Present
Mr. Justice Aqeel Ahmed Abbasi
Mr. Justice Muhammad Junaid Ghaffar
Ahmed Ali ………………………………………………… Appellant
Versus
Faysal Bank Limited and others………..…………….. … … Respondents
Date of hearing : 24.09.2014
Date of order : 24.09.2014
Mr. Abdul Shakoor, advocate for the appellant
Mr. Suleman Hudda, advocate for the respondent No.1
Mr. Muhammad Azhar Faridi, advocate for the respondent No.4.
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Aqeel Ahmed Abbasi, J: Being aggrieved and dissatisfied by the order dated 11.12.2013 passed by the learned Judge Banking Court No.III, Karachi, in Execution No.167 of 2013, whereby the learned Judge of the said Court was pleased to dismiss application under Section 151 CPC of the appellant and confirmed Sale in favour of Respondent No.4 with the directions to the Nazir to issue Sale Certificate in favour of the Auction Purchaser/Respondent No.4 and also to handover physical possession of the mortgaged property being all that piece and parcel of Flat bearing No.A/803, 8th Floor, Sea Castle Apartment, situated on Plot No.CA-2, Block-4, admeasuring 2739 square yards, situated at K.D.A. Improvement Scheme No.5, Kehkashan, Clifton, Karachi, the appellant has filed instant appeal under Section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, with the prayer to set-aside the impugned order.
2. Brief facts as stated in the memo of appeal are that the respondent Nos.2 and 3, who are the customers of respondent No.1 bank i.e. M/s Faysal Bank Limited were granted financial facility, who could not fulfill their financial obligation and defaulted in payment of the amount, whereafter, the respondent bank filed a suit bearing No.655/2009 for recovery before the Banking Court No. III, Karachi, which was decreed in the sum of Rs.4,447,594/- with cost and cost of funds, whereas, the Banking Court also allowed sale of the mortgaged property. The respondent bank filed Execution Application bearing No.167/2010 against the respondents No.2 and 3, for the enforcement of Judgment and decree, and in such execution proceedings, the mortgaged property was attached and proclamation of sale was published in two Newspapers i.e daily Dawn dated 13.09.2013 and the Jang dated 13.08.2013 for auction of the mortgaged property on 20.10.2013. Pursuant to such publication, the auction was held and respondent No.4 i.e. Abbas Hayat son of Khizar Hayat was declared as highest bidder, who gave the highest bid of Rs.4,650,000/- and also deposited 25% of the bid amount with the Nazir of the Banking Court. On 24.10.2013, the present appellant filed an application under Section 151 CPC before the Executing Court and made an offer of Rs.4,900,000/- for purchasing the mortgaged property. Such application was vehemently opposed by respondent No.4, who was the highest bidder, whereafter, the Banking Court No.II, Karachi, after hearing the parties vide impugned order dated 11.12.2013 dismissed the application of the appellant, which order has been assailed by the present appellant through instant appeal.
3. Learned counsel for the appellant has argued that the appellant could not participate in the auction proceedings, hence approached the Executing Court directly with an offer of an amount higher than the amount, which was offered by respondent No.4, therefore, the Banking Court was not justified to decline the application of the appellant. It has been further contended by the learned counsel that before finalization of sale of the mortgaged property, the appellant was entitled to make his bid for higher amount in respect of the mortgaged property, and the Banking Court was under legal obligation to accept such offer and was not justified to decline the higher offer of the appellant and to confirm the sale in favour of the auction purchaser i.e. respondent No.4. In support of his contention learned counsel has placed reliance in the case of Messrs Bela Lubricant Ltd through Chief Executive and others Vs National Bank of Pakistan and others [2009 CLD 1056] and Captain-PQ Chemical Industries (Pvt) Ltd Vs Messrs A.W. Brothers and others [2004 SCMR 1950].
4. Conversely, the learned counsel for the respondent No.4 i.e. auction purchaser has vehemently opposed the maintainability of instant appeal and has seriously controverted the submissions made by the counsel for the appellant. It has been contended by the learned counsel for respondent No.4 that the appellant has no locus standi to file instant appeal as he is neither the decree holder or the judgment debtor nor participated in the bidding process in the instant case, and he is a total stranger to the proceedings. It has been further contended by the learned counsel that pursuant to a judgment and decree passed by the learned Banking Court No.III in Suit No.655/2009 in favour of respondent No.1 i.e. M/s. Faisal Bank Limited and against respondents No.2 and 3, i.e. the customers/borrowers, the respondent bank filed the Execution No.167/2010 for the recovery of decretal amount. The learned Banking Court during the course of execution proceedings passed an order for sale of mortgaged property through open auction, whereafter, proclamation of sale was published in the Newspapers and auction was held on 23.10.2013 in the Court premises in the presence of attorney of decree holder, whereas, three bidders, including respondent No.4 participated in the auction proceedings, and the respondent No.4 offered the highest bid for Rs.46,50,000/- and deposited an amount of Rs.12,00,000/- being 25% of the bid amount by the respondent. The amount offered by respondent No.4 was in excess to the forced sale value determined by the bank, whereafter, the entire purchase amount of Rs.46,50,000/- was deposited by the respondent No.4 before the Nazir of the Court within prescribed time in terms of proclamation of sale. It has been further contended by the learned counsel for the respondent that no objection whatsoever was raised from any quarter either with regard to transparency of the entire auction proceedings or the value of the mortgaged property for which the respondent No.4 had offered the highest bid and also paid the entire bid amount within the stipulated period, hence there was no reason whatsoever available with the learned Banking Court not to confirm the sale in favour of the respondent No.4 and to issue sale certificate in respect of the mortgaged property in his favour. Per learned counsel, the application filed by the present appellant under Section 151 CPC for the first time before the executing Court, after conclusion of the proceeding was misconceived in law and facts and has been rightly dismissed by the learned Banking Court vide impugned order, whereas, instant appeal is also misconceived and not maintainable, which may be dismissed with cost.
5. Learned counsel for the respondent bank has also supported the arguments made by the learned counsel for respondent No.4 and has raised an objection with regard to maintainability of the instant appeal for having been filed by a stranger to the proceeding. It has been contended by the learned counsel for the respondent bank that after completion of the auction proceeding and acceptance of the bid of respondent No.4 being the highest bidder, who had already paid the entire amount within the stipulated period in terms of proclamation for sale of mortgaged property, the appellant was not authorized in law to make an independent offer without participating in the open auction proceeding. It has been contended by the learned counsel for respondent bank that instant appeal is misconceived, which is liable to be dismissed in limine.
6. We have heard the learned counsel for the parties perused the record and the impugned order with their assistance. Since the facts as stated hereinabove are not disputed, we may not repeat the same to avoid repetition. The precise point for determination of this Court is to examine as to whether the impugned order suffer from any illegality or error and the appellant was entitled to file an application under section 151 CPC before the learned Banking Court in the Execution proceedings by making an offer for the purchase of a mortgaged property, after the auction proceedings and the sale transaction in respect of such mortgaged property had duly been concluded and a sale certificate had already been issued in favour of the highest successful bidder, who had made payment of the entire sale proceeds.
7. It will be advantageous to reproduce the relevant findings of the learned Banking Court, which read as follows:-
“8. It is admitted fact that the auction proceedings were conducted on 23-10-2013 in continuation of Proclamation of Sale published in newspapers viz: Daily “Jang” dated: 13-09-2013 and “Dawn” dated 13-09-2013 and the whole process was concluded transparently and all the codal formalities were observed. Mr.Abbas Hayat participated in the auction proceedings and offered the highest bid for Rs.4,650,000/- thus, he was declared the highest bidder. Subsequently, he has deposited full and final amount of offered bid within the prescribed time in terms of Proclamation of Sale. Even otherwise, it is settled proposition of law that once a bid has been accepted and no objections are filed within given time, the auction is to be deemed to have been confirmed the Courts can not be turned into auction house.
9. In view of what has been stated above, I am of my considered view that Applicant has not been able to make out his case for acceptance of his bid offer because, the process of open auction proceedings, to my mind, was concluded transparently on 23-10-2013 in continuation of Proclamation of Sale published in newspapers viz: Daily “Jang” dated: 13-09-2013 and “Dawn” dated 13-09-2013. Hence, application filed by applicant under Section 151 CPC merits no consideration and it is dismissed with no order as to costs.”
8. It is pertinent to note that the appellant was not a party in the Suit bearing No.655/2009 filed by the respondent bank against respondent Nos.2 and 3 for the recovery of the amount outstanding against them nor the appellant participated in the open auction proceedings held within the premises of the learned Banking Court under supervision of the Nazir. It is equally pertinent to note that the respondent No.4 in the instant case after having complied with all the codal formalities was declared as the successful bidder in open auction amongst other participants, who paid the 25% of the bid amount along with the offer and also paid the entire amount i.e. Rs.46,50,000/- within the stipulated period, whereafter, the sale certificate was issued in favour of the respondent No.4. There has been no objection by any party from any quarter with regard to transparency of the auction proceedings or the bid amount which has been offered by respondent No.4, who was admittedly higher than the forced sale value determined in respect of mortgaged property and highest amongst other participants in auction proceedings. It is surprising to note as to under what circumstances, the appellant, who is a stranger to the entire proceedings as he was neither a party in the suit nor participated in the open auction, came to know about such auction and the highest bid amount offered by the respondent No.4 for the purchase of mortgage property, and has found it convenient to file an application before the Executing Court by enhancing the bid amount, which was offered by the respondent No.4 in the open auction. We may observe that if such practice is allowed, it may render the Court proceedings and the transactions executed between the parties, pursuant to Court’s orders as redundant, which may destroy the public confidence in judicial proceedings.
9. The case law referred by the learned Counsel for the appellant in support of his contention is of no assistance to learned Counsel as the facts of this case are entirely distinguishable, hence, the reliance is misplaced.
10. In view of hereinabove facts, we are of the opinion that the impugned order does not suffer from any illegality or error, whereas, the appeal filed by the present appellant is without any substance and the same was dismissed vide our short order dated 24.09.2014 and these are the reasons for such short order.
JUDGE
JUDGE