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Petitioner: GHULAM NABI AND OTHERS VS Respondent: Seth MUHAMMAD YAQUB AND OTHERS
Court Name: Supreme Court of Pakistan Judge(s): Nasim Hasan Shah, Aslam Riaz Hussain, M. S. H. Qureshi Title: GHULAM NABI AND OTHERS vs Seth MUHAMMAD YAQUB AND OTHERS Case No.: Civil Appeal No, 41 of 1980Regular First Appeal No, 57 of 1969 Date of Judgment:1983-04-23 Reported As: PLD 1983 Supreme Court 344 Result: Appeal dismissed
JUDGMENT
JUDGMENT ' M. S. H. QURAISHI, J.-This appeal is directed against the judgment and decree of the Lahore High Court, dated 26-11-1978, dismissing R. F. A. No, 57 of F969 filed by Ghulam Nabi etc. Appellants and Sh. Fasal Elahi, the predecessor-in-interest of respondents 2 to 5, and affirming the judgment and decree for specific performance passed against them by the trial Court on 29-7-1969. 2. The dispute relates to a house known as Fasal Mansi bearing No, S. E.-73-R-18, Dii Muhammad Road, Lahore, belonging to the aforesaid Sh. Fasal Elahi. He entered into an agreement to sell the property with Seth Muhammad Yaqub (plaintiff and present respondent No. 1) and one Muhammad Yousaf on 26-10-1961 for the consideration of Rs, 1,35,000 of which he received Rs, 10,000 at the time of the agreement and the balance was to be paid before the Sub-Registrar and the sale-deed was to be executed within three months' time, i,e,, by 25-1-1962. According to the agreement, if the intending purchasers, in spite of fulfillment of all the conditions on the part of the owner, would not pay the balance amount within that period and get the deed registered, the deed would stand cancelled and the amount of advance forfeited in favour of the owner. The deed was, however, not executed as stipulated but on 13-7-1964, Sh. Fasal Elahi received another sum of Rs, 10,000 and by a letter dated 14-7-1964 agreed to extend the time, according to him, by two months. On 6-3-1966, the plaintiff addressed a letter to Sh. Fasal Elahi at Dacca where the latter used to reside, assuring him that he would arrange for the balance amount on his next visit to Lahore and asking him to inform at least ten days in advance about his visit to Lahore "enabling us to keep the amount ready and transfer the property in my name". On 16-4-1966, he remitted by bank draft a sum of Rs, 60,000 in favor of Sh. Fasal Elahi and on 18-5.1966 deposited another sum of Rs, 50,000 in the United Bank Limited for payment to him. Sh. Fasal Elahi came to Lahore on 20-5-1966 and the
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next day, that is on 21-5-1966, purchased stamp paper worth Rs, 5,400 ostensibly for sale of the property in favour of the plaintiff Seth Muhammad Yaqub. 3. It, however, appears that Sh. Fasal Elahi had in the meantime, on 15-3-1966, entered into a sale agreement at Dacca in respect of the same property in favour of Ghulam Nabi etc. Appellants, for a similar consideation of Rs, 1,35,000 and had received in that connection Rs, 10,000 the same day. On coming to know that Sh. Fazal Elahi had come to Lahore and was likely to execute a sale-deed in favour of the plaintiff, Ghulam Nabi etc. Appellants brought a suit on 21-5-1966 for a permanent injunction for restraining Sh. Fasal Flahi from selling the property to Seth Muhammad Yaqub or anyone else. However, Sh. Fasal Elahi executed sale-deed in favour of the appellants on 24-5-1966 and in his written statement dated 15-6-1966 conceded the suit and admitted that he had already executed a sale-deed in their favour which was pending registration. At the request of the appellants' counsel, the suit was dismissed on 16-6-1966. 4. On the other hand, the plaintiff Seth Muhammad Yaqub had also brought a suit on 28-5-1966 against Sh. Fasal Elahi and the appellants for a mandatory and perpetual injunction restraining Sh. Fasal Elahi from selling the property to anyone except himself. He withdrew the suit on 27-6-1966, but before that he had on 15-6-1966 instituted the present suit for specific performance of the agreement dated 26-10-1961 and subsequent oral agreement to sell the property in his favour. His case was that Sh. Fasal Elahi had come from Dacca to Lahore for execution and registration of the sale-deed in his favour and had even got non-judicial stamp paper purchased for the purpose, but the appellants, in spite of knowledge of the transaction, had prevailed upon him to sell the property to them instead of the plaintiff and that Sh. Fasal Elahi had disappeared and had executed the sale-deed in favour of the appellants. He asserted that he was willing to pay the balance price Rs, 5,000 and that he was entitled to specific performance of the agreement. The suit was resisted both by Sh. Fasal Elahi and the appellants. Sh. Fasal Elahi admitted having entered into the agreement to sell dated 26-10-1961. He also admitted having received the second payment of Rs, 10,000 on 13-7-1964 but pleaded that he had extended the time only by two months from that date and that the plaintiff not having paid the balance amount within that period, he was no longer bound under the agreement. He further pleaded that the payment of Rs, 20,000 earlier received had been forfeited in terms of the agreement. He denied having received the subsequent remittances of Rs, 60,000 and Rs, 50,000. In regard to the stamp paper having been purchased purportedly for sale of the property in favour of the plaintiff, his explanation was that the same was on account of misrepresentation by the latter. The appellants in their written statement pleaded that as the plaintiff had failed to fulfil the terms of his agreement, Sh. Fasal Elahi was free and entitled to deal with them and that their contract of sale with Sh. Fasal Elahi was "in good faith", "for value" and without any notice of previous agreement" between the plaintiff and Sh. Fasal Elahi. Objection, inter alia, was also taken to the maintainability of the suit in view of the provision of section 21 of the Specific Relief Act, and of order II, rule 2 and Order XXIII, rule 1 of the Code of Civil Procedure. 5. The contentions of the parties led to the framing of the following issues : "(1) Whether the suit is not maintainable in view of the preliminary objections Nos. 1, 2, 6, 7, 8, 9 and 10 in the written statement? D. (2) Whether Muhammad Yousaf is a necessary party ? If so, to what effect ? 0. D. (3) Whether the suit is time-barred ? 0. D. (4) Whether the plaint discloses any cause of action ? 0. P. (5) Whether the suit is properly valued for the purposes of court-fee ? 0. P. (6) Whether the plaintiff is estopped from filing the suit ? 0. D. (7) Whether the plaint is not properly verified in accordance with law? If so, to what effect ? 0. D.
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(8) Is the plaintiff entitled to the specific performance of the agreement to sell dated 26th October, 1961 and the alleged oral agreement entered into between the plaintiff and defendant No. 1 subsequently ? If so, on what terms ? 0. P. (9) Whether defendants 2 to 15 are bona fide purchasers for value without notice ? 0. D. (10) Are the defendants entitled to receive costs under section 35-A of the Code of Civil Procedure ? 0. D." ' Issues Nos. 5 and 7 were conceded by the appellants but the remaining issues were decided by the trial Court in favour of the plaintiff, resulting in the decreeing of suit in his favour. 6. In appeal, the High Court, on issue No. 1 relating to the bar under Order II, rule 2, C. P. C., held that it applies to a situation where one cause of action entitles a person to more than one relief and he at first sues . Only for one relief and not for others and later on brings a suit for the other reliefs as well ; that the earlier suit was not competent as the relief by way of injunction could not be stated to have flowed out of the cause of action on the basis of which the present suit was filed and that, therefore, the relief claimed in the present suit was not barred under Order H, rule 2, C. P. C. For the same reason that the first suit was not competent, the learned Judges also ruled out the objection on account of the bar imposed by Order XXIII. Rule 1, C. P. C. The plea of res judicata was repelled for the reason that "it is not possible to interpret the prayer made in the earlier suit which was clearly for restraining Fasal Elabi from selling the property to anyone other than the plaintiff, as one for specific performance of the contract" and that the earlier suit had not been heard and finally decided. Another objection to the maintainability of the suit in the absence of a prayer for possession, was rejected by reference to Momtazul Karim v. Abu Hussain and another (1). The learned Judges further held that time could not be regarded as being of the essence of the contract as Sh. Fasal Elahi "by his conduct showed his willingness right up to 21-5-1966, to sell the property to him (Seth Muhammad Yaqub)" and that as such the contract was still subsisting when the present suit was filed. On this view the plea of limitation, too, failed. The plea that the appellants were bona fide purchasers for value without notice, which formed the subject-matter of Issue No, 9, was rejected upon the finding that the appellants "were already aware, from a date prior to 21-5- 1966, that there was a subsisting contract" between Sh. Fasal Elahi and Seth Muhammad Yaqub. Consequently the High Court maintained the findings recorded by the trial Court and dismissed the appeal with costs. 7. Learned counsel for the appellants has argued against the maintainability of the suit on the basis of the provision of Order II, rule 2, C. P. C. The rule enjoins that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action and bars, except A with the leave of the Court, any subsequent suit in respect of any portion of his claim which the plaintiff omits or intentionally relinquishes in the first suit. The object of the rule is to avoid splitting of claims and to prevent multiplicity of suits and is based on the principle that the defendant should not be vexed twice for the same cause. The argument of learned counsel proceeds on the assumption that both the suits brought by Seth Muhammad Yaqub having been on the same cause of action and the relief by way of specific performance of the contract having not been included in the first suit, the second suit for the specific performance was hit by the provision of this rule. But it has not been shown that the rule applies even where the relief claimed in the' first suit had been incompetent or the suit itself had been barred by section 56(1) of the Specific Relief Act. A relief of injunction as claimed in the first suit could not be granted in a matter of breach of contract and specific performance being the proper and equally efficacious relief, the first suit was hit by the provision of section 56(1) of the Specific Relief Act. It had been held in Holland-Bombay Trading Co. v. Essardas Dhramhand (1) that under section 56(1) no injunction should be granted when equally efficacious relief can certainly be obtained by any other usual mode of proceeding except in case of breach of trust. The cases cited by learned counsel, namely,
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Muhammad Hafiz v. Mirza Muhammad Zakariya (2) Sher\\ Ali v. Torap(3) Amir Din Shahab Din v. Shiv Dev Singh (4), Muhammad Khali! Khan v. Mahbab Ali Mian (5), Mukhtar Ahmad v. Inamul Hague (6) Serajul Islam v. Abdur Rahman (7) Shafig Ahmad v. Muhammud Anwar Beg (8) and Fazal Muhammad v. Muhammad Noor (9), are of no help as they are not attracted to the facts of the present case. In Sardari Mal v. Hirde Nath (10) in the matter of an agreement to sell certain plot of land, a suit for permanent injunction had been brought which had been dismissed on the ground that such suit did not lie and plaintiff had then brought a suit for specific performance of the agreement. It was held that he was not debarred from doing so. In this connection, the Court had observed : "I do not think it necessary to decide whether or not the cause of action in the two suits is the same, for it is quite clear that a suit for a permanent injunction did not lie. The plaintiff was not entitled to come to the Courts for such a relief in respect of the present cause of action. This is quite clear from the provision of section 56(i) of the Specific Relief Act, which provides that 'an injunction cannot be granted when equally efficacious relief can certainly be obtained by any other usual mode of proceeding, except in case of breach of trust'. The usual mode of proceeding on breach of a contract for the sale of lands is to bring a suit for specific performance of the contract. The plaintiff, therefore, was not entitled to two reliefs in respect of the breach 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 II, rule 2, therefore, is no bar to the present suit." ' In Nasira Sultana v. Habib Bank Ltd. Etc. (11), where the plaintiff, a purchaser of the lessee's rights of allotment had filed a suit for declaration and injunctton to restrain further sale by the lessee and had subsequently filed a suit for specific performance against the lessee, it had been held that the subsequent suit was not barred under Order Ii, rule 2, C. P. C. 8. The next objection to the maintainability of the suit based on the provision of Order XXIII, rule 1, C. P. C. Is that the earlier suit having been withdrawn without permission of the Court to institute a fresh one, the subsequent suit being for the same subject-matter is barred. Under this' rule, where the Court is satisfied that (1) the suit must fail by reason of some formal defect or (2) there are other sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of the suit or part of the claim, it may grant the plaintiff permission to withdraw such suit but where the plaintiff withdraws the suit without such permission, then he is precluded from instituting a fresh suit in respect of such subject-matter or such part of the claim. A fresh suit envisaged in the rule is one filed subsequent to the withdrawal of the earlier suit. On the question whether the rule barred a suit which at the time of the withdrawal of the earlier suit had already been instituted and pending, we find that in Ram Mal v. Upendra Datt (1) relying on P. Surja Reddi v. Subba Reddi (2), it was held that a second suit will not be barred in the case of withdrawal of a previous suit unless conditions of Order XXIII rule 1, C. P. C. Are fully satisfied and that if the subsequent suit was already pending at the time of the withdrawal of the previous suit, the provision could not be attracted. A Division Bench of the Lahore Court in Mungi Lal v. Radha Mohan (3) held that "Order XXIII, rule 1 refers to permission to withdraw a suit with liberty to institute a fresh suit after the first one has been withdrawn. It appears to me that the section cannot be read so as to bar a suit which has already been instituted before the other suit had been abandoned or dismissed." ' This judgment had been followed in Abdullah v. Bashiran Bibi (4) and it had been held that a fresh suit which bad been pending at the time of withdtawal of a previous suit was not barred. The view taken in Mungi Lal's case had also been followed by this Court in Commissioner of Income-tax v. Ashfaq Ahmad (5), wherein it had been held that where one writ petition had been filed during the pendency of a previous writ petition, the withdrawal of the previous writ petition before reaching the stage of hearing on merit would not affect the maintainability of the second petition which
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could legally proceed in spite of the withdrawal of the previous petition. The Sind High Court has also been of the same view which is reflected in its judgments reported as Ashfaq Ahmad Khan v. Custodian of Evacuee Property (6) and Irshad Ali v. Islamic Republic of Pakistan (7). We are, therefore, not inclined to agree that the suit in question was affected by Order II, rule 2 or Order XXIII, rule 1, C. P. C. 8. Another objection to the maintainability of the suit proceeds from the contention that the matter had become res judicata in the appellants' suit. C This suit, as already stated, had been filed against Sh. Fasal Elahi and respondent Seth Muhammad Yaqub for a permanent injunction. Sh. Fasal Elahi having conceded the suit in his written statement filed on 15-6-1966 the appellant's counsel prayed to the Court on 16-6-1966 that the suit be dismissed without any further proceeding, whereupon the suit was dismissed the same day in the following words {{URDU TEXT}} ' It is submitted that the order in terms it was made was, though not a decree, an executable order and that Seth Muhammad Yaqub who had notice of the suit but had stood-by and let the order be passed was bound by it and could not collaterally bypass it His failure to object to the withdrawal of' the suit as having borne fruit operated as res judicata in regard to his interest in the property qua the appellants as also his co-defendant Sh. Fazal Elahi and as such his present suit was barred by the principle of res judicata particularly of constructive res judicata. Reference was made to Phillips v. Mitchell (1)in which it had been held that a ground of attack in a subsequent suit, if could have been alleged as ground of defence in a former suit but was omitted, was hit by the principle of res judicata. It was also submitted in this connection that at least Sh. Fasal Elahi who had conceded the suit was bound by the order and as such any decree for specific performance passed against him for transferring the property would be ineffective. It was further submitted that for the matter to be res judicata it was not necessary that there must have been passed a judgment or decree but that even an order passed by consent, express or implied, binds the parties. Reliance for this was placed on Muhammad Salim v. Mohiuddin (2) and Bakhtawar v. Amin (3). But the same as we will presently see have no relevance. 10. It is to be noted that in the appellants' suit, Seth Muhammad Yaqub had filed a written statement contesting the suit and the validity of any deal in regard to the property between Sh. Fasal Elahi and the appellants. Obviously his interest was in conflict with that of his co-defendant Sh. Fasal Elahi. The applicability of the principle of res judicata as bteween co-defendants in a suit has been repeatedly and consistently held by the Privy Council and the Courts in the sub-continent to be dependent upon the fulfilment of the following conditions : (1) The co-defendants were necessary and proper parties in the previous suit; (2) there was conflict of interest between them; (3) there was a necessity of decision on that conflict in order to give the plaintiff the appropriate relief; and (4) there was a final decision on that conflict. ' The principles, on the point had been laid down as early as 24-7-1886 by West, J., in Ramchandra Narayan v. Marayan Mahadev and another (4) in the following words : "Where an adjudication between the defendants is necessary to give the appropriate relief to the plaintiff, there must be- such an adjudication Nottingham v. Earl of Shrewsbury, 3 Hare's Rep. 627, and in such a case the adjudication will be res judicata between the defendants as well as between the plaintiff and defendants. But for this effect to arise, there must be a conflict of interest amongst the defendants and a judgment defining the real rights and obligations of the defendants inter se. ' The above view has prevailed throughout and a number of cases decided subsequently not only followed the principles set forth by West, J., but also elaborated on it. See Mt. Munni Bibi and others
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v. Tirloki Nath and others (5), Kishun Prasad v. Durga Prasad (6), Maung Sein Done v. Ma Pan Nyun (7), Kedar Nath v. Munshi Ram (8), Mohammad Saadat All v. Wiquar ' All (1), Chandu La! Agarwalla v. Khalil-ur-Rahman (2), Ramaswami Iyer v. Thumboyasami (3), Sukh Dial v. Mt. Bhop. (4), Bhola v. Shea Chand (5), Radharani v. Binodamoyer (6), Kuppan Chettlar v. Ramaswa mi Chettlar (7), Allah Bukhsh v. Taggia (8), Sana Ullah v. Ghulam Qadir (9), and Fazal Dad v. Ahmad All (10). The written statements filed by Seth Muhammad Yaqub and Sh. Fasal Elahi in the appellant's suit made it clear that there was conflict of interest between them and that in order to give relief to the appellants, a decision in regard to the same was necessary but this was not done and no adjudication took place. The order of the Civil Court dismissing the appellant's suit was neither a decree nor a decision because no adjudication had taken place. Much stress was laid on the use of the words in the order, but those words had appeared in the order merely because such statement had been made by the appellant's counsel and not that the Court itself had come to any such finding. In fact the order was complete even without a mention of those words and all that the civil Court meant was to dismiss the appellant's suit as withdrawn. Obviously the order does not meet the requirements laid down as aforesaid for the applicability of the principle of res judicata. It is established law that a mere withdrawal of a suit does not operate as res judicata for the D reason, if for nothing else, that there was no adjudication on merits See Ram Mal v. Upendra Daft (11) and Nand La! v. Mt. Lakhmi (12). The order, therefore, passed in the appellant's suit on 16-6- 1966 did not operate as res judicata and the suit of the Seth Muhammad Yaqub was as such not barred under section 11, C. P. C. 11. The limitation of the suit is governed by Article 113 of the Limitation Act which prescribes a period of three years from (1) the date fixed for z the performance or (2) if no such date is fixed when the plaintiff has notice that performance is refused. Where the case falls within the first clause, the second clause is not to be 'resorted to. See Lakha Singh v. Ghulam Muhammad (13). The case of the appellants is that as the contract was to be completed by 254-1962, the suit filed on 15-6.1966 was clearly time-barred. The case of the plaintiff was that Sh. Fazal Elahi's subsequent agreement dated 14-7-1964 amounted to novation of the contract inasmuch as Muhammad Yusuf had been dropped and the new agreement was only between Seth Muhammad Yaqub and Sh. Fazal Elahi and that time had been extended by two years. It was, therefore, contended that the suit was within time. Sh. Fasal Elahi's letter dated 14-7-1964, a copy of which was produced as Exh. D. 12, was neither relied upon by the plaintiff nor admitted by Sh. Fasal Elahi but the latter did admit that he had by a letter written in this regard, extended time by two months beyond that date and had also received Rs, 10,000 on that date for .It was argued on behalf of the appellants that this was only an extension of time and in no manner amounted to a new`contract in substitution of the previous one. It was further argued that the plaintiff not having complied with the term of the extension of the time, the parties reverted to the previous agreement with the result that terminus a quo remained 25-1-1962. 12. The letter Exh. D. 12 even if true did not amount to a novatioc of the contract. It was basically for extension of time and not for changing any of the other terms of the original contract. There is also no proper material to show that the parties had consciously agreed to drop Muhammad Yousaf as a co-purchaser. In Maksud All v. Eskandar Ali (I) where then had been an agreement to sell containing the averment that property agreed to be sold included land and basatbari thereon, and a second agreement had been executed for the purpose of granting =further time for completion of the sale, but mentioning property to be sold as "my own possessed land within District Dacca" and further declaring that other terms and conditions of the original document remained unaltered, it was held that there was no novation. The effect of extension of time in the present case was that the contract which had not been performed by 25-1-1962, as per the original agreement, could now be performed within two months from 14-7-1964. There is no reason to
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accept the plaintiff's claim that the time had been extended by two years as he had himself not relied upon Exh. D. 12. 13. The question now arises as to what is the starting point for the limitation, i. e., 25-1-1962 or 14-9- 1964. Learned counsel for the appellants, while maintaining that the extension of time allowed by Sh. Fasal Elahi not having been availed of by the plaintiff, the starting point remained 25-1-1962, also contended that a party whose conduct did not justify the grant of the discretionary relief of specific performance, particularly when change of conditions had been brought about on that…
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