P L D 1975 Karachi 900 (PLP)

3. The defendants have relied on three documents in support of their assertion that the authorities concerned had construed the restriction of main taining first class hotel as understood by them. The first letter is dated 18‑6‑1965, Exh. 7/5, which ..is a communication from the Secretary, Ministry of Agriculture & Works to his Joint Secretary. In this letter the Secretary mentioned that Mr. D. B. Avari, one of the defendants, had seen him regarding some notice which bad been issued to him by the Settlement Authorities alleging that he had violated the terms of the transfer order and in the view of this officer, who had gone through the transfer order, the defendants had not committed any breach by reason of the fact that he had provided certain facilities around the hotel and the provision for banks, petrol pump, shopping centre were necessary requirements‑ of a modern hotel. The officer felt that the party was being harassed unnecessarily and the Joint Secretary was asked to look into the matter and advise the Settlement Department. The next letter is dated 25‑6‑1965 which is a letter from the Deputy Secretary, Ministry of Works to the Settlement Commissioner for warding Exb. 7/5 and requesting for a report which may also indicate whether the transferees had leased out a part of Nedoo's Hotel estate for petrol pump, banks, shopping centre, etc. etc., and if so on what terms. The endorsement of the Chief Settlement Commissioner on this letter shows that the show‑cause notice had been sent to the transferees under direction from the Ministry and that at that time the Chief Settlement Commissioner had suggested that the explanation given by the transferees be forwarded to the Law Ministry and consulted. The third and the last letter is dated 2nd July 1965 Exh. 7/6 which is from Settlement Sir Rehabilitation Commissioner to the Deputy Secretary, Government of Pakistan and is reply to Exh. 7/3. In this the Settlement Commissioner states that the defendants could not be contacted and that the formal enquiries made revealed that a piece of 5 kanals of land had been sold to the plaintiffs for Rs. 2,'75,000 and further sale or leasing out of portions of the Hotel has been stopped in view of an announcement made by the Lahore Improvement Trust that the Trust was preparing certain Scheme for the area and that no property in the area should be alienated. The letter concluded by saying that there was no information about the terms 6n which the defendants bad leased out the land for a bank, petrol pump, shopping centre, etc., and if the Deputy Secretary deemed it proper defendants may be addressed a letter and asked to supply the required information

4. The present suit was filed on 19‑5‑1967 but prior thereto, on 2‑6‑1965 appeared a Public Notice by the Lahore Improvement Trust proposing to acquire certain lands for a Development Scheme including the suit land and inviting objections from the owners. On 14‑7‑1965 the plaintiffs filed their objections. In these objections the plaintiffs described themselves as the owners of the plot and referred to their ambitious Scheme to put up a multi storeyed building on the plot and concluded with a request to exclude the suit land from the Development Scheme of the Lahore Improvement Trust. On 15‑3‑1967, another application was made by the plaintiffs to the Lahore Improvement Trust for exclusion of the plot which was rejected by the Lahore Improvement Trust by its letter dated 10th October 1967 on the ground that the area was not meant for commercial type of buildings and as such it cannot be allowed to be sub‑divided to accommodate various commer cial concerns. The letter also stated that the plaintiffs had not consulted the Lahore Improvement Trust while purchasing the plot. During the pendency of the suit, on 11‑5‑1971, plaintiffs were served with a notice under section 9 of the Land Acquisition Act and in their reply Exh. 17/1, dated 24‑5‑1971 the plaintiffs as the sole owners of the land claimed compensation amounting to Rs. 29,08,

884. This letter claiming compensation was forwarded with another letter in which the plaintiffs again expressed the desire that they were interested in retaining the suit land. The plaintiffs did not hear further in the matter until 17‑8‑1971 when notice was received from the Land Acquisi tion Officer directing them to deliver possession of the suit land on the date mentioned therein, in which letter it was also mentioned the compensation payable to the plaintiffs has been deposited in Court. The award of the Land Acquisition Officer is dated 23‑6‑1971 but the plaintiff's case is that they had no notice of the said award. On 2‑7‑1971 the plaintiffs filed a reference under section 18 of the Land Acquisition Act which reference has been kept pending by reason of a statement made on behalf of the plaintiffs that further proceed ings be held in abeyance until this suit is decided. To complete the narra tion I may now finally refer to proceedings before the Land Acquisition Officer which would show that on 1‑4‑1971 and 8‑4‑1971 one Col. Hassan Kadir Khan of Avari Hotel Ltd., appeared before the Land Acquisition Officer where he made a statement that the owners of the Avari Hotel Ltd., and the owners of the suit land were in fact the same persons and as far as he was aware the sale deed in favour of the plaintiffs had been cancelled but he will enquire from the Karachi Office. At the next hearing he made a state ment that he had been informed by the Karachi Head Office that the sale deed has been cancelled.

5. The suit land together with certain other adjoining lands which are described as Plots Nos. 1 and 2 reserved for a first class hotel in the Lahore Improvement Trust Development Scheme were transferred in favour of Avari Hotel Ltd., under a registered sale deed dated 11‑3‑1972, Exh. 1.6/1. It would appear from this sale deed that the Avari Hotel Ltd., had to pay, for 2/3rd of this land at Rs. 3,500 per kanal on the basis of their entitlement to benefit of exemption from acquisition and for the remaining 1/3rd at Rs. 1,75,000 per kanal. Prior to the transfer of these plots in favour of Avari Hotel Ltd., the defendant No. 1 as Managing Director of Beach Luxury Hotel Ltd.. addressed a letter dated 27‑3‑1968 Exh. 11/1 to the Chairman, Lahore Improvement Trust. In this letter a mention is made of sanction by the Governor of West Pakistan dated November, 1967 approving the release of land measuring 69 kanals 1 marls and 195 sq. ft. which the writer says had been accepted by him as fully meeting with his requirement for building an ultra‑modern hotel on the said land and that steps be taken to release this area in favour of Beach Luxury Hotel Ltd, Karachi, who were the owners of the plot and buildings called Park Luxury Hotel, The Mall, Lahore. The letter also mentioned that the plaintiffs had filed the present suit for recovery of the sale price with interest on the ground of the plaintiffs' inability to build on the plot sold to them and that it was proposed to pay the plaintiffs off because even after the release of the area it is not possible for them, accord ing to the policy of the Government and of the Lahore Improvement Trust, to put up any building as no commercial building was allowed to put up on the Mall, in this area.

6. Consent issues in this case read as follows:‑ (1) Did the defendants have unrestricted right to sell and absolutely transfer the suit property without any restriction on the use thereof making out a marketable title to the plaintiffs? (2) Are there any restrictions attached to the suit property sold by the defendants to the plaintiffs and if so its effect? (3) Is there any breach of any of the covenants and warranties contained in the sale deed dated 12‑11‑1,964 on the part of the defendants and ii so its effect? (4) Whether the plaintiffs are barred from challenging the title of the defendants to sell the property in suit to them on the ground specified in para. 15 of the written statement? (5) Whether the condition inserted in the permanent transfer certificate that the defendants shall have to run the property as a first class hotel and shall have to maintain it as such is valid in law and binding or the defendants? (6) Whether the condition inserted in the permanent transfer certificate that the defendants shall have to run the property as a first class hotel and shall have to maintain as such amounts to an absolute bar to transfer of any portion of the property by the defendants? (7) Whether the sale of surplus land without affecting the maintenance o a first class hotel and facilities and amenities attached amounts to breach of the condition inserted in the permanent transfer certificate? (8) Whether the plaint discloses any cause of action? (9) Whether the plaintiffs are entitled to refund of the amount of sale consideration? (10) Whether the plaintiffs are entitled to get expenses incurred by way of payment of stamp duty and registration fee? (11) Whether the plaintiffs are entitled to any interest? If so from what date? (12) To what relief, if any, the plaintiffs are entitled?

7. Issues Nos. 1, 2, 6 and 7.‑These issues may conveniently be deal with together. There is no dispute that the defendants were the permanent transferees of the property bearing No. SE 19‑R‑87 known as Nedos Hotel Estate near Park Luxury Hotel, The Mall, Lahore measuring 96 kanals 1 marla and 12 sq. feet, equivalent of 48,000 sq. yds. It is also an admitted position that the existing Nedos Hotel on the plot occupied but a very small portion that the entire plot. It was a term of the auction, which was accepted by the defendants, that they will run it as a first class hotel and shall have to maintain it as such and except for this condition the defendants bad bee transferred all the proprietary rights in the property free from all encumbrances. It cannot, therefore, be said that the defendants had no right to sell any portion of the suit property or for that matter the whole of the proper but that the condition that the auction‑purchaser shall run a first class hotel and maintain it as such would continue to bind, not only the defendants, but their successors‑in‑interest. That even the plaintiffs understood it to be so is clear not only from the fact that they appeared to be satisfied with t insertion of a clause in the sale deed that the defendants shall keep and maintain the main hotel property as a first class hotel in accordance with the terms and conditions of the auction agreed to by the defendants on 21‑8‑1961 at the time of the auction, as mentioned in the Certificate of Permanent Transfer but that even their plaint proceeds on the same basis for their complaint para. 11 of the plaint is against restricted use of the property. As aforesaid the defendants were the transferees of as many as 48,000 sq. yds. of land and it does not stand to reason on that by the conditions referred to above it was intended that the defendants were prevented from making unrestricted use of the surplus land, that is land other than on which the existing hotel stood on what was reasonably required for a first class hotel. Such a condition, G assuming its validity, must be construed strictly and not permitted to make inroads into the proprietary right of the defendants in the land transferred to them free from all encumbrances. What is, however, more important is that not only the parties so understood the condition but that the defendants transferors, the Settlement Authorities, notwithstanding the knowledge of the transfer of the suit land to the plaintiffs, neither avoided the transfer in favour of the defendants nor disturbed the plaintiffs' possession of the suit land or even addressed to them any letter. The plaintiffs at the best could only rely on certain inter se communications between the Secretary and the Joint Secretary, Ministry of Agriculture and Works and the Settlement Commis sioner, Exhs. 7/3, 7/5 and 7/6. These letters in fact show that though a show cause notice had been issued to the defendants (as to what its actual contents were, we have no knowledge) the Government or the Department did not con sider the transfer of the suit land to the plaintiffs as violation of the condition laid down in the Permanent Transfer Certificate and in fact no communication was addressed to the defendants and no action taken against them or the plaintiffs. I may add here that even the plaintiffs have only very vaguely asserted in the plaint that "it has now transpired" that the Settlement Depart ment considered that the defendants had no right to sell any portion of the property in view of the above condition. The plaintiffs have failed to dis charge this burden. My conclusions on these issues, therefore, are that the defendants had the right to sell the suit land without any restriction on its use and that the condition that the defendants will run and maintain a first class hotel on the land transferred to them was not a bar and that sale of surplus E land without affecting the maintenance of a first class hotel did not amount to breach of the condition in the Certificate of Permanent Transfer.

18. Issues Nos. 3 and 4.‑In view of my finding on the aforesaid issues Nos. 1, 2, 6 and 7, it would follow that the defendants have not committed any breach of the covenants and warranties contained in the sale deed. Mr. Saeed A Shaikh, the learned counsel for the defendants, however, con tended that even if it was assumed otherwise, the plaintiffs have no cause for complaint. The covenant, the breach of which is alleged is one relating to the peaceful and quiet enjoyment of the suit property without any let, hindrance or interruption by the vendors or persons claiming through or under them and is, said to arise on account of the condition mentioned in the auction notice and the Permanent Transfer Certit:cate and accepted by the defendants that they will run and maintain a first class hotel. Mr. Sayeed A. Shaikh gave three reasons in respect of his contention. Firstly, that in law the rights of the purchaser under a contract of sale are materially different from those of a purchaser under a deed of conveyance and once the matter passes beyond the stage of the contract and the transaction has resulted in conveyance it is well established that the purchaser has no longer the right to rescind the transfer on the ground that a representation made was erroneous, or claim compen sation for the same in the absence of fraud on the part of the vendor. Secondly, the plaintiffs had accepted the conveyance in full knowledge of the aforesaid condition in the defendants' Certificate of Permanent Transfer and they were, therefore, estopped from challenging the transfer in their favour and, lastly, that there can be no breach of the covenant of title and covenant of enjoyment so long as the transferee remains in peaceful possession of the property. The second argument of estoppel can be disposed of shortly. The case here is not that the plaintiffs accepted the conveyance notwithstand ng their knowledge that the condition contained in the Certificate of Perma nent Transfer restricted the use of the whole of the property transferred to the defendants, but that both the parties, the plaintiffs and the defendants under stood that the condition bad a limited application, namely, that the defendants were to run and maintain the existing Nedos Hotel and no more.

9. In support of his first argument that the right of the plaintiffs after having taken the conveyance, for its rescission or claim for compensation would only arise if the defendants had committed a fraud and not otherwise, the learned counsel invited my attention to several reported decisions and in particular Eastern Mortgage & Agency Co. Ltd. v. Mohammad Fazlul Karim (A I R 1926 Cal. 385), Noor Mohammad v. Lilaram Hukumatrai (A I R 1928 Sind 61); Udho Das and others v. Mehr Bakhsh and others (A I R 1933 Lah. 262 ); Meerkaanai Rowther v. Periyakaruppan (A I R 1934 Mad. 687); Allahdino Bacha v. Odhoomal Amardinomal (A I R 1942 Sind 81 ) and Karpuniah Pillal v. Ponnuchami Pillai (A I R 1933 Mad. 768). I have carefully examined these decisions but find that they are clearly distinguishable. In all these cases reliance is placed exclusively on reported English decisions in which, unlike in the present case, there was no agreement, in the deed of conveyance for compensating the purchaser for a breach o warranty contained in the deed. More appropriate, therefore, would be the cases reported as Cann v. Cann ((1830) 3 Sim) and Ben v. Helsham ((1886) 2 Ex. 72(1)) where claim for compensation for defects in title was held to be maintainable after conveyance irrespective of fraud on the ground that the term of the deed expressly reserved such a right. In the present case, there is not only a warranty of quiet and peaceful enjoyment in the sale deed but also an agreement to keep the purchaser secured, harmless and indemnified against P any loss or detriment by reason of the breach of this warranty by the vendors or any person claiming through or under them. There is still another aspect of the matter to which Mr. Nusrat, the learned counsel for the plaintiff invited my attention. He referred to subsection (2) of section 55 of the Transfer of Property Act under which, in the absence of any contract to the contrary (and there is in the deed nothing contrary), the seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same, and went on to argue that if the defendants did not have the power to transfer the interest which they profess to transfer, namely, unencumbered use of the suit laud by the plaintiffs, the present action would be maintainable not withstanding the absence of fraud on the part of the defendants, independent of the parallel warranties and the indemnity clause contained in the conveyance. In principle I am inclined to agree with the learned counsel. Why should purchaser who has taken conveyance of a property on basis of warrantie contained in subsection (2) of section 55 of the Transfer of Property Act, lose his right to compensation for a breach of this warranty discovered after conveyance? If the purchaser did not contract to take a defective title, he a cannot in principle be denied the right to rescind the conveyance or claim compensation for loss occasioned to him, merely because the seller was innocent, for the law will not be found wanting in giving relief to, an equally. if not more, innocent purchaser.

10. This brings me to the third contention of Mr. Sayeed A. Shaikh that a covenant for title and for quiet enjoyment which involves a right to sundisturbed possession becomes enforceable only when there is obstruction of dispossession and so long as the purchaser remains in possession he suffers no loss which would sustain an action for damages for breach of this covenant. This appears to be the settled law and I may draw support from at least two decisions reported as Eastern Mortgage & Agency Co. v. M. Fazlul Karim and Gulabchand Daulatram v. Suryajirao Ganpatrao (A I R 1950 Bom. 401). In the first case Mukerji, J., further observed that in an action on a covenant of this descrip tion, the plaintiff must allege the facts constituting the disturbance and that the disturbance was lawful with sufficient particularly, to show the breach of covenant. In the present case, it is clear that in so far as the defendants and his predecessor‑in‑interest are concerned, there was not even an attempt to disturb the plaintiffs' possession of the suit land or to prevent them from making its unrestricted use. Equally the plaintiffs were not dispossessed by the defendants or any person claiming through or under them, but they lost their possession by a supervening event, namely, the acquisition of the land by the Lahore Improvement Trust. For reasons aforesaid, these issues are answered in the negative.

11. Issue No.

5. Mr. Sawed .A. Shaikh, the learned counsel for the defendants contended that the condition in the Certificate of Permanent Transfer that the defendants shall have to run the property as a first class hotel and shall have to maintain it as such is not valid in law. The learned counsel invited my attention, firstly to section 3 of the Displaced Persons (Compensation and Rehabilitation) Act, 1958 which empowers the Central Government to acquire evacuee property and when so acquired shall vest wholly and absolutely in the Central Government free from all encumberances. Section 16 of the Act provides for preparation of one or more schemes for the transfer of immovable property on evaluation basis or otherwise to claimants, non‑claimants or locals, in accordance with the provisions of the Schedule. The relevant para. in the Schedule is paragraph 5 which provides that hotels shall be disposed of by unrestricted public auction. The relevant scheme prepared by the Chief Settlement Commissioner for disposal of hotels is Scheme No. III. Paragraph 10 of the Scheme provides that when the Chief Settlement Commissioner has accepted the bid and the amounts payable by the auction‑purchaser have been paid in accordance with the terms and conditions of auction, the Chief Settlement Commissioner will pass an order transferring the auctioned property to the purchaser, and under paragraph 11, when such an order has been passed and communicated to the transferee the proprietary rights in the property shall, subject to the terms and conditions of the auction, stand transferred to him free from all encumbrances. The Scheme also provides terms and conditions of auction of hotels, paragraph 20 of which provides that where a property is transferred permanently the transferee will acquire full proprietary rights in it and under its paragraph 26 the property so transferred shall be subject to the condition that the transferee shall not dispose of the property until the full price of the property and all public dues in respect thereof and payable by him have been duly paid. A plain reading of the Act, the Schedule and the Scheme makes it quite clear that there is no power in the Settlement Authorities to impose any condition in the nature of an encumbrance except that the transferee shall not dispose of the property until he had paid the full price. It will, follow, therefore, that the condition imposed in the present case of running and maintaining a hotel was not warranted by the Act or the Schedule or the Scheme and has, therefore, no validity. In a case reported as Mahmooda Tehsin v. S. Ijaz Hussain Shah and others (PLD 1965 SC 618) the Supreme Court went as far as to state that even a scheme cannot add any limitation so as to deprive a person of a right to a transfer. In this case a restricted meaning was given to the expression permanent building in the Scheme which the Court ignored as being not in accordance with the Schedule to the Act and gave the expression permanent building its ordinary meaning. The defendants' case is on still higher footing for there is no power in the Settlement Authorities to impose the kind of condition imposed even in the Scheme. This issue is, accordingly, answered in favour of the defendants.

12. Issues Mos. 8, 9, 10 and 11.‑Mr. Saeed A. Shaikh, the learned counsel for the defendant contended that the plaintiffs are not entitled in any event to the relief claimed, namely, refund of the price paid in the absence of a prayer for cancellation of the Deed of Conveyance. The question is of academic importance only as subsequent events have overtaken the parties in as much as the suit property came to be acquired by the Provincial Govern ment. Moreover, I am in agreement with Mr. Nusrat, the learned counsel for the plaintiffs that a Court should be slow to throw out a claim on a mere technicality of pleading and it is always open to a Court to give the plaintiff such general and other relief as it deemed just to the same extent as if it had been asked for provided that occasions no prejudice to the other side. In the present case the Reference under section 18 of the Land Acquisition Act is still pending and if the plaintiffs were otherwise entitled to a decree all that would have happened was that the compensation would have been recoverable by the defendants.

13. Mr. S. A. Nusrat, the learned counsel for the plaintiffs made a, not unjustified, grievance that the defendants obtained release of the suit area in favour of Beach Luxury Hotel Ltd., Karachi vide Exh. 11/1 on representation made that it was proposed to pay the plaintiffs off and that but for this representation the defendants would not have obtained the release. It may be recalled here that M/s. Avari Hotels Ltd., which company was described by its Laison Officer Col. Hassan Kadir Khan as sister concern of the defendants in Exh. 13/2, ultimately obtained the transfer of Plots Nos. 1 and 2, inclusive of the suit land, under Exh. 16/1 with added benefit of certain exemptions which required them to pay for two‑thirds of the land at Rs. 3,500 per kanal being the development cost only and remainder at Rs. 1,75,000 per kanal. This is, however, a matter entirely between the defendants and the Lahore Improvement Trust.

14. The result is that the suit in the present form is maintainable but it lacks merits. The suit is accordingly dismissed but there will be no order as to cost as the defendants appear to have benefited by the subsequent release of the land in their favour by the Lahore Improvement Trust. Suit dismissed.