LAHORE, Dec 23: The Lahore High Court barred financial institutions on Tuesday from auctioning mortgaged property of defaulters without court’s permission.

A full bench, comprising Chief Justice Sayed Zahid Hussain, Justice Hamid Ali Shah and Justice Syed Asghar Haider, declared Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, repugnant to the Constitution.

Under Section 15, all financial institutions were empowered to auction mortgaged property of defaulters without seeking court’s permission.

Section 15 was in conflict with the fundamental rights enshrined in articles 2-A, 3, 4, 9, 23, 24 and 25 of the Constitution, the bench ruled.

The court decided that the properties sold out under Section 15 and whose sale has attained finality would not be interfered with.

If the sale of properties has attained finality, possession has been delivered to auction purchasers, sale process stood adjusted towards outstanding amount and sale deeds have been registered, they (properties) would be considered as past and closed transactions, the LHC ruled.

The court said if the sale had not attained finality, the auction price would be retuned to the purchaser within one month after he approached the financial institution concerned.