' SABIHUDDIN AHMED, J.---These two appeals are directed against the same order passed by a learned Single Judge of this Court exercising 'Banking Court jurisdiction and have therefore been heard together. Through the above order the learned Single Judge had accepted the offer of Messrs Euro-Plus (Mons-Belgium) (hereinafter mentioned as auction-purchaser) bid of Rs,460 millions for the purchase of assets of the sugar mill of the appellant in H.C.A. No,284 of 2002 (hereinafter mentioned as the judgment-debtor) and rejected the offer made by one Bashir Ahmed the appellant in H.C.A. No,295 of 2002. Both the judgment-debtor and the aforesaid Bashir Ahmed who is a Managing Director of one Eastern Sugar Mill have assailed the order of the learned Single Judge in these appeals.
2. By way of necessary background, it may be stated that the judgment-debtor had defaulted in repayment of finances to certain financial institutions whereupon suits for recovery were filed by Messrs United Bank Limited and Habib Bank Limited, which were decreed. Thereafter the decree- holders filed applications for execution of the two decrees and the Court directed the official assignee to take possession of the hypothecated goods stored in the Mill premises and invite public offers for its sale. A proclamation was issued but somehow no reserve price was mentioned.
Initially the official assignee received an offer of Rs,157 millions but upon being directed to invite further offers and negotiate with the bidders, he succeeded in obtaining a cash offer from the auction-purchaser in the amount of Rs,460 millions from auction bidder whereas the aforesaid Bashir Ahmed agreed to pay Rs,1 billion subject to the facility of making a down payment of Rs,50 million and the remainder in 16 instalments. It was in this context that the offer made by the auction bidder was accepted by the learned Single Judge.
3. Mr. Khalid Jawed Khan learned counsel for the judgment-debtor/appellant in H.C.A. No,264 of 2002 contended at the outset that since the property of the appellant was being sold in execution of the decree, he had a direct interest in ensuring that it should obtain the maximum price so that a large part of the appellant's liabilities were wiped out. On merits he argued that bids were invited from the public without any mention of the reserve price and the auction sale stood vitiated on this ground alone. In support of his contention learned counsel relied upon Division Bench judgment of the Lahore High Court in the case of Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs Muslim Commercial Bank Limited PLD 1993 Lahore 706 and of this Court in Shahida Saleem v. Habib Credit and Exchange Bank Limited 2001 CLC 126.
4. Learned counsel expressly relied on the following observations of the Ijaz Nisar, J., in the first case which tends to support his point of view:-- "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. 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."
5. In the case of Shahida Saleem this Court no doubt proceeded to set aside the auction sale and directed that the property be reauctioned after strict compliance with the rules upon finding that neither notice was issued to the appellant (judgment-debtor) nor the reserve price of the property was settled and afterwards was sold of at a throw away price. Nevertheless, as rightly contended by Mr. Rizwan Ahmed Siddiqui learned counsel for C.I.R.C. That the mere fact that reserve price was not shown in the A proclamation of sale/public notice would not -per se vitiate a sale. He referred to an earlier part of the judgment where the pronouncement of the Honourable Supreme Court in Ghulam Abbas v. Zuhra Bibi and another PLD 1972 SC 337 to the following effect have been referred to:-- "Indeed it would appear that the view of the Courts has consistently been that non-compliance with the provisions of the Code of Civil Procedure, with regard to the proclamation of sale, its publication and the conduct of the sale in execution are only material irregularities but not illegalities which render the sale in disregard of those provisions a nullity."
6. Indeed a careful reading of both the judgments cited by Mr. Khalid Jawed Khan show that the auction sale was set aside not merely because of technical error in not mentioning the reserve price in the sale proclamation but after considering a number of factors showing that material prejudice had been caused by sale of valuable property at a throwaway price. We therefore, find no force in the contention that mere non-mentioning of reserve price would per se vitiate the sale.
7. Mr. Khalid Jawed Khan however, further argued that material prejudice had been caused as the bid submitted by the auction bidder was far below the market price of the property. In this context learned counsel relied upon the working paper prepared by Bankers Equity Limited through valuator approved by the State Bank of Pakistan showing the assessed value of the assets at Rs,796 millions and the forced sale value at Rs,606 millions worked out in June, 2000. Responding to the above, the official assignee as well as Mr. Rizwan Ahmed Siddiqui pointed out that the mills had remained closed for the last four years and according to State Bank circular 50% depreciation was allowable with respect to the force sale value of the property and accordingly such value came to Rs,303 millions. The official assignee further pointed out that he had caused evaluation to be undertaken by a firm of consultants and according to their assessment the estimated market price/forced sale value in October, 2002 came to Rs,325 millions. Moreover he stated that pursuant to invitation of bids initially only an offer of Rs,175 millions was received and after great deal of negotiations the detail whereof are referred to in the impugned order a final offer of Rs,460 millions was received from the auction-purchaser. Moreover crushing season was likely to expire and there was little likelihood of receiving higher offers in the near future. In these circumstances the auction- purchaser's offer of Rs,460 millions merited acceptance.
8. Mr. Arshad Tayyab Ali learned counsel for Bashir Ahmed substantially supported Mr. Khalid Jawed's arguments and contended that his client had not merely undertaken to pay Rs,1 billion but had in addition also offered to liquidate the tax liabilities of the Government and those of cane growers as such it was most unfair to accept the offer of the auction-purchaser. The official assignee on the other hand pointed out that Bahsir Ahmed had only agreed to pay Rs,50 millions promptly and had agreed to pay the remainder through instalments staggered for a period of 16 yeaRs, He argued that this would hardly provide any relief to the decree-holders/creditors for whose benefit the auction sale had been undertaken. Moreover, he contended that prior experience in accepting offers on a deferred payment basis had been very unfortunate and in many cases the amounts were never recovered. Moreover Bashir Ahmed was not even willing to furnish tangible security for the payment of the outstanding amount. Therefore, the learned Single Judge was perfectly justified in rejecting such offer.
9. Mr. Ali Bin Adam Jafri learned counsel for auction-purchaser questioned the maintainability of these appeals by reference to rules 89, 90 and 92 and Order 21 and argued that any irregularity in the auction could be questioned through an application made before the learned Banking Court.
The right of appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was confined to judgments, decree or final orders and the mere fact that the impugned order was liable to be recalled by the Banking Court precluded any appeal to this Court. Though the argument does not appear to be without force, we are not inclined to undertake its careful examination, since we have decided to dispose of the appeal on merits.
10. Mr. Rizwan Ahmed Siddiqui learned counsel appearing for the C.I.R.C. On the other hand urged that under section 19(3) of the Ordinance, the decree itself conferred powers upon the Financial Institution to cause sale of mortgaged property and therefore, the provisions in Order 21, C.P.C.
Relating to auction sale were not strictly applicable. Moreover, he contended that neither the Banking Court nor. The High Court could grant an injunction restraining the sale or proposed sale of the mortgaged property under section 15(12) unless it was satisfied that no mortgage of immovable property had been created, or the money secured by mortgaged properties had been paid or the mortgagor or objector deposited the outstanding mortgaged money in the Banking Court. In the instant case admittedly none of these three conditions had been fulfilled.
11. Having gone through the record, we have noticed that a number of efforts were made by the Official Assignee under directions of the Court and amongst the competing bidders willing to make lump sum payment the next highest offer was made by one Chawla & Company for Rs,253 millions.
Indeed the offer made by Bashir Ahmed was much higher, but he was willing to make payment only, through instalments to be staggered for a period of 16 yeaRs, The net amount that he was willing to pay was only Rs,50 millions and he was not even prepared to furnish tangible security for the remainder. The only securities offered was to the extent of Rs,100 millions in the form of mortgage of agricultural property. Indeed the object of auction sale is to facilitate payment of amounts due to the decree-holders which would be substantially defeated if only a very insignificant amount is collected through auction sale to satisfy their debts. Incidentally none of the decree-holders have questioned, and understandably so, the order of the learned Single Judge. As far as the judgment-debtor is concerned, the record indicates that he was unable to secure a proper buyer for the mills while attempting to pay of the debts during proceedings under the N.A.B.
Ordinance. Even during the course of hearing of these appeals, we suggested to learned counsel for the appellants whether they were in a position to match the auction-purchaser's bid through cash payment but both Messrs Arshad Tayyab Ali and Khalid Jawed Khan expressed their inability to do so.
12. In the circumstances, we find the order of the learned Single Judge to be entirely unexceptionable and are constrained to dismiss both these appeals. These are the reasons for the short order announced in Court on 29-11-2002.