P L D 2003 Lahore 17 (PLP)

By this common judgment, I propose to decide two appeals titled "Friends Associates etc. v. Messrs Binn Bak Industries" and "Messrs Binn Bak Industries v. Friends Associates etc," as both of them are directed against the same order of the trial Court, by which, it decided application of the appellants/plaintiffs in the former appeal under Order XXXIX, rules 1 and 2 read with section 151, C.P.C, and questions of facts and law are also common.

2. The facts giving rise to these two appeals shortly stated are that M/s. Binn Bak Industries Private Limited/appellants in the second appeal are the owners of factory known as "Lyallpur Cotton Mills', situated at Factor area, Faisalabad inclusive of its machinery building, stores, godowns, sheds, offices, officers colony, workman quarters and outer four‑walls and the land underneath as it manifest from the recital of the agreement of sale in dispute, which particulars of this factory have been given in detail and the land underneath the factory is about 59 acres, 5 Marlas. An agreement of sale was executed by M/s. Binn Bak Industries through Abdul Rehman its Chief Executive in favour of M/s. Friends Associates on 1-10‑1995 for an amount of Rs.74 crores. The difference as to, performance, by the parties of their respective pans of the obligations settled in this agreement arose, which led to the tiling of suit by M/s. Friends Associates before the trial Court for specific performance of the said agreement. Alongwith the suit, the said plaintiffs made an application under Order XXXIX, rules 1 and 2 read with section 151, C.P.C. for issuance of temporary injunction as prayed for therein.

3. The suit as well s the said application were contested by the M/s. Binn Bak Industries on the main ground that the plaintiffs had not performed their part of the agreement by not making payments of consideration according to schedule of time fixed in the agreement, therefore, it was alleged that the same stood frustrated and was no more enforceable.

4. The trial Court through order impugned in these appeals accepted the said application and issued temporary injunction as prayed for subject to the condition of deposit of the remaining price of Rs.42 crores, within one month failing which temporary injunction issued was to stand vacated.

5. M/s. Friends Associates have challenged the order to the extent of condition of deposit of the amount of Rs.42 crores, whereas M/s. Binn Bak Industries‑defendants have challenged order as a whole and prayed for setting aside the same and dismissal of the application of the plaintiffs for temporary injunction.

6. I have heard learned counsel for the parties in support of their respective pleas and perused the record with their assistance.

7. It may he observed at the very outset that perusal of the agreement of sale in dispute the execution of which is an admitted fact shows that it was not a usual agreement of direct sale by one party to the other on payment of amount of consideration in which time was stipulated after payment of earnest money for execution of registered sale-deed and payment of his remaining amount of consideration, whereas it was an agreement development of the land underneath the factory after demolition and removal of the superstructure and machinery in the form of plots for further sale. M/s. Friends Associates‑plaintiffs according to the terms of the agreement were to develop the land to the form of plots after removal of Superstructure and machinery and sell the same, therefore, it was obvious that to enable the purchasers to undertake the exercise that it should be put in physical possession of the property without which no development work could be done, therefore, as per Clause 1 of the agreement, excepting an area of 14 acres mentioned in the said clause 1, M/s. Binn Bak Industries covenant to deliver possession of the entire other area simultaneously with the execution of the said agreement of sale to Friends Associates with the right that it could deal with the same alongwith superstructure, machinery, etc., in any manner i.e. could demolish the machinery and superstructure and sell the material and machinery so demolished and removed in any manner whatsoever. In clause 2 of the agreement, it was acknowledged and admitted by the seller namely M/s. Binn Bak Industries that the said Factory was under encumbrance on account of the loan of Habib Bank Limited, Factory Area, NDFC and Muslim Commercial Bank, which was to be paid on behalf of the seller to the said banks by Friends Associates so that the property be released from such encumbrances, which amount as specified in this clause was to be adjusted against the sale price of the property by Friends Associates M/s. Friends Associates were made liable to pay the said amount alongwith interest and mark‑up whatever becomes due on the said loans. It was also clearly mentioned in this clause that the said amount of loan may be paid by the purchasers‑Friends Associates from the sale proceed of the demolished building, material and the machinery.

8. Since the dispute between the parties centres around about the performance of non‑performance whatever the case may be of their respective obligations arising from this agreement as to schedule of payment of the amount of consideration and the manner of payment and the time limit settled thereunder, therefore, for facility of ready reference, it is advantageous to reproduce the relevant classes of the agreement in this judgment in extenso which are Clauses 1, 2, 2‑A and 3 as under:‑‑

9. As has already been observed, the total area of the land underneath of factory out of which the seller was not in a position to deliver possession of an area measuring 14 acres as mentioned in clause 3 of the agreement and it undertook to deliver possession of the same within six months of the date of execution of the agreement, after which the purchasers will have a right to demolish the said portion of the factory also and in case the seller was not in a position to get the said area vacated and deliver its vacant possession to the purchasers the schedule of payment already made was to be accordingly adjusted.

10. Admittedly, the seller could not get the said area of 14 acres as mentioned in clause 3 of the agreement vacated within six months which as admitted was as a matter of fact got vacated later on after lapse of considerable period and possession thereof delivered. It was also admitted in the written statement and by the learned counsel of M/s. Binn Bak before me when questioned that the possession of the other area of about 9 acres underneath the Chairman Rest House, certain offices and Officers Colony in possession of the seller, which was covenanted to be delivered simultaneously with the execution of the said agreement of sale too, was not delivered to the purchasers which up to date is in possession of the vendor.

11. Admittedly, an amount of Rs.32 crores stood paid to the vendor out of which, amount of loads with mark‑up was paid to the bank concerned but in spite of repeated demands by it from M/s. Binn Bak Industries from time to time that it should deliver possession of the said area of 9 acres under Officers Colony, etc. so that the development work could be continued which had been blocked on account of non‑availability of the land underneath the Officers Colony without which development could neither be completed nor the remaining area developed because both according to development scheme so inter-connected that no further work was possible due to which no plots could be developed so as to make developed plots available for Sale.

12. According to the plaintiff, M/s Binn Bak Industries instead of performing their part of the agreement of making delivery of possession of the said unrelieved portion to the purchasers started raising demands for compliance with the schedule of payment and the time fixed therein which was linked with the delivery of physical possession of the entire area of the factory to the purchasers. The defendants attempted to interfere with the possession of the other area delivered to the purchasers and the material of the demolished building available on the said area which necessitated the filing of the suit from which these appeals have arisen.

13. It is clear from the terms of the agreement as are reproduced above that there was no ambiguity and the parties executing the same were aware that delivery of physical possession of the factory simultaneously with the execution of said agreement to the purchasers alongwith the right to demolish the building, machinery, etc., and further right to sell the same was the essence of the contract which the seller was bound to perform in the first instance. The delivery of area of 14 acres of the factory as mentioned in clause 3 of the agreement was postponed with the undertaking by the vendor that he would get the same vacated as it was his obligation to do so within six months and in case the same was not done within this period, the schedule of payment shall be adjusted from the date of delivery of possession of the said area. From the record, it is not clear as to for what reasons, the possession of the area about, 9 acres under Officers Colony in its possession was not and has not so far been delivered to the seller uptil today by M/s. Binn Bak Industries.

14. The main burden of arguments raised, on behalf of M/s. Friends Associates‑purchasers in support of their appeal was that without performance of their own part of the agreement regarding delivery of possession of the property subject‑matter of agreement at the time of its execution, the defendant M/s. Binn Bak Industries could not claim observance of the schedule of payment of the amount of consideration, for it being agreement mainly for development of the land in the form of plots and further sale of the same. This aspect of the case was the deciding factor being essence of the contract, as such, the defendant had no right to interfere with the possession of the portion of the property already delivered to the vendee other than the said area of 9 acres under Officers Colony which is . in possession of the defendants and also to interfere with sale of the machinery and building material available after demolition which right had been created under the agreement itself. He also argued that in these circumstances, the condition of deposit of remaining amount of consideration of Rs.42 crores was not only violative of the terms and conditions of the agreement itself but was also harsh, for ultimately if the plaintiffs succeed, decree for specific performance of the said agreement is to be passed in terms of the agreement itself according to which, the defendant as per terms of the agreement would not be entitled to‑ receive or claim payment of the retraining price without first making delivery of the said portion of property, and the remaining sale price was to be made from the sale proceeds of the developed plots. He also maintained that while requiring the plaintiffs to deposit the remaining consideration amount, it was erroneously assumed as if it was a case of agreement of direct sale of property on payment of amount of consideration. In order to substantiate his above submissions further, learned counsel argued that while requiring the plaintiffs to deposit the remaining sale price, the agreement itself has been grossly misconstrued and the scheme of events settled in the agreement reversed as if the delivery of possession of the property was to follow the payment of the entire amount of consideration. He argued that the plaintiffs had strong prima facie case and the balance of convenience was also in their favour and it was the plaintiffs who were to suffer irreparable loss if temporary injunction as prayed for was not issued, for the rights and interest of the defendants in the land had been adequately and sufficiently safeguarded by providing therein that in spite of development of the land into plots after spending of huge amount, the title in the land would continue to vest in the vendor and no plot could be sold unless sale‑deed is executed by it with further protection that till such time, the amount of consideration is fully paid up, the sale proceeds of the plots shall be paid to the vendor after which for the sale of the remaining land, the vendee has a right to ask the vendor to execute power of attorney, in its favour to enable it to sell the un-disposed plots and retain their sale proceeds. He further maintained that in any case, even if the plaintiffs dispose of the demolished material and machinery, the defendants could not claim to suffer any loss, for as per terms of the agreement it is entitled to ascertain amount of Rs.42 crores irrespective of the fact whether the sale proceeds of the said material and machinery and even the land after development into plots is not sufficient to pay off the said amount in which even the plaintiffs are liable to pay, therefore, it is not a case where the defendants could urge that it was a case where compensation in terms of money would not be ascertainable. Lastly, he argued that delivery of possession and development of the land after demolition of superstructure and machinery into plots for sale is so much linked that non‑performance‑ of the obligation by the defendants in this regard had the effect of depriving the plaintiffs of the valuable rights created under the agreement to pay the amount of consideration from the sale proceeds of the developed plots apart from other losses which it is suffering on account of delay in the matter.

15. On the other hand, it was argued by learned counsel for the respondents that delivery of possession of land underneath Officers Colony of about 9 acres will be made by them to the plaintiff only on the payment of remaining amount of consideration of Rs.42 crores. He also reiterated the plea as raised before the trial Court that the agreement stood frustrated and that the plaintiffs voluntarily have abandoned the rights. He has also relied upon number of judgments reported as Mehr Zulfiqar Ali Babu and others v. Government of Punjab through Secretary, Local Government and others 1997 SCMR 117; Manzoor Ahmed and others v. Hamid Shah Gilani and others 1997 SCMR 1443; Fateh Muhammad v. Muhammad Hanif PLD 1990 Lah. 82; Shama Enterprises (Pvt.) Ltd. v. Malik Ghulam Sarwar and others 1989 MLD 21; Ferozuddin and others v. Tien Ying Lee and others 1987 MLD 2035; Muhammad Banaras Khakan v. Miss Rubina Chaudhry and others, 1997 CLC 997; Balquees Zaman Khan and others v. Tahir Mahmood Butt 1991 CLC 1507; Wiqar. Avais v. Raja Muhammad Shafi Janjua and others 1992 CLC 8 and Muhammad Nazir v. Yaqoob Khan and others 1994 CLC 12 to argue that in the cases for specific performance injunction should ordinarily be granted subject to the deposit of the balance sale consideration. Attending to last plea first, it may be held that it is not a rule of law that essentially in all the cases, of specific performance while granting temporary injunction to the plaintiff, the Court should impose condition of deposit of balance consideration. It depends upon the facts and circumstances of the case enabling the Court to exercise its discretionary equitable relief. In the instant case, the agreement dated 1‑10‑1995 between the parties is not a simple agreement in nature of sale purchase of immovable property, rather it is for the development of the suit property, enabling the appellants to develop the land arid sell plots to third parties and to pay amounts to the respondents from the sale proceeds of such sales though within a specified period as stipulated in the agreement. But as the respondents prima facie are found at fault in not handing over the entire suit property to, the appellants for the purpose of such development, therefore, the imposition of condition for the deposit of the balance consideration in the facts and circumstances of the case, would be harsh and runs against the settled rules for the exercise of discretions. As regards the other pleas of the respondents' side, I fail to comprehend as to how without delivering the possession of the whole of the suit property to the appellants, the respondents can demand the payment of the balance consideration, when according to the clear stipulation of the agreement, they were bound and had actually admitted in the agreement to have put the appellants into the possession of the suit property at the time of the execution of the agreement, except the 14 acres under the residential quarter, but this was not paractically done. It is also inconceivable and even not spelt out of the record, that the appellants who have already paid a colossal amount of about thirty‑two crores would themselves abandon the agreement or that when the respondents have defaulted in performing their part of the agreement in handing over the complete possession of the suit property, the agreement stood frustrated.

16. The argument raised by the learned counsel for the plaintiffs prima facie have considerable force. Keeping in view the agreement as a whole and the relevant clauses which have been reproduced above, the plaintiffs have succeeded in establishing prima facie case in that delivery of possession of the premises to enable them to demolish superstructure, machinery, etc. for development of land underneath into plots was to be made simultaneously with the execution of the agreement itself, for without delivery of possession, there could not be any development of the land underneath. It is also clear from the agreement that the plaintiffs had also been conferred right to sell the demolished material and machinery, etc. and utilize its sale proceeds and further that in order to pay the price of the land as settled, the plaintiffs were also entitled to generate funds by the sale of the developed plots and pay the said amount of consideration from the sale proceeds of these plots. Till such time, the entire consideration amount was adjusted, they were nut entitled to sell the remaining land and to utilize their sale proceeds. Ors the record, at present, no sufficient or cogent reasons have been brought by the defendants, as to why and for what reasons, the delivery of possession of area of about 9 acres under Officers Colony, etc. was withheld and it has not been delivered even uptil today to the plaintiffs in spite of the said covenant of delivery of possession. The onus is on the defendants to explain before the trial Court to, justify its failure to deliver possession of the said area but for the time being, in order to determine existence of prima facie case, the factum of non‑delivery of possession of the E said area can be considered in favour of the plaintiffs. According to the plaintiffs, they had not been able to complete the development of the land underneath to convert the same in the form of developed plots capable of being sold and to complete the scheme of development on account of non delivery of possession of the said area of about 9 acres in possession of the defendants under Officers Colony due to which it has been deprived of the right to sell the plots after development and to, pay the sale price to the defendants. The title of the land subject‑matter of agreement continues to vest in the defendants and arguments of learned counsel for the plaintiffs has substance that no risk of the defendants is involved, for no sale can be made of the plots even after development of the land unless the vendor executes the sale deeds in favour of the intended buyer and retains the sale price till such time the entire amount of consideration was cleared. The defendants under the agreement are to recover ascertained amount of Rs.42 crores, therefore, the argument that it was not a case of the nature that compensation or loss could not be ascertained in terms of money if temporary injunction was issued has force. Even if the sale proceed of the entire land after development is less than the remaining amount of consideration of Rs.42 crores, the plaintiffs shall continue to be liable to pay the said remaining amount even if they sustain losses. By ordering the plaintiffs to deposit an amount of Rs.42 crores as a condition for temporary injunction, the trial Court prima facie acted contrary to the terms in the agreement which provide that delivery of possession was to precede the schedule of payment and insistence of the defendants that the plaintiffs should pay the said amount before asking for delivery of possession of the said area of about 9 acres under Officers Colony in its possession was also prima facie contrary to the terms of the agreement.

17. The plea raised by the respondents that the agreement stood frustrated or that the plaintiffs had abandoned their rights of the premises has no substance, rather looks ridiculous for the reasons mentioned above. As argued by the learned counsel for the plaintiffs, it appears that after the plaintiffs had paid the huge amount of loans alongwith mark up and got the property redeemed and the same became free from encumbrances, the defendants started raising the demand of payment bf the remaining price in order to avoid performance of its own part of the agreement regarding delivery of possession.

18. For all what has been discussed above, the plaintiffs have established existence of prima facie case in their favour, balance of convenience was also in their favour for it was they who were to suffer irreparable loss in case temporary injunction was not issued and the condition of deposit of the remaining amount of consideration of Rs. 42 crores was not legally justified for as discussed above it was not an agreement of the nature of direct sale but an agreement for development of the property into plots and thereafter sale of the developed plots and payment of the amount of consideration from the sale proceeds.

19. The order of deposit of Rs.42 crores in these circumstances to my view, amounted to denial of the relief of temporary injunction to which the plaintiffs were entitled.

20. For the foregoing reasons, the appeal filed by the plaintiffs is accepted and the condition of deposit of amount of Rs.42 crores in the impugned order dated 9‑3‑2002 is set aside. The appeal tiled by the defendants is hereby dismissed. Both the parties are left to bear their own costs. Q.M.H./M.A.K./F‑112/ L Order accordingly.