P L D 1960 (W (PLP)

The plaintiffs have filed this suit for the recovery of Rs. 36,160 against the defendant. By an agreement dated the 5th of November 1953, the defendant agreed to sell to late Malik Hasan Din, the husband of Plaintiff No. 1 and father of plaintiffs Nos. 2 to 4, a plot of lease‑hold land measuring about 2926 square yards, bearing New Survey No. 39/A Survey Sheet P. R. 2, on Victoria Road, Preedy Quarter of the City of Karachi, with all the buildings standing thereon except the structures built on three open plots rented to S. Azhar Haider, Mahmood Mirza and Abdul Rasool Ghulam Hussain Mithaiwala for a consideration of Rs. 3,25,

000. On the 29th of October 1953 the deceased paid a sum of Rs. 32,500 as earnest money towards the purchase price of the said property and under the terms of the agreement the parties agreed that the sale transaction will be completed within two years of the date of the agreement. Clause 2 of the Agreement (Exh. 5/2) provided that the balance of the purchase money shall be paid by Malik Hasan Din to the defendant within two years of the date of the agreement on the defendant obtaining all the required certificates and sanctions which were necessary according to law for the completion of the sale transaction and on making out a clear, valid, subsisting and marketable title to the property agreed to be sold free from all claims, encumbrances and charges whatsoever, Clause 3 provided that time fixed for the completion of the sale is of the essence of the contract and the purchaser is bound to take conveyance of the property within the aforesaid time limit. Clause 4 of the agreement provided that all costs of stamp duty, registration charges attending the sale deed shall be borne by the purchaser. Malik Hasan Din died on the 16th of April 1955 and there is nothing on the record to show that the contracting partie s by that time took any steps for the completion of the contract entered into between them about the above‑mentioned property. It, however, appears that on the 18th of May 1955, the defen dant's counsel sent a notice to plaintiff No. 1, widow of deceased Malik Hasan Din, and plaintiffs Nos. 2 to 4 the other legal representatives of the deceased, informing them that the deceased ' had entered into an agreement with the defendant for the purchase of the above mentioned property and that the sale transaction was to be completed within two years of the date of the agreement and that time was the essence of the contract. The defen$ant called upon them to take conveyance of the said property on payment of Rs. 2,92,500 being the balance purchase price on or before the 5th of November 1955, and further informed them that in default thereof, the amount paid as earnest money will be forfeited. The plaintiffs did not take any steps for the completion of the said,contract till the 29th of September 1955, when their lawyer by a letter of the same date called upon the defendant to give inspection of the title deeds and to satisfy them about her title. According to the plaintiffs the defendant committed the breach of the contract as she failed to produce the necessary certificates for the completion of the sale transaction and important title deed for making out a valid and subsisting title to the said property within the stipulated time. They have filed this suit for the refund of Rs. 32,500 as earnest money and Rs. 4,160 as interest at 6% per annum from 29‑10‑1953 to 28‑12‑1955 against the defendant. The defendant has resisted the suit on the ground that the breach was committed by the plaintiffs, that she was always ready and willing to perform her part of the contract and as the breach was committed by the plaintiffs the amount of earnest money has been forfeited and the plaintiffs are not entitled to recover it. On the pleadings of the parties the following issues were framed (1) Did the defendant fail to complete the contract for sale on 5‑11‑1955 ? (Burden on defendant). (2) Were the plaintiffs ready and willing to complete the sale within the stipulated period ? (3) On whose part is the breach of the contract for sale ? (4) Are the plaintiffs entitled to the refund of earnest money ? (5) Are the plaintiffs entitled to claim interest ? (6) Are the plaintiffs entitled to a decree in the absence of the succession certificate? (7) What should be the'decree ? Issues Nos. 1, 2, 3 & 4.‑I propose to deal with these issues together as they cover the same point. Before dealing with the various aspects of the case involved in these issues it will be desirable to discuss the evidence produced by the parties in support of their contentions. It is admitted by both the parties that upto the death of Malik Hasan Din te, the 16th of April 1955, no steps were taken towards the completion of the contract. On the 18th of May 1955, the defendant, after the death of Malik Hasan Din, by Exh. 5/11 called upon the plaintiffs as legal representatives of the deceased to complete the sale on payment of the balance purchase price of Rs. 2,92,500 on or before the 5th of November 1955. The plaintiffs through their counsel Mr. Abdul Latif Soofi on the 29th of September 1955, by letter (Exh. 5/12) called upon the counsel of the defendant to give inspection of all the title deeds for making out valid and subsisting title to the property in question. This letter must have crossed the letter sent on behalf of the defendant (Exh. 5/13) dated 1st October 1955 addressed to the plaintiffs informing them that as the last date for the completion of the sale of the property expires on the 5th of November 1955, and time is of the essence of the contract, the earnest money of Rs. 32,500 will stand forfeited in case they failed to take conveyance of the property in dispute by the said date. On the 5th of October 1955, Mr. M. N. Kotwal, advocate for the defendant by Exh. 5/14 informed Mr. Abdul Latif Soofi, the advocate for the plaintiffs, that he could take inspection of the documents of title in his office at any time convenient to him between 4 and 5 p.m. on any date. The defendant gave inspection of the title deeds to the plaintiffs some time before the 2nd of November 1955, which is acknowledged in the plaintiffs' counsel's letter (Exh. 5/15) dated 2‑11‑1955. This letter further shows that the inspection of the documents was not given on the first visit of the plaintiffs' counsel but on the second visit and that important documents viz. the original will in favour of the defendant by her mother and the Sanad relating to the property in dispute, were not produced for inspection. Consequently the plaintiffs' counsel by this letter called upon the defendants' counsel for their inspection and also informed him that the defendant till then has not taken any steps to obtain the required certificates and sanctions necessary for the completion of the said contract and enquired from him how long she would take to obtain these certificates. This communication was promptly replied by the defendant's counsel on the same day. The defendant's counsel informed the plaintiffs' counsel by Exh. 5/17 that the inspection was taken very late, the Income‑tax clearance certificate and Custodian's certificate would be available within a month, but before any steps are taken to obtain them, he would like to know whether the plaintiffs are ready and willing to take conveyance of the property and also pointed out that the reference in the letter "that we are running against time" is indeed clumsy and uncalled for in view of the fact which has already been mentioned in the correspondence exchanged between the parties. It will be pertinent to note here that this reply is silent on the question of the production of the will and the Sanad for inspection. This letter was followed by another letter dated the 3rd of November 1955, (Exh. 5/16), whereby the defendant informed the plaintiffs that the earnest money will stand forfeited on the 5th of November 1955, as their wilful conduct has made the completion of the sale impossible on that date. The plaintiffs immediately repudiated this allegation and their counsel by letter (Exh.5/18) dated 4‑11‑1955 informed the defendant's counsel that the plaintiffs have always been rsady and willing to perform their part of the contract, they have already taken inspection of the documents, but the obliga tion to obtain Income‑tax clearance certificate and Custodian's certificate was on the defendant, which she has failed to discharge and is liable for all the consequences of the breach thereof. He further informed the defendant's counsel that as she has expressed her inability to convey the property within the stipulated period, the defendant is called upon to refund the earnest money forthwith. This letter was followed by further correspondence between the parties. On the 8th of November 1955 by letter (Exb. 5/19) the defendant's counsel informed the plaintiffs' counsel that the proceedings for obtaining the Custodian's certificate and Income Tax Certificate had been taken and hearing before the Custodian was fixed for 11th November 1955. He pointed out that the will was merged in the subject‑matter of the award decree which was already shown to him and was not of much importance for inspection. According to this letter the will required for inspection was in the possession of the defendant's only brother who had been requested to produce it by a personal letter addressed to him on 5‑10‑1955, and as soon as it was available it would be placed for inspection. On the 19th of November 1955 the defendant's counsel by letter (Exh. 5/20) informed the Plaintiffs' counsel that the defendant had obtained the Income‑tax Clearance Certificate on the 17th of November 1955, after depositing a heavy sum by way of advance income‑tax and the Custodian's certificate on the 16th of November 1955 and called upon the plaintiffs to complete the transaction within two months of the said letter, failing which the plaintiffs will be responsible to pay damages for breach of the contract apart from the forfeiture of earnest money which will ensue in the usual course. This stand was not accepted by the plaintiffs. Their counsel by letter (Exh. 5/21) dated 24‑I1‑1955 informed the defendant's counsel that the plaintiffs are not prepared to extend the time for the completion of the contract, that time was the essence of the contract and as the defendant failed to produce the necessary certificates within the stipulated period they have committed the breach and the plaintiffs are entitled to the refund of the earnest money. This letter was followed by letter dated 1st December 1955 (Exh. 5/23) on behalf of the defendant informing the plaintiffs that the sale transaction could not be completed on account of the wilful default on their part and that another opportunity had been given to them which they should avail of and complete the transaction within two months of the letter dated 19‑11‑1955. But the plaintiffs through their counsel Messrs Azmat Ullah and Zahoorul Haq informed the defendant that they were not prepared to give any further time for the com pletion of the transaction and as the defendant had failed to complete the transaction within the stipulated period the Plaintiffs are entitled to the refund of Rs. 32,500 paid to her on the 29th of October 1953. The matter did not end here and the defendant's counsel for the first time by letter (Exh. 5/25) dated the 4th of January 1956, informed the plaintiffs that the original will required for inspection was in the custody of the Court and was open for inspection of the plaintiffs. He further reiterated the position that the breach was not committed by the defendant and the plaintiffs were not entitled to the refund of the earnest money. The parties also led oral evidence in support of their respective contentions. Mst. Munawar (Exh. 6) appeared as her own witness. She deposed that in May 1955, she was under going Iddat in West Punjab and returned to Karachi after 4JJ months, and then gave a suitable reply to the defendants notice (Exh. 5/11). In support of the contention that the plaintiffs were always ready and willing to perform their part of the contract she produced Exh. 6/2, a cheque for Rs. 10,498 dated 3‑11‑55, good for payment, drawn on the National Bank of India Limited for purchase of the stamp paper required for the sale deed. She also produced two challans (Exhs. 6/3 and 6/4) dated 4‑11‑55 prepared for depositing the said amount in the Treasury. She further deposed that the plaintiffs were in a position to pay the purchase price to the defendant. According to her the deceased was dealing in motor spare parts business under the name of Royal Motor Stores at Bunder Road, Karachi on a very large scale. The stock‑in‑trade of the said business was worth about rupees three lacs and the plaintiffs could easily pay the balance of the purchase price. The deceased was also plying three taxis on hire in Karachi. She also stated that after the death of the deceased the plaintiffs purchased a bungalow at Karachi for Rs. 30,000 and spent about Rs. 25,000 on additional construction. P. W. 2 Abdul Rahim (Exh. 7), Manager of her husband's firm supported her. He stated that the turn‑over of the sales of the business carried on by Royal Motor Stores during the year 1953‑54 was in the range of Rs. 1,70,000 and at the time of the death of the deceased the value of the stock‑in‑trade consisting of motor spare parts in the said business was about rupees four lacs. He also produced Income‑tax Assessment Orders Exhs. 7/1 and 7/2 to show that the deceased used to pay large amount as Income‑tax for both the businesses. The defendant only examined herself as her witness. She deposed that she was always ready and willing to perform her part of the contract, but admitted in her cross‑examination that on the 15th of November 1955 her brother published a notice in the newspaper "Dawn" Exh. 8/1 whereby he informed the purchasers that he claimed certain rights of easements in the property in dispute and whoever purchased it would do so subject to those rights. She failed to explain why the Custodian's certificate and the Income‑tax clearance certificate were not obtained before the 5th of November 1955 and stated that her lawyer would explain it. She admitted that the deceased had a big shop on Bunder Road of motor spare parts. She also admitted that after the death of the deceased plaintiff No. 1 in the company of her Manager visited her and on being told about the time of the completion of the sale replied "we will see". This is all the evidence produced by the parties in support of their pleas. Now the main question for determination in this case is who was guilty of the breach of the contract. It is a well settled principle of law that the earnest money paid by a purchaser is a guarantee for the performance of the contract and if the purchaser fails to perform his part of the contract, the seller is entitled to forfeit it, but if the seller fails to perform his part of the contract, it is liable to be refunded. The fate of this case depends on the decision of the question who was responsible for the breach of the contract. I have discussed in detail the oral and documentary evidence produced by both the parties. It shows that till the 16th of April 1955, deceased Malik Hasan Din did not take any steps for the `completion of the contract. Malik Hasan Din‑died on the 16th of April 1955 and the defendant by a letter dated the 28th of May 1955, informed his widow and the other legal representatives about the contents of the agreement entered into between the parties and called upon them to perform the contract by the "th of November 1955. She also warned them that if they failed to perform their part of the contract by that time the earnest money would be forfeited. It was admitted by the learned counsel for the defendant that the plaintiff being a Muslim widow was undergoing Iddat and this sufficiently explains the delay in replying to letter dated 28‑5‑1955. It is customary amongst Muslims that the widows very seldom attend to any business during the 4# months period of Iddat. But it is amply proved that immediately after the expiry of Iddat period, plaintiff came to Karachi and entrusted the whole matter to her counsel Mr. Abdul Latif Soofi, who also immediately contacted the defendant's counsel and moved for the inspection of the title deeds. The first letter on that question was written by him on the 29th of September 1955. It is therefore clear that plaintiff No. 1, after the death of her husband, and the other legal representatives showed their willingness to perform the contract entered into by the deceased. But the evidence on the record shows that the defendant failed to produce two important documents viz. a will executed by her mother and the Sanad of the property by the 5th of November 1955. The defendant for the first time made the will available for inspection by her letter (Exh. 5/25) dated the 14th of January 1956. It is thus obvious that the two important documents were not placed at the disposal of the plaintiffs for satisfying them about the subsisting and marketable title of the defendant in respect of the property in dispute. Apart from this, under clause 2 of the agreement, the defendant was responsible for the procurement of the Income‑tax clearance Certificate and custodian's certificate which were required under the law for the completion of the sale transaction. The Income‑tax certificate was required under Ordinance No. IV of 1947 and the Custodian's certificate was required under sections 16 and 17 of Ordinance XV of 1949. The letters of the defendant's counsel dated the 2nd of November 1955 (cxh. 5/17) and Exh. 5/19 dated the 8th of November 1955, clearly prove that these certificates had not been obtained till 5‑11‑1955. These certificates were for the first time obtained on 16th and 17th November 1955 and were offered by a letter dated the 19th of November 1955 (Exh. 5/17) i.e. much after 5th of November 1955, which was the stipulated period for the completion of the contract. It was admitted by the parties that time was the essence of the contract in this case and that the sale transaction ought to have been completed by the 5th of November 1955. Mr. Azmat Ullah the learned counsel for the plaintiffs invited my attention to a decision of their Lordships of the Privy Council reported in Paul Couvreur and another v. M, G. Shapiro (1). In that case their Lordships were considering an agreement in which it was also stipulated that the vendee will procure the necessary certificates for the completion of the sale deed which they failed to procure within the stipulated time. In that case also time was the essence of the contract. It was urged before their Lordships that a reasonable time may have been granted to the vendee for the procurement of the certificates. Their Lordships repelled this contention and observed "But where the contract falls to be completed within a fixed period and therefore time is of the essence of the contract, to require of the vendor that he should allow reasonable time beyond the fixed period to enable the purchaser'to do what he was required to do by the terms of the contract, would amount to making a new contract." Their Lordships therefore repelled the contention and held that the vendees having failed to procure the certificates within the stipulated period, committed breach of the contract and were not entitled for the specific performance of the contract. In view of the observations of their Lordships there is no doubt that the defendant was bound to procure the Income‑tax clearance certificate and Custodian's certificate within the stipulated period and as these certificates were essential for the completion of the contract, the defendant by not obtaining them in time committed A breach of the contract and must suffer all the consequences arising from such breach. The defendant later on tried to rectify the breach by extending the time for the performance of the contract but it is of no avail as the plaintiffs refused to a extend it. Mr. Kotwal argued before me that the case under con sideration is covered by the provisions of section 55 (1) (b) and (d) of the Transfer of Property Act. He contended that the plaintiffs were not ready and willing to perform their part of the contract ; they never presented any draft of the proposed sale deed within the stipulated time and in such circumstances it was not obligatory on the defendant to obtaijQ the Custodian and Income‑tax certificates and the plaintiffs Must be considered to have committed the breach of the contract. III my opinion the contention of the learned counsel for the defendant is not sound. The very phraseology of section 55 of the Transfer of Property Act says that it is subject to any contract to the contrary, and therefore in this case we have to find out whether there was any such term. Clause 2 of the agreement is clearly a departure from the provisions of the Transfer of Property Act and section 55 ((), 1 ransfer of Property Act cannot come to the rescue of the defendant in this case. It Would only come into play if the defendant had discharged her obligations under the contract. But (1) AIR 1948PC192=PLD1947PC 360 on close examination it will be observed that the duty to produce the documents of title even under section 55 (1) (b) was on the defendant and as already observed she failed to produce two important documents at the proper time for inspection of the plaintiffs' counsel. Section 55 (1) (d) in terms does not say that the purchaser should tender a conveyance but it is now well established that it is the duty of buyer to tender it for execution of the sale deed: It, however, does not mean that if a conveyance is not tendered the seller is discharged from all obligations. It E appears Jo me that in this behalf no hard and fast rule can be laid down but there is good authority for the proposition that if both the parties to the sale have fulfilled their obligations under the contract and only a sale deed is to be executed, the buyer will not be entitled to the specific performance of the contract if he failed to tender the conveyance to the seller before seeking the aid of the Court. It will thus be seen that much does not depend in this case on the question whether the plaintiff tendered the conveyance or not. It was next urged by the defendant's counsel that the plaintiffs were not in a position to pay the balance of the purchase price and had no ready money. He contended that the capacity of the plaintiffs to purchase the property in dispute is doubtful and they were not in a position to perform their part of the contract. The question of readiness and willingness on the part of the buyer arises only in cases for the specific performance of the contract or for damages for breach thereof. It does not arise where the suit is only for the recovery of the earnest money. The question of the refund of the earnest money or forfeiture of the earnest money depends entirely on the question whether the purchaser or the seller was responsible for the breach of the contract. It seems to me that this point is irrelevant for the decision of this case. Assuming for the sake of argument that it is necessary even in a case of refund of earnest money, I have already reproduced and discussed the evidence led by the parties on this point. On this evidence there is no doubt that the plaintiffs were in a position to pay the balance of the purchase price to the defendant. It is true that they did not have full amount ready with them, but the assets of their business at the relevant time were in the range of rupees four lacs in the shape of motor spare parts, which could be easily sold and cashed in no time in Karachi market. There is also in evidence that the plaintiffs about the relevant time not only purchased a bungalow and spent con siderable amount on additional construction but also had some money in the bank. This evidence clearly established that the plaintiffs had‑ means to meet their liabilities. It seems that the law does not require that there should be ready money available with the buyer. He is only required to prove that they were disposed and able to perform their part of the contract. This is sufficiently demonstrated in this case. After the death of the deceased the plaintiffs were vigorously pursuing the matter. They engaged a counsel, personally contacted the defendant, made arrangements for the purchase of the stamp and were disposed to discharge all the obligations of the deceased under the contract. They had suffcient means to meet the financial obligations. I therefore decide this plea against the defendant. After careful consideration of the documentary and oral evidence produced by the parties I am firmly of the opinion that the defendant committed the breach of the contractasshe failed to obtain the Income‑tax and Custodian's certificates which were necessary for the completion of the sale transaction and which were required to be obtained under clause 2 of the agreement entered into between the parties within the stipulated time. I am further of the view that the defendant also failed to produce E within the time stipulated two important documents of Title for the inspection of the plaintiffs and thus failed to make out a valid and marketable title to the property in dispute. On this view of the matter it is obvious that the defendant was at fault. As such the plaintiffs are entitled in law for the refund of the` amount of Rs. 32,500 paid as earnest money. I will, therefore, decide these issues against the defendant. Issue No. 5.‑The plaintiffs have claimed interest from the defendant from the 29th of October 1953 to the 28th of December 1955 at Rs. 32,

500. The learned counsel for the plaintiffs has not been able to show me under what provision of law the plaintiffs are entitled to interest on the earnest money for this period. For the first time they gave notice to charge interest from the defendant at 6% by letter (Exh. 5/24) dated 1‑1‑1956. g In these circumstances the plaintiffs are not entitled to claim any interest prior to this date. They are only entitled to interest at 6% on the said amount from 1‑1‑1956. The present suit wasY filed on 7‑1‑1956 and by that time nothing had accrued to the Plaintiffs as interest. I will therefore disallow the claim of interest. Issue No. 6.‑It was admitted by the learned counsel for the plaintiffs that they were not entitled to a decree unless and until they produced a succession certificate., The learned counsel for the plaintiffs invited my attention to an order passed by this Court on 24‑10‑1955 in Misc. Application No. 68 of 1955. Under this order the High Court has granted a succession certificate to plaintiff No. 1 in respect of the subject‑matter of 'this suit. 1h Plaintiff No. 1 failed to furnish the security required for the shares of the minors and the order remained in abeyance. She, however, again moved in the matter And this Court by an order dated 1‑10‑1959 has allowed her to obtain the Succession Certificate on furnishing a personal bond. I will, therefore, hold that the plaintiffs are not entitled to enforce the decree unless and until they procure the Succession Certificate as required by section 372 of the Succession Act. Under the circumstances I will grant the plaintiffs a decree for Rs. 32,500 on condition that they will obtain a Succession Certificate for the recovery of the said amount within three months of the passing of the decree. The decretal amount will G carry interest at 6% from the date of the suit till realisation. The defendant will also bear proportionate costs of the suit. A. H, Suit decreed.