Auction Notice Omission Did Not Void Sale Without Proven Injury: Supreme Court

Independently written and published by Shahbaz Shah Legal Journal.

An omission of notice before drawing up an auction proclamation did not, on this record, make the sale a nullity. The Supreme Court of Pakistan upheld Liberty Mills' purchase after examining the judgment-debtors' knowledge of the proceedings, their original objections and the absence of substantial injury caused by the alleged irregularity. Judgment, paragraphs 37–41.

The Court preserved the adjusted purchase price of Rs227.5 million. It also held that seeking review in the High Court did not restart the expired time for challenging that court's original judgment. Justice Miangul Hassan Aurangzeb wrote the judgment, announced on 26 October 2026, for a bench comprising Chief Justice Yahya Afridi, Justice Muhammad Shafi Siddiqui and himself. Bench and case particulars Paragraphs 22–23 Paragraphs 42–43 and announcement date.

A banking decree and a disputed industrial-property sale

Allied Bank obtained a decree against Muslim Cotton Mills and its directors on 15 November 2010 for Rs166,630,737 together with cost of funds. Execution concerned mortgaged industrial property of about 1.04 acres in Karachi's SITE area and hypothecated assets. The challenge to the underlying decree eventually failed and the decree became final. Paragraphs 2–4.

For the auction held on 22 April 2014, the property had a market valuation of Rs253,660,447 and a reserve price, corresponding to its forced-sale value, of Rs227.5 million. Liberty bid Rs125 million. The executing court accepted and confirmed the bid on 8 August 2014, and a sale certificate followed. Paragraphs 6–8.

The judgment-debtors then objected under section 47 and Order XXI Rule 90 CPC. Their objections were dismissed in 2016. On appeal, the Sindh High Court declared the confirmation illegal for want of the notice contemplated by Rule 66(2), but gave Liberty the option to purchase at Rs227.5 million. Liberty paid the additional Rs102.5 million on 6 February 2021. Paragraphs 9–10 Paragraphs 11–12.

Rule 90 requires proof of the injury alleged

The Supreme Court examined the objections actually placed before the executing court. Order XXI Rule 90 permits an affected person to challenge a sale for material irregularity or fraud in its publication or conduct. Its first proviso requires substantial injury caused by that irregularity or fraud; its second addresses a deposit or security as directed by the court, subject to the stated ceiling. Paragraphs 25–26.

The original objection principally attacked acceptance of a bid below the reserve price and alleged that the Nazir had failed to inform the court of the valuation. The report, however, recorded the evaluator and the valuation basis. The executing court's order referred to the auction advertisement containing the reserve price. The Supreme Court concluded that the court knew the valuation when it accepted the offer. Paragraphs 27–28.

General references to irregularity, fraud or financial injury did not supply missing particulars. The Court applied Order VI Rules 2 and 4 and rejected vague allegations as a basis for the requested relief. Paragraph 32.

Knowledge and the pleaded grounds mattered

The judgment-debtors had not alleged in their original objections that they were unaware of the auction or that the proclamation had been prepared without notice. They introduced the Rule 66(2) ground in their appeal. The Court considered their knowledge of the execution, the agreed valuation and reserve price, the published auction notice and their opportunity to participate. Paragraphs 29–31 Paragraph 33.

Section 19(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 automatically converts the banking suit into execution proceedings upon judgment and decree, without a separate execution application or fresh notice of that commencement. The Court considered that rule when assessing the judgment-debtors' knowledge. That commencement of execution is a distinct step from drawing up the sale proclamation under Rule 66(2). Paragraphs 30–31.

Rule 66(2) requires notice to the decree-holder and judgment-debtor before the proclamation is drawn up. The judgment does not abolish that requirement. It explains that notice need not necessarily be conveyed through the court's formal process, and assesses the alleged omission in the circumstances before it. The judgment-debtors' failure to plead that ground in their original objections was also material. Paragraphs 37–38.

When asked to identify a defect in the proclamation, counsel questioned the property's description. The Court found the description adequate. Nor was inadequate advertising alleged. The suggestion that the property might have fetched a higher price did not establish that omission of notice had caused an inadequate sale price. Without that causal injury, the Court declined to treat the sale as void on these facts. Paragraphs 39–40 Paragraph 41.

The price remained Rs227.5 million

Liberty's purchase was not restored at its original Rs125 million bid. The company had exercised the High Court's option and paid the additional Rs102.5 million, bringing the total to the reserve price of Rs227.5 million. It did not seriously challenge that adjustment before the Supreme Court, which left it intact. Paragraph 35 Paragraph 42.

Review did not give a fresh appeal period

The judgment-debtors challenged the High Court's original judgment of 4 February 2021 and the review refusal of 25 June 2021 through CPLA 917-K/2021 filed on 8 July 2021. For that litigation, the Supreme Court calculated that the sixty-day period for challenging the original judgment had expired on 6 April 2021. No application for condonation accompanied that challenge. Paragraph 21.

A timely challenge to the refusal of review could not revive the expired challenge to the original judgment. The Court examined the review refusal separately; review was not an opportunity to reargue the case as an appeal, and the judgment-debtors had established no apparent error in giving Liberty the option to pay the reserve price. Paragraphs 22–23 Paragraph 34.

Liberty's civil appeal was allowed to the extent stated in the judgment. The judgment-debtors' challenge to the original High Court judgment was dismissed as time-barred, their challenge to the review refusal was also dismissed, and they were ordered to bear Liberty's costs. Paragraph 43.

For connected procedural questions, see review and error apparent and the need to plead and prove a challenge to a registered transaction.

Sources

• Read the complete Supreme Court judgment.
• Download judgment PDF.
• Case metadata and searchable judgment summary.

Frequently asked questions

Did the Supreme Court uphold Liberty Mills' purchase?

It allowed Liberty's appeal against the finding that the sale was illegal for want of notice. It left intact the price of Rs227.5 million which Liberty had paid under the High Court's directions. paragraphs 42–43.

Does every omission of an Order XXI Rule 66 notice invalidate an auction?

The Court did not accept automatic invalidity on this record. The judgment-debtors knew of the auction, had an opportunity to participate, had not pleaded this notice ground in their original objections, and failed to prove resulting substantial injury under Rule 90. paragraphs 37–41.

Must substantial injury be connected to the irregularity alleged?

Yes. Rule 90 requires proof of substantial injury caused by the material irregularity or fraud. The possibility that the property might have fetched more was insufficient on the facts examined here. paragraph 41.

Was the original Rs125 million price restored?

No. Liberty had paid an additional Rs102.5 million, bringing its payment to the reserve price of Rs227.5 million. The Supreme Court did not interfere with that price adjustment. paragraph 42.

Did seeking High Court review restart the time for challenging the original judgment?

No. A timely challenge to the refusal of review did not revive the expired challenge to the original judgment. The Court examined the review refusal separately and dismissed the original-judgment challenge as time-barred in the absence of a condonation application. paragraphs 21–23.

What happened to the judgment-debtors' petition?

CPLA 917-K/2021 was dismissed as time-barred insofar as it challenged the original High Court judgment, and was also dismissed insofar as it challenged the review refusal. The judgment-debtors were ordered to bear Liberty's costs. paragraph 43.