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Challenging an Auction Sale under the Artha Rin Adalat Ain, 2003

An auction sale held by an Artha Rin Adalat can be challenged first before the Adalat itself (Order XXI rule 90 CPC, or section 57 of the Ain), then by appeal under section 41 or, in limited cases, by writ under Article 102. The grounds fall into two groups. Jurisdictional defects make the sale void: execution barred by section 28 limitation, no execution case at all, execution against a dead judgment-debtor, no sale proclamation at all, or a section 33(7) certificate issued without the steps the Ain requires. Irregularity or fraud in publishing or conducting the sale vitiates it when it causes substantial injury: short notice, a sale on a hartal day, a shockingly low price, or collusive bidding. Fraud is not shut out by res judicata or by confirmation of the sale (Jahangir Kabir Chowdhury, 22 BLC (AD) 139).

The forum matters as much as the ground. The Appellate Division has refused writ relief where the petitioner skipped an application under Order XXI rule 90 CPC (Mohd. Junayed Quader, 2009; Fariduddin Mahmud, 2010). Questions of fraud and irregularity are treated as questions of fact for the Adalat, not the writ bench. A writ is the right first step mainly where the Adalat acted wholly without jurisdiction, or where it refused to hear the objection at all.

A sale made by the bank itself before suit, under section 12, stands on a different footing: section 12(8) bars a challenge to it, leaving the owner a suit for damages (Banesa Bibi, 63 DLR (AD) 160), though one High Court Division bench set such a sale aside in a title suit for short notice (Abul Khayer Mollah, 2016). It is treated separately below.

This note is drawn from the sixteen judgments supplied with the request. Statements of the general law (limitation periods, deposit rules) not found in those judgments are marked "to verify".

The statutory framework

The Ain, 2003 has its own sale procedure in section 33, and section 26 imports the CPC's execution provisions where not inconsistent. Because Chapter VI of the Ain has no provision for objecting to a sale, Order XXI rules 89, 90 and 91 CPC apply to Artha Rin execution (Fariduddin Mahmud, 63 DLR (AD) 93).

Four further provisions shape the challenge. Section 57 gives the Adalat inherent power to make any order for the ends of justice; it can be used to set aside a sale procured by fraud even after confirmation (Jahangir Kabir Chowdhury). Section 20 bars a separate civil suit attacking the Adalat's decree or execution, including by a successor of the judgment-debtor (Agrani Bank v Rina Humayun, 14 ADC 872). Order XXI rule 66 CPC applies through section 26: the proclamation must be drawn after notice to both parties and state the property, encumbrances, the amount due and everything material to value. Section 48 counts time periods in working days only (Abul Khayer Mollah).

Title passes only on a registered sale certificate, not on confirmation alone (Habibur Rahman Miah, 2019). That matters for timing: the window for settlement and challenge stays widest before the certificate is registered and possession delivered.

How: the routes of challenge

The safe sequence is: object before the Adalat, then appeal, and go to writ only for a jurisdictional nullity or where the Adalat refused to hear the objection.

Object on the day of sale (bank). File under s.33(2ga) at bid opening that the offer is too low, and ask for a fresh tender or a certificate under s.33(5)/(7). Do it before confirmation. In ABBL v Artha Rin Adalat No. 3 (2007) the bank waited about a month, the sale became absolute under O.XXI r.92, and s.33(7) could no longer be invoked. The Adalat must decide the substance, not the wording of the application (Sonali Bank v Asa Tex, 2014).

Miscellaneous case under O.XXI r.90 CPC (any affected party). This is the principal remedy for fraud and irregularity. Plead the specific irregularity, the facts showing fraud, and the substantial injury (usually the gap between price and value). Ask for an inquiry and time to file valuation evidence; the Adalat cannot reject it summarily on "maintainability" (Agrani Bank v Artha Rin Adalat, 2019). No 20% bid-money deposit is needed (Sardar Jan-A-Alam, 1999). Limitation: 30 days from the sale under Article 166 of the Limitation Act (to verify).

Deposit and retain the property (judgment-debtor). Where the debtor can pay, an application under O.XXI r.89, or settlement under s.45 before the sale certificate is registered and possession delivered, saves the property. The purchaser is compensated with solatium (Abdul Jalil v BHBFC, 41 DLR (AD) 109, applied in Asadullah; 5% solatium ordered in Habibur Rahman Miah).

Transfer of the execution (any party). If the Adalat sits outside the district of the property, apply under s.27 so the sale is held locally for the best price (Gulshana Ara Begum, 70 DLR 230; applied in Agrani Bank, 2019).

Appeal under s.41 (against the order on the objection). Post-decree orders are appealable under the 2003 Ain, and the s.44(2) bar on interlocutory appeals covers pre-decree orders only (Sonali Bank v Asa Tex, 20 BLC 185; Trade Multiplex, 62 DLR 533). Banks deposit nothing (s.41(4)). A judgment-debtor who attacks only the sale and keeps the decree intact need not deposit 50% (Dr Md Asadullah, 62 DLR 474).

Writ under Article 102 (exceptional). Use it where the order is wholly without jurisdiction, void, mala fide, or in breach of natural justice, or where no efficacious remedy exists (Fariduddin Mahmud, para 19). The writ bench must issue a Rule Nisi to every affected party, including the judgment-debtors and the auction purchaser, and cannot grant relief summarily (Fariduddin Mahmud; National Engineers v Jubak Housing, 67 DLR (AD) 176).

Forum caution. The cases do not speak with one voice on writ versus appeal under the 2003 Ain. Sonali Bank v Asa Tex holds that the 1990-Act line of writ cases no longer applies now that s.41 provides an appeal. Yet Agrani Bank (2019), Habibur Rahman Miah (2019) and Joinaul Abedin Mintu (2010), along with Saboj Traders (2017) and Zodiac Sweaters (2014), all granted writ relief against execution orders made after the 2003 Ain came into force. The practical answer is to exhaust the O.XXI r.90 objection first, then choose appeal or writ by the nature of the defect: factual disputes go on appeal, nullities may go on writ.

Section 57 application. Where fraud surfaces after rule 90 remedies have been used up, or after confirmation, apply to the Adalat under s.57. In Jahangir Kabir Chowdhury the debtor had lost a rule 90 case, appeals and several writs, yet the Appellate Division held the sale fraudulent and let him retain the property on paying the purchaser four times the bid. Applications under s.57 were also the vehicle in Saboj Traders (2017). Expect the objection that the Adalat is functus officio after confirmation; the Appellate Division has said that argument does not stand in the way of undoing fraud.

Separate civil suit. A suit to declare an Artha Rin execution sale void is barred by s.20 where brought by the judgment-debtor or one claiming through them (Agrani Bank v Rina Humayun). Use the execution court, appeal or writ instead.

Sales by the bank itself under section 12

A bank may sell mortgaged property without going to court under s.12, and s.12(8) bars any challenge to that sale on grounds of illegality or irregularity; the owner's remedy is a suit against the bank for damages. The Appellate Division applied the bar and refused writ relief in Banesa Bibi v Senior Vice President, 63 DLR (AD) 160 (2009), where notice had appeared twice in national dailies and the bank held a registered power of attorney.

The bar has not stopped every challenge. In Abul Khayer Mollah v Agrani Bank (HCD, 2016) a title suit succeeded because the s.12 auction notice gave only 12 working days, in breach of s.12(4) and s.33 read with s.48; the suit was decreed on condition that the owners pay the purchaser Tk 22,86,666 within 30 days. That is a High Court Division first appeal and does not discuss Banesa Bibi, so treat it as an argument for gross procedural breach, not settled law.

Grounds of challenge

The strongest grounds attack the Adalat's power to sell at all; the next strongest show a defect in the sale process plus a price far below value.

A. Jurisdictional defects: the sale is void

B. Material irregularity in publishing or conducting the sale

C. Price and fraud

A shockingly low price, evident on the record, is itself a material irregularity (Agrani Bank, 2019, citing XIV ADC 465). In Fariduddin Mahmud the Appellate Division listed the classic forms: understating value in the proclamation to mislead bidders, a sale at serious undervalue, and deliberately low valuation by the decree-holder, which amounts to fraud. Gross undervaluation combined with a relative of the purchaser bidding is treated as fraud.

Collusive bidding is proved by circumstances. In Agrani Bank (2019) the three bids came from a father, son and brother, on pay orders with serial numbers 3157296–98 drawn at one sitting; two bidders paid less than the 10% earnest money. The court held the whole auction a nullity. The Appellate Division drew the same inference in Jahangir Kabir Chowdhury, 22 BLC (AD) 139, where the same purchaser rebid at almost the same price with two token bidders.

Useful price comparisons from the cases: Tk 10 crore against a bank valuation of Tk 20.21 crore and dues of Tk 21 crore (Agrani Bank); 10.5 decimals at Banani for Tk 40 lakh (Asadullah); Tk 1.40 crore against dues above Tk 6 crore (Sonali Bank v Asa Tex); Tk 6.10 crore against dues of Tk 22.35 crore (National Engineers). Price alone, with no irregularity, is a weaker ground; pair it with a defect in process.

Two Appellate Division cases add stronger facts. In Jahangir Kabir Chowdhury (2016) over three bighas at Tejgaon sold for Tk 7.76 crore, a price the Adalat had rejected as shockingly low two months earlier. In Agrani Bank v Rina Humayun (2017) nearly 20 kathas at Gulshan sold for Tk 1 crore and the purchasers agreed to resell for Tk 5 crore days later; the unpaid principal had been only Tk 83,307.90. A quick resale at a multiple of the bid is strong evidence of fraud (Punjab Mercantile Bank v Kishan Singh, AIR 1963 Punj 230, cited there).

D. Natural justice

A sale, or an order on a challenge to it, made without hearing the party whose property or purchase is at stake can be set aside. The writ bench must issue a Rule on the judgment-debtors and examine the Adalat's reasons itself; it cannot make a Rule absolute merely because the bank does not oppose (National Engineers v Jubak Housing). Equally, an auction purchaser who has acquired rights must be heard before the sale is stayed (Fariduddin Mahmud).

Limits and likely defences

Expect the auction purchaser and, sometimes, the bank to raise these points; each has defeated a challenge in the cases supplied.

Statutory remedy not used. A writ was held not maintainable where the petitioner neither challenged the decree nor filed under O.XXI r.90 (Mohd. Junayed Quader, 5 LM (AD) 418). Fraud and irregularity "are essentially a question of fact to be determined on evidence" and not for writ (Antibiotic Stores, 55 DLR (AD) 13, approved in Fariduddin Mahmud).

Wrong forum: civil suit. A separate suit against an Artha Rin decree or execution sale is barred by s.20 (Agrani Bank v Rina Humayun). In that case the Appellate Division still ordered a fresh auction under Article 104 to do complete justice, but that power belongs to the Appellate Division alone.

Pre-suit sale under s.12. Section 12(8) bars a challenge; the remedy is damages against the bank (Banesa Bibi).

Delay, waiver and unclean hands. A debtor who filed serial writs to stall the sale, never offered to pay in the Adalat and raised no price objection at the sale was refused discretionary relief (Fariduddin Mahmud). Suppressing an earlier writ on the same issue counted against the petitioner in Banesa Bibi. A bank that did not object at bid acceptance was held to have waived s.33(7) (ABBL, 2007).

Res judicata and earlier failed challenges. Not a bar where fraud is shown on the face of the record; a sale obtained by fraud is a nullity and can be attacked even in a collateral proceeding (Jahangir Kabir Chowdhury). Repeated failed applications will still weigh on the remedy granted.

Sale already confirmed and vested. After confirmation under O.XXI r.92 the property vests in the purchaser from the date of sale (s.65 CPC); the decree-holder cannot then seek a certificate under s.33(7) without first having the sale set aside (ABBL, 2007). Confirmation and a registered boinama do not protect a sale procured by fraud (Jahangir Kabir Chowdhury; Rina Humayun).

More than two auctions is not by itself illegal. Section 33 allows repeated auction attempts, including after a low bid is cancelled (ABBL, 2007). The argument that only two invitations are allowed failed in Mohd. Junayed Quader.

Bona fide purchaser. The plea does not save a void sale; in Agrani Bank, Asadullah, Sardar Jan-A-Alam and Rina Humayun sales were set aside despite payment, sale certificate and possession. The purchaser's protection is usually money: refund with interest, solatium, or, in Jahangir Kabir Chowdhury, four times the bid (Tk 32 crore) paid by the debtor in instalments.

Settlement behind the purchaser's back. It is still valid before the sale certificate is registered and possession delivered, but the bank should notify the purchaser (Habibur Rahman Miah). Settlement under ss.38 and 45 remains open while the execution case is pending (Zodiac Sweaters).

Drafting checklist

☐ Identify the sale: Adalat execution under s.33, or the bank's own pre-suit sale under s.12 (different remedy).

☐ Pull the full order sheet of the execution case; date every step against s.28 and the date of the decree (a preliminary money decree is final at once).

☐ Check that an execution case was filed at all before any s.33 step.

☐ Check every judgment-debtor is alive and served; if one died, check substitution of heirs.

☐ Check the proclamation was drawn under O.XXI r.66 after notice to both parties and states the value of the property.

☐ Collect every sale proclamation and newspaper cutting; match each actual sale date to a publication.

☐ Count the notice period in working days (s.48); check notice-board posting and beat-of-drums on the record.

☐ Check the sale date against hartals, holidays and the parties' presence.

☐ For a s.33(7) certificate: was there a prior auction attempt, and if s.33(4) had started, were s.33(5)–(6) followed? Was a bid accepted while a s.33(7) application was pending?

☐ Get the bid sheet: bidders' names and relationships, pay-order numbers and issuing branch, earnest money paid by each.

☐ Assemble value evidence: bank's sanction-time valuation, a fresh valuation, mouza rate, comparable sales, any quick resale by the purchaser; compare with dues.

☐ Confirm whether the sale is confirmed, sale certificate registered and possession delivered.

☐ File the O.XXI r.90 miscellaneous case (and, for a bank, the s.33(2ga) application) promptly; ask for an inquiry, not a hearing on maintainability alone. If fraud surfaces later, apply under s.57.

☐ If the debtor can pay, offer deposit or settlement under O.XXI r.89 / ss.38, 45, with solatium to the purchaser.

☐ If the Adalat is outside the property's district, apply for transfer under s.27.

☐ On rejection: appeal under s.41 (no 50% deposit if only the sale is attacked); writ only for a nullity, naming the judgment-debtors, bank and purchaser and seeking a Rule against all. Do not file a separate civil suit (s.20).

Table of authorities

Newest first; all sixteen from the judgments supplied (Manupatra prints).