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Petitioner: KARACHI GAS CO. LTD., KARACHI VS Respondent: MESSRS FANCY FOUNDATION
Court Name: Sindh High Court Judge(s): Zaffar Hussain Mirza Title: KARACHI GAS CO. LTD., KARACHI vs MESSRS FANCY FOUNDATION Case No.: Suit No, 447 of 1976 Date of Judgment:1976-11-03 Reported As: PLD 1977 Karachi 191 Result: Order accordingly
Judgment ORDER ' This is an application by the plaintiffs for grant of a temporary injunction restraining defendants from transferring, alienating, or creating any encumbrance upon the suit property, pending the decision of the suit. 2. The facts formic g the background of the controversy in this suit may be briefly stated. The dispute in this case relates to a plot of land bearing Survey No, 7/3, St. No, S. R. I. Sarai Quarter, measuring about 3,325. S. Yards , situated at I. I. Chandigarh Road, Karachi. The defendants. Messrs Fancy Foundations are the owners of this plot and it is admitted that in 1967 the plot was covered by buildings and structures. The case of the-plaintiffs is that in about April 1967, the parties entered into an oral agreement whereby the defendants agreed to sell to the plaintiffs the property in suit which was known as Nariman Kothari Chambers at the rate of Rs, 1,000 per sq. Yards. Under the terms of the agreement, the plaintiffs paid a total sum of Rs, 30,00,000 out of the consideration of Rs, 33,25,000, between 20.4-1967 and 16-5-1967. On 20-11-1969, the defendants confirmed the existence of the contract in a letter addressed by them to the plaintiffs wherein they acknowledged the receipt of the aforesaid amount of Rs, 30,00,000 and informed the plaintiffs that necessary formalities regarding the execution of conveyance deed and registration thereof will be completed as soon as the remaining tenants are ejected enabling them to hand over clear possession of the plot. It is pertinent to mention that in this very letter it was further disclosed that the defendants had already commenced necessary action to eject the remaining tenants. It is common ground between the parties that the litigation between the defendants and the tenants of the property terminated by judgment of the Supreme Court dated 30.5-1974 by which finally the orders of ejectment passed against the tenants were upheld and the tenants were directed to vacate the
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premises within four months. It was, however, observed by the Supreme Court that at the appropriate time it will be open to tenants to apply to the Rent Controller for relief under subsection (5-B) of section 13 of the West Pakistan Urban Rent Restriction Ordinance, 1959 which provides for re-instatement of a tenant in the new building constructed on the same site. 3. At this stage it may be mentioned that the case of the plaintiffs as set out in the plaint as well as in the correspondence exchanged between the parties all along was that the defendants had agreed to sell to the plaintiffs the suit property free from all claims, charges, liens, or encumbrances and that they had undertaken to transfer possession without restriction or qualification. The plaintiffs alleged that they were ready and willing always to perform their part of the contract and to pay the balance of purchase price but the defendants were avoiding to perform their part of the contract. Accordingly, the plaintiffs sent notice dated 2-1-1975 calling upon the defendants to complete the transaction of sale and hand over clear possession within six weeks. In this notice which is produced as Annexure E to the plaint it was clearly asserted that the defendants had agreed under the terms of the contract to hand over clear possession free from the rights and claims of others, but the possession that was now being offered by them was subject to the rights of the tenants to reinstatement as declared by the Supreme Court. It was, therefore, required of the defendants in this notice to negotiate and settle with the tenants of the property and deliver possession thereof free from rights of the tenants. It seems that correspondence had been captiously exchanged between the parties much of which has been produced by the parties in support of their respective cases. The plaintiffs finally by their notice dated 16-7-76 called upon the defendants to hand over to the plaintiffs clear possession of the property" and to convey the same by making out a valid subsisting marketable title in favor of the plaintiffs, and complete the sale against the receipt of the balance amount of Rs, 3,25,000. They also claimed in this notice the payment of rents realized by defendants from the tenants as well as the proceeds of the debris, as it appears that by that time the standing structures and buildings on the plot in question had been raised down. In this notice the plaintiffs also disclosed that the defendants were trying to sell the suit property to some other party for a higher amount and warned them to exist from doing so. Since no response was forthcoming from the defendants the plaintiffs filed the present suit on 30-7-1976 praying for the relief of pacific performance of the contract of sale along with a decree for payment rents and proceeds of debris and a sum of Rs, 36,67.239.76 as compensation for refusal and delay in performance of contract. In the alternative plaintiffs prayed for a money decree for Rs, 99,92,239.76 comprising the sum of Rs, 30,00,000 paid as advance consideration and Rs, 33,25,000 by way of compensation for breach of contract and the remaining amount as interest. 4. Along with the plaint the plaintiffs submitted the present application for interim relief of temporary injunction as stated earlier. The defendants have resisted the application and have filed counter-affidavit. They have denied that any contract was arrived at between the parties containing the terms and conditions as alleged. According to them an understanding was reached between them in relation to the plot in suit which was referred to in the minutes the meeting of the Board of Directors of the plaintiffs company held in May 1971 wherein a decision was recorded regarding the probable rate at which the said plot could be purchased from Fancy Foundation. t is their case that this understanding was confirmed by the defendants in their letter dated 20-12-1969 (Annexure A to the plaint) which clearly states that action for ejectment of tenants was in progress. However, V'e defendants admit having received from the plaintiffs a sum of Rs, 30,00,000 in terms of the understanding referred to above. They further alleged that they kept the plaintiffs informed about the various stages of the litigation between them and the tenants, and therefore they have vehemently denied the allegation that the plaintiffs were kept in dark regarding the true nature of the proceedings against the tenants. The defendants have categorically asserted that the plaintiffs
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were aware of the right of the re-instatement of tenants in the new building prescribed by law by amendment of the West Pakistan Rent Restriction Ordinance, 19)9 by the amending Act issued in 1965. In this connection the defendants have relied upon various documents consisting of correspondence exchanged between the parties from 20-11-1969 to 14-11-1974. In short the plea of the defendants is that the understanding between the parties as contained in letter Annexure A to the plaint did not contain a stipulation that possession of the property would be handed over to the plaintiffs unimpaired by the statutory rights of the evicted tenants for re-induction in the new building. The defendants have further alleged in their affidavit that in view of the fact that legal proceedings instituted for ejectment of the tenants was likely to take considerable time, the plaintiffs agreed in December 1969 that the plot in suit be transferred to the Pakistan Chrome Mines Ltd., for a profit. -But, they changed their mind once again and decided to retain the plot for themselves. However, the defendants pressed this fact into service and urged that on account of this they were absolved of all liabilities in this aspect. The defendants then submitted that after the decision of the Supreme Court in all good faith they offered to hand over the possession to the plaintiffs after getting the delivery thereof from the tenants. It is their case that the plaintiffs declined to accept the possession and were not ready and willing to perform their part of the contract. In these circumstances the defendants alleged that they were free to enter into a valid agreement for the sale of the plot and did so in favour of the Muslim Commercial Bank Ltd , Karachi prior to receiving ad interim orders of injunction passed by this Court, The defendants have also taken a plea that the plaintiffs by their letters dated 13-12-1972, 9-2-1973, and 14-11-1974 categorically agreed to accept back the sum of Rs, 30,00,000 paid by them and to treat the contract as cancelled. Further they alleged that by their letter dated 12-12-19-,5, the defendants finally terminated the understanding between the parties in view of the breach on part of the plaintiffs, and this position was acquiesced in by the plaintiffs by their long silence for about seven months. It was, according to them, after the ' plaintiffs have learnt of the agreement of sale entered into between the defendants and Muslim Commercial Bank Ltd., that the plaintiffs mala fide claim specific performance of the alleged contract. 5. In support of the application, Mr. Snaraf Faridi, learned counsel appearing for the plaintiffs submitted that the documentary evidence produced by the plaintiffs, specially the letter written by the defendants hated 20-11-1969 Annexure A clearly established a strong prima facie case that the parties entered into a contract whereby the defendants agreed to sell the plot in suit to the plaintiffs for the stipulated consideration. It was accordingly contended by the counsel that in order to protect the interests of the plaintiffs it was necessary to maintain the property which is the subject-matter of this suit in status quo. He further urged that the blatant assertion on the part of the defendants that they wish to transfer their rights and interests in the property to a third party under a contract entered into subsequent to the contract in suit, clearly make out a case of irreparable injury to the plaintiffs If the injunction prayed for is not granted. Learned counsel laid great stress upon the admitted fact of the defendants having received Rs 30,00,000 being nearly 90 per cent. Of the entire consideration for sale and went on to argue that this amount was illegally retained on false pretexts by the defendants for their own use over a long period of 9 years. In order to establish balance of convenience in favor of plaintiffs, learned counsel invoked the doctrine of Bs pendens and placing reliance on two decisions of this Court, urged that where in a case it is shown that a valid contract for sale of immovable property prima fade exists Between the parties, ancillary relief by way of injunction restraining transfer of the properly in dispute is invariably granted. In this connection he placed reliance on Miss Iqbal Fatima v. Kaiser Tanveer (1), Perveen Begum v. Mohammad Sarwat Khan (2) and S. N. Gupta v. Sardar Nanda Ghosh (3).
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6. Mr. Sharaf Faridi submitted that the plaintiffs insisted upon the defendants to settle the claim of the tenants as regards their right of rehire diction in the new building under a bona fide belief that the contract provided for possession to be handed over to the plaintiffs free from any such rights. However, if the Court comes to the conclusion at the time of decision of this suit that such rights are a necessary incident of the transfer of title to the plaintiffs as a private of Estate, they would be willing to accept the property subject to such rights. He, therefore, strongly contended that this question is not material for the purpose of deciding the question whether in view of the plaintiffs' past assertion, they are entitled to specific performance of the contract so as to subject their title to the rights of the tenants, 7. Mr. Khalid Ishaque, learned counsel appearing for defendants in reply contended that it is legally impossible to transfer possession of the plot free from rights of the tenants in view of the legal position arising out of the decision given by the Supreme Court. He urged that if the contract provided transfer of possession free from all such claims, then the contract is unenforceable by the doctrine of frustration, inasmuch as, it is not possible to perform it in terms of the alleged stipulation. The submission of the counsel was that the Court in an action for specific performance cannot substitute a different contract for the one entered into between the parties and therefore if the original contract has become impossible of (1) PLD 1976 Kar. 734 (2) PLD 1956 Sind 521 (3) PLD 1960 Dacca 153 ' performance the only result would be to refuse specific performance of the contract. Learned counsel also raised the plea of limitation and referring to the letter dated 9-2-1973 (Annexure D/28), contended that to the knowledge of the plaintiffs the defendants had declined to hand over the possession to them in the manner demanded by them more than three years prior to the institution of the suit. Counsel invited my attention in to letter dated 13-12-1972, Annexure D/27 filed by the defendants and submitted that this furnishes the clear proof of the fact that the plaintiffs abandoned the contract and greed to accept money compensation and consequently they cannot row plead that they were ready and willing to perform their part of the contract. Learned counsel next strongly contended that the plaintiffs have been guilty of laches in so far as they threatened legal action as far back as 9.2-1943 (Annexure D/28) but remained quiet for more than three years, which disentitled them from seeking equitable relief. Counsel also contended that there is overwhelming documentary evidence to show that there exists a fundamental disagreement between the parties regarding the terms of the contract and no contract can be specifically performed of which the terms are not certain or unambiguous. Referring to the arguments of the learned counsel for the plaintiffs, counsel contended that the plaintiffs, themselves are seeking to enforce an altered contract and therefore the defendants could not be blamed for their refusal to perform the alleged contract in its original form. 8. I have given my best consideration to the respective contentions and arguments advanced by the learned counsel for the parties. Hiving regard to the voluminous documentary evidence produced by the parties, all said and done, the conclusion is inescapable that, prima facie, there existed a contract for sale of the suit property between the parties. Without meeting to decide the issue finally, for the present purpose, I would not hesitate to express that to my mind it is unimaginable that a huge sum of Rs, 30,00,000 was parted with only on a pious wish that the sale of the property would come about in the future. However, the question that has vexed my mind is, is this fact alone sufficient to pass order of injunction tying down the hands of the defendants from dealing with their property? And if not, will the plaintiff be able to avail the remedy sought in the suit by way of specific performance if the suit is decreed for that relief? 9. As to the first question Mr. Sharaf Faridi emphatically contended that the Court is not required to go into the niceties of the case on merits at this stage. Learned counsel made this submission in an
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effort to tide over the forceful contention of other side that there is clear documentary evidence available to show that at one stage the plaintiffs had abandoned the contract and demanded refund of the advance payment. It is needless for me to burden this order with the decision as to what is meant by prima facie case and of the considerations which weigh with the Court in -V e matter of grant of temporary injunction. The principles governing the discretion for granting such relit f are now very well laid down. I am unable to agree that the question of injunction can be approached with any hard and fast rule like a mathematical formula. Injunction is a discretionary and equitable relief and each case has to be decided in the light of its own facts and circumstances. 10. I agree that the decision in such cases lies within a narrow compass and care is required not to adjudicate an issue as such at this stage but, nonetheless, in order to judge whether the plaintiff has made out a prim fade case, the assessment of the facts of the case in the limited sense is inevitable. In am, therefore, of the clear opinion that a Court for this purpose would be well within the bounds of legitimate exercise of this jurisdiction to take into consideration the admitted documents placed before it. It is needless to say that all such assessments are of tentative nature and do not bind the Court trying the suit at the hearing. If authority is required for this proposition reference may he made to cases reported in 1970SC MR 654 and PLJ 1975 SC 71. 11. Now the prayer for injunction is being sought as an ancillary relief and therefore necessarily has reference to the main relief of specific performance. The plaintiffs in order to show that they have a prima jack case must not only show that there was a contra& between the parties but that S prima facie the contract still subsisted and further that all the prerequisites for grant of such relief were present in the case or that there is nothing to impair the remedy sought at the trial. In this connection I might with advantage refer to Margin.Th Siddiqi v. Hama Ahmad (1) where their Lordships of the Supreme Court made the following observations:- "Although as interim injunctions are granted under Order XXXIX, rule IL of the Code of Civil Procedure, the principles, which govern the grant of injunction contained in the Specific Relief Act, have also to be kept in view. Under section 56, clause F, one of the principles is that an injunction cannot be granted to prevent the breach of a contract the performance of which cannot specifically be enforced. Now it is well settled that contracts for personal service are not contracts which could be specifically enforced. The granting of an injunction therefore, i3 a service matter like the present one is opposed to the principles governing the grant of such injunctions." This being the position, it would legitimately be open to the defendants to show that the contract sought to be enforced is not prima facie capable of or specific performance, even for the purposes of temporary injunction. 12. In the light of the above principles I shall now examine the circumstances of this case. In Annexure P/27 which is letter dated 13-12-1972, addressed by the plaintiffs to the defendants it was stated as follows:- "It was not proper for K. G. C. To have paid Rs, 30,00,000 without obtaining possession of the plot. Fancy Foundation should, therefore, arrange to hand over clear possession of the plot to K. G. C. Within three months; alternatively K. G. C. Would be prepared to accept back amount paid to Fancy Foundation plus interest for the period. Fancy Foundation should either arrange to retain the plot for itself or sell it to some other party." ' Again in Annexure 28 which is a letter dated 9-2-1973, the plaintiffs stated as follows:- "I, therefore, write to request to arrange to hand over vacant possession of the Airman Kothari Chambers plot to K. G. C. Without any encumbrance within one month from the date of this letter and make out marketable title and complete the sale and conveyance within three months as otherwise we shall consider that the agreement for sale has been cancelled and the Fancy Foundation will be liable
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(1) 1974 SCM R 519 ' to refund the amount of Rs, 30,00,000 to K. G. C. With interest from the date of payment and other costs." ' In Annexure D/15, which is a letter date I 14-11-1974, the plaintiffs again wrote as under:- "We shall, therefore, be grateful if in "accordance with this indication you will kindly arrange to have vacant possession of the plot of Nariman Kothari Chambers, free from all encumbrances, given to us immediately failing which we would be constrained to request you kindly to refund the entire amount of Rs, 30,00,00a paid by us towards purchase price of the plot together with interest." ' On 4-7-1975, defendants' Advocate write to the plaintiffs vide Annexure D/23 saying that the defendants were willing to hand over the vacant possession of the plot as it had been obtained from the tenants pursuant to the judgment of the Supreme Court dated 30-5-1973. It was further stated in this letter that the arrangement for sale of the above-mentioned property to the plaintiffs was subject to the claim of the tenants for re-instatement. It was stated at the Bar by Mr. Khalid Ishaque that as many as six times the possession was offered, but the plaintiff insisted on the defendants to settle the claim of the tenants as regards re-induction in the new building to be erected on the plot. This position is reflected in the notice given through the Advocate by the plaintiffs dated 2-4-1975 (s).Annexure B to the plaint). It was stated in this notice as under "Our clients accordingly require you to negotiate and settle with the tenants and occupants of the property and make the property free of rights and claims of others and free of clog or other restrictions on the property and its title." From the above circumstances, two things emerge, prima fade, namely that at one stage the plaintiffs were willing to accept refund of the advance payment along with interest and other charges; and the at until the filing as the suit the plaintiff insisted on the possession to be delivered free from claims of the evicted tenants, whereas the defendants continued to offer possession subject to all legal rights vesting in the tenants under the judgment of the Supreme Court: It was in the context of these circumstance that Mr. Khalid Ishaque forcefully contended that the plaintiffs are di entitled to discretionary relief as by their own showing monetary compensation was considered adequate relief by them. Alpo that the parties were a variance as to the essential terms of the contract regarding the nature of the possession to be delivered by the defendants. In this connection, learned counsel placed reliance on Ratnji Patel v. Rao Krishwar Singh (1), which w a case for specific performance of contract for sale of immovable property. Their Lordships of the Privy Council refused decree for specific perform on the finding that compensation in money was an adequate relief to the plaintiff and in view of the express provisions contained in sections 12(c and 21(a) of Specific Relief Act. He also cited the case of Bari Kishna v. K. C. Gupta (2) in which following the above Privy Council case, it was held that in a suit for specific performance of contract where it is established that the plaintiff had himself at one stage offered to accept damages as adequate compensation in place of specific performance, the jurisdiction to grant specific performance is barred by section 21(a), Specific Relief Act. 12-A. Since Mr. Sharaf Faridi strongly relied upon the judgments mentioned earlier I would consider the same in the light of the present case (1) AIR 1929 P C 190 (2) AIR 1949 All. 440 ' The first case referred to above by the learned counsel namely Mst. Iqbal Fatima v. Kaiser Tanveer (1) is my own judgment in a case for grant of temporary injunction. The passage relied upon is contained in para. 9 of the judgment which states that it was not necessary to give finding on the factual controversies raised by the parties as they would be subject-matter of decision at the trial and that what was necessary to see was whether the plaintiff had made out an arguable case by raising a serious question to go to trial, There can be no cavil against the proposition of law stated in the passage as the same is axiomatic in regard to the matters of temporary injunction. However,
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the perusal of the judgment will show that tentative assessment of the facts of the case was undertaken for the purpose of determining prima fade case. The second case referred was Perween Begum v. Mohammad Sarwat Khan (2) in which in a suit for specific performance of contract for sale of plot of" land the Court granted temporary injunction restraining time defendant from transferring the property. In this case, Inamullah, J., (as he then was) had relied upon the observations of Lord Justice Turner in the case of Halley v. The London Bank of Scotland 3). As the counsel particularly relh:d upon this observation it is necessary to reproduce it, which is as under: - "I have always understood…
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