P L D 1959 (W (PLP)

WAHIDUDDIN ARMED, J.

This is an application for the issue of a writ of certiorari and for a writ of mandamus against the Lahore Improvement Trust to revive the bargain of sale of plot No. 19‑B of the Shahalmi Gate Scheme in favour of the petitioner without any penalty, as ordered by the Government of Punjab on 3rd of October 1955.

2. The respondent Trust prepared a scheme known as `Shahalmi Gate Scheme Lahore' in pursuance of the Punjab Development of Damaged Areas Act, 1952. Plot No. 19‑B; consisting of 9 m‑arias and 5 feet, in the said scheme was purchases by the petitioner in;public action at Rs. 1,525 per marla on 17th November 1949. He paid Rs. 3,500 as earnest money and agreed to pay the balance of Rs. 10,978 within six months. The balance was paid on 4th January 1950 Thereupon, both the parties, on 22nd July 1950, executed and registered an agreement for sale The material terms of the said agreement are reproduced below:-- "(a) Within a period of 18 months from the date of execution of this Agreement the intended vendee or his successor‑in- interest may for the purpose of building and executing works in the manner and to the extent hereinafter stipulated enter upon the said pieces of land. "(b) Within a period of 18 months from the date of execution of Agreement the intended vendee or his successor -in‑interest shall, at his own expense, erect upon and over the said respective pieces of land, cover in, and complete in a substantial and workmanlike manner, a building, including an arcade above a height prescribed by the trust according to the provisions of the scheme and shall commence the erection of the building within a period of six months from the date of this agreement". The petitioner, however, did not carry out any construction on the said plot of land. On 31st October 1951 the respondent called upon him to commence construction. On 19th August 1952 the petitioner represented that he has suffered heavy losses in business and his family has gone for Haj and prayed for further time to construct a building on the said plot of land. On 4th March 1953 the respondent called upon him to proceed with the construction. In spite of the repeated efforts of the respondent the petitioner did not commence construction on the said plot of land and finally on the 5th of January 1954 the respondent called upon him to show cause within a week why the agreement of sale between the parties should not be cancelled. It will be useful to reproduce the relevant term on the basis of which the res pondent is entitled to terminate the agreement for sale between the parties. Condition (h) of the said Agreement reads as under :‑ "(h) In case the said intended vendee shall commit any breach or make any default in the performance of all or any of the covenants of his part hereinbefore contained, it shall be lawful for the Trust, or any officer in its employ or acting on its behalf to enter into and upon and gain possession of the said land and of all such buildings, erections, and materials as may then be found upon the said land for the absolute use of the Trust and thereupon this agreement so far as it relates to the engagement of the Trust shall be void and the said security deposited as aforesaid shall be forfeited to the Trust and may be retained by it and shall belong to it absolutely, but without prejudice to all other legal rights and remedies of the Trust against the said intended vendee". The petitioner paid no heed and, consequently, the bargain of the plot was cancelled by the respondent's order dated 24th February 1954 read with the Trust resolution No. 16 dated 23rd March 1954. If the respondent had taken action on this resolution, there could possibly be no objection to the proposed action against the petitioner, but it appears that the petitioner made further representations to the respondent for extension of time for the purposes of the construction of the building on the said plot of land. These representations were, in the first instance, rejected. On 19th July. 1954 the respondent ultimately agreed to revive the bargain in favour of the petitioner on pay ment of Rs. 5,000 at the rate of 1 per cent. as composition fee and extended the time for construction of the building till 19th January 1955. This order of the respondent was also not complied with by the petitioner and on 8th August 1955 the res pondent decided to fall back on their order of cancellation of the bargain dated 23rd March 1954 and got an advertisement published in the local newspapers for the resale of the said plot of land on 17th August 1955.

3. On 16th August 1955 the petitioner made a representation to the Chief Minister of the old Punjab Government against tide proposed resale of the said plot. The respondent was asked to submit their version of the matter and on 8th October 1955 the Punjab Government set aside the order of the respondent Trust and directed them to give final extension for the construction of the said building for a further period of six months on payment of advertisement charges by the petitioner. This order was communicated to the petitioner and the respondent, and on 2nd November 1955 the respondent sent a communication to the petitioner informing him of the decision of the Punjab Govern ment and asking him to proceed with the construction of the building within the extended period. The petitioner was further informed that as soon as the cost of the advertisement was calculated communication will be sent to him for payment of the said amount. The trouble between the parties, however, arose on account of the next letter dated 17th February 1956 whereby the respondent informed the petitioner that the bargain can only be revived in his favour on payment of Rs, 7,379 as composition fee plus cost of advertisement. As a result of this the petitioner filed a civil suit. This was withdrawn on 26th of June 1957 on account of certain defects, particularly in view of section 98 of the Punjab Town Improvement Act, under which no suit can be filed without giving a notice to the respondent.

4. The petitioner has challenged the order of the respondent dated 17th February 1956, inter alia, on the grounds that the respondent had no power to impose any penalty and to cancel the agreement, that it ought to have carried out the order of the Punjab Government and as such it has no power to take possession of the land and to resell it to any other person.

5. The learned counsel for the parties have taken us through the entire record and particularly through the terms of the agreement of sale dated 22nd July 1950. There is no doubt in our mind that the petitioner has not carried out his obligations and has been evading the construction of the property on one pretext or another. It appears to us that his financial position was not sound and he was not in a position to construct the building on the said plot of land, but the fate of this writ petition does not depend on this fact alone. Under condition (h) of the agreement the respondent is perfectly justified to terminate the agreement of sale between the parties if the purchaser has not carried out or complied with the other conditions and terms of the agreement. The learned counsel for the petitioner con tended (1) that at the time of the sale the petitioner was given an assurance that a 30 feet wide road will be provided before the construction is started in front of the plot in dispute, (2) that a dilapidated house, situated at a distance of 5 feet, on the land earmarked for the road will be demolished, and (3) that the debris lying on the plot in question will be removed. But he has failed to satisfy us that any such assurance was given by the respondent to the petitioner before the agreement for sale was executed between them. In fact, the terms of the agreement for sale show that it was the duty of the petitioner to remove the debris lying on the plot in question.

6. The fate of this writ petition, therefore, depends largely on the question whether the respondent, in the circumstances of this case, validly terminated the agreement between the parties ; whether they were bound to comply with the order of the old Punjab Government and whether after accepting the directions of the Punjab Government they are justified to proceed under clause (h) of the said agreement against the petitioner. It is now a well‑established principle of law that in contracts to sell land there is no presumption that time is of the essence of the contract. This view was expressed by their Lordships of the Privy Council in Jamshed Khodaram v. Burjorji Dhunjibhai (43 I A 26). Their Lordships observed at page 31: " Their Lordships do not think that this section lays down any principle which differs from those which obtain under the law of England as regards contracts to sell land. Under that law equity, which governs the rights of the parties in cases of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended more than that it should take place within a reasonable time. The principle is well expressed in what Lord Redesdale said in his well‑known judgment in Lennon v. Napper (1802) 2 Sch. & Laf. 682 which was adopted by Knight‑Bruce L. J. in Roberts v. Berry 3 D M & G 284 at p.

289. The doctrine laid down in these cases was again formulated by Lord Cairns in Tilley v. Thomas L R 3 Ch. 61 and by the House of Lords in the recent case of Stickney v. Keeble (1915) A C

386. Their Lord ships are of opinion that this is the doctrine which the section of the Indian statute adopts and embodies in reference to sales of land. It may be stated concisely in the language used by Lord Cairns in Tilley v. Thomas : " The construction is and must be in equity the same as in a Court of Law. A Court of Equity will indeed relieve against and enforce specific performance, notwithstanding a failure to keep the dates assigned by the contract: either for completion or for the steps towards comple tion, if it can do justice between the parties, and if (as Lord Justice Turner said in Roberts v. Berry, there is nothing in the `express stipulations between the parties, the nature of the property, or the surrounding circumstances' which would make it inequitable to interfere with and modify the legal right. That is what is meant, and all that is meant, when it is said that in equity time is not of the essence of the contract. Of the three grounds mentioned by Lord Justice Turner express stipulations' requires no comment. The `nature of property ' is illustrated by the case of reversions, trusts, or trades. The ` surrounding circumstances ' must depend on the facts of each particular case.' " Their Lordships will add to the statement just quoted these observations. The special jurisdiction of equity to disregard the letter of the contract in ascertaining what the parties to the contract are to be taken as having really and in substance intended as regards the time of its performance may be excluded by any plainly expressed stipulation. But to have this effect the language of the stipulation must show that the intention was to make the rights of the parties depend on the observance of the time limits were of merely secondary importance in the bargain, and that to disregard them would be to disregard nothing that lay at its foundation. Prima facie, equity treats the importance of such time limits as being subordinate to the main purpose of the parties, and it will enjoin specific perfor mance notwithstanding that from the point of view of a Court of law the contract has not been literally performed by the plaintiff as regards the time limit specified. This is merely an illustration of the general principle o;' disregarding the letter for the substance which Courts of Equity apply, when for instance, they decree specific performance with compensations for a non‑essential deficiency in subject‑matter.

7. Bearing in mind these principles it seems to us that) clauses (d), (k) and (1), taken together, do not express in an unmistakable language an intention to make time of the essence of the contract. In such situations every partys general right too have the contract performed within a reasonable time remains unaffected and in case of unnecessary delay the other party may give the party at fault notice fixing a reasonable time after the expiration of which he will treat the contract as at an end. Judging the decision of the respondent, dated 23rd March 1954, from this standpoint, it is perfectly obvious to us that the respon dent had subsequently to the expiry of the period fixed for the construction of the building made time as being of the essence of contract and terminated the agreement for sale after giving reasonable opportunities and notices to the petitioner. If there had been no order of the Punjab Government, there is no doubt in our mind that both in law and in equity the petitioner had no case and there would have been no ground to interfere in this writ petition.

8. The learned counsel for the respondent, however, urged that the decision of the Punjab Government communicated in their order dated. 3rd October 1955, reproduced below, is not of a binding nature. The respondent could ignore and proceed against the petitioner on the basis of the terms agreed upon between the parties. "

2. Government considers that a final extension for a period of six months for building may be given to Mr. Muhammad Shafi, allottee of plot No‑ 19‑B in the Shahalmi Gate Scheme. "

3. He should, however, be asked to pay the cost of advertisement by the Lahore Improvement Trust for the auction of the plot, after its cancellation against him." This takes us to the question whether the Punjab Government had any supervisory jurisdiction on the activities of the respondent Trust. There is no direct provision to this effect, but the scheme of the Punjab Town Improvement Act, 1922 shows that the respondent is the creature of the Provincial Government. The majority of the members and chairman are nominated by the Provincial 0ovexnmew 4.0 not only the Government pan remove they chairman and nominated trustees, but they are also entitled to, dissolve the Trust whenever they find that it is nut acting according to their directions or instructions (vide sections 4, 5, 9, 10 and 103). Under section 21 of the said enactment the Trust is duty bound to‑furnish all the information and statements which the Government directs it to send them for purposes of their consideration. The question, however, whether the Punjab Government had any, power to control the activities of the Trust is not very material as in this case the respondent accepted the decision and the directions given by the Government in a letter dated 10‑11‑55 communicated to the respondents. By this letter the respondent informed the petitioner of the decision of the Provincial Government. The petitioner was informed that as soon as the cost of the advertisement is calculated, he will be asked to pay the said amount. He was also asked to proceed with the construction of the building forthwith. In our opinion, by this letter the respondent waived its right of forfeiture and in law it is not entitled to take action against the petitioner on the basis of its decision dated 23rd March 1954.

9. The only question that remains for consideration is whether any further action was taken by the respondent under clause (h) of the said agreement. The learned counsel for the respondent has failed to point out any other step or resolution of the respondent Trust to this effect. The learned counsel has again relied on the letter of the respondent dated 17th February 1956 whereby it agreed to revive the bargain in favour of the petitioner on payment of Rs. 7,379 as composition fee and on payment of advertisement charges incurred for the resale of the said plot of land. This letter, however, does not show that any fresh action or steps were taken against the petitioner in pursuance of clause (h) of the agreement. According to the principles applicable to sale of land the respondent was duty bound to provide further reasonable opportunity to the petitioner to commence and complete construc tion on the said plot of land. It took no such action and did not fix any reasonable time for the above‑mentioned purpose. In our opinion both under the agreement and under the law the respondent is not entitled to impose any penalty on the petitioner in pursuance of the said agreement. This could only be done by an agreement between the parties. If the respondent wants to terminate the agreement, it must proceed within the four corners of the terms agreed upon between the parties. In the agreement itself there is no stipulation or condition under which the respon dent can impose any penalty. The respondent having accepted the directions of the Punjab Government should have allowed the petitioner to commence and complete construction within the time indicated by the Provincial Government on the said plot of land. In view of the above the order of the respondent contained in its letter dated 17th February 1956 is not justified and cannot be allowed to stand in the way of the performance of the contract entered into between the petitioner and the respondent.

10. For the reasons given above we set aside the order of the respondent Trust, dated 17th February 1956, and direct that a writ of mandamus be issued to it to the effect that if the peti tioner commences and constructs a building on the said plot of land within four months of this order, no action will be taken against him in pursuance of clause (h) of the said agreement. In the circumstances of the present case we order the parties to bear their own costs. A. H. Writ issued.