Law: Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)

Section: 19(7)

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--- ----S. 19(7)---Auction proceedings set-aside by Banking Court---Unjust enrichment of Bank at the cost of auction purchaser---Return of deposited amount to auction purchaser with penalty/mark-up---Appellant Bank being a decree holder placed a mortgaged property owned by the -debtor up for auction to recover the decretal amount---Respondent submitted the highest bid in the sum of Rs.50,50,000---Banking Court confirmed the auction of the property in favour of the respondent (auction purchaser)---On appeal the High Court set aside the order of Banking Court---Respondent thereafter filed an application for return of the auction amount, which was allowed by the High Court, with the direction to the Bank to refund the amount of Rs.50,50,000/- together with 10% mark up as penalty---Held, that respondent was entitled to receive compensation on the amount which he deposited with the Bank by way of price of the auctioned property---Matter of auction of property lingered on in courts for a number of years for no fault of the respondent---Bank had possession and use of the funds (deposited amount) for a period in excess of nine years---During such time surely the money was utilized by the Bank in its business and obviously the Bank earned returns on the same, therefore it would neither be just nor proper to allow the Bank, free use of the money, as it would amount to un just enrichment at the cost of the respondent (auction purchaser) who was not to be blamed for delay in the legal process---Supreme Court upheld the of the High Court but reduced the amount of penalty/mark up awarded from 10% to 8% per annum---Supreme Court directed that respondent shall now be entitled to recover the entire amount of Rs.50,50,000/- together with penalty mark up calculated @ 8% perannum from the date of deposit till the date of refund. (b) Administration of justice--- ----Act of the Court shall not prejudice any of the parties. THIS ORDER PASSED BY: IJAZ UL AHSAN, J.--- This appeal is directed against the judgment of the Lahore High Court, Multan Bench, Multan passed on 15.06.2015. Through the impugned judgment,…

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