Law: Code Of Civil Procedure, 1908.

Section: 89,90,92(2)

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

Section:

Core Facts ZTBL obtained an ex-parte decree for recovery of Rs.106,033/- against the predecessor of the appellant. During execution proceedings, the mortgaged property measuring 4 kanals 14 marlas situated at Mouza Torlandy, District Swabi, was auctioned. The property was sold for Rs.290,000/-. The appellant filed objections under Order XXI Rule 89 of the Code of Civil Procedure (CPC) after depositing the amount required by law, seeking to set aside the auction sale. The Banking Court dismissed the objection petition and confirmed the auction sale. The appellant challenged that order before the Peshawar High Court. Core Issue Whether an auction sale can be set aside under Order XXI Rule 89 CPC when the applicant has fulfilled all statutory requirements by making the prescribed deposit, even though no allegation of fraud or irregularity has been proved. Held The Peshawar High Court allowed the appeal and held that: Order XXI Rule 89 CPC provides an independent statutory remedy to a person having an interest in the auctioned property. Once the applicant: files the application within the prescribed time, and deposits the decretal amount along with 5% compensation for the auction purchaser, the Court is bound to set aside the auction sale. The applicant is not required to prove fraud or material irregularity, as would be necessary under Order XXI Rule 90 CPC. The Banking Court erred by refusing relief despite the appellant's compliance with Rule 89. Decision Appeal Allowed. Judgment of the Banking Court dated 30.03.2022 was set aside. Application under Order XXI Rule 89 CPC was accepted. Auction sale of the mortgaged property was set aside. Necessary consequential directions regarding refund/payment to the auction purchaser were ordered in accordance with law. Parties were directed to bear their own costs. Laws & Sections Involved Order XXI Rule 89, Code of Civil Procedure, 1908 – Application to set aside sale on deposit. Order XXI Rule 90, CPC – Setting aside sale on ground of material irregularity or fraud. Order XXI Rule 92(2), CPC – Mandatory setting aside of sale where the deposit under Rule 89 is duly made. Key Precedents Relied Upon…