Mian Zafar Iqbal etc. vs Bank Of Punjab etc.

Stereo. H C J D A 38.

Judgment Sheet

IN THE LAHORE HIGH COURT,

MULTAN BENCH, MULTAN

JUDICIAL DEPARTMENT

EFA-15/2025

Mian Zafar Iqbal and versus The Bank of Punjab and 10 another others

JUDGMENT

Date of hearing: 30.9.2026 Appellants by: M/s Wasif Majeed and Muhammad Suleman Bhatti, Advocates Respondent Syed Muhammad Kaswar Gardezi, Advocate No.1 by:

Respondent Mr. Mehmood A.Sheikh, Advocate No.2 by:

Respondent Mian Babar Saleem, Advocate No.3 by:

MALIK MUHAMMAD AWAIS KHALID, J:- This is an Execution First Appeal under Section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the ‘Ordinance’) against the order dated 9.4.2025 passed by the learned Single Judge in Chambers whereby auction has been confirmed.

2.Through instant appeal, the appellants have made the following prayer:-

i. Allow the instant Execution First Appeal in the interest of justice, equity, and fair play;

ii. Set aside the Impugned Order dated 09.04.2025 passed by the learned Executing Court whereby the alleged auction proceedings dated 11.01.25 and 01.02.25 were unlawfully confirmed in violation of mandatory legal requirements and principles of natural justice;

iii. Any order consequent to the Impugned Order for the issuance of sale certificate or delivery of possession of the

mortgaged assets may also be declared invalid;

iv. Declare that the alleged auction proceedings as per auction report are null, void, and of no legal effect, and are liable to be struck down;

v. Direct the learned Executing Court to reinitiate fresh execution proceedings strictly in accordance with law, ensuring full compliance with the mandatory provisions of the Ordinance and CPC;

vi. Grant interim injunctive relief, restraining the Respondents, their agents, assignees, and any other persons acting on their behalf from taking any further steps, actions, or measures pursuant to the impugned auction confirmation, including the issuance of sale certificates, possession, or alienation of the mortgaged properties, until the final adjudication of the present appeal;

vii. Award costs of these proceedings to the Appellant against the Respondents, in view of the mala fide and unlawful actions complained of; and

viii. Pass any other, further, or additional relief that this Honourable Court may deem just, appropriate, and necessary in the circumstances of the case to secure the ends of justice.

3.Succinctly, the facts, as narrated in instant EFA, are that the respondent-Bank filed a suit for recovery of Rs.85,11,63,579.17 bearing COS. No. 01 of 2013 before this Court under the Ordinance. The said suit was decreed against the appellants to the extent of Rs.70,88,44,000/- vide judgment and decree dated 27.2.2017, which was challenged through an appeal bearing RFA No.119/2018. In the meanwhile, the respondent-Bank filed execution application bearing No. 16/2017 for the execution of the judgment and decree dated 27.2.2017 before the learned executing court. According to the

appellants, the respondent-Bank had categorically admitted that the appellant-Company had by then made a payment of Rs.1,82,67,000/- to the respondent-Bank. Vide order dated 29.4.2019, the learned executing court appointed Malik Sajjad Haider Maitla, Advocate, as joint court auctioneer along with Ms. Robina Imran Rana, Advocate. During the process of execution, the respondent-Bank instead of pursuing the auction under the supervision of the Court filed an application bearing C.M. No.1674/2023 whereby the respondent-Bank prayed for grant of permission for selling the mortgaged properties without intervention of the learned executing court. Reply to the said application was filed by the appellant-Company and vide order dated 01.04.2024, the learned executing court fixed the case for arguments on the said application. When the case was taken up for hearing on 10.9.2024, arguments had to be addressed on the said application, however the learned executing court instead took up C.M. No.1901/2023 filed by one of the joint court auctioneers namely Malik Sajjad Haider Maitla, Advocate seeking recusal from his duty as a court auctioneer. The said application i.e. C.M. No.1901/2023 was accepted on the same date and one Mr. Khalid Farooq was appointed as a joint court auctioneer along with the earlier auctioneer namely Ms. Robina Imran Rana. Thereafter, the case was fixed on 22.10.2024 for filing of the auction schedule. On the said date, the learned executing court approved the proclamation of sale which was filed before the court by Mr. Khalid Farooq, joint court auctioneer through C.M. No. 2163/2024. The appellants challenged the order dated 22.10.2024 before a Division Bench of this Court through EFA No.25/2024, which was taken up for hearing on 14.11.2024. On the said date, the counsel for the respondent-Bank appeared and stated at bar that on the application bearing C.M. No.2783/2024 filed by the court auctioneer, the learned Single Judge in Chambers had already declared the auction schedule as infructuous and the impugned order dated 22.10.2024 no longer holds the field. The counsel for the respondent-Bank also gave an undertaking that his undecided application under Section 19(3) of the Ordinance bearing C.M.

No.1674/2023 be decided on the next date by the learned executing court. In light of the said statement made by the counsel for the respondent-Bank, this Court disposed of EFA No.25/2024 in the following terms:

“In view of the aforementioned changed circumstances, this appeal has also become infructuous and disposed of accordingly for reason that fresh auction schedule has to be submitted accordingly.”

On the next date of hearing i.e. 10.12.2024, the learned executing court approved a schedule vide order dated 14.11.2024 in EFA No.25/2024. The order dated 10.12.2024 was assailed by the appellant through EFA No.32/2024, wherein the said order was vehemently agitated and thoroughly contested. However, at initial stage, this Court allowed the parties to explore the possibility of settlement, which was pursued in good faith by the appellants, whereas, the respondent-Bank showed its reluctance. The auctions were approved on 11.01.2025 and 1.02.2025. The court auctioneers submitted auction report on 17.2.2025 declaring the respondent-Bank as the successful auction purchaser of both the immoveable mortgaged properties and respondent No.2 as successful auction purchaser of the machinery/moveable property. The objection petition bearing CM/Diary No.118/2025 was filed against the alleged auction report dated 17.2.2025, which came on record of the learned executing court on 1.3.2025. Thereafter, the case was adjourned to 9.4.2025 for reply and arguments. On the said date, the learned executing court, through the impugned order, decided the objection petition of the appellants/ judgment-debtors. In the meanwhile, EFA No.32/2024 was taken up for hearing on 14.4.2025, wherein it was observed that although the appeal had been filed challenging the auction order dated 10.2.2024, the auction itself had already taken place during the pendency of the appeal. Moreover, the objections against the alleged auction report had been decided through the order dated 9.4.2025. Therefore, EFA No.32/2024 was disposed of with the above observations while also

preserving the right of the appellants to raise pre and post-sale objections by filing a fresh appeal. According to the appellants, during the adjudication of EFA No.32/2024, the appellants had filed multiple civil miscellaneous applications seeking stay of auction proceedings, which were being conducted illegally by the court auctioneer in collusion with the decree-holder/Bank. Whereas, the appellants also moved applications before the learned executing court bearing CMs No. 5/2025 and 234/2025, however the same also remained pending until the auction report was filed and the impugned order dated 9.4.2025 confirmed the auction proceedings.

4.Learned counsel for the appellants submits that the impugned order was passed without hearing any of the parties, more specifically the appellants in support of their objections to the alleged auction report, thus the learned executing court has committed illegality and irregularity as guaranteed under Article 10A of the Constitution of the Islamic Republic of Pakistan, 1973 (‘the Constitution’); and the impugned order dated 9.4.2025 is manifestly unlawful having been passed in clear violation of the appellants’ fundamental right to a fair hearing; the learned executing court confirmed the auction proceedings without hearing the parties, therefore, such denial of audience constitutes a grave infraction of the principles of natural justice, the doctrine of due process enshrined under Article 10A of the Constitution and established procedural law. Consequently, the impugned order dated 9.4.2025 is liable to be set aside.

5.On the other hand, learned counsel for respondent No.1 argues that appellant No.1 despite being a jointly liable judgment- debtor did not file any objection independently to the auctions, therefore, he is barred by estoppel and is precluded from raising objections through instant appeal, which is not maintainable under the circumstances; now the appellants are estopped form raising any objection to the reserve price and the auction as agreed and consented before this Court vide order dated 30.11.2022 passed in EFA

No.33/2022; the appellants have challenged the judicial confirmation of the auction primarily on the basis of alleged irregularity, fraud and collusion between the court auctioneer and decree-holder, however, as per law laid down by the Hon’ble Apex Court, mandatory requirement of substantial injury is to be followed; it was essential for the judgment-debtors to demonstrate a plausible case of material irregularity coupled with substantial injury which in this case is lacking; the auctions were conducted through competitive bidding wherein multiple bidders participated, therefore, no question of substantial loss or injury arises; the judgment-debtors holding 39% shareholding in the judgment-debtor company and having also possession and control of the auctioned properties, filed C.M. No.995/2025 whereby they conceded and sought confirmation of the auctions and in such situation, no question of any substantial injury or material loss arises; the mortgaged properties have been sold at a much higher value than the reserve price; that the allegation regarding collusion of the Bank with the bidders and engineering a non- competitive auction was contradicted by the auction report, according to which multiple bidders participated in open competition; the remaining judgment-debtors have already conceded to the auction, therefore, no question for interference is made out at this stage; the auction of the properties has been confirmed by the learned executing court which has now created a vested right in favour of the auction purchasers. He places reliance on Aamir Afzal and another vs. S.Akmal (deceased) through L.Rs and 2 others (2024 SCMR 1649), and Hudaybia Textile Mills Ltd. and others vs. Allied Bank of Pakistan Ltd. and others (PLD 1987 SC 512).

6.Learned counsel for respondent No.2 argues that respondent No.2 came to know about the auction through publication of proclamation in the daily ‘JANG’ and ‘DAWN’ wherein it was specifically mentioned that the land and building would be auctioned at the reserve sale price of Rs.24,38,32,250/- and the machinery would be sold independently and the bid would start with the reserve sale price of Rs.8,82,56,250/-; in the proclamation, the date of auction was

mentioned as 1.2.2025; the valuation of the property was done by M/s Harvester Services (Pvt.) Ltd., who determined the valuation which was accepted by the appellants/judgment-debtors and was not challenged as the appellants had agreed before this Court that they would accept the valuation done by M/s Harvester Services (Pvt.) Ltd. in EFA No.16/2017; at the time of auction, respondent No.2 was present there who got marked his attendance and also signed the attendance sheet; respondent No.2 made a highest bid of Rs.13,75,00,000/- against the reserve price; no loss or injury was caused to the judgment-debtors as the machinery was purchased by respondent No.2 at a higher price; no material irregularity has taken place nor fraud has been committed qua sale nor the judgment-debtors have sustained a substantial injury thereof. In this regard, he placed reliance on Zakaria Ghani and 4 others vs. Muhammad Ikhlaq Memon and 8 others (PLD 2016 SC 229); the judgment-debtors/appellants have not raised any ground in their objection petition or in appeal of any substantial injury or loss on account of any irregularity.

7.Arguments have been heard and record perused.

8.The contention of the appellants/judgment-debtors is that the auction proceedings relating to mortgaged properties of appellants were confirmed solely on the basis of the auction report and this confirmation was effected without addressing or adjudicating the substantial and material objections qua auction. However, these allegations have been negated by the other side. In this case, the learned executing court dealt with the objections against the report dated 17.2.2025 for setting aside the auction of the properties held on 11.1.2025 & 1.2.2025 through impugned order. Relevant Rule 90 of Order XXI CPC for ready reference is reproduced below:- "Application to set aside on ground of irregularity of fraud:- Where any immovable property has been sold in execution of a decree, the decree-holder, or any person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the Court

to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it:

Provided that no sale shall be set aside on the ground of irregularity or fraud unless upon the facts proved the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud: [Provided further that no such application shall be entertained unless the applicant deposits such amount not exceeding twenty percent of the sum realized at the sale, or furnishes such security, as the Court may direct].”

It is, therefore, obvious from the above referred rule that sale may be set aside on the grounds of material irregularity or fraud, wherein the applicant has to establish substantial injury sustained by him owing to such material irregularity or fraud in the sale by public auction. First of all, it is mandatory for the judgment-debtor to satisfy the court, on the merits, that the sale should be set aside on the ground of a material irregularity, or fraud. Another condition is prescribed by means of the proviso thereto which stipulated that no sale shall be set aside on the ground of irregularity or fraud unless, upon the facts proved before the Court, it is established that the judgment-debtor has sustained substantial injury by reason of such irregularity or fraud. A mere allegation is not sufficient. It has to be established that not merely an irregularity but a material irregularity has taken place, or, in the alternative, that fraud has been perpetrated in the process of carrying out the sale. Even if these conditions are complied with, the judgment- debtor must satisfy the court that he has sustained a substantial injury by reason thereof. It is well settled law that the Court has the power to set aside any auction if the same is proved to have been conducted in an unlawful manner or the property has been sold at a throw away price. On the touchstone of above referred rule, we have also seen the record. The fresh schedule of auction was approved by the learned executing court and reserve prices of the properties i.e. the machinery and the land were fixed on the basis of fresh evaluation report. The

properties i.e. moveable and immovable were sold at the highest price which is more than the reserve price and this fact has also rightly been discussed in detail by the learned executing court in the impugned order. As discussed above, the mortgaged properties have been sold at a much higher value than the reserve price. The auction report further transpires that numerous bidders participated in the auction proceedings. It is also evident that regarding auction, detailed proclamations were duly published in the daily ‘JANG’ and ‘DAWN’ on 2.1.2025 & 3.1.2025. Any irregularity, if any, in proclamation of auction proceedings cannot be attributed as substantial loss to the judgment- debtors. Court has inherent powers to adopt any mode and manner of auction prescribed by law which does not constitute as injury to the Judgment-debtor. Some judgment-debtors/ shareholders of the judgment-debtor company did not come forward to raise any objection to the auction process. As on one hand it has been alleged that the auction did not take place at the time and venue so approved, while on the other hand, the representative of appellant- Company/judgment-debtor namely Ammar Sajid was present during both auctions and his presence was also marked duly verified by his signature and he also raised no objection at that time, therefore, it is an admitted position that the auction proceedings were in fact conducted at the site and allegations levelled by the appellants are baseless and an afterthought. Furthermore, with regard to objection that the auction did not reflect necessary details, it is suffice to say that relevant information was substantially provided, hence is not a material irregularity and does not constitute a fraud. Objection after completion of sale should not ordinarily be allowed except on very limited grounds like fraud etc. Further, no such sale shall be set aside on any ground which the applicant could have put forward before the sale was conducted. It was held by this Court in the case of Standard Chartered Bank Limited vs. Nice N Easy (Pvt.) Limited and others (2019 CLD 840) while endorsing the dictum laid down in the judgment of Hon’ble Supreme Court in the case reported as Ghulam Abbas vs. Zohra Bibi and another (PLD 1972 SC 337) that it is clear

and obvious that unless any material irregularity, coupled with substantial injury, was shown to have been committed or caused to the judgment-debtor, no auction sale can be set aside. Reliance may also be placed on the cases of Evacuee Trust Property Board vs. Sh. Hameed Elahi and another (PLD 1981 SC 108) and Mumtaz ud Din Feroze vs. Sheikh Iftikhar Adil and others (PLD 2009 SC 207).

9.Admittedly, after issuance of notices to the parties on 14.11.2024, fresh schedule of auction was approved by the learned executing court. On the fresh evaluation report, reserve prices of properties were fixed. At that time, none on behalf of the judgment- debtors requested to decide any application under Section 19(3) of the Ordinance. Auction report was filed on 17.2.2025. The auction report fulfils all requirements of auction which was broadly advertised, competitive bidding took place in the presence of representative of judgment-debtor No.1/appellant who did not raise any objection to the auction proceedings at that time. The properties were sold at highest prices more than the reserve prices. Therefore, the allegations of fraud and irregularities raised by the judgment-debtors are of no help to them. Hence, the mere allegation from one side of the judgment- debtor is not sufficient to set aside the sale which was conducted and confirmed under judicial supervision. Some of the judgment-debtors/ shareholders of the judgment-debtor company did not raise any objection to the auction process. As discussed above, the representative of appellant-Company was present during both auctions and his presence was also marked and he also signed the attendance sheet raising no objection at that time, therefore, inference can be drawn that the auction proceedings were really conducted at the site and all allegations levelled by the appellants/judgment-debtors seem to be groundless and a postscript. The allegation against the Bank to the effect that it in connivance with the bidders got managed a non- competitive auction, is negated by the auction report which shows that multiple bidders took part in open competition. Hence, no question for any interference in the impugned order is made out. The auction of the properties has justly been confirmed by the learned executing court

while addressing and adjudicating the substantial and material objections qua auction.

10.While relying on the above case law and the judgment of Hon’ble Supreme Court of Pakistan in the cases of Tariq Zubair Khan vs. Mst. Tabassum Khan and others (2024 SCMR 1218), Zakaria Ghani and 4 others vs. Muhammad Ikhlaq Memon and 8 others (2016 CLD 480), and Muhammad Khalil vs. Messrs Faisal M.B. Corporation and others (2019 SCMR 321), we, therefore, find no justification to set aside the impugned order which is hereby upheld and as a consequence whereof, the instant EFA is dismissed, accordingly.

(Ch. Muhammad Iqbal) (Malik Muhammad Awais Khalid) Judge Judge

Announced in open Court on 29.10.2026.

JUDGE JUDGE

Approved for Reporting.

JUDGE JUDGE

SN