TANVIR AHMAD KHAN, J. -- This judgment shall dispose of Writ Petition Nos. 10183-99 and 19495-99 as in both of them not only the parties, but the subject-matter is also the same.
2. Facts briefly in Writ Petition No. 10183-99 are that a decree was passed against the petitioners on 7.12.1998 for a sum of Rs. 3494996.33 by the learned Judge Banking Court No. II, Lahore. Respondent No. 2 Muslim Commercial Bank Ltd. Filed an execution petition and secured an auction order of the property earlier mortgaged by the petitioners. The petitioners on coming to know about the auction immediately filed objection petition under Order XXI, Rule 90, CPC read with Section 151, CPC making prayer for setting aside of the auction. The learned Banking Judge through his order dated 14.5.1999 directed the petitioners to deposit 20% of the sale price which order has been challenged through this Constitutional petition. During the course of proceeding of the afore-mentioned writ petition learned counsel appearing for the petitioners as reflected from the interim order dated 14.3.2000 made a categorical offer to deposit Rs. 20 lacs on or before 31.3.2000 so as to show his bona fide in the satisfaction of the entire decretal amount.
3. The facts of Writ Petition No. 19495-99 are that after the aforesaid order dated 14.5.1999 the learned Banking Judge passed another order on 12.8.1999 whereby petitioners application for setting aside the auction was dismissed. Through another order dated 14.10.1999 the petitioners application/proposal for the payment of entire decretal amount was dismissed as according to the learned Banking Judge the sale had already been confirmed. A direction was also made that a sale certificate be issued in favour of the auction purchaser. Hence these Constitutional petitions.
4. It is argued by the learned counsel that the sale/auction of the property has been conducted in a pseudo manner as property worth more than one crore of rupees has been dolled of for a consideration of Rs. 40 lacs. He has further stated that the respondent auction purchaser did not deposit 1 /4th (one-fourth) of the bid money according to the law as such the learned Banking Judge committed an illegality in confirming the sale and making direction for the issuance of sale certificate. He has also stated at the bar that the proclamation of auction was not published in accordance with appendix 'E' Form 29 of CPC as the market value of the property was not at all mentioned. Reliance in this respect is placed upon Brig. (Retd.) Mazhar-ul-Haq and another Vs. M/s. Muslim Commercial Bank Ltd. Islamabad and another (PLD 1993 Lahore 706) and Messrs Da wood Flour Mills and others Vs. National Bank of Pakistan (1999 M LD 3205).
Mr. Ashar Elahi learned counsel for the auction purchaser has controverted the stance taken by the petitioner. He has stated that the sale certificate had already been issued to respondent No. 3 by the learned Banking Judge as such no exception can be taken to the same in the exercise of Constitutional jurisdiction. He has also stated that it is usually the practice that in such like auction prices are always on the lower side, In support of his contention he has placed reliance upon Hudabia Textile Mills Ltd. vs. Allied Bank of Pakistan Ltd. (PLD 1987 SC 512).
I have considered the contentions and have gone through all the documents appended with this petition, It is not denied that the decree in this case was passed on 7.12.1998 for an amount of Rs.
3494996.33 by the learned Banking Court-II, Lahore. The petitioners who are living in the disputed house tried to liquidate their liability from the beginning of the filing of the execution petition. The learned Banking Judge however, did not honour petitioners' commitment and the auction proceedings dated 7.4.1999 demonstrates that the property was auctioned in a very hasty manner.
Only three persons stated to have participated in the auction, In the auction proceedings it is vaguely stated that respondent No. 3 auction purchaser deposited 1 /4th amount of the bid money amounting to Rs. 10 lacs through cheque. However, the particulars of the cheque given therein are totally vague in nature. The auction purchaser submitted his report on 12.4.1999. There he has only mentioned the number of cheque without disclosing the bank where it was to be encashed. Under Order XXI, Rule 84 the auction purchaser is bound to deposit 1/4th of the purchase money with the Court auctioneer immediately on the fall of the hammer failing which the property is liable to be resold. Similarly, Rule 85 has also laid down that the remaining 3/4th amount is to be deposited with the Court within 15 days from the date of the sale, In this case 1/4th amount was not deposited as required under the law. A cheque was given and its particulars even were not given at all by the auctioneer in his report. A reference is made to the case of Brig. (Retd.) Mazhar-ul-Haq and another Vs. M/s. Muslim Commercial Bank Ltd., Islamabad and another (PLD 1993 Lahore 706) wherein the learned Division Bench while discussing the requirements laid down under Order XXI, Rule 84 and Rule 85 of CPC held as under:- "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 Saeed uz zaman 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 of to it by the Court auctioneer, (underline is mine).
Reference is also made to a Division Bench decision reported in Messrs Dawood Flour Mills and others Vs. National Bank of Pakistan (1999 M LD 3205) wherein deposit of 1 /4th amount as required under Order XXI, Rule 84, CPC was not made and instead a cheque was handed over to the auctioneers, the learned Judges set aside the sale. The relevant portion is as under:- "The auction purchaser was required to pay immediately after he was declared to be the purchaser, 25% of the bid money to the Court auctioneer and in default of such deposit the property shall be refold. Learned counsel for the alleged auction purchaser admits that such a deposit was not made and instead a cheque in the sum of Rs. 1,200,000/- was handed over to the officer conducting the auction, It is not clear from the record as to when the cheque was cashed.
However, this fact is certain that the requisite amount was not deposited or handed over to the officer conducting the sale. The consequence of this default is that the property was to be resold forthwith, It was not done by the Court auctioneer. Thus, no sale took place in favour of the alleged auction purchaser on 12.9.1998 as because of the failure of the purchaser to make the required deposit, sale stood nullified by operation of law. Needless to say that no resale took place. The manner and mode in which payment was to be made is prescribed by law and the consequence also laid down in law in clear terms. Over and above, this the matters were made clear in terms of proclamation itself. A cheque can, in no circumstances be held to be a substitute for the deposit required to be made under the law. The learned Banking Court has dealt with this objection in a very callous manner. This lapse on the part of the Court auctioneer, as seen in the light of patent fact that property worth fifty millions had been managed to be sold for less than five millions also supports the contention of the learned counsel for the appellants that there was fraud in the conduct of sale. Even if we were to hold that there was no intentional fraud, the said lapse on the part of the executing Court, constituted a material irregularity within the meanings of Order 21, Rule 90, CPC. It was held in Manila! Mohanlal v. Sayed Ahmed (AIR 1954 SC 349) that the provisions of Order 29, Rules 84 to 86 are mandatory and upon non-compliance with this provision there is no sale at all and the sale proceedings were completely a nullity, It was further observed that the very fact that the Court was bound to re-sell the property in the event of default shows that the previous proceedings for sale were completely wiped of as they do not e>cist in the eye of law." (underline is mine).
5. I have also noticed that the petitioners had paid all the decretal amount and the Vice-President of Muslim Commercial Bank has issued a certificate on 20.6.2000, in the following terms:- "RECOVERY OF DECRETAL AMOUNT RS. 35,45.796/- AS PER LHCL ORDER MCB VS. M/S. SPRL REHMAN BROTHERS.
In the captioned matter, we hereby confirm about the recovery of decretal amount of Rs.
35,45,796/- from Judgment-debtor as per LHCL order dated 14.3.2000.
You are requested to intimate the Hon'ble Court accordingly and get direction for the delivery of original property documents held with us, to the real owner/mortgagor and refund of bid amount to the auction purchaser. Regards."
The aforesaid resume demonstrates that the auctioneer conducted auction in a hasty manner and did not ensure that the legal requirements for the same are followed in letter and spirit. The property worth more than a crore of rupees was sold away for an amount of Rs. 40 lacs. The auction purchaser did not deposit 1/4th of the bid money at the spot as required under the law.
Even the auction proceedings as well as the auction report submitted by auctioneer did not inspire confidence, In these circumstances, I accept this petition and declare the sale and its consequent confirmation as having been done without lawful authority and of no legal effect. Since all the decretal amount has been cleared by the petitioners as reflected from the certificate issued by the Bank as such I also direct the respondent Bank functionaries to return the papers of the petitioners, if nothing is due against him.
6. I would have given some percentage to the auction purchaser as required under the law, but I am not inclined to issue direction for the fact that he had not even bothered to deposit 1/4th of bid money as required under the law at the time of fall of hammer. There shall be no order as to costs in the circumstances.