Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: MESSRS KARACHI GAS COMPANY LTD. VS Respondent: MESSRS FANCY FOUNDATION
Court Name: Sindh High Court Judge(s): Saeeduzzaman Siddiqui Title: MESSRS KARACHI GAS COMPANY LTD. vs MESSRS FANCY FOUNDATION Case No.: Suit No, 447 of 1976 Date of Judgment:1984-01-09 Reported As: PLD 1984 Karachi 233 Result: Order accordingly
JUDGMENT
JUDGMENT ' The plaintiff has filed this suit for specific performance of an agreement of sale in respect of immovable property bearing No, 7-3 S. R. 1, Serai Quarters measuring 3325 sq. Yds. Situated on J. I. Chundrigar Road, Karachi, against the defendant. The plaintiff has also claimed a sum of Rs, 36,67,239.76 as compensation and or damages for delay/refusal is the performance of the agreement of sale with interest at 13% per annum. In the alternative the plaintiff has claimed a sum of Rs, 99,92,239.76 being the amount of damages and refund of the sale consideration. 2. The plaint in the suit discloses the following facts :- ' The defendant in or about April, 1967 agreed to sell orally the plot of land mentioned above at the rate of Rs, 1000 per sq. Yd. The plaintiff paid a sum of Rs, 30 lac out of total sale consideration of Rs, 33,25,000 between the period from 20th April, 1967 to 16th May, 1967. It is the case of the plaintiff that the defendant had agreed and undertaken to hand over clear vacant possession of the plot after rejecting the tenants who were then in occupation of the property. It is an admitted position that the litigation between defendant and the tenants of the suit property continued upto the Supreme Court and the dispute between them was finally disposed of by an order which is reported as Hassan v. Fancy Foundation (D. The plaintiff alleges that in spite of the order of the Supreme Court the defendant failed to deliver the clear vacant possession of the plot and thus committed breach for the agreement. The defendant in its written statement raised number of legal pleas regarding maintainability of the suit and denied breach of agreement on its part. It is alleged by the defendant that the breach of agreement, if any, was on the part of plaintiff who refused to accept the possession of the plot which carried with it the right of the ejected tenants to be inducted {{FOOT NOTE}}
---
## Page 2
(1)PI,D1975SC1 {{FOOT NOTE}} ' back into the premises in view of the order of the Supreme Court referred to above. 3. Both plaintiff and the defendant submitted their respective draft issues which came up for settlement before the Court on 28-2-1977 when the following order was passed :- "28-2-1977 Mr. Faridi for Plaintiff Mr. Liaquat Merchant for Defendant. ' They have filed draft issues. By consent Mr. Merchant dropped issues Nos. 12, 17 and 18. Documents and commission application if any within two weeks. Hearing on the date in office in the month of April as already ordered. Issues submitted by Mr. Faridi are adopted by consent of Advocate of other side. All issues except Nos. 12, 17 and 18 submitted by Mr. Merchant are by consent adopted." 4. In view of the above order all the issues suggested by defendant and the plaintiff were adopted as consent issues except issues Nos. 12, 17 and 18 suggested by the defendant, which are as follows :- (1) Whether the suit is barred by limitation ? (2) Whether_. The suit for specific performance is barred by law? If so what is the effect? (3) Whether the suit is misconceived and not maintainable? (4) Whether a legal, valid and binding agreement was entered into between the defendants and the plaintiffs for sale of the property bearing No, VII-3 (Nariman Kothari Chambers), I. I. Chundrigar Road, Karachi. (5) What are the terms on which the sale was to be effected by the defendants to the plaintiffs particularly relating to vacant possession, marketable title and the period for completion of sale transaction ? (6) Whether the plaintiffs were not aware of the legal proceedings instituted by the defendants for ejectment of tenants when the alleged agreement of sale was entered into or thereafter? (7) Whether the right of re-instatement of tenants in the new building provided by section 13(5-B) of the Rent Restriction Ordinance, 1959 is a clog, encumoerance or restriction affecting the title of the defendants ? (8) Whether the plaintiffs were not aware and/or were not deemed to be aware of the right of re- instatement of tenant under section 13(5-B) of the Rent Restriction Ordinance as interpreted and declared by the Supreme Court of Pakistan ? (9) What is the effect of judgment of Supreme Court of Pakistan, reporter! In PLD 1975 SC 1 and whether the plaintiffs and defendants are equally bound and liable in law under the said judgment? (10) Whether the defendants were bound and liable to complete the sale transaction in favour of the plaintiffs by conveying and transferring the property free of claims and rights of tenants as claimed by the plaintiff? If not what is the effect? (11) Whether the defendants offered to complete the sale in favour of the plaintiffs, subject to the right of reinstatement of tenant as provided by law and whether the plaintiffs refused to complete the sale transaction as offered by the defendants? If so, what is its effect? (12) Under what circumstances did' the plaintiffs agree to sell the property in dispute to Pakistan Chrome Mills Ltd. And at whose instructions and in what circumstances was this agreement cancelled and the right to the property in dispute retained by the plaintiffs? (13) Whether the plaintiff demanded from the defendants refund of the purchase price in 1972, 1973 and 1974 and authorised the defendants to sell the property to any other person? If so what is its effect? (14) Whether the plaintiffs were entitled in law to sell and conveyance of the property with boat any restriction, or right of re-instatement of tenant as demanded by them?
---
## Page 3
(15) Whether the defendants were justified and entitled to cancel the alleged sale agreement on account of the continued refusal by the plaintiffs to complete the sale subject to the right of re- instatement of tenants as prescribed by the law? (16) Whether the defendants failed/were unable to hand over clear possession of the property in suit in terms of the contract and if so what is the effect? (17) Whether the defendants committed breach/avoided to perform their part of the contract and if so what is the effect? (18) Whether the plaintiffs are entitled to specific performance of the contract of sale of property in suit and also to the payment of Rs, 36,67,239.76 or any other amount as compensation and/or damages for refusal and delay in the performance of the contract as well as to the payment of the rents and proceeds for debries and salary material etc. Realised/recovered by the defendants? (19) Whether the plaintiffs, in the alternative or otherwise, are entitled to the payment of Rs, 33,25,000 by way of compensation and/or damage and to the payment of Rs, 30,00,000 (being the amount paid in advance towards the sale price) with interest thereon as claimed by the plaintiffs and also to charge upon the property for the claim in the suit? (20) To what relief, if any, the plaintiffs are entitled? (21) What should the decree be? ' The parties have produced evidence on the above issues which is mainly documentary and has been brought on record by consent. The plaintiff's documents have been exhibited as P-1 to P-13 while those of the defendant are exhibited as D-1 to D-29. Apart from the documentary evidence referred to above, the plaintiff has examined one Shaikh Abdul Waheed son of Shaikh Abdul Aziz, an employee of the plaintiff's company in support of the case and has produced documents Exh. 6-1 to 6-12 through this witness. 1 have heard the learned counsel for the parties at great length and my findings on the above issues are as follows :- ' Issues Nos. 1, 2 and 3.-1 will take up all these issues together as the only contention of Mr. Khalid Ishaque, the learned counsel for the plaintiff, on the above issues is that the suit is barred under Article 113 of the Limitation Act. The above article in the Limitation Act relied upon by the learned counsel reads as follows :- {{TABLE}} "113. For Specific (Three years) The date fixed for performance of the performance, a contract. Or, if no such date is fixed when the plaintiff has notice that performance is refused." {{TABLE}} ' According to the above article of Limitation Act the period prescribed for filing of a suit for specific performance of a contract is 3 years from the date which is fixed for its performance in the agreement, but where no date is fixed or specified in the agreement for its performance the period of 3 years starts from the date when the plaintiff has notice of refusal by the defendant to perform the contract. The learned counsel for the defendant has relied on the documents Exhs. D-24, P-7 and D-12 in support of his contention that the above suit when filed on 30-7-1976 was beyond time. Exh D-24 is the resolution of plaintiff's company whereby it was resolved that the plot in suit may be purchased by the plaintiff at the rate of Rs, 1,000 per square yard The resolution of the company is, dated May, 1967 and is as follows :- ' Board Minutes Nos. 306, May 1967. ' Fancy Foundation had acquired a plot of 3,200 sq. Yds. Opposite State Bank of Pakistan, McLeod Road, for which they had very high offers; but for K. G. C. They were prepared to sell this plot at a reasonable price. ' Mr. Amirali H. Fancy requested the Directors present about their advice regarding the probable rate at which the said plot could be purchased from Fancy Foundation.
---
## Page 4
Alter some discussions the Directors agreed that the plot of Fancy Foundation opposite State Bank of Pakistan, McLeod Road, could be bought by K. G. C. At the rate of Rs, 1,000 per sq. Yd." ' Exh. P-7, is a D. O. Letter, dated 13th December, 1972 addressed by Mr. M. Q. Zaman of plaintiff to Mr. Amir Ali H. Fancy of defendant, in which it is stated that the defendant should either arrange banding over of the clear vacant possession of plot to plaintiff within 3 months or alternatively return back the amount paid to defendant plus interest for the period. The defendant was given the option either to retain the property themselves or sell it to some other party. Exh. D-12 is another D. 0. Letter, dated 9-2-1973, addressed by Mr. M. Q. Zaman of plaintiff to "Mr. Amir Ali H. Fancy of the defendant informing the latter that in case the defendant failed to deliver vacant possession of the suit property within one month from the date of this letter and further failed to complete the sale transaction in favour of plaintiff after making out marketable title, within 3 months, the sale agreement shall be treated as cancelled and the defendant will be liable to refund the amount of Rs, 30 lacs with interest from the date of its payment, with cost. The contention of Mr. Khalid Isbaque, the learned counsel for the plaintiff firstly is that the suit should have been instituted within three years of the date' of the resolution (Exh. D-24) which was passed in May, 1967 and in any case the suit must be shown to have been instituted within 3 years of the period allowed under (Exh. D- 12) which expired on 9-5-1973 as the agreement to sell came to an end on that date. It is, therefore, contended that the suit as instituted on 30-7-1976 was beyond time. The contention of the learned counsel has not impressed me at all. The agreement entered into between the parties was originally an oral agreement as is evident from the letter, dated 20-4-1967 (Exh. 6-11) addressed by the plaintiff to the defendant which reads as under :- "Mr. Amirali H. Fancy, 20 April, 1967. I. M. L. ' As desired I am enclosing herewith a cheque for Rs, 15 lacs made out in the name of Fancy Foundation Limited in respect of purchase of property located in front of State Bank Building of McLeod Road. This is an advance payment as part purchase price of the said property. (Sd.) M. Q. Zaman, Manager Karachi Gas Co. Ltd." ' This was followed by the resolution of plaintiff's company reproduced above and another letter of plaintiff sent to defendant on 16-5-1982 (Exh. 6-12). The defendant for the first time in writing confirmed the sale transaction by their letter, dated 20-11-1969 (EA. 6-6) which reads as follows :- "The Executive Director, ' Karachi Gas Company Limited, Premier Insurance Building, Wallace Road, ' Off McLeod Road, ' Karachi, ' Sir, ' Plot of Land Opposite State Bank of India Building bearing Survey No, 7-3 Measuring Approximately Street No, S. R. I. Serai Quarters 3,325 sq. Yds. ' We confirm having sold you the abovementioned plot at Rs, 1,000 per square yard against which you have advanced us Rs, 30 lacs. Necessary formalities regarding execution of conveyance deed and registration thereof will be completed as soon as the remaining tenants are ejected and we are in a position to hand over clear possession of the plot. ' Necessary action to eject the remaining tenants is in hand and we are taking steps to expedite this matter. The balance amount may be cleared on completion of formalities. Yours faithfully, The Fancy Foundation." It is quite clear from the letter of defendant, dated 20-11-1969 (Exh. 6/6) that no date for performance of the agreement was fixed. It is also clear froing the aforesaid letter that at the time
---
## Page 5
the agreement was entered into between the parties, the property was occupied by the tenants against whom ejectment cases were pending and the defendant had undertaken to complete the sale in favour of plaintiff as and when it was in a position to band over clear possession of the plot to plaintiff. In these circumstances the first part of Article 113 of the Limitation Act which provides a period of 3 years for filing of a suit for specific performance from the date mentioned in the contract was not at all attracted. In so far the next contention of Mr. Khalid Ishaque, that the suit should have been instituted in any case within 3 years of the date fixed in Exh. D-12, is concerned, that too is not correct. The letter Exh. P-7, dated 13-12-1972 and D-12, dated 9-2-1973, relied by the learned counsel cannot be treated as a refusal on the part of defendant to perform the contract so as to attract the provision of the later part of Article 113 of Limitation Act. In both these letters the plaintiff made a conditional offer to treat the agreement as cancelled if the defendant refunded the amount of consideration received by them with interest. There is nothing on record to show that the defendant at any time accepted the above offer of plaintiff. On the contrary the evidence on record clearly established that even after 9-2-1973 (the date of Exh. D-12) the defendant treated the contract as valid and binding for enforcement. On 26-4-1973 vide Exh. P. 3 the defendant informed the plaintiff that the appeal filed by the tenants of the suit property has been fixed before the Supreme Court for hearing at Lahore on 15th May, 1973, and that it hoped to get a favourable decision therein and thereafter it will be in a position to eject the tenants from the property. Again by letter Exh. P-2, dated 4-9-1973, the defendant forwarded to the plaintiff a copy of the paper book of the Supreme Court case, photo copy of the conveyance deed, dated 28th June, 1963, in respect of the property in suit executed by the previous owner of property in favour of defendant and a photo copy of the letter issued by the office of Deputy Commissioner, Karachi, renewing the lease of plot for a further period of 99 years commencing from 1-9-1977. In addition to these letters, the defendant in its letter, dated 21st December, 1974 (Exh. P-13) addressed to plaintiff expressed its surprise over the demand of plaintiff for refund of sale consideration and concluded the same as under :- "We wish to place on record that we have always been and are ready to transfer the property to Karachi Gas Company Limited even today, while execution proceedings are going on." ' On face of the above conduct and admissions of defendant it is hardly open to argument that the suit when filed, on 30-7-1976 was beyond time. From the correspondence exchanged between the parties in this regard it is absolutely clear that until 12th December, 1975, when the defendant terminated the agreement, the contract was kept alive for enforcement by the parties. The suit having been filed on 30-7-1976 is, therefore, well within time. These issues are accordingly answered in the negative. ' Issues Nos. 4 and 5.-I will take up both the issues together as they are inter-connected. The plaintiff in paragraphs 3 and 4 of the plaint has alleged that the defendant in or about April, 1967 agreed to sell the property in suit to the defendant at the rate of Rs, 1,000 per square yard with clear vacant possession and received a sum of Rs, 30 lacs from the plaintiff towards the sale price of the property. The defendant in its written statement though admitted having received the sum of Rs, 30 lacs from the plaintiff towards the sale price of the property but denied existence of any valid and binding agreement of sale in respect of the suit property between the parties. The contention of the learned counsel for the defendant is that no formal agreement incorporating the terms and conditions of sale was executed and, therefore, it cannot be said that there was any legal and binding agreement of sale in respect of the suit property between the parties. I have already held while dealing with issues Nos. 1 to 3 that there was an oral agreement of sale between the parties in respect of property in suit. The law does not require making of an agreement of sale in any specific form. Sale and contract for sale are defined B in section 54 of the Transfer of Property Act, as follows :-
---
## Page 6
"54. 'Sale defined'.-Sale is a transfer of ownership in exchange for a price paid or promised or part paid and part promised sale how made: Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immovable property, of a value less than one hundred rupees such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller places the buyer, or such persons as he directs in possession of the property. ' Contract for sale.-A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself create any interest in or charge on such property." ' It is clear from the above provision of law that the essential terms of sale of immovable property are : (i) payment of the sale price of property or promise to pay the same by the purchaser to the seller and (Ii) the delivery of possession of the property sold by the seller to tie purchaser. If these two essential terms of sale are determinable in the agreement between the parties with certainty it may constitute a valid agreement of sale between the parties and mere absence of other terms in the agreement regarding rights and liabilities of seller and purchaser would not render the agreement invalid or unenforceable. In such an event the provisions contained in the Transfer of Property Act, relating to other rights and liabilities of seller and purchaser will be applicable. In the case before me the correspondence between the parties clearly show that on 20th April, 1967, vide Exh. 6-11, the plaintiff forwarded a cheque in the sum of Rs, 15 lacs to the defendant towards sale price of the property in suit. On 16th May, 1967, vide Exh. 6-12 another cheque in the sum of Rs, 5 lam towards the sale price of the property was also forwarded to defendant. The defendant by its letter, dated 20th November, 1969 (Exh. 6-6) confirmed having sold the property to the plaintiff at the rate of Rs, 1,000 per square yard and also admitted receipt of a sum of Rs, 30 lacs towards the sale price of the property. The defendant, in the same letter undertook to complete the sale in favour of plaintiff as soon as it was in position to deliver clear possession of the plot to the plaintiff after rejecting the remaining tenants of property and agreed to receive the balance of the sale consideration on completion of sale in favour of plaintiff. All these documents are admitted by the defendant. From these documents all the essential terms relating to the sale of suit property are clearly ascertainable and therefore, it constituted a valid agreement of sale between the parties. The learned counsel for the defendant is unable to show that under law an agreement of sale is required to be executed in any particular form. I accordingly hold that there was a valid agreement of sale between the parties in respect of the property in suit and the defendant had agreed to sell the property @ Rs, 1,000 per square yard and out of total agreed sale consideration received a part payment of Rs, 30 lacs agreeing to receive the balance amount upon completion of sale and upon delivery of clear vacant possession of the plot to the plaintiff. There was no time limit, however fixed in the agreement for its performance. These issues are accordingly decided. ' Issue No, 6.-The burden of proving this issue is on the plaintiff. I have already held that the initial agreement of sale between the parties was an oral one which was entered into in or about April, 1967. The plaintiff's witness S. A. Waheed has deposed in his evidence before the Court (Exh. 6) that Messrs Amir Ali Fancy, Jimy Fancy, Shoukat Fancy, Anwer Fancy, and Noor Ali Fancy, were the common directors on the boards of directors of the plaintiff and defendant, and they continued to act as such till December, 1971. The plaintiff in its evidence as produced Exh. 6/7 dated 15th August, 1979 which is a note written by Mr. Amir Ali Fancy to another director S. A. Waheed. This note was meant for plaintiff's company. In this note the pendency. Of Court cases against the tenants of the suit property is clearly mentioned. Similarly in the letter, dated 20th November, 1969 tExh. 6/6) wherein the defendant for the first time admitted sale of property in favour of plaintiff, the pendency of ejectment cases against the tenants of the suit property is also clearly mentioned.
---
## Page 7
The lengthy correspondence exchanged between the parties on the subject also indicates that the pendency of Court cases against the tenants of building was well within the knowledge of plaintiff. In these circumstances I hold that the plaintiff was fully aware of the ejectment cases pending against the tenants of the suit property both at the time it entered into the agreement of sale with the defendant as well as thereafter. Issues Nos. 7, 8 and 9.-All the above-mentioned issues are inter-connected and, therefore, they can be dealt with together conveniently. I have already held while dealing with issue No, 6 that at the time the plaintiff entered into the agreement of sale with the defendant they were aware of the pending ejectment cases against the tenants of the building. Subsection (5-B) was added after section 5 in section 13 of the West Pakistan Urban Rent Restriction Ordinance, 1959 by the Amending Ordinance XXI of 1965. This newly added subsection (5-B) of section 13 of Ordinance VI of 1959, provided for the right of re-instatement of a tenant evicted from a building on the ground of D reconstruction, in the newly constructed building on the same site. The agreement of sale between the parties in respect of the suit property we made in or about April, 1967. It is, therefore, quite clear that on the date agreement of sale between the parties was made subsection (5-B) of section 13 of Ordinance VI of 1959 was part of the statute. This being the position, the plaintiff will be deemed to be aware of the right of re-instatement of the tenants who were sought to be evicted by the defendant on the ground of reconstruction of building, in the newly constructed building on the same site. The judgment of the Supreme Court in the case of Hassan and others v. Fancy Foundation (1) only declared the law as it stood after subsection (5-B) was incorporated in section 13 of the Ordinance VI of 1959. The fact that prior to the above judgment of Supreme Court the Courts interpreted the provision of subsection (5-B) of section 13 of the Ordinance in a different manner or that the plaintiff or the defendant in suit understood it differently could not change the true legal position. In view of the above discussion I held that the right of re-instatement of tenant guaranteed in section 13 (5-B) of Ordinance VI of 1959 did not amount to any clog on the title of defendant in respect of the suit property and plaintiff will be deemed to be aware of…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.