ORDER SHEET

Judgment Sheet

IN THE HIGH COURT OF SINDH KARACHI

Constitutional Petition No. D – 1333 of 2005

Before :

Mr. Justice Nadeem Akhtar

Justice Mrs. Kausar Sultana Hussain

Petitioner : Mohammad Ahmed, through

Mr. Muhammad Ali Waris Lari, Advocate.

Respondent No.1 : Federation of Pakistan through the Secretary

Finance, Ministry of Finance, Islamabad, called

absent.

Respondents 2 & 3 : The Chairman and the General Manager,

House Building Finance Corporation, through

Mr. Muhammad Zannoon Khan, Advocate.

Respondent No.4 : Khalid Ahmed Khan, through

Mr. Amir Azam, Advocate.

Date of hearing : 08.11.2018

J U D G M E N T

NADEEM AKHTAR, J. – Through this Constitutional Petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, the petitioner has impugned the sale / auction of his immovable property by respondent No.2 / House Building Finance Corporation (‘HBFC’) without intervention of the Banking Court under Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, (‘the Ordinance’).

2. Relevant facts of the case, as averred in the petition, are that immovable property viz. House No.L-14, Aswan Town, Survey No.255, Deh Drigh, Tappo Malir Karachi, (‘the subject property’) was mortgaged by the petitioner with respondent No.2 / HBFC in consideration of a finance facility obtained by him which could not be repaid by him as per the terms and conditions of the finance agreement. In order to avoid any legal or coercive action against him and the subject property, the petitioner approached respondent No.2 for settlement. In the meantime, respondent No.2 had already initiated proceedings under Section 15 of the Ordinance by issuing first, second and then third / final notices to the petitioner under Section 15 ibid calling upon him to pay the amount claimed therein. The above notices were followed by an auction notice published in newspaper on 07.08.2005 by respondent No.2 for sale of the subject property under Section 15 ibid. As the petitioner came to know about the impugned actions of respondent No.2 through the above auction notice, he served a legal notice upon respondent No.2 which was ignored by the said respondent. Despite sincere efforts by the petitioner to settle the liability and despite his serious objection with regard to the above mentioned notices and auction notice under Section 15 ibid, auction of the said property was held by respondent No.2 and it was purportedly sold to respondent No.4.

3. In the above context, we may refer to the pronouncement made by the Hon’ble Supreme Court in National Bank of Pakistan and 117 others V/S SAF Textile Mills Ltd. and another, PLD 2014 Supreme Court 283, wherein it was held, inter alia, that it is clear and obvious that the real intent and purpose of the provisions of Section 15 of the Ordinance is to deprive the mortgagor / debtor of his right to object to the mode, the conduct of the mode and method of the conduct of the sale by barring all remedies thereagainst ; such extinguishment of right occurs without any process let alone after due process and fair trial as envisaged by Article 10-A of the Constitution ; the right in property in terms of Article 24 of the Constitution also stands bruised and offended against ; fair and well-recognized terms and conditions and the mode and the methodology of sale of mortgaged property recognized by law or by jurisprudence have been excluded from the purview of the grounds to obtain an injunction against the sale before it takes place ; the deprivation of the rights of the mortgagor / debtor qua the terms and conditions of sale is yet against without any fair trial or due process as envisaged by Article 10-A of the Constitution ; the conscious exclusion of remedies and deliberate omissions provide for a due process of conduct of sale including the absence of the necessity to fix a reserve price becomes even more significant as the financial institution has been clothed with the right to purchase the property put by it to public auction at the highest bid for which no permission is required from any Court as is in the normal course in terms of CPC ; and, thus, in fact, it is a financial institution which is the seller, buyer, the auctioneer and the beneficiary, hence enabled to take full advantage of the misfortune of the mortgagor / debtor thereby facilitating predatory and exploitative behavior which perhaps would not sit well with Article 3 of the Constitution. In view of the above findings, the entire Section 15 of the Ordinance was held to be ultra vires to the Constitution by the Hon’ble Supreme Court.

4. Learned counsel for respondents 2 and 3 (HBFC) as well as learned counsel for respondent No.4 (auction purchaser) were unable to justify the impugned actions taken by respondent No.2 under Section 15 of the Ordinance and/or to satisfy the Court as to how such actions are sustainable in law in view of the law laid down by the Hon’ble Supreme Court in National Bank of Pakistan (supra). They, however, made a feeble attempt to argue that the impugned actions were taken by respondent No.2 prior to the declaration of Section 15 ibid as ultra vires to the constitution by the Hon’ble Supreme Court and since it is not specifically held in National Bank of Pakistan (supra) that the declaration made therein shall have retrospective effect, the above authority shall not apply in the instant case. We do not agree with the learned counsel for the respondents as the actions / proceedings that have been challenged before us were admittedly taken only under Section 15 of the Ordinance which has been declared by the Hon’ble Supreme Court as ultra vires to the Constitution. Faced with this situation, learned counsel for respondent No.4, after seeking instructions from the said respondent, requested that he is willing to forego his right / claim in respect of the subject property provided respondent No.2 is directed to return the entire sale consideration to him.

5. In view of the above, the impugned sale / auction of the subject property under Section 15 of the Ordinance is hereby set aside by directing respondents 2 and 3 / HBFC to return to respondent No.4 / auction purchaser within thirty (30) days from the date of this judgment the entire sale consideration paid by him in respect of the subject property.

Foregoing are the reasons of the short order announced by us on 08.11.2018 whereby this petition was allowed in the above terms with no order as to costs.

JUDGE