Banks can’t auction joint Khata properties without demarcation of land

LAHORE: Banks cannot auction joint Khata properties without demarcation of land. A higher appellate forum has set aside an order of the lower appellate forum, which allowed the auction of a petrol pump property without demarcating the land.

The forum ruled in favour of the property owner who claimed that the petrol pump was situated on their share of the joint Khata property.

Initially, the preliminary appellate forum had allowed the auction without verifying the ownership of the land. The owners, who were not parties to the original case, objected to the auction and the higher appellate forum remanded the case for a fresh decision.

According to details, the joint Khata holder, being third party, objected to the auction of mortgaged property on the pretext that they were lawful owners in possession of the land.

He developed and established a petrol pump on the aforementioned land and obtained dealership of an oil distribution company and was running their business without any interference.

He further informed the appellate forum that both he and his shareholder invested huge amount for the construction and installation of petrol pump.

Due to shortage of funds, they obtained finance facility regarding his share in the aforesaid property and executed collateral mortgaged deed in favour of a bank registered in office of Sub-Registrar and the charge of mortgage still existed in favour of the bank.

It came into his knowledge that the petrol pump was auctioned by the order of the court. He was of the view that neither he had mortgaged the property nor any loan facility was availed by him. The property in question was allegedly auctioned through a bogus auction without the court auctioneer.

He maintained he got arranged demarcation of their property by making a request to the revenue authorities and it was clear that the debtor had no concern with the property, therefore, the auction report was based on fraud which was liable to set aside.

The appellate forum maintained that the preliminary appellate forum should have verified property ownership before allowing auctions and ordered for demarcation of joint Khata properties to avoid disputes.

Copyright Business Recorder, 2025