1994SCMR2189 (PLP)

Date of hearing: 11th July, 1994. SAEEDUZZAMAN SIDDIQUI, J.‑‑‑The above direct appeal under Article 185(2)(d) & (e) of the Constitution of Islamic Republic of Pakistan is filed against the judgment and decree dated 2‑12‑1991 passed by a Division Bench of Lahore High Court in R.F.A. No. 29 of 1984. The appellant entered into an oral agreement of sale with deceased Col. Muhammad Ismail (hereinafter to be called 'the deceased' only), the predecessor of respondent 1‑A to 1‑I, on or about 8‑6‑1975 in respect of House No. 29, Street No. 25, Sector F‑8/2, Islamabad, hereinafter to be referred to as 'the suit property only, for a consideration of Rs.3,00,

000. The appellant paid a sum of Rs.25,000 through cheque dated 8‑6‑1975 towards part payment of sale consideration. The balance of the sale price was agreed to be paid at the time of registration of the sale‑deed. On 15‑9‑1975 the appellant served a notice on the deceased alleging that he had failed to execute the sale‑deed as promised and thus committed breach of the agreement of sale and called upon him to pay a sum of Rs.50,000 being the double of the earnest money paid by her within 15 days from the date of receipt of this notice. Non‑compliance of the notice was threatened with initiation of legal proceedings against the deceased. On 1‑10‑1975 the deceased replied the above notice of the appellant and took the plea that the sale consideration of the suit property was fixed at Rs.6,00,000 and not Rs.3,00.00G as alleged by the appellant. It was further alleged in the notice that the balance of the sale consideration amounting to Rs.5,75,00p was to be paid by the appellant within 2 months, failing which the amount of earnest money was liable to be forfeited. It was claimed by the deceased that as the appellant had failed to pay balance of the sale consideration, the earnest money was forfeited and accordingly the demand of Rs.50,000 made by the appellant in her notice dated 15‑9‑1975 was refuted. This was followed by a notice dated 16‑10‑1975 sent on behalf of the appellant by A.K. Barohi and Co., Advocates, calling upon the deceased to specifically perform the oral agreement of sale and receive the balance of the sale consideration. The appellant claims that after receiving notice dated 16‑10‑1975 the deceased approached her and requested for increasing the sale consideration from. Rs.3,00,000 to Rs.3,65,000, which she agreed. It is also asserted by the appellant that accordingly a draft agreement of sale was sent to the deceased incorporating the enhanced sale consideration of the suit property which was corrected by the deceased in his own hand and thereafter a final agreement of sale was also drawn in accordance with the corrected draft which was signed by the appellant and sent to the deceased who, however, did not sign the same. The deceased in the meantime sold the property to respondent No.2 (Mrs: Nijat Begum) for a consideration of Rs.4,00,000 through an agreement of sale dated 28‑11‑1977. The plaintiff claimed that she became aware of the said sale when she received a letter from Ministry of Works informing the appellant that respondent No.2 has become owner of the suit property as a result of its sale in her favour by the owner. The appellant then sent another notice through A.K. Barohi & Co., on 14‑5‑1976 to the deceased threatening to commence the legal proceedings against the deceased. This was followed by the institution of civil suit before the Civil Judge, Islamabad, on 7‑9‑1976. The suit was resisted by the deceased as well as respondent No.2 and on the pleadings of the parties the trial Court framed the following issues:‑‑ (1) Is the suit competent in its present form? (2) Whether the predecessor‑in‑interest of defendants Nos.l‑A to 1‑I entered into a contract for sale with the plaintiff regarding the suit house? (3) Whether the plaintiff has been ready and willing to perform her part of the contract? (4) If Issue No.3 is proved whether the contract for sale can be specifically enforced? (5) Whether the defendant No.2 is a bona fide purchaser for value and consideration without notice and as such her rights are protected under section 53 of Transfer of Property Act? (6) Has the plaintiff no cause of action to bring the action in view of the fact that suit property was transferred to defendant No.2 by the C.D.A.? (7) Relief. " After recording evidence of the parties, the Civil Judge decreed the suit for specific performance in favour of the appellant. On appeal the learned Judges of the Division Bench reversed the judgment and decree of the Civil Judge and dismissed the suit for specific performance filed by the appellant. However, in respect of the alternate prayer for recovery of damages to the tune of Rs.2,60,000 with 13 per cent interest made in the suit, the learned Judges granted a decree for compensation to the extent of Rs.50,000 against the legal representatives of the deceased (respondents 1‑A to 1‑I). In support of this appeal, Mr. S.M. Zafar the learned counsel for the appellant, raised the following contentions:‑‑ (i) That the agreement of sale having been admitted, the part of the sale consideration having been received by the vendor and the appellant being in possession of the suit property in part performance of the contract of sale, she was entitled to the decree of specific performance against the respondents; (ii) that the novation in the contract of sale between the appellant and the deceased related only to the price of the property which was enhanced from Rs.3,00,000 to Rs.3,65,000 and therefore specific performance could be ordered on the basis of the enhanced sale consideration agreed to be paid by the appellant for the suit property; (iii) that the respondent No.2 having purchased the property with notice of the agreement of sale between appellant‑and deceased, was bound to, convey the property in favour of appellant; (iv) that the appellant at no stage abandoned the relief of specific performance and that the learned Judges of the High Court erred in holding that the notice Ex11.P‑7 dated 15‑9‑1975 amounted to abandonment of the contract. The learned counsel for the respondents supported the judgment and decree of the High Court and jointly contended that respondent No.2 was a bona fide purchaser for valuable consideration arid that she had no notice of the alleged agreement of sale between the appellant and the deceased. It is also contended by the learned counsel for the respondent that mere payment of Rs.25,000 by the appellant to the deceased, without specifying the sale consideration and other terms and conditions of sale, did not constitute a valid agreement of sale capable of being enforced specifically. The learned counsel for the respondents further contended that the appellant, on her own showing had abandoned the original alleged contract of sale by substituting it with a new contract which she failed to prove and as such there was no agreement of sale in existence which could be specifically enforced in the case. The learned counsel for the respondents very vehemently argued that the appellant having herself claimed Rs.50,000 by way of compensation for the breach of the contract was not entitled, to claim the relief of specific performance. We have heard the learned counsel for the parties at length and our conclusions are as follows. The first question which requires determination in the case is whether there was any concluded contract between the appellant and the deceased? The admitted position in the case is that the original agreement between the appellant and the deceased was an oral agreement. According to the appellant, the sale price of the suit property was settled at Rs.3,00,000 and she paid a sum of Rs.25,000 by way of advance to the deceased agreeing to pay the balance price on the completion of the sale in her favour. The deceased admitted receipt of Rs.25,000 through a cheque from the appellant for sale of the suit property but claimed that the sale consideration was settled at Rs.6,00,000 and not Rs.3,00,000 as alleged by the appellant. The appellant further alleged that after service of the notice dated 16‑10‑1975,‑through her counsel the parties agreed to enhance the price of the suit property from Rs.3,00,000 to Rs.3,65,

000. The trial Court as, well as the learned Judges of the High Court reached the conclusion that the deceased could not establish that the suit property was agreed to be sold to the appellant for Rs.6,00,

000. However, the trial Court accepted the plea of appellant that after service of notice dated 16‑10‑1975, the deceased agreed to convey the property against enhanced sale consideration of Rs.3,65,000., The learned Judges of the High Court did not agree with the above findings of the trial Court and held that the appellant could not prove that the deceased had agreed to sell the property against enhanced sale consideration of ks.3,65,

000. However, both the Courts below held that there was an agreement of sale between the appellant and the deceased for sale of the suit property against the sale consideration of Rs.3,00,000 and the deceased had received a sum of Rs.25,000 by way of earnest money. The learned Judges of the High Court while considering this aspect of the case, observed as follows:‑‑ "

8. It will be noticed that while receipt Exh.P‑1 was silent as to the sale price, Exh. P‑7 mentions it to be rupees three lacs whereas Exh. P‑8 reveals that it was rupees six lacs. It became a moot point. The respondent sought support from the testimony of P. W.1 Mr. S. P. Raza, Advocate who being a witness to the receipt Exh.P.‑1, no doubt, testified that the sale price agreed upon between the parties was rupees three lacs. The vendor died before he could possibly make a similar statement on oath showing that the price was rupees six lacs, nor had his legal representatives been left with any interest in making any testimony whatsoever about it. Although P.W.1 was cross‑examined, yet no particular question was put to him if the price was ks.600,000, as was claimed by the deceased vendor in his reply Exh.P‑

8. Thus, there was no reason to ignore the deposition of the aforesaid witness and believing the same one could come to the conclusion that the price initially agreed upon between the parties. was rupees three lacs." The learned counsel for the respondents, however, argued that there was no satisfactory evidence on record to reach the conclusion that there was any concluded contract between the parties in respect of the sale of the suit property by the deceased in favour of the appellant. The learned counsel for the respondents argued that according to Exh_P‑1 which is the only document in support of the alleged sale agreement, only a sum of Rs.25,000 was paid by the appellant to the deceased but neither the sale consideration of the suit property nor other terms and conditions of sale are ascertainable from this document. It is accordingly, contended that such a document did not constitute a valid agreement of sale capable of being enforced specifically. The argument of the learned counsel for the respondents overlooked the fact that the appellant had not relied on Exh.P‑1 as the agreement of sale between her and the deceased. The appellant's case, throughout, was that the agreement of sale between her and the deceased was oral and she tendered the receipt Exh.P.l in evidence to prove payment of part of sale consideration in pursuance of the oral sale agreement. Therefore, absence of the details of the other terms and conditions of. sale in Exh.P.1 were of no significance and the appellant was entitled to prove the terms of sale by leading oral evidence in the circumstances of the case. The learned counsel for the respondents are unable to point out any provision of law or precedent which prohibited an oral agreement to sell of an immovable property. The trial Court as well as the learned Judges of the High Court while dealing with the question of existence of agreement of sale between the appellant and the deceased relied on the evidence of Mr. S.B. Raza, Advocate, who was a disinterested and independent witness, and categorically stated before the Court on oath that the sale price was settled as Rs.3,00,000 and out of this agreed sale consideration a sum of Rs.25,000 was paid towards part payment of the consideration through a cheque which was duly received by the deceased. This witness was a marginal witness of the document Exh.P.I and the 2 Courts below have relied on the evidence of this 8 witness to hold that there was an agreement of sale between the appellant and the deceased to convey the suit property in favour of the appellant against the consideration of Rs.3,00,

000. This concurrent finding of fact by the two Courts below is neither contrary to the evidence on record nor suffers from any misreading of the evidence. We, therefore, find no substance in the contention of the respondents that there was no concluded agreement of sale between the parties in respect of the suit property which could be specifically enforced. The next point which requires consideration in the case is, as to what is the effect of novation of the contract alleged by the appellant on the original agreement of sale entered into between her and the deceased? The learned Judges of the High Court after analysing evidence in the case reached the conclusion that although the appellant had alleged that she had agreed to enhance the sale consideration from Rs.3,00,000 to Rs.3,65,000 which was accepted by the deceased, who made correction in his own hand in the draft agreement of sale sent to him; but there was nothing in the evidence to show that , the proposed novation of the contract was assented to by the deceased. The learned Judges of the High Court while dealing with the question of novation of contract and enhancement of the price by mutual consent from Rs.3,00,000 to Rs.3,65,000 as well as the claim of the deceased that the sale price of the suit property was fixed at Rs:6,00,000 and not Rs.3,00,000 observed as follows:‑‑ "The respondent's version was that the deceased vendor himself had made a number of alterations in the draft Exh.P.10 in his own hand and, therefore, the same constituted sufficient evidence of the demised agreement. The record disclosed that this document was not initially tendered alongwith the plaint. To the contrary, it was placed upon the record as late as 10‑3‑1982, subject to an objection raised by the appellants in regard to its admissibility as also relevancy. With this clear reservation it was placed on the file but there appears to be no order by the Court disposing it of finally. It was not shown before us as to how it could have been admitted without a specific order of the Court giving reasons for its late admission. The provisions of Order 13, rule 2, C.P.C., are quite clear requiring a Court to always give reasons for allowing a document not produced at the first hearing of the suit. Further it was tendered on a date when the vendor had already died. By then it was not possible to confront him with the so‑called alterations made by him therein nor was any attempt made to get them proved through any expert. In this background, relying merely upon the oral statement of a subordinate official like P.W.4 who incidentally happened to be present in the room of the respondent would, indeed, be not safe. The other witness of the event was the respondent's own son‑in‑law Major Imran, who was not examined. Speaking for myself, I feel that the innovated contract stipulating Rs.3,65,000 as price of the house was not established, nor was the vendor's claim fixing the price at rupees six lacs (as in Exh.P.8) correct. The added reason for holding so was that the, deceased charged only rupees four lads from the subsequent vendee. It clearly suggested that he was trying to bargain with the respondent who might have allowed an additional amount of Rs.65,000, but there was no tangible proof for holding that the deceased had agreed to accept it. A contract could come into existence if both the parties agree to the same terms in the same sense. The principle of ad idem contained in section 13 of the Contract Act makes such consensus on the part of the promisor and the promisee essential. Accordingly, even if the respondent one‑sidedly agreed to pay Rs.3,65,000, in the absence of the vendor's acceptance, the novation was not established." In view of the above finding of the learned Judges of the High Court, which is not challenged before us by the respondents and which otherwise does not suffer from any infirmity, we are of the view that the allegation of the appellant that the deceased had subsequently agreed to convey the suit property in favour of appellant at an enhanced sale consideration of Rs.3,65,000 remained unsubstantiated. However, a further question then arises as to whether in view of the novation of original agreement of sale pleaded by the appellant which she failed to prove, she was still entitled to enforce the original agreement of sale between her and the deceased. The learned counsel for the respondents contended that by pleading novation of contract the original agreement of sale stood superseded and substituted by the new contract and as the appellant failed to prove the novation of the original agreement of sale, there was no valid agreement of sale in existence in respect of the suit property between appellant and the deceased which could be enforced specifically. The contention does not appear to be correct. No doubt appellant pleaded that subsequent to the service of notice dated 16‑10‑1975, the deceased had approached her and requested for enhancement of the sale consideration of the suit property from Rs.3,00,000 to Rs.3,65,000 which she accepted and the deceased agreed to convey the property against the sale consideration of Rs.3,65,000 but she failed to prove the novation of the original sale agreement. However, from this, it did not follow that the original, agreement between the parties stood abrogated and became unenforceable. Section 62 of the Contract Act which deals with the effect of novation, rescission and alteration of contract, reads as follows:‑‑ "

62. Effect of novation, rescission and alteration of contract.‑‑If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. " The above provisions make it clear that if the parties to the contract agree to substitute a new contract in place of the original one, then the original contract need not be performed. Therefore, performance of original agreement between the parties is dispensed with only where the parties to the contract agree to substitute the original contract by a new contract. However, where only one of the parties to the contract alleges novation or alteration in the original contract but fails to establish the same, then mere allegation of novation in the original contract by one of the parties to the contract does not absolve the parties to the original contract from obligation to perform the original contract. The parties can only be relieved from performance of the original contract if they have. by mutual consent substituted a new contract in place of the original one. In the present case, both the Courts below concurrently held that the appellant failed to establish the novation of the original contract pleaded by her: From this, however, it could not follow that the original contract between the appellant and deceased stood superseded or abandoned on account of novation pleaded by the appellant. We are, therefore, of the view that although the appellant failed to prove that the deceased had subsequently agreed to convey the suit property to appellant at an enhanced sale consideration of Rs.3,65,000 the original agreement of sale between the parties was not superseded or came to an end on account of failure on the part of appellant to prove .novation of original agreement of sale. The next point for consideration in the case is, whether the appellant by serving the notice dated 15‑9‑1975 abandoned her right for specific performance of the agreement of sale? The contention 'of the appellant is that the sum of Rs.50,000 was claimed by her in the notice dated 15‑9‑1975 on account of default on the part of deceased to perform the agreement of sale, in addition to the relief of specific performance which she was entitled to claim under the law. The learned counsel for the respondents on the other hand contend that while demanding the sum of Rs.50,000 through notice dated 15‑9‑1975, the appellant neither reserved her right for specific performance of the agreement nor she stated in her above notice that the sum of Rs.50,000 was demanded in addition to her right to claim specific performance which she was entitled to under the law. It is, accordingly, contended that these facts clearly established that the claim of Rs.50,000 made by the appellant in her above notice was in substitution for the claim of specific performance and as such the appellant vas disentitled to the relief of specific performance in the case. Notice dated 15‑9‑1975 served by the appellant on the deceased reads as follows:‑‑ "I, Mrs. Mussarat S. Ali d/o Mian Nizatn‑ud‑Din resident of Brig. No. 29, Street 25, Sector F‑8/2, Islamabad, serve upon you (Col. Muhammad Ismail s/o Faqir Muhammad, resident of 13‑D, Satellite Town, Rawalpindi) with notice as under:‑‑ (1) That on Friday, 14th March you negotiated with in e the sale of your Bungalow No. 29, Street No. 25, Sector F‑8/2, Islamabad, consisting of 4 bedrooms on 1,244 sq. yards and you had agreed to sell the said Bungalow for Rs.3.00,000 (Rs. three lacs). (2) That you had received Rs.25,000 as earnest money in advance vide my Cheque No. CCB73256 dated 8‑6‑1975, drawn on Habib Bank Ltd. Secretariat Branch, Islamabad. In token of receipt of earnest money (part payment) you had written and signed on stamped judicial paper after being informed by your banker that the said amount As.25,000 had been realized in your account. In negotiation you took the liability to sign the sale‑deed and get balance of remaining amount, including liabilities such of any loan taken or dues of any department outstanding against title of this plot within period of one month mutually agreed upon. (3) That I have been calling on you personally and sending messages by all possible means to and complete the sale‑deed but you failed to fulfil your promise and did not turn up till yet for needful. (4) That you are defaulter for not completing the sale‑deed intentionally and wilfully for which you must pay Rs.50,000 (Rs. Fifty thousand) only the double of earnest money within fifteen days from the date of receipt of this notice. I hereby preserve rights to file suit in the Court at your risk and cost, in the event of non‑receipt of Rs.50,000 within prescribed limit of time. A copy of this notice is retained for my record." From reading of the above notice, it does not appear that the appellant while demanding the sum of Rs.50,000 on account of alleged default committed by the deceased in performing the contract of sale made the demand of damages by way of substitution for the relief of specific performance of the contract. In any event, in reply to appellant's notice dated 15‑9‑1975 the deceased not only refuted the claim of the appellant for ks,50,000 as false and fictitious but he also raised the plea that the non‑performance of the contract was on the part of the appellant who had failed to pay the agreed consideration of Rs.6,00,000, in respect of the suit property within the stipulated period. We have already reproduced earlier the relevant portion of the discussion by the High Court on the plea of the deceased that sale price of the property was settled at Rs.6,00,

000. The learned High Court observed that there was no reliable evidence on record to reach the conclusion that the sale price of the suit property was settled at Rs.6,00,

000. Immediately on receipt of the notice of the deceased dated 1‑10‑1975 wherein he had alleged that the sale price of the suit property was settled at Rs.6,00,000 and not Rs.3,00,000 the appellant served a notice dated 16‑10‑1975 through A.K. Brbhi & Co., Advocates, calling upon the deceased to specifically perform the contract in respect of the suit property. Reading the notice of the appellant dated 15‑9‑1975 alongiwth reply of the deceased dated 1‑10‑1975 and further notice dated 16‑10‑1975, it cannot be said that the appellant had abandoned the relief of specific performance or that the sum of Rs.50,000 was claimed by her in substitution for the relief of specific performance. Even otherwise if the notice dated 15‑9‑1975 created any impression that the appellant had abandoned the relief of specific performance it was sufficiently dispelled by service of subsequent notice dated 16‑10‑1975, on the deceased through her counsel in which she unequivocally asserted right to claim specific performance of the agreement of sale 'Therefore, after 16‑10‑1975, the deceased had clear notice that the appellant was claiming the right of specific performance of the contract in addition to the claim of damages of Rs.50,000 on account of alleged breach of contract by the deceased. Section 19 of the Specific Relief Act clearly provides that a person suing for specific performance of a contract may also ask for compensation for its breach either in addition or in substitution for relief of specific performance. The evidence on record in the circumstances of the case did not show that the sum of Rs.50,000 was claimed by the appellant in her notice dated 15‑9‑1975 in substitution for the relief of specific performance or that 'by claiming the sum of Rs.50,000 she intended to abandon her right to enforce the sale agreement specifically against the deceased. The learned Judges of the High Court relying 'on the observations made by Allahabad High Court in the case of Hari Krishna Agarwala v. K.C. Gupta (AIR 1949 Allahabad 440) reached the conclusion that as in the notice served by the appellant on the deceased the words ' without prejudice' were not used the claim of the double of the amount of earnest money paid by her was clearly a compensation for not claiming relief of specific "O performance. We are unable to agree with the above reasoning of the learned Judges of the High Court. Firstly, the facts of Allahabad case (supra) are quite distinguishable and had no application to the facts of the present case. In that case the vendee had made a conditional offer to the vendor to accept a specified amount for non‑performance of the agreement of sale provided the offer is accepted by the vendor within a specified time and the amount was paid to vendee This offer was mace by the vendee without prejudice to his other rights. The vendor in that case did not accept the offer. Therefore, at the trial when the plea of abandonment of relief of specific performance was raised it was repelled by the Court. No such facts arise in the present case. Therefore, the inference drawn by the learned Judges that on account of absence of expression 'without prejudice‑ in the notice dated 15‑9‑1975, the appellant shall be deemed to have abandoned or given up her right of specific performance was not at all justified in the circumstances of the case. The plea of abandonment of the right to obtain specific performance was to be decided taking into consideration the conduct of the party and the evidence on this point. There is neither any thing‑ in the conduct of appellant nor in the evidence of the parties to show that appellant had given up her right to sue for specific performance. In fact that heirs of the deceased led no evidence to show that appellant had abandoned her right to claim specific performance. The appellant under the law was not only entitled to sue for, specific performance but was also well within her right to ask for compensation either in addition or in substitution of the relief of specific performance. The appellant, therefore, had the right to claim compensation in addition to the relief of specific performance. The appellant, no doubt, in her notice dated 15‑9‑1975 while demanding Rs.50,000 did not mention that the above amount claimed by 4ter was either in addition to or in substitution of the right of specific performance but immediately on receipt of the reply to her above notice from the deceased she made it clear that she had not abandoned the relief of specific performance in the case. After considering the entire evidence in the case, we are unable to agree with the learned Judges of the High Court that there was abandonment of the relief of specific performance of the contract by the appellant when she claimed a sum of Rs.50,000 being the double of the earnest money on amount of breach of the contract from the deceased in her notice dated 13‑9‑1975. The learned counsel for the respondents also placed reliance on an unreported case of Bilal Ahmed Malik v. Mst. Amtul Huseen (Civil Appeal No. 855 of 1990), decided on 21‑11‑199, (1,994 SCMR 2075) to contend that in the case the relief of specific performance was denied by this Court as the appellant had himself in similar circumstances at one stage of the proceedings claimed a specific amount by way of compensation from the vendor. The facts of the above unreported case, are however, quite distinguishable. In the above unreported case, the appellant had agreed with respondent No.l in that case to purchase property measuring 12 Kanals in the city of Lahore at the rate of Rs.42,000 per Kanal with building constructed thereon, on (r8‑1971. At the time the agreement of sale was executed between the parties, a sum of Rs.30,000 was paid by way of advance and balance amount was agreed to be paid at the time of registration of the sale‑deed. A further sum of Rs.20,000 was paid to the vendor on 5‑4‑1972. The property, at the time it was agreed to be sold to the appellant, was occupied by Local Government, Social Welfare Department, who were tenant of the vendor and the agreement of sale provided that the vendor would, convey the property to the appellant alongwith vacant possession of the property. The vendor after execution of the agreement of sale tried her best to obtain vacant possession of the property but failed. In the meantime the, Government decided to purchase this property and accordingly the Collector pf Lahore District was asked by the Government to issue notification under section 4. of the Land Acquisition Act in respect of that property. A notification under Land Acquisition Act was accordingly issued on 17‑5‑1973 and thereafter through negotiation, the property was sold by the vendor to the Government of Punjab for a sum of Rs.7,00,

000. It was contended by the vendor that before completion of sale in favour of the Government the contract between her and the appellant was terminated which was denied by the appellant. In the above‑stated background, the appellant served a notice dated 13‑8‑1973 on ‑ the vendor before institution of Civil Suit for specific performance in which he only claimed damages which included return of Rs.50,p(10 paid as advance with interest at prevalent rate, Rs.2,00,000 received by the vendor in excess of the agreed sale consideration from the subsequent vendee and Rs.10,00,000 as damages which were estimated on the basis of benefits which would have arisen to the appellant if the sale was completed as agreed. It was in these circumstances held in that case that the damages claimed in the notice immediately preceding the institution of the suit for specific performance, were in substitution for the relief of specific performance. It was also found in that case that in the agreement of sale between the appellant and the vendor, the appellant had the option to ask for specific performance of the contract without insisting for vacant possession but he never exercised this option and all along insisted for performance of the contract by delivery of the vacant possession which was not possible in that case. In the present case after service of notice dated 15‑9‑1975, the appellant in reply to the notice of the deceased (vendor) dated 1‑10‑1975, asserted the right to claim relief of specific performance in her notice dated 1‑10‑1975 sent through her counsel which was served before institution of the suit and sale of the property to respondent No.2. Therefore, facts and circumstances of the present case are quite distinguishable from the facts of unreported case relied by the learned counsel for the respondents. We are, therefore, inclined to hold that by serving notice dated 15‑9‑1975 the appellant did not give up her right for specific performance of the agreement of sale entered into between her and the deceased. The next question for consideration in the case is, whether respondent No. 2 was a bona fide purchaser for valuable consideration without notice of the agreement between the appellant and the deceased? The learned counsel for the appellant contended that the appellant being in possession of the suit property respondent No. 2 was bound to enquire about the nature of the possession of the appellant over the property in suit at the time of entering into the agreement of sale with the deceased. The learned counsel for the appellant pointed out that in her evidence before the Court, respondent No.2 admitted that before execution of the sale‑deed she never met the appellant or made enquiries with regard to nature of her possession over the suit property: It is accordingly contended by the learned counsel that even if it is assumed that respondent No. 2 had no actual notice of the existence of agreement of sale between the appellant and the deceased in respect of the suit property she shall be deemed to have a constructive notice in view of Explanation II to the expression "a person is said to have notice in section 3 of Transfer of Property Act. (For the sale of convenience, we will hereinafter refer the above expression and the Explanation II in section 3 of the Transfer of Property Act, as "the expression" and "Explanation II to section 3" respectively). The Explanation II to section 3 relied by the learned counsel for the appellant reads as follows:‑‑ "Any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof. " Relying on the Explanation II in section 3, Mr. S.M. Zafar, the learned counsel for the appellant contended that respondent No. 2 shall be deemed to have notice of the existence of the agreement of sale between the appellant and the deceased under the law and as such she was bound to convey the property to the appellant It is also contended by the learned counsel that in the circumstances of the case, very heavy burden lay on respondent No. 2 to show that she had no notice of the existing agreement between the appellant and the deceased, which she failed to discharge. The learned counsel for respondent on the other hand contended that respondent No. 2 and her son Tariq Akbar in their evidence before the Court categorically stated on oath that they had no notice of the agreement of sale between the appellant and the deceased before purchasing the suit property and as such the burden was shifted on the appellant to show that the respondent No. 2 had the notice of the said agreement, which the appellant miserably failed to discharge. The learned Judges of the High Court while dealing with this issue observed as follows:‑‑ "The proposition that physical possession even as tenant is notice to all intending purchasers was quite sweeping. No doubt, Explanation to section 3 of the Transfer of Property Act so provides, but unreserved acceptance thereof would render the definition of the expression a person is said to have notice' given in the earlier part of the same section, totally redundant. The definition envisages that a person would have notice of a fact when he actually knows that fact, or when, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it. The one imputes an ipso facto notice of the occupant's interest, but the other, contrarily, visualises "an inquiry or search" about his interest in the property. The apparent inconsistency between the two, namely, one providing for an inquiry and the other dispensing with it, needs to be respired or else the consequence of making one of them redundant will ensue. It will be in this context that a reference could be made even to the provisions of section S3‑A of the Transfer of Property Act, which had been introduced by the same amending Act, namely, the Transfer of Property. (Amendment) Act, 1929 (20 of 1929). This also deals with notice on the part of the subsequent purchaser of any prior contract. It refers to a transferee being already in possession and provides that if he continues in such possession, he must have done some act in furtherance of the contract. The genesis' for doing some thing more in furtherance of the contract lay in the principle that it should serve as notice to all others. Conversely, in the absence of doing any such act, the presumption would be that the transferee already in possession continued availing the same in a different capacity, say as tenant or so, suggesting thereby that a subsequent vendee would have no notice of his new title. I am conscious of .the fact that section 53‑A in terms relates to a contract made in writing, signed by the transferor and not to an oral contract pressed in this case. I think this distinction may not detain us from insisting upon doing something in part performance so as to serve a notice to all subsequent purchasers. If it is an indispensable requirement in case of ' a written agreement, the oral agreement may not be put on a better footing to do it away. It is a salutary rule making things clearer to all purchasers. Otherwise, it might involve an arduous practice for each succeeding purchaser to make a queue upon the person in possession in order to know what precise interest he may be having in the property physically occupied by him. At the same time, an uncanny occupant might blackmail tile owner. Public convenience, on the outer hand, demands that he should do something by himself in order to operate as a warning to all those who intend to purchase the property over and above his interest." We are unable to subscribe to the above reasoning of the learned Judges. If a. property sold is in occupation of the vendor, the onus to prove that the purchaser had no notice of the prior agreement of sale between the vendor and a third party is normally discharged, if the subsequent purchaser appears before the Court and states on oath that he was unaware of the previous agreement of sale between the vendor and the third party. The onus in such a case to prove that the subsequent purchaser had the notice of earlier agreement of sale between vendor and the third party then shifts on the person who has prior agreement of sale in his favour. However, where the property sold is not in possession of the vendor but .is occupied by a third party, the burden of proving that the subsequent purchaser had no notice of the earlier agreement of sale between the vendor and third party cannot be discharged by mere appearance of the subsequent purchaser before the Court and making a statement on oath that he had no notice of the earlier agreement of sale between vendor and the third party, in view of Explanation II to section

3. Explanation II to section 3 embodies the well‑known principle, that possession is a prima facie title to the property and declares that where a person acquires an immovable property he shall be deemed to have notice of the title, if any, of the person for the time being in possession of that property. To us there appears to be no inconsistency between the expression and the Explanation II to section

3. The expression states the circumstances in which a person shall be, deemed to have the actual notice of a fact. These circumstances are; (i) when e actually knows that fact, or (ii) when on account of wilful abstention from making inquiry or search which he ought to have made or but for his negligence he would have known it. The expression deals with the conditions necessary td show the actual notice of a fact to the party while the Explanation II to section 3 refers to the constructive notice to a purchaser of immovable property of the title of a person for the tithe being in actual possession, of the property. The expression and the Explanation II to section 3 therefore, deal with two different situations and they are to be read independently. There is no justification to tread in Explanation II to section 3, the conditions necessary to constitute the actual notice of a fact to a party under the expression. We are therefore, of the view that if the subsequent transferee of an immovable property acquires it without snaking any inquiry as to the title of the person in possession, he takes the property subject to the rights and title of the person in possession. In the case before us, the appellant was admittedly in possession of the suit property at the time respondent No.2 purchased the same from the deceased. There is nothing in the evidence led by respondent No.2 that she made any inquiry with regard to the nature of the title of appellant although she was in possession of the property. Respondent No.2 (D.W.2) and her witness Tariq Akbar (D.W.1) categorically stated in their evidence before the Court that they met the appellant for the first time after purchase of the house. Appellant in her evidence before the Court stated as under:‑‑ Tariq Akbar (D.W.'1) in his cross‑examination admitted that his deceased father and Sheikh Muhammad Said (D.W.3) an estate broker had together contacted C.D.A. office before purchasing the house. Although Tariq Akbar and respondent No.2 denied in their evidence that they had either met the appellant or had gone to see the property in suit before purchasing the same, but D.W.3, Sheikh Muhammad Said in his evidence before the Court made the following statement:‑‑ The learned Judges of the High Court while deciding the issue regarding notice. of the previous agreement of sale to respondent No.2 did not advert to the above important piece of evidence on record which had direct bearing on the issue. The fact that the appellant failed to prove that she was in possession of the suit property in part performance of the agreement of sale, did not matter as possession of a person over immovable property envisaged by Explanation II to section 3 does not refer only to the possession obtained in part performance of the agreement of sale. The expression "person who is for the time being in actual possession thereof" in Explanation II to section 3 is wide enough to include actual possession of a lessee, tenant, licensee, trespasser or actual possession under any other title. The learned Judges of the High Court while dealing with this issue came to the conclusion that before purchasing the suit property, the deceased husband of respondent No.' alongwith property dealer Sheikh Muhammad Said (D.W.3) had gone to the office of C.D.A. to check the title of the deceased in respect of the house which sufficiently discharged the burden with regard to inquiry about the title of the possession of the appellant over the suit property. With respect to the learned Judges, there is nothing in the evidence led by respondents in the case to show that they made any inquiry with regard to nature of the possession of the appellant over the property before purchasing the property in suit. The inquiry in the C.D.A. made by respondent No .2 through her deceased husband could not reveal the nature of the possession or title which the appellant claimed over the property. The record of C.D.A. would only show the nature of the title of the deceased who was the allottee from the C.D.A. According to the evidence of Sheikh Muhammad Said (D.W. 3) the appellant was present at the time of visit of respondent No.2 alongwith her husband and the estate broker Sheikh Muhammad Said to the said property. Respondent No.2 for obvious reasons concealed her visit to the suit, property alongwith her husband and the estate broker Sheikh Muhammad Said while deposing in the Court. In this state of evidence on the issue, we are of the view that respondent No.2 failed to discharge the burden that she was a bona fide purchaser of the suit property without notice of the earlier agreement of sale between the appellant and the deceased. The last contention of the learned counsel for the respondents is that the grant of relief of specific performance is discretionary, and in the circumstances of the case, the relief of specific performance cannot be granted. It is contended by the learned counsel for the respondents that according to appellant's own showing the contract was to be performed within one month and as the appellant was responsible for the breach of the contract, she was not entitled to the specific performance in the case: It is true that grant of relief of specific performance is discretionary with the Court but this discretion cannot be. exercised arbitrarily. The relief of specific performance being an equitable relief, it can be refused by the Court only if the equities in the case are against the plaintiff. The Court while refusing to grant a decree for specific performance to a plaintiff must find some thing in the conduct of plaintiff which disentitled him to the grant of equitable relief of specific performance, or the Court reaches the conclusion that on account of delay in seeking the relief, the circumstances have so materially changed that it would be unjust to enforce the agreement specifically. The specific performance of a contract cannot be refused merely because it is lawful for the Court to refuse it. Section 22 of the Specific Relief Act, though not exhaustive provides some instances in which the specific relief of a contract may be refused by the Court in its discretion. The learned counsel for the respondents have opposed the grant of specific relief mainly on the ground of delay, abandonment of the relief of specific performance by appellant, and novation of the original contract which the appellant failed to prove. We have, already dealt ,with at length the arguments relating to abandonment of the relief of specific performance by the appellant and effect of novation pleaded by the appellant and these need no be repeated here again. We would, therefore, consider here whether the appellant lost her right to enforce the specific performance of the agreement of sale on account of delay on her part. It is open to the parties while entering in the agreement of sale in respect of an immovable property to provide that the time for performance of the agreement will be treated as essence of the contract. In such cases, if the party seeking enforcement of the contract is shown to be in breach of the contract, the Court may in appropriate cases refuse to enforce the contract. It is, however, well‑settled law that in the absence of a provision in the agreement to sell an immovable property that the time fixed for performance of the contract is to be treated as the essence of the contract, the time fixed for performance of the contract is not treated as the essence of the contract. Therefore, specific performance of an agreement of sale relating to immovable property can be granted by Courts even after expiry of the period fixed in the contract. (See Seth Essabhoy v. Saboor Ahmed PLD 1973 SC 39). It may also be mentioned here that where the parties have not treated the date fixed for performance of the contract relating to immovable property as the essence of the contract at the time of entering into the agreement, subsequently, one of the parties to the contract cannot unilaterally make the time as the essence of the contract (see Abdul Hamid v. Abbas Bhai, PLD 1962 SC 1). In the case before us, the appellant in her evidence stated that the deceased had undertaken to complete the contract within one month. It is an admitted position that at the time the agreement of sale was entered into, the completion certificate in respect of the house was not issued in favour of the deceased by the C.D.A. and the property was mortgaged with the House Building Finance Corporation (H.B.F.C.). It is, therefore, quite natural that certain preliminary steps were to be taken by the deceased before final sale Could be executed in favour of the appellant in respect of the suit property. There is no evidence on record to show that after receiving the sum of Rs.25,000 from the appellant towards sale of the suit property, the deceased took any step or informed the appellant that all formalities were completed and she should get the property transferred in her favour. The appellant in her evidence categorically stated that after receiving the payment of Rs.25,000 she was ready and willing to perform her part of the contract but the deceased did not turn up to complete the sale. The first payment of Rs.25,000 was made by the appellant on 8‑6‑1975 and on 15‑9‑1975 she served a notice alleging breach on the part of the deceased to fulfil the contract. The deceased in his reply dated 1‑10‑1975 stated that the amount was to be paid within 2 months and he claimed that the sale consideration was fixed at Rs.6,00,000 and not Rs.3,00,000 as claimed by the appellant. The deceased, however, refused to perform the contract. This was followed by a notice dated 16‑10‑1975 calling upon the deceased to fulfil the agreement of sale failing which a suit for specific performance was to be instituted against him. The appellant thereafter attempted to persuade the deceased to accept enhanced sale consideration of the suit property but failed. The property in suit was in the meantime transferred to respondent No.2 on 26‑5‑1976 and immediately thereafter a civil suit was filed for specific performance of the agreement of sale. No evidence was led in the case on behalf of the deceased that the time fixed for completion of the contract was of the essence of the contract and that on account of non‑performance of the contract within the stipulated time it became inequitable to enforce the contract specifically against him. The facts on record on the contrary show that there was no inordinate delay on the part of the appellant to disentitle her to claim the relief of specific performance. In the case of Ghulam Nabi v. Muhammad Yaqub (PLD 1983 SC 344) which related to specific performance of an agreement of sale of immovable property, this Court while considering the consequences arising out of inaction of a vendee to enforce the agreement of sale, it was observed as follows:‑‑ "

13. The question now arises as to what is the starting point for the limitation, i.e., 25‑1‑1962 or 14‑9‑1962. Learned counsel for the appellants, while maintaining that the extension of time allowed by Sh. Fazal Elahi not having been availed of by the plaintiff, the starting point remained 25‑1‑1962, also contended that a party whose conduct did not justify the grant of the discretionary relief of specific performance, particularly when change of conditions had been brought about on that account, could be non‑suited even though the period of limitation had not yet expired. Reliance was placed on Lekh Singh v. Dwarka Nath (AIR 1929 Lah. 249) where it had been held that even if mere delay does not disentitle a plaintiff to claim specific performance of a contract, nevertheless delay is one of the factors to be considered in giving the discretionary, relief and inordinate and unexplained delay coupled with the change of conditions is a sufficient ground for refusing specific performance. The view had been followed though not in an unqualified manner in Muhammad Wazir v. Jahangiri Mal (AIR 1949 Lah. 72) and it had been held that where a statute of limitation imposes a bar, mere inaction by a claimant within the time allowed by the statute cannot be treated as evidence that he has waived or abandoned his right, but on the other hand where a claimant knows that a party against whom he has a claim is altering his position in the belief that the claimant has abandoned or will not enforce his claim and even then, the claimant does nothing, his inaction may bar his claim for specific performance even within the period of limitation. Ordinarily, the rule is that a party cannot be non‑suited for mere laches when the period of limitation is yet to expire. In Suryaprakasarayudu v. Lakshminarasimhacharyulu (AIR 1914 Mad. 462) it was held that as mere laches or delay short of the period of limitation is not always evidence of waiver or abandonment of claim, even where it is up to the hilt of the limitation period, that is no ground for refusing specific performance. See also Osmond Beeby v. Khitish Chandra (AIR 191 Cal. 13). In the matter of relief by way of specific performance, they latter Court had in Kissen Gopal Sadaney v. Kally Prosonno Set (ILR 33 Cal. 633) held that the delay which is short of the period prescribed by Limitation Act and which is not of such a character as to give rise to an inference of abandonment or right is no bar to a suit for specific performance unless it is shown to have prejudiced the defendant. This view had been followed in Mst. Ratulan v. Nittna' Das (AIR 1918 Patna. 630) which was again a case of specific performance and it had been held that the failure of the plaintiff to obtain compulsory registration of the deed in his favour is not of itself sufficient to prove abandonment. The Lahore High Court had in Allah Ditta v. Janina Das (AIR 1929 Lah. 679) held that in no case does mere lapse of time deprive the plaintiff of his right to specific performance, unless it be held that there has been abandonment, acquiescence or waiver, or at the least, an alteration in the position of the defendant in that the other party has been put in a situation in which it would not be reasonable to place him, if the remedy were afterwards to be asserted. " In view of the above‑discussed position, delay simpliciter which is short of period of limitation prescribed under the law, is not enough to disentitle a plaintiff to the relief of specific performance. However, if the delay gives rise to inferences of abandonment or waiver of the contract on the part of vendee, or the vendor on account of delay changes his position in which the vendee acquiesced, the specific performance may be declined on equitable considerations. There is nothing in the evidence in the present case to show that the appellant had either given up her right to enforce the specific performance of contract or that she unduly delayed assertion of right to claim specific performance with the result the deceased changed his position creating third party's interest and the appellant acquiesced into it. In fact, the heirs of the deceased led no evidence in this behalf. The evidence led by the appellant in this behalf shows that she all along asserted her right to get the property. The fact that the appellant alleged novation of the contract which she failed to prove did not in any way prejudice her right to claim specific performance. We have noticed the considerable appreciation in the value of suit property since the filing of the suit and have considered whether in the changed circumstances, the grant of relief of specific performance would be inequitable? We, however, found that there was no evidence on record to show that there was any worthwhile appreciation in the value of suit property between the period, the agreement of sale was entered into between the appellant and the deceased and the suit for specific performance was filed by the appellant. The increase in the value of the property after the filing of suit for specific performance cannot be taken into consideration for denying the relief of specific performance, as this change in the circumstances is not attributed to the conduct of the appellant after entering into the agreement of sale. We are, accordingly, of the view that the appellant was entitled to the relief of specific performance in the circumstances of the case. However, as the appellant herself had offered to pay the deceased enhanced sale consideration amounting to Rs.3,65,000, she should pay the same to the respondent. We, accordingly, allow the appeal, set aside the judgment and decree of the High Court, and restore the decree of trial Court. The parties will bear their respective costs. M.B.A./M‑2135/S Appeal allowed.