P L D 1965 Dacca 56 (PLP)

MURSHED, J.‑Petitioner, Mir Hasmat Ali, instituted a suit for specific performance of a contract to sell certain properties including land, building and various other structures in the town of Faridpur for a sum of Rs. 7,

500. There was an agreement between petitioner and opposite‑party No. 1, Birendra Kumar Ghosh, in respect of the aforesaid properties and the agreement was registered after its execution, the agreement being dated the 9th of October 1958. It appears that the aforesaid properties belonged to five co‑sharers, namely, opposite‑party No. 1 Birendra Kumar Ghosh, opposite‑party No. 2 Shib Shankar Ghosh, opposite‑party No. 3 Himangshu Kumar Ghosh, opposite party No. 4 Sisir Kumar Ghosh and opposite‑party No. 5 Bhubanmoyee Ghosh. It is also admitted that the said opposite parties Nos. 2 to 5 left Pakistan and have ceased to be its citizens. They are now residing in India and are Indian citizens. It is asserted by the petitioner and stoutly denied by opposite party No. 6, Province of East Pakistan, that opposite‑party No. 1 Birendra Kumar Ghosh is a Pakistani citizen. The main ground on which Pakistani citizenship is thus claimed seems to be based on the possession of a Pakistani Passport by opposite‑party No. 1 Birendra Kumar Ghosh although he (opposite‑party No. 1) is a resident of Calcutta and practises as a professional lawyer there. Petitioner has alleged that, in accordance with the terms of the aforesaid agreement between him and opposite‑party No.

1. Birendra Kumar Ghosh, the said opposite‑party No. 1 was required to institute a suit for declaration that he was the sole owner of the aforesaid properties and that the aforesaid opposite parties Nos. 2 to 5 were no longer co‑sharers thereof. According to the petitioner, opposite‑party No. 1 became the exclusive owner of the said properties on an amicable partition between him and opposite‑parties Nos. 2 to

5. It is alleged that petitioner paid a sum of Rs. 2,000 in advance as part of the consideration money. It is also alleged that he again paid the defendant a sum of Rs. 1,500 in order to enable opposite‑party No. 1 to satisfy a mortgage debt in respect of the said properties. It is again asserted that opposite‑party No. 1 took a further advance of Rs. 1,500 to ensure expedition of the execution of the kabala with regard to the said properties. Petitioner, therefore, claims that he has paid a total sum of Rs. 5,000 out of the aforesaid consideration money. It is contended by opposite‑party No. 6, Province of East Pakistan, that such alleged payment of money is highly improbable in the face of patently dubious title of opposite‑party No. 1 alone to the suit properties. It is the further case of the petitioner that opposite‑party No. 1 did institute a suit for a declaration that he was the exclusive owner of the said properties and the suit was marked as Title Suit No. 3 of 1959. In that suit the Province of East Pakistan, on its application, was added as a party to the suit, that is, as a defendant. When the Province of East Pakistan appeared in that suit, the plaintiff, namely, opposite‑party No. 1 did not press the suit any further, eventually, the suit was dismissed for default. Petitioner contends that inasmuch as opposite‑party No. 1 failed to execute a kabala in spite of demands, the present suit was instituted by him to enforce the contract. The suit is still awaiting trial before the learned Subordinate Judge at Faridpur. It, however, transpires that opposite‑party No. 6, Province of East Pakistan, applied to the learned Subordinate Judge to be added as a party defendant in the present suit instituted by the petitioner for specific perfor mance of the aforesaid contract. The application of the Province of East Pakistan to be added as a party in this suit (Title Suit No. 15 of 1961) was resisted by the petitioner, i.e., the plaintiff. Learned Subordinate Judge by a short order dated the 18th of May 1961, overruled petitioner's contention and allowed opposite party No. 6, Province of East Pakistan, to be added as a party. Petitioner thereafter moved this Court in its revisional jurisdiction and obtained the present Rule. Inasmuch as this case raises a question of considerable importance, we invited Mr. B. N. Chowdhury to appear as amicus curiae in this case and we would like to acknowledge, at the outset, the assistance we have received from Mr. Chowdhury as well as from the learned lawyers representing the parties before us. We had the advantage of hearing frill and useful arguments from the Bar. The point involved in this application, and, as mooted before us, is, whether it was permissible to add opposite‑party No. 6, Province of East Pakistan, as a party in the suit, in the cir cumstances mentioned above. Learned Subordinate Judge has allowed the Province of East Pakistan to be added as a party in the suit under the provisions of Order 1, rule 10, of the Code of Civil Procedure. The question is, whether he could do so. It has been contended by the learned Advocate for the petitioner that Order 1, rule 10, of the Code of Civil Procedure cannot be prayed in aid to implead opposite‑party No. 6, Province of East Pakistan, in the suit. He has urged that in a suit for specific performance only parties interested in the contract are necessary parties but, a third party, that is, a party not impleaded in the suit, cannot be brought into the suit unless he is interested, either in the contract or in the subject‑matter of the contract. He has, also, contended that the language of Order I, rule 10, does not warrant the impleading of the Province of East Pakistan as a party defendant in the suit. The relevant portion of Order I, rule 10, of the Code of Civil Procedure may be quoted thus: (1) * * * * * (2) . . . . . the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added". In our view, the order passed by the learned Subordinate Judge in impleading the Province of East Pakistan in the present suit can be supported on various grounds, although the learned Subordinate Judge has given practically no reason for allowing the said Province to intervene in the suit as an added defendant. In this connection, it is useful to note the background of the prayer of the Province to be impleaded in the suit. It is the contention of the Province of East Pakistan that the alleged contract is a collusive transaction the purpose of which is to evade the provisions of various enactments or other restrictions on sale of properties by persons who are not citizens of Pakistan. It is further contended that the contract is a contrivance to evade the .Foreign Exchange Regulations of Pakistan. It has been urged that the vendor is alleged to be a citizen of Pakistan although he has long ceased to be so. The majority of the co‑sharers are Indian citizens and the contract is supposed to be made by an alleged citizen of Pakistan (a proposition which is hotly contested by the Province of East Pakistan) because there are no such restrictions of transfer of properties by a citizen of Pakistan. In the first place, it should be remembered that specific performance is an equitable relief notwithstanding the statutory provisions of the Specific Relief Act. It is not granted as a matter of course merely because there is a contract. The relief is in the nature of an indulgence peculiar to jurisdiction of equity. It is not a matter of right in the party seeking such relief but of discretion of the Court and, from the very first when specific performance was introduced, it has been treated as a question of discretion. Since the discretion is judicial, it has to be decided as a judicial issue and not arbitrarily. These are well‑settled principles: See Cox v. Middleton ((1854) 2 Equity Rep. 631: 42 Digest 426 para. 7); Lamare v. Dixon (43 L J Ch. 203: 42 Digest 427 para. 9); Per Righby, L. J. In re: Scott and Alveraz's Contract ((1885) 2 Ch. 603: 42 Digest 427 para. 10) and Karsondas Kalidas v. Chhotalal Motichand (I L R 48 Born. 259). The point is of importance because a legal remedy, as distinct from an equitable remedy, being granted as of right, cannot be usually refused on extraneous considerations upon which an equitable relief may not be granted. Specific performance will be granted or refused on considera tions of equity and not merely on the terms of the contract, even though the contract may be free from any legal defect. The Court, under such circumstances, has a wider discretion to add to the suit a party who will be able to place before it facts and circumstances at relevant to the suit, upon which the Court may refuse to enforce the contract. Such party may be added under the inherent powers o the Court or under Order I, rule 10, of the Code of Civil Procedure. Thus, specific performance being an equitable and discre tionary relief, the Court will insist that plaintiff' must come with clean hands. See Nagorathna v. Chidambaram (A I R 1928 Mad. 860). Such relief of specific performance will be given on equitable consideration and not merely on the terms of the contract. See Gobinda Chandra v. Nanda Kumar (18 C W N 689); Janki Pershad v. Yahia Hossain (13 I C 637); Thakur Prosad v. Syed Yahya Hossain (16 C L J 119). Specific performance will be refused if detrimental to public welfare; See Gaj Kumar v. Lachman Ram (14 CJ 627). From that we have stated above, it is obvious that, being a, discretionary relief, a Court of Law has full discretion to allow or refuse specific performance, if circumstances justify such refusal although the contract may be free of any legal defect. But,! although specific performance is not grantable ex debito justitae." that is, as a matter of right on mere proof of a legal contract, the discretion to grant or refuse such relief must be governed by sound and reasonable principles, for the exercise of the discretion is itself a judicial issue. The circumstances and principles which would justify a refusal of the relief cannot be specified in a short compass, although, generally speaking, they are by now well settled. But, the categories of such principles cannot be said to have been exhausted, having regard to the exigencies and need of a changing society. In a sense, however, it would be correct to say that the relief will not be refused unless sound principles justify such a course. The discretionary nature of the relief is recognised on the provisions of section 22 of the Specific Relief Act, which opens with the following provisions: "The jurisdiction, to decree specific performance is dis cretionary, and the Court is not bound to grant such relief merely because, it is lawful to do so; but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal. "The following are cases in which the Court may properly exercise a discretion not to decree specific performance:‑ * * * * *" Thus, in a general way, it will not be inaccurate to say, that specific performance is a right created by Courts of equity and will not be refused unless equitable considerations would warrant such refusal. Such considerations are material and relevant in a suit for specific performance. Mr. Rouf has argued that it is not permissible for a Court to refuse specific performance of a contract which has been otherwise proved to be legal and valid, except on grounds specified in section 22 of the Specific Relief Act. It will be seen that section 22 merely illustrates the principles involved in the exercise of the discretion. That it is merely illustrative is apparent from p the terms in which section 22 has been couched. The section merely sets out a number of illustrations where specific perfor mance may be refused and it is obvious from the language of that section that it does not pretend to be an exhaustive definition or enumeration of the principles upon which specific performance will be allowed or refused. Section 22 merely catalogues some pointers giving direction and guidance as to the principles upon which Courts will grant or refuse specific performance. It is by no means exhaustive. In this connection, we may quote a passage from Story's Commentaries on Equity Jurisprudence, Twelfth (English) Edn., p. 729, section

742. The observations are quoted as follows:‑ ". .Specific performance of contracts is not a matter of right in either party; but it is a matter of discretion in the Court Clowes v. Higginson 1 Ves. & B 527; Scott v. Alvarez (1895) 2 Ch. 603; not, indeed, of arbitrary or capricious dis cretion, dependent upon the mere pleasure of the Judge, but of that sound and reasonable, discretion which governs itself as far as it may, by general rules and principles; but at the same time, which withholds or grants relief according to the circumstances of each particular case, when these rules and principles will not furnish any exact measure of justice between the parties Hall v. Warren 9 Ves. 605; Revell v. Hussey 2 Ball. & B 280; Hay‑wood Cope 25 Beav. 140; Smith v. Colbourne (1914) 2 Ch.

533. On this account it is not possible to lay down any rules and principles, which are of absolute obligation and authority in all cases.; and, therefore, it would be a waste of time to attempt to limit the principles, or the exceptions, which the complicated transactions of the parties, and the ever changing habits of society, may, at different times, and under different circumstances, require the Court to recognize or consider. The most that can be done is, to bring under review some of the leading principles and exceptions which the past times have furnished, as guides to direct and aid our future inquiries." In our opinion, this is exactly what section 22 of the Specific Relief Act does, namely, it brings under review "some of the leading principles and exceptions which the past times have furnished, as guides to direct and aid our future inquiries". See Jethalal Nanshah Modi v. Bachu (A I R 1945 Bom. 481) and Gaj Kumar v. Lachman Ram. We may also quote a similar passage from Fry on Specific Performance, 6th Edn., p. 19, para. 44, which runs thus:‑ "There is an observation of ten made with regard to the jurisdiction in specific performance which remains to be noticed. It is said to be in the discretion of the Court. The meaning of this proposition is not that the Court may arbitrarily or capriciously perform one contract and refuse to perform another, but that the Court has regard to circumstances outside the contract itself, and that the mere fact of the existence of a valid contract is not conclusive in the plaintiff's favour (Lamare v. Dixon L R 6 H L at p. 423; R1 Terry and White's Contract 32 Ch. D at p.

27. See also Leech v. Schweder L R 9 Ch. at p. 467n.) `If the defendant', said Plumer V. C., can show any circumstances dehors, independent of the writing, making it inequitable to interpose for the purpose of specific performance, a Court of equity, having satisfactory information upon that subject, will not interpose'. Clowes v. Higginson I V & B 527". This is exactly the ground upon which the Province of East Pakistan has sought to intervene as a party to this suit. True, the Province does not claim any interest in the suit properties and, in that sense, it is a stranger to the suit. But, the Province contends that it stands to suffer a wrong if it is not allowed to resist the relief claimed by the plaintiff and to expose the real nature of a collusive contract calculated to do harm to the Province and to the Public in general. The Province of East Pakistan claims to be able to expose the real conduct of the parties and to place before the Court, in the words of Fry, "circum stances outside the contract itself" which will make it "inequitable" for a Court "having satisfactory information" to interpose in favour of the plaintiff. Thus, even when a contract is proved to satisfy the require ments of law, a Court may be justified in refusing to grant specific performance, if it is found to be detrimental to public welfare: See Gaj Kumar v. Lachman Ram. The aforesaid principle has been recognized in a series of leading decisions and we would like to quote here the observations of Sir Ashutosh Mookerjee in the aforesaid case of Gaj Kumar v. Lachman Ram (14 C L J 627 at 635) which are as follows: "No doubt, the doctrine has sometimes been recognised that the fact that a contract, although not illegal, is nevertheless detrimental to the public welfare, is a good ground to justify refusal of its enforcement in equity. Palo County v. Harrison (1885) 68 Lowa 81, 26 N W 16, Ryan v. McLane (1900) 91 Md. 175, 80 Am. St. Rep. 438, Foll's Appeal (1879) 91 Pa. 434, 36 Am. Rep. 671 and Kandall v. Frey (1889) 74 Wis. 26, 17 Am. St. Rep.

180. It is by no means easy, however, in the present case to apply that doctrine". Having regard to the principles noticed above, we shall again advert to some of the admitted facts of this case and to some other facts as stated in the counter‑affidavit filed on behalf of the Province of East Pakistan (opposite‑party No. 6). Plaintiff petitioner himself, in the petition filed in this Court, has sufficiently indicated that, in order to assure himself of the exclusive title to the suit properties by opposite‑party No. 1, Birendra Kumar Ghosh, there was a specific term incorporated in the aforesaid agreement that the said opposite‑party would institute a suit for declaration of his exclusive title to the suit properties. The exclusive title of opposite‑party No. 1 is thus, on the plaintiff's own case, a dubious proposition. Prima facie the suit properties were joint properties belonging to five co- sharers including opposite‑parties Nos. 2 to

5. Apart from the question that the petitioner himself insisted on being satisfied that opposite‑party No. 1 Birendra Kumar Ghosh, in fact, exclusively possessed such title, it has been stated before us (and we have no reason to disbelieve such statement) that it will be apparent from the municipal records that municipal dues were being regularly paid on behalf of all the co‑sharers, namely, opposite parties Nos. I to 5, and not by opposite‑party No. 1 alone. On behalf of the Province of East Pakistan certain other materials were placed before us, which are unnecessary for us to set out at this stage, but may be treated as pieces of evidence tending to show that the properties were joint at the time when the afore said contract was made. It is also admitted that opposite‑party No. 1 instituted a suit for a declaration of his exclusive title to the properties but did not eventually prosecute the suit which was dismissed for default. Mr. Jani Alam, appearing for the Province of East Pakistan, has read out to us a portion of the judgment pronounced by the learned Subordinate Judge in the aforesaid suit (namely, the suit instituted by opposite‑party No. 1 to establish his exclusive title), which will show that it was found affirmatively that opposite‑parties Nos. 2 to 5 were also co‑sharers of the suit properties. It has been strenuously contended on behalf of the Province of East Pakistan that opposite‑parties Nos. 2 to 5 are foreign nationals (Indian nationals) and that opposite‑party No. 1 is also a foreign national notwithstanding his alleged possession of a Pakistani Passport. It has been further contended by the Province of East Pakistan that even if opposite‑party No. 1 is proved to be a Pakistani national, the majority of the co‑sharers are foreign nationals. In summing up the background of the case, it was again contended that, in the above‑mentioned circumstances, the contract was a collusive transaction designed to evade Foreign Exchange Regulations and various other laws of this country which put an embargo upon such sale. We think that there can be no manner of doubt, that the Province of East Pakistan is, to say the very least, "a proper party" in respect of this suit, within the meaning of Order I, rule 10, of the Code of Civil Procedure. The Province of East Pakistan has succeeded in making out a prima facie case that the circumstances leading to the alleged contract raise suspicions that it is, in all probability, a collusive bargain which tantamounts to a contrivance to dodge laws enacted for the protection of public interest. The Province is undoubtedly entitled, in the aforesaid circumstances, to prove that the contract involves contravention of Foreign Exchange Regulations and some other laws which restrict transfer of properties by foreign nationals. Whether the Province will succeed in ultimately establishing such a case is another matter. Such question can only be decided when the suit is tried out. Order I, rule 10, of the Code of Civil Procedure specifically empowers Court to add a party. to the . suit for the purpose of effectively deciding "all. the points involved in the suit". The phrase, "all the points involved in the suit" does not mean "all the points that. are raised by parties". The phrase is not amenable to any such. restricted meaning. All the points, though not raised as between the parties themselves, as are material to a proper decision of the suit, are necessarily paints "involved" in the suit. There can be no doubt that one of the points "involved" in the suit is, whether the plaintiff is entitled to a decree for specific performance. In the light of the circumstances of this case, this is an issue which is not only involved in the suit but is one which is raised directly by the pleadings of the parties. Thus, even in the restricted sense, as some would have it, the point which the Province of East Pakistan seeks to establish is "involved" in the suit, even on issues which directly arise from the very nature of the relief claimed by the plaintiff. The Province of East Pakistan has brought to the notice of this Court that it is in a position to prove that the contract is not really what it appears to be and that it is a colorable transaction the purpose of which is to escape the consequences of the Foreign Exchange Regulations and allied laws of Pakistan. A Court of equity is a Court of conscience and, both on authority as well as on principles, it is called upon, in the exercise of its discretion, to refuse specific performance when the contract will lead to or even facilitate an evasion of Foreign Exchange Regulations in this country. We have noticed above that a contract may not be enforced because it may be void‑ as being opposed to public policy. It may not also be enforced it is against public welfare (as distinct from public policy) rendering it inequitable to enforce it even when the contract is not legally void. In these circumstances, it is evident that under the provisions of Order I, rule 10, of the Code of Civil Procedure, opposite party No. 6, Province of East Pakistan, is a "proper party" in this suit within the meaning of the said rule. If the contract is of a collusive nature (and circumstance mentioned above makes it probable that it may be so) as alleged by the Province of East Pakistan, then material facts in this behalf will not be placed before the Court by the parties, namely, the plaintiff and the defendants. The presence of the Province of East Pakistan thus becomes necessary for the purpose of enabling the Court to receive all relevant informations which will give guidance as to appropriate principles applicable to the case. This proposition would find support from the following cases: Doraiswand v. Subramania A I R 1950 Mad. 659; Virbhadrappa v. Shekabai Harun A I R 1939 Born. 188; Sm. Satyabala Dasi v. Sm. Sudharanee Dasi 35 C W N 122; Secretary of State v. Murugesa A I R 1929 Mad. 443; Mangacharyulu v. Krishnamacharyulu A I R 1940 Mad. 225 and Shivashankareppa v. Shivappa A I R 1943 Bom.

27. In this connection, we may also usefully cite the case of United Provinces v. Atiqa Begum (AIR 1941 F C 16). In the aforesaid case the Advocate‑General of the United Provinces was added in the suit as a party where the vires of a land legislation was impeached along with other disputes between the parties. One of the points mooted before the Federal Court was whether, in the aforesaid circumstances, the Advocate‑General representing the Province of United Provinces was a proper party to the suit. It was held unanimously by the Federal Court (although that Court was divided on some other point) that under the provisions of Order I, rule 10, of the Code of Civil Procedure. The United Provinces as represented by the Advocate‑General was a proper party. In the case before us the Province of East Pakistan was made a party not because it was felt that lawyers representing the Province could be in a better position to argue the case before the learned Subordinate Judge, but because it was felt that the said Province might be in a position to place before the Court material pieces of evidence which would enable it to adjudicate whether the contract upon which reliance was placed by the plaintiff, was a collusive transaction and whether the apparent was not the real. What the Province of East Pakistan undertakes to place before the Court are not mere arguments or citation of decisions applicable to the case, but to place such evidence and material facts and circumstances as would enable the Court to properly adjudicate the most material issue raised by the pleadings, namely, whether the plaintiff is entitled to a decree for specific performance on equitable considerations. In these cir cumstances, there is a good deal of force in the contention advanced by Mr. Jani Alam that the Province of East Pakistan in this suit becomes a "necessary party" as distinct from being merely a "proper party". We are giving no final decision on the point as to whether, under the aforesaid circumstances, the Province can be more appropriately described as a "necessary party" to the suit, having held that it is undoubtedly a "proper party" within the meaning of Order I, rule

10. All that we wish to say is that in the present case we are of opinion that there can be no manner of doubt that, under the provisions of Order I, rule 10, of the Code of Civil Procedure, the course taken by the learned Subordinate Judge is not merely justified but that it is a proper and necessary course. There are also authorities for the proposition that even where the language of the Code of Civil Procedure does not cover such addition or substitution of parties, Courts have ample powers to make necessary orders in the interest of justice; See Jaimala Kunwar v. Collector of Saharanpur (I L R 55 All. 825). The authorities have also proceeded to say that the provisions of the Code of Civil Procedure do not affect the inherent power of the Court to make an order by way of substitution or addition of a party if it is necessary to do so for ends of justice: See Lakhmichand v. Gulabchand (I L R 35 Born. 393). We would take leave of the case by quoting an observation of Knight Bruce, L. J., in the case of Rede v. Oakes (34 L J Ch. 145 ; 42 Digest 465, para. 326), and we quote the same as follows:‑ "The doctrines and principles applicable to this case are opposed to granting specific performance in the present instance; and if it is not clear that the breach of contract was a breach of trust, it must be held at least to be extremely doubtful whether it is not so". Specific performance was refused in that case on the ground that it was not unlikely that the enforcement of the contract might lead to a breach of trust even when such breach of trust was not proved. We have cited the above case in order to illustrate the point that Courts have exercised a very wide discretion to refuse specific performance and to emphasise a well‑established principle that a Court of equity is forum of conscience and that it would refuse, to lend its helping hand in regard to matters where the Court will feel that it will be unconscionable to do so having regard to the interest of the public. As to what would constitute unconscionable transaction will, of necessity, depend upon the facts and circumstances of each case and no specific norm can be enunciated which will be of universal application. We need not dilate this point any further since we have quoted Fry and Store to strengthen the argument that the exigencies of human society do not permit a precise definition and formulation of principles upon which specific performance would be refused. Be that as it may, a breach of Foreign Exchange Regulations is a matter of vital consequence to modern States under the stress of the economic pressure of the times. Foreign Exchange Regulations, in their present form, have come into existence after the Second; World War as a rigid protective barrage which States have raised against their disappearance by unauthorised means. Can it, therefore, be doubted that if it is shown that a transaction is likely to lead to an unauthorised leakage of foreign exchange, al Court of equity would refuse to grant a decree for specific performance? The result, therefore, is, that for reasons stated above, the Rule is discharged without any order as to costs. A. SUBHAN CHOWDHURY, J.‑I agree. S. Q. Rule discharged.