2022 PLP 744 (CLC)

SULTAN TANVIR AHMAD, J.

This single judgment shall decide the above titled matters, being outcome of same judgment dated 24.05.2011.

2. The titled Regular Second Appeals are directed against the consolidated judgment dated 24.05.2011 passed by the learned First Appellate Court in Civil Appeals Nos.259-2010, 257-2010, 260-2010 and 258-2010, whereby judgments and decrees passed by the learned trial Court on 30.06.2008 was maintained and appeals were dismissed. The Regular Second Appeals bearing Nos.149 of 2011 and 150 of 2011, connected with the appeals in hand, have been dismissed as withdrawn today.

3. The facts, necessary for decision of the present Regular Second Appeals, are that Agreements to sell was executed between the Appellant and Respondent No.1 whereby the Appellant in Appeal No.122 of 2011 agreed to sell Plot No.304 bearing Khasra No.3686/574 measuring 10 Marlas 30 sq. ft. Gulshan Block, Allama Iqbal Town, Lahore against consideration of Rs.2,380,000/-, out of which Rs.500,000/- was paid to Respondent No.1. Similarly on the same day Respondent No.1 in Appeal No.121 of 2011 executed Agreement to sell in favour of the Appellant with respect to property No.301 bearing Khasra No.3686/686 measuring 10 Marlas 30 sq. ft. Gulshan Block, Allama Iqbal Town, Lahore. The Properties mentioned above are hereinafter called as the "Properties" and the aforesaid agreements will be called as the "Agreements". The Appellant filed suits for specific performance of the Agreements which was contested by Respondent No.1 by filing written statement and raised legal as well as factual objections.

4. Out of divergent pleadings, the learned trial Court has framed the following seven consolidated issues:-

1. Whether the plaintiff has always been willing and ready to perform his part of the agreement to sell dated 08.09.2003 in both the suits but defendant No.1 has failed to adhere to the terms and conditions of the said agreements,? if so, its effect? OPP

2. Whether the time was of essence of the contract? OPD

3. Whether the agreements to sell dated 08.09.2003 stand rescinded on 23.10.2003 and earnest money stand forfeited in favour of defendant No.1? OPD

4. Whether the present suit is not maintainable in its present form? OPD

5. Whether the plaintiff is stopped by the agreements to sell to institute the present suit? OPD

6. Whether the plaintiff has failed to perform his part of the contract within the stipulated period and as such agreements to sell have come to an end? OPD

7. Relief.

5. The learned trial Court gave issue-wise findings and relief for specific performance was declined, decree for recovery of Rs.2,000,000/- was passed (being double amount of earnest money paid by the Respondent No.1 against the Agreements in both the Suits No.879-1 of 2004 and No.880-1 of 2004). The said judgments and decrees were challenged by way of Civil Appeals No.259 of 2010 and No.260 of 2010, which were dismissed, by the learned First Appellate Court, on 24.05.2011. Aggrieved from the same present Regular Second Appeals have been filed.

6. Malik Noor Muhammad Awan, learned counsel for the Appellant has submitted that judgment and decree dated 30.06.2008 passed by learned Civil Judge, Lahore and judgment and decree dated 24.05.2011 passed by learned Additional District Judge, Lahore are illegal, against the law and facts; that issue No.1 was decided in favour of the Appellant and once the same was decided and it is proved on record the specific performance in respect of the property is the only relief; that merely because there is mentioned in the Agreements about double amount, is not a ground to refuse specific performance. Submitted that Appellant throughout, was ready to complete performance of the Agreements but the Respondents failed to perform the same. Added that the Appellant cannot be penalized as the Respondents are being given benefit for their own failure to perform the Agreements. Further submitted that the judgments of both the Courts below are against settled law that the relief of specific performance is the only relief that should have been granted, against the immovable property. Learned counsel added that alternate relief of recovery of damages is not reasonable when the execution the document is admitted by the parties and there is no reason to refuse the relief of specific performance in view of law laid down in judgments titled Mrs. Mussarat Shaukat Ali v. Mrs. Safia Khatoon and others (1994 SCMR 2189) and Dr. Mian Anjum Habib and another v. Waseem Ahmed Khan and another (2014 SCMR 1621); that there is no valid reason for declining the specific performance of the Agreements when the learned two Courts have reached to the conclusion that the time is not essence of the contract, in respect of the immovable property.

7. Conversely, Mr. Abdul Wahid Ch, learned counsel for the Respondents opposed the appeals and supported the impugned judgments and decrees while relying upon cases titled Abdul Haque and others v. Shaukat Ali and 2 others (2003 SCMR 74) and Muhammad Afzal (Decd.) through L.Rs. and others v. Muhammad Bashir and another (2020 SCMR 197). The learned counsel for respondent while withdrawing Appeal No. R.S.A. No.149 of 2011 and R.S.A. No.150 of 2011 also submitted that the original earnest money has been already deposited and the respondent wants pay the remaining as per the impugned judgment and Decree.

8. I have heard the arguments and with the able assistance of the learned counsel for the parties record is perused.

9. The Appellant himself appeared as PW-1. Abid Ismail and Muhammad Iqbal were examined as PW-2 and PW-3, respectively and they claimed to be marginal witnesses of the Agreements in question. Ex.P-1 to Ex.P-4 were brought on record by the Appellant which included the original Agreements to sell, receipt of earnest money. Sheikh Arshad Ali Manager Credit HBL Zila Council Branch Faisalabad appeared as DW-1 whereas Special attorney of Mst. Shamim Akhtar, namely, Mukhtar Ahmed appeared as DW-2. Ex.D-1 to Ex.D-8 were brought on record which included photocopies of Agreements to sell, two sale deeds, general power of attorney and other documents.

10. Barely any argument was addressed on the finding, given by the learned trial Court, on issue No.2 (time essence of the Agreements) which is even otherwise, is correct in view of law laid down in cases titled Fazal-ur-Rehman v. Ahmad Saeed Mughal and 2 others (2004 SCMR 436), Mst. Samina Riffat and others v. Rohail Asghar and others (2021 SCMR 7) and Mst. Gulshan Hamid v. Kh. Abdul Rehman and others (2010 SCMR 334)

11. The Agreements and their execution have been admitted by the parties. The main contest of the parties and thrust of the arguments of the learned counsel for the parties remained as to the following points:- (i) Interpretation of the Agreements and true intention of the parties at the time of execution of the said agreement. (ii) Refusal of grant of specific performance of the Agreement in view of the fact that the same are admitted documents and the learned Courts below have concurrently decided that time is not essence of the contract. (iii) Whether it is justified to refuse the relief of specific performance in view of clause return of double of the earnest money in the Agreements and whether the learned Courts below have rightly refused to exercise the discretion, under the Specific Relief Act.

12. It will be advantageous to reproduce the relevant part of the Agreements (Ex.P-1) and (Ex.P-3):- (Highlighting is added and striking through / `cross-out of clause is as per record)

13. The reproduced part of the Agreements clearly reflect that in case of failure to perform the obligations by the seller/Respondent No.1 the consequence is the penalty of double payment of the earnest money and the consequence of breach by the purchaser/Appellant is settled as confiscation of the earnest money. Interestingly, the right to sue for specific performance is written in the Agreement but the same is crossed out. Malik Noor Muhammad Awan, learned counsel for the Appellant has vigorously argued before the Court that this cross-out on the Agreement is subsequent and it is a forgery on the part of the Respondent. However, this stance is contrary to the evidence and the record as well highly improbable. Witnesses when appeared in the witness-box deposed contrary to this argument. Appellant / PW-1, deposed during cross-examination in the following words:- DW-1/purchaser was also confronted with this matter during the cross-examination who answered the question as follows:- Additionally, the original agreements were produced in evidence by the Appellate as Exhibit P-1 and Exhibit-P3 which inevitably means that after execution, the Agreements went into the custody of the Appellant, leaving no chance of crossing out or forging the Agreements. The respondent produced photocopies of the Agreements as exhibits that essentially reflects that after execution of the Agreements, the Sellers / Respondent was provided with the photocopies. This chain of event is not merely evident from the above produced extracts of the evidence but the remaining record as well. At the same time it is more probable being standard practice and in accord with custom. Moreover, heavy burden of proof was required to be discharged to prove allegation of forgery through coherent and confidence inspiring evidence. The allegation / argument of crossing-out the clause, as to specific performance, is without substance and rather it is contrary to the record.

14. Crossing-out the clause, of right of specific performance, before execution of Agreement, indicates that while settling the terms, at the final stage, the parties agreed and were mindful that the consequence of breach is not the specific performance but penalty. This leaves me with no second thought but to reach to the conclusion that the parties at that time intended not to get Agreement specifically performed but showed contentment to the penalty clauses, as mentioned above.

15. As far as the question of law raised by the learned counsel of the parties (specific performance of agreement despite stipulation of penalty clause), is concerned, the august Supreme Court of Pakistan as well as this Court have already made the law amply clear as to the following proposition:- (i) Stipulations of specific performance and payment of double earnest money, simultaneously, do not bar to exercise the discretion to grant specific performance. (ii) When the agreement provides for payment of double penalty but silent as to specific performance, still the Court can grant the relief of specific performance, at its discretion. Reliance can be placed upon cases titled Dr. Mian Anjum Habib and another v. Waseem Ahmed Khan and another (2014 SCMR 1621), Nisar Ahmed Afzal v. Muhammad Taj and 7 others (2013 SCMR 146), Syed Arif Shah v. Abdul Hakeem Qureshi (PLD 1991 SC 905), P.D. Souza v. Shondrilo Naidu (2004) 6 SCC 649), Manzoor Ahmed Mangray v. Ghulam Hassan Aram and others (1999) 7 SCC 703), Abdul Rahman v. Nasir Ali Khan (AIR 1931 Lahore 657) and Mirza Shafaat Ali Baig versus Wg. Cdr. (Rtd.) Khurshid Anwar and another (2020 YLR 886). In case titled Dr. Mian Anjum Habib and another v. Waseem Ahmed Khan and another (supra), the Honourable Supreme Court of Pakistan decided the abovesaid proposition as follows:- "The only meaning that can be spelt out from this stipulation is that even if the respondent had paid double the amount received by him as per market value, the agreement will not cease but will remain operative for the appellant to have it enforced through Court of law for obtaining registry/transfer of the said property. Looked from this perspective, the only fair conclusion that can be reached on close scrutiny of the two Agreements dated 10.03.2003 and 10.12.2003 is that there remained no option available to the respondent to cancel the agreement and purported cancellation of the agreement made by him per clause 10 of the agreement dated 10.3.2003 did not at all cancel the agreement made between the parties for selling of the said property." (Emphasis Supplied) However, the remedy of specific performance is discretionary in nature and the Court is not bound to grant the same merely if it is lawful to do so. The relevant part of Section 22 of Specific Relief Act, 1877 is as under:-

22. Discretion as to decreeing specific performance. The jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal. The followings are cases in which the Court may properly exercise a discretion not to decree specific performance: I. Where the circumstances under which the contract is made are such as to give the plaintiff an unfair advantage over the defendant, though there may be no fraud or misrepresentation on the plaintiff's part. II. Where the performance of the contract would involve some hardships on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff. III. Where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance. (Emphasis supplied)

16. Reading of the above makes it quite clear that the Court has discretion to allow or disallow specific performance of the Agreement. This discretion cannot be exercised arbitrarily but ought to be used on sound, reasonable and judicial principles. Further the relief of specific performance is an equitable relief and it can be granted keeping in view the principles of equity. In case titled Muhammad Riaz Hussain v. Zahoor ul Hassan (2021 SCMR 431) the august Supreme Court of Pakistan eloquently dealt the matter in terms that:- "It may be noticed from the above quoted provision that the grant of specific performance is not mandatory and can be refused by a Court where the circumstances so require. Reliance is also placed on the judgment of this Court in the case of Liaqat Khan v. Falak Sher (P L D 2014 SC 506): "18: A plain reading of above reproduced statutory provision [section 22] leads to a definite conclusion that the relief of specific performance claimed by respondents Nos.1 to 4 in their suit is, purely discretionary in nature and the Court is not bound to grant such relief merely as it is lawful to do so. At the same time, the discretion to be exercised by the Court shall not be arbitrary, but it should be based on sound and reasonable analysis of the relevant facts of each case, guided by judicial principles and capable of correction by a Court of appeal When the above reproduced provision of law [section 22] is read in conjunction with the case-law cited at the Bar by both the learned Senior Advocate Supreme Courts, the things as regards powers of the Court in exercising its discretion, become even more clear that there is no two plus two, equal to four formula available with any Court of law for this purpose, which can be applied through cut and paste device to all cases of such nature. Conversely, it will be the peculiar facts and circumstances of each case, particularly, the terms of the agreement between the parties, its language, their subsequent conduct and other surrounding circumstances which will enable the Court to decide whether the discretion in terms of section 22 (ibid) ought to be exercised in favour of specific performance or not. Besides, some well articulated judgments on the subject, have further broadened the scope of exercise of such discretion of the Court by way of awarding reasonable compensation to the parties, keeping in view the other surrounding circumstances, such as rate of inflation, having direct bearing the value of suit property, inordinate delay/passage of time, and change in the circumstances or status of the subject property etc."

5. It therefore becomes clear from the above cited passage that rather than mechanically granting the relief of specific performance to every party, Courts should examine the circumstances of each case to ascertain whether such relief is equitable on the facts " (Emphasis supplied) In Case titled Abdul Aziz and another v. Abdul Rehman and others (1994 SCMR 111), the Honourable Supreme Court of Pakistan has deal with the matters as follows:- "The learned Judge of the High Court in revision petition filed by the petitioners has referred to the entire evidence and documents and discussed it at length. This contention even if accepted, would not improve the case of the petitioners as held in the judgment that the grant of specific performance of agreement is a discretionary relief which can be refused even if the execution of agreement is proved." Further reliance can be placed on the cases titled Abdul Karim v. Muhammad Shafi and another (1973 SCMR 225), Muhammad Hafeez v. Saif-ur-Rehaman and 2 others (2018 CLC Note 130) and Abdul Majeed through Legal Heirs v. Ghulam Shabbir and 4 others (2000 CLC 643).

17. Furthermore, the Appellant failed to establish through the evidence that he remained willing to perform his part of obligation i.e. payment of the remaining consideration. Suits were filed on 22.10.2004, very soon after the issuance of 'No Objection Certificate' by Respondent No.2/LDA. No notice was served rather the Appellant rushed to contact the Court where no permission was sought for the payment or deposit of remaining consideration. Throughout the trial no plausible evidence could be given by the Appellant that he ever had (Rs.1,880,000/- + Rs.1,880,000/-) Rs.3,760,000/- at the time of filing of the suit or even at subsequent stages. It is not the case where the remaining consideration was not deposited but no attempt was made to bring on record that Statement of Bank Account or any other evidence, to show that the Appellant had adequate money, at the requisite time. To seek the discretionary and equitable relief of specific performance it was incumbent upon the Appellant to show his readiness, willingness as well as capacity to perform Agreements. In case titled Muhammad Yaqub v. Muhammad Nasrullah Khan and others (PLD 1986 Supreme Court 497), the Honourable Supreme Court has observed as follows:- "

8. From the above the only conclusion that can be arrived at is that the appellant has not only failed to prove that he was prepared to perform his part of the contract but in fact did not perform his part of the contract at all and is, therefore, not entitled to any relief. Reliance in this respect is placed on Narinjan and others v. Muhammad Yunus (1) wherein it has been held : "In order to obtain a relief by way of specific performance of a contract the plaintiff has first to allege and prove that he was ever ready and willing to perform his part of the contract from the date of the contract to the date of the suit, as the contract really was and not in the way he thought the contract to be." (Emphasis supplied) Reliance can also be placed on cases titled Mst. Samina Riffat and others v. Rohail Asghar and others (2021 SCMR 7), Muhammad Arif Awan v. Daud Khan and others (Civil Appeal No.1767 of 2019 decided on 27.04.2021) and Mst. Samina Riffat and others v. Rohail Asghar and others (2018 CLC Note 130).

18. On the other hand, Respondent No.1 has brought on record copies of the Bank Statements (as Ex.D-2 to Ex.D-4) to demonstrate that the suit property was sold to meet their needs and failing to pay the consideration resulted into obtaining loan against interest from the bank. Keeping in view the accumulative (i) The intention of the parties while entering into the Agreement (as discussed in above), (ii) Conduct of the Appellant and (iii) Failure to demonstrate, with reasonable certainty the readiness, willingness and capacity to perform his part of obligation, it can be safely concluded that the learned Courts below have rightly refused to exercise the discretion of granting relief of specific performance.

19. Learned counsel for the Appellant has failed to make out any case of interference the concurrent in judgments and decrees passed by the learned Courts below. No case of decision contrary to law or decision having failed to determine some material issue of law or substantial defect or error in procedure could be shown, persuading the Court to exercise jurisdiction under Section 100 of the Code of Civil Procedure, 1908 is made out.

20. The Regular Second Appeals are, therefore, dismissed and the impugned Judgments and decrees passed by the learned First Appellate Court are upheld. No order as to costs MH/M-178/L Second appeal dismissed.