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Petitioner: Messrs Performance Automotive Private Limited through Chief Executive Officer and 3 others VS Respondent: Muhammad Safwan Javaid and 6 others
Court Name: Islamabad High Court Judge(s): Babar Sattar Title:Messrs Performance Automotive Private Limited through Chief Executive
Officer and 3 others vs Muhammad Safwan Javaid and 6 others Case No.: F.A.O. 137 of 2020 Date of Judgment:2021-05-04 Reported As: 2022 CLC 37, 2022 PCTLR 497 Result: Appeal dismissed Judgment ORDER BABAR SATTAR, J.----The appellant is aggrieved by order dated 15.10.2020 passed by the learned Additional District Judge, Islamabad West whereby application filed by respondent No.1 under Order XXXIX, Rules 1 and 2, C.P.C. was accepted. 2. Learned counsel for the petitioner stated that respondent No.1 placed an order for purchase of Porsche 911 Turbo MY 2018 ("Vehicle") for a total consideration of $398,845.00, of which partial consideration in the amou nt of Rs.22,503,000/- (equivalent to $195,075. 00) was paid by respondent No.1 ("respondent") . The learned counsel for the appellant stated that the respondent continued to act in an irrational manner and insisted that the salesman of the appellant has committed at the time of booking the Vehicle that it will be delivered by August 2018. That clauses 35 and 36 of Vehicle Order Agreement dated 02.04.2018 ("Contract") provided a six-month delivery period. That the respondent threatened to terminate the Contract and by an email dated 01.06.2018 the appellant offered to cancel the Contract and make a 100% refund while explaining that the delivery time is tentative as per the Contract. That the appellant repeated the same by email dated 27.08.2018 and certain correspondence took place between the appellant and the respondent which reflects that the appellant made considerable effort in order not to lose a customer . Consequently , it was communicated by the respondent on 10.11.2018 that he would stick to the Contract. The learned counsel for the appellant then stated that production schedule from respondent No. 4 ("Porsche AG") was received on 13.12.2018 and 19.12.2018 was identified as freeze point after which no further customization could be ordered or features changed in relation to the Vehicle and the respondent was informed that the Vehicle would be delivered in the first fortnight of February , 2019. That on 21.12.2018 respondent once again cancelled the Contract and sought immediate refund of the advance. The learned counsel for the appellant stated that on 25.05.2019 the responde nt filed a complaint with the Consumer Court established under the
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Islamabad Consumers Protection Act, 1995 and the said complaint was dismissed by the learned Consumer Court on 24.02.2020 for want of jurisdiction. That in the said complaint the respondent had sought only recovery and damages and not delivery of the Vehicle. That on 22.06.2020 the respondent filed a suit for specific performance, declaration and mandatory injunction. That meanwhile the appellant entered into an agreement to sell the Vehicle to a third party . The learned counsel for the appellant stated that where compensation and damages are sought in the alternative, specific performance cannot be ordered as such alternate remedy is proof that the claimant would suffer no irreparable loss. He further stated that balance of convenience is in favour of the appellant as it has already entered into an agreement to sell the Vehicle to a third party . He relied on sections 21 and 56 of the Specific Relief Act, 1877 ("Act") to argue that the Contract cannot be specifically performed. That there was no prima facie case in favour of the respondent as the Contract stood cancelled on the basis of communication received from the respondent. That the Vehicle could not be delivered in accordance with the tentative schedule mentioned in the Contract due to the respondent's conduct. The learned counsel for the appellant relied on Secretary of State v. Mask & Co. (AIR 1940 Privy Council 105), Abdul Rauf and others v. Abdul Hamid Khan and others (PLD 1965 SC 671), Molasses Export Co. Ltd. v. Consolidated Sugar Mills Ltd. (1990 CLC 609) United Bank Limited, D.I. Khan v. Jinda Bibi and 8 others (1990 CLC 1901 ), Barkat. Ullah v. Wali Muhammad (1994 SCMR 1737 ), Rehmat Ali v. Additional District Judge, Multan (1999 SCMR 900), Kanwar Qutubuddin Khan v. Karachi Development Authority (2002 CLC 634), Amanat Khan and others v. Noor ur Rehman and others (2006 SCMR 1622 ) and Jubilee General Insurance Company v. Ravi Steel Company , Lahore ( PLD 2020 SC 324 ). 3. Learned counsel for the respondent stated that in accordance with clause 17 of the Contract, respondent paid 50% of the consideration for the Vehicle on 03.04.2018 which is admitted and that 30% of the balance consideration was payable upon confirmation of date of manufacture and 20% upon confirmation of shipment of the Vehicle. That neither the date of manufacture was ever communicated by the appellant to the respondent nor the date of shipment and consequently the respondent never breached any obligation under the Contract. He further stated that the appellant consistently breached his obligations under the Contract, by failing to have the Vehicle delivered within a period of six months, by failing to communicate the realization of various threshold points identified in the Contract i.e. confirmation of manufacture schedule, shipment and delivery of the Vehicle, and it was in view of the appellant's dereliction under the Contract that out of frustration the respondent threatened to terminate the Contract. The learned coun sel for the respondent stated that the appellant misrepresented himself all along as the Vehicle arrived in Pakistan on 17.09.2019, which was kept hidden from the respondent and also from the learned Consumer Court which was hearing the complaint of the respondent at that time. The appellant then clandestinely entered into third party agreement on 17.09.2019 for sale of the Vehicle, which was customized and manufactured pursuant to the respondent's order just to make an additional profit. The learned counsel for the respondent stated that the suit was filed on 22.06.2020 and an interim injunction was granted on 24.06.2020 which was confirmed by the impugned order . He submitted that the Contract had never been terminated in accordance with its terms and as the Contract is still in the field the respondent was seeking its specific performance while also seeking compensation and damages as an alternate remedy , which did not mean the Contract was not to be specifically performed. The learned counsel for the respondent stated that the respondent did seek to terminate the Contract due to the appellant's breach of the Contract and repayment of the respondent' advance upon termination of the Contract. However , the appellant refused to accept such offer made by the respondent and continued to keep the Contract alive and sought to ' enforce its terms and thus the Contract is still in the field. That the appellant cannot be allowed to approbate and reprobate simultaneously and claim that while it wished to enforce the terms of the Contract when the respondent wishe d to terminate it and get a refund, but is to be deemed to have been terminated now that the respondent is seeking its enforcement. The learned counsel for the respondent submitted that the respondent has made out a prima facie case before the learned Civil Court. That balance of convenience is on his side and he would suffer irreparabl e loss if the customized vehicle produced pursuant to the Contract, which model of the Vehicle is no longer in production, is sold to a third party as the respondent cannot procure a similar
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vehicle from the market anymore. Consequently , the impugned order suffers from no illegality and the appeal is liable to be dismissed. 4. Let us first consider the question of whether or not a contract can be specifically enforced if the party seeking its enforcement claims compensation and damages as an alternate remedy , as lack of irreparable loss in the present case was the mainstay of the appellant's argument seeking setting aside of the injunctive relief granted by the learned civil court. Puri Terminal Limited v. Government of Pakistan (2004 SCMR 1092 ) and Bolan Beverages (Pvt.) Limited v. Pepsico Inc. and 4 others (2004 CLD 1530 ) have been cited for the proposition that where a party claims compensation as alternative relief it would be tantamount to admitting that the party would not suffer any irreparable loss in case of refusal to grant injunction and it will be assumed in such case that the claimant can be made whole by payment of compensation. But the august Supreme Court laid down no such absolute rule in Puri T erminal or Bolan Beverages. 5. In Puri Terminal the subject-matter was the procurement of a Built-Operate-T ransfer contract. Alleg ing mala fide in the award of contract to another party, the petitioner sought specific performance of the contract along with seeking a declaration, compensation, damages and injunction before the High Court. A Judge-in-Chambers refused to confirm the injunction initially granted and a division bench of the learned Sindh High Court also refused to grant injunction. Discussing the details of the case, the august Supreme Court upheld the concurrent orders challenged before it as it did not find that the petitione r had made out a prima facie case. The apex Court also observed that, " [lit is pertinent to note that the petitioner irrespective of seeking declaration, permanent injunction, compensation also claimed damages as an alternative relief. By claiming damages as an alternative relief, the petitioner seemed to be not confident about the grant of other relief. Section 56 of the Specific Relief Act, stipulates that an injunction cannot be granted in the cases where an interference is sought in the functions of public duties of any department of the Federal Government or any Provincial Government or with the sovereign acts of a foreign Government. Though it was a service matter yet this Court in the case of Province of West Pakistan through the Deputy Commissioner , Hyderabad and another v. Malik Asghar Khan 1971 SCMR 569 held that issuance of temporary injunction against the Government departments in respect of service matters is bound to disturb their working and they should not ordinarily be issued unless there are compelling reasons to do so because balance of convenience ordinarily would not lie in disturbing the administrative arrangements of a department. On the question of any irreparable injury , it has also been observed that respondent on refusal of temporary injunction can claim a monetary compensation in case he succe eds in the suit. To further fortify , it would be relevant to refer the case of Ghulam Nabi and others v. Seth Muhammad Yaqub and others PLD 1983 SC 344 wherein this Court has observed that in view of provisions of section 56(1), no injunction should be grante d when equally efficacious relief can certainly be obtained by any usual mode of proceedings. Since the petitioner has claimed compensation/damages as an alternative relief in the suit, as such, the above principle is fully attracted in the instant case." In Puri Terminal the petitioner was arguing that grant of the contract for construction of a Project by a public authority to another company was illegal and sought an injunction against the grant. And thus, in view of the fact of the case, the august Supreme. Court held that denial of injunctive relief by the Sindh High Court did not suffer from any infirmity as in the event that the petitioner prevailed in its suit, grant of monetary compensation, in that case, would be equally ef ficacious relief. 6. In Bolan Beverages , Pepsico Inc. had cancelled an agreement appointing Bolan Beverages (Pvt.) Limited as the bottler and distributor of Pepsico Inc.'s products in Balochistan such as Pepsi Cola etc., and Bolan Beverages sought an injunction pending adjudication of the suit challenging such termination. One of the arguments made by the counsel for Pepsico opposing the grant of injunction was that Pepsico had already revoked the franchise agreement and stopped the sale of concentrate to Bolan Beverages and the grant of injunction would force a revoked contract upon Pepsico. It was in view of the peculiar facts of the case that the august Supreme Court .held that the loss to be suf fered by the appellant could not be regarded as irreparable loss in the following terms: "Mr. Khalid Anwar , learned Advocate Supreme Court placed reliance on section 21(a) of the Specific Relief Act, which provides that the contract for the non performance of which compensation in money is an adequate relief, cannot be specifically enforced. He added that in the instant case the Bolan Bottlers have claimed a money decree
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of an exorbitant amount which shows that if decreed, the non performance of contract shall stand compensated in terms of money and this being an adequate relief, it was never a fit case for the grant of temporary injunction. There is no cavil with the proposition that money reliefs like claim of compensation and damages are brought about by the plaintiffs mostly to avoid the misch ief of Order II, Rule 2 of the C. P. C. yet the calculation of such amount and the claim thereof would automaticall y give an impression that such loss or damage is reparable in terms of money . We agree with the learned counsel and believe that, in the circumstances of the present case, the loss cannot be irreparable in case the decree for compensation and damages etc. As claimed by the plaintiff is ultimately granted." The ratio of Bolan Beverages is not that in every case of calculation of damages by a claimant it must be concluded that the damage is reparable in the terms of money . Bolan Beverages only lays, down a general guideline for regulating the exercise of discretion in injunction matters, where in the facts and circumstances of the case the claimant is unlikely to suffer irreparable loss, which sense is further buttressed by the fact that the claimant has also put a monetary value to the loss he believes he will suffer. But in Bolan Beverages the august Supreme Court explicitly acknowledges that it is Order II Rule 2 of CPC which explains why compensation and damages are sought as alternate relief in suits for specific performance. 7. Neither Puri Terminal nor Bolan Beverages lays down a plain rule that whenever a party seeks compensation or damages as alternative relief, it must be treated as proof of lack of irreparable loss. Such interpretation would be contrary to the dicta in Ghulam Nabi v. Seth Muhamad Yaqub (PLD 1983 SC 344) that Puri Terminal relied upon and also the dicta in other cases discussed later in this judgment. 8. Ghulam Nabi v. Seth Muhammad Yaqub (PLD 1983 SC 344) involved specific performance of a contract for sale of property , wherein the petitioner has previously filed a suit for injunction, that had been withdrawn, and most of the discussion in the judgment related to non-application of res judicata and the bar in the Order II, Rule 2 of C.P.C. The apex Court held that "a relief of injunction as claimed in the first suit could not be granted in a matter of breach of contract and specific performan ce being the proper and equally efficacious relief, the first suit was hit by provisions of Section 56(i) of the Specific Relief Act." The Court cited with approval dicta from Sardar Vial v. Hirde Nath (AIR 1925 Lah. 459(2)) , wherein it was held that: "The usual mode of proceeding on breach of a contract for sale of lands is to bring a suit for specific performance of the contract. The plaintif f, therefore, was not entitled to two reliefs in breac h of a contract one by way of injunction and the other by specific performance. He was entitled only to the one relief, namely , a suit for specific performance, in which he could have added a claim for compensation: Order XI, Rule II, therefore, is no bar to the present suit. " The ratio in Ghulam Nabi thus was that where the appropriate remedy was a suit for specific performance and a plaintif f initially filed a suit for injunction, which he then withdrew for it being barred by Section 56(i) of Specific Relief Act, the subsequent suit for specific performance would not be barred under Section 11 of C.P.C. or Order II Rule 2. 9. In Barkat Ullah v. Wali Muhammad (1994 SCMR 1737 ) the petitioner argued that the respondent had asked for compensation in the event that specific performance was not granted and this was a basis for rejecting the relief of specific performance. The august Supreme Court held that, "we find little merit in this contention. It is usual for parties seeking specific performance of an agreement for the sale of land to pray in the alternative for the relief of compensation. But then, the mere fact that a party has asked for compensation as an alternative relief does not imply that it no longer insists upon the specific performance of the agreement." It relied on Abdul Karim v. Muhammad Shafi (1973 SCMR 225 ) wherein it was held that: "Section 20 says that a contract, otherwise proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same. Section 22 provides that the jurisdiction to decree specific performance is discretio nary, and the court is not bound to grant such relief merely because it is lawful to do so, but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of connection by a court of appeal. The aforesaid provisions
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thus clearly empower the court to decree a specific performance of the contract even though a sum be named in the contract as the amount to be paid in case of its breach ." 10. In Liaqat Ali Khan v. Falak Sher (PLD 2014 SC 506), it was reiterated that the relief of specific performance of an agreement was purely discretionary in nature and exercise of discretion in this regard was to be based on sound and reasonable analysis of the relevant facts of each case, particularly the terms of agreement between the parties, their subsequent conduct and surrounding circumstances etc. 11. Let us also consider dicta from a few judgments of High Courts that sugg est that an alternate prayer for damages cannot be deemed to be a concession that the claim is not specifically enforceable. i. Sakina Bai v . Kurnool Muhammad Bashir (PLD 1967 Sindh 158) "15. Counsel argued that reading section , 21(a) and section 12(c) together , the conclusion at which one arrives is that granting the relief of specific performance is a discretionary matter with the Court and that the discretion is to be exercised against granting specific performance if it is found that pecuniary compensation can afford adequate relief to the claimant. 16. Mr. Zari interpreted the above-quoted portion of the notice, marked J, as sufficient to create estoppel against the plaintiffs against giving up that position and claiming specific performance. 17. He was right to the extent that specific performance is a discretionary relief, but he did not appear to advance a sound view of the provision of law when he contended that the mere fact of a party's willingness to accept compensation in the event of the failure of the opposite party to perform its part of the contract, is sufficient to establish the allegation of fact that compensation in money is actually an adequate relief. The word of clause (a) of section 21 do not refer to the views of any one party but lay down, for adjudication, the consideration whether compensation in money is or is not an adequate relief. This aspect of the matter becomes clearer if we look at section 20 of the Specific Relief Act, which is as follows: "A contract, otherwise 'proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same. " The above section has the following illustration: "A contracts to grant B an under -lease of property held by A, under C and that he will apply to C for a license necessary to the validity of the under -lease, and that, if the licence is not procured A will pay B Rs. 10,000. A refused to apply for the licence and offers to pay B Rs.10,000. B is nevertheless entitled to have the contract specially enforced if C consents to give the licence. " 18. The conclusion to which the discussion leads is that the Court itself has to determine whether compensation in money is an adequate relief in a case like this or not. " ii. In Hakim Ghulam Rasool v . Sh. Imdad Hussain (PLD 1968 Lah. 501) the following was held: "7. It was next contended on behalf of the respondent that the compensation in money furnished an adequate relief to the appellant and, therefore, he was not entitled to a decree for the specific performance of the contract. Under section 12 of the Act, "unless and until the contrary is proved, the Court shall presu me that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money . " This rule would prima fade apply here but it is argued that, as there is a condition in the contract for the payment of damages in default of performance, whether by the vendor or by the vendee, it must be held that the parties considered that the enforcement of these damages would be adequate in case the contract is not performed. In section 20 of the Specific Relief Act it is provided: "A contract, otherwise proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same. This is further explained by illustration to section 20 which reads: "A contracts to grant B an under -lease property held by A under C, and that he will apply to C for a licence necessary to the validity of the under -lease, and that, if the licence is not procured. A will pay Rs.10,000. 00. A refuses to apply for the licence and offers to pay B Rs.10,000.00. B is nevertheless entitled to have the contract specifically enforced if C consents to give licence." In Ranger v. Great Western Railway Co. (5 HLC 94), Lord Granworth explained: "A Court of Equity is in general anxious to treat the penalty as being merely a mode of securing the due performance of the act contracted to be done, and not as a sum of money really intended to be paid. " Halsbury has expressed the rule thus: "Where the
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contract contains a stipulation that in the event of non performance a certain sum of money shall be paid, that fact is not in itself decisive in considering whether or not specific performance should be granted. Nor does the distinction between penalty and liquidated damages affect the answer to this question. The answer is to be found by considering the intention of the parties, that is, whether the party bound to performance has an alternative choice given to him by the contract to perform or to pay the agreed sum, or whether he is bound to do a certain thing, with a penal sum or sum by way of liquidated damages attached as security . In the latter case the Court, notwithstanding the penal clause, enforces performance, if the contract be such that without the penal clause it would have been proper for specific performance. Whether the contract contains a penalty clause, the contracts has his right in law upon the contract for the money payable under the clause, and also his right in equity to specific relief; , he can, at his election, obtain either form of relief, but he cannot obtain both forms ... The general rule of equity is that if a thing is agreed upon to be done, though there is a penalty annexed to secure its performance, yet the very thing itself must be done. " iii. Mian Kaman IIahi v . Digiri Sugar Mills Limited (2014 CLD 1583 ) "15. As regards the other contention of the learned counsel for the defendants that plaintiffs apart from relief of specific performance of the agreements have also claimed damages to the tune of Rs. 1, 000, 000, 000. Since damages have been calculated specific performance of the agreements would not be granted. Likewise, when a specified sum of damages has been claimed, one of the necessary ingredients for grant of interim injunction vis-a- vis irreparable loss likely to be suffered by the plaintiff is missing, the injunction could not be granted. I do not agree with the contention of defendants' counsel, that since the plaintiffs have claimed damages, no relief by way of temporary injunction could be granted. Under Rule 2 of Order XXXIX of C.P.C., the plaintiffs can apply to the Court for a temporary injunction, to restrain the defendants from committing breach of contract whether compensation is claimed in the suit or not. The damages claimed by the…
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