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Official Citation: 2020 CLC 1209
Court / Jurisdiction: LAHORE-HIGH-COURT-LAHORE
Parties: IJAZ AHMAD KHAN vs EDEN DEVELOPERS (PVT.) LTD.Honorable Justice Mirza Viqas RaufNaveed Shahryar,Muhammad Shahzad Shaukat
This judicial decision was delivered by the LAHORE-HIGH-COURT-LAHORE. The matter involves proceedings between IJAZ AHMAD KHAN and EDEN DEVELOPERS (PVT.) LTD.Honorable Justice Mirza Viqas RaufNaveed Shahryar,Muhammad Shahzad Shaukat, officially reported as 2020 CLC 1209. 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.
2020 C L C 1209 [Lahore] Before Mirza Viqas Rauf, J IJAZ AHMAD KHAN----Appellant Versus EDEN DEVELOPERS (PVT.) LTD. through Chairman Muhammad Amjad----Respondent Regular Second Appeal No.132 of 2011, heard on 27th February, 2020. (a) Specific Relief Act (I of 1877)--- ----Ss.12 & 22---Contract Act (IX of 1872), S. 55---Suit for specific performance of agreement to sell---Time as an essence of contract---Determination of---Procedure---Document produced as "mark" by the party---Evidentiary value---Plaintiff filed suit wherein defendant submitted that remaining sale consideration had not been paid within stipulated period and agreement had been cancelled as time was an essence of contract---Trial Court decreed the suit but Appellate Court dismissed the same---Validity---Time was made essence with the consent of the parties and plaintiff was bound to pay installments as per schedule annexed with the agreement---Plaintiff had not agitated alleged non-performance of the agreement on the part of defendant before any forum---Defendant issued notices to the plaintiff for payment of monthly installments but he had committed default---Even notice for cancellation of agreement was issued to the plaintiff with the direction to pay outstanding amount but he did not pay monthly installments---Amount deposited on behalf of plaintiff had been refunded to him without any objection---Plaintiff was estopped to institute the present suit---None of the party to an agreement could justify his lapse while blaming the other for non-performance of his part---Plaintiff had produced documents as "mark" to prove that defendant had failed to carry out necessary development in terms of agreement---Law did not recognize any such practice and if a document was not produced and proved in accordance with law then it could not be treated as admissible evidence---Time might not be an essence in every agreement and it could be gathered from the facts and circumstances of each case---Agreement to sell did not confer any right to the proposed vendee in the property---Agreement to sell did equip the vendee with a right to file a suit for specific performance for enforcement of the same---Plaintiff was bound to establish his alleged right in the suit property in the light of alleged agreement to sell by leading cogent and convincing evidence---Relief of specific performance was discretionary and it would depend upon judicial conscious of the Court either to grant or refuse the same---Court was empowered to refuse the relief of specific performance even in the cases where agreement had been validly proved by the plaintiff---Plaintiff could not claim the relief of specific performance as a matter of right---Trial Court had misread evidence available on record---Second appeal was dismissed, in circumstances. State Life Insurance Corporation of Pakistan and another v. Javaid Iqbal 2011 SCMR 1013; Mst. Amina Bibi v. Mudassar Aziz PLD 2003 SC 430; Muhammad Abdur Rehman Qureshi v. Sagheer Ahmad 2017 SCMR 1696; Mst. Kubra Amjad v. Mst. Yasmeen Tariq and others PLD 2019 SC 704; " 2017 SCMR 516 and Farzand Ali and another v. Khuda Bakhsh and others PLD 2015 SC 187 rel. (b) Civil Procedure Code (V of 1908)--- ----O.XLI, R. 33---Conflict between judgment of Trial Court and First Appellate Court---Effect---Judgment of First Appellate should be given preference over the judgment of Trial Court unless there was any legal infirmity or material irregularity. Muhammad Nawaz through L.Rs v. Haji Muhammad Baran Khan through L.Rs. and others 2013 SCMR 1300; Amjad Ikram v. Mst. Asiya Kausar and 2 others 2015 SCMR 1; Muhammad Hafeez and another v. District Judge, Karachi East and another 2008 SCMR 398 and Mst. Saeeda through her son Muhammad Abid v. Muhammad Naeem and 3 others PLD 2013 Sindh 39. rel. (c) Civil Procedure Code (V of 1908)--- ----S.100---Second appeal---Interference---Scope---Judgment of lower appellate court cannot be interfered with in second appeal unless some procedural defect materially affecting such findings is pointed out by the appellant. Bashir Ahmed v. Mst. Taja Begum and others PLD 2010 SC 906 and Muhammad Feroze and others v. Muhammad Jamaat Ali 2006 SCMR 1304 rel. Naveed Shahryar for Appellant. Muhammad Shahzad Shaukat for Respondent. Dates of hearing: 26th and 27th February, 2020. JUDGMENT MIRZA VIQAS RAUF, J.----The appellant namely Ijaz Ahmad Khan entered into an agreement with the Eden Developers (Private) Limited (hereinafter referred as "respondent") for the purchase of a residential plot No.A-392 size 9.850 Marla. As per agreement, the appellant has to pay an amount of Rs.22,03,350/- at the rate of Rs.1,11,000/- per Marlas as per payment schedule mentioned at annexure 'B' of the agreement which reads as under :- SCHEDULE OF PAYMENT
INSTALMENT NO.
AMOUNT (Rs.)
DUE ON
ON BOOKING
550,838
August 26, 2002
1st INSTALMENT
550,838
September 25, 2002
2nd INSTALMENT
247,877
December 24, 2002
3rd INSTALMENT
247,877
March 24, 2003
4th INSTALMENT
247,877
June 22, 2003
5th INSTALMENT
247,877
September 20, 2003
6th INSTALMENT
110,168
ON POSSESSION
(Within 15 days intimation by the Company)
TOTAL AMOUNT:
2,203,350
The appellant though made certain payments but on account of default his plot was cancelled. This prompted the appellant to institute a suit for declaration, specific performance and mandatory injunction wherein he pleaded that he was ever ready to perform his part of contract but it was the "respondent" who failed to carry out the necessary development at the site as per clause 4 of the agreement. Suit was resisted by the "respondent", who submitted written statement wherein not only factual assertions were controverted but maintainability of suit was also seriously questioned. It was pleaded that time was essence of the agreement and as such contract was righty cancelled on account of failure of the appellant to pay the outstanding amount. From the divergent pleadings of the parties multiple issues were framed whereafter both the sides produced evidence oral as well as documentary. On completion of evidence suit was decreed through judgment dated 16th April, 2010. The "respondent", feeling dissatisfied preferred an appeal under Section 96 of the Code of Civil Procedure (V of 1908) (hereinafter referred as "CPC") before the learned Additional District Judge, Lahore which was accepted through judgment and decree dated 04th May, 2011, hence this regular second appeal in terms of Section 100 of the Code ibid. 2. Learned counsel for the appellant submitted that as per terms of agreement, the "respondent" was obliged to make necessary developments at the site after receipt of first installment. It is contended that development work was to be completed within eighteen months. Learned counsel maintained that appellant has paid a considerable amount through installments to the "respondent" and successfully performed his part of agreement. It is added that appellant was ever ready to perform his part of agreement but the allotment was cancelled unilaterally and without any justifiable cause. In order to supplement his contentions, learned counsel has also drawn the attention of this Court to the documents available on the record. Learned counsel emphatically contended that suit was initially decreed through a well-reasoned judgment but the learned lower appellate court without adverting to the material pieces of evidence has drawn a contra view, which is not tenable. 3. Conversely, learned counsel for the "respondent" at the very start of his submissions contended that relief of specific performance is a discretionary relief. He added that appellant seeking specific performance was obliged to perform his part of agreement to show his bona fide. It is contended that default in payment of the amount is established beyond any doubt. Learned counsel submitted that cancellation of allotment was made after adopting all the formalities and the learned Additional District Judge has rightly set at naught the findings of the learned trial court. To fortify his contentions, learned counsel has also referred documents placed on the record by both the sides. It is also one of the contentions of learned counsel for "respondent" that time was essence. Learned counsel maintained that amount deposited by the appellant was returned to him through cheque, which was got encashed without any objection. In the last, learned counsel submitted that appellant has failed to demonstrate any perversity in the impugned judgment, justifying interference. 4. I have heard learned counsel for the parties at considerable length and also perused the record. 5. Agreement dated 24th September, 2002 (Exhibit-P2) interse parties is an admitted document. As per clause 3 of the agreement time was made essence and it was obligatory for the appellant to ensure the payment of the installments as per schedule annexed with the same. The main stay of the appellant is that he has never committed any willful default in payment of installments and the act of cancellation of his allotment is highly unwarranted. The controversy canvassed by both the sides was though capsulated through framing of multiple issues but relevant amongst those are reproduced below :- 1. Whether the defendant being owner of suit property mentioned in para No.3 of the plaint received Rs.5,50,838/- from the plaintiff on 09.09.2002 at the time of booking of suit plot and on 24.09.2002 defendant entered into an agreement to sell with the plaintiff for a total consideration of Rs.22,03,350/- and plaintiff also paid Rs.5,00,000/- through Pay Order dated 25.9.2002 and 27.1.2003? OPP 2. Whether the plaintiff is ready and willing to perform his part of agreement to sell, but defendant failed to perform his part of the agreement to sell? OPP 3. Whether the notice dated 17.7.2003 for cancellation of plot of the plaintiff is illegal, void ab initio having no legal sanctity in the eye of law. Hence, the same is liable to be cancelled? OPP In order to prove his case, the appellant examined Shaukat Ali as PW1, Nadeem Ahmad as PW2 and he himself appeared as PW3. The appellant also produced certain documents in addition thereto. Exhibit-P1 is a receipt showing payment of Rs.5,50,838/- by the appellant in pursuance to the agreement. Agreement was tendered in evidence as Exhibit-P2 which carries a schedule of payment as annexure B already reproduced hereinabove. It is though stance of the appellant that he has made payments strictly according to the schedule but record speaks otherwise. The appellant was required to pay first installment amounting to Rs.5,50,838/- on 25th September, 2002 but receipt (Exhibit-P3) depicts that he deposited only Rs.3,00,000/- and Rs.2,00,000/- through receipt (Exhibit-P4) on 22nd February, 2003. The default in payment is further established from notice (Exhibit-D5) wherein it is shown that Rs.7,94,469/- were outstanding towards the appellant. 6. It is apparent from the record that the default in payment of installments is not seriously refuted by the appellant but his case is that after payment of initial two installments, he became acquainted with the fact that the "respondent" has failed to complete the necessary development at the site, which resulted into irregular payment in future. The appellant has not agitated the purported non-performance of the agreement on the part of the "respondent" before any forum. On the contrary, it is evident from the record, especially from the documents tendered in evidence as Exhibit-P19, Exhibit-P20, Exhibit-P21 and Exhibit-P22 that despite issuance of notices by the "respondent" requiring the appellant to deposit the monthly installments, the appellant committed default. First notice for cancellation was issued on 30th December, 2002 (Exhibit-P22) wherein the appellant was directed to pay the outstanding amount Rs.4,98,715/- within ten days. This followed final cancellation notice (Exhibit-P5) dated 17th July, 2003. It is apparent that after cancelling the allotment of the appellant, the amount deposited by him was refunded through cheque which was got encashed on 26th August, 2006 without any objection. The appellant was thus estopped to institute the suit. 7. The claim of the appellant that penal clause 3 can only be invoked if the "respondent" was able to carry out the development work as specified in clause 4, suffice to observe that under the agreement every party has to perform its own part. None of the party to an agreement can justify his lapse, while blaming the other for non-performance of his part. I have noticed that plea of the appellant that the "respondent" has failed to carry out necessary developments in terms of clause 4 of the agreement rest upon the documents which were made part of record as "Mark". Law does not recognize any such practice and if a document is not produced and proved in accordance with law it cannot be treated as admissible evidence. Reference in this respect if needed, can be placed on "State Life Insurance Corporation of Pakistan and another v. Javaid Iqbal" (2011 SCMR 1013). 8. There is no cavil that in every agreement time may not be an essence and it can be gathered from the facts and circumstances of each case but in this case by virtue of clause 3, it was specifically mentioned by both the sides with their free consent that time would be essence of the agreement. Clause 3 is reproduced below for ready reference and convenience :- "3. That the time fixed for payment of each installment is the essence of the Agreement. If payment is not made as per the said Payment Schedule persistently, Plot shall be cancelled without notice and the paid amount shall be refunded on completion of the Project after deduction of 5% of the total price of the Plot irrespective of number of installments paid." 9. Section 55 of the Contract Act, 1872 deals with the subject which reads as under :- "55. Effect of failure to perform at fixed time, in contract in which time is essential.----When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before a specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. Effect of such failure when time is not essential.---If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. Effect of acceptance of performance at time other than that agreed upon----If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so." In the case of "Mst. Amina Bibi v. Mudassar Aziz" (PLD 2003 Supreme Court 430) the Hon'ble Apex Court, while dealing with the similar proposition outlined the scope of Section 55 of the Contract Act, 1872 and laid down certain guidelines in the following manner:- "13. It is well-settled that intention to make time of the essence of the contract must be expressed in unmistakable language and it may be inferred from what passed between the parties before, but not after, the contract is made. A mere mention of a specified period in an agreement for completion of sale has been held as not to make the time of essence of the contract. In contracts of sale of immovable property, ordinarily, time is not considered to be of essence of the contract unless it was expressly intended by the parties and the terms of the contract do not permit of any other interpretation: Both the learned counsel have heavily relied upon Abdul Hamid v. Abbas Bhai Abdul Hussain (PLD 1962 SC 1), which reiterates the legal proposition as to whether the time was of essence of a contract. It may be inferred from what passed between the parties before but not after the contract is made. Equity will not assist where there has been undue delay on the part of one party to the contract and the other has given him reasonable notice that he must complete the contract within a definite time. In the case in hand, it has been found as a matter of fact that the appellant neglected to perform her part of the contract whereas the respondent had issued timely notice to her for discharge of her obligation by executing the relevant documents. Mr. Dogar agitated that it was incumbent upon the respondent to obtain No Objection Certificate from the Society for transfer of the plot in his favour but as no such plea was taken at the trial of the suit, we are not inclined to entertain the same at this stage. Refer Zaheer Ahmad v. Abdul Aziz (1983 SCMR 559). Suffice it to observe, conduct cat (sic.) the parties tends to reflect that the respondent, though a property dealer by profession, was anxious for completion of the contract within the stipulated period. It was the appellant, who avoided and neglected to perform her part of contract with a view to frustrate the contract. Learned counsel submitted that by not tendering the balance consideration to the appellant, respondent had rendered the contract void and she was entitled to revoke the same. We do not feel persuaded to agree with the submission of the learned counsel, as concurrent findings of fact are against her which do not suffer from misconception of law or misconstruction of evidence. Learned counsel relied upon Bahawood Deen v. B.G. Desouza (PLD 1974 Quetta 36) and Ghulam Nabi v. Muhammad Yaqub (PLD 1983 SC 344). Both the cases reiterate the principle enunciated in the earlier judgments that mere mention of time in a contract for sale of immovable property for its performance does not necessarily mean that time was of essence of the contract. Intention of parties in that behalf can be gathered from the terms of the contract and facts and circumstances of the case. Besides the above said cases, rule of law was clearly laid down in Essabhoy v. Saboor Ahmad (PLD 1973 SC 93), Zaheer Ahmad v. Abdul Aziz (1983 SCMR 559), Muhammad Yaqub v. Muhammad Nasrullah Khan, (PLD 1986 SC 497), Mussarat Shaukat Ali v. Safia Khatoon (1994 SCMR 2189) and Sandoz Limited v. Federation of Pakistan (1995 SCMR 1431). In Zaheer Ahmad (supra), it was held that a party guilty, of prevention of completion of contract within time could not plead that time was essence of the contract. This principle was reiterated in Mussarat Shaukat Ali, (supra). Saeeduzzaman Siddiqui, J. (as his Lordship then was) speaking for the Full Bench observed as under:-- "It is open to the parties while entering the agreement of sale in respect of an immovable property to provide that the time for performance of the agreement will be treated as essence of the contract. In such cases, if the party seeking enforcement of the contract is shown to be in breach of the contract, the Court may in appropriate cases refuse to enforce the contract. However, in the absence of a provision in the agreement to sell an immovable property that the time fixed for performance of the contract is to be treated as the essence of the contract, the time fixed for performance of the contract is not treated as the essence of the contract. Therefore, specific performance of an agreement of sale relating to immovable property can be granted by Courts even after expiry of the period fixed in the contract." 10. Though in the normal practice in contracts involving immovable properties, time is not generally treated as essence but in view of wide spread of property business and rapid increase in prices of immovable properties, law has gone under a radical change and in this context case of "Muhammad Abdur Rehman Qureshi v. Sagheer Ahmad" (2017 SCMR 1696) is quite relevant wherein the Hon'ble Supreme Court of Pakistan held as under :- "9. As far as the argument of learned counsel for the appellant that time was of the essence of the contract is concerned, we do not find ourselves in agreement with him for the reason that admittedly time for execution of the sale deed was extended on a number of occasions and at least on a few of the said occasions it was on the request of the appellant. However, in view of the commercial nature of the property business and a widespread trend of rapid increase in prices of immovable properties, a seller cannot be left at the mercy of the buyer to bind him in an agreement to sell and then delay completion of the contract for as long as he may wish hiding behind an archaic legal principle that in contracts involving immovable properties, time is generally not of the essence. This rule was settled many centuries ago when prices of real estate remained constant and stagnant for years on end. It is high time that this rule was revisited and revised keeping in view the changed circumstances and the ground realties of the real estate market. In this day and age, on account of rapid increase in population demand for real estate has increased. Further, on account of various reasons better financial resources are available with prospective purchasers. Big investors have also entered the fray to take the benefit of growing demand for real estate. On account of increasing demand and limited supply, property prices rise rapidly, at times in a matter of months. Therefore, the aforesaid principle that in real estate transactions, time is not of the essence cannot indiscriminately be applied. It must be interpreted and applied specifically considering the facts and circumstances of each case to balance equities, keeping the standards of reasonability in mind and ensuring that injustice is not done to either side." The above principles were further reiterated by the Hon'ble Apex Court in the case of "Mst. Kubra Amjad v. Mst. Yasmeen Tariq and others" (PLD 2019 Supreme Court 704). 11. Law is well settled that the agreement to sell does not confer any right to the proposed vendee in the property, subject matter of the said agreement. At the most agreement to sell equips the vendee with a right to file a suit for specific performance for the enforcement of the same. The appellant has to establish his alleged right in the suit property in the light of alleged agreement to sell by leading cogent and convincing evidence. In terms of Section 22 of the Specific Relief Act, 1877 the relief of specific performance is discretionary relief and it depends upon the judicial conscious of the court, either to grant or refuse the same to the person claiming right under agreement. The court is empowered to refuse the relief of specific performance even in the cases where the agreement was validly proved by the plaintiff. The plaintiff cannot claim the relief of specific performance as a matter of right. Reliance in this respect can be placed on "" (2017 SCMR 516) and "Farzand Ali and another v. Khuda Bakhsh and others" (PLD 2015 Supreme Court 187). 12. Though there is divergence of views in the courts below and conclusions are contrary to each other but this Court, while exercising jurisdiction in terms of Section 100 of "C.P.C." is supposed to make comparative analysis of both the judgments in order to determine their validity on the touchstones of said provision. It is cardinal principle of law that in the matter of giving preference to the judgments of learned lower Courts, while analyzing the same in exercise of appellate jurisdiction, the preference and regard is always given to the findings of the learned Appellate Court, unless those are suffering with any legal infirmity or material irregularity. Reference in this respect, if needed can safely be made to the case of "Muhammad Nawaz through L.Rs v. Haji Muhammad Baran Khan through L.Rs. and others" (2013 SCMR 1300). Relevant extract from the same is reproduced herein below:- "12 We have also taken into consideration the judgment of the Appellate Court which is based on proper appraisal of evidence on record and the findings of the Appellate Court are to be preferred as it has been held by this Court in the cases of Madan Gopal and others v. Maran Bepari and others (PLD 1969 SC 617) that if the findings of fact reached by the first appellate Court is at variance with that of the trial Court, the former will ordinarily prevail, although it would not possess the same value or sanctity as a concurrent finding." This view also finds support from the cases of Muhammad Shafi and others v. Sultan Mahmood and others (2010 SCMR 827) .." The above view also…
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