2016 PLP 115 (YLRN)

S.12

Contract Act (IX of 1872), S.55

Suit for specific performance of agreement to sell

Time as essence of contract

Performance of agreement

Proof

Plaintiff entered into agreement to sell with defendant to purchase his shop and paid earnest money

Defendant refused to execute sale deed on the plea that plaintiff did not make balance payment within the time fixed in the agreement

Trial Court decreed the suit in favour of plaintiff

Validity

Plaintiff was ready to perform her part of agreement as she had purchased stamp papers for preparation of sale deed

Plaintiff also sent two legal notices to defendant out of which one was received back

Plaintiff also deposited with property dealer a sum of Rs.19,00,000/- who deposited the same in the account of his son so that it could be paid to defendant and such fact was proved by statement of account

Pay order in favour of defendant was got issued by plaintiff which showed that she was ready to perform her obligation and she had sufficient funds

Delay in completion of transaction occurred due to the lapse on the part of defendant as he failed to get the shop vacated with the stipulated period of time, therefore, defendant could not be given premium of his own lapse

Trial Court rightly decreed the suit in favour of plaintiff and judgment did not suffer from any legal infirmity or misreading of record

Appeal was dismissed in circumstances. [Para. 7 of the judgment] Lahore Cantonment Cooperative Housing Society Ltd., Lahore Cantt. v. Dr. Nusrat Ullah Chaudhry and others PLD 2002 SC 1068; Sandoz Ltd. and another v. Federation of Pakistan and others 1995 SCMR 1431; Fazal-ur-Rehman v. Ahmed Saeed Mughal 2004 SCMR 436; Mst. Munawar Shahzadi v. Muhammad Ghafoor 2013 CLC 880; Bashir Ahmed and 4 others v. Muhammad Ramzan and another 1988 CLC 1600; Muhammad Nawaz Khan and another v. Mst. Farrah Naz PLD 1999 Lah. 238; M/s. Pioneer Housing Society (Pvt.) through Managing Director, Bank Square, Lahore v. Messrs Babar and Company through Shakir Ali Khan and 2 others PLD 1999 Lah. 193; Anjuman-e-Islamia, Sialkot v. Haji Muhammad Younas and others PLD 1977 Lah. 153; Bashir Ahmed and 4 others v. Muhammad Ramzan and another 1988 CLC 1600; Mian Mahmood Ashraf and 3 others v. Zaheer Ahmad 2002 YLR 1478; Hafiz Shaikh Anwar-ul-Haque through L.Rs. v. Jehan Khan and others PLD 2011 SC 540 and Mst. Batul and others v. Mst. Razia Fazal and others 2005 SCMR 544 ref. JUDGMENT MUHAMMAD FARRUKH IRFAN KHAN, J.

The instant appeal is directed against the consolidated judgment and decree dated 26.10.2011 of the learned Civil Judge, 1st Class, Lahore, whereby the suit for declaration filed by the present appellant was dismissed whereas suit of the respondents for specific performance of the contract was decreed on payment of balance amount of Rs.19,00,000/- within 15 days in the Court.

2. Brief facts of the case are that the appellant and respondent No.1 entered into a written agreement to sell dated 17.1.2005 qua shop bearing No. R-130/1, comprising khewat No.1, Khatauni No.173, khasra No.2279/251, measuring 1 marla 126 sq.ft., situated in St.No.7, Barkat Market, Zaman Colony, Maunaza Koray, Tehsil Cantt. District Lahore (hereinafter referred to as the "disputed shop"). According to the aforementioned agreement, total sale consideration of the disputed shop was settled as Rs.3,400,000/-out of which Rs.500,000/- were paid as earnest money on the same day. Rs.600,000/- were agreed to be paid on 2.2.2005 and the balance sale consideration of Rs.23,00,000/- was to be paid within two months. It was also incorporated in the agreement that the appellant/vendor will be responsible to handover vacant possession of the disputed shop to respondent No.1/vendee at the time of payment of balance sale consideration. As per terms of the agreement Rs.600,000/- were paid to the appellant by respondent No.1 against receipt dated 2.2.2005, and endorsement to this effect was also recorded at the reverse of first page of the agreement. Another part payment of Rs.400,000/- was made on 3.3.2005 which was also acknowledged on the reverse of second page of the agreement. It was stated in the plaint that the disputed shop was in possession of the tenants and the appellant would get it vacated for handing over its possession to respondent No.1 at the time of receiving balance sale consideration. The appellant provided Fard (jamabandi) on 11.3.2005 whereupon respondent No.1 purchased stamp papers for execution of the sale deed but the same could not be completed because the appellant could not get the disputed shop vacated and sought further time to do the needful. Thereafter when the appellant provided fresh jamabandi on 24.5.2005 respondent No.1 handed over balance sale consideration of Rs.19,00,000/- to respondent No.2 for onward payment to the appellant after completion of the sale deed. Later on, a pay order was got issued by respondent No.1 in favour of the appellant in the sum of Rs.19,00,000/- but he allegedly did not come forward to complete the transaction of sale. Consequently, respondent No.1 served the appellant with a legal notice and thereafter filed the suit for specific performance of the agreement to sell. The appellant also filed a suit for declaration praying therein that the agreement to sell dated 17.1.2005 may be declared to have expired on 2.4.2005 and the earnest money of Rs. 500,000/- may also be declared as forfeited in favour of the appellant. Both the suits were consolidated. Out of divergent pleadings of the parties consolidated issues were framed and both the parties were directed to adduce their respective evidence. After conclusion of the evidence, the learned trial Court decreed the suit of respondent No.1 and dismissed the appellant's suit, vide judgment and decree dated 26.10.2011 as aforestated. Hence, the instant appeal.

3. Learned counsel for the appellant contends that judgment and decree of the learned trial court is contrary to law and facts on the record; that findings of the trial Court are based on surmises and conjectures and the impugned judgment is the result of misreading and non-reading of evidence on record; that respondent No.2/Zaman Shah, was an important witness to resolve the controversy but he was not produced by respondent No.1; that none of the witnesses of the agreement were produced in evidence by respondent No.1; that respondent No.1 was not ready and willing to perform her part of the agreement as she was not having sufficient resources to pay the balance sale consideration in time; that mala fide of respondent No.1 is apparent from the fact that she did not deposit the balance amount of Rs.19,00,000/- in the Court till the decision of her suit; that the learned trial Court has failed to appreciate the fact that by efflux of time the prices of property have escalated and currency has suffered devaluation and as such balance consideration should have been enhanced keeping in view the above said facts; that time was of the essence of the agreement to sell and respondent No.1 having failed to perform her part of contract till 2.4.2005 the agreement was rendered expired; that the time for completion of the sale transaction was never extended twice and findings of the learned trial Court in this regard are factually incorrect; that second Fard was not issued for performance of the agreement but the same was issued for renegotiation; that non-vacation of the disputed shop was not a bar created in the agreement enabling respondent No.1/vendee to refuse payment of the balance sale consideration; that the appellant was only bound to help respondent No.1 in getting vacant possession of the disputed shop after completion of the sale transaction; and that as the impugned judgment has resulted in miscarriage of justice it is liable to be set-aside. Reliance is placed on the cases of Lahore Cantonment Cooperative Housing Society Ltd. Lahore Cantt. v. Dr. Nusrat Ullah Chaudhry and others (PLD 2002 SC 1068), Sandoz Ltd. and another v. Federation of Pakistan and others (1995 SCMR 1431) and Fazal-ur-Rehman v. Ahmed Saeed Mughal (2004 SCMR 436).

5. Arguments heard. Record perused.

6. Learned counsel for the appellant has mainly pressed that the time was of essence of the agreement to sell dated 17.1.2005 and failure of respondent No.1 to pay the balance sale consideration of Rs.19,00,000/- till 2.4.2005 made him liable for forfeiture of his earnest money and cancellation of the agreement in accordance with the terms contained therein. In order to appreciate this argument of the learned counsel we would like to refer to the case of Sandoz Limited and another v. Federation of Pakistan and others (1995 SCMR 1431) wherein the Hon'ble Supreme Court of Pakistan has laid down the following guidelines for determination whether time was the essence of a contract/agreement or not: (i) The parties to a contract may make time for the performance of their contract as of the essence by expressly providing that "time is of the essence" or by using any other words which may manifest that the intention of the parties is that the time shall be of essence of the contract. (ii) That the intention of the parties as to the factum, whether the time for the performance of the contract is of the essence or not may be ascertained by the nature of the contract or the circumstances of the case. If the nature of the contract is such that non-performance of the same within the stipulated period rendered the contract for the promisee useless or of no benefit, the time for the performance shall be construed as of the essence. (iii) That if non-performance of the contract within the stipulated period does not cause any loss or injury to the promisee, time is not regarded as of the essence of the contract even when a date for completion of the contract is specified. (iv) The rule of the common law was that time for the performance of a contract was always considered as of the essence and non-performance of the same within the agreed time used to render a promisor to be sued inter alia for damages, but with the passage of time the above rule stands modified/negated inter alia by statutory provisions, like section 10(2) of the English Sale of Goods Act, 1893, which provides that stipulations as to the time of payment are not deemed to be the essence of the contract of sale, subject to a contrary express agreement. (v) When under the terms of the contract both the parties have undertaken to do certain acts, in other words, they have made reciprocal promises, the party who brings an action against the other party will have to prove that he had performed his part under the contract or that he had done everything that was in his power to do before he could bring such an action. In the light of above guidelines of the Hon'ble Supreme Court of Pakistan we thrashed out the entire oral as well as documentary evidence, particularly Agreement to sell (Ex.P.1) with an analytical approach and came to the conclusion that time was not the essence of the agreement to sell in the lis in hand. We are forming this opinion on the basis of the preceding facts borne out from the record. There is no mention in the Agreement to sell that time will be the essence of the agreement. Even from the pleadings and conduct of the appellant it is manifestly clear that it was never the intention of the parties to treat the time as of essence of the agreement. Admittedly, agreement to sell was executed between the parties on 17.1.2005 and not 15.3.2004 as written at its fag end. The appellant/vendor received, Rs.500,000/- at the time of execution of the agreement to sell as earnest money. He also received part payment of Rs.600,000/- on 2.2.2005 in terms of the said agreement. The factum of receipt of part payment of Rs.600,000/- was reduced into writing at the back of the first page of the original agreement to sell, which was signed by both the parties and witnessed by two witnesses. In the agreement to sell no specific date for final payment and completion of sale transaction was fixed and only a period of two months was fixed for this purpose. However, at the time of receiving part payment of Rs.600,000/- the appellant wrote that he will receive Rs.23,00,000/- as the outstanding balance of sale consideration till 17.3.2005, which if calculated from the date of execution of the original agreement to sell dated 17.1.2005 becomes a period of two months. The appellant received another part payment of Rs.400,000/- from respondent No.1 on 3.3.2005 and endorsed this fact by writing at the back of second page of agreement to sell, which was also signed by the parties and attested by two witnesses. As this second part payment was never included in the terms of agreement to sell this fact lends support to the assertion of respondent No.1 that this payment was made at the request of the appellant as he needed the same for getting the shop under sale vacated from the possession of the tenant. There are some more facts which show that time was not of essence of the agreement. It is discernible from a bare perusal of the agreement to sell that subject to fulfillment of certain terms and conditions by both the parties the transaction was to be completed within a period of two months from 17.1.2005 and as per written acknowledgement of part payment on 2.2.2005 this was to be accomplished by 17.3.2005. However, the said date was never treated as of the essence of the agreement by both the parties. The appellant in para 2 of his plaint in his suit for declaration stated the last date for payment of outstanding amount of Rs.19,00,000/- as 2.4.2005, calculating the period of two months from the date of making first part payment i.e. 2.2.2005 and not from the date of execution of the original agreement to sell dated 17.1.2005. In para 4 of the plaint he maintained that he again approached respondent No.1 on 9.6.2005 to perform his part of agreement but she flatly refused. This assertion of the appellant also indicates that the agreement to sell even after the cut off date i.e. 17.3.2005 (according to respondent No.1.) and 2.4.2005 (according to the appellant). was not repudiated and it remained open for the parties to complete the transaction of sale despite the expiry of time period fixed for the same. The appellant while appearing as P.W.1 in his examination in-chief admitted that he had got issued 'Fard malikiat' two times the first one on 17.3.2005 and the second one on 24.5.2005 and the same were handed over to the respondent. Providing 'Fard malkiyat' beyond the period of time specified in the agreement for completion of sale agreement shows that time was not of the essence of the contract and both the parties had bound themselves with the performance of certain obligations, making them reciprocal promises. In these circumstances, it could safely be inferred that time was not of the_essence of the agreement entered into between the parties. Besides the above factual position, the law as laid down by the Hon'ble Supreme Court of Pakistan also supports the version of respondent No.1. In this regard reliance is placed on the case of Sandoz Limited and another v. Federation of Pakistan and others (supra) wherein the Hon'bie Supreme Court of Pakistan has made the following observations: It is well settled proposition of law that in case of any ambiguity in a contract document, the Court in order to resolve it and to ascertain the real intention of the parties, can have resort to the correspondence preceding and/or subsequent to the execution of the contract document, conduct of the parties and the attending circumstances (underlining is ours supplied for emphasis). The above discussion reveals that the conduct and attending circumstances of the case in hand makes it abundantly clear that time was not regarded as of essence in the agreement to sell. In the case of Hafiz Shaikh Anwar-ul-Haque through L.Rs. v. Jehan Khan and others (PLD 2011 SC 540), it has been held by the Hon'ble Supreme Court of Pakistan that if time is extended for performance of a contract pertaining to immovable property, then time can never be enforced as the essence of the contract. In the case of Mst. Batul and others v. Mst. Razia Fazal and others (2005 SCMR 544) it was held that an agreement to sell of immovable property, time is not its essence when it stood extended time and again. The agreement to sell also contains that in case the vendor/appellants avoids completion of the sale transaction on one pretext or the other the vendee/respondent No.1 would have a right to enforce the agreement by way of legal proceedings before the competent court of law. This clause of the agreement also excluded the possibility of terming the time as of the essence of the agreement.

7. We see no merit in the argument of learned counsel for the appellant that respondent No. 1 was not ready to perform her part of agreement as she did not have sufficient resources to pay the balance sale consideration. Admittedly, both the parties had taken certain responsibilities towards the completion of the sale transaction and in this regard had made reciprocal promises. As per terms and conditions of the agreement it was the duty of the appellant to provide title documents and 'Fard Malkiat' for preparation of the sale deed and also hand over vacant possession of the shop in dispute to the vendee/respondent No.1 at the time of receiving balance sale consideration and executing sale deed in her favour as admittedly the same was in occupation of a tenant. Delivery of possession of the shop in dispute was an obligatory duty of the appellant in performance of his part of the agreement. At the time of receiving second part payment on 3.3.2005 it was again specifically written on the backside of second page of the agreement to sell that the appellant will receive the balance consideration at the time of execution of sale deed and delivery of possession. It was also specifically mentioned that in case the appellant failed to get the shop vacated till 17.3.2005 he will be responsible for his acts and it will not affect the rights of the vendee/respondent No.1 in any manner. The appellant appeared in the witness box as P.W.1. During cross-examination he admitted that the shop in dispute was got vacated some time before 26.5.2005. This shows that the appellant had failed to perform his part of agreement within the time period provided in the agreement to sell for completion of the sale transaction. Even after getting the shop in dispute vacated he did not send any notice to respondent No.1 informing him of this fact and asking to come forward for payment of the balance sale consideration. On the other hand, from the record it is evident that respondent No.1 was ready to perform her part of agreement. She had purchased stamp papers for preparation of the sale deed, produced as Ex.D-11. She also sent two legal notices to the appellant, out of which one was received back. She also deposited with Amir Ali Shah, property dealer a sum of Rs.19,00,000/- who deposited the same in the account of his son, namely, Zaman Ali Shah so that it could be paid to the appellant. Statement of account of Syed Zaman Ali Shah was produced as Ex.D.1 on record, which proves the fact of deposit of the said amount on 26.5.2005. Thereafter, pay order in favour of the appellant was also got issued by respondent No.1. In this view of the matter, the argument of the learned counsel that respondent No.1 was not ready to perform her obligation as she had not sufficient funds is merely a bald assertion. The delay in completion of the transaction had occurred due to the lapse on the part of the appellant as he had failed to get the shop in dispute vacated within the stipulated period. In the cxircumstances, the appellant could not be given premium of his own lapse.

8. For the foregoing reasons, we are of the considered opinion that the learned trial Court has rightly decreed the suit of respondent No.1 in her favour and dismissed that of the appellant. The impugned judgment does not suffer from any legal infirmity or misreading of record. The instant appeal has no merit and the same is accordingly, dismissed with no orders as to the costs. MH/F-14/L Appeal dismissed.