1997 PLP 880 (MLD)

20. As pointed earlier, no doubt the time was fixed in the agreement for completion of the contract but even under endorsement on the letter Exh.5/4, this time was extended beyond the fixed period viz. up to November, 1980. Subsequently, the, time was extended up to 21st October, 1986, as such time cannot be considered to be the essence of the contract in the instant case. ISSUE NO. 4:

21. Article 5 of the agreement required the defendants to obtain Capital Gain Tax Clearance Certificate from Excise and Taxation Department. Admittedly, they never obtained this Gain Tax Clearance Certificate till this requirement was done away with by the Sindh Finance Act, 1986. The evidence of Mr. Ghulam Dastagir witness No. l for the plaintiff Exh.6 shows that the production of Capital Gain Tax Clearance Certificate was necessary for the registration of the Department as per orders of Secretary to the Government of Sindh which is produced as Exh.6/1 dated 15‑3‑1979 and as per instructions issued by the Commissioner, Karachi Division which is produced as Exh.6/2 Mr. Syed Shabbir Hussain witness No.2 for the plaintiff Exh.7 who was working as AETO in the Taxation Department states that production of Capital Gain Tax was necessary for the registration of sale‑deed from 1979 to 1986. Under the circumstances, because of this failure of the defendants to obtain the requisite Certificate uptil 30‑6‑1986, the option vested with the plaintiff to cancel the contract and sue for damages but instead the plaintiff had kept the contract alive and has sued for the performance of contract.

22. In view of the above facts my finding is in affirmative on the issue to the extent that the defendants failed to obtain the Capital Gain Tax Clearance Certificate for nearly six years and its consequence will be that thereafter they could not fix any time unilaterally to be the essence of contract. ISSUE N0.5:

23. The contention of the defendants is, that they were not legally required to obtain the Capital Gain Tax Clearance Certificate before the registration of the sale‑deed. In fact both the plaintiffs witnesses Mr: Ghulam Dastagir and Syed Shabbir Ahmed have admitted in the cross‑examination that they do not know of any law which prevents the registration of the sale deed without obtaining the prior Capital Gain Tax Clearance Certificate. However, both the witnesses have asserted that no sate‑deed was registered without the Capital Gain Tax Clearance Certificate from 1979 to 1986. They have relied upon the order of the Chief Secretary Government of Sindh which has been produced as Exh.6/1 which shows that the Martial Law Administrator Zone‑C, had been pleased to order that Capital Gain Tax wherever levyable shall be recovered from the assessee before registration of the sale‑deed. He also produced order of the Inspector General Registration Exh.6/2 whereby in view of the order of Martial Law Administrator Zone‑C all the Registering Authorities in Karachi were directed not to register any sale‑deed without Clearance Certificate. Besides even under the agreement of sale under Article 50 the defendants were required to obtain this Certificate. Defendant's witness Ibrahim has admitted in his cross -examination that the defendants had undertaken to obtain Capital Gain Tax Clearance Certificate from the Excise Department before registration of the sale- deed. In view of the documentary and oral evidence my findings on this issue is in affirmative. ISSUES NOS.6 and 7:

24. In para.21 of the affidavit‑in‑evidence, the plaintiff's witness Baseer Hasan has stated, that while abolishing the Capital Gain Tax the Government of Sindh under Finance Act, 1986 raised the rate of stamp duty to 8 % as against 6 % . The Government also fixed the valuation of properties in different areas at different rates in the valuation table for the purpose of charging stamp duty irrespective of the price agreed between the parties. This assertion is not denied by Mr. Ibrahim witness for the defendants in his affidavit in evidence which is Exh.8/1‑B. In para.19 of the plaint similar assertion has been made by the plaintiff. This para. is replied by para. No. 19 of written statement in which it is only stated that the stamp duty at 8% was not payable on the valuation fixed by the Government irrespective of agreed price. It is asserted that these could be challenged. In other words the allegation of the plaintiff that the stamp duty were raised to 8 % and that the Government had fixed value of property at different rates in different areas in valuation table has not been specifically denied. Mr. Ghulam Dastagir, Sub‑Registrar Exh.6 has stated that after abolition of Gain Tax, Government introduced valuation table for the purpose of valuation of properties of different areas and of different categories to assess stamp duty and registration fee as per section 27‑A of Stamp Act, 1899. He has produced a notification dated 1st July, 1986 as Exh.6/3. He further stated that subsequently valuation Table was again revised vide notification dated 18th November, 1986 Exh.6/4 and in the years 1989 and 1990 it was again revised vide Exhs.6/5 and 6/7. Mr. Ghulam Dastagir has further stated that the Sub‑Registrar is bound to follow the Valuation Table issued by the Government and assess Stamp Duty accordingly. His this statement is not challenged in the cross‑examination. The document Exh.6/7 produced by him is a notification of the Government of Sindh dated 6‑6‑1990 whereby the Stamp Duty in Urban Area was raised from Rs.8 to Rs.9 and in the Rural area from Rs.6 to Rs.7. No evidence in rebuttal has been produced by the defendants. In view of this evidence my finding on both the issues is in affirmative and its effect would be that for the registration of sale‑deed, Stamp Duty and' Registration Tax will have to be paid according to the latest notification of the Government. ISSUES NOS. 8 and 9:

25. The plaintiff has prayed for the specific performance of the contract of sale or property in suit and also for the payment of Rs.7,2,736, Rs.3,63,680 and Rs.45,460 as compensation on account of enhancement of Stamp Duty and Registration Charges due to delay in the performance of contract by the defendants and in alternative he has prayed for the payment of Rs.62,71,000 by way of compensation and refund of the earnest money with interest thereupon.

26. I have already held that the defendants could not obtain the Capital Gain Tax Clearance Certificate as required under the agreement of sale until it was abolished on 30‑6‑1986 by the Sindh Finance Act, 1986.1 have also held that alongwith abolition of the Capital Gain Tax the Government simultaneously enhanced Stamp Duty and fixed the valuation of the property for the purpose of registration and Stamp Duty. The plaintiff in para. 21 of the plaint has calculated the additional amount payable by him in the following manner:‑‑ (a) Additional Stamp Duty at 2 % on original sale price which comes to Rs.72,736. (b) The difference on account of Stamp Duty and registration charges payable on the difference between agreed price and the value fixed under the law in the Valuation Table amounting to Rs.3,66,680 and Rs.45,460 respectively. The defendants in the written statement in paras. 20 and 21 have denied the averments made by the plaintiff. He has shifted the blame of the delay on the plaintiff but has not specifically denied the amounts calculated by the plaintiff payable by him due to enhancement of the Stamp Duty and the valuation of the property.

27. I have already held that the delay in obtaining Capital Gain Tax Clearance Certificate which was necessary, under the contract as well as under the practice followed in the Registration Office before the registration of the sale‑deed, was on the part of the defendants. The plaintiff had the opportunity to cancel the contract and sue for damages but he has shown his preference for the enforcement of specific performance of the contract. This is evident from the correspondents that ensued between the parties, after June, 1986. The defendants in their letters called upon the plaintiff to complete the same and plaintiff also showed his willingness to complete the sale, but wanted some reasonable time and also wanted defendants to share additional burden upon him. In section 55 of the Contract Act it is stated in the third part of this section as under:‑‑ "If in case of contract voidable on account of promises failure to perform his promise at the time agreed, the promisee acts upon performance of such promise at any time other than that agreed, the promise cannot claim compensation for any loss occasioned by the non performance of the promise at the time agreed unless at the time of acceptance he gives notice to the promisor of his intention to do so."

28. In the instant case time was fixed in the agreement for the performance of the contract which was extended by mutual consent to the end of November, 1980. Admittedly the contract could not be performed within the specified time and had become voidable at the option of the purchaser, but he has chosen to insist upon the performance of the contract at the time other than agreed, therefore, he is not entitled to any compensation. In view of this clear provision of law specially as he has not given any such notice to the promisor viz. the defendants, though he had been asking them to share the additional burden put upon him, he is not entitled to compensation in addition to specific performance of contract.

29. I have already held that because of the conduct of the parties, the time ceased to be essence of contract but that fact alone would not entitle the plaintiff to claim such compensation. No doubt the plaintiff is saddled with additional burden of Stamp Duty and Registration Fee but at the same time the value of the property has also increased and he would be adequately compensated for the loss that he may suffer due to additional burden. It is admitted by Mr. Ibrahim witness for the defendants, that in 1989‑90 he received an offer of Rs.2,000 per square yards for the suit land. Therefore, equity and justice requires that the defendants should not be burdened with the additional amount payable by the plaintiff, for Stamp Duty and Registration Fee in addition to specific performance of the contract.

30. The plaintiff has calculated the damages which he claims in case specific performance of the contract is refused in para. 26 of the contract. He has calculated Rs.45,45,000 to be difference of the market price as on 13‑2‑1980 and on the date of the filing of the suit being Rs.1,000 per square yard. He appears to have based this difference on the increase of the price for the purpose of valuation. The suit was filed on 25‑2‑1988 and as pointed above in 1989 the witness of the defendants was admittedly offered Rs.2,000 per square yard. This claim of the plaintiff therefore does not look unreasonable. He has claimed 3,75,000 which was paid by him to the defendants at the time of the agreement in earnest money. The receipt of this amount is admitted by the defendants. In case the specific performance of the contract is refused he is entitled to receive back this amount also alongwith interest.

31. The plaintiff also claims Rs.1,50,000 on account of litigation against the tenants up to Supreme Court. There is no detailed evidence produced by the plaintiff to show how much he spent upon the litigation. Under sale agreement the plaintiff had agreed to proceed against the tenant for ejectment at his own cost. Therefore, he is not entitled to receive this amount.

32. The plaintiff has also claimed Rs.12,00,000 as compensation on account of mental torture and agony caused to the plaintiff for withholding the performance by the defendants. This claim is denied by the defendants in para.25 of the written statement. However, the burden was upon the plaintiff to show that they actually had suffered mental torture and agony for which Rs.12,00,000 as compensation could be awarded. It may be pointed the original plaintiff had died because he was admittedly ailing even before the registration of suit and therefore the suit was filed through his attorney. None of the legal heirs have been examined to prove this claim of the plaintiff. As such in my opinion the plaintiff is not entitled to claim this amount as compensation.

33. The third question that requires consideration in these two issues is whether the plaintiff is entitled to the specific performance of the contract. Section 12 of the Specific Performance Act provides, the cases in which Specific Performance is enforcible at the discretion of the Court. Clause C of this section provides specific performance of contract may in the discretion of the Court be enforced when the Act agreed to be done is such that pecuniary compensation for its non‑performance would not afford adequate relief. Illustration to clause C in this section, shows that where A contracts with B to sell his house for Rs.1,000, B is entitled to decree directing A to convey house to him, he paying the purchase money.

34. The explanation to this section provides "unless and until the contrary is proved the Court shall presume that the breach of contract to transfer immovable property cannot be adequately relieved by compensation in money, and the breach of contract to transfer movable property can be thus relieved.

35. In the Specific Relief Act by Sardar Muhammad Iqbal, 1981 Edition at page 138 the learned author has relied upon the case of New Beerbhoom Coal Co. v. Bulla Ram Mahata reported in ILR 5 Cal. 932 (PC) wherein reliance is placed on the first illustration to the clause C and it has been held that there is presumption that the breach of the contract to transfer of immovable property cannot be adequately relieved by compensation and therefore specific performance should be enforced.

36. On the same page, the learned author has observed that Court of equity will decree a performance of the contract of land, because damages at law, which must be calculated upon general value of the land may not be complete remedy to a purchaser, to whom land may have a peculiar and special value. The locality, character vicinage, soil easement or accommodation of the land generally may give a peculiar and special value in the eyes of purchaser, so that it cannot be replaced by other land of the same precise value, but not having the same precise local convenience or accommodation and therefore a compensation in damages would not be adequate relief.

37. Therefore, in my view the plaintiff is entitled to Specific Performance of the contract only. Both the issues are answered accordingly. ISSUE NO. 12:

38. I will deal with this issue first as it also affects the entitlement of the plaintiff to obtain the decree of the specific performance of the contract.

39. I have already pointed out, that the dealings between the parties in the shape of correspondence was in two phases. In the first phase the defendants first insisted upon the plaintiff to make payment of balance of the sale price but the plaintiff instead had insisted that first they should obtain the Capital Gain Tax Clearance Certificate whereafter at the time of registration the balance amount was payable to the defendants as per the terms of the said agreement. In the letter Exh.5/10 dated 3‑9‑1981 the defendants Advocate stated in para.2, that Mr. Fazlur Rehman plaintiff was ready and willing to complete sale of the above property on terms contained in the agreement and that his clients will be obtaining the required Gain Tax Clearance Certificate and in the meantime proposed sale‑deed may be sent to the defendants' Advocate for their approval. I have already pointed that the proposed sale‑deed Exh.5/14 was sent to the defendant's Advocate vide the letter Exh.5/13 dated 21‑10‑1981. Admittedly for the first time the defendants applied for Capital Gain Tax Clearance Certificate on 6‑3‑1982 but they did not get the Certificate till this Capital Gain Tax was abolished by the Sindh Government under Sindh Finance Act, 1986. Thereafter, the second phase of correspondence shows that defendants called upon the plaintiff to complete the sale contract. The plaintiff however required sometime and also asked the defendants to share the burden of additional taxation. No doubt it has been held that the plaintiff was not entitled to get the amount from the defendants towards this additional tax burdened. However, his request cannot be considered to be absolutely unreasonable. He did show his willingness to complete sale‑deed. He also requested for reasonable time as more than six years had passed and naturally he required sometime to arrange for such huge amount of about Rs.33,00,

000. Even the witness for the defendants Mr. Ibrahim has admitted that Mr. Fazlur Rehman never refused to execute sale‑deed. Therefore my finding is in affirmative, so far as willingness of plaintiff to complete the sale‑deed was considered there is no evidence to show that he caused defendant's difficulties in the Taxation Department to delay the sale.

40. Even before the abolition of the Capital Gain Tax the plaintiff vide letter Exh.5/23 dated 20‑8‑1985 called upon the defendants to obtain Capital Gain Tax Certificate and complete the sale‑deed. Under letter Exh.5/24 dated 30‑9‑1986 the defendants called upon the plaintiff to complete the sale before 21st December, 1986. In reply by letter dated 10‑10‑1986 Exh.5/25 the plaintiff informed the defendants that defendants had taken more than six years to show their intention to finalise the transaction and it was unreasonable and unjustified to ask the plaintiff to finalise within any unilateral specified time and asked for some reasonable time. The defendants claimed to have sent a letter dated 23‑9‑1986 Exh.5/20 under which the plaintiff was asked to complete sale before 21st October, 1986. This letter is denied by the plaintiff to have been received and a copy of it subsequently sent by letter dated 9‑3‑1987 Exh.8/30 to the plaintiff after the time for performance of the contract had expired. Even the witness for the defendants have admitted that the plaintiff never refused to execute the sale‑deed. All the letters which have been brought on the record show that plaintiff was always willing to complete contract but the delay if any was on the part of the defendants.

41. The defendants have relied upon PLD 1986 Supreme Court page 497 wherein their Lordships have held, that in order to obtain the relief by way of specific performance of contract, the plaintiff has first to allege and prove, that he was ever ready and willing to perform his part of contract as really was and not in the way he thought. Similar views were taken in cases reported in AIR 1932 Lahore 265, AIR 1948 Cal. 147 and AIR 1950 Nagpur 238.

42. The evidence of witness Mr. Basir the letters exchanged between the parties, the admission of the defendant's witness Ibrahim and the final notice dated 20th January, 1988 Exh.5/38 clearly show, plaintiff's willingness and readiness to perform his part of contract. In view of the facts and the evidence on record, in my opinion, the plaintiff is entitled for specific performance of his contract as he was ready and willing to complete the same. ISSUE N0.13:

43. Under Article 113 of the Limitation Act, the period of limitation for specific performance of contract is three years from the date fixed for performance of contract or if no such date is fixed; when the plaintiff has notice that its performance is refused.

44. Originally date fixed under the agreement was four months from the date of the agreement viz. 13‑2‑1980 which could‑be extended by two months which means the date of performance would be 13‑8‑1980. If the time of limitation is to run from this date, then the suit is hopelessly time‑barred.

45. In the Limitation Act by Shaukat Mehmood, at page 563 the learned author has relied upon the case reported in AIR 1922 PC 178 and has observed that where time under the contract be extended, the new date substituted, was the date fixed for the performance. Admittedly the defendants lastly fixed the 21st October, 1986 to be the date of performance.

46. The learned author also on the same page, quoted from AIR 1965 Madras 24, where though the cause of action accrued to A on the date of agreement, no suit could have been brought on this cause of action, till 8‑1‑1953, when cause of action was complete. It is further observed that a cause of action arises for a party under a contract only when as contemplated by the parties, the obliger is in a position to perform his promise effectively". In the instant case also the defendants could not perform their part of contract till 30‑6‑1986 when the requirement of production of Capital Gain Tax was done away with.

47. Mr. Ibrahim in his affidavit in evidence in para.21 has stated that the defendant's through their Advocate wrote to the deceased plaintiff on 20‑9‑1987, reiterating that the contract for sale of suit property stood terminated due to his failure to complete the sale.

48. The plaintiff filed the suit on 25‑2‑1988. If we take the date from which the period of limitation is to run from any of the abovementioned three dates viz. 30‑6‑1986 when the defendants could perform his promise after the w abolition of the Capital Gain Tax or from 21‑10‑1986 when the defendants lastly fixed the date for completion of the sale or from 20‑9‑1987 when the contract was terminated by the defendants the suit would still be within time viz. within three years. My findings on Issue No. 13 is therefore in negative. ISSUE N0.14:

49. There is nothing on record to show, that the plaintiff had assigned/transferred his right to the attorney Mr. Basir Hasan, except that irrevocable power of attorney was executed in his favour. Under this power of attorney whatever acts were done by attorney were on behalf of and in the name of plaintiff. Even D.W. Mr. Ibrahim has admitted in the cross‑examination, that he had no knowledge about Mr. Basir Hasan being the nominee of the plaintiff. Even otherwise, under clause 7 of the sale agreement Exh.5/1 the vendors undertook to execute the sale deed of property in favour of the purchaser and/or his nominee or nominees. My finding therefore is in negative on this issue. ISSUE NO. 10:

50. The plaintiff has filed the suit for specific performance of the contract and damages or in alternative. for damages. I have already held, that plaintiff is not entitled to additional damages, if his prayer for specific performance is allowed. I have also held as to what amount he would be entitled to get as damages, if his prayer for specific performance is allowed. I have also held as to what amount he would be entitled to get as damages, if his prayer for specific performance is refused.

51. The case‑law which has been discussed above clearly shows, that the plaintiff, before seeking specific performance of contract, is to show his willingness and readiness to perform the contract. I have also held that evidence on record proves, that he was willing and ready to perform his part of contract. In 1973 SCMR 225 it has been held by their lordships:‑‑ "The contention, that therein a contract of sale or immovable property, the contract provided for payment of specific amount on vendors' failing to fulfil the contract, no specific performance of the contract would be enforced by the Court, cannot be accepted. "

52. Section 12 of the Specific Relief Act provides that specific performance of the contract may be enforced in the discretion of the Court. Explanation to section 12 of the Act clearly states, that unless and until the contrary is proved, the Court shall presume, that the breach of contract of transfer of immovable property cannot be adequately relieved by compensation money. In 1983 CLC 1085 a Division Bench of this Court had held that conduct of the appellant/vendor has to be consistent. If he is responsible for flagrant violation of sale agreement for ulterior motive, but blamed the vendee for the breach of the contract, he was not entitled to press his claim, for discretion of the Court to be exercised in his favour.

53. In the instant case also, the vendors failed to get requisite Certificate for nearly six years and then gave a notice for very short period to the plaintiff for which also they could not prove that the same was received by plaintiff in time. Such a conduct does not entitle them to claim the discretion of the Court to order award of damages instead of specific performance of the contract. The defendants have relied upon the case reported in 1988 MLD 608 but the facts of the case are distinguishable from the facts of the instant case. In that case the vendee did not pay the rent of the shop, which was in his possession, pending the completion of the sale‑deed as per agreement. He also offered to pay half of the price of the amount paid by the vendor he claimed adjusted sale price at 8 annas per rupee. Therefore, it was held, that the vendee could not be allowed specific performance of contract, after the expiry of the time of payment of amount, which he was formerly not willing to pay.

54. Before I part with this suit one other point also requires consideration. Under orders of the Court, the plaintiff deposited the balance of the sale price money about 32,61,800 in the Court, which were ordered to be deposited in the Khas Deposit Certificate. The question now arises as to who is entitled to receive the profit, though the sale price would naturally go to the defendants on the execution of sale‑deed. In the case reported in 1983 CLC 1085, a Division Bench of this Court has held, that where respondent deposited in the Court sale consideration in pursuance of High Court Order, while appellant vendor enjoyed possession of property, which they did not pass on to respondent, the appellant cannot be allowed benefit of possession as well as interest accumulated on the sale consideration. The appellant was entitled to sale consideration according to sale agreement, while the respondents/purchasers were entitled to interest thereon. However, I find that after 30‑6‑1986 the plaintiffs can also partly be held responsible for the delay, though this suit cannot be dismissed on that account, for reasons already recorded, but justice and equity requires, that the profit earned on the deposit for the first two years therefore be paid to the defendants while profits for rest of period be paid to the plaintiff. This arrangement would be equitable in the sense that the defendants do not have now to pay Rs.22,00,000 as Capital Gain Tax and also they will be receiving some amount viz. the profits earned for the first two years. It will offset the feeling of the defendants that they have been deprived of the benefit of escalation in the price of the land though on that account they cannot cancel the contract. The plaintiff would also be compensated by payment of the profit for the balance of period, as he has to pay additional Stamp Duty and Registration Fee due to the delay of the defendants in getting the requisite certificate. The plaintiff will also get the benefit of escalation in the price of land. The defendants had also been enjoying the rent of the suit property during all this period as power of attorney only entitled the plaintiff to obtain possession of suit property which he was unable to get. My finding therefore, on this issue is that the plaintiff is entitled to get relief of specific performance of contract and the amount of profits as mentioned above. ISSUE NO. 11: In view of all discussions the suit of plaintiff for specific performance is decreed with costs. (The balance of sale consideration is already deposited in the Court, the defendants are to execute the sale‑deed in favour of the plaintiff or their nominee as per para. 7 of the sale agreement and if they refuse or fail to do so, within reasonable time, the Nazir of the Court may execute the sale‑deed. A.A./R‑8/K Suit decreed.