' MUHAMMAD KHALID ALVI, J.---With the concurrence of the learned counsel for the parties this case is treated as a "pacca" case.
2. Brief facts of the case are that respondent No,1 filed a suit for recovery against the petitioner and respondents Nos.3 to 5. This suit was decreed vide judgment and decree dated 21-11-2001 with the consent of the parties to the tune of Rs,51,42,276. Thereafter respondent No,1 filed an execution petition. During the pendency of said execution, respondent No,1 on 30-5-2002 filed an application under section 19(3) of the Financial Institution (Recovery of Finances) Ordinance, 2001 with a prayer that the financial institution be allowed to sell the mortgaged property on its own. This application was allowed by the learned Banking Court vide order dated 13-6-2002 with the consent of the parties. Respondent No,1 auctioned the property in dispute on 16-9-2002 in consideration of Rs,32,00,000 in favour of respondent No,6. The present petitioner on 8-10-2002 filed objections regarding the conduct of the auctioi. On these objections, the learned executing Court vide order dated 21-12-2002 directed the petitioner to deposit a sum of Rs,6,40,000 as 20% of the auction money in view of Order XXI, rule 90, C.P.C. This order is being assailed through the instant'
Constitutional petition.
3. Learned counsel for the petitioner contends that under section 19(7) of the Financial Institution (Recovery of Finances) Ordinance, 2001, C.P.C. Is not applicable for the determination of objections/claims in relation to sales conducted by the financial institutions on their own. Relies on 2002 SCM R 496.
4. On the other hand, learned counsel for respondent No,1 has argued that the respondent-Bank has sold the property in question under the decree therefore, C.P.C. Was applicable. It is further argued that keeping in view the provisions of Order XXI, rule 89 the petitioner was obliged to deposit the entire auction money therefore, it is submitted that the learned executing Court had already granted sufficient concession to the petitioner by making an order of deposit of 20% of auction money only.
5. We have considered the arguments of the learned counsel for the parties.
6. The interpretation required in the instant case relates to the various provision of section 19 of the Financial Institution (Recovery of Finances) Ordinance, 2001, which are reproduced for ready reference:--
19. Execution of decree and sale with or without intervention of Banking Court:---
(1) Upon pronouncement of judgment and decree by a Banking Court, the suit shall automatically stand converted into execution proceedings without the need to file a separate application and no fresh notice need be issued to the judgment-debtor in this regard. Particulars of the mortgaged, pledged or hypothecated property and other assets of the judgment-debtor shall be filed by the decree-holder for consideration of the Banking Court and the case will be heard by the Banking Court for execution of this decree on the expiry of 30 days from the date of pronouncement of judgment and decree: ' Provided that if the record of the suit is summoned at any stage by the High Court for purposes of hearing an appeal under section 22 or otherwise, copies of the decree and other property documents shall be retained by the Banking Court for purposes of continuing the execution proceedings.
(2) The decree of the Banking Court shall be executed in accordance with the provisions of the Code of Civil Procedure, 1908 Act (V of 1908) or any other law for the time being in force or in such manner as the Banking Court may at the request of the decree-holder consider appropriate, including recovery as arrears of land revenue.
Explanation.---The term assets or properties in subsection (2) shall include any assets and properties acquired benami in the name of an ostensible owner.
(3) In cases of mortgaged, pledged or hypothecated property, the financial institution may sell or cause the same to be sold with or without the intervention of the Banking Court either by public auction or by initiating sealed tenders and appropriate the proceeds towards total or partial satisfaction of the decree. The decree passed by a Banking Court shall constitute and confer sufficient power and authority for the financial institution to sell or cause the sale of the mortgaged, pledged or hypothecated property together with transfer of marketable title and no further order of the Banking Court be required for this purpose.
(4) Where a financial institution wishes to sell, mortgaged, pledged or hypothecated property by inviting sealed tenders, it shall invite offers through advertisement in one English and one Urdu newspaper which are circulated widely in the city in which the sale is to take place giving not less than thirty days time for submitting offers. The sealed tenders shall be opened in the presence of the tenderers or their representatives or such of them as attend: ' Provide that the financial institution shall be entitled in its discretion, to purchase the property at the highest bid received.
(5) The provisions of subsections (5), (6), (7), (8), (9), (10) (11) and (12) of section 15 shall, mutatis mutandis, apply to sales of mortgaged, pledged or hypothecated property by a financial institution in exercise of its powers conferred by subsection (3).
(6) The Banking Court and the financial institution shall be entitled to seek the services and assistance of the police or security agency in the exercise of powers conferred by this section.
(7) Notwithstanding anything contained in the Code of Civil Procedure, 1908 Act (V of 1908), or any other law for the time being in force:-
(a) The Banking Court shall follow the summary procedure for purposes of investigation of claims and objections in respect of attachment or sale of any property, whether or not mortgaged, pledged or hypothecated, and shall complete such investigation within 30 days of filing of the claims or objections;
(b) if the claims or objections are found by the Banking Court to be mala fide or filed merely to delay the sale of the property, it shall impose a penalty up to twenty percent of the sale price of the property;
(c) the Banking Court may, in its discretion, proceed with the sale of the mortgaged, or pledged or hypothecated property if, in its opinion the interest of justice so required; ' Provided that the financial institution gives a written undertaking that in the event the objections are found to be valid, or are sustained it shall in addition to compensating the aggrieved party by the payment of such amount as may be adjudged by the Banking Court also pay a penalty up to twenty percent of the sale proceeds and such amounts shall be recoverable from the financial institution in the same manner as in execution of decrees passed hereunder.
7. According to subsection (2) the decree passed by the Banking Court is executable in accordance with the provisions of C.P.C. However, if a Financial Institution intends to sell the mortgaged property on its own under subsection (3) then permission can be granted by the Banking Court to do so. However, for that purpose, if some body has an objection to such an auction/sale then he can file objections/claims under subsection (7) which clearly ousts the provisions of C.P.C. For the determination of such claims/objections which are to be dealt in a summary manner. The said section also provides certain penalties for false claims on the one hand and a false or incorrect defence by the Financial Institution on the other side. The law referred by the learned counsel relates to the provisions of Banking Companies (Recovery of Loans Advances Credits and Finances), Act 1997 but the provisions dilated upon by their lordships of the Supreme Court are identical to those of the provisions of the Financial Institution (Recovery of Finances) Ordinance, 2001, therefore, the said law is fully applicable to the instant case. Resultantly we hold that the objection/claim raised by the petitioner before the learned Banking Court should have been dealt under subsection (7) of section 19 to which C.P.C. Was not applicable and the condition imposed by the learned Banking Court directing the petitioner to deposit a sum of Rs,6,40,000 as 20% under Order XXI, rule 19, C.P.C. Was illegal. The same is declared as such this writ petition is allowed. No order as to the costs.
8. The parties present in Court shall appear before Banking Court No,I, Multan on 4-6-2004. The learned Banking Court shall proceed with the objection/claim of the petitioner on day to day basis and shall decide the same within 30 days in terms contemplated in clause (a) of subsection (7) of section 19.