P L D 1962 (W (PLP)

ANWARUL HAQ, J.‑This letters patent appeal is by the defen dant Chowdhury Manzoor Ahmad Sahi, against whom a decree has been passed by our learned brother A. S. Faruqui, J. for a sum of Rs. 8,04,907‑2‑0, out of which Rs. 7,94,970 is the principal amount and the balance represents the interest at the rate of 6% per annum from the 26th of December 1959, till the date of the institution of the suit. Further interest at the same rate has also been awarded until the decretal amount is paid.

2. The suit was for the refund of the money which the plain tiff‑respondents, namely, the P & T Co‑operative Housing Society, had paid to the appellant as price of nearly 73 acres of land situated in deh Phiai, taluka Karachi and bearing survey Nos. 62 to 74 ; 76 to 79, 115 and 116, in pursuance of an agreement of sale executed between the parties on 21‑8‑57 (Exh. 8 on pages 60‑64). Rs. 25,000 were paid at the time of the drawing up of the agreement while the balance was to be paid in 11 months from the 1st of January to the 30th of November 1958. Under the agreement, Exh. 8, the defendant undertook to make out a clear; marketable title to the said land, to obtain the requisite per mission from the authorities concerned for the transfer of the lands and to get the lands mutated in the name of the plaintiffs. It was further agreed that the agreement would stand cancelled and the defendant would refund the whole amount received by him in case the said lands or any part thereof were requisitioned or acquired by the Government or any semi‑Government or corporate bodies.

3. It was alleged by the respondent that the society had paid to the defendant a total sum of Rs. 7,94,970 and called upon him to get the said lands transferred and mutated in their favour, but the defendant was not in a position to convey any title in these lands to the plaintiffs for the reason that there was a Government ban on the sale and transfer of all lands situated in the Korangi area including the lands in question, that the defendant had not obtained the requisite permission from the authorities and that the mutation procured by the defendant in favour of the plaintiffs on the 21st of February 1959, had been subsequently cancelled by the Mukhtiarkar on the 2nd of March 19-9. Finally, it was stated that the lands had been acquired by the Central Government and could no longer be conveyed to the plaintiffs. On these allegations the plaintiffs claimed that they were entitled to the refund of the entire price paid by them as well as interest thereon.

4. The defendant‑appellant admitted the agreement, Exh. 8, and also the receipt of Rs. 25,000 as advance on 21‑8‑57, but denied the receipt of any further sums under this contract until the 21st of February 19.9, when a new contract was drawn up between the parties, namely Exh. 50 (page 204). It was asserted that the previous agreement, Exh. 8 of the 21st of August 1957, became a part of this new agreement. Exh. 50, which dealt with the lands and the liabilities arising not only under the agreement, Exh. 8, dated 21‑8‑57, but also under another agreement, Exh. 20, dated 10‑7‑58 (page 141) as well as certain additional lands agreed to be purchased by the plaintiffs for the first time under agreement Exh.

50. On 21‑2‑59, according to the defendant, a total sum of Rs. 19,08,055‑8‑0 was due from the plaintiffs. He alleged further that he had given possession of all the lands in suit to the plaintiffs and that the mutation had also been effected in their favour and its subsequent cancellation by the Mukhtiarkar was illegal and invalid. The defendant also contended that the lands being what are known as `non‑bandishi agricultural lands' no permission was required for their transfer and accordingly the condition included in clause 14 of the agreement was clearly due to a misconception and was redundant. He denied that there was any Government ban on the transfer of these lands. He asserted that he had done all that was required of him to convey to the plaintiffs a complete title with full rights of ownership and that further he was always ready and willing to do anything more including the execution of any document that might reasonably be required by the plaintiffs. He stated that there had been no acquisition of these lands by the Government. On these grounds he denied his liability to refund anything to the plaintiffs.

5. The learned trial Judge framed the following 18 issues by consent, although, as he has himself rightly observed, some of them are either unnecessary or overlapping:‑ "(1) What amounts were paid by the plaintiffs to the defendant by 2 1‑2‑59 in respect of the lands in suit on the agreement dated 21-8‑57 ? (2) Was the defendant under any obligation to obtain any permission for transferring the non‑bandishi lands in suit ? (3) Was there any ban under Martial Law prohibiting the transfer of the lands in suit ? (4) Have any of the lands in suit been acquired by the Govern ment and if so, when ? (5) Was the transfer, to which the agreement of 21‑8‑57 relates, impossible for reason stated in the plaint, or because of any defect in the 'title to the lands or the; capacity to transfer ? (6) Was the mutation of the lands In suit, effected on 19‑2‑59, effected by the defendant by illegal mean, in defiance of legal prohibitions and illegal ? (7) Did the plaintiffs as well as the defendant have the mutation effected, and file the documents mentioned in para. 5 of the written statement ? (8) Was the mutation, effected on 19‑2‑1959, cancelled and if so, was the cancellation valid, and what was its effect ? (9) What was the effect of the agreement of 21‑2‑1959 ? (10) Was the transfer alleged to have been effected by the agreement of 21‑2‑1959 in any way affected by what took place thereafter? (11) Have 73 acres of the lands in suit been restored to the defendant or to their original owner, and if so, when, and under what circumstances, what is the effect thereof ? (12) What is the effect of clause 4 of the agreement of 21‑2‑58 ? (13) Are the plaintiffs entitled to claim any amount from the defendant ? (14) Have the plaintiffs any cause of action ? (15) Are the plaintiffs entitled to any relief ? (16) General. (17) Whether the defendant had effected sale of the plots in suit in favour of the plaintiffs on or by the 21st of February 1959 ? (18) Whether the mutation effected in favour of the plaintiffs on 19‑2‑1959 conveyed a title to the plaintiff's of the lands in suit ?"

6. After an exhaustive discussion of the manifold con tentions raised on behalf of the parties, Mr. Justice A. S. Faruqui came to the conclusion that the transfer of these lands had come under a restriction in view of an order issued by the Collector, namely, Exh. 33, in pursuance of which the mutations regarding the transfer of these lands from the original vendor Abdur Rahman in favour of the defendant‑appellant and by the appellant in favour of the plaintiff‑respondents were cancelled by the Mukhtiarkar ; and by his failure to get these restrictions removed the defendant had committed a breach of the terms contained in clauses 7 and 14 of Exh.

8. The learned Judge also found that although the lands had not been acquired by the time the suit was filed or even at the time of the writing of the judgment, yet a scheme had beef framed by the Karachi Development Authority envisaging the acquisition of these and other lands for the proposed Korangi Township, that an intimation of the proposed acquisition had been sent to the plaintiffs and that these circumstances were such as entitled the plaintiffs to rescind the contract and demand the refund of their money. The learned Judge then dealt with the question of the cancellation of the mutation of transfer from Abdur Rahman to the name of the defendant and concluded that the effect of the restoration of the major portion of the land to the original vendor Abdur Rahman was that the defendant was not able to transfer any title to the plaintiffs, and in any case the defendant had himself not acquired any title by virtue of the mutation alone, as there had to be a deed of conveyance and registration in his favour, neither of which had taken place, with the result that the defendant was not in a position, in his turn, to execute a deed of conveyance in favour of the plaintiffs.

7. On the basis of these findings, the learned Judge held that the defendant had failed to make out a marketable title. Upon the express agreement between the parties and under the implied covenants provided by section 55 of the Transfer of Property Act, the defendant in order to perform his obligation was bound to give a clear title In respect of the lands ensuring quiet and beneficial enjoyment thereof. It is an accepted principle of law that a purchaser is entitled to repudiate a contract if the seller's title to the property is not free from reasonable doubt and material defects."

8. On the question whether the agreement, Exh. 8, dated 21‑8‑57 was merged into, and extinguished by the agreement Exh. 50 dated 21‑2‑59, Faruqui, J. came to the conclusion that this was not so, as the scheme of Exh. 50 clearly showed that it primarily concerned itself with the lands shown in the schedule attached thereto, and this schedule does not contain the lands agreed to be sold under Exh.

8. He also referred to the fact that Exh. 50 clearly recited that the vendor had received Rs. 25,0(:0 towards the transaction embodied In this document, but admittedly the plaintiffs had already made payments upto 21‑2‑59 to the tune of Rs. 5,09,659 over and above the price of lands contracted for under earlier agreements marked Exhs. 5, 6 and

7. The learned Judge remarked that if the lands of Exh. 8 were intended to be covered by Exh. 50 and the two transactions had been consolidated, it would have been certainly stated in Exh. 50 that the consideration so far received was Rs. 5,90,659 and not only Rs. 25,OC0 as is actually stated in the opening paragraph of Exh. 50.

9. As regards the total amount of payments made by the plaintiff‑respondents in respect of the lands covered by Exh. 8 the learned Single Judge gave the finding that by 21‑2‑59 the plaintiffs had paid Rs. 5,65,659 and that thereafter out of the further payment of Rs. 2,47,500 the balance of the transaction under Exh. 8 must be deemed to have been paid first and appropriated accordingly, and that the remaining amount would be towards Exh.

50. In the result he held that the plaintiffs had paid to the defendant on the agreement, Exh. 8, a total sum of Rs. 7,94,970 which is the amount worked out on the basis of the area and the price mentioned In Exh.

8. In view of his earlier findings on the material issues in favour of the plaintiffs he decreed their suit.

10. Mr. A. A. Khan, the learned counsel appearing for the appellant, has raised the following contentions (1) The suit being on the basis of agreement, Exh. 8, is not maintainable, as that agreement had merged into, or at least become a part of, the latest agreement, Exh. 50, executed on 21‑2‑1959 ; (2) In the alternative the suit must be regarded as being premature for the reason that no acquisition had taken place when the suit was instituted and even if any acquisition did take place, the plaintiffs could be reimbursed under clause 17 of the agreement, Exh. 8 to the extent necessary after they had received compensation from the Government. (3) The defendant had a marketable title as (a) the cancellation of the mutations effected by Abdur Rahman, the original vendor in favour of the defendant, and by the defendant in favour of the plaintiffs, was illegal, as the Collector's order in this behalf had no legal sanction ; (b) that there was no ban on transfer of these lands under any Martial Law Regulations or Orders ; and (c) that there was no threat of any impending acquisition proceedings such as would create a cloud on the defendant's title on these lands. (4) The total amount of payments made by the plaintiffs towards the price of the lands covered by Exh. 8 has not been correctly worked out by the learned trial Judge, and interest should not have been allowed.

11. As regards the first contention that the suit is not maintainable as it has been filed on the basis of agreement, Exh, 8, which has been merged in agreement Exh. 50 it tray be stated at the outset that Mr. A. A. Khan was not prepared to go to the extent of stating that the agreement, Exh. 8, stood extinguished, or completely wiped out by Exh.

50. His position appeared to be that Exh. 8 bad become a part of Exh. 50 and, therefore, the suit should have been founded on both these agreements and not on Exh. 8 alone. The learned counsel took great pains in bringing out what he called circumstances to show the relationship between Exh. 8 and Exh.

50. He considered that the document, Exh. 50, not having been registered, was directly bit by section 49 of the Registration Act as it purported to convey property of more than Rs. 100 in value. The docu ment was, therefore, admissible in evidence only for the collateral purpose of showing any connection that may exist between it and the agreement, Exh. 8.

12. There were several agreements between the parties for the purchase of lands, namely Exh. 5 dated the 15th of October 1956, Exh. 6 dated the 20th of May 1957 and Exh. 7 dated the 12th of June 1957. Exhibit 7 was a consolidation of Exhs. 5 and

6. The transactions evidenced by these agreements are not in dispute as the full price has been paid and possession of the lands taken over by the plaintiffs. Agreement Exh. 8 was executed on 21‑8‑57, then came agreement Exh. 20 on 10‑7‑58 and finally agreement Exh. 50 on 21‑2‑

59. There is no doubt that the opening paragraph of Exh. 50 refers to both the agreements, Exhs. 8 and 20, yet the lands specified in the schedule to Exh. 50 do not include the lands covered by Exh.

8. The learned counsel referred us to a document placed on the record as Exh. 61 and described it as the original draft of Exh.

50. He wanted to rely on certain clauses in draft Exh. 61 to show that the agreement, Exh. 50, was intended to consolidate the transactions undertaken by the parties under Exh. 8, Exh. 20 and Exh. 50, but it seems to us that no useful purpose can be served by referring to Exh. 61 which was at best a draft and was not actually executed by the parties. We are already referring to Exh. 50 for only a collateral purpose, namely, to discover whether Exh. 8 had become merged in Exh. 50 and we think it will be going too far now to invoke Exh. 61 for a further collateral purpose of dis covering the true meaning of Exh.

50. A reference to the various clauses of Exh. 50 makes it quite clear that this document preserved a distinction between lands covered by it and those covered by Exh.

8. The lands mentioned in the schedule are described as "the said plots of land" in clauses 1, 4, 5, 6 and 8, whereas the lands covered by Exh. 8 are distinctly described by their survey numbers, although a confusion appears to exist with regard to survey No. 75 which is not included in Exh. 8, but forms part of the schedule to Exh.

50. However, that has no material effect in the present context as the lands in the schedule are clearly earmarked and consistently described as said plots of land in Exh.

50. It is, therefore, clear to us that Exh. 50 purports to be a conveyance with regard to the lands mentioned In the schedule and not with regard to the lands In Exh.

8. The reference to the lands of Exh. 8 in clause 4 of Exh. 50 appears to be by way of collateral security for ensuring the payment of the sale‑price by the plaintiffs in respect of the lands purchased by them under Exh. 50, clause 4 of Exh. 50, on which great emphasis was laid by Mr. A. A. Khan does not have the effect of making agreement Exh. 8 a part and parcel of Exh,

50. For this purpose it is enough to read the clause In question, keeping to mind the distinction which Exh. 50 draws between the said plots of land and the lands covered by Exh.

8. The clause reads as follows:‑ "

4. That in case the vendees shall make default in payment of any of the aforesaid instalments due and the same shall remain unpaid for more than a week the vendor shall be entitled to demand In writing payment of Instalments in arrears upto the date of such demand cumulatively and on non- satisfaction of such demand in full within the time specified in the demand notice it shall be at the discretion of the vendor either to cancel this indenture and resume possession of the said plots of land, (Survey Nos. to be selected by the vendor at his discretion out of the said survey Nos. and Survey Nos. 62 to 79, 115 and 116 of Deh Phiai, Karachi) without recourse to a Court of law and to treat all amounts paid against the above said plots of land upto the date of such cancellation as forfeited and also sue the vendees for losses and damages arising in consequences to the vendees' default In payments."

13. It is clear that clause 4 is referring to the non‑payment of the instalments due on the lands indicated in the schedule and not on the lands already covered by Exh. 8, although the lands covered by Exh. 8 are cited as security for the payment of instal ments due under Exh. 50.

14. The learned counsel went into great details about the total amount of money paid by the plaintiffs upto 21‑2‑59 and stated that there were serious discrepancies if the amounts were calculated on the basis suggested by the plaintiffs, namely, that they had first paid for Exh. 8 and not created a consolidated demand at the time of the execution of Exh.

50. It seems to us, however, that it is unnecessary to go into these details, for the reason that the recital in Exh. 50 itself makes the position clear. As already stated earlier In this judgment, it is admitted by the appellant that at the time of the execution of Exh. 50 the amount paid by the plaintiffs to the defendant exceeded the amount due to him under the previous agreements, Exhs. 5, 6 and 7 by an amount of Rs. 5,90,

659. This excess amount included Rs. 2.5,000 as advance under either Exh. 20 or Exh. 50, with the result "hat there was still a surplus payment of Rs. 5,65,

659. It was rightly pointed out by Mr. Z. H. Lari, the learned counsel for the respondents, that if the entire transaction covered by Exh. 8 was being consolidated under Exh. 50, then Exh. 50 could not recite on 21‑2‑59 that only Rs. 25,000 have been received and for the balance of the purchase money amounting to several lacs promissory notes would be executed. Clause 1 of Exh. 50 makes no mention of the amount of Rs. 5,65,659 in the hands of the defendant. The only explanation is that this amount had been paid towards Exh. 8, whose transaction was not included in Exh.

50. It was contended by the learned counsel for the appellant that the receipts on which reliance has been placed to prove these payments do not mention Exh. 8, on the contrary they mention either the earlier agreements or the subsequent agreement Exh.

50. This circumstance does not, however, alter the position for the reason that once it is admitted that on 21‑2‑59 Rs. 5, 65,659 had been paid in excess over and above the amount due under the earlier agreements, Exhs. 5, 6 and 7, the excess amount must by deemed to be towards Exh. 8, even though there was no express stipulation in the receipts to that effect. The contention that the creditor exercised his option under section 60 of the Contract Act to appropriate this amount towards the price due under Exh. 50 or Exh. 20, has no sub stance, because such a plea was not specifically raised in the written statement, and on the contrary, as already pointed out, there Is an indication in Exh. 50 itself that this amount already stood appropriated to Exh.

8. If anything, the case would appear to be covered by section 61 of the Contract Act, namely that the excess amount would be deemed to have been appropriated towards a prior debt, namely the one due under Exh.

8. For all these reasons we are in agreement with the observations of the learned single Judge that manipulation with the figures of the price paid by the plaintiffs to the defendant upto 21‑2‑59 does not advance the appellant's case.

15. The learned counsel then drew our attention to the various pronotes executed on behalf of the plaintiffs by their Secretary Mr. Ashrafi, and pointed out that this witness admitted the execution of a pronote including Rs. 2,05,000 in connection with Exh.

8. It appeared to the learned counsel that this was a circumstance showing that the payments under Exh. 8 were being made in pursuance of the arrangement mentioned in clause 1 of Exh 50, namely, by means of pronotes. It is true that this amount is included in the pronotes drawn up by Mr. Ashrafi, but this very witness has stated that by the 18th of June 1959, this amount was fully paid up to the defendant. Even if the pronote in question relating to an amount outstanding under Exh. 8 was drawn up in conformity with the arrangement mentioned in clause 1 of Exh. 50, this does not irresistably lead to the inference that Exh. 8 was merged in Exh. 50.

16. Mr. A. A. Khan finally referred to the various reports which were circulated by the plaintiffs to their own members, containing statements to the effect that possession of lands had been taken and allotments were being made to individual members. The point emphasised by the learned counsel was that all this was being done in pursuance of Exh.

50. Mr. Ashrafi, the Secretary of the plaintiffs, has explained that the allotments to members were paper allotments. We are clearly of the view that the statements made by the plaintiffs in the reports circulated to their members do not have a direct bearing on the issues which we are considering in the present suit, inasmuch as the question of title of the defendant and the question whether he had fulfilled his other obligations under the agreement, Exh. 8, are questions which have to be answered independently of what the plaintiffs may be stating to their members, and in fact these are matters which are not dealt with in the reports.

17. On a careful consideration of the very elaborate arguments addressed by the learned counsel for the appellant we are of the view that the agreement, Exh. 8, was not extinguished by agreement Exh. 50, even though there are references in Exh. 50 to the transaction embodied in Exh.

8. The parties having reduced the terms of Exh. 50 into writing, we cannot permit extraneous circumstances to influence the interpretation to be put on Exh. 50, unless the language is ambiguous and incapable of yielding a reasonable meaning. This is not the case here the document, Exh. 50, as it stands, clearly shows that it was intended to include the transaction already entered into between the parties under agreement Exh. 20, and to embrace the purchase of certain otter lands which were contracted for the first time under Exh. 50 itself. The transaction already undertaken under agreement Exh. 8 remained distinct, and the major portion of the price due under Exh. 8 had already been paid when the agreement, Exh. 50, came to be executed on the 21st of February 1959. The material terms of Exh. 8 regarding the area to be purchased, the price to be paid and the other obligations undertaken by the vendor (what is the appellant before us), remained intact and were not incorporated in Exh.

50. We have, therefore, come to the conclusion that there is no question of the suit being not maintainable, because of the fact that a subsequent agreement between the parties was embodied, in document Exh. 50.

18. We now take up the second contention put forward by Mr. A. A. Khan to the effect that this suit was premature. For this contention the learned counsel relied upon the terms of clause 17 of the agreement, Exh.

8. This clause is to the following effect: "The vendor bas assured that the said lands in whole or part (hereof have on this date not been requisitioned or acquisitioned. However; it is expressly agreed between the parties that on any such action of the Government, semi‑Government or Corporate bodies in respect of the said lands or part thereof by which the sale of said lands in whole or part thereof is made impossible, then this agreement shall stand cancelled in all respect ipso facto and the said vendor shall refund In whole or part or adjust the amounts, as the case may be (calculated on the affected part of the land) paid by the purchasers to the vendor against the price of the said affected land from the compensation or other moneys received from the said authorities concerned."

19. The contention is that the cause of action could arise to the plaintiffs only if the lands had been actually acquired by the Government which was not the case when the suit was filed, nor even when the judgment was delivered by the learned single Judge. In the first place it is necessary to point out that it is not correct to say that the lands had not been acquired by the time the judgment was delivered. The judgment of the learned Single Judge is dated the 7th of November 1960, whereas notifications under the Land Requisition Act, 1894 were issued on the 18th of October 1960. However, that is not, the material point in the context of the present contention. A perusal of clause 17 of the agreement makes it clear that the agreement would stand cancelled in all respects if any action is taken by the Government for the acquiring or requisitioning these lands if by that action sale becomes impossible. The question of adjustment of the amounts, keeping in view any price received icy way of compensation from the authorities, was only a subsidiary question Clause 17, as it stands, cannot be interpreted to mean that the plaintiffs were to remain spectators until such time as the acquisition proceedings were finalised and the amount of compensation payable to them or to the vendor determined by the authorities. The clause is clearly to the effect that the agreement between the parties would stand cancelled, the moment any action is taken by the authorities to requisition or to acquire the lands. This being the case, the question for determination would be whether there was any such action under contemplation of the authorities.

20. The evidence of Mukhtiarkar Inayatullah, D. W. 1, makes it clear that the Korangi Township Scheme had been prepared by the authorities and the lands in suit were included in that scheme. It would appear, therefore, that when the mutations were cancelled by the Mukhtiarkar in pursuance of the letter of the Collector dated 26‑2‑59 (Exh. 33), the Government were clearly contemplating to acquire the property. In other words, not only had a cause of action arisen to the plaintiffs under clause 17 of the agreement but also a cloud had been cast on the title which the appellant could convey to the plaintiffs.

21. The question whether the suit was premature or not does not however rest for its decision on clause 17 alone. There are three other clauses which are directly relevant in this behalf. The first one is clause 7 which Is as follows: "That the vendor, the party of the first part, shall make out a marketable title to the said lands and premises, to be sold, and the vendor shall clear all defects, if any, in this title at his own expense including all claims by way of lease, lien, inheritance, possession or otherwise."

22. The second clause to which reference is necessary at this stage is clause 11, namely: "That if the vendor fails to perform any of the conditions provided herein, he shall be liable to refund all amounts paid and also will be liable to reasonable charges that may be sustained by the purchasers or be sued in a proper Court of law for specific performance of this contract."

23. The last clause needing mention Is clause 14 which is in the following words: "That the land contracted to be sold is agricultural non -bundashi land for sale of which no‑objection certificates shall be secured by the vendor at his own costs and expenses."

24. It will be seen that under clause 11 the appellant was liable to refund all amounts paid to him by the plaintiffs if he failed to perform any of the conditions provided in the agree ment. Under clause 7 he had to make out a marketable title to the said lands and premises. It is clear to us that the appellant failed to do so. We have already stated that the mutation which had been entered in the name of the appellant from his vendor Abdur Rehman had been cancelled by the Mukhtiarkar in pursuance of the Collector's direction contained In Exh.

33. It is true that the appellant is challenging the legality of the directions issued by the Collector and the cancellation orders passed by the Mukhtiarkar, while acting under those instructions, but the fact remains that the mutation was cancelled and the defendant -appellant did not have the cancellation set aside by going up in appeal or revision to the higher Revenue Authorities. It is also clear that under section 135‑L of the Revenue Code no civil suit lies for having the mutation orders set aside. We think, there fore, that it is not necessary for us to give a finding as to whether the order of the Mukhtiarkar cancelling the mutation was legal or not. It is enough to take note of the fact that the order of cancellation stands with the result that there was no longer any mutation in favour of the appellant. The same remarks applies to the cancellation of the mutation effected on behalf of the appellant In favour of the plaintiffs.

25. In any case, even if the two mutations had not been cancelled, it could not be said that they conveyed any title or proprietary interest to the person in whose favour they were entered. As authority we may refer to Nirman Singh and others v. Lai Rudra Partab Narain Singh (53 I A 220). It is clear, therefore, that the appellant had not himself acquired any title in these lands, as his vendor Abdur Rehman had not executed a registered sale‑deed in his favour. The appellant was, therefore, not in a position to convey any title to the plaintiffs. In other words, the appellant was unable to fulfil the obligation of making out a marketable title as required by clause 7 of the agreement. It is correct that no time limit had been fixed under clause 7, but under section 46 of the Contract Act a reasonable time had to be allowed. In the present case, there are indications on the record that the time considered reasonable by the parties was about four months. The agreement was entered into on the 21st of August 1957 and stipulated that the payment of the price instalments shall commence from the 15th of January 1958, vide clause 3 of the agreement. It is reasonable to infer that the appellant was expected to make out a marketable title by that date. It is admitted that at the time the agreement was executed in August 1,957, the appellant had no title in the lands, and, therefore, the requirement embodied in clause 7 was essential requirement which any prudent purchaser would have insisted upon. Further, the appellant himself admits, during the course of his evidence at the trial, that the Secretary of the plaintiffs, viz. Mr. Ashrafi, was demanding proof of the appellant's title in November 1957, and it was for this reason that the appellant obtained a declaration from Abdur Rehman namely, Exh. 49, which is dated the 26th of November 1957. It is clear that this declaration of Abdur Rehman does not create any title, as it is an unregistered document. For all these reasons we must hold that the appellant had failed to comply with the obligation undertaken by him under clause 7 of the agreement.

26. A reference to clause 14 of the agreement, which has been reproduced above, would also show that the appellant was under an obligation to obtain a no‑objection certificate for the transfer of these lands although they were described as non -bundashi. Mr. Khan, the learned counsel for the appellant, contended that this condition was superfluous, but it seems to us that, whatever the legal necessity for this condition, the parties had agreed between themselves that a no‑objection certificate shall have to be obtained by the vendor, and if he fails to do so it is clear that he incurs the penalty in clause 11, namely, he becomes liable to refund the amounts received by him in respect of these lands. On this ground also the suit could not be said to be premature.

27. Finally, as we have already observed, the threat of acquisition proceedings bad appeared on the horizon casting a cloud on the title of Abdur Rehman who was the original owner of the lands. That being so, Abdur Rahman was not in a position to transfer a marketable title to the appellant, who, in turn, was also unable to do the same in favour of the plaintiffs. For this reason also the appellant would contravene clause 7 and incur the penalty contemplated by clause 11 of the agreement.

28. That this was the stand taken by the plaintiffs is clear from the notice, Exh, 12. (p. 67) addressed by the plaintiffs on the 11th of January 1960 to the appellant. In paragraph 1 of this letter it is clearly alleged that‑

"You represented to us that you were the absolute undis puted owner of Surveys Nos. 62 to 79, 87 to 92, 115 and 11.6 etc. and that .you had full legal right to the said lands which now it appeared you did not have." The appellant replied to this notice by means of his letter, Exh. 55 (page 212) on 14‑1‑60, and it is interesting to observe that he said nothing about the allegation of his not having a title in the lands. He simply referred to his previous letters and said that he reiterated his stand as contained in those letters and bad nothing more to add. The earlier letters referred to by the appellant in Exh. 55 appear to be Exh. 53 dated the 22nd of December 1959, (page 209) and Exh, 54 dated 4‑1‑60 (page 210), a perusal of which shows that not a word was said about the appellant's title in the lands. In Exh. 53 he only demanded payment of the instalments due from the plaintiffs.

29. On a consideration of all these facts and circumstances we are left in no doubt whatsoever that the appellant had failed to make out a marketable title within a reasonable time and that he had also failed to obtain a no‑objection certificate as agreed to in clause 14 of the agreement. The result was that he was liable to refund the amounts paid to him under clause 11 of the agreement. The suit could not, therefore, be described as pre mature by any means.

30. While dealing with the second contention of the learned counsel we have incidentally disposed of the major part of the third contention raised by Mr. A. A. Khan regarding the question of the appellant's title in the lands. It will be seen that we have dealt with the effect of the cancellation of the two mutations and also the presence or otherwise of the threat of impending acquisition proceedings. It is conceded by Mr. Lari that there was no ban on the transfer of these lands under any Martial Law Regulation or Order, but the absence of such a restriction has no material bearing on the case as there does exist the Collector's order Exh. 33; prohibiting the transfers of land in the Korangi area, including the lands in suit.

31. As regards the threat of acquisition proceedings we may, however, say a few more words. We have already pointed to the evidence of Inayatullah, the Mukhtiarkar, who had stated that when he cancelled the two mutations in question, a scheme bad been prepared for the Korangi Township and there was a proposal to acquire the lands. Besides this evidence two other documents have been brought on the record in this con nection. The first one is Exh. 66 dated the 11th of May 1960, which is a letter from a Section Officer to the Government of Pakistan in the Ministry of Works, Housing and Water Resources addressed to the President of the Respondent Society, intimating that‑

"it has been decided that eventually the land falling within sectors 6, 7, 8 and 9 which includes your society's land will have to be acquired. These sectors are shown in the attached Master Plan." The second one is Exh. 67 dated the 10th of September 1960 from the Collector of Karachi to the Secretary of the Respondent Society, Intimating that‑-- " proposal for the acquisition of survey numbers in suit as well as several others has been received from the Karachi Development Authority. Necessary notification under sections 4 and 6 of the Land Acquisition Act, 1894 are under pre paration."

32. These two documents would show beyond doubt that the threat of acquisition proceedings was assuming a more concrete shape. We have already stated that the lands have, in fact, been acquired by notifications issued on the 18th of October 1960.

33. Even if we do not take note of the notifications actually issued under the Land Acquisition Act after the suit had been filed, the present case appears to us to be covered by the decision of their Lordships of the Federal Court in Associated Hotels of India Ltd. and R. B. Mohan Singh Oberoi v. R. B. Jodha Mal Kothalia (P L D 1954 F C 35), on which reliance has rightly been placed by the learned Single Judge. In that case, the issue of a notice in connection with a scheme framed under the Punjab Town Improvement Act was held to create a material defect in the title of the vendor. Cornelius J., as he then was, expressed the opinion that‑ "Once the notice was issued under the Punjab Town Improve ment Act, declaring that a scheme had been framed and that the intention of the scheme was no other than the compulsory acquisition of titles in a larger area of land including this suit property, a proceeding was set on foot which, in the eye of law, reduced the title‑holders to the position of mere spectators, whilst it was decided between the authorities whether or not a proposal, presumably framed by the Improvement Trust after mature consideration, that their titles should be com pulsorily acquired, would or would not be carried out. Certainly, the threat to those titles would become more acute as the proceedings matured to the stage at which acquisition was in fact directed by the competent authorities, but the liability to be compulsorily acquired commenced from the time when the notice under section 36 was issued, and that liability was nonetheless real on account of its being at that stage contingent upon the conclusion of certain further formalities.

34. In that very connection Shahabuddin, J. observed as follows: `When the liability of compulsory acquisition of the property agreed to be sold arises the vendor can pass at best only a title subject to that liability. The position then is that the vendor who undertook to satisfy the purchaser before the registration of the sale deed as to the clear title is unable to do so on the date fixed for completion of the sale . . . . . in such circumstances it appears to me that the title of the vendor becomes imperfect and not free from reasonable doubt."

35. As pointed out by the learned Single Judge, the observa tions cited above "apply with full force to the facts of the present case, in which at least the framing of the scheme which covers the lands in question has been established by the evidence of the defendant's own witness, the Mukhtiarkar". We are in full agreement with the further remarks made by Faruqui, J. that‑

"Considering that the plaintiffs were buying these lands for the purpose of allotting them to the members for building their own houses, they were entitled to rescind the contract in view of the threat of the acquisition of the lands in question. The plaintiffs would be entitled to take the attitude that they were not going to purchase the land which was under the cloud of acquisition and that they were not going to wait and see what course these apprehended proceedings were going to take."

36. Another point was made by the learned counsel for the appellant that the plaintiffs bad been given possession of the lands by the appellant and, therefore, if any acquisition took place subsequently, the appellant was not liable in any way. He contended that the deal fell through because the society had no money to pay the instalments due, and in order to avoid the liability which the respondent society would have incurred under clause 4 of Exh. 50, the society rushed to Court as a tactical device. There does not appear to be much substance in this contention. We have already held that the defendant‑appellant had failed to make out a marketable title In the lands, that he had failed to obtain the no‑objection certificate and finally, that there was a threat of acquisition by the Government. For these reasons the respondent society was perfectly justified in rescind ing the contract and demanding the refund of the price paid by it to the appellant. The question of adopting any tactical devices on the part of the society did not arise. Further, It is clear that by putting the plaintiff society in possession of the land, the appellant cannot be relieved of his obligation to make out a marketable title. The appellant as the vendor cannot take shelter behind the doctrine embodied in section 53‑A of the Transfer of Property Act. That provision is intended for the benefit of vendees alone so as to protect them against the vendors. That position does not arise here. Lastly, In any case, it is not even satisfactorily established on the record that the respondent society did get possession of all the lands In suit. The references to the annual reports of the society do not seem to us to con stitute a satisfactory proof in this connection.

37. For all these reasons, we are of the view that the learned Single Judge was right in decreeing the suit of the plaintiffs and there is no merit in the present appeal which must fail. However, there is one last point regarding the payment of interest which needs examination. The learned Single Judge has allowed interest at the rate of 6%. per annum from the 26th of December 1959. This is the date of the document, Exh. 11, (page 85), by means of which the plaintiffs for the first time demanded the refund of the money paid by them to the appellant. Mr. Khan has pointed out that in this letter interest was not mentioned. A second notice was then sent by the plaintiffs on 11‑1‑

60. This is Exh. 12, (Page 67). In it the demand was made for Rs. 8,36,000 as the price paid by the society to the appellant plus damages to the extent of Rs. 3,00,

000. No mention was again made of any claim for interest. The society then addressed Exh. 13 (page 70) on the 18th of February 1960, and in this notice a clear demand was made for the payment of interest as well at the rate of 6% per annum. Mr. Khan has contended that in the first place no interest should be allowed as this was not stipulated in the agreement, Exh.

8. In the alternative, he has urged that the interest should be allowed only from 18‑2‑6) as that was the first time when a claim for interest was put forward.

38. We consider that the matter regarding the payment of interest is covered by section 1 of the Interest Act of 1839. This section is to the following effect: "

1. It Is, therefore, hereby enacted that, upon all debts or sums certain payable at a certain time or otherwise, the Court before which such debts or sums may be recovered may if it shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time or if payable otherwise, then from the time when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand until the term of payment ; provided that interest shall be payable In all cases in which it Is now payable by law."

39. It will be seen that the present case is of "sums certain payable otherwise", and the interest can only be claimed from the date on which it was demanded. We have already) pointed out that Interest was claimed for the first time on 18‑2‑

60. We would accordingly allow Interest from 18‑2‑60 and not from 26‑12‑1959 until the date of the institution of the quit. On this basis the interest allowed would stand reduced by Rs. 7,

461. The total amount of the decree against the appellant will, therefore, be Rs. 7,94,970 as principal plus Rs. 2,476‑2‑0 As interest namely Rs. 7,97,446‑2‑0 in all. Further interest will of course be allowed as already decreed, from the date of the suit to the date of payment of the decretal amount.

40. The appeal, therefore, is dismissed except to the extent indicated above as regards the reduction in interest. The appellant shall pay proportionate costs to the respondents. K. B. A. Appeal dismissed with certain modification.