P 1 D 1988 Lahore 717 (PLP)

ABAID ULLAH KHAN, J‑‑ The events and circumstances giving rise to this appeal against the . judgment and decree ,of the learned Senior Civil Judge Sialkot; dated the 30th November, 1982, dismissing the appellant's suit far possession through specific performance, of contract of sale of the land included in Plat No. 47‑A and ha if of', plot No. 48‑A, alongwith the factory building, other constructions and electric fittings, etc., situate in the Small Industries Estate, Sialkot, may be stated in same detail. On the 16th October, 1978, the appellant, Messrs Aman Enterprises of Kotli Lodhran, Tehsil and District Sialkot, which is a registered firm, and respondent 1, Messrs Rahim Industries Pakistan Limited, Sialkot, a private limited company, executed the document, Exh. PW 3/1, on plain unstamped paper. On behalf of respondent 1 it was signed by its Managing Director, Humayun lqbal Sheikh. The appellant called it an agreement to sell the property in dispute while according to respondent 1 it 'reflected the discussion that had taken place between the parties and the agreement of sale had to be executed after settling its terms later on. For facility of reference its contents are reproduced below:‑ (Sd.) for Aman Enterprisers As is evident respondent 1 agreed that the sale of the property in question in favour of the appellant for Rs. 4,75,009 would be irrevocable, respondent 1 was to execute the sale agreement after obtaining permission for the sale of the property from the Small Industries Department, the appellant. was to pay all the dues which were outstanding against respondent 1 and was to adjust it against the price, the appellant was to pay the net price of half of .plot No. 48‑A in dispute and secure its lease in its name and the aforesaid price was not to be adjusted against the price settled in respect of the entire property. The appellant, after getting possession of the land and factory building, was to be responsible for the payment of dues for the period following the taking over of possession. It was provided that respondent 1 would be entitled to the full price after paying all the dues payable till the transfer of the property and getting clearance. The appellant was to be informed by respondent 1 of vacation of possession by removing machinery and the appellant was to be responsible for registration and payment within a month thereafter.

2. As stipulated the appellant paid Rs. 10,000 as earnest money to respondent 1 through cheque when the above referred to agreement was concluded. The cheque was received by Humayun Iqbal Sheikh, Managing Director, and was got encashed by Mr. Javed, Director of respondent 1.

3. Claiming that it had fulfilled its obligations and blaming respondent 1 for trying to get out of the agreement the appellant instituted suit on the 9th October, 1980, to recover possession of the property by enforcement of the agreement of sale. The appellant averred that it had extended all possible help to respondent 1 for securing permission for the sale of the property from the Small Industries Department, which permission had been eventually granted on the 22nd July, 1979, but respondent 1 had failed to do anything positive on its part for completion of the agreement. It charged respondent 1 with having negotiated a deal for sale of the property with respondent 2, Lloyd and Sons, Sialkot, which actually purchased the property during the pendency of suit.

4. Respondent 1 came up with the plea that no agreement of sale had taken place, that the document, Exh. PW 3/1, which the appellant gave out as an agreement of sale, simply contained the substance of the talk between the parties, that the conditions of sale had to be settled and agreement of sale had to be executed afterwards which had not been done. It contended that no one had been authorised by it to sell the factory and, therefore, the question of conclusion of any agreement of sale did not arise. To justify its assertion that it was the appellant which had not honoured its commitments under the alleged agreement respondent 1 explained that it had to ,pay the outstanding amount of loan to the Muslim Commercial Bank, Sialkot, with which the property in dispute had been mortgaged. It averred that it had to pay dues to Small Industries Department and as the appellant was responsible and liable under condition 5 of the agreement to liquidate the debt and pay the dues it was asked to make payment whereupon it had made Habib Bank Limited, Cantonment Branch, Sialkot, to stand surety to honour a cheque of Rs. 2,00,000 issued in respondent 1's favour by the appellant, but thereafter the appellant did not issue any cheque and subsequently issued instructions to the Bank revoking the surety resulting in initiation of legal action against respondent 1 for the recovery of the outstanding loan which was decreed: ‑The. Bank took out execution of the decree for the sale of the property as also for the arrest of respondent

1. In order to avoid his arrest and sale of the property respondent 1 arranged to pay off the debt himself; the appellant made no contribution towards discharge of the debt. 5 Respondent 2 affirmed that it had applies) for permission of the Punjab Small lndustries Corporation to Sell the property to the appellant but in the meantime the appellant moved application stating that it wanted to set up a factory for manufacturing tractor and sewing machine spare‑parts for which purpose the entire raw material had, to be imported from abroad and fur that reason 'permission could not be speedily secured. Respondent 1 maintained that the appellant had made no mention of setting up of such a factory when it had talked `over‑ the matter at the time of execution of Exh. PW 3/2. Respondent 1 alleged that the appellant by adopting such ‑ attitude had indicated that he did not want to purchase the property and that after remaining silent for more than two years instituted suit mala. fide when the value of the property had doubled. Respondent 1 pleaded estoppel against the‑appellant. According to respondent 1 ' the appellant had not been willing and ready to perform its part of the contract and was not entitled to the relief of specific enforcement of contract.

7. Respondent 2, apart from reiterating in its written statement some of the pleas taken up by respondent 1 to resist the appellant's suit., took the stance that it was purchaser of the property in good faith for consideration without notice of the agreement of sale between the appellant and respondent 1.

8. The learned trial Court formed the view that what was contained in Exh. PW 3/1 was in essence an agreement of sale of the property and not just the result of mere discussion between the parties. Since the alienation in favour of respondent 2 took place during the pendency of suit the plea of being bona fide purchaser for value without notice was held to be not available to respondent

2. Without entering into discussion of merits of the case as to which of the parties was at fault in committing breach of the contract and without examining the, desirability or otherwise of the specific enforcement of the contract the learned Court non‑suited the appellant on the short ground that Hamayun Iqbal Sheikh was not competent to enter into the agreement which was not binding on respondent 1.

9. Respondent 2 purchased the property during the pendency of litigation between the appellant and respondent

1. Therefore, the plea of being a bona fide purchaser for value without notice of the A agreement, in view of the doctrine of lis pendens, is not available to it. The view formulated by the learned trial Court in this behalf is not open to exception.

10. Referring to Article 47 of the Articles of Association of respondent 1 company, the learned counsel for the appellant contended that the Managing Director of respondent 1, as Humayun lqbal Sheikh was, had full powers to make and sign the agreement contained in Exh.PW 3/2. Article 47 no doubt empowers the Managing Director to make and sign all contracts and to draw, accept, endorse and negotiate on behalf of the company all bills of exchange, promissory notes, hundis, cheques, etc. It seems that the attention of the learned trial Court was not drawn to this Article otherwise its view would have been different. Being possessed of the requisite powers Humayun Iqbal Sheikh was competent to enter into and execute the agreement in question. The finding to the contrary recorded by the learned trial Court cannot be endorsed.

11. It remains to be investigated and determined as to which of the contracting parties was not prepared to or did not perform its part of the contract. It has come to light from the evidence produced by the appellant, especially the ‑ deposition of Muhammad Hussain, managing partner of the appellant, P.W. 4, that respondent 1 had taken loan from the :Muslim Commercial, Bank, Sialkot, and had mortgaged the disputed property with it and that the property was burdened with a charge of about three or four lacs of rupees when the agreement of its sale, Exh.PW 3/1, was executed. Moreover, dues of the order of Rs.50,000 were payable in respect of the property to the Small Industries Department. Without the payment of the loan to the Bank and the dues of the Small Industries Department the property could not be sold nor could a sale‑deed be executed and registered in favour of the appellant and this fact the appellant knew. These outstanding amounts were to be paid under condition No.5 of the agreement by the appellant. Habib Bank Limited, Cantonment Branch, Sialkot, at the instance of the appellant assured respondent 1 that it stood surety to honour a cheque of Rs.2,00,000 issued in f'avour of respondent 1 by the appellant. However, the appellant subsequently withdrew the surety with the result that respondent 1 did not receive any payment. The appellant was aware that Muslim Commercial Bank had secured decree for the recovery of loan outstanding against respondent 1 and in execution of the decree had obtained order not only for the sale of the property but also for the arrest of Humayun lqbal Sheikh. Admittedly the appellant made no attempt to liquidate its liability in matter of payment of the Bank's loan and the Small Industries Department's dues. It is significant to note that Muhammad Hussain, P.W.4, admitted that he had purchased a plot in the Small Industries Estate after the execution of the agreement of sale of the property. He conceded that the value of the property in dispute had doubled. Respondent 1, it seems, had not enough money to pay up the Bank's loan and Small Industries Department's dues. Its debt to the Bank and dues of the Department were paid by respondent 2 in whose favour it sold the property. It was due to non‑fulfilment by the appellant of the most essential condition of the agreement; namely, payment of all outstanding dues in respect of the property, that the sale in its favour could not be finalized. The appellant is itself to be blamed for falling through of the agreement. Unreasonable delay in bringing the suit is an additional factor for denying the discretionary relief of enforcement of the contract of sale to the appellant. Consequently the dismissal of its suit is kept intact and the appeal is dismissed with costs. A. A. /A-400/L Appeal dismissed.