1989 PLP 4254 (MLD)

The receipt Ext. 5/2 is signed by the original defendant and witnessed by her nephew Arif Hussain and estate broker Amin Haroon. The payment of Rs. 5,000 is shown as part payment out of total sale consideration of Rs. 4,60,000 in respect of property bearing No. 713/1, Dr. Jackson Road, Off Jamshed Road, Fatima Jinnah Colony, Karachi. The law on this point is to be found in the Catina of cases in Harichand v. Mancharam v. Govind Luxman Gokhale, 50 Ind. Appl, 25: (AIR 1923 P.C. 47); Currimbhoy and Company Ltd. v. Greet, 60 Ind. App. 297: (AIR 1933 P.C. 29); Shankarilal Narayandas Mundale v, New Mofusail Co. Ltd., 73 Ind. App. 98: (AIR 1946 P.C.97), Custodian of Enemy Property, Islamabad v. Hoshang M. Dastur and 6 others (PLD 1977 Kar. 377) and Major (Retd) Ahmad Khan Bhatti v. Masooda Fatima (PLD 1981 Kar. 398). Harichand's case (AIR 1923 P.C. 47) lays down the proposition that documents may upon their true construction, amount to a binding contract for sale and purchase of immovable property. enforceable by specific performance, although they provide for the preparation of a contract by a lawyer and that provisions with other terms of the agreement are described in the transaction of the documents as a condition. The Judicial Committee in that case distinguished the principle laid down in Von Hatzfeldt Wildenbury v. Alexander (1912) 1 Ch. 284: (1911-13) A.E.R. Rep

148. At page 49 to Harichand's case (AIR 1923 P.C. 47) the Judicial Committee enunciated the law as follows:-- "Whether an agreement is a completed bargain or mere y a provisional arrangement depends on the intention of the parties as deducible from the language used by the parties on the occasion when the negotiations take a concrete shape. As observed by the Lord Chancellor (Lord Cranworth) in Ridgway v. Walton (6 H.L. Cases 289) the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to an agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement". In Currimbhoy's case in 60 Ind. App. 297: (AIR 1933 P.C. 29), no new principles were laid down but the observations in Harichand's case (AIR 1923 P.C. 47) were reiterated at page 31 by Lord Thankerson. Finally, the Privy Council in Shankerlal's case (AIR 1946 P.C. 97) redefined the position almost on similar terms. Lord Du Parcq at page 99, 100 observed:-- "But apart from the objection that the point was taken too lam, their Lordships, with all due respect for the Judges of the High Court, are satisfied that it is without substance. In their Lordhsips' opinion, the facts do not support the inference that the parties intended to be bound only when a formal agreement had been executed. On the contrary, their Lordships consider that there was ample evidence to prove that both parties intended to make, and believed that they had made, a binding oral agreement. Their desire and intention to put that agreement into formal shape does not affect its validity." Same argument at the Bar was advanced on the ground that in this case there was reference to separate agreement in the receipt Ext. 5/2, therefore, it is to be regarded as a mere condition and on that ground it is to be distinguished from these cases. I am not convinced that it is so. In particular it was exactly the kind of point that Lord Du Parcq discussed and disposed of at page 100 of AIR 1946 P.C. 97 where his Lordship laid down the law in the following terms:-- "It was contented by counsel for the respondent that the agreement was necessarily incomplete because it had been left to the solicitors to settle some of its terms and because (as counsel rightly submitted) a solicitor has no implied authority to make a contract on his client's behalf. Their Lordships are of opinion, however, that no question as to a Solicitor's implied authority arises in this case. In their Lordships' view, it is a fair inference from the evidence that Sir Shapurji authorized Mr. Manekshaw to put before the plaintiff for his acceptance the "usual" terms. In the circumstances which have already been explained, this seems to their Lordships to have been a very natural and businesslike course for Sir Shapurji to take and necessarily resulted, when the appellant accepted the terms, in the formation of a binding contract." In Custodian of Enemy Property v. Hoshang M. Dastur and 6 others (PLD 1977 Kar. 377) a Division Bench of this Court laid down the law in the following terms: "In each of these cases the agreement relied on as constituting the completed contract was held to be inchoate, which provided either that the agreement was subject to `solicitor's approving the lease' or `the covenants to be contained in the lease" or was subject to `usual terms'. The proposition of law laid down in these cases is, no doubt, would settled. But, the question whether the parties had reached a concluded contract or not, is a question of fact to be deduced from the correspondence, and other documentary and oral evidence. The true test for deciding this question is to ascertain whether the parties were of one mind on all the material terms at the time it is said to have been finalised between them and whether they intended that the matter was closed and concluded between them. There is nothing on record to show as to what were the alleged "other terms and conditions" to be contained in this regular lease deed. Manek Chinoy (D.W.2) in answer to a Court question, admitted that no efforts were made by the Owner to finalise the terms and conditions of-the lease. Nor did Mr. Dingomal, the Legal Adviser, who drafted the letter (Exh. 8), even submit any new terms or conditions for consideration of the Dasturs. On the other hand, the documentary evidence supports the conclusion that all main and material terms and conditions to be contained in the proposed lease deed were settled." This question has been considered by my learned brother Saeed uzzaman Siddiqui, J. in Major (Retd.) Ahmad Khan Bhatti v. Mst. Masooda Fatima (PLD 1981 Kar. 398) in which he has come to the conclusion after giving cogent reasons which are fully supported by the various authorities discussed by him in the said judgment that "in such circumstances where a document which is relied upon as a contract, contemplates execution of another document, it is really a question of construction of the document whether the execution of the latter document is a condition of the terms of the bargain or is merely an expression of desire on the part of the parties as to the manner in which the agreed transaction is to take place. If the execution of later contract is found to be a condition of the terms of the bargain then no contract comes into existence until the later agreement is executed between the parties, but if the execution of the later agreement is held to be only an expression of desire on the part of the parties to state the manner in which the agreed transaction is to go through, then the non -execution of the later agreement may be ignored and the transaction as evidences by the original document may be given effect to as a binding contract." In view of the principles of law laid down m the above decisions, it is, clear that on the facts of this case I do not read the contract to sell in this case to be subject to and formal agreement of this nature as to preclude the conclusion and I hold that there was already a concluded contract for sale. It now remains only to say that the two cases of J.I.J. Hyam v. M.E. Gubbay (AIR 1916 Calcutta 1) and Raingold v. Bomrley (1931 Law Reports, Chancery Division 307, Volume 11) referred to by the learned counsel for the defendants are entirely distinguishable, both on facts and on the law. In the first case referred, the contract stipulated written agreement and in the latter case the arrangement was `subject to the terms of lease'. The last case referred to by the learned counsel for the defendant is Simon Ruben and others v. Haji Shaikh Mahomed Shustary (AIR 1922 Bombay 404). In this case the contract stipulates `subject to conditions and entering into regular lease'. It is not necessary to say any more on those these cases having regard to the decisions of the higher and binding authorities of the Judicial Committee of the Privy Council and the Division Bench of this Court. I accordingly hold that Ext. 5/2 contained the' essential terms of a binding agreement to sell the immovable property. The total price and sale consideration for which the property in suit was agreed to be sold was Rs. 4,00,

000. The amount of Rs. 5,000 was shown to have been received as part payment by the original defendant towards sale of property, full description whereof is given in the receipt. The name of the vendee is given with precision and the vendor signed the receipt in the presence of her nephew and estate broker Amin Haroon. I accordingly hold that Ext. 5/2 was a concluded sale agreement between the plaintiff and the original defendant. Issues Nos. 2 & 3: The burden of proving that receipt Ext. 5/2 was obtained by fraud, deceit and dishonest intention was upon the original defendant. D.W. No.2 Dr. Zaki Hassan stated in his evidence that his mother signed the receipt (Ext. 5/2) under pressure. He admitted in his cross-examination that he used the word "pressure" and not coercion or duress. The defendant, to prove the alleged misrepresentation, relied on the following facts:-- (1) One Amin Haroon approached the defendant with a proposal that if she agreed to pay 10% as accumulated arrears of rent, M/s. Thaver and Sons would take the responsibility of getting the possession of bungalow for the defendant as well as for the recovery of arrears of rent and current rent. (2) The said Amin Haroon by his representations, persuasion and conduct was able to create complete confidence in the defendant and she agreed to entrust the matter of recovery of arrears and possession of the house on the condition that she will pay 7-1/2% of the arrears to M/s. Thaver & Sons and they will recover the arrears of rent and possession of the bungalow for the defendant. (3) During his subsequent visits he suggested to the defendant that he has been able to find a person who is desirous to purchase the property and would undertake to recover the arrears of rent from National Construction Company for the defendant. (4) Abdul Sattar, Plaintiffs husband made a proposal regarding price of the bungalow to be Rs. 6,60,000 besides an undertaking that he would recover the arrears of rent and pay the same to the defendant. (5) He, however, suggested that the sale-deed shall be executed for Rs. 4,60,000 and Rs. 2,00,000 will be paid in cash at the tune of possession and in this way he will be able to save stamp duty and registration charges and the defendant would get the benefit of paying less Gain Tax and Property Tax as the amount of Rs. 2,000 which will be paid at the time of delivery of possession shall not be included in the sale consideration of the Deed. (6) It was also agreed that he will pay 25% as earnest money. (7) He brought a cheque for Rs. 5,000 as token money and promised that a regular agreement of sale embodying all the terms and conditions shall be prepared within a week and would be brought to the defendant for her approval (8) She was not prepared to accept the cheque of Rs. 5,000 unless the final terms of the agreement embodying all the conditions and all the amounts settled viz. Rs. 4,60,000 being the ostensible sale consideration and Rs. 2,00,000 for possession and Rs. 1,26,000 as arrears of rent besides current rent all are entered into the agreement. (9) Both Amin Haroon and Abdul Sattar by their representations and confidence tricks got the token receipt signed and on oath promised that they will bring the agreement and honestly adhere to all the terms and shall pay Rs. 1,10,(100 to make up 25% of the declared consideration. It was under these circumstances that receipt of Rs. 5,000 was executed. The original defendant was not a pardanashin woman. She used to manage her own affairs. It is quite true that Amin Haroon is the estate broke who approached her for negotiations. D.W. 1 Arif Hussain was present when the negotiations were going on. I have to consider the totality of circumstances an the conduct of the parties to determine whether the plaintiff's husband and Amin Haroon stood at the material times in the active confidence of the defendant. The following facts have been cither admitted or proved by the evidence: (1) The plaintiff's husband approached M/s. Thaver and Sons for the purchase of a house. (2) Amin Haroon took plaintiffs husband to the defendant for' negotiations. (3) The defendant called her nephew, D.W.1 Arif Hussain and he w present in the negotiations. (4) The negotiations were materialised and the price was settled between the parties and the sale consideration was Rs. 4,60,000. (5) The plaintiff paid Rs. 5,000 through cheque and the original defendant executed the receipt. From these facts it is not possible to hold, as alleged by her, that the plaintiff's husband and Amin Haroon stood in the active confidence of the original defendant. I think a woman who can negotiate for the recovery of arrears of rent and possession from the tenants must have some experience of such affairs and is capable of protecting her interests. As regards her relations with Amin Haroon, it is established that he was acting as estate broker. But as stated above, a broker is not necessarily in a position of active confidence. The mere fact that she agreed to sell the house to the plaintiff and received a cheque for Rs. 5,000 and executed a receipt for Rs. 5,000 is not sufficient to justify the conclusion that they stood in a position of active confidence to her. In my opinion receipt Ext. 5/2 is not vitiated by misrepresentation and the defendant was well aware of the nature of the receipt when she executed it. Her plea that the receipt was induced by misrepresentation is an afterthought. According to the plaintiff at the time of execution of Ext. 5/2, there was an oral agreement between her and the original defendant. The original defendant agreed to sell the property in suit for total sale consideration of Rs. 4,60,

000. The original defendant averred in para 4 of the written statement that the plaintiff's husband made a proposal to purchase the property in suit for Rs. 6,60,000 besides an undertaking that he would recover the arrears of rent and pay the same to her. He however suggested that the sale-deed shall be executed and registered for Rs. 4,60,000 and Rs. 2,00,000 will be paid in cash at the time of possession and in this way he will be able to save stamp duty and registration charges and the defendant would get the benefit of paying less as Gain Tax and Property Tax as the amount of Rs. 2,00,000 which will be paid at the time of delivery of possession shall not be included in the sale consideration of the Deed. In para 9 of the written statement the defendant averred that she was always ready and willing to sell the property on the agreed price of Rs. 6,60,000 alongwith other terms mentioned above and she has always been ready to convey the property on these terms. After the defendant filed her written statement, the plaintiff did not amend her plaint on the basis of the agreement pleaded by the defendant. But the plaintiff filed application under Order 12 Rule 6 CPC praying for passing a decree on admission made in the written statement. The plaintiff in tier application offered to pay this amount to the defendant. By order dated 21-8-1983 the plaintiff was directed to deposit the amount of Rs. 6,00,000. in pursuance of order dated 21-8-1983. On 13-11-1983 the consent issues were adopted. The case was adjourned to 28-11-1983. On 28-11-1983 the case was adjourned on the joint request of the parties. The plaintiff prayed in the application that she was ready and willing to accept the agreement pleaded by the defendant and she was willing to perform her part of that agreement and prayed that specific performance be granted on the basis of the price pleaded by the original defendant. The suit proceeded on the basis of the agreement pleaded in the written statement. The plaintiff accepted the amount of Rs. 6,60,000 as pleaded by the original defendant in her written statement. It is not the case of the original defendant that the value of the property in suit is much more than the sale consideration agreed upon between the parties. It has come in evidence that during the pendency of the suit, the tenants, namely National Construction Company had already handed over possession of the property in suit to the defendant. As the original defendant did not execute any power-of-attorney in favour of the plaintiff or her husband or M/s. Thaver Sons. In any case D.W. 3 gave an evasive reply about the arrears of rent. The burden was on the defendants to prove that the plaintiff gave an undertaking to recover the arrears of rent from National Construction Company. This burden was not discharged by the defendant. I have gone through the evidence of the parties carefully and I have come to the conclusion that the plaintiff never gave any undertaking to recover the arrears of rent as alleged by the defendants. From the circumstances established in the present case, it is difficult to see how the plaintiff obtained any unfair advantage over the original defendant or in what manner the performance of the contract would involve any hardship to the original defendant which she could not have foreseen. I therefore hold that the plaintiff was ready and willing and still is to -perform her part of the agreement for sale as pleaded by the original defendant in paras 4 and 7 of the written statement. There will therefore be in my view judgment and decree for specific performance of the said agreement. The defendants are directed to execute a sale-deed in favour of the plaintiff in terms of the agreement dated October 31, 1977, on the plaintiff tendering to them a sum of Rs. 6,55,000 and necessary expenses for execution and registration of the sale-deed and draft sale-deed within two months from today. If the defendants fail to execute the sale-deed, the plaintiff should deposit the requisite amount) with the Nazir of this Court within three months from today and apply for the execution of the decree for execution of sale deed. In the circumstances of the case the parties shall bear their own costs. There is an interim injunction in favour of the plaintiff and that injunction will continue until the conveyance deed is executed in favour of the plaintiff. AA./H-154/K Suit decreed.