2008 PLP 175 (CLC)

MUHAMMAD JEHANGIR ARSHAD, J.

This R.S.A. is directed against the judgment, dated 27-6-2002 passed by learned Additional District Judge, Lahore whereby the appeal filed by the appellant against the judgment and decree of the learned trial Court, dated 1-10-2001 dismissing his suit for specific performance, was also dismissed.

2. The facts in brief are that Syed Muzafar Hussain (deceased respondent No.1) and his wife Mst. Rati Muzafar are the owners of Property bearing No.37-E/I measuring 9 Kanals, 16 Marlas and 186 sq. feet situated in Gulberg-III, Lahore. The appellant namely Syed Ahmad on the basis of agreement to sell, dated 28-10-1974 (Exh.P.1) regarding portion of the said property comprising of plot measuring 1 Kanal, 5 Marlas at the rate of Rs.48,000 per Kanal (fully described in para.2 of the plaint) filed a suit through plaint dated 5-2-1975 alleging therein that Muzafar Hussain and his wife Rati Muzafar through the said agreement agreed to sell the, portion of the above mentioned property measuring 1 Kanal, 5 Marlas for a consideration of Rs.60,

000. The suit was contested by Muzafar Hussain and his wife, who through their joint written statement denied the agreement and also raised several preliminary objections. Originally, one Azhar Ali son of Ghulam Mohy-ud-Din and his daughter Shehla Mohy-ud-Din were also impleaded in the suit as defendants Nos.3 and 4 as out of total area of the property 1 Kanal, 19 Marlas and 38 sq. feet areas was admittedly sold to them by Muzafar Hussain and his wife through registered sale-deed dated 26-3-1977 registered on 4-4-1977, but subsequently vide order, dated 25-12-2001 they were deleted by the learned trial Court from the array of defendants, in view of the findings of this Court, dated 13-11-2000 in Regular Second Appeal No.97 of 1998 holding that transaction in favour of defendants Nos.3 and 4 would remain intact and in case the suit of the appellant was ultimately decreed then contract would be enforced against the Property No.37-E/I, Gulberg-III, Lahore excluding the plot sold to defendants Nos.3 and 4.

3. In view of divergent pleadings of the parties, the learned trial Court framed the following issues:-- Issues: (1) Whether the suit is not maintainable? OPD (2) Whether the suit is time-barred? OPD (3) Whether the suit is barred under order II, rule 2, C.P.C.? OPD (4) Whether the plaintiff has got no cause of action as alleged in preliminary objection No.5 of the written statement? OPD. (5) Whether the agreement of sale in respect of the disputed property was entered on 28-6-1974 between the plaintiff and defendants Nos.1 and 2? OPP (6) If Issue No.5 is proved in affirmative then the plaintiff is entitled to a decree for specific performance? If so what terms and conditions? OPP (7) Relief. After recording oral as well as documentary evidence of the parties, the learned trial Court though found Issue No.5 in favour of the plaintiff/appellant yet came to the conclusion that he was not entitled to the decree for specific performance and consequently dismissed the suit vide judgment, dated 7-3-1988. The appellant filed appeal against the above judgment of the learned trial Court, whereas, respondents/ defendants filed cross-objections against the findings of the learned trial Court on certain issues decided against them. However, the learned Additional District Judge vide judgment, dated 14-5-1990 allowed the appeal of the appellant and proceeded to decree the suit observing that contract would be enforced against remaining plot excluding the plot sold to defendants Nos.3 and

4. The cross-objections filed by the respondents were turned down through the judgment, dated 14-5-1990. Against the above mentioned judgment and decree of the learned Additional District Judge, two Regular Second Appeals i.e. 97 and 98 of 1990 were filed which were decided by my learned brother Moulvi Anwarul Haq, J. on 13-11-2002 in the following terms:-- "As a result of above discussion, these R.S.As. are allowed. The judgments and decrees passed by learned courts below are set aside. The matter is remanded to the learned trial Court. The parties shall appear before learned Senior Civil Judge, Lahore on 20-12-2000. Learned Senior Civil Judge shall either himself proceed with the suit or entrust it to another competent Civil Judge, who shall in the first instance procure the attendance of the witnesses with requisite record mentioned at Serial No.1 of the list of witnesses filed by respondent No.1 and record their statements. The appellants then shall be given a chance to rebut the said evidence and thereafter to record findings on Issues Nos.5 and 6 and consequently, to decide the suit in accordance with law. Before I part with this judgment, I may state here that Mian Nisar as also Rana Sarwar learned counsel for the appellants and respondent No.1 did not question the findings of the learned Additional District Judge that the sale made in favour of respondents Nos.2 and 3 (sic) appellants shall remain intact and in case the suit of respondent No.1 is ultimately decreed then the contract will be enforced against Property No.37-E/1, Gulberg-III, Lahore excluding the plot sold to respondents Nos.3 and

4. The parties are left to bear their own costs." After remand by this Court as mentioned above, the learned trial Court recorded additional evidence, which the parties wanted to lead, and ultimately after deciding all the issues against the appellant proceeded to dismiss the suit vide judgment and decree, dated 1-10-2001. Appeal filed by the appellant against the above dismissal of his suit, was also dismissed by learned Additional District Judge, Lahore on 27-6-2002. Both the above judgments and decrees of two Courts below are being assailed through the instant regular second appeal

4. Although in the plaint the appellants/plaintiffs have repeatedly referred the agreement to sell dated 28-10-1974 allegedly executed by Syed Muzafar Hussain deceased defendant/respondent No.1 and his widow Rati Muzafar Hussain defendant/respondent No.2 yet during arguments it transpired that no formal document in the form of an agreement to sell dated 28-10-1974 was in fact executed and it was only a receipt dated 28-6-1974 (Exh.P.1) whereby Muzafar Hussain deceased respondent admitted to have received Rs.20,000 as advance for a portion of Plot No.37-E/I, Gulberg, Lahore. Out of the said amount, ten thousand Rupees were stated to have been received through Cheque No.238445 dated 28-6-1974 and the balance of Rs.10,000 in cash, whereas, balance of Rs.40,000 was stated to be due on registration. The cheque mentioned above was later on admitted in evidence as Exh.P.W.7/1 through the statement of Munawar Ahmad P.W.7 after remand. According to learned counsel for the appellants this cheque was issued in the name of Rati Muzafar Hussain which was payable through payee's account only and was got encashed through Habib Bank Limited Gulberg, Lahore in the account of Rati Muzafar Hussain.

5. Learned counsel for the appellants submitted that as Rati Muzafar Hussain in her statement as D.W.4 got recorded on 29-5-2000 after remand by this Court, denied the receipt of said cheque as well as non-presence of her account in Habib Bank Limited, Gulberg, Lahore, therefore the appellant made an application before the learned trial Court on 16-3-2001 for summoning the record of Habib Bank Limited through some Authorized Officer to prove the fact that Rati Muzafar Hussain was in fact holding an account in the said Branch and the said cheque was encashed in her favour through her said account but the learned trial Court vide order, dated 17-4-2001 illegally dismissed the said application and that the appellant did challenge the said order in ground (f) of memo. of appeal before the learned First Appellate Court and the matter was also argued but the learned First Appellate Court recorded no findings on the said point in the impugned judgment, resulting in miscarriage of justice. Learned counsel for the appellants, therefore, submitted that the prayer of the appellants for summoning the record of Habib Bank Limited, Gulberg, Lahore was essential for the correct decision of the suit, therefore, the said prayer should have been acceded to and the authorized officer of the Habib Bank Limited should have been summoned along with record to make a statement whether Rati Muzaffar Hussain was in fact holding any account in the said Branch and the cheque mentioned above was encashed in her favour and credited to her said account and by not recording any findings on the said point, the learned First Appellate Court has acted illegally and with material irregularity, therefore, this Court in exercise of its jurisdiction under . Order XLI, rule 27, C.P.C. should allow the prayer of the appellant. The contention of learned counsel that the learned trial Court dismissed the application of the appellants on wrong premises and no embargo was put on the powers of the learned trial Court by this Court through its remand order regarding recording of any additional evidence, which was essential for the correct decision of the case and to support his contention the learned counsel has placed reliance on the provisions of Order XVIII, rule 2, (Explanation-I), C.P.C., as inserted by Lahore High Court. Amendment. The learned counsel has also argued that summoning of official witnesses not incorporated in the list of witnesses is no bar and the Court can examine any witness at any stage, if the Court finds the examination of such witness essential for the correct decision of the case. The learned counsel in support of his contention has placed reliance on the case "Ghulam Zohra and 8 others v. Nazar Hussain through Legal Heirs" 2007 SCMR 1117, 1990 CLC 1877 and 1995 CLC 327.

6. On the contrary, learned counsel for the respondents has argued that although appellants' application for summoning the record of the Bank was dismissed by the learned trial Court yet the said order was never challenged. Similarly, although in para.(f) of memorandum of appeal before the First Appellate Court, the order of the trial Court was challenged but neither the record indicates nor any affidavit by the learned counsel for the appellants has been placed on the record to show that said plea was in fact argued or even pressed before the First Appellate Court, therefore, the same could not be entertained at this belated stage.

7. On merits, learned counsel for the appellants has argued that from the evidence of Mehmood Ahmad P.W.1, Nasir-ud-Din P.W.2 and Munawar Ahmad P. W.7, the document Exh.P.1 is proved beyond any shadow of doubt and further Muzafar Hussain in his evidence as D.W.1 also admitted the execution of receipt Exh.P.1, therefore, the two Courts below acted illegally and with material irregularity by non-suiting the appellants while deciding Issues Nos.5 and 6 against him. The learned counsel has finally argued that since Muzafar Hussain deceased respondent in his evidence' has admitted the receipt of cheque and its encashment, therefore, presumption in terms of section 118 of the Negotiable Instruments Act arose in favour of the appellants that the cheque was for valuable consideration and the onus had now shifted on the respondents to prove that the same was without consideration. Learned counsel has also relied on the Provisions of seciton123-A of the Negotiable Instruments Act to argue that a cross-cheque payable through account ceases to be a negotiable instrument and can only be paid through account of the payee, therefore, it cannot be said that the said cheque was encashed through the account of some one other than Rati Muzaffar Hussain. Lastly, it is argued that although there existed no formal agreement between the parties yet the mere absence of formally signed-contract would not disentitle the appellant from seeking specific performance of the same, if existence of such contract is otherwise supported by actual conduct of the parties coupled with the surrounding facts. The learned counsel has placed reliance on the case Allexander Brogden and others v. The Directors C. of the Metropolitan Railway Company 2 AC 66.6 year 1877.

8. On the other hand, learned counsel for the respondents has argued that in fact there was no agreement to sell ever entered into between the parties and that receipt Exh.P.1 under no provision of law or stretch of imagination can be considered as an agreement within the meaning of section 2(b) of the Contract Act, 1872. Since only an agreement can be enforced by a suit for specific performance, therefore, the two Courts below rightly non-suited the appellants by dismissing the suit as well as appeal. To show what constitutes an agreement enforcible by a suit for specific performance, learned counsel has placed reliance on the case "Mst. Barkat Bibi and others v. Muhammad Rafique and others" 1990 SCMR 28 and "Mehran Sugar Mills Limited v. Sindh Sugar Corporation Limited through Chairman and 2 others" 1995 CLC

707. The learned counsel has argued that the appellant/plaintiff had to prove his case on the basis of his own evidence and under no provision the plaintiff could succeed on the weaknesses of respondents' evidence, as pointed out by learned counsel for the appellant in the statement of Muzafar Hussain respondent/appellant. In this behalf, the learned counsel has placed reliance on the case "Major (Retd.) Syed Baqar Hussain Shah v. Mst. Rashida Begum" 1992 MLD 2515. Further, argued that on the basis of mere receipt Exh.P.1 the appellant has not been able to establish the existence of a valid agreement to sell between the parties. Lastly, the learned counsel for the respondents has argued that this Court should be slow in disturbing the concurrent findings of two Courts below while exercising jurisdiction under sections 100 and 101, C.P.C. Reliance is placed on the case "Fazal Rahman v. Amir Haider and others 1986 SCMR 1814 and "Amjad Sharif Qazi and others" v. Salim Ullah Faridi and others" PLD 2006 SC 777.

9. The above noted arguments of learned counsel for the parties have been thoroughly considered and examined in the light of the material available on the record as well as the case-law referred to above.

10. The decision of this regular second appeal rests upon the resolution of following important points:-- (I) Whether the receipt Exh.P.1 constitutes an agreement within the meaning of section 2 of the Contract Act, 1872 for the purposes of specific performance; and (II) Whether the receipt Exh. P.1 has been proved for consideration, if so its effect.

11. Admittedly as mentioned above nothing like in the form of a formal agreement to sell was even executed between the parties nor is the same available on the record or proved by the appellant. Admittedly, the stance of the appellant is that agreement was completed between the parties in the form of Exh.P.1, which neither lays down terms and conditions of the agreement nor bears the signatures/thumb-impressions of either Rati Muzafar or of Syed. Ahmad appellant. It is an established principle of law that for the constitution of a valid agreement there must be at least two persons i.e. promisee and promisor who agree with their A free consent for a lawful object and legal consideration which is also the requirement of section 2 of the Contract Act, whereas in the present case the very first condition i.e. presence of at least two parties to the agreement is missing and Exh.P.1 only contains the signatures of Muzafar Hussain deceased respondent. Further the word "agreement" is defined in section 2(a)(b)(c) of the Contract Act, which means "offer/ proposal by one person and acceptance or willingness to accept the offer by the order" and in the absence of either the two i.e. offer and acceptance, the same would not ripe into an agreement and as held by Honourable Supreme Court of Pakistan in the case Mst. Barkat Bibi and others v. Muhammad Rafique and others 1990 SCMR 28, "only an agreement based on an offer and acceptance can be enforced by a suit for specific performance; and any document carrying other than proposal and acceptance would not qualify as a transaction of agreement to maintain a suit for specific performance of agreement". Further in the case Mehran Sugar Mills Limited v. Sindh Sugar Corporation Limited through Chairman and 2 others 1995 CLC 707, a learned Single Judge of the Honourable Sindh High Court, after exhaustive analysis of the case on the subject rightly held:-- "Mere signing of memorandum of understanding could not be termed as a valid agreement in the eyes of law and unless an agreement was finalized no legal or valid right would accrue to the plaintiff on the basis of memorandum of understanding." I am, therefore, satisfied that receipt Exh.P.1 neither fulfils the requirements of agreement as defined in section 2(a)(b) and (c) of the Contract Act, nor stand to the test of law as declared by the Honourable Supreme Court as well as Sindh High Court in the cited judgments and the same may in maximum be construed as an undertaking which cannot be construed equivalent to a contract. Moreover, Exh.P.1 neither discloses the full description of the parties nor the terms and conditions of the agreement. Further it appears that words "approx 1 Kanal, 5 Marlas" were added later on with a different pen and ink. Similarly, the words "balance Rs.40,000 and Rs:48,000 PK is due on registration" also appear to have been inserted afterwards. Further the question arose as to whether on the basis of exh.P.1 the defendants/respondents or even Muzafar Hussain alone deceased respondent could file similar suit against the appellant, when the same does not disclose that the receipt is being executed in favour of the appellant or on receipt of the amount mentioned therein from the appellant. On the above analysis of Exh.P.1 it cannot be held that receipt Exh.P.1 is an agreement within the contemplation of section 2 of the Contract Act, thus, no suit for specific performance could either be filed by the appellant nor the same was maintainable at all.

12. Although, learned counsel for the appellant by placing reliance on some judgment from House of Lords in the case Alexander Brogdin and others v. The Directors, & C, of The Metropolitan Railway Company 2 AC 666 year 1877 has argued that although no formally executed agreement in writing came into existence between the parties yet the act and conduct of respondents, especially with reference to the execution of exh.P.1, receipt of cheque and also handing over the original sale-deed to the appellants issued in favour respondents by L.D.A., though not exhibited, can constitute an act on the part of the respondents to signify their willingness for entering into a valid contract in terms of section 2(d) of the Contract Act, 1872, therefore, the suit was rightly filed on the basis of receipt Exh.P.1 and the same was maintainable. However, I am not convinced with this contention of learned counsel for the appellant for the simple reason that judgment of House of Lords relied upon by learned counsel for the appellants, is based on a general principle of contract as in vogue in England at the relevant time and such law cannot override the statutory provisions of the Contract Act, mentioned above. Further the facts of said judgment of House of Lords are distinguishable, inasmuch as in the said judgment, parties to the contract not only gave their mental assent but also physically acted upon the terms and conditions of the same, whereas, in the present case, neither one of the vendors namely Rati Muzafar ever signed Exh. P.1 nor both the vendors signified their assent to constitute a legal promise within the meaning of section 2(b) of the Contract Act, therefore the above mentioned contention of learned counsel for the appellant cannot be graced with legal sanctity.

13. So for as the second point with regard to the execution of receipt Exh. P.1 and its being with consideration, is concerned, there is considerable force in the contention of learned counsel for the appellant that the same did stand proved by implication through the statement of Muzafar Hussain as D.W.1. The learned counsel for the appellant has taken the Court through the said statement of Muzafar Hussain to show that his statement is full with contradictions on the question of receipt of cheque at the time of execution of Exh. P.1, especially when Muzaffar Hussain D.W.1 in his statement has admitted that at the first instance some negotiations with regard to the property in dispute took place between him and the appellant but later on the transaction could not materialize and the negotiations broke out. Further, the learned counsel for the appellant has also taken me through the following portions of statement of Muzafar Hussain D.W.1:

The learned counsel for the appellant has also referred to the evidence/statement of Munawar Hussain P.W.7 who is employee (Grade-III Officer) of United Bank Limited and the said witness in his statement proved the encashment of Cheque No. 238446 (Exh.P.W.(7/1) dated 6-7-1974 in favour of Rati Muzafar Hussain through her account maintained in Habib Bank Limited, Gulberg Branch, Lahore. The contention of learned counsel for the appellant is that since the said cheque was payable with an endorsement "payee's account only", therefore, the same ceases to be negotiable in terms of section 123-A of the negotiable Instrument Act, and could only be paid to the payee named in the cheque through his/her account and since except oral assertion by Mst. Rati Muzafar no evidence has been produced by her to prove that she was not maintaining any account in Habib Bank Limited, Gulberg Branch, Lahore, hence the evidence of P.W.7 supported by back record must be given due weight to hold that amount of said cheque was received by Rati Muzafar through her account in views of the presumption raised by section 118 of the Negotiable Instrument Act and the payment to her through the cheque be construed as part of consideration under the agreement through Exh.P.1. learned counsel for the appellant has also argued that as execution of Exh. P. 1 has been successfully proved by the appellant through the evidence of P.W.1 Mehmood Ahmad as well as the above referred portions of statement of Muzafar Hussain D.W.1 and in the absence of any satisfactory rebuttal by the respondents with regard to the receipt of Rs.10,000 in cash at the time of execution of Exh.P.1, the amount of Rs.10,000 paid in cash under Exh. P. 1 be also construed as a part of sale consideration for agreement to sell.

14. On the other hand, learned counsel for the respondents has strenuously argued that it is the appellant who had to prove his case and cannot succeed on the weaknesses of evidence of the respondent and the appellant was required to produce most satisfactory evidence in support of the oral agreement claimed by him. The learned counsel for the respondents further contends that a heavy burden lay on the appellant to prove his case without reasonable doubt and that the presumption under section 118 of the Negotiable Instruments Act arise only when some document is admitted or proved through legal evidence. Learned counsel in support of his contention has placed reliance on the case 1992 MLD 2515, 2002 MLD 1901, `PLD 1981 Kar. 170 and 2003 YLR 1866.

15. After careful consideration of the above noted argument of learned Counsel for the parties as well as perusal of the evidence, I am inclined to agree with the contentions of learned counsel for the appellant that the appellant has succeeded in proving the execution of Exh.P.1 as receipt and not as an agreement and also passing on of the consideration of Rs.20,000 to the respondents viz. Rs.10,000 in cash to Muzafar Hussain respondent at the time of execution of receipt Exh. P. 1 on 28-6-1974 and also receipt of Rs.10,000 by Rati Muzafar Hussain respondent/defendant through cheque Exh.P.W.7/1, especially when through the evidence of P.W.7, payment of amount under the said cheque to Rati Muzafar carrying endorsement "payee's account only" through her account at Habib Bank Limited, Gulberg Branch, Lahore and her mere denial cannot negate the above mentioned documentary evidence of the appellant nor the provisions of law as contained in section 123-A of the Negotiable Instruments Act baring payment of any amount under the cheque with endorsement "payee's account only", to a person other than the one named in the cheque. This answers Point No.2 as noted in para.10 above. In view of the above conclusion no order is called for on the application filed by the appellant before the trial Court regarding summoning of record of Habib Bank Limited, Gulberg Branch, Lahore for the verification of the existence of account in the name of Rati Muzafar Hussain. The respondents have been utilizing the amount of Rs.20,000 since 1974 so received by them from the appellant, therefore, it is held that-appellant is entitled to recover Rs.20,000 along with its profit which have been earned by him by use of the said amount for the period 1974 till date. There is no denying the fact that since 1974 till date due to speedy inflation the value of the currency has gone down several times as compared to the price of immovable property touching the sky. It would, therefore, be most appropriate rather in the interest of justice to direct the respondents to return the said amount of Rs.20,000 by multiplying it twenty times coming to Rs.4,00,000, which still to me is muchless than the present market value of the property in dispute.

16. Resultantly, issues Nos.5 and 6 are answered against the appellant but at the same time the suit filed by the appellant for specific performance is converted into one as suit for return of above mentioned amount in exercise of power conferred on this Court under Order XLI, rule 33, C.P.C. Relief

17. Consequent to the above discussion, this appeal is disposed of in the following terms:-- (I) The judgments of two Courts below, one of the learned trial Court dismissing the suit of the appellant for specific performance of agreement and the second by the learned Additional District Judge dismissing the appeal of the appellant against the above judgment of the trial Court, are upheld. (II) The suit filed by the appellant for specific performance of agreement is converted into one suit for return of Rs.20,000 and the same is decreed in the sum of Rs.4,00,000 in favour of the appellant- and against the respondents, as held above. (III) The respondents shall deposit the said amount with the learned trial Court till 15-12-2007, failing which the appellant shall be entitled to recover the said amount by way of filing execution proceedings and in such an eventuality the executing Court shall be free to recover this amount from the respondents and to pay the same to the appellant through sale of portion of the disputed property through auction; and (IV) Till payment of the above mentioned decretal amount of Rs.4,00,000 to the appellant, the property in dispute shall not be alienated by the respondents to any person in any manner. The decree-sheet be prepared accordingly and the record along with decree-sheet be returned to the trial Court. M.H./S-185/L Order accordingly.