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Petitioner: Mst. Shabina Firdous VS Respondent: Latif Siddique & 02 others
Court Name: Lahore High Court Judge(s): Shujaat Ali Khan, Ahmad Nadeem Arshad Title: Mst. Shabina Firdous vs Latif Siddique & 02 others Case No.: Regular First Appeal No.17780 of 2021. Date of Judgment:2022-02-21 Reported As: 2022 LHC 1613, PLJ 2022 Lahore 532 Result: Appeal dismissed
Judgment
J U D G M E N T. AHMAD NADEEM ARSHAD, J. This Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 (CPC) has been directed against the judgment and decree dated 09.12.2020, passed by the learned Civil Judge, Sialkot whereby respondents-vendees' suit for specific performance of agreements to sell was decreed. 2. Briefly, the facts, forming factual canvass of this appeal, are that appellant, being owner in possession of factory measuring 02 Kanal 06 Marla falling in Khewat No.902, Khatoni No.936 Kharsa No.1337 situated within the revenue estate of Jiram Pur Said Pur, District Sialkot, entered into an agreement to sell with the respondents against total consideration of Rs.6,75,00,000/- through agreement to sell dated 25.01.2016, which was followed by another agreement dated 30.04.2016. Out of total consideration amount, a sum of Rs.100,00,000/- was paid by the respondents-vendees at the time of execution of agreement to sell dated 25.01.2016, whereas, Rs.2,37,50,000/- were to be paid by the respondents-vendees on 25.04.2016 while Rs.1,68,75,000/- were to be paid on 25.09.2016 and the last instalment of Rs.1,68,75,000/- was to be paid by the respondents-vendees on 31.12.2016. The respondents-vendees paid total sum of Rs.3,37,50,000/- in terms of two agreements to sell. As the instalment due on 25.09.2016 was not paid by the respondents-vendees, the appellant served upon them a legal notice, dated 17.10.2016, sanitizing them to pay the due installment with the warning that in the event of their failure the agreement would stand revoked which was replied by the respondents-vendees inter-alia with the plea that since the appellant had not got issued NOC from the relevant department as the property was mortgaged with the bank against a loan, they were not bound to pay the installment(s). As a last resort, respondents-vendees filed suit for
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specific performance of agreements to sell dated 25.01.2016 on 24.01.2017, which was contested by the appellant inter-alia averring that since the respondents-vendees failed to perform their part of contract, they were not entitled to a decree for specific performance. Initially the Issues were framed by the learned trial Court on 12.04.2017, however, the same were re-casted on 22.11.2017 which are reproduced herein below: - ISSUES:- 1. Whether the plaintiffs were ready to pay the remaining consideration amount regarding suit property and they were also willing to perform their part of the agreement which could not be performed due to the reluctance of defendant? OPP. 2. Whether the plaintiffs are entitled to discretionary relief of specific performance if so at what grounds and to the what extent? OPP. 3. Whether the tenure mentioned in agreement to sell was essence of the contract but plaintiffs neither offered nor paid remaining consideration of suit property within stipulated period of time hence agreement to sell has been corrupted and impracticable? OPD. 4. Whether plaintiffs have no cause of action to bring this suit hence same is liable to be dismissed? OPD. 5. Relief. 3. To discharge their onus, Babar Siddique and Latif Siddique, two of the plaintiffs, appeared as PW- 1 and P.W.3 while they examined their father Muhammad Siddique as PW-2. In addition to oral evidence, the respondents-vendees also produced in evidence 09 documents ranging from Exh.P-1 to Exh.P-9. 4. On the contrary, one Muhammad Aleem Tahir, special attorney of appellant-defendant appeared as DW-1 and tendered ten documents as Exh.D-1 to Exh.D-10. 5. Upon conclusion of the trial, the learned trial Court decreed the suit of the respondents-vendees vide judgment and decree dated 09.12.2020 and directed them to pay the outstanding amount of consideration within 30 days after encashment of the Defence Saving Certificates already purchased against the amount deposited by them during the pendency of the proceedings before the learned trial Court. Being aggrieved of the judgment and decree passed by the learned trial Court, the appellate preferred the instant appeal. 6. Learned counsel for the appellant submits that while decreeing the suit, the learned trial Court failed to consider that at the time of execution of first agreement to sell it was made clear to the respondents-vendees that the suit property was mortgaged with the bank and it was to be redeemed upon payment of entire amount of consideration by the respondents-vendees but when they failed to abide by their commitment as per agreement to sell, they were not entitled for decree for specific performance which otherwise being discretionary relief could not be claimed by anybody as a right. Adds that the learned trial Court while passing the impugned judgment and decree mainly relied upon the bank statements produced by the respondents-vendees as Exh.P-3 to Exh.P-5 but while doing so it omitted to note that the closing balance as per the bank statements produced by the respondents-vendees was not sufficient to pay the remaining amount of consideration. Further adds that in the legal notice the appellant asked the respondents-vendees to deposit the balance amount of consideration in the bank(s) with which the property was mortgaged but they failed to do so which fact on the one hand speaks volumes about the bona fide of the appellant towards completion of the contract and on the other stands proof of inaction on the part of the respondents-vendees towards payment of the balance amount. Argues that according to the latest view of the superior courts, the intent of the vendee(s) to complete the agreement between the parties is discernable from his readiness to deposit the balance amount with the Court at the time of filing of suit for specific performance but the respondents-vendees did not do so until and unless they were compelled by the Court in that
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regard. Further, argues that non-serious attitude of the respondents-vendees is also vividly clear from the fact that firstly they deposited the balance amount with the Court but subsequently they succeeded to withdraw it and again they deposited the same after the decision of the suit. Contends that at the most the respondents-vendees were entitled for return of the paid amount but by no stretch of imagination they were entitled for a decree of specific performance. Further contends that though the appellant is not bound to return the amount received from the respondents-vendees but to show her bona fide she is ready to return the same. In support of his contentions, learned counsel for the appellant has relied upon the cases reported as "Sheikh AKHTAR AZIZ versus Mst. SHABNAM BEGUM and others" (2019 SCMR 524), "Mst. SAMINA RIFFAT and others versus ROHAIL ASGHAR and others" (2021 SCMR 7), "INAYATULLAH KHAN and others versus SHABIR AHMAD KHAN" (2021 SCMR 686), "MUHAMMAD JAMIL and others versus MUHAMMAD ARIF" (2021 SCMR 1108) and "MUHAMMAD YOUSAF versus ALLAH DITTA and others"(2021 SCMR 1241). 7. Conversely, learned counsel appearing on behalf of respondents-vendees, while defending the impugned judgment and decree, argues that since the cut-off date for final payment was 31.12.2016, the statements brought on record by his clients show that there were sufficient funds for payment of outstanding consideration amount, thus, the assertion of the learned counsel for the appellant that respondents-vendees did not have sufficient fund at the crucial date is against record thus it cannot be given any weightage. Adds that since no penal consequence were provided in the event of non-compliance of contract between the parties, the same could not be assumed by the learned trial court at the whims of the appellant especially when she herself was responsible for non-performance of her part of the agreement; that in a suit for specific performance instead of deposit of cash in the court, the capacity of the vendees has to be judged by the Court and when DW-1 in his cross examination admitted that respondents-vendees had the capacity to pay the balance amount, no illegality was committed by the learned trial Court while decreeing the suit; that bona fide and readiness of the respondents-vendees to perform their part of the contract in the shape of payment of balance amount is also evinced from the fact that while replying to the legal notice sent by the appellant, they stated in unequivocal words that they were ever ready to pay the balance but upon production of documents relating to redemption of suit property from the bank; that as a matter of fact the appellant defrauded the respondents-vendees as she did not disclose that the property was mortgaged against multiple loans availed by her; that when the appellant admitted during evidence that she had been receiving the installments against amount of consideration beyond the stipulated date, the time was not the essence of contract as alleged by the learned counsel for the appellant; that since the respondents-vendees deposited the balance amount before the learned trial Court, no adverse opinion could be formed against them on the ground that they did not do so at the time of filling of the suit as they could not deposit the amount without permission of the Court; that the application of the respondents- vendees before the learned trial Court for investment of the deposited amount in some profit bearing scheme stands proof of the fact that they were ever ready to perform their part of the contract; that prompt filing of the suit by the respondents-vendees within a month from the date of payment of last installment speaks volume about the fact that they were ever ready to perform their part of contract; that even during the evidence PW-1 stated in clear cut words that respondents-vendees were ready to pay the balance amount upon execution of formal sale deed by the plaintiff in their favour. To fortify his contentions, learned counsel for the respondents- vendees has relied upon the cases reported as "HOUSE BUILDING FINANCE COOPERATION versus SHAHINSHAH HUMAYUN COOPERATIVE HOUSE BUILDING SOCIETY and others" (1992 SCMR 19), "Mrs. MUSSARAT SHAUKAT ALI versus Mrs. SAFIA KHATOON and others" (1994 SCMR 2189), Mst. AMINA BIBI versus MUDASSAR AZIZ" (PLD 2003 Supreme Court 430), "Hafiz Shaikh ANWAR-UL-
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HAQURE THROUGH l.Rs. versus JEHAN KHAN and others" (PLD 2011 Supreme Court 540) and "MUHAMMAD IQBAL versus MEHBOOB ALAM" (2015 SCMR 21). 8. Learned counsel for the appellant, while exercise his right of rebuttal, submits that even if some part of the contract was performed by the respondents-vendees they were not entitled for decree of specific performance as held by the Hon'ble Supreme Court of Pakistan in case "INAYATULLAH KHAN and others versus SHABIR AHMAD KHAN" (2021 SCMR 686). Adds that since respondents failed to pay the instalments were due on 25.09.2016 and 31.12.2016 the applicability of sufficient fund in their account on a subsequent date is immaterial. 9. We have heard learned counsel for the parties and have also perused the record of the learned trial court in addition to the case-law cited at the bar. 10. There is no dispute with the facts that respondents-vendees entered into an agreement to sell dated 25.01.2016 with the appellant-defendant with regard to sale of the suit property for a consideration of Rs.6,75,00,000/- (rupees six crores and seventy five lacs) in equal shares and paid Rs.1,00,00,000/- (rupees one crore) as earnest money (Rs.25,00,000/- in cash and Rs.75,00,000/- through three cheques). Balance consideration amount of Rs.5,75,00,000/- was to be paid in three installments i.e. Rs.2,37,50,000/- on 25.04.2016, Rs.1,68,75,000/- on 25.09.2016 and Rs.1,68,75,000/- on 31.12.2016. Another agreement was executed between the parties on 30.04.2016 for extension of the time for payment of second installment and as a result of it Rs.2,00,00,000/- (rupees two crores) were paid through three different cheques and Rs.37,50,000/- were paid on 27.05.2016 which acknowledged by the appellant-defendant through receipt (Exh.P.3). The dispute arose between the parties when third installment of Rs.1,68,75,000/- was not paid on 25.09.2016. The appellant sent legal notice dated 17.10.2016 (Exh.D.1) which was duly replied by the respondents-vendees on 29.10.2016 (Exh.P.9). The appellant sent second notice on 12.01.2017 by informing that agreement was cancelled and earnest money was confiscated/forfeited. To resolve the controversy, respondents approached the Court by way of instituting the suit on 24.01.2017. It is also a matter of record that suit property was mortgaged with the Habib Metropolitan Bank through mutations No.4964 and 4282 as evident from two agreements (Exh.P.1 & Exh.P.2). During cross-examination, the attorney of appellant/defendant disclosed that third loan amounting to Rs.1,65,00,000/- was also availed by the appellant in year 2012 from Habib Metropolitan Bank and mutation No.3705 was sanctioned in this regard. In this background, we move to appreciate the arguments advanced by the respective counsel for the parties with reference to the evidence available on record. 11. Firstly taking up the foremost question as to whether the time was essence of the contract or not, we are of the view the same can be deciphered from the recitals of the agreements between the parties. For convenience of reference, agreement, executed between the parties on 25.01.2016, is reproduced herein below:-
From the perusal of the afore-quoted agreement, it appears that bargaining was struck between the parties for a total sale consideration of Rs.6,75,00,000/- in equal share. An amount of one crore rupees was received from respondents as earnest money to the modes i.e. Rs.25,00,000/- in cash and Rs.75,00,000/- through three different cheques. It was further settled between them that Rs.2,37,50,000/- was to be paid on 25.04.2016 and remaining Rs.3,37,50,000/- was to be paid in two instalments, one on 25.09.2016 with regard to Rs.1,68,75,000/- and second Rs.1,68,75,000/- on 31.12.2016. Thereafter admittedly second agreement was executed between the parties on 30.04.2016 which for convenience of reference is reproduced herein below: -
A cursory glance over the afore-quoted agreement brings it to limelight that with regard to payment of second instalment amounting to Rs.2,37,50,000/- on 25.04.2016 time was extended and it was settled that Rs.2,00,00,000/- was to be given through three cheques, the detail are as under:-
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Rs.67,00,000/- on 05.05.2016, Rs.67,00,000/- on 05.05.2016, & Rs.66,00,000/- on 05.05.2016. The remaining amount of Rs.37,50,000/- was to be paid within one month. On the backside of stamp paper a receipt was executed on 27.05.2016 (Exh.P.3) with regard to receipt of an amount of Rs.37,50,000/-, the details whereof are as under:- Rs.12,50,000/- through cheque dated 26.05.2016 Rs.12,50,000/- through cheque dated 26.05.2016 & Rs.12,50,000/- in cash dated 27.05.2016. In the above backdrop entering into further contract by the appellant was a sufficient indicator of the fact that time was not the essence of the contract. Due to the extension of time, the importance of the previous time frame had become redundant. 12. It is important to mention over here that in the contract relating to immovable property generally time is not the essence of the contract. The failure to perform part of contract by the date fixed in the agreement to sell i.e., for execution of the sale deed is not a ground for refusing relief of specific performance unless the circumstances must be highlighted and proved by the owner- vendor of the land that time is essence of the contract. Section 55 of the Contract Act, 1872 deals with the effects of the failure of a party to perform its part of the contract where time is essence of the contract and the contracts where the time is not the essence of the contract. For convenience of reference, the said provision is reproduced herein below:-: 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. From above, it is vividly clear that intention to make time of the essence of the contract must be expressed in unmistakable language and it can 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 would not make the time as essence of the contract unless it is expressly intended by the parties and the terms of the contract do not permit any other interpretation. This question has to be decided according to the intention of the parties reflecting in the agreement, its terms, conduct of the parties after the agreement and all the attending circumstances. Reliance is placed upon the case reported as Mst. AMINA BIBI versus MUDASSAR AZIZ" (PLD 2003 Supreme Court 430) wherein it has inter alia been held as under: - "12.Generally speaking, specific performance of a contract of sale of immovable property has been granted by the Courts although there has been a failure to keep the dates assigned by it, if justice could be done between the parties and if nothing in (a) the express stipulation of the parties, (b) the nature of the property, or (c) the surrounding circumstances make it inequitable to grant the relief.
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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 of 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 the 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." Similarly, in case of "MUHAMMAD HUSSAIN and others versus. Dr. ZAHOOR ALAM" (2010 SCMR 286) the issue, under discussion, was clinched in the following manner:- "In the contract relating to immovable property time is not generally the essence of the contract in the failure to perform part of the contract by the date fixed in the agreement to sell i.e. for execution of sale deed is not a ground for refusing specific performance unless the circumstances must be highlighted and proved by the owner of the land that time is essence of the contract in view of the law laid down by this Court in various pronouncements. See Abdul Hamid's case (PLD 1962 SC 1) Seth Essabhy's case (PLD 1973 SC 39)." Moreover, the apex court of the country in the matter of "Hafiz Shaikh ANWAR-UL-HAQURE THROUGH l.Rs. versus JEHAN KHAN and others" (PLD 2011 Supreme Court 540) responded the query, under discussion, in the following words:- "If time is extended for performance of a contract pertaining to immovable property, then time can never be enforced as of the contract." Likewise, the august Supreme Court of Pakistan in case titled "MUHAMMAD ABDUR REHMAN QURESHI Versus SAGHEER AHMED" (2017 SCMR 1696) while interpreting that whether time is essence of the contract in the real estate transactions held as under : - "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. If the question as to whether the time was essence of the agreements entered between the parties is adjudged on the touchstone of the afore-referred judgments of the Hon'ble Supreme Court there leaves no ambiguity that according to the recitals of agreement to sell (Exh.P-1) the suit property was under mortgage and it was settled between the parties that it would be the duty of the appellant/vendor to get redeem the whole suit property. The respondents-vendees were to pay balance consideration amount in three installments. In this way, the said agreement to sell consisted of reciprocal promises to be simultaneously performed by the parties to the contract without any penalty for non-performance of the respective part of the contract. In this background, it can safely be concluded that the time was not essence of the contract. 13. A bird's eye view over the appellant's evidence shows that her attorney while recording his statement as DW-1 deposed that she received Rs.3,37,50,000/- from the plaintiffs but did not pay even a single penny in bank from this amount. He volunteered that she (appellant-defendant) had been constructing a building due to which he could not make repayment of bank loan. The exact deposition is as under: -
He admitted it correct that in the year 2012, defendant took a loan of Rs.1,65,00,000/- from Habib Bank Metropolitan against which mutation No.3705 was sanctioned. He also admitted it correct that in the agreement to sell (Exh.P-1) the loan with regard to mutation No.3750 was not mentioned. The exact deposition in that regard is as under: -
From above admission on the part of DW-1 it is abundantly clear that the appellant-respondent concealed material fact regarding availing of loan against mutation No.3750 meaning thereby
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that she kept the respondents-vendees in dark. In the case of "Said Muhammad v. Abdul Rehman" (1996 MLD 60) while dealing with the consequences of non-payment of balance amount where the title of the vendor is not clear it has inter alia been held that-- "Plaintiff need not have offer to make balance amount to defendant on specified date for defendant's title was not perfect on the said date and defendant was not ready on the said date to perform his reciprocal of transfer of land in favour of the plaintiff" It is evident from the perusal of Exh.P-1 that the respondents/plaintiffs/vendees bound down themselves to pay remaining considering amount till 31.12.2016 and the date for execution of formal sale deed was settled as 31.12.2016. It was also settled that it was the duty of the appellant/defendant to get redeemed the whole suit property and she was liable to pay all dues. It was further settled that before registration, appellant/defendant/vendor will bound to deliver the possession within time after clearance of all dues and getting NOC from the bank and thereafter she would be bound to execute registered sale deed in favour of respondents/plaintiffs/vendees and would also be entitled to receive the balance consideration amount and in the event of her denial to get registered the sale deed within time, the vendees would have a right to institute suit for specific performance at the costs of the appellant-defendant and if the vendees failed to get registered the sale deed within time, then earnest money would be forfeited and agreement would be deemed to be cancelled. Exact wording in the agreement to sell is as under:-
The august Supreme Court of Pakistan in the case cited as "Mst. REHMAT and others versus Mst. ZUBAIDA BEGUM and others (2021 SCMR 1534) while interpreting section 51 of the Contract Act, 1872, concluded that in such situations time is not essence of the contract which is reproduced as under: - "Clause 4 of the said agreement made it mandatory for the First Party that is the vendor Mst. Ashfaq Jahan to obtain all documents necessary for registration of the suit property in the following terms:- "4) That the FIRST PARTY shall…
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