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Official Citation: 2012 PLD 247
Court / Jurisdiction: Supreme Court of Pakistan
Year of Decision: 2011
Decision Date: 2011-09-30
Parties: Haji ABDUL KARIM and others vs Messrs FLORIDA BUILDERS (PVT) LIMITED
This judicial decision was delivered by the Supreme Court of Pakistan on 2011-09-30. The matter involves proceedings between Haji ABDUL KARIM and others and Messrs FLORIDA BUILDERS (PVT) LIMITED, officially reported as 2012 PLD 247. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.
Case cited as PLD 2012 Supreme Court 247
Court Name: Supreme Court of Pakistan Judge(s): Nasir-ul-Mulk, Mian Saqib Nisar, Muhammad Sair Ali Title: Haji ABDUL KARIM and others vs Messrs FLORIDA BUILDERS (PVT) LIMITED Case No.: Civil Petition No,2052 of 2009 Date of Judgment:2011-09-30 Reported As: 2012 C.L.R. 33, K.L.R. 2012 Supreme Court 13, PLD 2012 Supreme Court 247 Result: Leave refused
JUDGMENT
JUDGMENT MIAN SAQIB NISAR, J.---The plaint of the petitioners in their suit for the specific enforcement of an agreement to sell regarding immovable property has been rejected by the learned single Judge of the Sindh High Court (the trial Court) vide order dated 4-11-2008, holding the suit to be barred by law i,e, limitation. The appeal against the above order filed by the petitioners before a Division Bench of the High Court has also failed on 3-11-2009. Hence this petition. 2. For the purposes of resolving the propositions involved in the matter, the relevant facts of the case in brief are, that admittedly the petitioners (the vendees) and the respondent-company (the vendor) entered into an agreement to sell dated Nil November, 1996 at Karachi with regard to the sale of the suit property situated in Islamabad, for a total consideration of Rs,13,59,00,000 out of which a sum of Rs,50,00,000 had been paid by the petitioners and for the remaining they were obliged to pay to the respondent according to the schedule of payment given in the agreement. After the discharge of certain reciprocal obligations by the parties, as envisaged by the agreement, 31-12-1997 was the date fixedtherein for the completion and finalization of the sale transaction, but this could not be so accomplished. The petitioners, therefore, on 7-1-2003 instituted the suit for specific performance against the respondent, complaining and alleging in the plaint, that the transaction could not be concluded within the stipulated period due to the failure and/or the inabilities of the respondent to perform its part of the agreement; in this regard, it is stated that soon after the execution of the agreement, the respondent through its Chief Executive informed the petitioners that serious differences have emerged between its constituents/directors etc. And the respondent, therefore, expressed its inability to proceed further in the matter for the steps that were required to be taken by the respondent, as the seller and the petitioners as the purchasers in
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furtherance of the agreement, it is thus alleged that a request was made by the respondent to the petitioners to stop the payment of the cheque dated 2-12-1996 amounting to Rs,50,00,000 (Rupees fifty lac) payable by them under the agreement, so as to avoid the risk of freezing of that amount upon the encashment thereof, in consequence of the winding up of the respondent-company or any other order being passed by the court in the pending litigation. It is averred in the plaint that the respondent thus sought time to settle the differences between themselves (directors/shareholders etc.) and further requested for the deferment of the performance of the part of petitionersobligations under the agreement till the differences were resolved/settled. The particulars of the litigation in which the respondent purportedly got entangled are mentioned in the plaint. It is also the case of the petitioners that the respondent was apprehensive about the encroachment upon the suit property and, thus, sought the petitionershelp to secure it, which. Was ensured by the petitioners by incurring huge amounts in the manner of constructing the guard rooms at the suit property, and also by deploying the guards, whose salaries/charges were paid by the petitioners. The plaint also find mention that certain further payments were made by the petitioners on account of the respondent, which amount was/is adjustable towards the sale price, thus for the afore-going some meetings were held between the parties, last in this regard being on 12-12-2002, in which certain fresh decisions about their obligations in relation to the agreement to sell and the liability of the petitioners to pay the consideration were taken. It is in the above scenario, a case was set out in the plaint, that the time was not the essence of the agreement; the sale could not be concluded within the stipulated period due to failure and/or inabilities of the respondent to perform its obligations under the agreement; the petitioners were prevented to discharge their obligation about the payments of the consideration as per the schedule under the agreement on the specific request of the respondent and in view of the litigation and difference within the respondent-company, otherwise the petitioners were ready and willing to perform their part of the contract. It may be pertinent to mention here that nowhere in the plaint it is specified that the date fixed in the agreement for the performance of the, agreement was changed/altered by the parties by any subsequent/further express agreement between them. Rather from the contents of paragraph No,18 of the plaint which pertains to the accrual of cause of action it is clear that the petitioners for the purposes of limitation of the suit were resorting to second part, instead of first part of Article 113 of the Limitation Act, 1908 (The Act). The respondent by filing its written statement controverted the averments of the plaint, and denied the allegations .Levelled about its failure or inabilities to perform its part of the agreement, rather specifically asserted that the petitioners defaulted in the payment of the sale consideration in terms of the agreement. The meetings between the parties and the alleged decisions taken therein were refuted; it was specifically and unequivocally asserted that due to the failure on part of the respondent to pay the consideration in terms of the agreement, the same under intimation was duly cancelled by the respondent on 19-2-1998. It was categorically stated that 31-12-1997 was the date fixed in the agreement for the performance thereof, thus the suit filed beyond the period of three years from that date was hopelessly barred by time. Be that as it may, beside, filing the written statement, the respondent also moved a separate application under Order VII, Rule 11, C.P.C. Seeking the rejection of the plaint on account of the bar of limitation. It is on this application that the impugned order dated 4-11-2008 was passed by the learned Single Judge, which has been upheld in appeal. 3. Mr. Abdul Hafeez Pirzada, learned counsel for the petitioners has argued, that the proposition of limitation in view of the facts stated in the plaint, which were controverted in the written statement by the respondent, was a mixed question of law and fact, therefore, such question could not be resolved without enabling the petitioners to produce evidence to prove that there was no default on the part of the petitioners to fulfil their obligations in terms of the agreement, rather the
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respondent was a delinquent party in this regard. While rejecting the plaint, the averments made therein should be taken to be correct, and if still the suit appears to be barred by law only then the plaint could be rejected, in the instant case, from the facts mentioned in the plaint, which should be presumed to be correct, it is clear that in terms of the agreement to sell, after having received certain amounts (parts) of consideration, the respondent was obliged to deliver the possession to the petitioners coupled with the execution of a power of attorney in favour of one of the petitioners authorizing him to have the layout and building plans approved/amended, to obtain permission for the advertisement and premise-wise sale of the premises proposed to be constructed and commence work on the suit property, besides the agreement envisaged that the respondent has an approved building plan, which turned out to be invalid, moreover the requisite permission/NOC from the concerned authorities for the transfer of the suit property to the petitioners was not procured by the respondent. These were pivotal obligations of the respondent which were a condition precedent for the payment of the whole or any part of the consideration, but the respondent miserably failed in this regard, therefore without prejudice to the fact, that the respondent itself stopped the petitioners to pay the amounts, they (petitioners) on account of the above circumstance 'were also not obliged to make the payment/s. In view of the expression "on or before" (emphasis supplied) mentioned in The agreement the date i,e, 31-12-1997 was not a date fixedfor the performance of the agreement within the object and meaning of Article 113 of the Act, therefore, the instant case shall be covered by the second part of the Article, which prescribes the starting point of limitation, when the plaintiff has notice that the performance is refused, the suit as per the facts stated in the plaint, was accordingly filed well within time. It is also argued that the petitioners have always been ready and willing to perform their part of the agreement and it is the respondent who has failed to discharge its obligations, as has been highlighted in the plaint, therefore, this case has to be adjudged in the context of the conduct of the, parties and the principles of waiver etc.; the time was not the essence of the contract, in this regard, besides relying upon the general rule particular reference has been made to a stipulation in the agreement, that in case the consideration is not paid by the petitioners strictly in accord thereto, they, shall be liable to pay markup as liquidated damages. In support of his various contentions, the learned Advocate Supreme Court has placed reliance on the judgments reported as Mst. Mehmooda Begum v. Syed Hassan Sajjad and 2 others (PLD 2010 SC 952), Muhammad Taj v. Arshad Mehmood and 3 others (2009 SCMR 114), Fatima Moeen v. Additional District Judge, Sheikhupura and 22 others (1992 SCMR 1199), Lal Khan through Legal Heirs v. Muhammad Yousaf through Legal Heirs (PLD 2011 SC 657), Muhammad Tufail and 3 others v. Ghulam Farid and 4 others (2000 SCMR 1037) and Inam Naqshband v. Haji Shaikh Ijaz Ahmad (PLD 1995 SC 314). 4. Mr. Khalid Anwar, learned counsel for the respondent, has conversely argued that the instant case is squarely covered by first part of Article 113 of the Act, which is mandatory provision of law and provides a period of three years to file a suit for specific performance from the 'date fixedbetween the parties for the conclusion of the transaction. As the date is clearly specified/fixed in the agreement to sell, therefore, the suit admittedly filed beyond three years therefrom was/is barred by law i,e, limitation, and the plaint has been rightly rejected by the courts. It is also stated that the bald allegations made in the plaint with an abortive attempt to seek the extension/enlargement in time when the case is covered by first part of Article 113 ibid has no relevance and it is the agreement which has to be taken into account for the purpose of computation of time, except when the time would extend, excluded or enlarged under any provisions of the Act, but this is not the case set out by the petitioners in their plaint, in this regard reliance has been placed on the provision of Order VII Rule 6, C.P.C. Learned counsel further argued, that the time being an essence of the contract or otherwise, has no relevance as far as the limitation for a suit for the specific performance, particularly the one covered by first part of Article
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113 of the Act, is concerned. It is also submitted that the plaint could be rejected in terms of Order VII, Rule 11, C.P.C. When it appears from the statement in the plaint to be barred by time, the plaint should be read with reference to the documents which the plaintiff has filed along therewith. The other submissions made by the counsel for the petitioners have also been controverted by Mr. Khalid Anwar. 5. Heard. In view of the aforementioned facts and the submissions of the learned counsel for the parties, the important/relevant proposition/s which, inter alia, emerge for the resolution by this Court is/are, the scope of Article 113 of the Act and Order VII Rule 11, C.P.C.; the applicability of these two provisions to the facts and circumstances of the present case. In the context of interpreting Article 113 of the Act, the provisions for the facility of reference are reproduced below:-- Description of suit Period of limitation Time from which period begins to run 1 2 3 113. For specific performance of a contract.Three years The date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused. And for the purpose of the above, it seems expedient to touch upon the legislative history of the Article. The prior Limitation Acts of 1871 and 1877, had in each of them the corresponding provision as in Article 113. However, the words in 1871 Act, were "when the plaintiff has notice that his right is denied", postulating that the second part of Article 113 was the only provision then regulating the limitation for the suits for specific performance and the commencement of three years period was dependent on the proof of the fact of notice of denial and the question of limitation was accordingly to be decided, having no nexus with the date even if fixed by the parties for the performance of the contract. The said provision however was expanded and these words were substituted in the subsequent Act of 1877, as are also found in the third column of the present Act. The change brought by the Legislature in 1877 Act was retained in Article 113 of the Act, by including the first part that the time would run from the 'date fixedfor the performance is thus purposive and salutary in nature, which contemplates and reflects the clear intention of the legislature to prescribe the same (three years) period of limitation, however, providing that the parties who otherwise have a right to fix a date of their own choice in the agreement for the performance thereof, such 'date in consequence of law shall also govern the period of limitation as well for the suits falling in this category. Thus now the three years period mentioned in Column No, 3 of the Article runs in two parts:-- (i) from the 'date fixed for the performance; or (ii) where no such date is fixed when the plaintiff has notice that performance is refused. The reason for the said change as stated above is obvious. In the first part, the date is certain, it is fixed by the parties, being conscious and aware of the mandate of law i,e, Article 113, with the intention that the time for the specific performance suit should run therefrom. And so the time shall run forthwith froth. That date, irrespective and notwithstanding there being a default, lapse or inability on part of either party to the contract to perform his/its obligation in relation thereto. The object and rationale of enforcing the first part is to exclude and eliminate the element of resolving the factual controversy which may arise in a case pertaining to the proof or otherwise of the notice of denial and the time thereof. In the second part, the date is not certain and so the date of refusal of the performance is the only basis for computation of time. These two parts of Article 113 are altogether independent and segregated in nature and are meant to cater two different sorts of specific performance claims, in relation to the limitation attracted to those. A case squarely falling
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within the ambit of the first part cannot be adjudged or considered on the touchstone of the second part, notwithstanding any set of facts mentioned in the plaint to bring the case within the purview of the later part. In other words, as has been held in the judgments reported as Siraj Din and others v. Mst. Khurshid Begum, and others (2007 SCMR 1792) and Ghulam Nabi and others v. Seth Muhammad Yaqub and others (PLD 1983 SC 344) "when the case falls within first clause the second clause is not to be resorted to". However, the exemption, the exclusion and the enlargement from/of the period of limitation in the cases of first part is permissible, but it is restricted only if there is a change in the date fixed by the parties or suck date is dispensed with by them, but through an express agreement; by resorting to the novation of the agreement or through an acknowledgment within the purview of section 19 of the Act. And/or if the exemption etc. Is provided and available under any other provision of the Act however, to claim such an exemption etc: grounds have to be clearly set out in the plaint in terms of Order VII Rule 6, C.P.C. We have examined the present case on the criteria laid down above, and find that according to the admitted agreement between the parties, 31-12-1997 was/is the 'date fixedbetween them for the performance of the agreement, which has not been shown or even averred in the plaint to have been changed or dispensed with by the parties vide any subsequent express agreement. In this behalf, it may be pertinent to mention here that during the course of hearing Mr. Abdul Hafeez Pifzada, on a court query, has stated that there is no agreement in writing between the parties which would extend/dispense the date fixed and that he also is not pressing into service the rule of novation of the contract. We have. Also noticed that the petitioners have neither alleged any acknowledgment in terms of Article 19 of the Act, which should necessarily be in writing, and made within the original period of limitation nor any such acknowledgment has been pleaded in the plaint or placed on the record. Besides, no case for the exemption etc. Has been set-forth in the plaint and the requisite grounds are conspicuously missing in this behalf as is mandated by Order VII, Rule 6, C.P.C. 6. Mr. Abdul Hafeez Pirzada, learned Senior Advocate Supreme Court has, however, urged that 31- 12-1997 was not the 'date fixedin the agreement as is envisaged by Article 113. In this context, it has been argued that the use. Of the words 'on or before(emphasis supplied) enabled the parties to have the completion/finalization of the sale prior to 31-12-1997, therefore it takes the said date out of the realm of the 'date fixedas is spirited by Article 113. We do not find ourselves persuaded` to agree with this plea, as in our view 31-12-1997 is a definite date with C reference to calendar, there is no ambiguity or absurdity in this behalf it is the cut-off date and connotes the ultimate, the absolute, the final and the 'dateterminal intended and meant by the parties for, the completion of the transaction. Only due to the use of the word 'beforeas a disjunctive to the said date, affording the parties with an opportunity to have the deal done before the given date would not mean that the date fixed shall lose its legal efficacy and the consequences as are envisaged by the Article. The case reported as Inam Naqshband v. Haji Shaikh Ijaz Ahmad (PLD 1995 SC 314) on which reliance has been placed by the learned counsel to argue that the period of one week mentioned in the agreement of that case was not construed a date fixed, suffice it to say that the ratio of the dictum is inapplicable to this case for the reason that no calendar date was fixed in the agreement supra case, but the position herein is absolutely otherwise, 31-12-1997 has been clearly and D unequivocally mentioned in the agreement to sell. Besides the said judgment was considered by this Court in akin circumstances thereto, and a different view was propounded in the judgment reported as Muhammad. Ramzan v. Muhammad Qasim (2011 SCMR 249). From the above discussion, the scope of Article 113 of the Act having been elucidated, we find that the present case was/is not covered by second part of the said Article, rather the first part thereof, is squarely and exclusively attracted and the limitation period shall commence forthwith from the date fixed by the parties, notwithstanding the alleged failure, inabilities of the respondent to perform its part of the
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obligations, the alleged interaction between the parties, their conduct, which all shall have no relevance in the context of the limitation of those suits covered by first part of the Article. 7. Before proceeding further in the matter and being still on the subject of limitation (Article 113 ibid), we would also like to dilate upon another submission of the learned counsel for the petitioners, that in view of the general principle and on account of the peculiar circumstances of this case the time was not the essence of the contract, therefore, the period of limitation shall be covered, as per paragraph No,18 of the plaint attracting second part of the Article. In this regard, in our candid view the noted rule has nothing to do with the proposition of limitation of the specific performance cases. The said rule is not an enunciation of any statutory instrument, but has emerged as the principle of equity for the .Exercise of discretion by the Courts in specific performance cases. It only touches on the right to enforce the contract and has relevance and nexus in respect of the judicial consideration, whether the agreement/contract should be enforced or not by the court in the set of .Facts of a given case, by resorting to the said rule and nothing more. Whereas, the limitation is a command of law, prescribing the statutory period within which the right has to be exercised and enforced. The courts thus shall have no lawful 'authority to ignore the date/period stipulated in the contract, which as a legal consequence is meant to regulate the period of limitation in terms of first part of Article 113 ibid, and on the touchstone of the equitable, discretionary principle, and to hold against the vivid and clear provisions of law, by extending, enlarging or exempting the said period in violation thereof. 8. At this stage it would be appropriate to carry out an analysis of Order VII, Rule 11 of the Code of Civil Procedure 1908. The said provision is reproduced below: (11) Rejection of plaint.---The plaint shall be rejected in the following cases: (a) Where it does not disclose a cause of action. (b) Where the _relief claimed is under-valued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so; (c) Where the relief claimed is properly valued, but the plaint is written upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so; (d) Where the suit appears from the statement in the plaint to be barred by any law. This is an important provision of law which has often been construed in a wide ranging series of cases. The interpretation applied thereto ,falls within a wide spectrum and some of the important case-law will be examined by us at a later stage. Prior to doing so, however, it is important to carry out an analysis of the precise language used in the statute. The salient features contained in the provision are the following; (i) The words used are "rejection of plaint". In other words the legislature has deliberately refrained from providing that the suit should be "dismissed". A distinction has thus been drawn between a dismissal of a suit and the rejection of a plaint and it is this distinction which needs .To be elucidated. (ii) The opening words indicate that it is mandatory on the court to reject the plaint if one or more of the four clauses is found to be H applicable. This is made, clear by the use of the word "shall" in the opening phase. (iii) The first clause need not detain us for long since it contains a clear statement that in case the plaint does not disclose a cause of action it is to be rejected. The next two clauses, namely, clauses (b) and (c) relate to the valuation of the plaint and the stamp duty to be affixed thereon and again do not require much discussion. It is the last clause, namely (d) in relation to which most of the litigation has taken place. It is this, therefore, which requires a careful analysis. (iv) Clause (d) has three constituent elements. The first part uses the important word "appears", the second part relates to statements made in the plaint, (i,e, there is no reference to the written
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statement) and the third part states the inference to be drawn if a suit "appears" from the statement in the "plaint" to be "barred" by any law. This read in conjunction with the opening words of Rule 11 make it mandatory on the court to reject the plaint. Right at the inception it needs to be stated clearly that Order VII, Rule 11, C.P.C. Cannot be properly construed in isolation. In order to understand the theory of law underlying it reference…
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