P L D 2002 Karachi 333 (PLP)

(4) Who committed breach of agreement, ‑ the defendant No. l or the plaintiff? (5) Whether the plaintiff is entitled to relief of specific performance of agreement dated 11‑7‑1998? (6) What should the decree be?

4. On these issues parties led evidence before the Commissioner appointed by the Court. The plaintiff and defendant No, l filed their affidavit‑in‑evidence and were cross‑examined while no evidence was 1,.!d br the defendant No.2. I have heard learned counsel for plaintiff and. defendant No.

1. Nonc appeared for defendant No. 2.

5. The plea of bar of suit under the rule of res judicata taken by the defendant NO. I is founded on the order dated 20‑2‑1998 passed by the VI11 Additional District Judge, Karachi South in Civil Appeal No.44 of 1997 filed by Mst. Gul Shahnaz, the plaintiff, against the defendants Nos. l and 2 whereby the‑appeal was dismissed and the order of the trial Court namely 2nd Senior Civil Judge dated 10‑7‑1997 rejecting the plaint on the ground that the suit was barred under section 42 of the Specific Relief Act and section 45 of the Transfer of Property Act was maintained. Mr. Khalid Dawoodpota, ‑learned counsel for defendants did not agitate this point seriously at the titre of arguments. However, Mr. Muhammad Sharif, learned counsel for plaintiff submitted that Suit No. 1332 of 1995 filed by the plaintiff against defendants Nos.l and 2 in the Court of 2nd Senior Civil Judge, Karachi South was for declaration and permanent injunction and not for performance of contract, as it is the case in the instant suit, therefore, the cause of action being manifestly different, the‑ doctrine of res judicata envisaged under section 11, C.P.C. would not apply. Secondly, the Court of Additional District Judge lacked inherent jurisdiction for the purpose of this matter as the valuation of the present suit is Rs.9,00,000 which is much above the pecuniary jurisdiction of Additional District Judge. I agree with I the learned counsel for plaintiff that on both counts stated above the `:3r contemplated under section 11, C.P.C. would not apply to institution: of the instant suit which is for specific performance of contract and permanent ! A injunction. No doubt, the order passed by learned Additional District Judge: dismissing the appeal has not been challenged and as such it has gained i finality but it would have no bearing on the instant suit owing to distinct cause of action in both the matters. The plea of res judicata, therefore, fails.

6. As regards the cause of action learned counsel for plaintiff rightly argued that the Agreement of Sale, which provides the basis for institution of the instant suit has been expressly admitted by the defendant No.1 and the 113 contract evidenced by this agreement is sought to be specifically enforced, therefore, the defendants cannot contend that cause of action has not accrued to the plaintiff to bring the suit. Again, there was no remarkable contest on this point by the learned counsel for defendant although the specific performance of contract was vehemently opposed. It is important to note that the point whether the contract is to be specifically performed or not is altogether different from the question whether the cause of action to file the suit had arisen to the plaintiff. Under the law cause of action has different meaning and import from remedy or relief to be granted, therefore, the two are not to be mixed up. In essence. as has been consistently held by superior Courts, cause of action means every fact that will be necessary for the plaintiff to prove if traversed in order to support his right to judgment. It has nothing to do with the defence set up by the adversary more it should be confined to nature and character of the relief sought. The agreement in the instant suit was enough to represent the case of plaintiff as it formed the foundation of the factual aspect of the cause clearly laying down the tight accruing thereby to the plaintiff for its specific petformancc. The plea that the cause of action had not arisen to plaintiff is, therefore, without substance. The Issue No.4 governs the main controversy and both parties were required to lead evidence on it. The plaintiff produced her husband Muhammad Afzal Chohan as the only witness on her side. He filed his affidavit‑in‑evidence wherein he stated that the plot in question was allotted to him and Naushad Ali and lease on Form ' C' was duly executed and registered on 11‑12‑1989. Naushad Ali gifted his share to Abdul Qayyum, defendant No.1 but the possession and control of the plot with construction thereon remained with him. On 1.1‑7‑1995 Abdul Qayyum Soomro entered into an agreement with plaintiff to sell 5036 of his share in the plot in question for a total consideration of Rs.9,00,000 and received an amount of Rs.3,00,

000. The balance of Rs.6,00,000 was to be paid at the time of execution of Conveyance Deed or Irrevocable General Power of Attorney. Again, an amount of Rs.2,00,000 was paid to Abdul Qayyum out of the balance consideration and only an amount of Rs.4,00,000 remained in balance. Since the defendant No.1 avoided to execute Conveyance Deed or Power of Attorney as aforesaid, a notice was given to him calling upon him to perform his part of contract. It was stated that another Suit No. 1332 of 1995 was filed by plaintiff for declaration and injunction, but the plaint was rejected and appeal preferred was also dismissed.‑In the proceedings of the said suit Abdul Qayyum accepted the Sale Agreement but alleged that since the plaintiff failed to. make payment on due date he had revoked the agreement and forfeited the amount paid to him by the plaintiff. It was further stated that the plaintiff was all along ready and willing to perform her part of contract. He produced the relevant documents along with his affidavit namely; copy of Declaration of Gift dated 3‑5‑1993, Agreement of Sale dated 11‑7‑1995, copy of receipt of Rs.2,00,000, copy of notice dated 24‑10‑1495, copy of order dated 10‑7‑1997 rejecting the plaint in Suit No. 1332 of 1995 and copy of appellate order dated 20‑2‑1998. He also clarified that original documents had already been filed in Court. In cross examination he admitted that half of the plot, which is the suit property, stands in his name. He stated that the amount of Rs.2,00,000 was paid on 20‑7‑1995. He admitted that he did not prepare the Sale Deed but he clarified that he would have prepared the Sale Deed after the defendant would express his readiness to execute the same.

8. On the other hand Abdul Qayyum Soomro, the defendant No. 1, in his affidavit‑in‑evidence admitted the execution of agreement in question but stated that in fact Muhammad Afzal Chohan, husband of the plaintiff, had come in contact with him and he purchased the plot in the name of his wife, the plaintiff. He also referred to earlier transaction between them. He stated that in the agreement it was one of the conditions that on her failure to get transfer and to pay balanceshe will pay Rs.10,000 per month and that such condition shall remain valid for two months only but the plaintiff failed to avail this concession. He stated that the balance amount was not paid till October,‑ 1995, therefore, after some time the amount already paid was forfeited. In cross‑examination he admitted the receipt of Rs.5,00,

000. He also admitted that mutation has not been made in his favour in the Defence Housing Authority as yet and that he cannot effect transfer in favour of plaintiff in absence of mutation. He further admitted that last amount of Rs.2,00,000 was received by him in September, 1995. He stated that he did not give a notice in writing for cancellation of the agreement. He admitted to have received notice issued by the plaintiff but stated that he did not send any reply.

9. Both the learned counsel, in the light of above pieces of evidence vehemently advanced their respective pleas for the purpose of establishing if the time was of essence of the contract or not. Mr. Muhammad. Sharif, learned counsel for plaintiff submitted that basically no time was fixed for final payment but even then the contract related to piece of land, time could, therefore, not be of essence of contract, even if, prima facie, a time is fixed for completion of the transaction. He, however, emphasized that intention of patties is the cardinal factor and for that initially the agreement is to be looked into. He relied on Muhammad Nawaz Khan v. Farrah Naz (PLD 1999 Lahore 238), Muhammad Anwar Khan Ghouri v. Muhammad Taqi (PLD 1977 Karachi 391), Faqir Muhammad v. Abdul Momin (PLD 1995 Lahore 405), Ghulam Nabi v. Muhantmad Yaqoob (PLD 1983 SC 344), Essabhoy v. Saboor Ahmed (PLD 1993 SC 39), Ghulam Jilani v. Munir Ahmed Khan [PLD 1960 (W.P.) Karachi 517] and Abdul Hamid v. Abbas Bhai‑Abdul Hussain (PLD 1962 SC 1) in support of his contention.

10. Mr. ‑ Khalid Daudpota, learned counsel for defendant No. 1 urged that in this contract time was of essence and the plaintiff failed to perform her part of contract on time, therefore, the contract was cancelled and the defendant No.1 was justified in forfeiting the earnest money. He placed reliance on Haji Muhammad Yaqoob v. Shah Nawaz (PLD 1998 Karachi 758) and Abdul Hameed v. Ghulam Muhammad (1987 SCMR 1005).

11. The authorities cited by learned counsel for plaintiff quoted above invariably reflect the consistent view that time is not of essence of contract in a transaction relating to land/immovable property. In Ghulam Nabi's case (PLD 1983 SC 344) a number of precedents were referred to and it was observed that though time is not ordinarily considered as being of essence of the contract involving transaction of immovable property but the true intention of the parties can be gathered from the terms of the contract and the facts and circumstances of the case and mere mention of time in the contract for its performance does not necessarily mean that time was of the essence. Reference was also made to Abdul Hameed's case (PLD 1962 SC 1) wherein it has been held that an intention to make time of the essence of the contract must be expressed in unmistakable language and it may be inferred from what passed between the parties, before but not, after, the contract is made, Reference was also made to Essabhoy's case (PLD 1973 SC 39) wherein the rule laid down was not different from what has been observed in the above authority. The principle Iluid down in the other authorities: Muhammad Nawaz Khan v. Farrah Naz (PLD 1999 Lahore 238), Muhammad Anwar Khan Ghouri v. Muhammad Taqi (PLD 1977 Karachi 391) and Faqir Muhammad v. Abdul Momin (PLD 1995 Lahore 405) is also the same. In Ghulam Jillani's case [PLD‑1960 (W.P.) Karachi 517] subsequent conduct of defendants was also considered but this view stands overruled in Abdul Hameed's case as also in Ghulam Nabi's case (supra). The authorities: Haji Muhammad Yaqoob v. Shah Nawaz (PLD 1998 Karachi 758) and Abdul Hameed v. Ghulam Muhammad (1987 SCMR 1005) cited by learned‑ counsel for defendant No. l also relate, inter alia, to the question as to in what circumstances time is of essence of the contract.

12. Thus, without reservation, the terms of the agreement shall themselves speak if the time was of essence of the contract and the earlier events demonstrating the conduct of parties may also be taken into account in I I this, context. Keeping in mind these principles I have examined the agreement. Para 1 of the agreement stipulates that the balance sum of Rs.6,00,000 shall be paid on the day of execution of Conveyance Deed but no time is fixed for the last mentioned purpose. A relaxation has been made in para. 2 to the effect that if the vendee fails to pay the balance amount then she is liable to pay Rs.10,000 per month to vendor but that condition would remain valid for two months. Although in the end at para. 8 a condition has been added to the effect that the Conveyance Deed/General Power of Attorney shall be executed by the vendor within one month i.e. 10‑8‑1995 but it is Inconsistent with what has been provided in para. 2, discussed earlier. Nevertheless, in substance, it is a warning to the vendor namely the defendant No.1 and not vendee/plaintiff for executing Conveyance Deed within one month. In real sense, the condition in para. 2 is, by itself, sufficient to show that 10‑8‑1995 was not inevitably the cut‑off date or the JE date for the execution of Conveyance Deed. It can, thus, be safely concluded that time was not of essence of the contract between plaintiff and defendant l No. 1.

13. As regards forfeiture of the amount received by the defendant No. I it appears to be important to mention that first receipt executed on 11‑7‑199.5 mentions fhe amount of Rs.3,00,000 as earnest money in terms of the agreement but the agreement itself shows the balance amount to be Rs.6.00,000 and it was, essentially, a part payment of the sale consideration. The subsequent receipt produced along with the affidavit‑in‑evidence clearly mentions that Rs.2,00,000 was accepted as part payment of this transaction. Ordinarily, the amount received by the vendor as advance payment or earnest money is not liable to forfeiture unless there is manifest breach of contract on the part of vendee in clear and unrebuttable infringement of the terms of the contract. In strict sense the true import of earnest money coupled with the factors warranting its forfeiture was examined by a Division Bench of this Court in Karachi Port Trustees v. Ghulamali Habib [PLD 1961 (W.P) Karachi 623] and it was held, after referring to a good number of foreign judgments, as under:‑‑ "27 Having carefully considered the question in the light of the authorities and the recognized principles of equity the conclusion that we have reached may now be summarized. Normally in a contract of sale of immovable property the seller is, upon a breach by the purchaser, entitled to forfeit the earnest money or a deposit of the same character. But in case it! which from the consideration of all the relevant circumstances the forfeiture and the retention of the amount by the seller would be unconscionable, the Court would upon equitable principles intervene and grant relief to the defaulting purchaser. In order that this may be done it is not enough that the amount of the deposit appears to be unreasonable having regard to its proportion to the sale price, because what is reasonable must normally be determined by the parties at the time of the contract. Therefore, it must be found that the retention of the amount by the seller would be unconscionable having regard to all the circumstances of the case. It may be that iii a certain case the amount described as a deposit may itself be so exorbitant that the inference may become irresistible that it is really in the nature of a penalty in the event of default, for equity looks to the substance and not to the form. In determining whether the forfeiture is unconscionable the Court will take into consideration the nature of F the contract, the conduct of the parties and the proportion of the amount of deposit to the sale price. Where the purchaser has notl merely defaulted but has repudiated the contract and his conduct suffers from impropriety the Court will refuse to come to his aid. because one who seeks equity must come with clean hands. On the F other hand‑, the fact that the seller has sharply exercised his right or has obtained an unfair advantage though acting within his right under law would be taken into consideration in favour of granting relief to the purchaser."

14. Obviously, scanned from above point of view the threatened action of defendant No.1 in forfeiting the amount in the instant case appears to be unconscionable. He has received more than 55 % of the consideration amount. He is, as such, not justified in equity to forfeit this amount I ‑unilaterally when there is no condition in the agreement itself and in b particular, the default in performance of the contract has been committed by him as would be shown in the discussion herein-below. The defendant No.1 was, therefore, not justified under the law to threaten, the plaintiff with forfeiture of amount already paid by him.

15. In order to ascertain precisely who committed the breach of contract the versions given by the parties in their "evidence coupled with the documentary evidence are of immense importance. The admission given by defendant No.1 in cross‑examination in this context; is reproduced hereunder:‑‑ "....It is correct that the mutation has not been completed in my favour in the Defence Housing Authority as yet. It is correct that I cannot effect transfer in favour of Shahnaz till mutation is effected."

16. The above statement by itself imparts a meaningful impression that the defendant No.1 could not get the mutation in his name, he was, therefore, not in a position to transfer the property in question. ,He had admittedly received a notice from plaintiff calling upon him to perform his part of contract but he did not give any reply. Obviously, on account of lack of mutation in his name he was helpless and unable to effect transfer, therefore, he kept quiet. He had earlier accepted the additional amount of Rs.2,00,000 for the purpose of completion of the formalities yet he did not respond in an appropriate manner to satisfy the plaintiff that he was willing to get the documentation updated in his favour. A plea was, however, taken by learned counsel for defendant No.1 that the property is already in the name of husband of plaintiff, therefore, only a little more was to be done. This plea cannot be sustained in the eye of law as the property was not in the name of plaintiff herself. The defendant No.1 was not relieved of his obligation to get mutation effected in his name merely because it was in the name of plaintiff's husband. If, at all, it Was so what was the necessity of executing a Conveyance Deed. The plea is beyond the scope of the transaction/contract and is, therefore, rejected. Moreover, even execution of Irrevocable Power of Attorney would be meaningless if in the record of rights, the property is not in the name of such person who grants the power. The fact, therefore, remains that owing to the reasons, aforesaid, it was none else but the defendant No. l who, by his conduct committed such acts as would be deemed to be his intention of commission of breach of contract. 1,

7. Since the plaintiff has performed her part of. contract the same is to be specifically enforced and the defendant No. 1 is under an obligation to complete the formalities and execute the necessary transfer documents as per stipulation in the agreement, after receiving the balance consideration of Rs.4;00,

000. The plaintiff is, thus, entitled to the relief of specific performance of contract. He is also entitled to the relief of injunction as admittedly the defendant No. I, has threatened the plaintiff with actions of H cancellation of contract and forfeiture of the amounts already paid much against the spirit of the contract.

18. In view of the fording on Issues No.4 and 5 above, the suit is decreed for specific performance and injunction. Defendant No.1 shall execute Conveyance Deed in terms of Sale Agreement in favour of plaintiff within two months hereof, failing which the amount of Rs.4,00,000 may be deposited with Nazir of this Court who may get the formalities completed and execute Conveyance Deed in favour of plaintiff. Since the matter involved mostly legal points, the parties shall bear their own costs. Q.M.H./M.A.K./G‑96/K Suit decreed.