2007 PLP 1186 (SCMR)

MUHAMMAD NAWAZ ABBASI, J.

This appeal by leave of the Court has been directed against the judgment, dated 11-5-2001 passed by Lahore High Court, Rawalpindi Bench, Rawalpindi whereby regular second appeal filed by the appellant against the judgment and decree passed by the learned Civil Judge in the suit for specific performance of contract and affirmed by the learned District Judge, Jhelum in first appeal has been dismissed.

2. The facts in small compass in the background are that the appellant being in possession of suit Property bearing New No.B-VII-2-R-18 owned by Muhammad Nawaz Khan predecessor-in- interest of the respondents, as tenant, entered into an agreement to sell dated 30-11-1966 with the owner for a consideration of Rs.53,000 and paid an amount of Rs.8,000 as earnest money. Subsequent to the sale agreement Muhammad Nawaz Khan, the (vendor) also executed a mortgage deed dated 9-3-1967 in favour of appellant in respect of the same property and having received another amount of Rs.8,000 delivered the possession of the property to the appellant. In the mortgage deed he also acknowledged the agreement to sell, dated 30-11-1966 with the undertaking that the mortgagee (appellant) on the payment of' balance sale price of Rs.37,000, would be entitled to get the property transferred in his name but after death of the mortgagor, his legal heirs refused to honour the agreement whereupon the appellant filed a suit, for specific performance of contract wherein he pleaded that mortgage deed was executed in affirmation of the agreement to sell as an acknowledgement of sale in his favour which was to be read as part of agreement and sought a decree for specific performance whereas the case of the respondents as set up in the written statement was that in consequence to the execution of mortgage deed, the agreement to sell dated 30-11-1966 stood annulled and was not enforceable.

3. The Court of first instance having formed' the opinion that the mortgage deed was executed in continuation of agreement to sell as an acknowledgement of sale and passed a decree in the suit which was reversed in appeal by the learned District Judge with the conclusion that notwithstanding the acknowledgement of the part payment of the sale consideration in the mortgage deed, the agreement stood extinguished on the execution of mortgage deed between the parties and the suit for specific performance of the contract was not maintainable. The High Court having examined the matter in detail, affirmed the judgment of the First Appellate Court and dismissed the second appeal.

4. Leave was granted in this appeal vide order, dated 8-10-2001 as under: Learned counsel for the appellant argued that the Courts below have failed to construe properly the terms of the mortgage deed in order to discover the real intention of the parties behind the execution of the said deed, for while construing a document in order to find out its nature, the intention of the parties is the criteria which was the determining factor. He maintained that the circumstances which made the parties to execute the said mortgage deed were that the vendor was in the need of further money and the vendee was not bound to make further payment to him under agreement of sale till November, 1967, therefore, in order to meet the requirements of the vendor, further amount was advanced by the appellant who wanted security of his right to get the property sold to him that deed was executed which was described as mortgage. The intention of the parties to keep intact the agreement of sale itself, therefore, it was stipulated in this deed that the remaining amount of Rs.37,000 out of the total amount of consideration may be paid by the appellant later and get the sale-deed executed, therefore, this mortgage deed was nothing but an agreement in furtherance of the original agreement of sale through which further amount was paid as earnest money and time was also extended. In the alternative, it was argued that the two immediate Courts. below have not decided the question of clog on equity of redemption in its true perspective inasmuch as according to law, if stipulation in the mortgage deed itself had provided that the same transaction would operate as sale-deed on the happening of certain events as per its terms, only then the same could operate as clog on equity of redemption but not in a case where the parties ;tided to keep alive and intact the previous agreement of sale and right of the prospective vendee to get the same enforced and sale-deed executed independently as is the position in the present case. The contention inter alia requires examination therefore, we are inclined to grant leave to consider the same. Learned counsel for the appellant submitted that the respondents have filed independent suit seeking redemption of the property and wants stay of the proceedings in the said suit."

5. Learned counsel for the appellant has contended that the sale of property by predecessor-in-interest of the respondents vide agreement dated 30-11-1966 is admitted and payment of Rs.8,000 as earnest money was also acknowledged in the mortgage deed executed on 9-3-1967 which was to be adjusted towards the mortgage money and thus, the mortgage deed for all intents and purposes would be treated as a sale agreement. Learned counsel emphasized that notwithstanding the recital of mortgage deed, the plain reading of the two documents together would clearly establish that the mortgage deed was executed in continuation of the agreement to sell with clear intention to treat it as part of the agreement. In nutshell learned counsel argued that the mortgage deed dated 9-3-1967 was an acknowledgement to the agreement to sell and since no period for performance of the contract was fixed in the mortgage deed therefore, the suit for the purpose of limitation would be governed by Article 113 of the Limitation Act, 1908. The precise argument was that in the present case, time would not be considered as essence of the contract as neither the predecessor-in-interest of the respondents during his life time, denied the performance of agreement nor the appellant had any notice of refusal of the performance by the respondents, therefore, the suit would be deemed to have been filed within time under second part of Article 113 of the Limitation Act, 1908.

6. Learned counsel for the respondents, on the other hand, has contended that the agreement dated 30-11-1966 stood extinguished on the execution of mortgage deed dated 9-3-1967 and notwithstanding the acknowledgement in the mortgage deed that appellant may on payment of sale price, mentioned therein, purchased the property, the same having entirely an independent legal character, would not be treated as a part of agreement to sell to maintain the suit for specific performance.

7. The execution of the agreement to sell dated 30-'11-1966 between the parties and the mortgage deed dated 9-3-1967 is admitted and this is also admitted that the predecessor-in-interest of the respondents acknowledged the payment of Rs.8,000 as earnest money in the mortgage deed out of the total sale consideration fixed in the agreement to sell dated 30-11-1966 with the undertaking for transfer of the property on payment of balance sale price and thus, the sole question requiring determination would be as to whether mortgage deed dated 9-3-1967 was part of agreement to sell dated 30-11-1966 or it was an independent legal document. The original agreement, dated 30-11-1966 was not brought in evidence rather its extract from the relevant register was made part of the record and predecessor-in-interest of respondents having acknowledged the execution of the agreement in the mortgage deed dated 9-3-1967 admitted the existence of the agreement with the undertaking that appellant would be entitled to complete the sale in terms of the agreement. In view thereof the contention of the learned counsel that the mortgage deed was executed in continuation of the agreement to sell and since no time was fixed in the mortgage deed for payment of remaining sale price or execution of sale-deed, therefore, the time would not be considered as essence of the contract and the appellant would be entitled to the decree for specific performance without the clog of limitation, has no substance.

8. The plain reading of the two documents would show that notwithstanding the acknowledgment of agreement to sell in the mortgage deed, both have entirely independent legal character and mortgage deed was not as such executed in continuation of the agreement, dated 30-11-1966 and mere fact that agreement was kept alive in the mortgage deed, would not effect the independent legal status of two documents. The predecessor-in-interest of the respondents without suppression of the agreement to sell executed mortgage deed wherein it was agreed that property would be transferred in the name of appellant on payment of the balance sale price fixed in the agreement dated 30-11-1966 in terms thereof without change of any condition contained therein, therefore, the assertion that time fixed in the agreement was not essence of the contract, has no legal foundation. It may be noted that time of one year was fixed in the agreement for completion of sale and in absence of any express stipulation in the mortgage deed regarding enlargement of time to complete the sale, it would not automatically extend and even in case of implied intention to extend the time, the sale must have been completed within reasonable time. The normal period provided for filing of the suit for specific performance of contract provided under Article 113 of the Limitation Act, 1908 is three years from the date of execution of the agreement and this statutory period of three years even if is considered to have commenced from the date of execution of mortgage deed or from the date of expiry of the agreement to sell the suit would still be time-barred and thus, the contention of the learned counsel that under second part of Article 113 of the Limitation Act, 1908, the time would be computed from the date of refusal of the performance of the contract, has no force. There is no cavil to the proposition that in a case in which time is not expressly provided for the performance of the contract or in the agreement of sale vendor acknowledged the right of the vendee in express terms for completion of sale beyond normal period fixed for its performance in the document, in such a case time may not be essence of the contract and limitation for filing the suit may be computed from the date of refusal.

9. There is no cavil to, the proposition that possession delivered under the sale agreement is a shield anchor to protect the right of the vendee and he may if time was not fixed in the agreement for completion of sale on payment of sale price, claim the specific performance of the agreement within reasonable time and thus, in such a case, time may not be the essence of the contract but this is not an inflexible rule to be made applicable in every case as the remedy of specific performance of contract is an equitable remedy which is always in the discretion of Court and suit for specific performance may be defeated if the plaintiff without any legal excuse failed to perform his part of the contract within the time specified therein. In the normal circumstances, the limitation in the suit for specific performance of the contract is not enlarged, in the light of the general principle that in respect of sale of immovable property, time is not essence of contract, unless a sufficient cause and a strong reason is shown for filing the suit beyond the statutory period. The above rule may not be helpful to the plaintiff/vendee who was not vigilant about the performance of his part of the contract and contributed in the delay caused in completion of the sale.

10. The learned counsel for the appellant has not been able to show us from record that before filing the suit the appellant made any effort for fulfilling his part of the contract and offered payment of the sale price within the stipulated time or at least within reasonable time to complete the sale. The learned counsel has also not been able to satisfy us that there was any acknowledgment of right either by the predecessor -in-interest of respondents or the respondents for completion of sale beyond the period mentioned in the agreement and thus, the delay in fling the suit beyond the normal period provided under the law would be fatal and appellant would not be entitled to claim the decree for specific performance.

11. The detail examination of the matter with the assistance of the learned counsel for the parties, we have not been able to find out any legal or factual infirmity in the concurrent findings of the two Courts to differ with the conclusion arrived therein.

12. In the light of the forgoing reasons this appeal being without any substance, is dismissed with no order as to costs. M.H./A-27/SC Appeal dismissed.