PLJ 2010
Present: Syed Hamid Ali Shah & Ali Akbar Qureshi, JJ.
Malik TANVEER ALI and another--Appellants
versus
SARDAR ALI IMAM and 2 others--Respondents
RFA No. 361 of 1999, decided on 26.5.2009.
Specific Relief Act, 1877 (I of 1877)--
----S. 12--Suit for specific performance of contract--Trial Court dismissed the suit--Regular First Appeal--Validity--Time as essence of contract--Held: Time being the essence of the contract, can be determined on the basis of intention of the parties that contracting parties had no intention that agreement will be performed beyond the period, specified in the agreement the intention can be gathered by seeing the pith and substance of the agreement. [P. 208] A
Limitation Act, 1908 (IX of 1908)--
----Art. 113--Barred by limitation--Appellants have instituted instant suit, after a period of more than nine years, while Art. 113 of the Limitation Act, provides a period of three years for filing the suit for specific performance--Viewing the case of the appellants from any angle, the suit is barred by limitation and finding of trial Court on this issue is unexceptionable. [P. 211] B
Specific Relief Act, 1877 (I of 1877)
----Ss. 14, 15 & 16--Contract Act, 1872, S. 39--Partial specific performance can be ordered only when conditions as envisaged in Section 15 of Specific Relief Act, 1877 are strictly complied--Provisions of Section 39 of the Contract Act, 1872 provide that contract has to be performed as a whole--Sections 14 to 16 of Specific Relief Act, 1877 are exceptions to the general rule--Appellants failed to amend their plaint to bring their case within the purview of Section 15. [P. 211] C
Deposit of
----Saving certificates equal to amount of balance sale--Remedy of injunctive relief--Consideration into Court--Appellants were required to prove that they were willing and ready to make the payment of the balance sale consideration--Defect in the title of vendor may result into enlargement of the time for performance of the agreement--This, however, does not absolve the appellants of their primary responsibility to be ready and willing to perform their obligation under the contract--They were directed to deposit with the Court saving certificates equal to the amount of balance sale consideration--They failed to deposit remaining sale price to avail the remedy of injunctive relief. [P. 212] D & E
Specific Relief Act, 1877 (I of 1877)--
----S. 21(g)--Agreement contains a condition that in case of litigation or defective title, the period for completion of the contract will stand extended, till the time the title of respondents is clear--The performance of the agreement would thus extend to a longer period than three years--Section 21(g) of the Specific Relief Act provides that such contract cannot be specifically enforced--Suit on the basis of unenforceable agreement does not lie and the agreement to sell cannot be specifically performed--Appeal dismissed. [P. 213] F & G
1997 SCMR 855, rel.
Mr. Ahmad Waheed Khan, Advocate for Appellants.
Mr. Shahzad Shaukat, Advocate for Respondents.
Sh. Shahid Waheed, Advocate for Respondent No. 2.
Date of hearing: 17.4.2009.
Judgment
Syed Hamid Ali Shah, J.--Land measuring 850 kanals 5 marlas situated in village Misson tehsil Ferozwala district Sheikhupura was in the name of the respondents of whom Col. Ali Imam was owner of 433 kanals 12 marlas, Qaisar Imam was owner of land measuring 212 kanals 13 marlas and Farukh Imam was owner of land measuring 204 kanals only. They jointly sold the above land through an agreement to sell dated 19.1.1986 (Ex.P.1) to the appellants for the sale consideration of Rs. 34,87,281/-. The land was bifurcated into two parts for the purposes of price; Land measuring 86 kanal 5 marlas was agreed to be sold at the rate of Rs. 33000/- per acre and price of the remaining 21 acres was fixed at Rs. 32000/- per acre). An amount of Rs. 400,000/- was paid as earnest money, while balance sale consideration of Rs. 30,87,281/- was to be paid at the time of registration of sale-deed. The sale was to be completed and the sale-deed was to be registered on or before 18.10.1987. The time for completion of sale was extendable, in case of any legal hurdle or litigation, till the removable of hurdle or final outcome of litigation. It was also agreed and incorporated in the agreement to sell that failure of the second party to make payment of the balance sale consideration, will entail consequences of forfeiture of the earnest money and rescission of agreement to sell. The respondents/vendors rescinded the agreement through a public notice published in newspaper, "daily News" in its print dated 10.12.1993. The appellants on the other hand instituted suit for possession through specific performance on 15.7.1996. The respondents entered appearance, contested the suit and filed written statement. The respondents admitted the execution of the agreement to sell and payment of earnest money by the vendees. They, however, controverted other assertions of the plaint and raised various preliminary objections in the written statement. Learned trial Court, out of the divergent pleadings of the parties, framed eight issues. The appellants produced two witnesses namely Muhammad Jamil PW.1 and Malik Muhammad Ashraf PW.2 in affirmative evidence. The documentary evidence of the appellants comprised Ex.P.1 to Ex.P.4. The defendants/respondents brought to the witness box DW.1 Aurengzeb, DW.2 Chaudhry Farzand Ali and DW.3 Shahnawaz. Sardar Akhtar Imam, one among the defendants, entered the witness box as DW.4. The respondents produced Ex.D.1 to Ex.D.7 in the documentary evidence. Ahmad Waheed Khan, PW.3 and Muhammad Asif, PW.4 were the witnesses of the plaintiffs in evidence in rebuttal. Learned trial Court on conclusion of the trial, dismissed the suit of the appellants/plaintiffs vide judgment and decree dated 12.4.1999, hence this appeal.
2. Learned counsel for the appellants contended that the parties to the contract, expressly stipulated in the agreement to sell that suit property is free from encumbrance, mortgage, sale, Tamleeq, gift or will and is clear from any loan as well. The respondents admitted execution of agreement to sell and payment of Rs. 400,000/- as earnest money. The respondents unjustifiably rescinded and abrogated the agreement and got published a notice in the newspaper. Learned counsel added that when the order passed on the application for temporary injunction was assailed in FAO No. 306-1996, the Court directed the appellants to arrange payment of the balance sale consideration for payment to the respondents. The appellants brought the money in the form of pay orders and Defense Savings Certificates which fact is evident from order dated 6.2.1998, passed in the above appeal. Learned counsel vehemently contended that the time was not essence of the contract and the appellants remained ready and willing to perform their part of the contract throughout. Learned counsel submitted that it has been expressly incorporated in the agreement to sell that in case of any defect in the title or in case of litigation, the period for completion of the sale will stand extended. Learned counsel emphasized that this condition in the agreement by itself is sufficient to prove that time was not essence of the agreement and the agreement is still enforceable. Learned counsel supported this contention by referring to the cases of "Messrs Pioneer Housing Society (Pvt.) Limited through Managing Director, Bank Square, Lahore Vs. Messrs Babar & company through Shakir Ali Khan and 2 others" (PLD 1999 Lahore 193), "Muhammad Nawaz Khan and another Vs. Mst. Farrah Naz" (PLD 1999 Lahore 238), "Mst. Batul and others Vs. Mst. Razia Fazal and others" (2005 SCMR 544) and "Muhammad Sharif Vs. Mst. Fajji alias Phaji Begum through Legal Heirs and another" (1998 SCMR 2485). Learned counsel submitted that out of 850 kanals & 5 marlas, land measuring 435 kanals was allegedly cancelled from the vendors name. Learned trial Court while relying on the provisions of 14, 15 & 16 of the Specific Relief Act, came to the conclusion that major portion of the agreement has become unenforceable. He contended that there is nothing on the record to prove that land measuring 435 kanals was cancelled from the title of the respondents. Learned counsel emphasized that litigation was initially with regard to a small portion of suit land i.e. 19 acres only. Provisions of Sections 14, 15 & 16 have no application to the case in hand. Learned counsel added that admission which is against the facts, is not binding and has to be ignored. Learned counsel supported his contention by referring to the case of "Barkhurdar Vs. Muhammad Razzaq" (PLD 1989 S.C. 749). Learned counsel submitted that the respondents had suppressed material facts at the time of the execution of the agreement. Learned counsel went through Paragraph No. 1 of the plaint and reply thereof from the written statement and contended that cause of the dispute was given by the appellants which was admitted by the defendants. While referring to Section 55 of the Transfer of the Property Act, learned counsel contended that it was primary responsibility of the seller to disclose to the buyers/appellants material defects in the property but they failed to perform their statutory duty. They also failed to produce for examination of buyers, relevant documents of title of the property. The omission on the part of the respondents to make proper disclosure is a fraudulent act on the part of the respondents. Declining specific performance of agreement to the appellants will amount to paying dividend to the respondents for their fraud. Learned counsel submitted further that the appellants remained throughout ready and willing to perform their part of the contract. Learned counsel while referring to the case of "Muhammad Akhtar and another Vs. Kohitex (Private) Limited" (PLJ 1998 Lahore 1082) contended that judgment without touching the points urged before it and without findings on all issues, is no judgment in the eye of law and such judgment is liable to be set aside. Learned counsel summed up his arguments with the contention that learned Court non-suited the plaintiffs/appellants by invoking the provisions of Section 15 of the Specific Relief Act. He added that relinquishment of the claim or any part of the suit property, could be made by a vendee at any time before the suit is finally decided by the Court of appeal. Learned counsel in this regard, placed reliance on the case of "Haji Abdur Rahman and three others Vs. Noor Ahmad and three others" (PLD 1974 Baghdadul Jadid 25). The respondents were not provided opportunity to relinquish part of the claim. The impugned judgment is liable to be set aside on this score alone. Learned counsel went on to argue that learned trial Court has misread the evidence on record and gave preference to the oral evidence over documentary evidence.
3. Mr. Muhammad
Shahzad Shaukat, Advocate for the respondents contended that the appellants
filed the suit with deficient Court fee. They were directed to make up the
deficiency within 15 days vide order dated 15.7.1996. The respondents moved an
application for enlargement of the time for payment of the Court fee. Learned
trial Court framed an issue in this regard but the same remained undecided.'
The suit was liable to be dismissed as deficiency of the Court fee was not made
and supported this contention by referring the case of "Assistant
Commissioner and Land Acquisition Collector, Badin Vs. Haji Abdul Shakoor and
others" (1997 SCMR 919). Learned counsel while referring to order dated
20.1.1998 passed in FAO No. 305-1996 contended that the appellant failed to
bring pay order, for the sum of Rs. 30,87,281/- as price of the suit land for
handing over the same to the respondents in the Court on 6.2.1998, and as such
the suit was liable to be dismissed. The petitioners/appellants failed to prove
the payment of Rs. 30,87,281/- as the pay orders which the appellants produced
were for Rs. 20,00000/- while the Court directed for the payment of total balance
amount of consideration i.e. 30,87,281/- in the form of pay orders. Learned
counsel submitted that the respondents showed their willingness to transfer the
land measuring 415 kanals 19 marlas against the proportionate price of the
available land but the appellants declined to accept the offer. Learned counsel
in this regard referred to order dated 10.11.1998 passed in FAO No. 305-1996.
Learned counsel submitted that the appellants cheated the Court and never
produced pay orders for a sum of Rs. 30,87,281/-. They were supposed to hand
over the said amount to the respondents. The attorney of the
appellants/plaintiffs showed his inability, to give details of the Defense
Savings Certificates or the pay orders. Learned counsel went on to argue that
the appellants were not willing to perform their part of the contract. Learned
counsel in this regard referred to the statements of DW. 1 and DW.2 who with
due corroboration stated that the vendees had opted to rescind the contract as
the appellants failed to perform then contractual obligation. The appellants
had no capacity to make the payment of the balance consideration which fact can
be ascertained from the fact that they had not paid the Court fee and sought
adjournment in this regard. They were twice directed to pay the sale
consideration, firstly to pay proportionate amount for the land left in the
hands of vendors and secondly through pay orders balance sale consideration.
Learned counsel submitted that the Court has rightly held that the contract on
cancellation of the ownership of the respondents has become unenforceable.
While referring to the case of "Khurshid Ali and others Vs. Abdur Rauf and
others" (PLD 1990 Lahore 211), learned counsel contended that equitable
remedy of Specific Performance of the contract is within the discretion of the
Court and the Court can refuse to pass decree, where the plaintiff has altered
the conditions of the agreement unilaterally. Learned counsel submitted further
that the appellants in order to show their willingness and readiness to perform
their part of the contract were under an obligation to produce in their
evidence draft of sale-deed, stamp papers, payment of taxes and fees including
the District Council Fee, but the appellants have not taken a single step in
this regard, therefore, it is wrong to contend that the appellants were willing
to perform their part of the contract. To support this contention, learned
counsel placed reliance on the case of "Muhammad Idrees Jag Vs. Mst.
Unezah Shahid and another" (2004 MLD 1033). Learned counsel further
contended that after payment of the earnest money, no additional amount was
received nor time was granted, which is sufficient to show that time has been
considered by the parties to the contract as essence of the contract. Learned
counsel supported this contention by placing reliance on the cases of
"Fazal
4. Sh. Shahid
Waheed, Advocate for Respondent No. 2 (Sardar Qaiser Imam) contended that both
the parties were aware of the litigation pending in Hon'ble Supreme Court. No
stay order from the
5. Heard learned counsel for the parties and record perused.
6. The sale transaction subject-matter of the instant controversy is based on agreement to sell dated 19.1.1986 (Ex.P. 1). The parties to the contract do not dispute the execution of the agreement and the payment of Rs. 400,000/- as earnest money. They are at variance, on the following issues:--
(a) Whether or not the time was not of the essence of contract.
(b) Willingness and readiness of the vendees (appellants) for performance of the contract.
(c) Enlargement of time for performance of the contract, due to pendency of litigation, was permissible.
(d) Rescission of the contract, due to non-payment of sale consideration by the vendees, on or before 18.10.87.
(e) Enforceability or otherwise of the contract.
7. Issue No. 2 was on the question of limitation and by this issue, the defendants were required to prove that the appellants had not filed the suit within the period of limitation. The agreement to sell dated 18.10.1987 stipulates penalty of rescission of contract, for non-payment of the balance sale consideration within the stipulated period. The relevant clause of the agreement reads:--
8. Normally, when the agreement pertains to the sale of immovable property and a date is mentioned for payment and for completion of sale, it will not make time essence of the contract. Time being the essence of the contract, can be determined on the basis of intention of the parties that contracting parties had no intention that agreement will be performed beyond the period, specified in the agreement. The intention can be gathered by seeing the pith and substance of the agreement. The parties in the instant agreement have fixed the time and also agreed for penalty for not performing the contractual obligation within the stipulated period. The respondents rescinded the contract and published a public notice in the Newspaper when the appellants failed in paying the balance sale consideration within the agreed period. The appellants on the other hand have stated in their evidence that they approach the respondents before the target date for signature on challan form, for completion of the sale. The stance taken by each party regarding performance of the agreement, transpires that parties intended that time for performance mentioned in the agreement is of essence of the contract. Another clause in the agreement provides for extension of time, on which the appellants have heavily relied, it reads as follows:--
9. Both the sides have interpreted this clause in the agreement in its own way. The appellants claim the benefit of this clause and have taken the stance that the time for the performance has been enlarge, as litigation regarding suit land was pending in the Supreme Court. The respondents to the contrary claim that only that litigation or defect in the title of the respondents, will extend the period for the performance of the agreement, which is subsequent to the agreement, wherein the word " " has been specifically incorporated. The litigation before Hon'ble Supreme Court was pending much before the execution of agreement (Ex.P.1.) and the pendency of the litigation in Hon'ble Supreme Court was within the knowledge of the appellants.
10. The parties were under the impression, at the relevant time that dispute/litigation is with regard to 19/20 acres of land only. It is reflected from the statement of DW.4 that litigation started in the year 1964-65 before Settlement Commissioner and it remained pending in this Court from 1970 till 1976. The leave to appeal was granted to Jammu & Kashmir Refugees in the year, 1981 and the appeal was ultimately decided in the year 1991. The revenue record reflects that the respondents lost 435 kanals of land from their ownership and now 415 kanals of land is left in their hands.
11. The appellants being owner of adjoining land were aware of this litigation. They were party before the August Supreme Court in a connected matter. They deal in property, had purchased thousands of kanals of land in the same area and had also developed housing schemes there. It is beyond comprehension that they remained unaware of the litigation for such a long time. PW-2 in the course of his cross examination has stated:--
The situation which emerges from the above statement of PW-2 is that two legal, and contractual remedies were available to the appellants. Either to leave the part of contract which is capable of performance, claim compensation for that part and seek performance of the contract which is capable of performance, as envisaged in Section 14 of the Specific Relief Act. The other course available to the appellant was to get sale-deed registered as there was no injunctive order in the field and reserve the right to suit for damages for any part of land which the respondents were to loss in the litigation. The appellants instead of choosing any legal course awaited for considerable long time i.e. more than 9 years. By this time the prices in the vicinity were appreciated considerably, due to construction of Motorway. The respondents cannot claim enlargement of time for performance of the agreement for various reasons. Firstly, they were aware of the litigation at the time of sale. Secondly, no injunctive order was operative, therefore, the suit land was capable of transfer without any restraint. Thirdly, the parties understood, at the relevant time that dispute is with regard to 20 acres of land and major part of the land was free for transfer to the appellants.
12. The plaintiffs were bound to institute the suit regarding the land which was available for its transfer to the vendees. The time can only be enlarged with regard to that land which was suffering from defect of title and not the whole land. W.P. No. 143/R/1970 was dismissed on 15.05.1976, leave to appeal (C.P. No. 550/1996) was granted on 02.05.1981 and the appeal (C.A. No. 265/1981) was ultimate decided on 09.03.1991. The litigation came to end on 09.03.1991, although the review petition was dismissed on 23.05.1995. The appellants have not instituted this suit even within the period of three years from the date when the appeal (C.A No. 265/1981) was decided. The appellants have instituted instant suit, after a period of more than nine years, while Article 113 of the Limitation Act provides a period of three years for filing the suit for specific performance. Viewing the case of the appellants from any angle, the suit is barred by limitation and finding of learned trial Court on this issue is unexceptionable.
13. By Issue No. 1, the defendants were to prove that suit is legally untenable. The total land subject matter of sale was 850 kanals and 5 marlas. The parties were under the impression that only 19/20 acres of land was in dispute but subsequently it was revealed to the parties that 435 kanals out of 850 kanals of land, has been cancelled and the respondents are now left with only 415 kanals of land in their ownership. Land measuring 435 kanals is the considerable portion of the property which the respondents had lost in litigation. The agreement as a whole is not capable of performance. The plaintiffs/appellants in the existing circumstances can choose either to claim compensation or seek enforcement of that part of the agreement, which can be performed specifically. The second choice is available when the vendee institutes the suit against vendor and relinquishes the claims including further performance and compensation. The language employed in Section 15 of the Specific Relief Act, 1877 is clear and phrase used in the enactment is "but the Court may at the suit of other party---------". The suit of the appellants is not with regard to the part performance of the contract which is capable of performance. The plaintiffs have claimed possession of total 850 kanals of land, without relinquishing the claim of compensation and relinquishment of performance of the agreement with regard to land (435 kanals). Partial specific performance can be ordered only when conditions as envisaged in Section 15 (ibid) are strictly complied. The provisions of Section 39 of the Contract Act, 1872 provide that contract has to be performed as a whole. Sections 14 to 16 of Specific Relief Act, 1877 are exceptions to the general rule. The appellants failed to amend their plaint to bring their case within the purview of Section 15. They were provided opportunity of partial performance of the agreement, during the proceedings in FAO No. 305 of 1996 but they failed to apprise the Court of their willingness to pay the proportionate price of available land. The respondents made the offer, which was incorporated in order dated 10.11.1998 of this Court in the said proceedings. The appellants sought time to verify the title of the respondents regarding available land but the offer could not be materialized.
14. The agreement as arrived at between the parties cannot be enforced in its entirety, while partial performance is not legally tenable within the contemplation of Section 17 of the Specific Relief Act, 1877. Learned Court has dealt legally with the proposition, under the provisions of Sections 14 to 16 of the Specific Relief Act, 1877. Learned trial Court after appraising evidence of the parties thoroughly found that conduct of the appellants qua performance of their contractual obligation was not fair and rightly concluded that the plaintiffs/appellants are not entitled to discretionary relief. The finding of the Court does not suffer from any legal infirmity and is affirmed and upheld.
15. Issue No. 7, was regarding the readiness and willingness of the plaintiffs/appellants to perform their contractual obligation i.e. payment of the balance sale price. By this issue, the appellants were required to prove that they were willing and ready to make the payment of the balance sale consideration since 18.10.1987. The defect in the title of vendor may result into enlargement of the time for performance of the agreement. This, however, does not absolve the appellants of their primary responsibility to be ready and willing to perform their obligation under the contract. PW.2 has stated in the witness box that when he went to Respondent No. 1 to get his signatures on challan form, he was told that 18/20 acres of the land under sale is in litigation. There is nothing on the record to show that the appellants have paid taxes, fees and other dues for the transfer of land. They have not even prepared the draft of sale agreement and placed the same on the record. Their capacity to pay can be ascertained from the fact that despite various opportunities they could not pay the Court fee and sought extension in time. The injunctive relief was granted to them conditionally. They were directed to deposit with the Court saving certificates equal to the amount of balance sale consideration. They failed to deposit remaining sale price to avail the remedy of injunctive relief.
16. The litigation took another turn, when order dated 20.1.1998, was passed, whereby the appellants were directed to bring pay order in the sum of Rs. 30,87,281/- as price of the suit land and hand over the same to the respondents. The suit on payment of the amount was to stand decreed. The appellants were entitled to decree, without going into the trial of suit, on payment of Rs. 30,87,281/-. Order dated 6.2.1998, transpires that the appellants informed the Court that they had brought the amount in the Court but instead of paying the same and earning a decree in their favour, they circumvented process and sought time to ensure that title of entire property has passed on to the respondents in view of the decision of Hon'ble Supreme Court in pending litigation. The willingness of the appellants to perform their part of contract could have been established if the appellants had made compliance of order dated 20.1.1998. PW.4 produced certificate of Prudential Commercial Bank dated 16.3.1999, in the trial Court. The certificate is for the sum of Rs. 20,00,000/- in the form of two pay orders. It is evident from this certificate that the appellants arranged the payment of Rs. 20,00,000/- through pay orders and not Rs. 30,87,281/-. PW.4 deposed in the learned trial Court that Rs. 20,00,000/- was in the form of pay order, while Rs. 10,87,281/- were in the shape of Defense Saving Certificate. The appellants were directed to bring pay orders in the sum of Rs. 30,87,281/-. The failure of the appellants to bring pay orders in the sum of Rs. 30,87,281/-, proves that the appellants were not ready to pay the sale consideration. The Defense Saving Certificate for the balance amount was also not produced in the Court to show that appellants arrange total amount of the balance consideration for its onward payment to the respondents. These facts prove that the respondents were not ready and willing for the performance of their part of the contract. The finding of the learned trial Court on Issue No. 6 is devoid of any legal infirmity. The issue was rightly decided in favour of the respondents and against the appellants.
17. We will now
advert to the question of legality and enforceability of the agreement to sell.
If it is found that the agreement is unenforceable, it will disentitle the
appellants to decree, even if the other issues are decided in their favour. The
agreement contains a condition that in case of litigation or defective title,
the period for completion of the contract will stand extended, till the time
the title of the respondents is clear. If the above condition is applied to the
litigation which was pending in Hon'ble Supreme Court, it will extend the
performance of agreement from the date of execution of agreement till decision
of the
18. Viewing the case from any angle, we are of the firm view that the impugned judgment of learned trial Court covers every aspect of the controversy. The evidence has been properly appraised and the law has been applied correctly. The judgment neither suffers from the defect of misreading or non-reading of evidence, nor from the wrong assumption of law.
19. For the foregoing, this appeal has no merit and is accordingly dismissed with no orders as to the costs.
(M.S.A.) Appeal dismissed.