Transparency of Auction Proceedings

In the case of Siraj Ahmed vs. Faysal Bank Limited (PLD 2018 SC 91), the Supreme Court of Pakistan delivered a significant ruling that addresses the legal procedures surrounding the auction of properties during execution proceedings and the responsibilities of executing courts to ensure fairness and transparency.

Background:

The case involved Faysal Bank Limited's recovery suit against Siraj Ahmed, resulting in a decree for a substantial amount. During the execution of this decree, the property owned by Siraj Ahmed was auctioned. The petitioner contested the auction process, claiming that it was conducted improperly, lacked adequate publicity, and resulted in the property being sold at a price significantly below its market value.

Key Issues:

Non-Compliance with Auction Procedures: The petitioner argued that the auction did not adhere to the mandatory provisions of Order XXI, Rules 66 to 68 of the Code of Civil Procedure (CPC). Specifically, the petitioner highlighted that the reserve price was not fixed, and the auction was not widely publicized as required by law. The Court found that the auction process indeed suffered from multiple procedural flaws, including the failure to advertise the auction properly, which likely affected the auction’s fairness.

Impact of Reserve Price and Auction Location: The Court noted that the auction was held on the premises of Faysal Bank Limited, the decree-holder, rather than at the property’s location, further raising concerns about the auction’s transparency. Additionally, the auction notice was published in an obscure newspaper, which did not ensure adequate public participation, leading to a sale at a throwaway price.

Judicial Review of Auction Proceedings: The Court cited relevant case law, including Lanvin Traders vs. Presiding Officer, Banking Court No. 2 (2013 SCMR 1419), where it was established that the absence of a reserve price and lack of proper publicity could render an auction void if it resulted in significant prejudice to the judgment debtor. Similarly, the Court referenced Imtiaz Ahmed vs. Ghulam Ali (PLD 1963 SC 382), emphasizing that procedural technicalities should not be allowed to thwart substantive justice.

Court’s Conclusion: The Supreme Court set aside the auction, acknowledging the serious procedural lapses that led to a miscarriage of justice. The case was remanded to the executing court with instructions to conduct a fresh auction in compliance with the law. The original auction purchaser was granted the right of first refusal in the new auction process, ensuring fairness to all parties involved.

Contact Us:

For professional legal assistance in banking and financial matters, including issues related to mortgage enforcement, property auctions, and execution proceedings, AUJ LAWYERS LLP offers expert legal services. Our experienced team is dedicated to ensuring that your rights are protected throughout the legal process. Contact us for comprehensive legal advice and representation tailored to your needs.

We are here to help

Talk to our lawyers today. We tailor our services around your legal needs so that we can reach the desired outcome together.