1988 PLP 1600 (CLC)

Mirza Manzoor Ahmad for Appellants. Ch. Muhammad Hussain Jehanian for Respondents. Dates of hearing: pith and 11th April 1988. This Regular Second Appeal impugns the validity of the judgment/decree dated the 2nd of December, 1987 of the learned Additional District Judge, Multan, whereby the respondents defendants' first appeal was accepted and the suit brought by the present appellants for specific performance of a contract was dismissed.

2. The plaintiffs' case was that the respondents‑defendants had agreed to sell the land in dispute by means of a registered agreement dated the 13th of February, 1978, in their favour for a sum of Rs.72,000 out of which Rs.35,000 were paid in cash; Rs.36,000 through a cheque dated the 11th of February, 1978, and the balance of Rs.1,000 was agreed to be paid at the time of registration which had to be completed on the 11th of February, 1979. They claimed that even the balance of Rs.1,000 was, in fact, paid against a receipt dated the 15th of January, 1979, and that though possession was delivered to them eversince, yet the respondents avoided to execute a formal sale‑deed and hence the suit.

3. The respondents admitted the execution of the agreement and even receipt of cash amount of Rs.35,000 as also the cheque of Rs.36,000 but explained that it was dishonoured due to shortage of deposit with the Bank. They observed that despite knowing that the cheque could not be encashed, the appellants failed to pay the amount. They denied receipt of the balance amount of Rs.1,000 pointing out that the receipt dated the 15th of January, 1979, was forged and fictitious and thus, a sum of Rs.37,000 was still due from them. They denied delivery of possession under the agreement but conceded that only Fazal Karim respondent who already occupied the land as tenant was continuing to occupy it in that capacity. Lastly, they submitted that the present suit was brought by the appellants‑plaintiffs as counterblast to theirs' brought before the Revenue Authorities for recovery of rent.

4. On these pleadings appropriate issues were framed by the trial Court which decreed the suit. In appeal, however, the learned Addl. District Judge took the view that in having committed default in payment of the consideration amount, the respondents had failed to perform their own part of the contract and hence could not compel the opposite‑party to be bound by it.

5. Almost all questions of fact involved in the case were either admitted or determined by the Courts below one way or the other. The agreement was admitted; receipt of Rs.35,000 was conceded; the balance of Rs.37,000 was to be paid later; acceptance of cheque worth Rs.36,000 was not denied, nor was its encashment affirmed. The lower appellate Court reversed the findings in regard to payment of the balance of Rs.37,000 through cheque and receipt and those findings presented fait accompli on the questions of fact like non‑payment of the balance. The only point urged for the appellants was that the agreement, relating as it was to, sale of immovable property, could not be rescinded on failure of part payment in time because' in such sales time was not of the essence of the contract. Section 55 of the Contract Act was referred to for this contention. Likewise, it was claimed that under section 12 of the Specific Relief Act money being no compensation for breach of such contracts, their specific performance could not be refused. Seth Essabhoy v. Saboor Ahmad PLD 1973 SC 39, Rais Abdul Rahman v. Province of West Pakistan and another P L D 1981 BJ 55 and Ghulam Nabi and others. v. Seth Muhammad Yaqub and others P L D 1983 SC 344 at 346 were relied upon in support of this plea. To further fortify the above assertion, counsel cited Abdul Hamid v. Abbas Bhai‑Abdul Hussain Sodawaterwala P L D 1962 SC 1 showing that in order to defeat specific performance of such a sale, the agreement itself should indicate that parties would keep time as an essence of the contract; that as held in Mst. Munawar Bibi v. Mst. Maheen Quddusi 1988 C L C 1887, an objection to that effect should be specifically taken up in the written statement or else it would be fatal to the defence; that a notice must be given to the purchaser to abide by the contract near about the expiry of the time fixed in the agreement for its performance; and that according to the rule enunciated in Muhammad Ayyub Khan v . Ch. Muhammad Aslam etc. 1984 C L C 2259, sometimes a stipulation made in the agreement that time would be of the essence of the contract, would not necessarily mean that it would be really so. Counsel emphatically asserted that in the written statement none of these prerequisites was urged and maintained that omission to do so was really fatal to the plea of avoiding performance of the contract.

6. On the other hand Ch. Muhammad Hussain Jahania, Advocate for the respondents asserted that the plea as to the time not being of the essence under section 55 of the Contract Act was not taken up in the plaint, or the grounds of appeal, nor had the appellants offered to pay the balance even now and thereby had disentitled themselves to get the discretionary relief of specific performance. He cited Muhammad Yaqub v. Muhammad Nasrullah Khan and others PLD 1986 SC 497 in support of the argument that a party committing default in performance of his own part of the contract could not enforce the same against the other. He claimed the respondents to be 'promisees' for the purpose of section 55 (ibid) and entitled to rescind the contract on non‑performance thereof by the appellants. Further, he submitted that since the appellants never applied for performance at proper place within the usual hours of business, as contemplated by section 48 of the Contract Act, they were not entitled to the discretionary relief. Lastly he pointed out that the suit was mala fide inasmuch as it was brought by way of reprisal to a suit brought by the respondents for‑ recovery of rent before the Revenue Court. He emphasized that giving the respondents a cheque without keeping corresponding balance of cash in the Bank indeed amounted to fraud besmearing the appellants' intention. He observed that they did not come with clean hands and as such were not entitled to be rendered any help at law.

7. It is a common experience that agreements to sell immovable property cannot be finally determined by a mere stroke of pen. Generally speaking time is not of the essence in such contracts. The basic evidence to see the parties' intent in that behalf is the agreement itself. This was what was laid down in Abdul Hamid v. Abbas Bhai Abdul Hussain P L D 1962 EC

1. A perusal of the disputed agreement EXh.P.l reveals a very pertinent clause reflecting abundantly that the parties did not intend to make time of the essence of the contract. The clause runs as follows:‑ A bare perusal of this stipulation unmistakably spells out an indisputable right on the appellants‑promisees to enforce the contract through Court in case the respondents did not abide by it. It obviously contemplated completion of the contract through Court even after the expiry of the terminal date and was a clear negation of an intent o making the time of the essence of the contract. In fact the appellants were doing exactly what the above‑mentioned clause authorised them and no objection could be taken to the process adopted by them. It will be desirable to examine the other clause which the learned counsel emphasized much to claim that in case the appellants failed to pay the amount in time, the earnest money earlier advanced by them would stand forfeited. I do not think this clause could be of any assistance to the respondents. Firstly it will yield to the one conferring a right of forcible registration of the sale‑deed on the appellants even after expiry of the deadline. Secondly it is penal in nature which is always in the discretion of the Court as per section 74 of the Contract Act. Thirdly, it was not relied upon in the written statement. Fourthly, the respondents did not give any notice to the appellants asking them to abide by the fixed time. Such notice was essential according to rule enunciated in Mst. 6lunawar Bibi's case. Fifthly, right to forfeit the earnest money by itself did not suffice that time was of the essence of the contract. Some sort of urgency or compulsion persuading the respondents to complete the sale within a limited span of time should have been clearly denoted to make the, appellants aware of any consequences adverse to their interest in case they could not carry out the sale in time. No such element was included in the agreement nor made clear to the appellants subsequently. For all intents it appeared to be a usual sale containing the usual confiscatory clause. According to the rule laid down in Seth Essabhoy's and Ghulam Nabi's cases time here was not of the essence of the contract.

8. Section 55 of the Contract Act rather helps the purchaser (promisee). The option to rescind the contract is given to him rather than the promisor like the respondents. Mr. Jahania did not appear to be much correct in claiming that the respondents were promisees in this case. They were promisors and had had no occasion to invoke section 55 (ibid). Conversely the appellants, who had the choice of rescinding the contract chose to enforce it and they could do it with impunity. Similarly the contention that the appellants (promisees) did not apply for performance at proper place and within usual hours of business within the contemplation of section 48 of the Contract Act was indeed irrelevant. They brought the present suit only to enforce the contract and that is what the contract itself authorised them to do. Institution of the suit itself would be enough application for specific performance of the contract. The plea that the part payment through the cheque and the receipt failed, would be of no material consequence because the appellants are even now willing to pay the same. The finding of the lower Court on the point was reversed and since it was a question of fact, they could not assail it in the present regular second appeal. Perhaps to cut short the matter they signified intention before the Court to pay the balance amount now. Because the time was not of the essence, it is open to them to tender the balance subsequently. Mr. Jahania for the respondents urged that now when the prices of land had gone sky‑high, to pay them only the small balance of Rs.37,000 agreed upon ten years ago would be inequitable. It is true that the prices have gone quite high, but the obligations arose out of the respondents own written commitment. They have been using not a small amount of Rs.35,000 taken by them from the appellants years ago. This was a benefit which they arrogated so that if they have to suffer a little correspondingly now, they should make no grievance. Equally there was no force in the plea that specific performance may be refused to the appellants under section 22 or section 24 of the Specific Relief Act. Money is no compensation in contracts for sale of immovable property. Explanation to section 12 of the Specific Relief Act is quite clear on the point. The corollary was that it could be specifically enforced and the promisor could not insist for payment of damages or pecuniary compensation.

9. As a result of the above discussion, the R.S.A. is accepted, the impugned judgment and decree are set aside, and instead the suit is decreed to the effect that the appellants‑plaintiffs shall be entitled to get the agreement in question specifically enforced on further payment of Rs.37,000 to the respondents. Parties to bear their own costs. A.A./B‑64/L Appeal accepted.