P L D 1988 Lahore 680 (PLP)

ABAID ULLAH KHAN, J.‑‑This is plaintiff's appeal against the judgment and Decree of the learned Civil Judge, Lahore dated the 2nd October 1984, recording dismissal of the suit for specific performance of contract of sale of the property in dispute bearing No.S.E.14‑R‑41, commonly known as 41 Empress Road. Lahore, and in the alternative for recovery of Rs.18,00,000, which sum represents earnest money, loss of profit and damages. Though in the plaint and the agreement of sale, Exh. P. 1, the area of land covering the property is mentioned as 11 kanals 8 marlas 125 square feet the true area found on actual measurement when the property was sold by respondent I to respondent 2 turned out to be 12 kanals 9 marlas 124 square feet. The property in question was transferred as evacuee property to Mst. Amtul Haseen, respondent

1. On the 6th August, 1971, she entered into agreement with the appellant. Bilal Ahmad Malik, to sell him this property. The terms and conditions of the agreement of sale are set out in the deed, Exh. P.1, which the appellant and respondent 1 executed. The salient features of the agreement were that a time limit of four months was fixed for the registration of the sale‑deed, respondent 1 was to pay all the dues in respect of the property and procure the necessary clearance certificates from various departments within the stipulated period and receive the balance of the price and deliver vacant possession to the appellant at the time of registration of the sale‑deed, the agreement was declared to be irrevocable and if respondent 1 were to refuse or avoid to sell the property the appellant could get the agreement specifically enforced, he was given the choice to get back the amount of earnest money if the lessee of the building was not to vacate possession within the aforesaid period of four months but he was not to be forced by respondent I to do so. The sale price of the property was to be at the rate of Rs.42,500 per kanal of land. The appellant paid to respondent 1 earnest money of Rs.30,000 on the 3rd August, 1971, and Rs.20,000 on the 5th April, 1972. ‑The balance of the price was to be paid at the time of registration of the sale‑deed.

2. When the agreement was executed the property was occupied by respondent 2, the Province of the Punjab, which was maintaining its office of Directorate of Social Welfare. According to the appellant one of the conditions of the sale agreement was that respondent I would get the premises vacated and deliver vacant possession to him. The appellant averred that respondent 1 failed to have the premises vacated by respondent 2 with in the stipulated period of four months and although in terms of condition No. 5 of the agreement he could have rescinded the contract yet he did not do so and kept the contract alive so as to enable respondent 1 to have the premises vacated and be in a position to fulfil her part of the contract. He maintained that on many an occasion on inquiry respondent I had assured him that she was taking steps to have the premises vacated and soon she would be in a position to deliver vacant possession and convey the property to him. fie pleaded that on the one hand she had been assuring him and or, the other she had been conducting secret negotiations with respondent 2 for the sale of the property in order to get higher price. He stated that he had met the concerned officers of respondent 2 and requested them to vacate the premises and that they had told him that they were looking for alternative accommodation and as soon as they got one they ‑would oblige him. He blamed them for not disclosing the negotiations of sale of the property with respondent

1. As he quoted he came to know from a notice/letter dated the Ist August, 1971, received from Mr. S.M. Hamid Ali, Advocate, that the property had been sold by respondent 1 to respondent 2 for , Rs.7,00,000 and the sale‑deed had been registered on the 18th June, 1973. He instituted suit for specific performance of contract of sale and in the alternative for the recovery of earnest money and damages on the 26th January, 1974.

3. The appellant charged the respondents with having acting concert, fraudulently, illegally and maliciously to deprive him of his valuable rights in the property under the agreement. He asserted that respondent 2 had full knowledge and notice of the agreement of sale of the property between him and respondent 1, and in spite of knowledge and notice had purchased the property mala fide at higher price. He ‑pleaded that he had all along been and still was willing to perform his part of the contract and pay the balance of purchase money.

4. According to the appellant value of the real estate particularly in. the locality in which the property in dispute was situate had considerably increased in June‑July, 1973, and the sale price, of land in the immediate vicinity was quoted between Rs.1,25,000 to Rb.1,50,000 per kanal. He said that he had planned to construct a modern multi‑storeyed building for residential-cum‑ commercial.,use and rent out the same. He estimated his claim against the respondents in the following fashion: (i) Advance paid to respondent 1 Rs.50,00 (ii) Loss/damages @ Rs.1,00,000 per kanal (being the difference between the prices in 1971, and June‑July, 1973 Rs.12,50,000 (iii) Special damages on account of permanent deprivation of enjoyment of the suit Property and its profits Rs. 5,00,000 Total : Rs. 18,00,000 ____________ He asked for the transfer of the property in his favour and in the alternative for payment of Rs. 18,00,000 by the respondents.

5. Respondent 1 came out with the plea that the appellant had abandoned and cancelled his claim for specific performance as was evident from the correspondence that passed between the parties before filing of the suit and that he was estopped by his conduct to sue. She averred that the time was of the essence of the contract and four months' period commencing on the 6th August, 1971, in the first instance and again the same duration beginning on the 5th April, 1972, when additional sum of Rs.20,000 as earnest money had been paid, had been fixed for the execution and registration of the sale‑deed. She complained that the appellant had not come to the Court with clean hands and as such was not entitled to the discretionary relief of enforcement of contract. According to her he never intended by his conduct to complete the negotiations and had filed the suit mala fide after the property had been acquired by the Government. She contended that he was aware of the efforts made by her to get the premises vacated and also of the fact that compliance with the condition of the agreement regarding vacation of the premises was riot within her power but he had not given his consent or shown his inclination to get the sale completed without possession rather he did not like conveyance of the property without possession. She repudiated his claim for damages and stated that the earnest money of Rs.50,000 had been deposited by her in the Court of the learned Senior Civil. Judge, Lahore, vide order dated the 30th January, 1974. She pleaded the bar of limitation to enforce the contract of safe and took exception to the competency of the suit for the reason that the property had been acquired by respondent 2 under the Land Acquisition Act and, that possession of the property by way of consequential relief had not been asked for.

6. Like respondent 1, respondent 2 objected to the' competency of the suit because of acquisition of the, property in dispute by the Government under the provisions of the Land Acquisition Act, 1894, It denied that it had knowledge of the agreement of sale of the property between the appellant and respondent

1. It explained that in the letters received from respondent I requesting for the vacation of the premises no mention of the agreement with 'the appellant nor the name of any intending purchaser was found. Confirming that the property had been purchased for Rs.7,00,000, it maintained that it was bona fide purchaser for consideration without any notice of earlier agreement of sale between appellant and respondent 1.

7. The learned trial Civil Judge settled the following issues for determination, ‑ (1) Whether the plaintiff is estopped by his conduct to file this suit? OPD. 1. (2) Whether the suit is not maintainable in its present form? OPD (3) Whether the agreement dated 6‑8‑1971 is not enforceable under the law? OPD 1. (4) Whether the suit for claiming damages is not maintainable in law? OPD 1. (5) Whether the suit is not competent as the suit property has been acquired by defendant No.2 under Land Acquisition Act, 1894? OPD 2. (6) Whether the plaintiff is entitled to the specific performance of agreement dated 6‑8‑1971? OPP. (7) Whether the defendant No.2 is bona fide purchaser of suit property without notice of prior agreement? OPD 2 (8) Relief. The learned Civil judge held that the plaintiff was not estopped to bring the suit which was competent and maintainable in the form it had been instituted. He did not agree to the respondent, contention that the property had been acquired under the Land Acquisition Act. He formed the view that the property had been directly purchased by respondent 2 from respondent 1 and consequently shelter of the Land Acquisition Act was not available to such a transaction. He considered the suit to be within time. He found that respondent 2 was I bona fide purchaser of the property for valuable consideration without any prior notice of the existence of agreement of sale between the appellant and respondent 1 and, therefore, the appellant was not entitled to seek specific performance of the agreement. He remarked that the only remedy available to the appellant was to claim damages against respondent

1. In the absence of any concrete evidence regarding the market value of the property in dispute and touching the loss due to non‑fulfilment of the agreement, he was not inclined to award him anything on account of damages. However, he thought that he should be given interest on the amount of earnest money which he had paid to respondent

1. Accordingly he directed payment of compound interest at the rate of 10 per cent per annum from the date of receipt of its payment by him till its realization. He decreed the appellants' suit only to the extent of the aforesaid payment of interest and dismissed the suit with regard to the rest of the relief. He made no order as to costs..

9. No caveat can be entered to the learned Civil Judge's finding that the property had not been acquired under the Land Acquisition Act. The Government stopped short of issuing notification under section 4 of the Act expressing its intention to acquire the property. Thereafter it did not pursue the acquisition proceedings rather it finalized the sale by direct negotiations with respondent I ' In the Every sale‑deed, copy Exh: D.25, executed by the attorney of respondent 1 on her behalf on the 16th June, 1973, it was clearly mentioned that as proceedings under the Land Acquisition Act would cause unnecessary expense, inconvenience and hardship to the vendress and as sale by private negotiations was in the interest and for the benefit of the vendors who had agreed to the absolute sale, of the property, it was concluded as such.

10. It may be convenient to set at rest the argument of the learned counsel for respondent 2 that since the property was on lease and in possession of respondent 2, which had the power under the then prevailing law laid down by this Court to requisition the property or to acquire it under the Land Acquisition Act and respondent I could not fulfil the obligation of conveying its physical possession to the plaintiff, she should be taken to have only imperfect title in the property and as such her agreement sell the same to the plaintiff should be considered to be void. Respondent Is right of absolute ownership could not be in any way impaired by the possession of respondent 2 or its power to requisition or acquire the property and B notwithstanding her inability to convey physical possession to the intending purchaser she remained fully competent to contract for or finalize its sale in favour of anyone she liked. The, agreement of sale of the property in question did not suffer from any legal defect nor could it be said to be void.

11. Questioning the correctness of the finding of the learned trial Court regarding lack of knowledge on the part of respondent 2 touching the existence of previous agreement of sale between the appellant and respondent 1, the learned counsel for the appellant drew our attention to the correspondence which passed between the respondents when respondent I was asking respondent 2 for vacating possession of the premises and respondent 2 was promising to vacate the same, on finding alternative accommodation, especially to respondent 1's letters addressed to respondent 2, whose copies are Exhs. D.9.D.11, D.13, intimating that agreement had been reached with a private party for the sale of property. The learned counsel submitted that even if the name of the intending purchaser and sale consideration had not been specified, respondent 2 was at least put on notice as to the bargain and could have ascertained further particulars thereof if it had made inquiry. Elaborating his argument he said that from its own documents, for example, Exhs. D.9, D.11, D.13, it was evident that respondent 2 was aware of the conclusion of agreement of sale of the property and, therefore, it could not be said that it had no notice and knowledge of the existence of the agreement.

12. To appreciate the argument of the learned counsel it may be useful to go over the correspondence between the respondents having bearing on the issue. Just after the conclusion of the agreement of the 6th August, 1971, respondent 1 addressed on the 12th August, 1971, letter (copy Exh. D.9) to the Director of Social Welfare, Lahore, intimating that due compelling personal reasons she had decided to sell the property in dispute and though agreement had been reached with a private party for its sale yet before the sale‑deed could be finalized the buyer had demanded vacant and free possession of the entire premises. She said that it was with great regret that she had to request the Directorate to vacate the premises ‑within two months in accordance with the condition of the lease under which the property was held. The Directorate of Social Welfare sent the reply, vide letter whose copy is Exh. D.10 and which was signed by the Assistant Director (Admn.), intimating respondent 1 that it was not possible to locate suitable accommodation by so short a notice and that the building would be vacated as and when some suitable accommodation was available. On the 4th October, 1971, respondent .1 sent letter (copy Exh. D 11) to the Assistant Director (Admn.) of the Directorate of Social Welfare acknowledging the receipt of his letter of the 10th September, 1971, and stressing the need of vacation * of the premises during the month of October. She suggested three other buildings where the Directorate could find accommodation according to their requirement. The Directorate again informed respondent 1, vide letter of the 12th October, 1971 (copy Exh. ' D.12), that the building would be vacated only when some suitable accommodation ‑was available. On the 8th December, 1972, respondent I approached the Chief Minister of the Punjab through her letter of the 8th December, 1972 (copy Exh.D.13). in an effort to get the building vacated. She recounted how her husband, brother and son were carrying on business in Chittagong and Dacca and how due to disturbances over there they had to leave all their assets in East Pakistan and come over to Pakistan and that their business and assets had been taken over by the Government of Bangladesh. As she explained, in order to earn livelihood and start new business in Pakistan she had been left with no alternative except to sell away the property. Stating that the intending buyer wanted vacant possession of the building and as more than a year had passed since the Directorate of Social Welfare was telling her that the building would be vacated as and when some suitable accommodation was available she requested that necessary orders might be issued for vacating the building at the earliest so that she could finalise the sale‑deed. She received the same stereo typed reply vide‑letter of the Directorate of the 19th November, 1973 (copy Exh.D.14), that the building in question would be vacated when some suitable accommodation was available. When respondent 1 again asked the Directorate through her letter of the 2nd February, 1973, for vacation of the building she received the letter of the Government dated 22nd March, 1973 (copy Exh. D.15), telling her that the Government intended purchasing the building and that she should wait for some time. Respondent 1 g continued pestering the Government with the demand of vacation of the building. However, the Government at one time made up its mind to acquire the property under the Land Acquisition Act, 1894, and for this purpose issued notification under' section 4 of the Land Acquisition Act, 1894, on the 17th May, 1973. Subsequently the Government abandoned the acquisition proceedings and finalized the sale by negotiations with respondent

1. She was paid Rs.7,000 property. The sale‑deed (copy Exh D.25) Ahmad, husband and attorney of respond 16th June, 1973, and it was registered

13. The appellant, while appearing as PW.4 and his son and attorney, Iftikhar Ahmad Malik. P.W.3, bore testimony to the effect that they had been approaching the officers of Respondent 2 for telling them that they had contracted to purchase the property and requesting them to vacate the possession of the premises. However, Muhammad Arif. D.W. 4, the then Director of Social Welfare and Zafar Ali, the then Assistant Director (Admn) of Directorate of Social Welfare, denied that they had been told by anyone or had any notice of the agreement of sale of the property between the appellant and respondent 1 Muhammad Arif said that though Haji Mateen Ahmad, husband and attorney of respondent 1, had been telling him they wanted to sell away the property and therefore it might be vacated he had never referred to any specific agreement.

14. Leaving aside the oral evidence a perusal of the correspondence referred to above indicates that the Government became aware of and was put on notice about the fact as early as in August, 1971, that respondent 1 had concluded agreement with someone to sell the property and this was reiterated over and over again by respondent 1 in her letters sent to the Government. In order to avail of the protection afforded to a bona fide purchaser respondent 2 ought to have made diligent inquiry and to have taken reasonable care to ascertain the particulars of the previous agreement of sale which had been brought to its notice and of the intending purchaser. In the circumstances, especially when the Government started negotiations with her for purchasing the property and actually purchased the same, it was quite easy for the Government to ascertain as to with whom she had entered into agreement and on what terms and conditions. The evidence produced by respondent 2 is silent with regard to any effort made by the Government or its functionaries to inquire about the prospective buyer and the terms and conditions of the bargain. Such an inquiry was not so complicated a task for the Government to accomplish. The Government could have simply asked respondent 1 to make available the particulars of the agreement and of the intending buyer and she would not have hesitated to disclose them especially when she was setting good bargain with Government. Failure to make the slightest move in making inquiry in this behalf would impair the bona fides of the Government.

15. It may be interesting to note that throughout her correspondence with the Government respondent did not disclose the particulars of the agreement of sale nor' the name of the intending purchaser (plaintiff). She did not inform the plaintiff either in writing about the negotiations or finalization‑ of gale with the Government before the sale‑deed, Exh ' 4D 25 was executed. On the 10th June, 1973, Mr. S.M. Hamid Ali, advocate, gave on behalf of respondent notice (copy Exh. D.31) to the appellant blaming him for his failure to perform his part of the contract of sale of the property within the stipulated time and drawing inference from his conduct that he was not interested in finalizing sale of the property. He was asked to collect Rs.50,000, earnest money, which respondent 1 was said verbally to have requested him several. times to receive, within a month failing which, he was told, the amount would be deposited in Court. Nowhere in the notice any referenced‑ to the, sale of the property to the Government was made. This notice was received back undelivered. Mr. S.M. Hamid Ali sent an other notice (copy Exh. 0.32) to the appellant on the 26th June, 1973. Copy of the earlier notice dated the 10th June, 1973, was enclosed with this notice and the appellant was requested to collect Rs,50,000 from respondent 1 within a month otherwise she should be compelled to deposit it in a court of law.

16. The crucial question as to how for the appellant was willing and ready to fulfil and perform his part if the contract may now be examined. Admittedly the appellant made no communication in writing touching the performance of finalization of sale of the property and execution & registration of the sale‑deed in favour of respondent

2. It was respondent 1 has divested herself of all rights in the property in dispute that the appellant started giving notice through his counsel to respondent 2 and getting advertisement published in the newspaper informing that he had entered into agreement with respondent 1 to purchase the property.Exh D.28 is the copy of the notice dated the 7th july,1973 sent by the appellant counsel.Mr. C.M.Latif Rawn,Advocate,to the director of social walfare on the assumption that the sale had still to be completed. Relevant portion of the notice is reproduced below: "Previously Mst. Aintul Haseen wife of Haji Mateen Ahmad owner of 41 Shahra‑e‑Bin Badis requested you on different occasions for the vacation of the premises and ultimately vide your letter No.S.W.(B)12-49/70-1190' dated 19‑1‑1973 you have informed her that the building in question would be vacated when some suitable accommodation would be available. That the said Mst .Amtul haseen has been requesting for the vacation of premises because she entered into an agreement for the sad premises my client and in that the vacant possession would be delivered to my client and in that respect my client has already made advance! payments to the said Mst. Amtuf Haseen. There is another term of agreement that the contract is irrevocable. It has come to the knowledge of my client that Haji Mateen Ahmad husband of Mst. Amtul. Haseen is negotiating with different persons including you for the sale of the said premises for which he has no right and a notice to that effect has been served upon him today for taking legal action in case the registration of the sale‑deed is not effected in favour of my client within fortnight. That Mst. Amtul Haseen or her husband have got no right to enter into any transaction for the sale of the said premises except my client." Simultaneously Mr. C.M. Latif Rawn sent to Mr.‑ S.M.Hamid Ali, Advocate, reply (Exh D.4) to the latter's above referred to notice dated the 22nd June, 1973 (copy Exh. D.32), on behalf of respondent 1 to the appellant. The reply proceeded on the assumption that the property was still with respondent 1 and had not been alienated by her although the property had. been sold on the 16th June, 1973. It emphasised the fact that condition precedent for the registration of the‑sale‑deed was the vacant possession of the bungalow in question. After referring to the correspondence which exchanged between the respondents the reply stated: "It is clear that the premises in question have not been vacated yet and the condition precedent for the registration of the sale‑deed has not been fulfilled." it pointed out that respondent 1 was negotiating with different parties, including the Directorate of 'Social Welfare, Lahore, for the sale of the premises for enhanced price which was not authorised ‑and warned that any such transaction would be illegal ab initio and that the appellant, apart from claiming damages, reserved the right to challenge it in the Court of law. It concluded thus,‑

"This reply is given to you alongwith this notice to your client that within a fortnight the sale‑deed may be got completed in accordance with the terms of agreement dated 6‑8‑1971 and be presented for the registration before the Sub‑Registrar, Lahore and the vacant possession of the premises should be delivered before the Sub‑Registrar when my client would make the remaining payment of the sale price in accordance with the agreement dated 6‑8‑1971. If this is not done by your client within fortnight then my client would be constrained to seek his remedy in a Court of law in accordance with the terms of the agreement having recourse to the Court of law for specific ‑performance of the agreement and in that event your client would be responsible for all the expenditure incurred by my client in accordance with the terms of agreement. My client also reserves his right to proceed against your client by getting a criminal case registered against her for defrauding my client and converting the above‑mentioned amount to her personal use."

17. On the 30th August, 1973, the appellant sent notice, Exh. D. 5, through his counsel, to respondent 1 charging her with the breach of the contract of sale she had entered into with him and with malicious transfer of the property by sale to defendant

2. He again stressed that the condition precedent for the registration of the sale‑deed was delivery of vacant possession of the bungalow in question and that the said condition was not fulfilled as the premises were not got vacated. He claimed damages but did not ask for the enforcement of the contract of sale or for the transfer of property in his favour. The concluding paragraphs of the notice, reproduced below, indicate manner of assessment and quantum of damages,‑

15. That my client intended to construct a building and for using it for multifarious purposes and if the possession would have been delivered in 1971 then my client would have earned a huge amount in the form of profits but he was deprived on account of your connivance with the Director Social Welfare Government of the Punjab Lahore who did not vacate the premises and made lame excuses and my client has to suffer a huge loss apart from mental torture.

16. That the damages are being assessed as follows,‑ (a) Rs.50,000 was received by you advance about 2 years ago for which you are liable to pay interest at the prevalent rate apart from the principle amount. (b) Rs. 2 lacs (approx.) which you have received in excess than the stipulated amount which vide agreement by my client to be paid upto the terms of the registration of the sale‑deed. (c) Rs.10 lacs as damages which would have incurred in the form of benefits which would have arisen if the possession would have been delivered and the property would have been got registered in 1971 according to the terms of the agreement dated 6‑8‑1971. You are, therefore, given this notice of a fortnight duration to pay the above‑mentioned principle amount, interest thereto and the damages as mentioned above to my client through cross cheque. In default thereof my client will be constrained to seek his remedy in a Court of law and in that event you will be responsible for all costs of the suit."

18. The appellant's son and attorney, Iftikhar Ahmed Malik, PW. 3, categorically stated that they (appellant were prepared to get the sale‑deed registered only in case respondent 1 told them that the property had been vacated. From the perusal of the reply to the notice, Exh. D.4, and the, notice, Exh. D.5, sent by the appellant and in view of the statement of the appellant's attorney it is clear that the appellant was prepared to get the sale‑deed executed and registered only if he were to get vacant possession of the property‑, in case vacant possession was not conveyed he was not willing and ready for the registration of the sale‑deed as also for the payment of the balance price. The appellant's denial of the suggestion in his cross‑examination while appearing as PW 4 that he did not want to get the property without its vacant possession is contradicted by his admissions in his reply to the notice (Exh. D.4) and his notice (Exh. D.5) as well as by his attorney's 'testimony and as such i cannot be attached much significance. By giving notice, Exh. D.5, he as a matter of fact abandoned the idea of getting the property by enforcement of the contract of sale and contented himself with claiming damages.

19. The appellant filed suit for enforcement of the contract of sale about a year and a quarter after sale of the property in respondent 2's favour had been Completed and sale‑deed registered. Such unreasonable delay would no doubt work adversely upon the mind of the Court in matter of grant of discretionary relief as the enforcement t of contract of sale is in the appellant's favour.

20. Having found that the appellant was not willing and prepared I to get the sale of the property finalised and the sale‑deed executed J and registered without the vacant possession of the property and I that he came to the Court after unreasonable delay we do not feel I inclined to grant him the relief of specific enforcement of contract of sale.

21. The learned counsel for the appellant tried to make out a case for recovery of damages from respondent 1 who was blamed for surreptitiously transferring the property to respondent

2. He admitted I that the appellant had not actually suffered any damage as a result of the alleged breach of contract on the part of respondent

1. However, he submitted that the appellant would have gained the difference between the contracted and the sale price of the property. The learned counsel for the respondent pointed out that there was no provision in the ' deed of agreement, Exh. P.1, for payment of damages or compensation to the appellant in any eventuality. The learned counsel contended that in case of non‑vacation of the premises the appellant was entitled to get back the earnest money paid by him and to abandon the contract and, therefore, no question of payment of any damages arose. He strenuously argued that the appellant could not claim damages on the basis of hypothetical raise in the price of the property or assumed loss of profits. We do not feet that in the absence of any specific stipulation in the agreement touching payment of damages and in the light of the fact that the appellant has suffered no actual damage and in view of the appellant's unwillingness to get of damages and in the light of the fact that the appellant the sale‑deed registered anything should be awarded to him.

22. Respondent 1, after securing order of the learned Senior Civil Judge, Lahore, deposited in his Court the earnest money of Rs.50,000 on the 5th February, 1974, that is, before the institution of the sui for payment to the appellant, after giving him notice (copy Exh. D‑31). In such circumstances she ought not to have been burdened with the payment of any interest. The appellant stated before us that he would forego the interest.

23. In view of the above we modify the impugned decree to the extent of deletion of payment of interest by respondent 1 and dismiss the appeal leaving the parties to bear their own costs. AA/B-76/L Appeal dismissed.