintiff-Bank acted mala fide and fraudulently in deliberately giving false address of the defendants in order to secure an ex parte decree against them? OPP.

(2) Whether the defendants were duly served in the first instance before the ex parte decree was passed? If so, with what effect. OPR.

12. There is no dispute to the fact that the appellants were never served personally and their service was effected through proclamation in the newspaper. A reference to the record of proceedings reveals that on 8-3-1981, the date on which the suit came up for hearing before the Court, summons were directed to be issued to the defendants for 2-4-1981 through ordinary process as well as through registered post. It was further observed that the service might be effected by affixation if the defendants could not be served in ordinary manner. The summons and the registered letter was despatched at the address of the defendants as given in the plaint, namely 462/D, 6th Road, Satellite Town, Rawalpindi. Both the processes were responded by an identical report of the concerned officials. The Process-Server reported that Bungalow No,462/D was in possession of its owner, namley Haji Fazal Hussain for the last 3 years; prior to that, it was rented out by him and that none of the defendants mentioned in the summons resided in it. To the same effect, was the report of the official of the Postal Department on the registered letter, sent back to the Court as undelivered. Presumably for that reason service was not effected through affixture.

13. However, when on 2-4-1981 the case came up before the learned Special Judge Banking, without adverting to the reports of the Process-Server and the postal official, seemingly in routine, he ordered service through publication for 27-5-1981 in "Afaq", Rawalpindi. The publication could not be made for that date and was issued for 25-6-1981 which was the next date of hearing. The appellants' address disclosed therein was the same as given in the plaint. On that date the case was adjourned to 23-7-1981 for ex parte evidence. On 23-7-1981, the learned trial Court recorded the statement of Tariq Saeed, Officer Incharge Advances, and as already stated passed the ex parte decree for suit amount. The learned Special Judge Banking answered both the issues against the appellants. According to the impugned order, the factors which influenced his decision in this behalf are that though while appearing as his own witness Brig. (Retd.) Mazhar-ul-Haq stated that he vacated house No,462/D in the middle of the year 1974, yet in the documents comprising deed of power of attorney (Exh.DH/1) executed by Ghulam Hussain in favour of the appellants, Bank's letter, dated 24-12-1974 (Exh.DH/3), the mortgage deed executed in January, 1975 (Exh.P.1) and the NOC, dated 25-10-1976 (Exh.DH/2) issued by the Bank to the appellants, their address given was 462/D, Satellite Town, Rawalpindi. It was observed that the appellants never gave any intimation to the Bank regarding their permanent address or change of the address. The learned trial Court also referred to the principle that debtor should follow the creditor.

14. 5.From the impugned order, it is also evident from the appellants' side, in order to assail the validity of service through publication, apart from reliance on other submissions, on the authority of Syed Muhammad Anwar v. Sheikh Abdul Haq 1985 SCM R 1228 it was pointed out to the learned Special Judge Banking that service through publication could not be sustained unless there was material before the Court for formulation of opinion that it was not possible to serve the defendants in ordinary way and further a finding was recorded that they kept out of the way to avoid service. The appellants' case was that once through the report of the concerned agencies it was established that the appellants no longer resided in Property No,462/D, it was incumbent upon the trial Court to have required the respondent-Bank, to furnish the correct address of the appellants and then make an effort to serve them by ordinary means, without which resort to service, in routine through publication was illegal. But this argument did not carry weight with the learned Special Judge Banking. He referred to Rule 8 of the Banking Companies Rules, 1980, while casts an obligation on the Reader of the Court to "issue summons and notices to the defendant simultaneously through the Bailiff of the Court, by registered post acknowledgment due and by publication" and expressed the view:--- "The order regarding substituted service through publication also had to be passed in routine, without keeping in view the circumstances which were required to be considered for substituted service, under the ordinary law, as contained in the Civil Procedure Code. In fact in the cases of recovery of loans no substituted service is provided and it is one of the modes to be adopted by the Court simultaneously alongwith the others."

15. In view of these findings the trial Court held that the appellants were duly served; consequently their assertion that the Bank, mala fide and deliberately gave their false address to procure ex parte decree, particularly when the Bank officials did not have any animosity against the appellants, was found to have remained unproved.

16. 6.It is admitted between the parties that at the time when the loan for the suit amount was raised, appellant No,1 namely Mazhar-ul-Haq was a serving personnel as Colonel in the Pakistan Army. He was posted at Rawalpindi and in that capacity resided in the aforesaid House No, 462/D, a private property owned by Mian Muhammad Afzal (A.W.3) which had been requisitioned by the Government. It has been established on record that subsequently appellant No,1 was posted at Karachi and the house was also derequisitioned.

17. 7.It is the burden of this judgment to examine as to how far these findings of the Special Court Banking are in conformity with the facts proved on the record and the law on the subject. It is on the record that house No,462/D belonged to Mian Muhammad Afzal, who deposed that it was requisitioned by GHQ and remained in occupation of Brig. Mazhar-ul-Haq, who in March 1974 was transferred to Karachi and he sold away the property and handed over its possession to the vendee. Appellant No,1 has deposed that at the time of grant of loan he was posted at Karachi but his family was residing in Rawalpindi and they vacated house No, 462/D in the middle of 1974.

18. According to his statement in October 1975 he was transferred from Karachi to Lahore Cantt. From where in 1979 he was sent to Army Medical College, Rawalpindi but towards the end of that year, he was re-transferred to Lahore; he was retired from Army from that station on 18th October 1981 and shifted to his house No,46-B-1, Gulberg III, Lahore, permanently. It is in his statement that during this period he has been corresponding with the Bank. In this respect he has tendered in evidence letters Exhs. D.1 to D.2. It has already been stated that the suit was instituted against the appellants on 5- 3-1981. It is evident from the statement of appellant No,1 that at that time, he was posted at Lahore, which finds ample support from the letters aforesaid. In the letters, dated 21-9-1977, 13-3-1978 addressed by the Bank to appellant No,1 (Exhs.D-1 and D-2) his official address of Lahore Cantt. Is mentioned. The same address appears in letters, dated 25-2-1976 and 2-10-1976 (Exhs.D-6 and D- 7) sent to the Bank by the appellant. The address of appellant No,1 given in letters, dated 2-4-1984 and 12-7-1984 (Exhs.D-4 and D-5) issued to him by the Bank is "46B/1 Gulberg III, Lahore". It is to be noticed that the factum of residence of appellant No,1 or for that matter of his family in house No,462/D, Rawalpindi, and its derequisitioning pertain to the year 1974 or so. It was 13 years thereafter that in the year 1987, appellant No,1 and his witness Mian Muhammad Afzal entered the witness-box. Even if there are some variations in their depositions, these are not of any significance and would not militate against the creditibility of these witnesses. The fact that in the deed of power of attorney, mortgage deed and N.O.C. Relating to the years 1974, 1975 and 1976 respectively the appellants' address was shown as 462/D, Rawalpindi, in the context of the controversy before us pales into insignificance. What is significant is that what was the correct address of the appellants at the time of institution of the suit and was its disclosure made in the plaint by the respondent-Bank. Technically, it might be considered as a little unfair on the part of appellant No,1 not to have specifically conveyed to the Bank the change of his address. But the fact remains that the latter had been in correspondence with appellant No,1, and as borne out from the said letters, was not unaware of his address and at least one thing is quite obvious that when the suit was filed the borrowers were no longer residing in Rawalpindi particularly when the Process-Server and the postal official had also submitted identical reports that none of the defendants was in occupation of the house in question. It was the obligation of the respondent-Bank to have given in the plaint the latest and accurate address of the appellants. But it failed to discharge this obligation.

19. 8.Ordinarily house No, 462/D, Satellite Town, Rawalpindi, could be treated as the appellants' last address and service including the substituted service validly effected on the same address. But it is established from the plaintiff-respondent's own record that the Bank had been making correspondence with the appellants not only at Lahore where the appellants had a private residence but also on the official address of appellant No,1. It is clear to us that the appellants had actually moved away from 462/D, Satellite Town, Rawalpindi and the address originally incorporated in the loan seeking documents was no more their place of abode, temporary or permanent, at the time of institution of the suit. The maxim "debtor seeks the creditor" cannot be stretched to the detriment of the appellants for the obvious reason that they had not lost their whereabouts and the parties were in contact with each other on the same cause at a different address. The principle of the maxim could be applied only in a case where the creditor had no liaison with the debtor and the latter would be under an obligation to keep the former abreast of his place--address. When the creditor keeps on pressing his demand and also supplies to the debtor the statement of accounts as has been in this case on an address different from the one originally recorded, the debtor shall be absolved of his duty of notifying to the creditor the change in his address, for the change is already known to the creditor. In such circumstances, the debtor shall rather be deemed to have chased his creditor. After going through the record including the statements of appellant No,1 and Mian Muhammad Afzal, we are firmly of the view that these have been grossly misread and wholly unwarranted and hypothetical conclusions drawn therefrom by the learned Special Judge Banking.

20. 9.We may now examine the relevant provisions of law governing the service of summons issued to defendant in a suit filed under the Banking Companies (Recovery of Loans) Ordinance, 1979. A reference has already been made to Rule 8 of the Rules made under section 15 of the Ordinance, as it stood at the time of institution of suit against the appellants. Subsequently on 31-1-1988 an amendment was introduced in this rule to the effect that service by any of the aforesaid modes shall be deemed proper and valid service for the purpose of the Ordinance. The effect of the amendment is obvious but as observed by their Lordships of the Supreme Court in Ahmad Autos v.

21. Allied Bank of Pakistan PLD 1990 SC 497 even under the unamended provision, service was to be held good service if it was effected by any one or more of the modes of service provided for in Rule

8. Hence, for the purposes of the present case, the unamended provision had the same effect as was intended to be given to it through the said amendment.

10. There is thus no doubt that a Banking Court is competent to order service by substituted measures in the form of publication but the provision does not divest the Court of its authority and duty to look into the relevant circumstances. This provision in fact presumes the correctness of the address of the defendant as given in the plaint. If the address is patently insufficient or incomplete or it comes to the notice of the Court that there is such a material defect in the given address as may obviate proper service, the Court will not be bound to take steps for the service of the defendant especially by affixation or publication unless correct address is given or the defect is removed. We may observe, that in exercising civil jurisdiction and hearing a suit against a borrower, under section 6 of the Ordinance, a Special Court has "all the powers vested in Civil Court, under the Code of Civil Procedure, 1908". Rule 8 is not in derogation of the powers vested in the Special Court under the provisions of C.P.C. Reference in this connection may also be made to section 3 of the Ordinance. In the present case, it has already been noticed that there were two identical reports, one from the Bailiff of the Court and the other from the post office that the defendants were not residing at the given address. In such circumstances, a straightaway order for substituted service through publication could not be justified unless it was shown to the satisfaction of the Court that the defendants' whereabouts were not known and they could not be served except at their last known address. We may even go to the extent of saying that even if the Court had ordered service through publication simultaneously with other modes and it transpired from the reports of Bailiff and postman that the defendant was not residing at the given address, the Court was not bound to accept the publication as a good and sufficient service. In such a case as already observed proper course would be to ask the plaintiff to supply correct particulars of defendants' address. The plaintiff would either comply with the direction or show to the satisfaction of the Court that he had no other address of the defendants. But if the plaintiff in spite of being in a position to provide other address does not provide, or suppresses the same intentionally or through inefficiency, the subsequent ex parte proceedings will be a nullity in the eyes of law.

22. 11.In the case in hand, the principles underlying provisions of Order V, Rule 20 of C.P.C. Shall also be attracted in that the order for service by publication was not made simultaneously with the order for issue of summons in ordinary manner. Thus, it was a case identical to the one contemplated by Order V, Rule 20, C.P.C. When all the three modes had not been adopted simultaneously and service had not been effected through the two processes, publication was not to be ordered mechanically without adverting to the reports. Before granting service through publication it was incumbent upon the Court to have applied its mind to the facts of the case and found out that whether in spite of the best efforts on the part of the plaintiff, the defendant could not be served for the reason that he was avoiding service with the object of obstructing the disposal of suit. The case of the principal defendant who was-not residing at the given address and had changed place of abode to the knowledge of the plaintiff, was all the more decipherable. We may refer here with advantage to the following observations appearing in the judgment rendered by Saleem Akhtar, J.

23. (now Judge of the Supreme Court) in United Bank Ltd. v. Nishat Chemical Industries Ltd. 1986 CLC 1985:--- "The third situation may arise where the summons has been published in a newspaper but the summonses issued through bailiff and by registered post A/D, have not been served or not issued at all. In such circumstances mere publication of summons cannot be treated as proper and valid service. Rule 8 precribes mode of issuing summons but the provisions of Ordinance or Rules are silent over the effect of publication of summons. In these circumstances in view of section 3 of the Ordinance the provisions of C.P.C. Which are not inconsistent with the Ordinance can be pressed in service. In my view the summons published under Rule 8 can be held to be due and proper service if it is established that the defendant is avoiding the service through bailiff and by post or his whereabouts are not known."

24. Before ordering publication the Court should have, therefore, satisfied itself that all the essential conditions for resorting to this mode of service and to proceed ex parte against the appellants existed. The view taken by the Special Court, that the publication had to be made in routine, divorced from the circumstances of the case is wholly untenable. A Court, Judicial Tribunal or even a quasi-judicial Tribunal, entrsuted with the duty to determine the valuable rights of the parties arraigned before them are required to act deliberately and after proper application of mind to the matter before them.

25. 12.Be that as it may, during the trial of the applications under appeal it became crystal clear that the appellants were not residing at the address given in the plaint and their subsequent place of living was known to the plaintiff Bank. Much emphasis has been laid on behalf of the respondent that the Bank had no mala fides to sue the appellants on a wrong address that for this reason alone the impugned order should be maintained.

13. Let the question of mala fides for the sake of arguments be presently excluded from consideration. The point for determination then would be whether the appellants were lawfully served or not. It is a mixed question of fact and law which is to be answered independent of the intention of any party. The defendants-appellants had a right to defend their cause and for that purpose, the plaintiff-Bank was under a legal obligation to make best efforts in effecting the service on the defendants through the process of Court. It could provide to the Court alternate and correct address for the service of the defendants; the address where the Bank had itself been corresponding with the defendants. The claim that the Bank had no mala fides regarding the address 19r service, therefore, for the purpose of adjudication of the limited point under consideration, has no relevancy. It may be added that from jurisprudential angle,' what is done without due care and caution cannot be considered to have been done in .Good faith. It is clear to us that the plaintiff-Bank failed to perform its legal obligation, which amounts to mala fides in law.

26. Appellant No,1 could have well been served through. GHQ, but no effort was made. We, therefore, have no hesitation in holding that the respondents were not duly served; consequently the ex parte decree is not in conformity with law and cannot be sustained. The findings on issues Nos.1 and 2 are, therefore, reversed.

27. 14.It has been contended by the respondent decree-holder that the judgment-debtors were aware of the proceedings of the suit and ex parte decree. This brings us to issue No,3 which has been answered by the learned Special Court against the appellants largely for two reasons, firstly the statement of Ihtasham-ud-Din, Bank Officer and secondly, the post ex parte decree publications got made by the Court auctioneer, in the newspaper to effect the sale. This led the Court to conclude that the appellants' applications for setting aside the ex parte decree and the sale were barred by time. Issue No,4 framed in this behalf was thus also decided against the appellants. We are not persuaded to uphold these findings. Ihtasham-ud-Din (R.W.1) in his statement claimed that on 15-1-1984 a meeting of the Nationalized Banks Credit Committees held in National Bank of Pakistan, was attended by appellant No,1 and on account of his failure to liquidate the liability; the Bank filed a suit which was decreed and orders for sale of the property were also passed.

28. According to the witness, appellant No,1 did not pay any heed to him and demanded that the Bank had charged exorbitant rate of interest.

29. 15.We may observe that the solitary statement of R.W.1 is not sufficient to prove the contention, firstly, because the alleged meeting was held under the auspices of some other Bank namely, the National Bank of Pakistan and, secondly, as admitted by the witness, minutes of the meeting do not get mention of the presence of appellant No,1 or of the discussion about his case. Furthermore appellant No,1 was not cross-examined on this point to impeach his incredibility on the question of his so-called previous acquiescence in the ex parte decree. There is still another reason for not believing this evidence. Exh.D/4 one of the various letters issued to the appellants by the Bank on 2- 4-1984 for the settlement of outstanding amount, refers to a letter, dated 15-1-1984 of appellant No,1 undertaking to pay the suit amount before the end of March, 1984. This could be a very strong and cogent evidence against the appellants but for the reasons best known to the decree-holder it was not produced before the Court during the trial of the appellants' application. Moreover, the tenor of the letter Exh.D-4 belies the respondent's stand that appellant No,1 had been informed of the ex parte decree and the order as to the sale of the property in execution thereof. It is difficult to accept that despite such information resulting in his deprivation of a very valuable property, the appellant did not agitate in the matter. As regards the publication made at the instance of the Court auctioneer, Brig. Mazhar-ul-Haq in his deposition has categorically stated that he did not come across any such publication. The record shows that the trial Court sent summons Exh.D-9 to Pakistan Railway Board, which occupied a part of the mortgaged property as tenant under appellant No,1. The Railway Department vide their letter Exh.D-8 passed on this summons to the appellant. The latter has deposed that it was on receipt of Exh.D-8 that he got the Court file inspected through his counsel and came to know of the ex parte decree and the subsequent proceedings conducted on its basis. That he did not receive any notice from the Court, or Bank etc. Keeping in view the facts and circumstances of the case, we have no reason to doubt the veracity of statement of appellant No,1. The period of limitation would start from the date of knowledge i,e, 14-9-1986 which is date of the file inspection. The application for setting aside the ex parte decree and for grant of leave to defend the suit was not barred by time.

30. 16.We now proceed to deal with issue No,5 to the effect as to whether special circumstances exist for setting aside the ex part decree and the execution. On this issue as well the Special Court rendered a verdict against the appellants. The reasons given by it in this behalf were that the appellants' assertion that they were not served, by itself did not constitute a special circumstance for setting aside the ex parte decree. That upon the terms of the loan, the Bank had the authority to dispose of the property without intervention of the Court. That the contents of the mortgage deed posed a bar for the appellants to question the fairness and correctness of the sale price. In the course of its decision on this issue, the Special Court also found justification for the commencement of execution proceedings as the time limit mentioned in the decree for payment of decretal amount had expired. In the opinion of the Court below, the auction proceedings did not suffer from any Illegality. It may be stated that before the trial Court it was urged that the property worth more than Rs,65 lacs was fraudulently auctioned away for a paltry sum of Rs,5,10,000; its monthly rent was Rs,40,000; since the decretal amount could be recovered through attachment of rental income of a few months, there was no need to sell away the property. These contentions were however, turned down by the Special Court. It was maintained that inadequacy of sale price was no ground for interference with the sale. The learned trial Court also relied upon the application, dated 19-4-1981 (Exh.R.W.3/3) addressed to United Bank Limited by appellant No,1, stating therein that after his retirement he had no funds to clear the liability of that Bank. The fact that the appellant had obtained loan from other Banks which he failed to re-pay also influenced the decision of the Court, in answering this issue against the appellants.

31. 17.We have gone through the record to assess the correctness of the reasoning which prevailed with the learned Court below and feel that the decision of the aforesaid issue has been influenced by irrelevant considerations and the conclusions drawn by it are contrary to the facts proved on the file. We have already held that the appellants' service through publication was no service in law and the ex parte decree passed on the footing of such service was a nullity. Where a defendant satisfies the Court that he was prevented by sufficient cause from appearing in the Court, the decree' passed against him would be set aside and permission granted to him to contest the suit.

32. We are firmly of the view that the appellants' failure to appear in the Court, can fairly be attributed to sufficient reasons. The argument founded by the Special Court on the terms of the loan and mortgage deed and that the appellants owed debt to other Banks are hardly germane to the controversy falling for decision under the said issue. As regards the sale price and rental value of the property, the record before us clearly demonstrates that it is a four-storeyed building inclusive of basement, having an area of 3,000 sq. Ft. Located in Supper Market, Islamabad which is the important commercial area of the capital. The fact that Pakistan Railway Boad and Lawrencepur Woollen Textile Mills hired parcels of this building is suggestive of the inference that the premises are somewhat prestigious ones. It is in the statement of Haji Mumtaz who is serving as Supervisor with M/s. Royal Furniture, Peshawar that this concern is a tenant in a shop in the building at the monthly rent of Rs,5,500 since the year 1980. The statement of Ch. Muhammad Iqbal (A.W.2) shows that M/s. Lawrancepur Woollen and Textile Mills hired first floor of the building from 1980 to 1986 and paid rent to appellant No,1 @ Rs,8,500 p.m. The details of the tenants occupying different tenements of the building and rent paid by them have been disclosed by the appellant in his statement as under:--- Name of the tenant Monthly rent 1.Pakistan Railway Board (a)Basement (b)2 Floor Rs, 4,400 9,000 2.Victoria Furniture: (a)Basement (b)3 Shop in ground floor.

33. 2,000 6,500 3.Progressive Traders: (One shop in ground floor)

34. 3,500 4.Royal Furniture Peshawar: (2 shop in ground floor)

35. 5,500 5.Lawrencepur Woollen & Textile Mills: (1 Floor)

36. 8,500 Total. 39,400 While discussing issue No,5, the learned Special Court has not adverted to the evidence of the appellants regarding rental value of the property and rejected their claim on the ground that had that much rental income accrued to them, they would have cleared their liability. This argument should carry no weight, The fact of the matter is that unfortunately the appellants committed default in clearing the outstanding debt and, therefore, were sued by the Bank. The evidence regarding rent is in consonance with the appellants' claim that the value of the property which is a commercial building at the relevant time was not less than Rs,6,50,000. The appellants' evidence in this behalf has remained unrebutted. We are aware that mere inadequacy of sale price by itself is not a sufficient ground for interference by the Court. But if the inadequacy of price is by reason of fraud and material irregularity it provides a ground for setting aside the ex parte decree as well as the sale. (See Ganapathia Pillai v. Malaipernumal Chettiar and another AIR 1925 Mad. 202 at 203).nd rd nd st The question of commission of fraud has been discussed in the later part of this judgment (16-A).

37. Elsewhere it has also been discussed that in exercise of its civil jurisdiction the Special Court has to follow the procedure provided in C.P.C., except to the extent that a contrary provision is found in the Banking Companies (Recovery of Loans) Ordinance, 1979. Section 7(2) of the Ordinance expressly lays down that even in suits based on mortgage the summary procedure provided for in Order 37, C.P.C. Shall be followed. The combined reading of the relevant provisions of the Ordinance will reflect that in a recovery suit before the Special Court, a defendant cannot appear and defend the suit as a matter of right and has first to obtain the leave of the Court to defend the suit. Thus except for this deviation, other provisions of the C.P.C. Will apply to a suit for recovery heard by the Special Court. Under Order 34, Rule 4, C.P.C. In a suit based on mortgage a preliminary decree has to be passed necessarily, if the defendant fails to pay the amount due from him, only then the plaintiff can apply to the Court for final decree. It is the practice of this Court while acting as a Special Court under section 2(b)(ii) of the Ordinance to pass a preliminary decree in suit founded on mortgage.

38. In the instant case, the learned Judge Banking Court failed to pass a preliminary decree. In the impugned judgment, it is stated that ex parte decree is the final decree. The appellants were thus deprived of the opportunity to pay into the Court the amount due from them and avoid the Court sale, in terms of Order 34, C.P.C. The non-compliance with Order 34, C.P.C. Provides sufficient reason for setting aside the impugned decree. It may be added that the existence of a valid decree is the condition precedent for sustenance of the auction proceedings and the orders passed in such proceedings. Since there was no valid decree, the entire superstructure would be knocked down.

39. The learned Court's reliance on the application of appellant No,1 (Exh.R.W. 3/3) is also misconceived. The reason is that it was never put to him as required by Article 144 of "Qanun-e- Shahadat" which is mandatory.

40. For all these reasons, Ave find that there are special circumstances for setting aside the ex parte decree and other proceedings, and allow the appellants to defend the suit. The Special Court's finding on issue No,5 cannot be sustained. This issue should have been answered in favour of the appellants.

41. 18.An application under Order 21, Rule 00 cannot be entertained "unless the applicant deposits such amount not exceeding twenty per cent. Of the sum realised at the sale, or furnishes such security, as the Court may direct". In the prayer clause of the appellants' application, a specific request was made that if directed by the Court they were prepared to deposit, in accordance with law the requisite amount in the Court. The learned Special Court did not give any such direction. The appellants however, moved another application on 30-10-1986 for permission to deposit 20% of the sale price in the Court. The permission was given on 1-11-1986 and the amount was deposited by them in the Court. The respondents objected to the maintainability of the application under Order 21, Rule 90, C.P.C. On the ground that it was not accompanied by the deposit at the time of its institution. This objection which is reflected by issue No,7 has been accepted by the learned trial Court. It is also reiterated before us by the learned counsel for the respondents, but we are unable to agree with the learned trial Court. We feel that under the 2nd proviso to Rule 90 ibid the Court is duty bound to pass an order specifying the amount not exceeding 20% of the sale price, requiring the applicant to deposit the same or furnish security in lieu thereof. It is only when the applicant fails to comply with the order that the application can be rejected. This view finds support from the following observations made by Zafar Hussain Mirza, J. (as he then was) who spoke for the D.B. In Alhamdi Begum v. National Bank of Pakistan PLD 1976 Kar. 723:--- "In my humble opinion, the Court had to pass an order either to direct the deposit of a sum up to twenty per cent. Of the auction amount or to direct furnishing of security as was deemed appropriate under the circumstances, and then give an opportunity to the appellant to comply with such order. It was only when the appellant had failed to comply with such an order that his application under rule 90 could be summarily dismissed."

42. To the same effect is the opinion expressed by this Court in M. Shafique Shah and others v. Mst.

43. Irshad Begum and others 1981 CLC 369. Since the Special Court did not pass any order regarding deposit at the initial stage, the application could not be ignored on the ground of non-deposit. The deposit made by the appellants in pursuance of the order, dated 1-11-1986 would be treated as in order. Issue No,7 was also wrongly decided and is answered in favour of the appellants.

44. 19.In order to show that the sale was liable to be set aside on the ground of material irregularity and fraud in publishing and conducting sale, several points highlighting the gross violations of mandatory provisions of Order 21, C.P.C. And other provisions of law were pressed into service on behalf of the appellants which were rejected by the Special Court without a detailed examination thereof on the ground that after the confirmation of the sale in favour of a third party, the Court becomes functus officio and ceased to have jurisdiction to examine the correctness of the objections raised by the appellants. This led the learned Special Court to decide issues Nos.8 and 8-A against the appellants. In the course of decision of these issues, the Court also made an observation that it has been established under a Special Statute and is not bound to follow C.P.C. In stricto senso. Before proceeding further, we feel it advantageous to refer to, even at the cost of repetition, what has already been stated, regarding the procedure to be followed by the Special Court in hearing a suit for recovery of loan. Sections 4(1), 141, C.P.C., sections 3 and 6 (a) of the Ordinance, if read together, clearly demonstrate that while exercising civil jurisdiction the Special Court has to follow the procedure laid down in C.P.C. And for the purpose of execution of the decree it can adopt Order 21 and allied provisions of the said Code. Of course, if there is conflict between the provisions of C.P.C. And the Ordinance, the latter shall prevail.

45. 20.It is obvious from the record of the case that the Special Court did proceed under Order 21, C.P.C.

46. The concept of confirmation of sale by the Court and the consequences flowing from such confirmation owe their origin to Order 21, Rule 92, C.P.C. Once the Special Court had chosen to adopt C.P.C,, the correctness of the orders passed by it in conducting the sale of the property in dispute shall have to be necessarily adjudged on the touchstone of C.P.C. If the appellants succeed in establishing the illegalities or material irregularities committed in the course of auction of the property and confirmation of the sale, these cannot be legitimately protected merely because in the opinion of the Special Court, it may pick and choose the provisions of the C.P.C., and where gross violation of that law is identified by the aggrieved party, express the view that it is not bound to follow C.P.C. Stricity. Such a course can hardly advance the cause of justice.

21. To begin with such illegalities, it is evident from the file that under the execution petition, the decree-holder sought the recovery of decretal amount by attachment and sale of the mortgaged property but in the Fard Talika annexed with it, the property particularized is house No, D/462, Satellite Town, Rawalpindi, and not the property in dispute. The special Court issued the warrant of attachment on 4-3-1982 addressed to Muzaffar Khan Bailiff, but it pertains to movable property and the mortgaged property is nowhere mentioned in it. On the back side of this warrant appears the Bailiff's report, dated 1-4-1982 (Exh.R.W.2/1) regarding attachment but neither the number of the mortgaged property is mentioned in it, nor the same is described by boundaries, to facilitate the identification. The case of the appellants is that the Bailiff was in collusion with the officials of the Bank and the attachment was not made at the spot. The plea finds support from the statements of A.W.1 and A.W.2. The Bank did not examine the Bailiff and produced one of its officials, Kaleem Raza Sherwani, to prove the Bailiff's report. This witness categorically claimed that the warrant of attachment related to the appellants' property in question but when confronted with the same, he had to admit that it was only with regard to movables. This would tell upon the weight of the evidence of this witness. The extrinsic evidence apart, the fact remains that in the absence of property number and description of boundaries it becomes difficult to associate this report with the mortgaged property. It is correct that a Court can order sale of a property even without its attachment but the record does not reflect that the Special Court intended to dispose of the property without attachment. On the other hand, it appears that it intended to attach the property but in doing so, lamentably exhibited lack of application of mind and attached movables. These features of the case are relevant for decision of the disputed points as these facts constitute res gestae being incidental to and connected with the main issue namely material irregularities and fraud in publishing and conducting the sale. It is pertinent to mention here that in the `Robkar' sent to the Court auctioneer by the learned Special Judge Banking, he was required to auction the property according to Fard Talika, which as already observed related to movables. The auction of the property in dispute, thus, did not have lawful backing of the Special Court.

47. 22.Under Order 21, Rule 66, it is duty of the Court to cause to be made a proclamation of sale in the language of the Court, where the property is to be sold by public auction. Such proclamation has to be drawn after notice to the judgment-debtor. Under sub-rule (3) for such a sale, an application has to be made to the Court. Further as per clause 2(c), the proclamation should include everything considered as material by the Court, to enable a purchaser to know the nature and value of the property. According to Order 21, Rule 67 read with Rule 54(2), such proclamation has to be made by the beat of the drum and a copy thereof affixed on the property as well as the Court House. Under Order 21, Rule 68, there should be an interval of 30 days between the date of the sale and the date of the proclamation. Rule 69 lays down that where the sale through auction is adjourned for more than 7 days, a fresh proclamation shall be issued unless waived off by the judgment-debtor.

48. 23.The grievance of the appellants is that no such proclamation was issued and consequently no notice was issued to them, with the result that they had no intimation that their property was to be sold in execution of the decree. Even no intimation in pursuance of the direction given in the impugned decree requiring the appellants to pay the decretal amount within six months was imparted to them; without serving them with a notice in this behalf the decree; could not be executed. The decree-holder also never applied to the Court for sale of the property.

24. The non-issuance of the proclamation is not disputed. The noncompliance with the other provisions of Rules 66, 67 and 68 has also not been seriously controverted. The view taken by the Special Court in this respect is that since publicity was given through publication of notice of auction, the requirement of law stood fulfilled. The learned counsel for the respondents in their submissions supported this view. In our opinion, the stand of the respondents is not in consonance with law on the subject. It seems to us that the non-publication of sale proclamation by beat of drum, upon the facts of the case, has caused a serious injury to the appellants. The effect of this omission needs to be measured in combination with other illegalities, with which the record is replete and has been pin-pointed in the succeeding paragraphs of this judgment. We are, therefore, dissuaded to accept that there was substantial compliance with the provisions of law, and the lacuna stood removed by publication. So far as issuance of proclamation under Order 21, Rule 66 is concerned, it appears to be mandatory. Resultantly due to the contravention of this provision the sale is rendered as a nullity.

49. 25.In Narayan Pursushottan Bansod v. Ramchandra Mudgalji Choudharkar and others AIR 1948 Nagpur 177, it is laid down that issue of notice under Order 21, Rule 66 touches the jurisdiction of the Court which effects the sale; these provisions are mandatory and the omission to give notice cannot be treated as a curable irregularity. It can well be stated that the power to sell property in execution, vests in the Court only after service on the judgment-debtor and a Court sale without such notice is void.

26. We now proceed to examine the effect of omission to issue the proclamation under Order 21, Rule 66, from the point of view that there was no disclosure to the prospective buyers of the approximate value of the property. The purpose of fixing the reserve price, under the proclamation is that the Court safeguards the rights of the judgment-debtor and the bid starts from that figure.

50. Such price has to be fixed after objective consideration of the relevant material which the Court can procure by holding a summary inquiry and summoning and examining any person possessed of necessary information as provided by clause (4) of Rule 66. The omission to issue a proclamation resulting in non-disclosure of the reserve price of the property, has a very strong bearing on the appellants' allegation as to the commission of the fraud; inasmuch as a very valuable commercial property situate in the heart of Islamabad, was shown to have been auctioned away at a throw away price. As no notice was issued to the judgment-debtors, they had no intimation regarding the sale of their property and thus could not protect their rights.

51. 27.In the context of the appellants' prayer for removal of the Court sale on the ground of fraud, the publication in the newspaper requires a scrutiny. We have seen the four Newspaper proclamations relating to four different dates, got published by the Auctioneer for the purpose of holding the auction. Out of these, the last proclamation for 21-12-1984 on which date the property was shown to have been auctioned is of significance. The property is notified in it simply as Block No,18, Markaz Shalimar with construction. Similar was the description given in the previous publications. The proper course for the Court Auctioneer was to have described the property as 4-storyed building commercial in character and located in Super Market, Islamabad so that it could attract sizable number of prospective purchasers. The contentions of the appellants are that since the property was not properly described in the proclamation, the buyers were not attracted. In this respect, they also impute motive to the Auctioneer.

52. 28.We have already noticed some of the material irregularities by which the publication, dated 21- 12-1984 is visited. The other point worth consideration is that the conditions of auction were not notified in the said publication. According to the appellants, this was a designed move. The other point brought out by them is that the previous date of sale was 26-5-1984 but the sale was adjourned and 21-12-1984 was fixed by the Court auctioneer for auctioning the property. The interlude between the two dates being a longer period than 7 days under Rule 69 ibid a fresh proclamation was necessary and the date of sale had to be fixed by the Court and not by the Court auctioneer. It is argued that the latter did not place the matter before the Court. There is no plausible explanation for this lapse. The submission is had the auctioneer brought this issue to the notice of the Court, and a fresh proclamation under Rule 69(2) was issued, the possibility that the appellants might have entered appearance cannot be ruled out.

53. 29.The appellants' next objection is directed against the bid sheet prepared by the Court auctioneer. It is pointed out that except their names, it does not contain any other particular of the bidders. The bids offered by them even do not bear their signatures. The identification of the bidders was thus rendered impossible. At what time the auction proceedings were commenced by the auctioneer and whether such time coincided with the one given out to the public, in the proclamation? The bid sheet is silent. Then how long the auction proceedings continued and whether the Court auctioneer waited for considerable time to enable the prospective buyers to come to the spot to participate in the auction? There is no answer to this question as well in the bid sheet. These are some of the issues which emerge from the record before us. It is contended by the appellants that the acution was never held at the spot and the entire proceedings have been manipulated by the auctioneer in connivance with the auction-purchaser. Apart from the inferences deducible from the record, the oral evidence in support of this assertion is to be found in the statements of A.W.1 and A.W.2., The auction-purchaser examined Kh. Saleem Ahmad, who claimed to have participated in the auction and offered the bid of Rs,4,25,000, but he admits that he neither deposited any amount with the auctioneer nor he held the amount of the bid to his credit in the Bank. It is difficult to conceive that in the absence of funds, how he chose to take part in the auction.

54. 30.While confirming the sale the Court is expected to apply its judicial mind to the nature and location of the property and the bid offered for it on its sale through auction. The difference in the price fetched through auction and the one by private sale is not unknown. But when the auction price is too low, the Court mechanically accords approval to the sale, without considering that the offer is too low and the property could clearly fetch a far more higher price, both the elements of material irregularity and injury to the judgment-debtor would be present in the case. In large towns, the annual rental value of the property can provide a yardstick for estimation of its market value. It appears that the Special Court confirmed the sale against Rs, 5,10,000 in routine and none of these factors was then present to its mind. In this context, the other criticism against the conducting of the auction is that the Court auctioneer's report should have informed the Court as to whether or not the highest bid of Rs, 5,10,000 on which the fall of hammer took place, keeping in view the location and condition of the property, approximately commensurated with its market value and that despite calls none in the assembly was prepared to offer bid higher than Rs,5,10,000.

55. On this point to the report is silent. This silence is categorized by the appellants as a wilful suppression of facts as in their submission five months' rental income of the property was more than enough to meet the entire decretal amount, and there was no need to auction the building.

56. 31.The Court auctioneer's report is dated 21-12-1984, but according to the file of the trial Court, it was submitted to the Court on 26-1-1985. Under Order 21, Rule 84, the auction-purchaser was bound to deposit 1/4th of the purchase money with the Court auctioneer immediately on the fall of the hammer, failing which the property was liable to be re-sold. As laid down in Rule 85, the remaining 3/4th amount had to be deposited with the Court within 15 days from the date of the sale.

57. According to the Court auctioneer's other report, dated 13-2-1985, he received the sum of Rs,3,82,500 through cheque from the auction-purchaser on 17-1-1985; obviously the amount was paid to him 27 days after the sale. It is noteworthy that the particulars of the cheque are not given in the report. Even if the payment was so made to Court auctioneer, much less to deposit the amount in the Court immediately, he did not convey information to the Court, in this respect until expiry of 27/28 days after receipt of cheque. All these factors need to be noticed as there are serious allegations against the Court auctioneer 'and thus his conduct is under gaze. In law 3/4th of the sale price should have been deposited by auction-purchaser in the Court within 15 days of the sale. It is well-settled that if such deposit is not made in the Court within the time limit of 15 days, the Court is bound to set aside the sale as it is rendered void. It was held so by Saeeduzzaman Siddiqui, J. (now Judge of the Supreme Court) in National Bank of Pakistan v. Nasir Industries 1982 CLC 388. The Supreme Court of India in Manilal Mohanlal Shah v. Sardar Sayed Ahmad AIR 1954 SC 349 has maintained that Rules 84 and 85 of Order 21 are mandatory. If the auction-purchaser fails to deposit the amount as per time limit fixed therein, there would be no sale at all. These aspects of the case were completely ignored by the Special Court and not pointed out to it by the Court auctioneer.

58. 32.As regards the payment of 1/4th of the sale price, to the Court auctioneer, as per his report, dated 21-12-1984, in this behalf, a sum of Rs,1,27,500 was paid to him by the auction-purchaser at the spot, but the argument of the other side is that no such payment was made to him; that had such payment been made the auctioneer would have deposited the same in the Court on the next working day, as the retention of the State money was unlawful. The record reveals that the Court auctioneer handed over a bank draft for Rs,5,10,000 to the counsel for the decree-holder on 13-3- 1985. This was wholly illegal. But, the auction-purchaser's counsel submits that the payment to the Bank's counsel was made under the orders of the Special Court. We may observe that such an order which is directly in contravention of the express and mandatory provisions of law, cannot cure the illegality. However, in this respect the other plea of the appellants is that the auction- purchaser who was in league with the Court auctioneer had no funds; he arranged the amount subsequently and passed on the same to the auction-purchaser; that is why that it was long after the sale that the auctioneer chose to offer the amount to the Court and then days after such offer, transmitted it to the counsel for the decree-holder through a pay order. Leave apart the decretal amount, although its direct payment to the decree-holder is not countenanced by law. But the more serious question is that under which law, the amount in excess of the decretal amount, which undoubtedly belonged to the judgment-debtor, instead of being deposited in the Court, was passed on to the decree-holder.

33. A fraud is a multidimensional concept. Broadly speaking, it is a deceitful act which exposes someone to actual loss or risk of possible loss. An active concealment of fact by anyone having knowledge of the same is another facet of the fraud. A distinction has to be drawn between mere suspicion and the actual commission of fraud. It is not easy to unearth a fraud because a person who embarks upon such an exercise usually defaces all traces leading to his deceitful act. Law does not provide a particular quantum of evidence for establishing a fraud. It is for the Court called upon to decide such an issue to be satisfied by the material brought before it, as to the practising of fraud, on it or on one of the litigating parties by the other. From evidential point of view, a finding of fraud is an inference arising in relation to certain facts established on the record. But in order to determine whether the appellants have succeeded in establishing the allegation of fraud, the effect of the facts proved on the record, must be assessed in totality. The material on the record shall have to be evaluated in the light of these accepted principles. We are mindful of the laudable rule of giving protection to an innocent 3rd party succeeding at the Court sale, but this rule cannot be stretched too far that the possibility to do justice to a judgment-debtor deprived of his valuable property and condemned unheard, is practically shut out. With this background, on careful examination of the record, we irresistibly gain an impression that on the question of fraud, collusion and concealment of information, the appellants' contentions are entitled to some weight and the facts highlighted by them exhibit sufficient preponderance of probability in their favour. We are satisfied that in consequence of fraud and collusion etc. They have sustained substantial injury to justify setting aside of the sale.

34. Order 21, Rule 92, C.P.C. Provides that where no application is made under Order 21, Rule 89, Rules 90 and 91, or such application having been made is disallowed, the Court may confirm the sale which upon confirmation becomes absolute. The necessary corollary arising from these premises therefore, is that the Court has no power to confirm the sale during pendency of such application or when the time for making the application has not expired. Section 18 of the Limitation Act provides that where a party is kept away from the knowledge of their right to sue or file an application, because of fraud of the other party, for the purpose of limitation, the time shall be computed from the date of the discovery of the fraud. No one can be expected to seek removal of an order, of which he has no knowledge. It thus follows that when a judgment-debtor is kept in dark regarding the ex parte decree, subsequent auction proceedings, and the confirmation thereof by practising fraud and misconduct, section 18 of the Limitation Act would clearly be attracted and the period of limitation starts from the date the fraud comes to the knowledge of the affected party. In such a case the period of limitation shall be deemed not to have run out and confirmation of sale by the Court made during this interregnum in ignorance of true facts, will be considered as without lawful authority, a nullity in law and incapable of creating rights in favour of the auction-purchaser.

59. We have already discussed as to how on receipt of letter Exh. D-8 from the Railway Department the appellant became aware of the ex parte proceedings on 14-9-1986. We are of the view that as a result of collusion and concealment discussed earlier, to which the appellants were subjected, they had no knowledge regarding the auction and the confirmation until they received Exh. D-8 and got the file of the case inspected through their counsel. In these circumstances, they are entitled to benefit of section 18 ibid and the period of limitation under Article 166 would start against them from the date of their knowledge. Their application under Order 21, Rule 90, C.P.C. Therefore, could not be thrown away as barred by time.

60. 35.The main plank of the respondents' arguments is that after confirmation of the sale in favour of respondent No,2, no jurisdiction vested in the Court to set aside the sale. The learned counsel for respondent No,2 went to the extent that even if the ex parte decree is set aside, the sale having become absolute cannot be disturbed. In support of these submissions, reliance is placed by him on Janak Raj v. Gurdial Singh and another AIR 1967 SC 608 and Hudaybia Textile Mills v. Allied Bank of Pakistan PLD 1987 SC 512. After carefully going through the two precedents, we have no hesitation in holding that these are distinguishable and are not attracted to the instant case. In the case from Indian jurisdiction the judgment-debtor prayed only for removal of the ex parte decree and there was no prayer for setting aside the sale. The judgment in Hudaybia Textile Mills deals with an application under Order 21, Rule 89, C.P.C. The demolition of a confirmed Court sale, on the ground of fraud covered by an application under Order 21, Rule 90, C.P.C., as is the case before us, is not in issue in these precedents.

36. It is a settled proposition that if confirmation of sale is got through fraud, an objection can be raised even after confirmation and the confirmation of sale cannot be used as a shield for the fraud by which it has been induced to make the sale. In Degapudi Pulla Peddi v. Rabin Rattabhrami Reddi and others ILR 56 Mad. 734, the fraud was attributed to auction-purcahser and section 18 of the Limitation Act applied to an application under Order 21, Rule 90 filed by a judgment-debtor for setting aside the confirmation of a Court sale. A Full Bench of Rajistan High Court in Phoolchand v.

61. Bader Prasad AIR 1953 Raj. 51, paras. 8 and 17 reviewed the case-law and relying on Ganapathy Muddian v. Krishna Muhakiat AIR' 1917 PC 121 expressed the opinion that the sale made and confirmed by a Court having jurisdiction cannot be challenged except on the ground of fraud.

62. There is a consensus of opinion that the commission of fraud furnishes a legitimate basis to set aside a sale even when it has become absolute. Since in the instant case the judgment-debtors have succeeded in proving that the sale and its confirmation were obtained by fraud, and on that account a substantial injury was inflicted on them, we hold that the sale is liable to be set aside.

63. In view of what has been discussed above, both the appeals are accepted; the impugned ex parte decree; the sale, and all consequential orders are set aside. The appellants' application for grant of permission to defend the suit shall be treated as within time and disposed of afresh according to law. Consequently, the suit shall be decided afresh. The purchase money shall be refunded to respondent No,2. The deficiency in the purchase money, if any, of which the appellants shall be informed by the learned Special Court, shall be made good by them within one month of receipt of such information from the Special Court. In case the appellants fail to make good the deficiency, they will be precluded from defending the suit. The parties are left to bear their own costs.