Deposit of 20% Auction Amount for Entertaining the Appeal

Deposit of 20% Auction Amount for Entertaining the Appeal Auction Banking Case Laws Corporate Law Knowledge – Corporate Law Lahore High Court Litigation & Arbitration Solutions - Corporate Law Mr. Justice Muhammad Sajid Mehmood Sethi in his judgment has decided the issue regarding deposit of 20% auction amount for entertaining the appeal in Execution First Appeal No. 76 of 2016.

1. Through this appeal, the order dated 01.12.2015, passed by learned Single Judge of this Court, in Ex. A. No.18-B of 2013 titled MCB Bank Limited v. M/s. Jaguar (Pvt.) Ltd., etc., has been assailed, whereby the post-sale objection petition filed by the appellants, was dismissed.

2. Brief facts of the case are that respondent bank filed a recovery suit against the appellants and respondents No.2 & 4 to 8, wherein an interim decree dated 07.03.2013 was passed. Respondent No.1 initiated execution proceedings through Execution Petition No.18-B/13. Learned Executing Court approved the proclamation/schedule of auction sale vide order dated 12.06.2015. In consequence thereof, the properties of appellants were ordered to be auctioned. The appellants submitted objections (pre-auction) by filing C. M. No.765-B/2015 against the proposed auction sale and alleged innumerable illegalities, irregularities and procedural lapses, which allegedly on the face of record, constitute violations of mandatory requirements of law and reason to cause substantial injury to the appellants. Learned Executing Court proceeded to pass the order that the auction shall be subject to the fate of decision of this application and option was given to the appellants to bring a buyer before this Court before the approval of the sale, to match the reserve price mentioned in the auction schedule. Pursuant to the aforesaid order, the auction was conducted on 31.08.2015 and 01.09.2015. Subsequent to the said auction, the appellants filed objection petitions (post-auction sale) bearing C. M. No.942-B/15, 943-B/15, 944-B/15 and 945-B/15, under Section 19 (7) of the Financial Institutions (Recovery of Finances) Ordinance (“FIO”), 2001, read with Order XXI Rule 90 of the Code of Civil Procedure, 1908 (“CPC”). The said objection petitions were heard and dismissed vide order dated 01.12.2015, which has been impugned through the instant appeal.

On 19.01.2016, case was partly argued and learned counsel for the appellants was confronted with proviso to Rule 90 of Order XXI CPC, for deposit of 20 % of the auction amount for entertaining the appeal and for grant of interim order. As main thrust of his arguments was that properties were being auctioned at much lower price, therefore, he was given another opportunity at appellate stage to fetch best price of the properties, in order to satisfy claims of all concerns, including decree holder banks. Relevant extract of the said order is reproduced here under:-

“8. Learned counsel for the applicant is confronted with order 21 rule 90 for deposit of 20 % of the auction amount. On this objection, learned counsel for the applicant submits that he has already made offer and undertakes, on behalf of his client, who is present in court, that he will endeavor to match the bid amount in order to satisfy all the creditors, charge of whom is on properties in question.”

In response, C. M. No.3 of 2016 was filed to claim that a potential purchaser is arranged, who was willing to purchase property No.1 at three times more than the auction price. Admittedly, the offered amount was not sufficient to satisfy decree and other claims. Confronted with this, he did not press the application and opted to argue the appeal on merits. Since offer in C. M. No.3 of 2016 is not in accordance with the order supra, and is not pressed, hence, is dismissed.

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