2015 PLP 1468 (MLD)

JAMAL KHAN MANDOKHAIL, J.

The respondent No.2 was proceeded against ex parte, where-after the appeal was finally decided on 21st October, 2010, by this Court. The respondent No.2 filed a Civil Miscellaneous Application No.2607/2011 on the ground that he was not properly served. On scrutiny of the record, it was found that the respondent No.2 was not personally served, as such, on 13th April, 2015, the application was allowed and the ex parte judgment and decree were recalled. After re-hearing the parties including the respondent No.2, the matter was reserved for judgment.

2. Briefly stated facts of the case are that the predecessor of the appellants Nos.1 to 9, 11 to 22 and the respondent No.10, being joint owners of the land (described in the plaint), started construction of a building over it, with the name and style of Asmat Plaza. the appellants received an amount of Rs.5,50,000 (Rupees five Lacs & fifty Thousand Only) from the respondent No.1 as premium (Pagri) in respect of a shop. On completion of the building, the shop was rented out to the respondent No.1 @ Rs.500 (Rupees five hundred only) per month.

3. After some time, the predecessor of the appellants sold out the entire building including he shop in question to the respondent No.2, who thereafter, filed an eviction application against the respondent No.1. The, tenant contested the application, claiming therein that he had paid an amount of Rs.5,50,000 to the previous owners, as such, he is owner of the superstructure of the shop in question. His eviction was ordered, wherein it was also held that the respondent No.1 had paid the said amount as "Pagri" (premium). The matter went up to the Hon'ble Supreme Court of Pakistan, where the eviction order and findings with regard to the amount of 'Pagri' was maintained, however the respondent No.1 was allowed to avail proper remedy for recovery of the said amount, hence the present suit for recovery of said the amount along with damages has been filed by the respondent No.1 against the appellants and the respondent No.2 (the purchaser). The trial Court, out of the pleadings, framed the following issues: "(1) Whether suit is not maintainable in view of legal objections B, C & E? (2) Whether plaintiff has paid Rs.6,50.000 as advance for construction to the defendants Nos.1 to 6? (3) Whether plaintiff is entitled to receive the advance Rs.5,50,0004 paid and damages of Rs.1,50,000" Both the parties led their respective evidence and also produced the documents. After conclusion of the case, the trial Court decreed the suit only to the extent of the original amount against the appellants vide judgment and decree dated 18th February, 2006, hence this appeal.

4. The learned counsel for the appellants stated that the property in question, including the shop of the respondent No.1, was sold out by the appellants to the respondent No.2 with all liabilities and encumbrances, which is evident of the fact that lesser amount of consideration was fixed. He stated that the appellants have received an amount of Rs.5,50,000 from the respondent No.1 as Pagri, therefore, a nominal monthly rent was fixed. He added that after purchase of the property, the respondent No.2 became its owner and landlord, whereas the respondent No.1 became his tenant, therefore, now it is up to the respondent No.2 to pay the amount of premium to the respondent No.1.

5. The learned counsel for the respondent No.1 supported the contention of the learned counsel for the appellants and stated that actually, the amount of Rs.5,50,000 was received from him by the predecessor of the appellants. He contended that after purchase of the property, the respondent No.2 filed an eviction application against the respondent No.1, which was allowed, however, the claim of the respondent No.1 with regard to payment of the amount against the shop in question was accepted by the Rent Controller, whose order was upheld by the Hon'ble Supreme Court of Pakistan. He stated that since the respondent No.2 is the beneficiary of the shop in question, therefore, he is also responsible for the liabilities against this shop. The learned counsel added that the respondent No.2 was when approached to pay the amount, he refused to do so, hence the present suit has been filed against both the parties. The learned counsel stated that his claim is attached with the shop in question, therefore, after eviction, the respondent No.1 is entitled for the recovery of the amount, either from the respondent No.2 or the appellants.

6. The learned counsel for the respondent No.2 opposed the contention and stated that the appellants admit the fact that they have received the amount of Rs.5,50,000 from the respondent No.1, then it is their responsibility to pay back the said amount to him. He stated that the respondent No.2 purchased the property without liabilities and legally it is the responsibility of the seller to clear all the dues, liabilities and encumbrances attached to the building, therefore, the respondent No.2 is not responsible for the payment of the said amount.

7. We have heard learned counsel for the parties and have perused the available record, which reveals that the payment of an amount of Rs.5,50,000 by the respondent No.1 to the appellants is undisputed. It is the case of the appellants that lesser amount of the consideration is the proof of the fact that the property was sold out to the respondent No.2 along with all encumbrances, including receipt of the amount of Rs.5,50,000 from the respondent No.1. The only point for consideration in this appeal is that who is responsible for the payment of the alleged amount to the respondent No.1.

8. The sale transaction in respect of the building including the shop in question between the appellants and the respondent No.2 is undisputed. According to section 55(1)(a) of the Transfer of Property Act, (IV of 1982) ("the Act"), "The seller is bound": (a) to disclose to buyer any material defect in the property or in the seller's title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover". Similarly, according to section 55(5)(d) of the Act, "The buyer is bound, (d) where the ownership of the property has passed to the buyer, as between himself and seller, to pay all public charges and rent which may become payable in respect of the property the principal moneys due on any encumbrances subject to which the property is sold, and the interest thereon afterwards accruing due."

9. According to the above referred provisions of law, it is the responsibility of the seller to disclose all encumbrances, charges, dues etc. against a property to the buyer. After gaining knowledge, it is the prerogative of the buyer to purchase the property with or without encumbrances. If he purchases a property with all the liabilities, then the encumbrances that are attached to the property automatically transfers to the buyer.

10. The word "Encumbrance" has been defined in Black's Law Dictionary, as under:-- "A claim or liability that is attached to property or some other right and that may lessen its value, such as a lien or mortgage; any property right that is not an ownership interest. An encumbrance cannot defeat the transfer of possession, but it remains after the property or right is transferred." Admittedly, the respondent No.1 was occupying the shop as a tenant after 'payment' of Pagri to the appellants (previous owners). After purchase of said property, the respondent No.2 has stepped into the shoes of the previous owners, whereas the respondent No.1 became his tenant. After purchase of the property, the respondent No.2 is bound by all the deeds and agreements executed between the previous owners and the respondent No.1. After taking over the possession of the property, taking over its charge and payment of entire consideration amount, the respondent No.2 became absolute owner of the property. Under such circumstances, the new owner is now entitled for every benefit of the property and at the same time, is also responsible for all encumbrances, attached to the said property. On completion of the sale transaction, the ownership of the property passed to the new owner, who is bound to pay all the encumbrances attached to the property. The previous owners are no more concerned with the building in question, nor in any manner are responsible for any of its liability. Keeping in view the fact that the tenant was occupying the property against payment of nominal amount as rent, the statements earlier given by the previous owners before the Rent Controller and the material available on the record, it is established that the liabilities attached to the property was a reason of lesser amount of sale transaction of the property. The respondent No.2 despite having knowledge about the liabilities attached to the property, purchased it on "as is where is" basis. As the respondent No.2 is beneficiary of the eviction of the respondent No.1 from the shop in question, whereas the re-payment of the amount of `Pagri' was subject to eviction of the tenant, therefore, in such view of the matter, the respondent No.2 is responsible for payment of the amount of premium, received by the previous owners against the shop in question. Had the respondent No.1 not evicted from the shop in question, there would have been no demand of payment of premium by him. The respondent No.2 himself opted to get eviction of the respondent No.1 from the shop in question, therefore, he is liable to pay the amount of premium to the respondent No.1. The trial Court, while deciding the case, was right in decreeing the suit to the extent of payment of amount to the respondent No.1, but the trial Court has erred by fixing the responsibility upon the appellants. Thus, in view of what has been stated and discussed hereinabove, the appeal is partly allowed and the impugned judgment and decree dated 18th February, 2006, passed by the trial Court are hereby modified. Consequently, the suit filed by the respondent No.1 for the recovery of an amount to the extent of Rs.5,50,000 is decreed against the respondent No.2, who shall pay the said amount to the respondent No.1 within a period of thirty days, w.e.f. 10th June, 2015. The office to prepare a decree sheet accordingly. ZC/66/Bal. Appeal partly allowed.