Lahore High Court Declares Auction Sale Illegal Strengthens Legal Precedents on Public Auctions and Unconstitutional Laws
Islamabad 22-03-2025: In a significant ruling, the Lahore High Court, Rawalpindi Bench, has set aside the confirmation of an auction sale conducted under a now-invalidated provision of law. The Court held that the auction of mortgaged property under Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, was unlawful as the provision was declared unconstitutional in 2014 by the Supreme Court of Pakistan in National Bank of Pakistan Vs. SAF Textile Mills Ltd. (PLD 2014 SC 283).
The case, Bashir Ahmad Bhatti & Others Vs. Albarka Bank Pakistan Ltd., was filed under Section 22 of the Ordinance to challenge the auction sale of a mortgaged property that took place on June 25, 2012. The appellant argued that since Section 15 was later struck down, the auction could not be considered valid. The respondents sought multiple adjournments, which were denied by the Court in light of judicial efficiency principles.
Key Legal Findings:
- The Court reaffirmed that an unconstitutional law is void from the beginning, meaning any transactions made under it can still be challenged unless the doctrine of prospective overruling is explicitly applied.
- The auction was confirmed despite receiving only a single bid, which contradicts the public auction requirement, as established in Al-Hadi Rice Mills Vs. MCB Bank Ltd. (2023 CLD 85).
- The Respondents argued that Financial Institutions (Recovery of Finances) Rules, 2018, allowed single-bid consideration. However, the Court noted that the relevant rule (Rule 3(c)(iv)) was declared ultra vires in Muhammad Shoaib Arshad Vs. Federation of Pakistan (2020 CLD 638).
- The Court emphasized the impact of frequent adjournments on the judicial system, citing Moon Enterpriser CNG Station Vs. SNGPL (2020 SCMR 300), and denied further postponements.
The Lahore High Court declared the auction sale illegal and set aside its confirmation order. The appellants were granted the right to seek restitution and reversal of actions taken under the unlawful auction.
Powered by Froala Editor
