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Petitioner: Mst. HAJRA BAI VS Respondent: Mst. AMTUL BATOOL BEGUM
1989 M L D 4254
1989 M L D 4254
[Karachi]
Before Haider Ali Pirzada, J
Mst. HAJRA BAI--Plaintiff
Versus
Mst. AMTUL BATOOL BEGUM through her Legal Heirs--Defendant
Suit No. 17 of 1978, decided on 3rd July, 1988
(a) Transfer of Property Act (IV of 1882)--
--S. 53-A--Agreement to sell between parties--Necessary ingredients of--Receipt for payment of part of sale price, signed by the original defendant, attested by two witnesses wherein sale consideration was also mentioned, two lines at the bottom whereof mentioning that "a separate agreement of sale would be executed later on within a week"--No separate agreement was, however, executed by the parties--Receipt for payment of part of sale price duly signed by the original defendant thus amounted to a concluded agreement to sell in spite of absence of separate agreement of sale, because it contained the essential terms of a binding agreement to sell the immovable property.
Hussey v. Horne Payne (1879) 4 A C 311; Harichand v. Mancharam v. Govind Luxman Gokhale 50 Ind. App. 25; AIR 1923 P C 47; Currimbhoy and Company Ltd. v. Greet 60 Ind. App. 297: AIR 1933 PC 29; Shankarilal Narayandas Mundale v. New Mofusail Co., Ltd. 73 Ind. App. 98: AIR 1946 PC 97; Custodian of Enemy Property, Islambad v. Hoshang M. Dastur and 6 others PLD 1977 Kar. 377; Major (Retd.) Ahmad Khan Bhath v. Masooda Fatima PLD 1981 Kar. 398; Harichand's case AIR 1923 PC 47; Von Hatzfeldt Wildenbury v. Alexander (1912) 1 Ch. 284: (1911-13) A E R Rep 148; Ridgway v. Walton 6 H L C 289; J.I.J. Hyam v. M.E. Gubbay AIR 1916 Cal. 1; Raingold v. Bromley (1931) 3 L R 307, Ch. D and Simon Reuben and others v. Haji Shaikh Mahomed Shustary AIR 1922 Bom. 404 ref.
(b) Contract Act (IX of 1872)--
---S. 19--Voidability of contract on misrepresentation--Plea of misrepresentation on the part of defendant not established on record--Admitted facts between parties did not constitute ingredients of misrepresentation--Defendant pleading misrepresentation was not a pardanashin lady as she had been negotiating for the recovery of arrears of rent and possession from tenants of the property, the subject-matter of suit and was thus capable of protecting her interests- Defendant's plea that the receipt constituting agreement to sell was induced by misrepresentation was thus an after thought.
(c) Specific Relief Act (I of 1877)--
---S. 12--Contract Act (IX of 1872), S. 73--Suit for specific performance of contract--Plaintiff proved on record to be ready and willing to perform her part of agreement for sale--Defendants were thus directed to execute a sale-deed in favour of plaintiffs in terms of agreement, on plaintiff tendering the agreed amount and necessary expenses for execution and registration of sale-deed--In the event of defendants failing to execute the sale agreement, plaintiff was required to deposit the amount in Court and get the sale agreement executed through Court.
S. Ishtiaq Ali for Plaintiff.
Naseem Farooqi for Defendant.
Date of hearing: 10th February, 1988.
JUDGMENT
This is a suit filed by the plaintiff Mst. Hajira Bai against Mst. Amtul Batool (hereinafter referred to as the original defendant) for specific performance of an agreement for sale dated 31-10-1979 between the plaintiff and the original defendant alternatively for Rs. 2,00,000 as damages and refund of Rs. 5,000 with interest at the rate of 12% per annum from the date of the suit till the date of payment.
The plaintiff's case is that in July, 1977 the plaintiff and her husband decided to purchase a house as they were living in a rented house. In September 1977 they came in contact with the original defendant through Amin Haroon of Thaver & Sons and negotiations started and on 31st October, 1977 there was an oral agreement between the plaintiff and the original defendant whereunder the original defendant agreed to sell the property in suit to the plaintiff for a total sale consideration of Rs. 4,60,000. The agreement was arrived at in the presence of Amin Haroon, Arif Hussain, the plaintiff and the original defendant.
The material terms and conditions which were settled between the parties are set out hereinbelow:
(i) That the plaintiff shall pay a sum of Rs. 5,000 (Rupees five thousand only) on 3rd November, 1977 through cheque as earnest money towards part-payment of the sale consideration of Rs. 4,60,000 of the said property.
(ii) That the terms and conditions shall be reduced into writing duly signed by both parties within a week from the date of the payment of Rs. 5,000 as mentioned above and a further sum of Rs. 50,000 shall be paid as part-payment of sale consideration by plaintiff to the defendant at the time when the terms and conditions shall be reduced into writing and be in signed by both parties.
(iii) That the plaintiff shall further pay a sum of Rs. 2,65,000 to the defendant at the time of handing over the physical vacant possession of the said property by the defendant to the plaintiff within 30 days from the date of the contract i.e. 31st October, 1977.
(iv) That the remaining balance of sale consideration of Rs. 1,40,000 shall be paid by the plaintiff to the defendant at the time of execution and registration of sale-deed before the Registrar or Sub-Registrar, Karachi.
(v) That it was also agreed that the defendant shall execute and get registered the sale-deed of the said property within two months from the date of the payment of Rs. 5,000 by the plaintiff to the defendant. It was also agreed that the defendant shall transfer the said property free from all encumbrances, liens, claims of whatsoever nature.
(vi) That it was also agreed that this agreement of sale would specifically be enforceable in law between the plaintiff and the defendant.
It is alleged in the plaint that after finalization of sale, the plaintiff paid Rs. 5,000 as agreed on 3rd November, 1977 to the original defendant and she after receiving the cheque executed a receipt thereof duly signed by her in the presence of Amin Haroon and Arif Hussain. The receipt (Ext. 5/2) is in the following terms:--
"Received Rs. 5,000 (Five thousand only) vide cheque No. SBM 474745 dated 3-11-1977 drawn on Habib Bank Ltd from Mst. Hajra Bai Mohammad towards part payment of sale consideration of Rs. 4,60,000 (four lacs sixty thousand only) of my property hearing Plot No. 713/1 adjacent to Fatmi Masjid, situated on Dr. Jackson Road, Off Jamshed Road, Fatima Jinnah Colony, Karachi admeasuring 1,000 (one thousand) square yards for which a separate agreement of sale will be executed later on within a week thereof."
It is alleged in the plaint that a draft agreement was prepared by the plaintiff through her Advocate. The plaintiff sent the draft agreement alongwith Rs. 50,000 but the origial defendant started to avoid to sign the agreement and also refused to accept payment of Rs. 50,000 saying that at the time of possession the defendant would accept payment of Rs. 3,15,000 instead of Rs. 2,65,000. Thereafter the original defendant refused to perform her part of the contract in spite of requests of the prospective vendee. The suit was filed on 9th January, 1978.
The original defendant contested the suit. Her case was that the property in suit was let out to National Construction Company on monthly rent of Rs. 4,500. The said company neither paid the rent nor vacated the property in suit and there was an accumulated arrears of rent of about Rs. 1,60,000. She being an old sick lady was mostly confined to bed and as such could not pursue the matter of either recovery of possession or arrears of rent of the property in suit. One Amin Haroon approached her with a proposal that if she agreed to pay 10% as accumulated arrears of rent, M/s. Thaver and Sons would take the responsibility of getting vacant possession of the property in suit for her as well as for the recovery of the arrears of rent and current rent. It is alleged in the written statement that the said Amin Haroon by his representations, pursuasion and conduct was able to create complete confidence in the original defendant and she agreed to entrust the matter of recovery of arrears and possession of the property in suit on the condition that she will pay 7-1/2 of the arrears to M/s. Thaver & Sons and they will recover the arrears of rent and possession of the house for her The said Amin Haroon was visiting her off and on in that connection and he was able to create original defendant's full trust in himself. During his subsequent visits he suggested to the original defendant that he has been able to find a person who is desirous to purchase the property and would undertake to recover the arrears of rent from the National Construction Company for the original defendant. He insisted and persuaded the original defendant to meet him. Next day he brought Abdul Sattar the husband of the plaintiff. The said Abdul Sattar made a proposal to purchase the bungaow for Rs. 6,60,000 besides an undertaking that he would recover the arrears of rent and pay the same to the original defendant. He, however, suggested that the sale-deed shall 'be executed and registered for Rs. 4,60,000 and Rs. 2,00,000 mill be paid at the time of possession and in this way he will be able to save stamp duty and registration charges and the original defendant would get benefit of paying less as Gain Tax and Property Tax as the amount of Rs. 2,00,000 which will be paid at the time of delivery of possession shall not be included in the sale consideration of the Deed. It was also agreed that he will pay 25% as earnest money. He brought a cheque for Rs. 5,000 as token money and promised that a regular agreement of sale embodying all the terms and conditions shall be prepared within a week and would be brought to the original defendant for her approval. She was not prepared to accept the cheque Rs. 5,000 but it was under those circumstances receipt Ext. 5/2 was executed. The terms as stated in the plaint are all imaginary and false. It is her case that the receipt was obtained by fraud, deceit and dishonest representations and it is a nullity in the eyes of law. The plaintiff and her husband never brought or sent any draft agreement. The defendant herself telephoned Amin Haroon and asked them as to why they have not brought the draft agreement. After about a week Abdul Sattar came with Amin Haroon and pretended that the delay was due to the fact that he was contacting National Construction Company and negotiating for the recovery of possession and arrears of rent and was trying to finalize the matter. He told that it would take some time and he further suggested that instead of an agreement on original terms, an agreement in respect of ostensible price of Rs. 4,60,000 be entered and he produced a draft which he wanted her to sign and represented that the agreement for payment of Rs. 2.00,000 and possession would be entered into separately after the matters were settled with National Construction Company. 1t was at this stage the original defendant suspected some foul play and evil designs and she straightaway told them until and unless all the terms and conditions originally agreed were embodied in a proper sale agreement, she will not sign. The claim to compensation is also denied.
The following issues were raised:
(1) Does the receipt constitute a concluded agreement enforceable by law?
(2) In view of the offer of sale consideration of Rs. 6,60,000 by the plaintiff, is the plaintiff entitled for specific performance of the contract. If so, its effects?
(3) Whether the plaintiff has given undertaking to recover the arrears of rent from N.C.C. accumulating amounting to Rs. 1,26,000 for the defendant as one of the terms of the agreement of sale of the property in dispute
If so, its effects?
Issue No. l:
The plaintiff examined her husband and attorney and Amin Haroon, the estate broker. P.W.1 Abdul Sattar stated in his evidence that on 31-10-1977 it was settled that the property in suit will be sold to the plaintiff by the original defendant for a sum of Rs. 4,60,000. Accordingly he paid a sum of Rs. 50,000 for which a receipt (Ext.5/2) was executed. It was agreed at that time that an agreement of sale will be executed between the parties within one week of the execution of the receipt and upon execution of agreement of sale the sum of Rs. 50,000 was to he paid to the original defendant. He then sent a draft agreement of sale to the original defendant on which the corrections were made by witness Arif Hussain who is nephew of the original defendant. The draft agreement was produced as Ext. 5/3. No formal agreement, however, was drawn between the parties as the original defendant kept on avoiding its execution on one pretext or the other.
The witness denied the suggestions in cross-examination that the actual sale consideration of the property was Rs. 6,60,000. This witness also denied the suggestion that apart from these terms he was also liable to recover a sum of Rs. 1,26,000 from National Construction Company which was due to the original defendant as rent and which he was also to pay to the original defendant.
P.W.2 Mohammad Amin Haroon stated in his evidence that the property in suit was agreed to be sold by the original defendant for a sum of Rs. 4,60,000. He further stated that there was no over money agreed to be paid in the deal. He stated that he had not made any commitment to the original defendant that a sum of Rs. 1,26,000 due to her as rent from National Construction Company will be recovered through Abdul Sattar. In fact there was no such term.
D.W.No.l, Arif Hussain the nephew of the original defendant stated in his evidence that the terms discussed between the parties in his presence were that (1) the plaintiff should recover the arrears of rent, (2) the original defendant was not in a position to give vacant possession of the house to the plaintiff, and (3) that the sale consideration should be a sum of Rs. 4,60,000. It was also discussed that over and above the sum of Rs. 4,60,000 an additional sum of Rs. 2,000,000 should be paid to her at the time of delivery of possession. He admitted his signature on receipt (Ext.5/2). He stated that he made some suggestions in the draft agreement (Ext.5/3). The suggestions were marked as Exts. 7/1 and 7/2. He stated that this draft was never finalized. He stated that the original defendant informed him that the proposed conditions were the provision of Rs. 2,00,000 which was settled as "over money" and also a provision for the amount of outstanding rents to be recovered by the plaintiff and to be paid after recovery to the original defendant.
D.W.No.3 Dr. Zubair Hassan, the son of the original defendant, stated that the total sale consideration agreed between the parties was Rs. 4,60,000. The plaintiff was to pay Rs. 4,60,000 at the time of agreement and the balance at the time of possession. He stated that the broker had to recover the rent from the tenant and this amount was to be paid by to the purchaser. He stated that National Construction Company had vacated the property. He admitted in his cross-examination that the original defendant did not sign the receipt under coercion or duress but under "pressure".
Mr. Kazim Hassan, the learned counsel appearing for the defendants contended that the contract was neither final nor concluded. However it was urged before me on behalf of the plaintiff that the contract was concluded between the parties.
Evidence on record shows that the deceased Mst. Amtul Batool (original defendant) was the owner of the property in suit. I was referred to a receipt Ext. 5/2. This receipt is signed by the original defendant and Arif Hussain and Amin Haroon were the witnesses to the signature. It shows that the sale consideration is Rs. 4,60,000 on which the original defendant agreed to sell the property in suit to the plaintiff. I nay (gain add here that no sale agreement was executed between the parties in spite of the fact that last two lines of the receipt mention that "a separate agreement of sale will be executed later on within a week hereof". It is on the bass of last two lines reproduced hereinabove the defendant contended that the contract between the plaintiff and the original defendant was not concluded on the ground that it was subject to a separate agreement for sale. The essential question on this branch of law is to find out whether the formal or separate agreement is of such a nature that it was merely commemorative of the evidence on the point. The actual pleading in the plaint is that it has to "evidence" the agreement and nothing more. The memorandum of agreement in this case is the usual memorandum of agreement for sale containing the usual terms. The observations of Lord Chancellor Earl Cairns at page 313 of Hussey v. Horne Payne (1879) 4 A.C. 311 on three certificates of price, property and purchaser have been relied upon as indispensable requisites for a concluded contract of which the Court will enforce specific performance.
The receipt Ext. 5/2 is signed by the original defendant and witnessed by her nephew Arif Hussain and estate broker Amin Haroon. The payment of Rs. 5,000 is shown as part payment out of total sale consideration of Rs. 4,60,000 in respect of property bearing No. 713/1, Dr. Jackson Road, Off Jamshed Road, Fatima Jinnah Colony, Karachi.
The law on this point is to be found in the Catina of cases in Harichand v. Mancharam v. Govind Luxman Gokhale, 50 Ind. Appl, 25: (AIR 1923 P.C. 47); Currimbhoy and Company Ltd. v. Greet, 60 Ind. App. 297: (AIR 1933 P.C. 29); Shankarilal Narayandas Mundale v, New Mofusail Co. Ltd., 73 Ind. App. 98: (AIR 1946 P.C.97), Custodian of Enemy Property, Islamabad v. Hoshang M. Dastur and 6 others (PLD 1977 Kar. 377) and Major (Retd) Ahmad Khan Bhatti v. Masooda Fatima (PLD 1981 Kar. 398). Harichand's case (AIR 1923 P.C. 47) lays down the proposition that documents may upon their true construction, amount to a binding contract for sale and purchase of immovable property. enforceable by specific performance, although they provide for the preparation of a contract by a lawyer and that provisions with other terms of the agreement are described in the transaction of the documents as a condition. The Judicial Committee in that case distinguished the principle laid down in Von Hatzfeldt Wildenbury v. Alexander (1912) 1 Ch. 284: (1911-13) A.E.R. Rep 148. At page 49 to Harichand's case (AIR 1923 P.C. 47) the Judicial Committee enunciated the law as follows:--
"Whether an agreement is a completed bargain or mere y a provisional arrangement depends on the intention of the parties as deducible from the language used by the parties on the occasion when the negotiations take a concrete shape. As observed by the Lord Chancellor (Lord Cranworth) in Ridgway v. Walton (6 H.L. Cases 289) the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to an agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement".
In Currimbhoy's case in 60 Ind. App. 297: (AIR 1933 P.C. 29), no new principles were laid down but the observations in Harichand's case (AIR 1923 P.C. 47) were reiterated at page 31 by Lord Thankerson. Finally, the Privy Council in Shankerlal's case (AIR 1946 P.C. 97) redefined the position almost on similar terms. Lord Du Parcq at page 99, 100 observed:--
"But apart from the objection that the point was taken too lam, their Lordships, with all due respect for the Judges of the High Court, are satisfied that it is without substance. In their Lordhsips' opinion, the facts do not support the inference that the parties intended to be bound only when a formal agreement had been executed. On the contrary, their Lordships consider that there was ample evidence to prove that both parties intended to make, and believed that they had made, a binding oral agreement. Their desire and intention to put that agreement into formal shape does not affect its validity."
Same argument at the Bar was advanced on the ground that in this case there was reference to separate agreement in the receipt Ext. 5/2, therefore, it is to be regarded as a mere condition and on that ground it is to be distinguished from these cases. I am not convinced that it is so. In particular it was exactly the kind of point that Lord Du Parcq discussed and disposed of at page 100 of AIR 1946 P.C. 97 where his Lordship laid down the law in the following terms:--
"It was contented by counsel for the respondent that the agreement was necessarily incomplete because it had been left to the solicitors to settle some of its terms and because (as counsel rightly submitted) a solicitor has no implied authority to make a contract on his client's behalf. Their Lordships are of opinion, however, that no question as to a Solicitor's implied authority arises in this case. In their Lordships' view, it is a fair inference from the evidence that Sir Shapurji authorized Mr. Manekshaw to put before the plaintiff for his acceptance the "usual" terms. In the circumstances which have already been explained, this seems to their Lordships to have been a very natural and businesslike course for Sir Shapurji to take and necessarily resulted, when the appellant accepted the terms, in the formation of a binding contract."
In Custodian of Enemy Property v. Hoshang M. Dastur and 6 others (PLD 1977 Kar. 377) a Division Bench of this Court laid down the law in the following terms:
"In each of these cases the agreement relied on as constituting the completed contract was held to be inchoate, which provided either that the agreement was subject to `solicitor's approving the lease' or `the covenants to be contained in the lease" or was subject to `usual terms'. The proposition of law laid down in these cases is, no doubt, would settled. But, the question whether the parties had reached a concluded contract or not, is a question of fact to be deduced from the correspondence, and other documentary and oral evidence. The true test for deciding this question is to ascertain whether the parties were of one mind on all the material terms at the time it is said to have been finalised between them and whether they intended that the matter was closed and concluded between them. There is nothing on record to show as to what were the alleged "other terms and conditions" to be contained in this regular lease deed. Manek Chinoy (D.W.2) in answer to a Court question, admitted that no efforts were made by the Owner to finalise the terms and conditions of-the lease. Nor did Mr. Dingomal, the Legal Adviser, who drafted the letter (Exh. 8), even submit any new terms or conditions for consideration of the Dasturs. On the other hand, the documentary evidence supports the conclusion that all main and material terms and conditions to be contained in the proposed lease deed were settled."
This question has been considered by my learned brother Saeed uzzaman Siddiqui, J. in Major (Retd.) Ahmad Khan Bhatti v. Mst. Masooda Fatima (PLD 1981 Kar. 398) in which he has come to the conclusion after giving cogent reasons which are fully supported by the various authorities discussed by him in the said judgment that "in such circumstances where a document which is relied upon as a contract, contemplates execution of another document, it is really a question of construction of the document whether the execution of the latter document is a condition of the terms of the bargain or is merely an expression of desire on the part of the parties as to the manner in which the agreed transaction is to take place. If the execution of later contract is found to be a condition of the terms of the bargain then no contract comes into existence until the later agreement is executed between the parties, but if the execution of the later agreement is held to be only an expression of desire on the part of the parties to state the manner in which the agreed transaction is to go through, then the non -execution of the later agreement may be ignored and the transaction as evidences by the original document may be given effect to as a binding contract."
In view of the principles of law laid down m the above decisions, it is, clear that on the facts of this case I do not read the contract to sell in this case to be subject to and formal agreement of this nature as to preclude the conclusion and I hold that there was already a concluded contract for sale.
It now remains only to say that the two cases of J.I.J. Hyam v. M.E. Gubbay (AIR 1916 Calcutta 1) and Raingold v. Bomrley (1931 Law Reports, Chancery Division 307, Volume 11) referred to by the learned counsel for the defendants are entirely distinguishable, both on facts and on the law. In the first case referred, the contract stipulated written agreement and in the latter case the arrangement was `subject to…
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