2013 C L D 1562

2013 C L D 1562

[Lahore]

Before Ijaz Ahmad, J

MUHAMMAD TAHIR through Special Power of Attorney and 2 others---Petitioners

Versus

MUHAMMAD ASHRAF and 16 others---Respondents

Writ Petition No.7566 of 2012, decided on 30th January, 2013.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 15(10) & 15(4)---Civil Procedure Code (V of 1908), S.12(2)--- Sale of mortgaged property--- Fraud, misrepresentation, or lack of jurisdiction in sale of mortgaged property---Scope---Suit for recovery was decreed whereafter during sale of mortgaged property, some of the defendants made application under S.15(10) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for filing of proper accounts of the sale proceeds, which was allowed, and the Bank was ordered to remit the excessive amount to the defendants---Subsequently, the other defendants/applicants made application under S.12(2), C.P.C. for setting aside order for filing of accounts, on grounds of fraud and contended that the rest of the defendants had connived with the Bank to sell away the property at throw away price---Said application under S.12(2), C.P.C. was rejected by the Banking Court---Defendants/applicants impugned the said order inter alia on the ground that no notice was served upon the defendants/applicants before the order for filing of accounts was made---Validity---Bank had adopted the procedure laid under S.15(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 by putting to auction the mortgaged property and had published two notices, one in an English daily and one in an Urdu Daily, both having country-wide circulation---After receipt of an application under S.15(10) of the Ordinance, the other defendants/applicants would be deemed to have been validly served by the Banking Court by publication in the newspaper---After the property had been put into auction, and the highest successful bid was offered, the Financial Institution/Bank was only to file the proper accounts of the sale proceeds in the Banking Court, which was done--- Application made by the applicants/defendants  after  a  lapse  of  ten  years  was  of  no  avail  and  they  should have  availed remedy of appeal against decree of Banking Court---Impugned  order was a final order and even otherwise an application under S.12(2), C.P.C. was not maintainable as there was no element of fraud, misrepresentation and lack of jurisdiction in the present case---Application under S.12(2), C.P.C. was rightly rejected by Banking Court---Appeal was dismissed, in circumstances.

            Muhammad Aslam and another v. National Bank of Pakistan and 7 others 2009 CLD 1389; Ghulam Mustafa Bughio and another v. Judge Banking Court No.4, Karachi and another 2006 CLD 528; Messrs Gold Star International and another v. Muslim Commercial Bank Limited 2000 MLD 421 and Mst. Ruqiyya Rhazes v. Al-Falah Bank and 7 others 2002 CLD 401 rel.

            Messrs Unicon Enterprises v. Banking Court No.5 City Court Building, Karachi and 2 others 2004 CLD 1452; Muhammad Umer Rathore v. Federation of Pakistan PLD 2009 Lah. 268 and Javaid Mahmood v. United Bank Limited and 4 others 2001 CLC 2011 ref.

            Tariq Zulfqar Ahmed Choudhary for Petitioners.

            S.M. Baqir for Respondent No.15.

            Syed Zumrad Hussain for Respondent No.16.

ORDER

            IJAZ AHMAD, J.---Respondents Nos.1, 7, 8 and 9 have already been proceeded ex parte. Respondents Nos.10, 11, 13 and 14 are represented through Ch. Mubarak Ali, Advocate. The name of learned counsel appears in the cause list. No one  has  turned  up  on  their  behalf.  They  are  proceeded ex parte.

2.         Messrs Choudhary Cotton Factory whose proprietors were the petitioners, Respondents Nos.1 and 2 and the predecessor of respondents Nos.3 to 8, availed loan facility from Allied Bank, Grain Market Branch, Vehari. The loan was not returned. It swelled to Rs.77,41,509. In order to satisfy the loan, the respondent/Bank put the mortgaged property to auction. The said respondents, then made an application under section 15(10), Financial Institutions (Recovery of Finances) Ordinance, 2001, for filing proper accounts in the sale proceeds in the Banking Court within the stipulated period. The present petitioners were arrayed as respondents Nos.8, 9 and 11 therein. Notices were sent to the respondents, named therein. Respondents Nos.1, 2 and predecessor of respondents Nos.3 to 8 appeared in the Banking Court and made a statement that they admitted their liability for repayment of the loan Rs.77,41,509. They also  accepted  the  auction  proceedings and   expressed their no objection. The learned Banking Court vide order dated 19-2-2003, in view of the above statement, accepted the application, made by respondent No.16. The auction proceedings were confirmed. The excessive amount was ordered to be remitted to respondents Nos.l to 8. The petitioners made an application under section 12(2), C.P.C. on 10-8-2010 for setting aside the order dated 19-2-2003 on the allegation of fraud, mala fide, mis-representation of facts and law, want of jurisdiction and connivance. It was alleged therein that no notice was issued to the petitioners; that respondents Nos.1 to 8 had connived with respondent Bank to cast away the property at a through away price. Respondent No.15 the successful bidder made an application for rejection of the application-made by the petitioners. The application was accepted and the petitioners' application under section 12(2), C.P.C. was rejected vide the impugned order dated 28-4-2012.

3.         It is contended by the learned counsel for the petitioners that no notice was served to the petitioners in accordance with law; that the order dated 19-2-2003 has been obtained by connivance and a criminal combination between respondents Nos.1 to 8, 15 and 16; that valuable property of the petitioners has been cast away at a through away price and the petitioners have been deprived of their due share; that respondents Nos.1 to 8 had no authority to make a statement and to acquiesce to the auction proceedings on behalf of the petitioners; that an application under section 12(2), C.P.C. to set aside the order passed by the Banking Court is competent. Relies on 'Muhammad Aslam and another v. National Bank of Pakistan and 7 others' (2009 CLD 1389).

4.         On the other hand, it is contended by the learned counsel appearing on behalf of respondents Nos.15 and 16 that section 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 provides a complete mechanism for the sale of mortgaged property of the mortgager. It is provided under subsection (4) of the section 15 of the Ordinance ibid that in case of failure of mortgager to pay the amount as demanded and after due date given in the final notice, the Financial Institution may without the intervention of the Court may sell the property by public auction, provided a notice is published in two newspapers, one reputed English and one 'Urdu' daily newspaper with wide circulation in the Province in which the property situates. He submits the record which transpires that the notices were so published. The court after receipt of application under section 15(10) of Ordinance ibid caused to be issued notice through registered post and by publication in newspaper and it was so published. The service in any one of the modes referred to in section 9 of Ordinance ibid would deem to be a valid service; that an application under section 12(2), C.P.C. against a decree passed or a decision made is not maintainable as the Ordinance ibid provides an appeal under Section 22. Relied on 'Ghulam Mustafa Bughio and another v. Judge Banking Court No.4, Karachi and another' (2006 CLD 528), 'Messrs Gold Star International and another v. Muslim Commercial Bank Limited' (2000 MLD 421) and 'Mst. Ruqiyya Rhazes v. Al-Falah Bank and 7 others' (2002 CLD 401). He further contends that upon execution and registration of the sale deed of the mortgaged property in favour of the purchaser, all rights shall vest to him free from all encumbrances and the mortgagor  shall  divest  of  any  right, title and interest in the mortgaged property. The Financial Institution under section 15(10) of Ordinance ibid, has only to file the proper accounts of the sale proceeds in the Court. No confirmation by the Court is required in this case and that the application, made by the petitioners after elapse of ten years is a futile exercise to retrieve the property after its appreciation many times over since 2002. Relies on 'Messrs Unicon Enterprises v. Banking Court No.5, City Court Building, Karachi and 2 others' (2004 CLD 1452); that the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act , 1997 provides that the provisions of the Ordinance will not be in derogation to the existing laws whereas Ordinance, 2001 ibid contains the ouster clause borne its Sections 4 and 15(4) that the provisions of the Ordinance shall have effect notwithstanding anything inconsistent contained in any other law for the time being inforce. Relies on 'Muhammad Umer Rathore v. Federation of Pakistan' (PLD 2009 Lahore 268). It is further contended that notice to one of the partners shall be deemed to  be  notice  to  all  the  partners  and  any  partner  living abroad  cannot  press  the  non-service  of  the  notice. Relies on 'Javaid Mahmood v. United Bank Limited and 4 others' (2001 CLC 2011)

5.         I have heard the arguments of learned counsel for the parties and perused the record.

6.         Availing of the loan facility is not denied. The respondent/Bank retrieved the financial facility advanced by it by putting to auction the mortgaged property of the mortgagor/loanee under the provision of section 15 of Ordinance ibid. The Bank has adopted the procedure laid down under section 15(4) of Ordinance ibid and has issued notices through two, one English and one 'Urdu' daily newspapers, having country wide circulation and circulation in the Province concerned. After the property having been put to auction, the highest successful bid offered by respondent No.5, the Financial Institution was only to file the proper accounts of the sale proceeds in Banking Court, which was done. The application made by the petitioners after elapse of ten years is of no avail to them. The petitioners had the actual  remedy  of  preference  an  appeal  against  any judgment, decree or a final order passed by a Banking Court under section 22 of the Ordinance 2001 ibid. The order dated 19-2-2003 being a final order in that matter was appealable. An application under section 12(2), C.P.C. is not maintainable in view of the judgments titled 'Ghulam Mustafa Bughio and another v. Judge Banking Court No.4, Karachi and another' (2006 CLD 528), 'Messrs Gold Star International and another v. Muslim Commercial Bank Limited' (2000 MLD 421) and 'Mst. Ruqiyya Rhazes v. Al-Fatah Bank and 7 others' (2002 CLD 401), referred by the learned counsel for the respondents and was not maintainable as there is no element of fraud, misrepresentation or lack of jurisdiction apparent from the record. The judgment 'Muhammad Aslam and another v. National Bank of Pakistan and 7 others' (2009 CLD 1389), referred to by the learned counsel for the petitioners will be of no avail to petitioners as the same have only the persuasive value whereas the judgments 'Ghulam Mustafa Bughio and another v. Judge Banking Court No.4, Karachi and another' (2006 CLD 528) and Mst. Ruqiyya Rhazes v. Al-Falah Bank and 7 others' (2002 CLD 401) given by the Lahore High Court, Lahore and the judgment 'Messrs Gold Star  International and another v. Muslim Commercial Bank Limited' (2000 MLD 421) given by the learned Divisional Bench of the Lahore High Court, Lahore are to be followed. The Act of 1997 contracts its own extent and opts not to derogate from the  existing  law.  The  Ordinance  of  2001  ibid  overlaps the existing laws. After receipt of an application under section 15(10) of Ordinance ibid, the petitioners will be deemed to have been validly served by the Banking Court by publication in the newspaper. The said section is exhaustive in nature and provides a complete procedure and mechanism for recovery of finances.

7.         For what has been discussed above, I am of the view that the learned Judge Banking Court has rightly rejected the application of the petitioners under section 12(2), C.P.C. This appeal has no merits and is dismissed.

KMZ/M-75/L                                                                                      Appeal dismissed.