Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: NISAR AHM AD KHAN VS Respondent: ABDUL SATTAR KHAN
Court Name: Other Judge(s): Ch. Ijaz Ahmad Title: NISAR AHM AD KHAN vs ABDUL SATTAR KHAN Case No.: R.F.A. No. 359 of 1993' Date of Judgment:1997-09-03 Reported As: K.L.R. 1998 Civil Cases 325 Result: N/A
JUDGMENT
JUDGMENTCH. IJAZ AHMAD, J.- Since the parties have also filed different applications in the present appeal i.e. C.M. Nos. 689-C-96. 227-C-95, 266-C-95, 590-C-95, 2062-C-96, 386-C-97 and C.M. 539-C-97. Therefore, main appeal as well as these applications are disposed of by consolidated judgment. 2. The brief facts out of which the present appeal arises are as follows:- Respondent No. 1 Abdul Sattar Khan filed a suit for recovery of Rs. 49,0, 000/- and permanent injunction against Raja Nasir Khan present appellant and Shahid Javed. Respondent No.2 on the ground that respondents No.1 and 2 were known to each other as businessmen doing the business in real estate and on account of earlier transactions mutual understanding between them existed. The appellant informed respondent No. 1 that a commercial building known as A1-Amin Plaza was under construction at the Mall Rawalpindi. He stated that he had purchased ground floor of the said Plaza and it consisted of 15 shops^f on front, and 11 on the rear on the ground floor and present respondent No. 1 agreed to pay Rs. 76,00,000/- to purchase the said premises and out of the agreed price Rs. 24.00,000/- were given by respondent No. 1 to the present appellant by three cross cheques i.e., 1. Cheque no. 135225 of bank of America, Islamabad Branch. Dt. 16-2-1988 Rs. 10,00,000/- 2. Cheque No. 037730 of Bank of .America Islamabad Branch. Dt. 20-2-1988 Rs. 08,00,000/- 3. Cheque No. 037740 of Bank of America, Islamabad Branch. Dt. 6-4-1988 Rs. 06,00,000/- It is pertinent to mention here that present appellant was not the owner of the said premises on the
---
## Page 2
day of oral agreement between the parties. Subsequently neither the property' in question for sale followed to the alleged vendor with a perfect title through its actual owner namely Sh. Muhammad Amin and his family members nor the present appellant arranged for a title in his name and its onward sale to respondent No.1, therefore, respondent No.1 has filed suit for recover)' in the terms that he was entitled not only to recovery of the actual amount of Rs. 24.0, 000/- but also damages amounting to Rs. 25,00,000/- as compensation with the following prayer:- 'It is, therefore, respectfully prayed that a decree for the recovery of Rs. 49.00 lacs may kindly be awarded in favour of the plaintiff against defendants. Further, it is prayed that a decree for the permanent injunction may also be awarded whereby the defendants be restrained to further sell, dispose of or to alienate the property comprising of a shopping plaza known as Qaisar Plaza constructed on 18 plots bearing Nos. 1441, 1442, 1443, 1446, 1447, 1473, 1474, 1375, 1476. 1477, 1478, 1479, 1480, 1481, 1482. 1488, 1489 and 1490 purchased by the defendants through the sale deed dated 9-7-1988 till the payment of the suit amount of the plaintiff. 3. The present appellant contravened the allegations levelled in the suit in his written statement and only admitted to the extent that appellant acknowledged the receipt of " Biana'. 4. The leamed trial Court out of the pleadings of the parties framed the following issues:- (1) Whether the suit is not maintainable in its present form? OPD. (2) Whether the shops have been misdescribed. If so, its effect? OPD. (3) Whether the suit is bad for non-joinder of necessary panies? OPD. (4) Whether the plaintiff is entitled to recover Rs. 49,00,000/- from the defendant on the grounds mentioned in the plaint? OPP. (4-A) Whether the counter claim prayed by defendant No.2 is not maintainable? OPP. (4-B) Whether the defendants are estopped to raise the plea of counter claird on account of their conduct? OPP. (4-C) Whether the time was the essence of the agreement executed between the panies. If so, with what effect? OPP. (4-D) Whether the defendants are entitled to a decree for Rsi 1,00,00,000/- on account of counter claim on the grounds mentioned in the written statement? OPD. (5) Relief. The leamed trial Court decided Issues No.2 and 4 jointly in the following ternts:- "There is no denial of the fact that Rs. 24,00,000/- have been received and encashed by defendant No.1 alone. So is admined by DW-l. Therefore, the plaintiff is entitled to recover it form the man concerned. This amount was paid in the year 1988 and since thereafter. Obviously utilized by the recipient in his profitable business as a property dealer. 1 decline to conceive the arguments by the leamed counsel for the defendants that the defendant is not liable either to return this amount, or account for the benefits derived by its user. As already indicated and dealt with at length, that where the plaintiff was at fault on the point of the proposing to purchase a property with uncertain title of defendant No.1, the later is also found unreservedly that he played a foul game with Abdul Sattar khan plaintiff. In the circumstances as such, the defendant is held liable to pay some thing more and in addition to the amount actually received.
---
## Page 3
At this juncture, I may refer to the statement of PW. I Abdul Sattar Khan w herein he has claimed for the damages worth Rs. 25,00,000/- but there is no cogent and positive evidence as to how he was entitled to the amount as such. Therefore, in the fitness of the circumstances and keeping in view the principles of natural justice, I propose to concldde this controversy with a finding that the defendant No. 1 would remain liable to pay Rs. 15% as of compound annual interest over the actual amount received and so from April 1988 and onwards, unless his total liability is discharged in favour of the plaintiff. Both the issues are decided accordingly and for the plaintiff. Issue No.1 w-as not pressed by present appellant, therefore, decided against him. Issue No.3 w as also not pressed by the present appellant, therefore, decided against him. The leamed trial Comr decided issues No. 4-A, 4-B and 4-D jointly in the following terms:- There is no evidence as such on the case file, therefore, the counter claim of Rs. 1,00,00,000/- is nothing but baseless and is turned down. The trial Court also decided issue No. 4-C against the present appellant on the ground that there being no iota of evidence on the question confined in this issue. The leamed trial Court decreed the suit in the following terms:- Directing him to pay Rs. 24,00,000/- (Rupees twenty for lacs only) plus compound interest at the rate of Rs. 15% per annum w.e.f. Apr 1988. He would remain under an obligation to discharge the liability as such, unless, the entire decretal amount is paid to the party entitled. On 22-7-1993. Hence the present appeal. 5. The leamed counsel for the appellant contended that respondent No.1 set out a claim of damages which was not awarded by the trial Court, therefore, the trial Court was not justified to award compound interest on the earnest money. He further argued that respondent No. 1 did not mention a word regarding interest in the plaint, therefore, the leamed trial Court was not justified on any canon of justice to grant interest to the respondent on the well known principle that parties entitled to the relief as claimed by the plaintiff in its plaint as mentioned above plea of interest was not taken in the plaint, therefore the trial Court was erred in law to grant the same to the respondent/plaintiff. The respondent/plaintiff did not fulfil the terms and conditions of the agreement arrived at between the parties as the remaining amount was not paid by the respondent plaintiff and the trial Court did not consider this aspect of the case and wrongly did not accept the claim and damages sustained by the present appellant. He further argued that respondent/plaintiff himself violated the terms and conditions and, therefore, his suit was not maintainable by virtue of his conduct but the leamed trial Court did not consider this aspect of the case and finally argued that interest is in violation of Injunctions of Islam and the trial Court is bound to take into consideration principle of injunctions of Islam by virtue of Article 2-A of the Constitution. The leamed trial Court misread the whole record and decided the matter in vacuum and has failed to appreciate the materia] aspects of the case and gave importance to the factum of receipt of money by the appellant but did not give consideration to the loss sustained by him because of non-fulfilment of the conditions by respondent No.1. He further-argued that admittedly the original sum of Rs. 24,00.000/- was received as Biana and because of the non-fulfilment of terms and conditions by respondent No.1 to make good the remaining consideration the Biana was forfeited, therefore, findings on Issue No.4 are non-existent in the eyes of law. The leamed trial Court failed to appreciate that the appellant is not liable either to return the amount or to account , for the benefits derived by its users without any cogent reasons. In support of his contentions he relied
---
## Page 4
on the following judgments:- (1) Sh. Maqbool Ahmad v. Board of Revemie (199QALD 586), (2) Irshad H. Khan v. Mrs. Paneen Ijaz (PLD 1987 Kar. 466), (3) House Building Finance Corp: v. Shahinshah Hunutym Cooperative House (1992 SCMR 19) (4) M/s. Shifa Medicos v. Commerce Bank Ltd. (1988 MLD 1126) (5) Ghulam Abbas v. Trustees of the Port of Karachi (PLD 1987 SC 393) 6. The leamed counsel for respondent No.1 contended that it is admitted fact on the record that appellant received Rs. 24.00,000/- as Biana!'earnest money. It is also admitted fact on record that there was no written agreement between the parries, therefore, rime is the essence of the contract does not arise in the present case out of the pleadings of the patties and the evidence adduced before the trial Court, lt is also admitted fact that appellant failed to purchase the property in question from Sh. Muhammad Amin and his family, therefore, the appellant did not demand the.Remaining amount from respondent No.1. In the absence of the terms and conditions of the agreement the amount of Biana could not be forfeited, therefore, findings of the trial Court are based on proper appreciation of the evidence on record. If the evidence on record is appreciated on any angle or any principle of canon of justice the result would have been the same that the appellant is bound to return the said amount of Rs. 24,00,000/- to respondent No.1, therefore, the judgment of the trial Curt is valid. It is a commercial and business transaction and it is admitted fact that the appellant used the huge amount of Rs. 24.0, 000/- since 1988, therefore, the trial Court was justified to grant the compound interest and that is not above the bank rate. The appellant must have earned more benefits as compared to the amount calculated on the earnest money by utilizing the same by purchasing property etc. As the appellant and respondent No.2 are doing the business of real estate. Finally the leamed counsel for respondent No. I contended and supported that the judgment of the trial Court is valid and in accordance with law. 7. We have given our anxious consideration to the contentions of the leamed counsel for the parties. It is admitted fact on record that there is no written agreement between the parties for sale of the disputed property. Three cheques were received by the appellant amounting to Rs. 24.00,000/-. Lt merely shows that a sum of Rs. 24,00,000/- was paid by the respondent No.1 as earnest money in respect of the property in question. Therefore this document can only be a corroborative piece of evidence to show that this amount was paid in pursuance of an oral agreement. An agreement or contract made between the competent parties with their consent for law fol consideration and law ful object is not binding on the parties. Oral agreement is valid and enforceable. Reference can be made to Muhammad Khan v. Riaz-ud- Din (PLD 198l Karachi 170). In the absence of terms and conditions question of forfeiting the earnest money does not arise, lt is basic and fundamental principle of agreements and contracts regarding the immovable property time never be considered as essence of the contract and in a very special and extraordinary evidence on record the time is considered to be an essence of the contract. We have examined the whole record. Present appellant failed to bring on record and evidence to show' that time is the essence of the agreement, therefore, contention of the leamed counsel for the appellant has no force. We are tonified from the judgments reported as Abdullah v. Muhammad Siddique (NLR 1992 UC 235). The relevant observation is as follows:- This is a suit involving transaction relating to immovable property in w'which the defendants have failed to comply with condition regarding completion of sale. They, therefore, cannot insist in performance within time fixed by the agreement.
---
## Page 5
And Seth Essa Bay v. S.A. Boor Ahmad (PLD 1972 SC 39). Relevant observ ation at page 43 is as follows:-It is a well-settled principle of law that in contracts relating to immovable property, time is not of the essence of the contract. The appellant admitted that he received Rs. 24,00,000/- as earnest money. Therefore, in the absence of any terms of agreement the appellant has no right whatsoever to forfeit the earnest money, therefore, the contention of the leamed counsel has no force. On the basis of the evidence on record both the parties are doing the business of real estate, therefore, the appellant must have utilized the said amount in any transaction and the price of the immovable property are raised to a very high since 1988 to 1997, therefore, appellant must have earned the huge benefits from the said earnest money, so the leamed' trial Court was justified to grant the compound interest on the said earnest money. The leamed trial Court has ample power under different Provisions of Civil Procedure Code and Specific Relief Act to grant compound interest in the interest of justice and fair play. Keeping in view special circumstances of the case since it is a commercial transaction which w as not finalized on account of the appellant who failed to purchase from Sh. Muhammad Amin and' his family members, therefore, respondent was not penalized for the mis-deeds of the appellant. The leamed counsel for the appellant seriously contest only the portion of the judgment of the trial Court in which the compound interest w as awarded on the earnest money on the touch, stone of Injuction of Islam by virtue of Article 2-A of the Constitution. We are afraid that it is a contract between the parties and the appellant as mentioned above has received huge benefits front the earnest money, therefore, by virtue of the conduct and the transaction in question we are not in agreement with the contention of the leamed counsel. Even otherwise the parties are bound to remain w within the terms and conditions arrived at between the parties. The Federal Shariat Court declared the interest against Injunctions of Islam but the aggrieved party has filed appeal against that judgment befc^e the supreme Court Appellate Bench of Supreme Court of Pakistan, therefore, the Judgment of the Federal Shariat Court by virtue of the Provisions of the constitution remains suspended till the decision of the appeal. Hence apart from the above discussion we do not agree with the contention of the leamed counsel for the appellant. We are fortified by the Judgment of Supreme curt reported as Muhammad Mumtaz Musud and 2 others v. House Building Finance Corporation (1994 SCMR 2287). The relevant observation is as follows:- "The judgment of the Federal Shariat Court has not yet attained finality as appeal against it is pending disposal before the Shariat Appellate , Bench of this Court.' The appellant has not taken this ground in the Memorandum of Appeal, therefore, he is not permined ro agitate the same at the time of arguments. We are fortified by the judgment reported as Allied Ban of Pakistan v. M/s. Gujrat Friend* Traders (NLR 1992 UC 282). The plea of appellant is inconsistent. On the one hand he argued that Injunction of Islam should be taken into consideration while he himself violated the Injunctions of Islam, as he promised to sell the property in question to the respondent but he did not fulfil his own promise against the injunctions of Islam, therefore, the contention of the leamed counsel for the appellant has no force. The judgments cited by the leamed counsel for the appellant are distinguishable on facts and law. Ln Syed Maqbool Ahmad v. Board of Revenue (1990 ALD 586) the relevant observation is as follows:- Payment of interest on claimed amount, although withheld for many years unreasonably was not allowed, as allowing of interest in cases where there was no statutory compensation would amount to acting against the mandate of Constitution.
---
## Page 6
In the present case, the leamed trial Judge granted interest on the basis of Statutory Provision i.e. Sec. 34 CPC. In House Building Finance Corporation v. Shahinshah Humayun Cooperative House Building Society (1992 SCMR 19) the House Building Finance Corporation gave loan to respondents for construction of building. As the entire amount with simple interest as demanded by the appellants had been paid, therefore, compound interest was w aived sent aside. Ln the present case respondent No. 1 has not received even a single penny till date. Reference has been made in Ghulam Abbas v. Trustees of the Port of Karachi (PLD 1987 SC 393). This judgment only discussed the power of Arbitration and the Court in para 22 at Page 412. This judgment is also not applicable. Reliance has also been placed on M/s. Shifa Medicos v. Commerce Bank Ltd. (1988 MLD 1126).Record shows that an express agreement was reached between the parties to the ettect that simple interest would be chargeable. In view5 of this compound interest was set aside. So this case is also not applicable. In Irshad H. Khan v. Mrs. Parveen Ijaz (PLD 1987 Karachi 466) interest is declared against Injunctions of Islam, This judgment interpreted in the given circumstances in Muhammad Hashim's case i.e. 1989 MLD 3284. The relevant observation is as follows:- "The Promissory Note does not stipulate payment of any interest. However, in view of the Official acknowledgment of on going depreciation in the value of Pakistani currency and in recognition of Muslim Law concept of the liability of a debtor to make good an amount equivalent to that borrowed. I would in exercise of powers of this Court under Section 151. CPC allow 10% per annum to the plaintiff on the principal amount claimed in suit. Such payment at 10% per annum as aforesaid shall ensure towards adjustment of the referred depreciation and the same shall continue to be reckoned till realisation of the decretal amount. This suit, is. Therefore, decreed for the principal amount of Rs. 1,23,000/-10% per annum from the date of the Promissory' Note i.e> 25-5-1987 rill realization." Keeping in view the above-mentioned observation this judgment will support the case of respondent No. 1. The leamed counsel for the appellant contended that the trial Court granted/awarded interest to respondent No.1 in spite of the fact that he had not make Specific prayer for award of interest, therefore, this part of the judgment of the trial Court is incorrect. This contention has also no force. Section 34 of the CPC clearly empowers the Court to aw ard the interest in so far as a decree is for the payment of money, at such rate as the Court deems reasonable to be paid on principle sum so adjudged, from the date of the suit to the date of the decree. Section 34 may be read in conjunction with Order VII, rule 7 CPC which relates to ancilliary relief. It is settled law that an ancialliary relief can be awarded in spite of the fact that it has not been prayed. We are fortified by the judgment AIR 1921 Lahore 125. (Rap Ram v. Harphul). It is, therefore, quite plain that even if there was no specific prayer for grant of interest the Court
---
## Page 7
was entitled, rather justified in granting interest. Reliance can be placed on 1987 CLC 482. In our view. Section 34 gives a complete discretion to the Court to award interest if it deems reasonable to do so in the interest of justice and fair play. We are fortified by the judgments:- (1) M/s. M.L Malik & Company & others v. M/s. Splendoura International (1997 SCMR 309). (2) Nizam-ud-Din v. Zia-ud-Din (PLD 1984 Kar 441). (3) A. Ismail Jee and Sons Ltd. v. Pakistan (PLD 1986 SC 499). (4) Pakistan v. Wali Ullah (PLD 1965 SC 310). (5) Khan Ifiikhar Hussain Khan v. M/s. Ghulam Nabi Corporation Ltd. (PLD 1971 SC 550). (6) Mian Abdul Aziz v. Alliance Bank of Simla Ltd. (AIR 1933 Lah. 352). In this case learned trial Court has exercised its discretion, it is well settled that the appellate Court will not ordinarily interfere in the exercise of discretion by the Lower Court in the matter of grant of interest unless it is exercised arbitrarily. We are fortified by the following judgments:- (1) AIR 1955 SC 468(2) AIR 1942 PC 61(3) AIR 1925 PC 280(4) AIR 1932 Lahore 25(5) PLD 1965 SC 310. Keeping in view' the following circumstances:- (1) The learned trial Court exercised it discretion properly qua granring/awarding compound interest to respondent No.1. (2) Respondent No.1 paid Rs. 24,00.000/-. (3) Appellant received Rs. 24.00,000/-. (4) Both appellant and respondent No. I are doing business of real estate. (50 Property in question is commercial. (6) Oral agreement took place regard ingcommercial transaction. (7) Appellant used/utilized the said huge amount in his profitable business as a property dealer. (7) Appellant executed agreement even when he was not absolute owner or having title of the property. (8) Sh. Muhammad Amin family sold property to other people. Even then appellant did not return the said amount to respondent No. 1 and earnest money stand forefeited, by the appellant. (9) Prices of the property raised very high from 1988 onward till the decree. (10) Respondent No.1 did not receive single penny till date except litigation. (11) Socio-econnomic condition prevailing in country. (12) Suit was pending for adjudication from 1988 to 1993. (13) Long, delayed payments under vexatious and oppressive circumstances.
---
## Page 8
(14) Breach of Trust/mutual confidence. The trial Court had awarded interest from April, 1988 whereas the suit was filed on 6-8-1988 for recovery of Rs. 49,00,000/- which was decreed on 22-7-1993 directing appellant to pay Rs. 24,00,000/- plus compound interest at the rate of Rs. 15% per annum. Ln view of these circumstances on the date of suit the claim of the plaintiff/respondent was for an unascertained sum, which had to be determined by the Court. There would, therefore, be no justification to burden the appellant with the payment of interest when he did not know what his liability in terms of money as the principal amount i.e. According to him he has forefeited the said amount on account of violation of terms and conditions of the contract by respondent No.1. Whether the pleas taken by appellant were vexatious was a matter for the trial Court to comment upon. However, once the Court determined a sum due against appellant and passed a decree, obviously the plaintiff being deprived of the amount due and payable to him on that date, entitled to be compensated by award of interest. We are supported by the following judgments of Supreme Court.(1) A. Lsmailjee and sons Lid. v. Pakistan (PLD 1986 SC 499). (2) Temi S.P.A. v. PECO iPakistan Engineering Company) Ltd. (NLR 1993 SCJ 1). The relevant observations in para 30 to 31 and finally in Para 37 of the latter judgment are as under: -"30. The Pakistan Law provides for the grant of interest. The right to interest for the period prior to the date of suit has been held by the Privy Council and by the Supreme Courts of Pakistan and India to be amatter of substantive law and can be allowed if there is (a) a statutory provision, (b) an agreement, express or implied between the parties, (c) a mercantile, usage, (d) or some equitable consideration to justify such a grant. See S.N. Railway v. Rutianji Ramji (AIR 1938 PC 67), Mahabir Prasad Rungia v. Durga Dana (AIR 1961 SC 990) and Ghulam Abbas v. Trustees of Port of Karachi (PLD 1987 SC 393. The law with regard to the grant of interest prior to the date of suit on a debt or sunt certain payable at a certain specified time or otherwise is dealt with by the Interest Act. XXXII of 1839. Section 1 of this Act provides that the Court in its discretion can allow upon any debt or sum certain is payable otherwise, then from the time when demand of payment has been made in writing, giving to the debtor notice that…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.