QAZI MUHAMMAD FAROOQ,.J.---This appeal, by leave of the Court, is directed against the judgment dated 6-10-1999 passed by a learned Division Bench of the Lahore High Court, Multan Bench in F.A.O. No,19 of 1998.
2. Brief facts of the case are that in execution of a decree for recovery of money obtained by the Agricultural Development Bank of Pakistan, Ghousia Oil Mills alongwith the land covered by it was auctioned for an amount of Rs,2,00,000 in favour of one Muhammad Sadiq. The auction was challenged by the judgment-debtors through an objection petition under Order 21, rule 90, C.P.C.
On the grounds that the sale was fictitious as no auction at all was conducted by the Court auctioneer at the spot mentioned in the advertisement and the structures of the Mills together with machinery land measuring 10 Kanals were sold for a paltry sum of Rs,2,00,000 as a result of which the judgment-debtors had suffered a substantial financial loss. It was specifically mentioned in the application that the objectors were ready to deposit 20% of the auction amount. The objection petition was dismissed by the learned Judge Banking Court, Multan on 11-3-1998 and F.A.O. No,19 of 1998 arising therefrom was dismissed by a learned Division Bench of the Lahore High Court, Multan Bench vide judgment dated 6-10-1999.
3. Leave was granted to consider whether the payment of an amount of Rs,2,00,000 in terms of the order passed by the learned members of the Division Bench of the Lahore High Court, Multan Bench, Multan in compliance with the order dated 1-4-1998 in F.A.O. No,19 of 1998 on 29-4-1998 and the balance of the decretal amount of Rs,7,50,000 under this Court's order vide receipt dated 21-12- 1999 could not be treated as indicating the bona fides of the petitioner/judgment-debtor and the further question whether the auction of the property for a sum of Rs,2,00,000 which was accepted as security by the Agricultural Development Bank of Pakistan .Against the advance of loan of Rs,10,00,000 is not to be considered as ruling the lis to extent of the decision in application under Order XXI, Rule 90, C.P.C.
4. It was contended by the learned counsel for the appellant that the auction was liable to be set aside on the ground of illegality or fraud in publishing and conducting it as it was fictitious and collusive, property worth more than Rs,30 lacs was sold for a petty amount of Rs,2 lacs as a result of which the judgment-debtors had suffered a great financial loss, the bona tides of the judgment- debtors were above board as they had deposited a sum of Rs,10 lacs in compliance with the orders passed by this Court and the High Court and the requirement of depositing an amount equal to 20% of the sale amount stood fulfilled in view of the amount deposited by the judgment-debtors in compliance with the orders of the High Court passed in F.A.O. No,19 of 1998. In this context it was further submitted that F.A.O. No,19 of 1998 was admitted for regular hearing by the Lahore High Court and in compliance with the order of the learned Division Bench seized of the same the appellant had deposited a sum of Rs,2,50,000 in the Banking Court No,II Multan on 29-4-1998. The Criminal Original Petition No,5-L of 2000 was, however not pressed.
5. The learned counsel for the auction-purchaser, on the other hand, contended that the auction did not suffer from any legal defect or infirmity and the sale was rightly confirmed as the judgment-debtors had neither deposited an amount equal to twenty per cent of the sum realized at the sale nor availed the opportunity provided to them by the High Court and the Judge Banking Court to deposit the entire decretal amount. It was also contended that the appellant had no locus standi to file the appeal as he was no more a shareholder in the Mills.
6. The learned counsel for the decree-holder took the stance that the execution petition was still pending, therefore, the decree-holder had no objection to the setting aside of the sale in question.
7. Before adverting to the rival contentions it may be useful to refer to the relevant provisions of the Code of Civil Procedure. An application for setting aside a sale of immovable property in execution of a decree is governed by the provisions of Order XXI, Rules 89 to 92, C.P.C. Under Rule 89 a judgment-debtor has a right to have the sale set aside on depositing in Court a sum equal to five per cent. Of the purchase inanely besides the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered less any amount which may, since the date of sale, has been received by the decree-holder. Rule 90 gives a judgment-debtor the right to apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting the same if he has sustained substantial injury by reason of such irregularity or fraud.
Under Rule 91 the purchaser is entitled to apply to the Court to set aside the sale on the ground that the judgment-debtor had no saleable interest in the property sold. Rule 92 provides that in the absence of an application under Rules 89 to 91 or where such application is made but dismissed the Court shall make an order confirming the sale and thereupon the sale shall become absolute.
It also provides that the Court shall make an order setting aside the sale if an application under Rule 89 is filed and the requisite deposit is made within thirty days from the date of sale. Sub-rule
(2) of Rule 89 also provides that where a person applies under Rule 90 to set aside the sale of his immovable property he shall not be entitled to make or prosecute an application under Rule 89 unless he withdraws his application. ,
8. In the present case the prayer for setting aside the sale was made by the judgment-debtors through an application under Order XXI, Rule 90, C.P.C. The application was dismissed by the learned Judge Banking Court, Multan on the grounds, firstly, that on 13-1-1998 and 4-3-1998 the objectors were directed to deposit twenty per cent. .Of the sale proceeds but they had not complied with the direction, secondly, they were afforded an opportunity to deposit the entire decretal amount and retain the Mills but in vain and, thirdly, instead of taking the shelter or Order XXI, Rule 89, C.P.C., in response to the notice given under Order XXI, Rule 66, C.P.C., they had filed an objection petition under Order XXI, Rule 90, C.P.C. Which suggested that their conduct was not above board. The F.A.O. Filed by the appellant was dismissed with the following observations "6. Learned counsel for the appellants was specifically' asked, if the appellants were prepared to purchase the property over and above the price at which it was auctioned or if they had any buyer who could offer any amount over and above the auction price or in the alternative if they were prepared to deposit decretal amount. Learned counsel submitted that none of the three offers were acceptable to his client and despite this, the appellants would be entitled to object the auction.
7. The above situation is indicative of the fact that the objections and present appeal were filed with mala tide intentions to obstruct execution of decree on one plea or the other. The executing Court allowed the appellants to deposit the decretal amount or to pay any amount over and above the auction price but this offer was never encashed. Same position happened in the course of hearing of present appeal when the appellants did not agree to either arrange for a buyer offering more price or to have the property by giving more price or to get the property discharged by depositing the decretal amount. All that the learned counsel interested was to set aside the auction and to go for fresh auction. This is obviously not permissible, particularly on account of conduct of the appellant. The fact that the appellants are not prepared to pay any amount in excess of the auction price nor have any buyer making any offer in excess of the amount at which the property was auctioned, would show that the property was auctioned in due course. It is also observed that the appellants never deposited 20% of the auction price within 30 days as per requirement of law despite being so directed by the Court and, therefore, their objection petition could not otherwise be entertained."
9. No doubt the objectors had not deposited an amount up to twenty per cent. Of the auction price in compliance with the orders passed by the Banking Court on 13-1-1998 and 4-3-1998 but the technical detect stood removed when a sum of Rs,2,50,000 was deposited by them before the target date fixed by the High Court. In the wake of the said deposit the matter ought to have been remanded to the Banking Court for decision on merits particularly when an application under section 148, C.P.C. Was made at the lower forum by the objectors for enlargement of time for making the requisite deposit and appeal is a continuation of proceedings. The said deposit is envisaged by the second proviso to Rule 90, C.P.C. The rationale behind the proviso is to discourage frivolous objections. The deposit made by the appellants in the High Court, which far exceeds twenty per cent. Of the auction price, certainly served the purpose for which the said proviso was incorporated in. Rule 90 by means of an amendment through Law Reforms Ordinance, 1972.
10. The remaining grounds on which the objection petition was turned down travel beyond the scope of Rule 90 and as such are not pertinent. A judgment-debtor is well within his right to seek annulment of a sale through an application under Rule 89 or an application under Rule 90 which have different connotations and parameters. If he elects to file an application under Rule 90 it has to be decided within the parameters thereof and not on the basis of his refusal to deposit the decretal amount or accept the offer to purchase the property over and above the price at which it was auctioned or procure a buyer who could offer an amount over and above the auction price.
Similarly, no adverse inference can be drawn with regard to his credentials and conduct. Even otherwise the objection petition filed by the judgment-debtors cannot be said to be tainted with mala fide in the face of the huge amount deposited by them in compliance with the orders of this Court and the High Court. As regards the contention with regard to the locus standi of the appellant, suffice it to say that he is admittedly one of the judgment-debtors and there is no tangible proof on record that he has transferred his share to a third person.
11. The application in question cannot be decided on merits as it was dismissed by the Banking Court without recording evidence of the parties. Needless to mention that disposal of an application under Order XXI, Rule 90, C.P.C. Involves holding of an investigation and recording of findings based on evidence adduced by the parties.
For the foregoing reasons, the appeal is allowed, the impugned judgment and the order dated 11- 3-1998 of the Banking. Court Multan to the extent of the objection petition of the judgment-debtors are set aside and the case is remanded to the Banking Court, Multan with the direction that the application under Order XXI, Rule 90, C.P.C. Filed by the judgment-debtors be decided on merits, after recording evidence of the parties, within a period of six months. Parties to bear their own costs. Criminal Original Petition stands dismissed as not pressed.