1999 PLP 1076 (CLC)

SARMAD JALAL OSMANY, J.‑‑‑ The brief facts of the matter are that the appellants allotted a plot of land measuring one acre for setting up an industrial unit for manufacture of Chemicals to the respondents upon application to this effect by the respondents. Alongwith said application a pay order in the sum of Rs.30,100 was also enclosed being 10 per cent. of the premium amounting to Rs.27,500 Licence Fee Rs.2,500 and Registration Fee Rs.100. Thereafter, a provisional allotment order was issued in favour of the respondents, on the terms and conditions appearing on such document, which included premium of Rs.2,75,000 per Acre. In due course the 40% of the premium amounting to Rs.1,10,000 was also paid to the appellants by the respondent and the same was duly acknowledged by the former. Subsequently, the appellants demanded the balance premium whereupon the respondents expressed their inclination to pay the same provided the infrastructure facilities were provided i.e. roads, power gas etc. which was the appellants obligation. Thereafter, a letter dated 9‑7‑1991 was addressed by the appellants to the respondents informing the latter that the premium had been increased from Rs.2,75,000 per Acre to Rs.7,00,000 and consequently, the respondents were called upon to pay the balance amount. Thereafter, further correspondence ensued between the parties in which the respondents insisted upon the previous rates of premium whereas the appellants did not agree to this and finally served the respondents with the notice to the effect that unless the balance premium was paid allotment of the respondents will be cancelled. As a result of such disagreement between the parties as to the premium rates, the respondents filed Suit No.952 of 1996 against the appellants praying that the contract between the parties be specifically performed through execution of a lease in favour of the respondents by the appellants with regard to the plot in question and also a prayer was made for damages in the amount of Rs.10,00,000 being the estimated loss suffered by the respondents for not being able to set up their industrial unit due to non development of the plot in question by the appellants. In the alternative, an amount of Rs.25,00,000 was sought by way of damages against the appellants for non‑performance of the agreement to lease the plot in question to the respondents. In reply to the suit, a written statement was filed by the appellants whereby the allotment of the plot in question were admitted but it was denied that the possession of the plot were taken over by the respondents so also the defendants impugned action of enhancing the premium on the plot were justified and it was urged that the contract between the parties disentitled the plaintiffs to all discretionary reliefs. On the basis of the parties pleadings, the following issues were framed:‑ (1) Whether the Agreement between the parties was for execution of Lease or a Licence? (2) What was the total Sale consideration for the Plot B/22, S.I.T.E. North Karachi, Scheme No.33 and whether the plaintiffs paid full price of the lease amount? (3) What was the total sale price of the plot? (4) Whether the plaintiffs paid the total price of the plot as agreed between the parties? (5) Whether the time was the essence of Agreement? (6) Whether the plaintiffs' conduct disentitled them to all discretionary reliefs? r (7) Whether the plaintiffs have any cause of action? (8) What relief if any, the plaintiffs are entitled to? In reply to Issue No. 1, the learned Single Judge came to the conclusion that neither any Agreement to Lease or Licence was entered into between the parties. As regards issues Nos.2 and 3, it was held that the sale consideration was agreed at Rs.2,75,000 per acre which could not be unilaterally varied by the appellants. Issue No.4 was answered in the positive and Issues Nos.5 and 6 decided in favour of the plaintiffs/respondents and in the circumstances, the suit was decreed only to the extent of specific performance and the appellants/ defendants were directed to execute the necessary Lease Deed within 30 days of the decree. We have heard the learned counsel for the parties and our conclusions are as follows:‑‑

1. Mr. S.A. Samad Khan, Advocate for the appellants vehemently stressed Issue No.6 before us to the effect that no specific performance could be granted in the Suit for the following reasons:‑ (a) That Suit was hit by section 17 of the Specific Relief Act as the facts thereof as disclosed in the Plaint did not allow part performance of the contract as decreed by the learned Single Judge i.e. grant of Lease and in this regard, the learned counsel relied upon the case of Wali and others v. Malak Ali and others PLD 1965 SC

651. There is no dispute as per section 17 of the Specific Relief Act that part performance of a contract cannot be allowed unless the case can be brought within the provisions of sections 14 to 16 of the said Act. However, in the present case, learned counsel has not been able to point out as to how the decree in question directs the part performance of the bargain between the parties. In our view an agreement, which could be a binding contract and, thus, capable of being specifically performed consists of an offer, I consideration and acceptance. In this case all these three elements are present i.e. the respondent applied for the allotment of the land in question ,and enclosed pay orders totalling to Rs.30,100 which were accepted by the appellants as per their allotment letter albeit on the terms and conditions appearing thereunder. In fact, the subsequent correspondence exchanged between the parties can easily be construed as offers and acceptance by the parties inter se as regards terms and conditions upon which plot in question was allotted to the respondents by the appellants. As regards the lease to be executed between the parties, which has been decreed by the learned Single Judge, it would be relevant to observe that the same was contemplated by the Agreement of Licence as well as Lease itself; and it was the intention of the parties to enter into such Agreement followed by a proper lease document pro formas of which have been produced as Exhs.6/A and 6/B respectively. For all foregoing reasons, we are unable to agree with the learned counsel that there is no agreement between the parties, which could be specifically enforced and in this regard, we agree with the learned Single Judge on his findings on this issue. (b) Learned counsel for the appellants next contended that the contract between the parties could not be specifically performed also due to the fact that it was hit by doctrine of mutuality i.e. each party should be able to enforce its contractual rights against the other. However, again learned counsel has not been able to convince us that the parties could not enforce the terms of their contractual arrangements against the other. It would be seen that the plot in question was allotted on certain conditions and if these conditions were not fulfilled, it was always open to the appellants to cancel the plot. Similarly, where all these conditions were fulfilled by the respondents, they could obtain specific performance of all their rights to become owners of the plot in question. In our view the bargain between the parties was specifically enforceable, against the other and cannot be faulted on this score alone. In this respect, learned counsel has relied upon the following case‑law:‑‑ Bibi Molumannisa and others v. Tafazul Karim AIR 1959 Pat.

132. In this case, the facts were that the respondent had contracted to purchase some property from the appellant on the terms and conditions appearing in said contract. However, later on this contract was cancelled and there was fresh oral contract between the same parties on certain other terms and conditions. Upon fulfilment of these terms and conditions, the respondent called upon the appellant to convey the property to him and upon their failure to do so he filed the suit in the lower Court for Specific Performance of the Contract. The main defence of the appellant in the lower Court was that due to inordinate delay by the respondent, the contract could not be specifically enforced. The trial Court refused to grant a decree for specific performance on the basis that three had been a change in the position of the parties due to a rise in the prices on account of inordinate delay by the respondent/plaintiff but granted a decree for the refund of advance taken by the Appellant from the respondent. The only point considered by the Appellate Court was whether there was any mutuality of contract between the parties, which could have allowed the specific performance of their contract. The learned Appellate Court came to the conclusion that at tire time the contract was entered into, there was mutuality between the parties although some conditions were attached and consequently the appeal was dismissed. In our opinion this ruling is not at all relevant to the facts of the case, as we have earlier held that the bargain between the parties contained mutual rights and obligations, which could be enforced by either party against the other. Next learned counsel referred to the case of Ramchandra Ganesh v. Ramchandra Kondaji 22 ILR 46: In that case too, in our opinion, the facts thereof were entirely different from the present case as a contract was sought to be enforced by the plaintiff against the seller of the property as well as a subsequent purchaser who pleaded that he was a bona fide purchaser for value without knowledge of the prior sale. The Court came to the conclusion that the plaintiff could not be conveyed the property due to the bar contained in section 21(b) of the Specific Relief Act although it held that the subsequent purchaser had knowledge of the prior sale. Lastly, learned counsel relied upon Dewan Chand Sabborwal v. Union of India and another AIR 1951 Pb. 426 where the Court refused specific performance of a building contract by the contractor as against the owner on the basis that in such cases the only remedy lay in damages. Again we do not see as to how this case is relevant to the facts of the present matter, which admittedly involve the rights of an allottee of land which has changed hands for valuable consideration as against those of the Governmental Agency, which received such consideration. (c) Learned counsel for the appellants has vehemently contended before us that the suit was not maintainable because at the most the respondents were inchoate licensees and thus could not specifically enforce the Licence Agreement to become lessees of the plot in question. This controversy concerns issue No.l. In this regard learned counsel has relied upon section 64 of the Easements Act and has argued that where a Licence has for no fault of his been evicted by the Licensor before the latter has fully enjoyed the rights of the Licence, then at best, the licencee could only recover compensation from the Licensor. Learned counsel has relied upon Muhammad Khan v. Ramnayarian and others AIR 1956 Orissa

156. On the other hand Mr. Sohail Muzaffar has submitted that in the circumstances of the case the parties have entered into a binding contract for the ultimate conveyance of the plot in question to the respondents by virtue of an Agreement to Lease. Learned counsel has stressed that all the documents on record i.e. allotment letters, pro forma agreements for licence and the subsequent correspondence if considered together conclusively established that the relationship between the parties was not that of a licencee and licensor but that of an allottee and allotter which gave a legitimate expectancy to the allottee that upon fulfilment of the terms and conditions of the allotment, it would be entitled to ownership rights of the plots in question. Learned counsel has further submitted that the respondents on their part had fulfilled their part of the bargain i.e. had paid all the fees and charges whereas because of the appellant's failure to develop the plot in question they (respondents) could not construct their factory buildings on such plot. In this regard learned counsel has relied upon Muhammad Mustaqeem Khan v. Pakistan Employees Cooperative Housing Society Limited and another PLD 1985 Kar. 326; Muhammad Azim v. Pakistan Employees Cooperative Housing Society Ltd. and 4 others PLD 1985 Kar. 481 and Abdul Razaq v. Shah Jehan 1995 SCMR 1489. In rebuttal learned counsel for the appellants has vehemently stressed that the intention of the parties is paramount which, as the documents on record would show, was that they intended to enter into a Licence Agreement and nothing more. In support of this proposition, learned counsel has relied upon H.B.F.C. v. Shahinshah Hamayun Cooperative H.B.S. 1992 SCMR 190 and W.P.I.D.C., Karachi v. Aziz Qureshi PLD 1973 SC

222. In our opinion the above controversy goes to the root of the issues involved in these appeals. It would be seen that a licence merely grants the Licencee permission to enter upon the licensor's property and do something, which in the absence of such grant would be unlawful; such grant or permission would amount to a licence (as per section 52 of the Easements Act). However, in our opinion, if such a grant creates an interest in the property the same could not be construed as a licence and in this connection the intention of the parties would also have to be considered. In the present case, as we have already observed that the respondents applied for an allotment of the plot in question; paid substantial amounts to the appellants in lieu thereof whereupon the plot was allotted to the latter on the terms and conditions appearing therein. No doubt one of the terms was that the industry for which the plot was allotted should be completed within eight months of the allotment order; however, it is the respondent's case that they were unable to do so due to the appellants failure to provide the infrastructure facilities and hence they could not be penalized on this score. The subsequent correspondence between the parties also establishes that right from the very beginning it was the parties intention that the respondents be allowed to construct buildings of a permanent nature on the plot in question for which purpose they would be given ownership rights through proper lease documents. In the circumstances of the case we are of the view that based upon the documents brought upon the record the transaction between the parties amounted to an agreement to lease rather than a licence and hence the provisions of the Easements Act are not at all relevant to the facts of the matter. Reference can be made to Pakistan Employees Housing Society Ltd. v. Anwar Sultana PLD 1969 Kar 474 wherein similar circumstances a Division Bench of this Court 'came to the conclusion that the allotment order in question was in fact an agreement to lease. This case was followed in Muhammad Azim v. P.E.C.H.S. Ltd. PLD 1985 Kar.

481. On the merits of the case learned counsel for the appellants submitted that as the time was the essence of the contract, the appellants were well within their rights to cancel the allotment order issued to the respondents and resume the plot where the latter failed to establish their industries therein within the agreed time frame. This argument touches Issue No.5. No doubt time may have been the essence of the bargain between the parties, however, it cannot be said that one of the parties can be non‑suited if it failed to perform its D obligations under the contract due to the corresponding failure of the other party to perform its own obligation. The learned Single Judge has considered this aspect of the matter and has come to the conclusion that the appellants failed to provide the necessary infrastructure facilities i.e. roads, power and gas connections (excluding water connection) and hence could not be allowed to plead that the allotment was validly cancelled on this score and we see no reason to disagree with him. As to the other Issues i.e. Nos.2 to 4 regarding the price and enhancement of the same it would be seen that this was a unilateral exercise and all along the respondents protested to such enhancement on the basis that the price had been agreed upon between the parties. In fact it would appear that the only reason why the allotment was cancelled was due to the respondents' failure to pay the enhanced rates. Again the learned Single Judge has considered this aspect of the matter and has rejected this contention as a basis for cancellation of the plots in question while relying upon his earlier judgment in Millac Pakistan (Pvt.) Ltd. v. Sindh Industrial Estate Limited 1996 CLC

213. We see no sound reasons for disagreeing with the learned Single Judge on these issues as well and hold that once the price of the plot in question had been agreed between the parties, merely by efflux of time this could not be varied by the appellants and E made the basis for the cancellation of the plot in question upon failure of the respondent to pay the enhanced price. For all the foregoing reasons we find no force in this appeal, which is accordingly dismissed. The appellants shall execute the necessary lease in favour of the respondents within thirty days of this order. I agree. (Sd.) Mrs. Majida Razvi, J N.B.T./S‑189/K Appeal dismissed.