P L D 2021 Supreme Court 434

Present: Mushir Alam, Faisal Arab and Sajjad Ali Shah, JJ

Mst. JAIWANTI BAI---Appellant

Versus

Messrs AMIR CORPORATION and others---Respondents

Civil Appeal No. 133-K of 2016, decided on 19th July, 2017*.

(Against the order dated 23.9.2015 passed by High Court of Sindh, Karachi in II-Appeal No. 72
of 2009).

(a) Transfer of Property Act (IV of 1882)---

----S. 54---Contract Act (IX of 1872), S. 55---Agreement to sell immoveable property---Time,

essence of the contract---Scope---Generally in a sale of immoveable property, time was not the
essence of the contract, unless it was made so.

(b) Specific Relief Act (I of 1877)---

----S. 12---Contract Act (IX of 1872), S. 51---Transfer of Property Act (IV of 1882), S. 54---
Specific performance of agreement to sell immoveable property---Scope---Specific performance
could be sought by a vendee or vendor who had performed and was ready and willing to perform
reciprocal promise.

(c) Registration Act (XVI of 1908)---

----S. 50(1), first and second proviso---Transfer of Property Act (IV of 1882), S. 54---Specific
Relief Act (I of 1877), S. 12---Unregistered instrument---Prior in time to registered instrument---
Rights of a person, having established that they were equipped with an unregistered instrument,
which was prior in time, and were in possession of property in part performance of such
instrument, would rank superior even against the subsequent registered instrument.

Faza v. Mehr Dia and 2 others 1999 SCMR 837; Mushtaq Ahmed and others v. Muhammad
Saeed and others 2004 SCMR 530 and Sardar Arshad Hussain v. Muhammad Zenat Un Nisa
2017 SCMR 608 ref.

(d) Contract Act (IX of 1872)---

----S. 37---Immoveable property---Assignment---Scope---Assignment, in cases relating to

immoveable property, took place when one party to an existing contract conveyed all the
obligations, rights and interest under the agreement to another person---In such an eventuality,
the assignee stepped into the shoes of the assignor and assumed all the contractual rights and
obligations flowing therefrom.

AIR 1962 SC 1810 at 1817, Paragraph 21 ref.

(e) Transfer of Property Act (IV of 1882)---

----S. 54---Contract Act (IX of 1872), S. 37---Immoveable property---Forward contracts---

Forward transferee---Supreme Court observed that it was common usage and custom in real
estate, construction and building contract that at, or before the execution of sublease, investors
booked the apartments/shops in advance and sold, or transacted, forward sale multiple times,
before the final sublease was executed; that traditionally, such type of transaction was evidenced
by tripartite arrangement by and between the allottee, forward purchaser, and the builder; that in
Pakistan, such contracts and arrangements were not regulated, therefore it was high time that the
real estate business was regulated, to secure rights and interests of builders, allottees and forward
transferees alike---Appeals were allowed with said observations.

(f) Limitation Act (IX of 1908)---

----Art. 113---Specific Relief Act (I of 1877), S. 12---Agreement to sell immoveable property---

No time for performance mentioned in agreement---Suit for specific performance of such
agreement---Limitation period, commencement of---Scope---Where no time for the performance
was mentioned in the agreement to sell/instrument, the court was required to find out when the
vendee/plaintiff had notice that the performance was refused---Once such date or period was
discovered, then period of three years was to be computed therefrom.

Gunwantbhai Mulchand Shah and others v. Anton Elis Farel and others (2006) 3 SCC 634 and
R.K Parvatharai Gupta v. KC Jayadeva Reddy (2006) 2 SCC 428 ref.

Neel Keshaw, Advocate Supreme Court and K.A. Wahab, Advocate-on-Record for Appellant.

Ex parte for Respondents.

Date of hearing: 19th July, 2017.

ORDER

MUSHIR ALAM, J.---Facts necessary for the disposal of this instant appeal, with the leave of
the court, are that Respondent No.2 booked apartment No. 402, fourth floor (hereinafter referred
to as subject apartment), in a commercial multi-storied building, namely 'Adam Arcade', situated
in Karachi sponsored by Respondent No.1, Amir Corporation Ltd, in 1980.

2. Subsequently, Respondent No.2, having paid the entire amount to the Respondent No. 1 in
installments, being allottee, entered into a forward sale agreement dated 30th September, 1989
with the husband of the Appellant, Mr. Kesholal, in respect of subject apartment for a total sale
consideration of Rs. 5,70,000/-. It was stipulated by, and between the vendor/Respondent No.2
and the vendee, Mr. Kesholal, that on payment of the entire sale consideration, Respondent No.2
shall transfer the said apartment in favour of the vendee or his nominee. Therefore, on the
payment of the entire sale consideration to the vendor, in terms of the sale agreement, the
vendee, vendor, and the Appellant, being the nominee of her husband, visited the office of the
builder, Respondent No.1, on 08.11.1989 to get the transfer of allotment, transfer of possession,
and consequent execution of sublease in respect of the subject apartment from Respondent No. 1.

3. Afterwards, with the concurrence of the vendor/allottee, the Respondent No.1, at the
instruction of the husband of the Appellant/ vendee, approved the transferred, and assigned her
rights and interest in the allotted apartment to the Appellant. The requisite entry was recorded in
the 'Memorandum of Transfers' in the favor of the Appellant, Mst. Jaiwanti Bai, and endorsed on
08.11.89. Respondent No.2 then, in performance of the sale agreement, handed over the
possession of the apartment to the Appellant, including receipt of all payment made to the
sponsor of the project, Respondent No.1, the allotment letter, and acknowledgement of
possession letter, duly endorsed by the Respondent No.1 to the Appellant.

4. Respondent No.1 then demanded and received a sum of Rs. 9,000/- in order to process the
execution of sublease in favor of the Appellant, Mst. Jaiwanti Bai, with an additional sum of Rs.
7866/- to provide an electric and gas meter. Respondent No.1, on receipt of the amount as
demanded, assured the Appellant that she will be informed of the date and time for the
appearance before the registrar for the execution of the sublease after the appropriate
documentation is prepared.

5. It is evident from the record that the Appellant got the property registered in her name in the
office of excise and taxation and has been paying the property tax since 1990-1991. She has also
got the electric, gas, and telephone connection installed in her name and all recently paid bills
were produced. It may be pertinent to mention here that the Appellant is in physical possession
of the apartment since the date of handing over the possession on 08.11.1989, as well as in
possession of all the original allotment papers, receipts for payments made to the vendor, the
builder, property taxes, utility bills, and service charges to the association of the project. There is
no denial of this stated fact.

6. It is the case of the Appellant that she and her husband, Mr. Kesholal, made several personal
visits to the office of the Respondent No.1 to get the time and date for the execution of sublease
but the matter was deferred to a future date every time, which never materialized. After realizing
all her efforts were in vain, the Appellant issued a legal notice dated 23.01.2006 to Respondent
No.1 on their original address known to the Appellant, whereby, Respondent No.1 was called
upon to execute the sublease or, in the alternative, to refund the entire amount with interest, but
this act too was to no avail.

7. The Appellant, left with no option, filed a suit on 14th September 2006 before the VIIIth
Senior Civil Judge, Karachi East seeking judgment and decree for execution of sublease and
other consequential reliefs. Respondent No.1 and Respondent No.2 were both made parties to the
suit. Service against Respondent No. 1 was held good on 16.10.2006, whereas, notices sent to
Respondent No. 1 remained
unanswered. Therefore, service was affected through newspaper 'Nawa-e-waqt' dated 10th
March 2007. The suit against Respondent No. 2 was dismissed as not pressed vide order dated
16.10.2006, whereas, the suit against Respondent No.1 was proceeded ex-parte. After the
commencement of the suit, ex-parte evidence was taken and there was no rebuttal to the case of
the Appellant. However, the learned trial court dismissed the suit vide judgment dated
24.12.2008 on the assumption that under the sale agreement dated 30.9.1989 "transfer of the
property was settled between both the parties within 30 days but the suit was filed on 15th
September, 2006..." It was further held that "in the schedule of Limitation Act, 1908 time for
Specific performance of contract is 2 years, therefore suit is time barred" and accordingly the
suit was dismissed for being barred by time.
8. The current Appellant then filed Civil Appeal No.16/2009 which was dismissed on an
altogether different assumption, whereby, it was held that the agreement was between
Respondent No.2, Mrs. Zakir Parvez, the original allottee/vendor, and Mr. Kesholal/vendee, the
husband of the current Appellant, and therefore, the current Appellant, Mst. Jaiwanti Bai, did not
have a Locus Standi before the Court. The learned Appellate Court, in the penultimate paragraph
of the judgment observed that the signature of respondent No.2 Mrs. Zakia Pervaiz on the
acknowledgement receipt of sale consideration of Rs.5,70,000 (page 59) is totally different from
that on the sale agreement (page 53). It was further observed that another payment made by the
Appellant through the receipt of Rs. 9000/- in favour of the builder does not create any right for
her to file a suit for specific performance. It was finally observed 'that the appellant has come to
court with unclean hands and tried to take shelter under the umbrella of court order to legalize
her illegal act and Want to usurp suit property by playing fraud with the court of law'. In
conclusion, the Court held that the Appellant had no locus to file the suit and dismissed the suit
with compensatory cost of Rs. 25,000/-.

9. Surprisingly, in the second appeal under section 100 of the Code of Civil Procedure, 1908, the
learned bench of the Sindh High Court, although, condoned the delay by relying on section 53-A
of The Transfer of Property Act, 1887, but held that 'since the original vendor/allottee undertook
to execute the general power of attorney/ sale deed in favour of the Vendee or his nominee/ and
the suit, if filed under clause 7 of the agreement, may enable the vendee to transfer the suit
property in his favour or in favour of his nominee.' Consequently, the Honorable Sindh High
Court dismissed the second appeal for want of evidence and lack of Locus Standi vide impugned
judgment dated 23.09.15.

10. Mr. Neil Keshev, the learned ASC for the Appellant, has contended that the learned Trial
Court committed serious errors of law by dismissing the suit solely on the ground of limitation.
Secondly, he contends that the first Appellate Court failed to appreciate the documents, more
particularly the acknowledgement receipt, which, on the face of record, shows that the Demand
Draft on record was received for Respondent No.2 and not by the Appellant herself. Therefore,
the comparison of signature on the receipt and sale agreement was not justified which led to the
erroneous assumption and the Appellate court erred to non-suit the Appellant on the ground of
locus standi. It was also argued that the issue of limitation under facts and circumstances was not
attracted and yet, the High Court invoked the defense available to a vendee in possession in part
performance of agreement to sell under section 53-A Transfer of Property Act, and condoned the
limitation, while at the same time, concurred with the first Appellate Court which caused serious
miscarriages of justice. Therefore, the counsel for the Appellants contends that the impugned
judgments are liable to be set aside and suit to be decreed.

11. It is also argued by Mr. Neil Keshev, learned ASC for the Appellant, that the learned trial
court has misread the evidence, committed error of law by dismissing suit on the erroneous
assumption that the suit is barred by time, and assumed that limitation for such kind of suits is
two years. It was further urged that the first and the second appellate courts have failed to
appreciate the nature of the transaction, which comprised of forward sale of the subject
apartment by and between the Respondent No.2 and the husband of the appellant in the first
place. Secondly, the Appellate Courts have failed to take note of the fact that the payment of the
entire sale consideration by the Appellant, being nominee through cash and Demand Draft as
acknowledged by the Respondent No.2, such sale of allotment, was duly approved and endorsed
by the builder, Respondent No.1, as evidenced by the change and transfer of all rights and
entitlement of the original allottee in favour of the Appellant as recorded by way of
'Memorandum of Transfer' on 8.11.1989 and the Respondent No.1 received a sum of Rs.9000/
being full and fugal payment for sublease charges against acknowledgement receipts on same
date (at page 60).

12. We have heard the arguments of the learned Counsel for the Appellant, and examined the
record.

13. It is a settled position in law that generally in a sale of immoveable property, time is not the
essence of the contract, unless it is made so. In the instant case, as could be seen in the first limb
of the sale transaction dated 30.9.1989 (page 51), clause 7 provided for an obligation on the part
of the vendor to do all acts necessary "in connection with transfer and or registration in favour of
the vendee or his nominee." Clause 12 thereof, provided that the sale "transaction shall be
finalized within 30 days of on payment of balance sale consideration".

14. From the record it is evident that the first limb of the sale transaction was finalized on
8.11.1989 when the balance sale consideration was paid for through the Demand draft No. DD-
199405 (page 55), which was acknowledged (page 59) on behalf of the Respondent No.2, who in
turn appeared before the Respondent No.1 to have the entries in the 'Memorandum of Transfer'
amended in favor of the Appellant as nominee/assignee of the vendee endorsed by the
Respondent No.1 on 8.11.1989 (page 64), and delivered the possession (page 61) to the
Appellant being nominee/assignee of the vendee, and allotment was transferred in the name of
Appellant. Therefore, the first limb of the transaction under the sale agreement completed upon
settlement of balance consideration.

3(sic). The second limb of the transaction commenced from the time the builder, Respondent
No.1, acknowledged the Appellant as the transferee of the rights and interest of the original
allottee, her husband, by endorsing transfer of allottee right and interest in the allotment through
'Memorandum of Transfer' on 8.11.1989 (page 64) and further by the endorsement dated
8.11.1989 on the possession letter (page 61) in the favor of the Appellant. The original allotment
letter does not stipulate the time to execute the sublease, even while recording endorsement of
transfer on Memorandum of Transfer, as mentioned herein, no date was provided. Specific
performance could be sought by a vendee or vendor who have performed and "is ready and
willing to perform reciprocal promise". In the instant case, Respondent No.2 performed her part
of the contract with Respondent No.1 by paying the entire sale consideration. In a forward
contract, Respondent No.2, having received the entire sale consideration from the Appellant, had
performed her part of the contract by assigning and transferring her right in allotment of subject
apartment, which Respondent No.1 acknowledged and is obliged to perform their reciprocal
obligation by executing sub-lease under law. Specific performance is sought by the Appellant
against Respondent No.1 for the execution of sublease, for which a sum of Rs. 9000/- was
received on 8.11.1989 and further sum of Rs. 7,866/- was received on account of electric and gas
meters (page 60). There is no denial of such fact on record.

14(sic). Prior to addressing the issue of limitation, it is first to be seen whether the Appellant had
a locus standi to file the suit for specific performance. The learned first Appellate Court held that
the Appellant has no locus standi to file the suit and such conclusion was drawn on the fact that
the agreement dated 30.09.1989 was executed between the Respondent No.2, and Mr. Kesholal,
the husband of the Appellant. Similarly, the learned Appellate Court also stated that the signature
of the Vendor, Respondent No.1, and the signatures on the acknowledgement receipt do not
tally. Therefore, the learned Appellate Court concluded that since the Appellant herself has not
entered into the sale agreement, she could not file a suit for specific performance.

15. We have examined the material on record and noted that the learned first appellate Court
mis-appreciated the evidence on record that led to erroneous finding, which cannot be sustained.
The receipt acknowledging payment of Rs. 5,20,000/- in cash and Demand Draft No. DD
19940541/09 is available at page 59 of the file. It may be noted that the receipt is signed for Mr.
Zakia and not by Mrs. Zakia, therefore, dissimilarity of signature on the agreement and receipt is
understandable.

16. We have also noted that the Demand Draft No. DD 199405 41/09 is available on record page
55 which shows that it is drawn in the name of Mrs. Zakia. There is nothing on record to show
that sale consideration was not paid to the vendor/allottee. Further receipt of Rs.9000/- as
payment issued by the Respondent No.1 for execution of sublease is coupled with
acknowledgement of possession executed by Respondent No.2, as approved by the Respondent
No. 1.

17. The transaction, as disclosed by the appellant, has not been denied nor disproved. The
provisions of section 50 of the Registration Act, 1908, become relevant in transactions such as
these wherein:

"every document of the kinds mentioned in clauses (a), (b), (c) and (d) of section 17, subsection
(1), 3 [and every document registerable under section 18 in so far as such document affects
immoveable property or acknowledges the receipt or payment of any consideration in respect of
any transaction relating to immovable property], shall, if duly registered, take effect as regards
the property comprised therein against every unregistered document relating to the same
property, and not being a decree or order, whether such unregistered document be of the same
nature as the registered document or not."

18. However, it may be noted that provisos to subsection (1) to Section 50 of the Registration
Act, 1908 in stated condition, nullifies the privilege enjoyed by the registered instrument, with
regard to the rights and interests where immoveable property is concerned. A protection is
provided to the transferee, who establishes to be in occupation and possession of the property,
claiming rights and interests in the property on the basis of unregistered instrument, in part
performance thereof, from any the transferor, or any person claiming under him. The
implications of two provisos to subsection (1) of section 50 of the Registration Act, 1908 which,
for ready reference, are reproduced below:-

Provided that the person in possession of the property under an unregistered document prior in
date would be entitled to the rights under section 53-A of the Transfer of Property Act, 1882 (IV
of 1882) if the conditions of that section are fulfilled:

Provided further that the person in whose favour an unregistered document is executed shall be
entitled to enforce the contract under the unregistered document in a suit for specific
performance against a person claiming under a subsequent registered document, subject to the
provisions of clause (b) of section 27 of the Specific Relief Act, 1877.
19. On bare perusal of above, it is clear that in terms of 1st and 2nd provisos to subsection (1) of
the Registration Act, 1908, if it is established on record that a person is in part performance of an
unregistered document prior in time and is in possession of the property,
such person, in terms of exception provided under first proviso "is entitled to the rights under
section 53-A of the Transfer of Property Act, 1882". Further, in terms of exceptions carved out
in the 2nd proviso to subsection (1), they "shall be entitled to enforce the contract under the
unregistered document in suit for specific performance against a person claiming under a
subsequent registered document, subject to the provisions of clause (b) of section 27 of the
Specific Relief Act, 1877".

20. The rights of a person, having established that they are equipped with an unregistered
instrument, which is prior in time, and are in possession of property in part performance of such
instrument, would rank superior even against the subsequent registered instrument. Such position
in law was considered with approval in the cases cited as Faza v. Mehr Dia and 2 others,
Mushtaq Ahmed and others v. Muhammad Saeed and others 3, which was recently affirmed in the
case of Sardar Arshad Hussain v. Muhammad Zenat Un Nisa 4. It may be observed that as a
subsequent registered instrument was not brought on record, the Appellant cannot be provided
the protection under the proviso of section 50 of the Registration Act, 1908 read with section 53-
A of the Transfer of Property Act, 1882.

21. Had there been a subsequent purchaser of the subject apartment with a registered instrument,
the aforementioned law would have protected the rights of the Appellant. It seems that on the
current facts, the correct status of the Appellant is that she is the 'assignee' of her husband. There
is nothing on record in rebuttal to the claim of the Appellant or her being an assignee of her
husband.

22. An assignment, in cases relating to immoveable property, takes place when one party to an
existing contract (as in this instant case the under the agreement to sell) conveys all the
obligations, rights and interest under the agreement to another persons 5. It is an admitted position
that the current Appellant is the wife of the vendee under the sale agreement executed on
30.09.1989 by the Respondent No.2. It is also a matter of record that Respondent No.1, with the
concurrence of allottee/vendor, Respondent No.2, and the vendee (husband of the Appellant),
approved and endorsed the assignment by signing the 'Memorandum of Transfers' on 08.11.1989
(on reverse of allotment in favor of the original allottee at page 63 of the file) of the subject
apartment in favor of the Appellant. Given the conferment of rights in the 'Memorandum of
Transfers', coupled with the signatures of the original Vendee and Vendor on the sale agreement,
and handing over of the possession with the concurrence of Respondent No.1, the Appellant
became the assignee to her husband.

23. In such an eventuality, the assignee steps into the shoes of the assignor and assumes all the
contractual rights and obligations flowing therefrom. The concept of assignment is invoked both
in contract and real estate, or property law, transactions. In the instant case, the possession was
handed over to the Appellant (assignee of the vendee), as endorsed by the Respondent No.1,
which is sufficient evidence that the rights and interest of the original allottee in the subject
allotment were to be duly conveyed and transferred to the Appellant. Therefore, the assignee,
Appellant, becomes a 'representative-in-interest' 6 of the assignor7 (her husband) and can lawfully
enforce the performance of the contract against Respondent No. 1.
24. It is common usage and custom in real estate, construction and building contract, that at, or
before the execution of sublease, investors book the apartments/shops in advance and sell, or
transact, forward sale multiple times, before the final sublease is executed. Traditionally, such
type of transaction is evidenced by tripartite arrangement by and between the allottee, forward
purchaser, and the builder. In the instant case, the memorandum of transfers executed by the
builder, with the concurrence of the Allottee (vendee), has been produced at page 63, coupled
with delivery and acknowledgement of possession in favor of assignee dated 8.11.1989 (page 61
of the file), which bears the signatures of all the three contracting parties. It is a routine and
common commercial sale transaction. As noted, it is tripartite agreement and each of the three
parties assumes respective rights and obligation. Neither the Respondent No.1 nor Respondent
No. 2 denied such transaction. In Pakistan, such contracts and arrangement are not regulated
unlike in many countries including India where such transactions are stringently regulated under
the Real Estate (Regulation and Development) Act, 2016. It is high time in Pakistan that the real
estate business is regulated, to secure rights and interest of builders, allottees and forward
transferee alike.

25. In view of the foregoing, it is established that the assignee from the vendee, having stepped
into the shoes of the assignor, acquired all the rights and interests, including the equity to seek
specific performance of contract from the builder and becomes a representative-in-interest of the
Vendee. Therefore, she has the locus standi to file the suit for specific performance. Hence, the
finding of the Courts below on the issue of locus standi is erroneous cannot be sustained.

26. Attending to question of limitation, cases of specific performance are governed under Article
113 of the Limitation Act, which is reproduced below for convenience sake:
Description Period of Time from which
of Suit Limitation period begins to run

11 For Specific Three years The date fixed for the

3 per-formance performance, or if no
of a contract such date is fixed,
when the plaintiff has
notice that
performance is refused

27. It is on record that the interest in the allotment of subject apartment was assigned, as per the
sale agreement, by the husband in the favor of his wife, the Appellant, being his nominee, and
payment of the balance consideration was made by the Appellant through Demand Draft to
Respondent No.2. Thereafter, Respondent No.2 performed their part of the obligation by doing
what was required under the sale agreement and transferred the allotment of the subject
apartment as is evidenced by entries in the 'memorandum of transfers'. An Amount of Rs.9000/-
was demanded and received by the Respondent No.1, however, the sublease was never executed
and Respondent No.1 abruptly vanished from the scene. Given that no date was fixed for
performance of execution of sublease between the Appellant and Respondent No.1, for all
practical purposes, the Appellant may treat refusal of performance when the legal notice
remained unanswered.

28. To seek specific performance of agreement to sell, Article 113 of the Limitation Act provides
two starting points to trigger the period of limitation of three years; one from 'the date fixed for
the performance, and second where 'no such date is fixed, when the plaintiff has notice that
performance is refused.' In the case at hand, it is evident that the original allottee, Respondent
No.1, completed all the formalities as committed under the sale agreement with the husband of
the Appellant on receipt of the entire sale consideration by transferring her rights and interest,
handing over the possession in the allotment of suit apartment in favor of the Appellant, which
was concurred and endorsed by the builder, Respondent No. 1.

29. There is nothing on record to show that any date was fixed by Respondent No.1 for
execution of the sublease, either in the original sale transaction between the original
allottee/vendor, nor any date was provided for in the execution of sublease at the time of transfer
of assignment of rights and interest in the allotted apartment by Respondent No.1 in the
memorandum of transfer. In cases such as these, the vendee can make time the essence of the
contract by calling upon the vendor to perform the agreement within date specified in the notice
and the period of limitation of three years would run from the date so specified.

30. In the instant case, as noted, no time for the performance, i.e. for execution of sublease was
fixed by Respondent No. 1. In such a situation, the court is required to find out when the
vendee/plaintiff had notice that the performance was refused. Once such date or period is
discovered, then period of three years is to be computed thereof. In a case reported as
Gunwantbhai Mulchand Shah and others v. Anton Elis Farel and others8, the Indian Supreme
court relying on the case of R.K Parvatharai Gupta v. KC Jayadeva Reddy 9 held that a suit, in
terms of the requirement of Article 54 of the Indian Limitation Act, (akin to Article 113 of
Limitation Act, 1908 of Pakistan) should have been filed within a period of three years from the
date of expiry from the date of receipt of the notice of refusal. The limitation of three years
within the contemplation of second part of Article 113 of the Limitation would under the facts
and circumstances of the case run from the date Appellant was only notified of refusal of
performance when the legal notice dated 23.01.2006 remained unanswered. Hence, given that
the suit was filed on 14.09.2006, it was well within time.

31. In the light of the above discussion, this court is of the considered view that the Appellants
are entitled to the grant of decree of specific performance of the contract and accordingly the suit
is decreed against Respondent No.1 and in favor of the Appellants. The impugned judgments and
decree dated 24.12.2008 and 20.1.2009 respectively passed by the learned Trial Court, Judgment
in C.A. 16 of 2009 dated 13.10.2009 by the learned VIIIth Additional District Judge, Karachi
East, Judgment in Second appeal No.72 rendered by the High Court dated 23.9.2015 are
respectively set aside. Consequently, Suit No.1075/2006 is decreed in favor of the Appellants.
Respondent No.1 is directed to execute the sublease in favor of the appellants within a period of
one month from the date of receipt of this order, since the appellant had already paid the cost of
sublease to the Respondent No. 1. In case Respondent No.1 fails to execute the sublease within
30 days, the Nazir of the learned Trial Court to do the needful, in accordance with law and the
Appellant shall bear all the expenses and in turn recover the same from the Respondent No.1
with cost throughout.

MWA/J-6/SC Appeal allowed.

2021 S C M R 1108
[Supreme Court of Pakistan]

Present: Mushir Alam and Qazi Muhammad Amin Ahmad, JJ

MUHAMMAD JAMIL and others Petitioners

Versus

MUHAMMAD ARIF---Respondent

Civil Petition No. 852 of 2020, decided on 10th September, 2020.

(Against the order dated 23.12.2019 passed by Lahore High Court, Lahore in Civil Revision No.
77548 of 2019)

(a) Specific Relief Act (I of 1877)---

----S. 22---Discretion as to decreeing specific performance---Scope---Specific performance was

a discretionary relief, and the Courts were not bound to grant such relief mechanically merely,
because it was lawful to do so---Discretion to grant relief of specific performance or otherwise,
by the Court was not something mechanical or arbitrary exercise of jurisdiction but, was
structured on sound and reasonable judicial principles, amenable to judicial review and
correction by the court of appeal.

(b) Contract Act (IX of 1872)---

----S. 52---Performance of reciprocal obligations---Scope---Reciprocal obligations under the

agreement were to be performed, in the manner and sequence it was provided for---Where the
agreement did not expressly provide the manner by which such obligations were to be
accomplished, then the respective obligations were to be performed in the manner and sequence,
which the nature of transaction required.

(c) Transfer of Property Act (IV of 1882)---

----S. 54---Specific Relief Act (I of 1877), S. 12---Contract Act (IX of 1872), S. 51---Specific
performance of agreement to sell immoveable property---Obligations of vendor and vendee---
Foremost requirement to seek specific performance, for a vendee was to demonstrate his
readiness and willingness to perform the agreement---Promisor (vendor) need not perform his
part of promise or obligation, unless the promisee (i.e vendee) was ready and willing to perform
his reciprocal promise---In cases arising out of agreement to sell, a vendee to demonstrate his
readiness and willingness to perform his part of obligation, had to plead, that he had offered to
pay, and was always prepared to pay the consideration---Vendee could not seek enforcement of
reciprocal obligation on the part of vendor to execute the sale deed, unless he demonstrated that
he not only had the financial capacity but he was also always willing and ready to meet the same.

Mst. Samina Riffat v. Rohail Asghar and others 2021 SCMR 7; Abdul Hamid v. Abbas Bhai
Abdul Hussain PLD 1959 (W.P.) Karachi 629; Hamood Mahmood v. Shabana Ishaq 2017
SCMR 2023; Kwait National Real Estate Co. (Pvt.) Ltd. v. Educational Excellence Ltd. 2020
SCMR 171; Pushparani S. Sundaram and others v. Pauline Manomani James (deceased) and
others (2002) 9 SCC 582; Saradamani Kandappan and others v. S. Rajalakshmi and others
(2011) 12 SCC 18 Paragraph 31 and C.S. Venkatesh v. A.S.C. Murthy D. through LRs. AIR
2020 SC 930 = 2020 (3) SCC 280 ref.

(d) Transfer of Property Act (IV of 1882)---

----S. 54---Specific Relief Act (I of 1877), S. 12---Contract Act (IX of 1872), S. 55---Specific
performance of agreement to sell immoveable property---Time essence of the contract---Rule
that generally time was not of essence in contracts involving sale/purchase of immoveable
property---Said rule could not be used as a ground to grant or otherwise specific performance,
unless the circumstances that proved otherwise were highlighted and proved by the vendor and
or vendee as the case may be.

PLD 1962 SC 1; PLD 1973 SC 39; 2009 (5) SCC 182; 2010 SCMR 286; 2015 SCMR 21; Malik
Bahadur Sher Khan v. Haji Shah Alam 2017 SCMR 902 and Muhammad Abdur Rehman
Qureshi v. Sagheer Ahmad 2017 SCMR 1696 ref.

(e) Transfer of Property Act (IV of 1882)---

----S. 54---Contract Act (IX of 1872), S. 55---Agreement to sell immoveable property---Time

essence of the contract---Balance consideration not paid within the time stipulated in the
agreement---Forfeiture of earnest money---Scope---Court may always allow the vendor to
appropriate the earnest money in terms of the forfeiture clause in the agreement and or as may be
deemed appropriate, the court may compensate the vendor as it deemed just and reasonable.

The vendee-plaintiff conceded in evidence that consequence for not making payment in time
would result in forfeiture of the earnest money. He also declined the offer of the vendor-
defendant to purchase the property at the current value. In the present case, earnest amount paid
to the vendor represent merely 7.834% of total sale consideration. The vendor was unjustly
entangled in litigation by the vendee and dragged up to the Supreme Court with two suits,
several rounds of appeals and revisions, injunctive orders, repeated non-compliance of orders of
the trial and appellate court to deposit the balance sale consideration, delay in deposit of the
amount beyond three years as set out in the agreement, and clog of injunctive order on the rights
of the vendor to deal with his property etc. Court could approve forfeiture of the earnest money
by the vendor on basis of such considerations.

Space Telecommunication (Pvt.) Ltd. v. Pakistan Telecommunication Authority 2019 SCMR

101 and Mst. Samina Riffat and others v. Rohail Asghar and others 2021 SCMR 7 ref.

From the facts, circumstances and evidence available on record it had become discernable to the
Court, that the vendee had deliberately created a cobweb to entice the court into concluding that
he had an intention to pay balance sale consideration. Specific time was set for performance of
the contract, with consequences for both the parties committing breach of the time line. The
vendee was not able to convincingly demonstrate that the time was not the essence of the
contract and or that the vendor was either willing to accept the performance beyond the time so
fixed or that the circumstances were such that the vendor could be forced to accept the
performance beyond the time.
Court may always allow the vendor to appropriate the earnest money in terms of the forfeiture
clause in the agreement and or as may be deemed appropriate, the court may compensate the
vendor as it deemed just and reasonable. In the present case, by way of sheer indulgence,
generosity and grace the vendor agreed to refund 50% of the earnest money received from the
vendee through cross cheque. Supreme Court appreciated such benevolent gesture on the part of
the vendor. Petition for leave to appeal was converted into appeal and allowed.

Ch. Ishtiaq Ahmad Khan, Advocate Supreme Court for Petitioners.

Malik Muhammad Qayyum, Senior Advocate Supreme Court for Respondent No. 1.

Date of hearing: 10th September, 2020.

JUDGMENT

MUSHIR ALAM, J.---Petitioners have impugned the judgment dated 23.12.2019 whereby
concurrent judgment and decree of the learned Additional District Judge, Toba Tek Singh dated
27-11-2019 maintaining judgment and Decree passed by the learned Civil Judge Pir Mahal dated
7.02.2019 decreeing the Suit for specific performance, was maintained. By consent petition was
heard at leave granting stage and being decided.

2. For ease and convenience, the appellant/vendor shall be referred to as the Defendant and the
Respondent/vendee as the Plaintiff. Facts are that the Plaintiff, entered into an agreement to sell
dated 26.03.2014 with the Defendants Nos. 1 to 3 in respect suit property for a total sale
consideration in foreign currency in the sum of Britain 2,17,000/- out of which 17,000 was paid
in advance as earnest money. Balance sale consideration, was agreed will be paid at the time of
the execution of sale deed, attestation of mutation and handing over of the possession on or
before 15.4.2015. To ensure adherence to the time line for the performance of respective
obligations by the parties, the agreement also contained penal consequences for breach of
agreement by either party.

3. Record shows that the Plaintiff on assertion that the Defendant refused to receive the balance
sale consideration, on 14.3.2015 filed a suit for specific performance, in the Civil Court, Pir
Mahal, a month before the cutoff date fixed for specific performance. Learned trial court,
granted ad interim injunctive relief, subject to deposit of balance consideration by 28.3.2015
with a caution that on failure to deposit, the ad-interim order, be deemed to be vacated. Balance
consideration, was not deposited rather, further time at his request was enlarged to 30.3.2015
with a similar caveat and the suit was adjourned to 11.4.2015.

4. It is matter of record that instead, of depositing balance sale consideration, as ordered by the
Civil Judge Pir Mahal. The respondents on 1.4.2015 filed yet another suit in the Court of Civil
Judge Toba Tek Singh. He managed to obtain ad-interim orders, without offering to deposit or
seeking any directions of the court to deposit the balance sale consideration. On 11.4.2015 he
withdrew the earlier suit, on the ground inter alia to remove some legal defects, from the court of
Civil Judge Pir Mahal.

5. In the subsequent suit, stay application was contested and granted unconditionally, vide Order
dated 02.11.17. On appeal, stay order was modified and subjected to deposit of the balance sale
consideration within 120 days (four months), with a caveat, that on failure to deposit, injunction
application would stand dismissed. It is matter of record that such order was not complied, yet
the trial court granted 2 days' more time and later on the direction of Revision Court, amount in
Pakistani currency was deposited in the treasury of the trial court on 02.10.18.

6. Suit after full dress trail was decreed, for specific performance vide judgment dated 07.02.19.
Plaintiff was directed to receive back the balance consideration deposited in Pakistani Rupee
and, was given 30 days further time from to deposit the balance amount of 200,000 with the
Court; the order was not complied.

7. The appeal filed by the Defendant was dismissed on and so also the Revision met the same
fate, vide Orders dated 27.11.2019 and 23.12.19 respectively; on the assumption that the
defendant carry an attitude of non-performance and the plaintiffs were ready and willing to
perform their part of the contract. The Plaintiffs through impugned judgment was again directed
to deposit 200,000 with the trial court within 30 days, if it has not been deposited earlier, which
order, it is pointed out, has not been complied with. Concurrent Judgments of all the three courts
below, have been impugned before us,

8. Learned counsel for the Defendant argued, that the sale agreement dated 26.3.2014 clearly set
out the time for performance of reciprocal obligations by both the parties. Breach thereof by the
respondents entailed penal consequence of forfeiture of earnest amount, likewise, refusal on the
part of appellant to execute sale deed and effect mutation made him liable to return double the
amount of earnest money and a right to seek legal remedy by the respondents, made time essence
of the contract. Appellant argued that even before the cut of date, without offering the sale
consideration to the appellant; Respondent with mala fide intentions filed the Civil Suit in the
Court of Pir Mahal and obtained interim injunction, which was subject to deposit the balance
amount. It was urged, that the Respondent had no money to pay the balance sale consideration,
he failed to deposit the balance amount, despite the direction of the trial court Pir Mahal and
lastly when at his request time was enlarge by the trial Court on 28.3.2015 to deposit the amount
failing which injunction will be deemed to be vacated. He mischievously filed another suit, in
the Court of Toba Tek Singh and thrived on ad-interim order without deposit of balance
consideration for more than three years fixed in the agreement. Learned Counsel placing reliance
on case reported as Hamood Mahmood v. Shabana Ishaq 2017 SCMR 2017, wherein it was held
on omission to seek permission to deposit balance sale consideration on the very first date,
makes the suit for specific performance liable to be dismissed. It was urged such legal position,
was not considered by any of the three courts, rendering the impugned judgments bad in law. It
was urged that when time for performance of respective obligation was made essence of
contract, by freewill of the parties. Court cannot unilaterally rewrite the contract and, without
justification extend time. Learned counsel argued that, the finding of the learned trial court,
concurred by appeal and revision Court that the Respondent was always willing to perform the
contract, is contrary to the fact and evidence on record. It was argued that Impugned judgment is
based on gross misreading and non-reading of evidence. Learned Counsel took us through record
to show that despite repeated indulgence by the learned trial Court, Appellate Court.
Respondents failed to deposit the balance sale consideration, which is sufficient to show that he
had no means nor ability to pay. He was, not ready and willing to fulfil his financial obligations
as per agreement. The amount, in local currency, was deposited in court, after more than three
years fixed in the agreement. Learned Counsel argued that the impugned judgment is based on
assumptions and supposition beside being contrary to law, as laid down by superior Courts. In
support of his contentions, he has relied upon Malik Imam Baksh 2017 SCMR 516, Hamood
Mehmood v. Mst. Shabana Ishaq 2017 SCMR 2022 and Kuwait National Real Estate Co. (Pvt.)
Ltd v. Educational Excellence Ltd. 2020 SCMR 171.

9. Malik Muhammad Qayum, learned Senior ASC for the Respondent, supported the impugned
judgments. He urged, Respondent offered the balance sale consideration to the appellant before
the date fixed in the agreement. Such circumstances, according to him, reflects that the
Respondent was ready and willing to perform the agreement. According to him, filing of the suit
for specific performance, before the due date, is also manifestation of fact that the Respondent
was always ready and willing to perform his part of the contract. When queried, why the
Respondent did not deposit the amount, as directed by the learned trial Court Pir Mahal, in the
first instance. He stated, since before the time fixed for the deposit, second suit was filed; in the
court of Civil Judge Toba Tek and the court did not called upon him to deposit the balance
amount, Respondents cannot be held liable for the act of the Court. He contended that the on the
directions of Appeal Court, the balance amount in foreign Currency could not be deposited, as
the trail court had no foreign currency account and he was handicapped and circumstances
beyond his control. The amount in local currency, after due permission form the court was
deposited.

10. Arguments heard. Record perused.

11. In the instant case, the agreement to sell dated 26.3.2014, to ensure that both the parties
perform their reciprocal promise and obligations by 15.04.2015.

12. Respondent/Plaintiff on 14.3.2015 filed a suit for specific performance, in the Civil Court,
Pir Mahal. On the same date, injunctive order not to create third party interest; subject to deposit
of balance consideration was passed. Twice time was enlarged and, the suit was adjourned to
11.4.2015. Instead of depositing amount, the Respondents on 1.4.2015 filed yet second suit in
the Court of Civil Judge Toba Tek Singh, and enjoyed injunctive relief without any deposit of
balance consideration and conveniently withdrew the earlier suit before the Civil Judge Pir
Mahal, on 11.4.2015.

13. Second suit was contested on merits; the application under Order XXXIX, Rules 1 and 2,
C.P.C. filed along with the suit was allowed without, any direction to deposit balance sale
consideration vide order dated 02.11.17. On appeal, order of the trial court was modified to the
extent that the remaining sale consideration of 200,000 was directed be deposited within a period
of 120 days of vide Order dated 01.02.18. It is matter of record that the balance consideration in
Pakistani currency in the sum of Rs. 3,70, 00,000/-was deposited in the treasury of the trial court
on 02.10.18 after more than three years from the date fixed in the agreement.

14. Suit proceeded on merits parties led their respective evidence. Plaintiff Muhammad Arif
appeared as PW-1 in cross-examination admitted that "other than earnest money no amount was
paid". He further admitted that "It is correct that learned Court directed to deposit the balance
sale consideration, we did not deposit the amount in the earlier Suit"..... "I have not deposited
balance sale consideration in any Court, nor have I issued any notice to Jamil to calling upon him
to receive balance consideration and execute the sale deed".

15. Appellant/defendant, Muhammad Jamil appeared as DW-1 and deposed that "he returned
from Scotland in February to complete the transaction, defendant expressed disability to pay the
amount and later filed the suit." Learned trial Court on preponderance of evidence concluded
vide judgment dated 07.02.19, that the Plaintiffs, are entitled to a decree of specific performance
with respect of agreement to sell and to receive back the security amount deposited in Pakistani
Rupee as per the Orders of the appellate court. Trial Court gave 30 days further time from the
date of the judgment to deposit the amount of 200,000 in the Court. Appeal was dismissed on
27.11.2019 and so also Revision petition met the same fate through judgment dated 23.12.2019
impugned herein.

16. Specific Performance is a discretionary relief, and the Courts are not bound to grant such
relief mechanically merely, because it is lawful to do so. The discretion to grant relief of specific
performance or otherwise, by the Court is not something mechanical or arbitrary exercise of
jurisdiction but, is structured on sound and reasonable judicial principles, amenable to judicial
review and correction by the court of appeal 1. Genesis of agreement to sell draws its lineage
from the Contract Act, 18722 and principles enumerated therein, have direct bearing on
interpretation and deciphering the intent, purpose, manner and consequences flowing from
agreement to sell. However, in contemporary jurisdiction in India, Specific Relief Act, 1963 has
replaced archaic Specific Relief Act, 1877 thereby substantially and suitably amended to
addresses many ground realities having direct bearing on specific performance of promise and
obligations arising out of contracts. Attending to present case, the reciprocal: obligations under
the agreement are to be performed, in the manner and sequence it is provided for. Where the
agreement does not expressly provided the manner such obligations are to be accomplished, than
the respective obligations are to be performed in the manner and sequence, which the nature of
transaction requires3. In case in hand as noted, the Respondent under the agreement, was
required to make the balance payment on or before 15.4.2015, where upon the Appellant was
correspondingly obligated to sign and execute the conveyance deed, and hand over the
possession. Foremost requirement to seek specific performance, for a vendee is to demonstrate
his readiness and willingness to perform the agreement 4. The Promisor (vendor) need not
perform his part of promise or obligation, unless the promisee (i.e vendee) "is ready and willing
to perform his reciprocal promise." In cases arising out of agreement to sell, a vendee to
demonstrate his readiness and willingness to perform his part of obligation, has to plead, that he
had offered to pay, was and is always prepared to pay the consideration. In a recent case, cited as
Mst. Samina Riffat v. Rohail Asghar and others 5, such aspect of the matter was considered, this
court cited with approval case of Abdul Hamid v. Abbas Bhai Abdul Hussain 6. The court
held7 "In the first place, willingness to perform one's contract in respect of purchase of property
implies the capacity to pay the requisite sale consideration within the reasonable time. In the
second place, even f he has the capacity to pay the sale consideration, the question still remains
whether he has the intention to purchase the property. On consideration of all the facts, it appears
that the appellant was not in a position to pay the balance sale consideration. At any rate, the
appellant was not willing, even if he had the capacity to pay the money, to have the sale deed
completed."

17. Agreement to sell, as noted above, is comprised of reciprocal promises and corresponding
obligations to be performed in the manner provided for. A vendee cannot seek enforcement of
reciprocal obligation on the part of vendor to execute sale deed, unless he demonstrate that he
not only has the financial capacity but he was and is also always willing and ready to meet the
same8. The Promisor/Appellant (Vendor) need not perform his part of promise or obligation to
execute conveyance, unless the promisee/Respondents, (the vendee) "is ready and willing to
perform his reciprocal promise." This Court in a recent case held it to be "mandatory for such
party that on first appearance before the court or on the date of institution of the suit, it shall
apply to the Court for permission to deposit the balance amount. Any omission in such regard
would entail the dismissal of the suit or decretal of the suit, if it was flied by the other side" 9.

18. In a case where a party seeking specific performance of agreement to sell moveable property
("Shares" in a corporate entity), it was held by this court that "It is now well settled that a party
seeking specific performance of an agreement to sell is essentially required to deposit the sale
consideration amount in court. In fact, by making such deposit, the plaintiff demonstrates its
capacity, readiness and willingness to perform its part of the contract, which is essential
requirement to seek specific performance of a contract 10. In a case from across boarder cited as
Pushparani S. Sundaram and others v. Pauline Manomani James (deceased) and others, 11 apex
court interpreted 'readiness and willingness' from the conduct of the plaintiff and the totality of
circumstances in that particular case. Court considered imperative that "that mere plea is not
sufficient, it has to be proved." (One may also gainfully see Saradamani Kandappan and others
v. S. Rajalakshmi and others12, C.S. Venkatesh v. A.S.C. Murthy D. through LRs. 13 Consensus of
judicial precedent that emerges is "The amount which he has to pay the defendant must be of
necessity to be proved to be available. Right from the date of the execution of the contract till the
date of the decree, he must prove that he is ready and willing to perform his part of the contract.
The court may infer from the facts and circumstances whether the plaintiff was ready and was
always ready to perform his contract" 14.

The apex court of India, while restoring the judgment of the learned trial court further held:-

"Mere plea that he is ready to pay the consideration, without any material to substantiate this
plea, cannot be accepted. It is not necessary for the plaintiff to produce ready money, but it is
mandatory on his part to prove that he has the means to generate the consideration amount". 15

19. In the light of above stated legal position, we have examined the case in hand. It is matter of
record. that the Respondent/Plaintiff filed a suit for specific performance, along application
under Order XXXIX, Rules 1 and 2, C.P.C. with the with the Civil Court, Pir Mahal on
14.03.15, a month before the cutoff date fixed for specific performance of the agreement to sell.
On the very first date of presentation of suit, learned trial Court, granted injunctive order, not to
create third party interest, subject to deposit of 'balance consideration, it was further ordered that
on failure to deposit the amount the ad- interim order shall be deemed to be vacated. On the
adjourned date i.e 28.3.2015, on application, further time enlarged to 30.3.2015 with a caveat
that on failure to deposit the balance amount ad-interim order deemed vacated, and the suit,
adjourned to 11.4.2015.

20. It is matter of record that the respondent did not deposited the balance sale consideration by
the date ordered by the court in the first mentioned suit. On 1.4.2015, the Respondent filed yet
second suit in the Court of Civil Judge Toba Tek Singh. To give jurisdiction to such Court,
added additional Director Land, Sub-Registrar, Toba Tek Singh and the Province of Punjab and
by concealment of proceedings of earlier suit, managed to obtained ad-interim orders, without
offering and or seeking any permission to deposit the balance sale consideration. The
Respondents very conveniently withdrew the earlier suit before the Civil Judge, Pir Mahal, on
11.4.2015 with the permission to file a new suit after removing some legal defects, the
withdrawal of suit was allowed, subject to cost of Rs.1000/- There is nothing on record to show
that cost was deposited.
21. The appellant contested the second suit, in written statement appellant denied having refused
to receive the balance consideration. It was also, stated that taking advantage of ad interim orders
in earlier suit, the Respondents have broken open the lock had forcibly occupied the upper floor
of the suit property and an FIR was got registered. It is matter of record the newly added official
respondents were struck out being neither necessary nor proper party. The suit was transferred
for trial to Civil Judge Pir Mahal, which exposed the conduct of the Respondent that they had no
justification to withdraw the suit from the court having territorial jurisdiction and refile the same
in Court having no territorial jurisdiction.

22. Learned Civil Judge Pir Mahal, heard the application under Order XXXIX, Rules 1 and 2,
C.P.C., granted the same without, any direction to deposit balance sale consideration and at the
same time framed issues vide Order dated 02.11.17. On appeal, learned Additional District
Judge, Pir Mahal, modified the order passed by the trial court to the extent that the remaining
sale consideration of 200,000 was directed be deposited within a period of 120 days of vide
Order dated 01.02.18. Appeal court, further cautioned, "That if the Plaintiff/present respondent
would not deposit remaining consideration amount within prescribed period, application under
Order XXXIX, Rules 1 and 2, C.P.C., will be deemed to be dismissed.

23. Respondent's failure to deposit the balance amount as directed by the appeal court, prompted
the Appellant to file an application for dismissal of the suit under Order VII, Rule 11, C.P.C.
Learned Civil Judge Pir Mahal, in consideration of fact that National Bank do not maintain
foreign Currency account, on 27.9.2018 granted 2 days' further time to deposit the balance
amount, with caveat that "failing to do so shall result in invoking the consequences as laid down
in 2017 SCMR 2022 even without hearing arguments of parties". Record show that the Revision
Court granted further seven days' time to deposit the amount in Pakistani currency in the sum of
Rs. 3,70,00,000/ within seven days, which was ultimately deposited in the treasury of the trial
court on 02.10.18, after more than three years from the date so fixed in the sale agreement.

24. Thereafter suit proceeded on merits and parties led their respective evidence. Plaintiff
Muhammad Arif appeared as PW-1 in cross-examination admitted that "other than earnest
money, no amount was paid". He further admitted that "It is correct that learned Court directed
to deposit the balance sale consideration, we did not deposit the amount in the earlier Suit"....."I
have not deposited balance sale consideration in any Court, nor have I issued any notice to Jamil
to calling upon him to receive balance consideration and execute the sale deed".

25. It is not the case of the plaintiff nor, our attention was drawn towards any material or
evidence on record to show, that the defendant impeded or prevented the vendee to perform his
obligation or vendor refused to receive the balance payment, which could have caused to,
withhold performance of obligation on his part 16. Observation of the learned appellate court in
para 5 of the judgment that since the Appellant/Defendants admittedly "had not served any
notice for depositing of remaining consideration amount". It may be observed that there was no
occasion for the defendant to, demand the balance amount when the date fixed for performance
had not yet matured, secondly the plaintiff prematurely filed the suit a month before the date
fixed for specific performance. Then too despite the directions of the Civil Judge Pir Mahal,
balance sale consideration was not deposited though time was extended. To circumvent the
consequences for non-deposit, Respondents filed another suit in the court of Civil Judge, Toba
Tek Singh, without any justification, as no legal defect, as claimed, in the earlier suit was pointed
out, by the learned counsel for the respondents. Official respondents were merely added to give
jurisdiction to the court of Toba Tek Singh, was just a sham justification, which was not
approved. A suit for specific performance subject to pecuniary or other limitation prescribed by
law, lies in a court within the local limits of whose jurisdiction the immoveable property is
situated17. It is matter of record that the subsequent suit in the instant matter was transferred to
Civil Judge Pir Mahal, having territorial jurisdiction, over the subject property.

26. Even if it is presumed, as noted that no notice was issued by the Vendor to demand balance
consideration, to make time essence of the Contract. Very fact that agreement and so also section
53 of the Contract Act guards against such eventuality and provides for the penal consequence
for preventing the vendee to perform the agreement in the manner provided for. Specific plea
was raised in the written statement that for failure to make the payment of the balance sale
consideration within the period stipulated in the agreement the agreement stood rescinded and
earnest amount forfeited. Such plea in the written statement was sufficient notice to ring the bell
of recession, to put the Plaintiff on guard to promptly offer to deposit the balance consideration
in the court to show his bona fides, readiness and willingness to perform his part of the
reciprocal obligation.

27. Examining the case in hand penal consequence for the breach of respective obligations,
under the sale agreement was provided in following terms:

meaning thereby that 'in case of failure of the defendant/ vendor to perform, plaintiff was entitled
to seek refund double the amount of earnest money and to seek enforcement of judgment under
law. It was similarly provided that in case plaintiff fail to abide by the terms of the agreement;
earnest amount shall be deemed forfeited'.

28. Another fundamental principle, often misconstrued, is that time is not the essence of the
contract in cases of specific performance, in respect of immoveable property. Generally, reliance
is place on section 55 of the Contract Act 18. The archaic rule that generally, time is not of
essence in contracts involving sale/purchase of immoveable property 19, could not be used as a
ground to grant or otherwise specific performance, unless the circumstances that prove otherwise
are highlighted and proved by the vendor and or vendee as the case may be 20.

29. This Court, in the case of Malik Bahadur Sher Khan v. Haji Shah Alam. 21 has calibrated the
rule in accordance with the intent and spirit of the provision 22 of Contract Act quoted above in
following terms:

"The argument of the learned ASC for the respondent that the time was not of the essence of the
agreement does not appear to be correct when we look at the words used in the agreement
providing that the remaining part of the agreement would be performed within one and a half
months. If for a while we do not consider the dates mentioned in the agreement showing
terminus a quo and terminus ad quern then time would not be of the essence in any contract. If
the date stipulated in the agreement is not considered as a terminus ad quern, we are at a loss to
understand what else could be considered as a terminus ad quern. Such interpretation of the
agreement, quite obviously, would not only put the vendor in a disadvantage but also leave him
at the mercy of the vendee who may or may not perform the remaining part of the agreement on
one pretext or another. This state of things could be accepted in the sixties and seventies of the
20th Century when the prices of the land used to be static for decades and decades together.
Perpetuation of such a state of things in this part of the 21st Century would rather be unfair,
unjust and even inequitable when every passing day brings a decrease in the value of the rupee
and a manifold increase in the prices of the land. We, thus, do not approve diluting the import of
the words used in the agreement expressing terminus a quo and terminus ad quem and
envisaging time as of the essence of the contract."

30. The question, time is essence of contract or otherwise, was also examined by this Court in
the case of Muhammad Abdur Rehman Qureshi v. Sagheer Ahmad 23 and it was concluded that:

"As far as the argument of learned counsel for the appellant that time was of the essence of the
contract is concerned, we do not find ourselves in agreement with him for the reason that
admittedly time for execution of the sale deed was extended on a number of occasions and at
least on a few of the said occasions it was on the request of the appellant. However, in view of
the commercial nature of the property business and a widespread trend of rapid increase in prices
of immovable properties, a seller cannot be left at the mercy of the buyer to bind him in an
agreement to sell and then delay completion of the contract for as long as he may wish hiding
behind an archaic legal principle that in contracts involving immovable properties, time is
generally not of the essence. This rule was settled many centuries ago when prices of real estate
remained constant and stagnant for years on end. It is high time that this rule was revisited and
revised keeping in view the changed circumstances and the ground realties of the real estate
market. In this day and age, on account of rapid increase in population demand for real estate has
increased. Further, on account of various reasons better financial resources are available with
prospective purchasers. Big investors have also entered the fray to take the benefit of growing
demand for real estate. On account of increasing demand and limited supply, property prices rise
rapidly, at times in a matter of months. Therefore, the aforesaid principle that in real estate
transactions, time is not of the essence cannot indiscriminately be applied. It must be interpreted
and applied specifically considering the facts and circumstances of each case to balance equities,
keeping the standards of reasonability in mind and ensuring that injustice is not done to either
side."

31. The Plaintiff No.1 not only conceded in evidence that consequence for not making payment
in time would result in forfeiture of the earnest money. He declined the offer of the Defendant to
purchase the property at the current value. In a recent case 24 this court approved the forfeiture (of
the 3.5%) earnest amount, where the bidder failed to make the balance payment within time. In
the instant case earnest amount paid to the defendant represent merely 7.834% of total sale
consideration. The defendant was unjustly entangled in litigation and dragged up to this court
with two suits, several rounds of appeals and Revisions, injunctive order, repeated non-
compliance of orders of the trial and appellate court to deposit the balance sale consideration,
delay in deposit of the amount beyond three years as set out in the agreement, clog of injunctive
order on the rights of the defendant to deal with his property are some of the consideration, on
which court may approve forfeiture of the earnest money by the vendor. Recently in the case
reported as Mst. Samina Riffat and others v. Rohail Asghar and other 25, on facts and
circumstances noted therein, approved forfeiture of 50% of the earnest money.

32. From the facts, circumstances and evidence available on record it has become discernable to
this Court, that the Plaintiff has deliberately created a cobweb to entice the court into concluding
that such an intention to pay balance sale consideration was present. However, the truth could
not elude the eyes of this court as decrypted above. In instant case, as noted above, specific time
was set for performance of the contract, with consequences for both the parties committing
breach of the time line, made time essence of the contract. The Respondent was not able to
convincingly demonstrate that the time was not the essence of the contract and or that the
defendant was either willing to accept the performance beyond the time so fixed or that the
circumstances were such that the defendant could be forced to accept the performance beyond
the time26.

33. Under facts and circumstances of the case, we are of the considered view that the Courts
below have neither appraised the evidence correctly nor, appreciated the law on the subject
properly and arrived at the wrong conclusion by inferring an intention to pay on the part of
plaintiff that was merely being paraded and not proven. In light of the aforementioned
discussion, the petition is converted into appeal and allowed.

34. As far as question of refund of the earnest money is concerned, court may always allow the
defendant/vendor to appropriate the same in terms of the forfeiture clause in the agreement and
or as may be deemed appropriate, the court may deem just reasonable to compensate the
plaintiff. However, by way of sheer indulgence, generosity and grace learned counsel for the
defendant on instructions agreed to refund 50% of the earnest money received from the plaintiffs
through cross cheque. Court appreciates such benevolent gesture on the part of the defendant in
suit.

MWA/M-27/SC Petition allowed.

2010 SCMR 334
[Supreme Court of Pakistan]

Present: Sardar Muhammad Raza Khan, Muhammad Qaim Jan Khan and Syed Zawwar
Hussian Jaffery, JJ

Mst. GULSHAN HAMID---Appellant

Versus

Kh. ABDUL REHMAN and others---Respondents

Civil Appeal No.1086 of 1999, decided on 9th June, 2009.

(On appeal from judgment of Lahore High Court, Lahore dated 9-7-1999 passed in R.F.A.
No.218 of 1993).

(a) Specific Relief Act (I of 1877)---

----Ss.12 & 22, Illus I---Suit for specific performance of agreement to sell---Signing of such
agreement by vendor-defendant, but its non-signing by vendee-plaintiff-Validity-Such
agreement created rights and liabilities on both sides---Vendee by not signing agreement had
kept himself immune from any future claim of vendor---Had, there been an occasion for vendor
to bring such suit, then she should not have succeeded as vendee had not signed agreement so as
to accept any liability thereunder---Such case was hit by illustration 1 of S.22 of Specific Relief
Act, 1877---Plaintiff was not entitled to exercise of discretion in his favour, who had not
accepted any liability, but had claimed all rights under such agreement---Such unilateral
agreement not signed by plaintiff-vendee ' was not mutually enforceable, whereupon no decree
could be passed---Suit was dismissed in circumstances.

Arif Shah v. Abdul Hakeem Qureshi PLD 1991 SC 905 rel.

(b) Specific Relief Act (I of 1877)---

----Ss. 12 & 22---Suit for specific performance of sale agreement property

located in Cantonment area---Signing of agreement by vendor-defendant, but its non-signing by
vendee-plaintiff-Execution of agreement by vendor lady at place "I", but its attestation in her
absence by Oath Commissioner at place "S", where suit-land situated---Agreement containing a
term to the effect that vendee had to obtain NOC from GHQ/Cantonment Board and within 15
days of receipt of intimation regarding NOC, vendee was required to get sale-deed registered
after payment of balance amount; and on failure of vendee to do so, advance money would stand
forfeited and agreement would be considered as cancelled-Non-payment of balance money by
plaintiff within fifteen days after defendant obtained NOC---Plea of defendant that time was
essence of agreement, thus, same stood cancelled on such failure of defendant---Validity---
Vendee by not signing agreement had kept himself immune from any future claim of vendor,
thus, same was not' mutually enforceable and no decree of specific performance could pass on its
basis---Vendee had not appeared in witness box in order to avoid cross-examination---
Restriction of registration within 15 days after intimation to vendee could not be enforced
against him as he had not signed agreement and was not bound by any of his liabilities--Vendee
after receiving information about issuance of NOC had failed to pay balance amount to vendor---
Time was essence of contract and vendee had failed to perform his part of contract---Agreement
itself provided that if vendor failed to perform agreement after obtaining NOC, then vendee
would receive double the amount of advance money as compensation---When compensation was
already provided and consequences of non-performance were already determined in agreement,
then aggrieved party would stand well-compensated and same would be a good ground for
refusal of specific performance--Issuance of NOC by GHQ was an act of third party, which was
not party to suit or contract, thus, its act or omission would remain binding upon parties---GHQ
having issued NOC had withdrawn same after institution of suit, thus, court could not direct
specific performance of agreement in absence of NOC---Vendee after getting Pay Order in
vendor's name had mala fidely withdrawn same after two days---Conduct of vendee had never
remained above board---Vendee had forged agreement through Oath Commissioner in absence
of vendor---Real owner of suit property was Federal Government, and its ostensible owner at
spot was merely lessee---Such unilateral agreement not signed by vendee was not mutually
enforceable and no decree could be passed on its basis---Compensation was already provided
and consequences of non-performance were already determined in agreement, thus, vendee
would stand compensated and same would be a good ground for refusal
of specific performance---Suit was dismissed in circumstances.?

Qureshi Muhammad Anwar v. S.A. Qureshi 1994 CLC 733; Muhammad Ishaq v. Mst. Sufia
Begum 1992 SCMR 1629; Barkat Ullah v. Wali Muhammad 1994 SCMR 1737 and Muhammad
Taj v. Arshad Mahmood 2009 SCMR 114 rel.

Mst. Amina Bibi v. Mudassar Aziz PLD 2003 SC 430 distinguished.

(c) Specific Relief Act (I of 1877)---

----S.3S---Time as essence of contract---Determining factors stated.

To hold as to whether time is of essence of the contract, it is always to be determined from the
circumstances of each case and of each contract. If it is simply written that some agreement is to
be performed within a certain period, this by itself cannot be considered to be of essence of the
contract. But when the non-performance within such period entails upon certain consequences
and such consequences are also given in the contract, the time becomes of essence.?

In the present case, it was specifically provided that if the contract is not completed within 15
days and balance amount is not paid, the advance money would stand forfeited and above all the
contract would stand cancelled. Here the time was, therefore, of the essence of the contract.?

Wasim Sajjad, Senior Advocate Supreme Court and Mehr Khan Malik, Advocate-on-Record for
Appellant.

Abdul Rehman Ansari, Advocate Supreme Court and Rana Nasrullah Khan, Advocate Supreme
Court for Respondents.

Date of hearing: 9th June, 2009:

 JUDGMENT

SARDAR MUHAMMAD RAZA KHAN, J.---Mst. Gulshan Hamid, after leave of the Court,
has filed this appeal against Kh. Abdul Rehman etcetera, from the judgment and decree dated 9-
7-1999 passed by a learned Division Bench of Lahore High Court, whereby the appeal of
respondents against the judgment dated 31-7-1993 of the learned Trial Court was accepted and
suit filed by respondents for specific performance of contract was decreed in Regular First
Appeal. Earlier, the learned Trial Court had dismissed the suit with costs.

2. Mst. Gulshan Hamid owned Bungalow No.17 measuring 2.55 acres on Quaid-i-Azam Road
Sialkot Cantt. She agreed to sell the bungalow in favour of Kh. Abdul Rehman, Riaz Butt and
Kh. Naseem Ejaz for a sum of Rs.11,25,000. A sum of Rs.1,25,000 was received in advance and
the remaining amount of Rs.10,00,000 was to be paid at the time of registration. As the
bungalow was situated in Cantonment Area, a No Objection Certificate (NOC) was to be
obtained by the vendor from the GHQ, the written intimation whereof was to be given at the
earliest to the vendees. Within 15 days from receipt of intimation, the vendees were required to
get the sale-deed registered after payment of the amount due. If the vendees failed to do so., the
advance money was to be forfeited and the agreement was to be considered as cancelled.

3. To the contrary if the vendor, after giving NOC, failed to get the sale registered, the vendees
had a fight to get double the amount of advance money i.e. Rs.2,50,000. In case the NOC was
declined the advance money of Rs.1,25,000 was liable to be returned to the vendees.

4. The record reveals that GHQ had issued NOC on 4-9-1986. For reasons alleged and counter
alleged', the transaction could not be materialized and hence the vendees aforementioned brought
a suit for specific performance of contract in January, 1987. After framing of issues and the
recording of evidence pro and contra, the learned Trial Court/Senior Civil Judge Sialkot
dismissed the suit with costs vide judgment dated 31-7-1993, holding that the plaintiffs had
failed to perform their part of the contract. Holding this aspect to the contrary, the learned High
Court through the impugned judgment set aside the judgment of the Trial Court and granted
plaintiffs the decree prayed for. Hence this appeal.

5. We had the opportunity of listening to exhaustive arguments advanced by Mr. Wasim Sajjad
learned ASC for the appellant and Mr. Abdul Rehman Ansari and Rana Nasrullah Khan learned
ASCs for the respondents. After evaluation of the assertions and counter assertions, it was found
that the learned High Court has not properly attended to certain imported aspects of the case. We
would thus start from the alleged agreement (Exh.P.3-PP: 130 to 132).

6. A perusal of the deed would indicate that it was signed by the appellant Mst. Gulshan Hamid
alone and not by any of the three vendees. As evident from the contents of the deed, it created
rights and liabilities on both sides. Had there been an occasion for the owner-lady to bring a suit
for specific performance, she would not have succeeded because the vendees had not signed the
deed so as to accept any of the liabilities. The circumstances under which the contract is made
are such that the present plaintiffs are given an unfair advantage over the defendant. Section.22
of the Specific Relief Act, 1877 clearly provides that in such circumstances, the discretion is not
to be exercised in favour of the plaintiffs. For ready reference section 22 (clause-I) is reproduced
as follows:

"22. Discretion as to decreeing specific performance.---The jurisdiction to decree specific

performance is discretionary, 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 correction by a Court of appeal.

The following are cases in which the Court may properly exercise a discretion not to decree
specific performance:

1. Where the circumstances under which the contract is made are such as to give the plaintiff an
unfair advantage over the defendant, though there may be no fraud or misrepresentation on the
plaintiff's part".

7. This Court in Arif Shah v. Abdul Hakeem Qureshi PLD 1991 SC 905 (e) held that the
illustrations, given in S.22 are a few instances where discretion should not be exercised in favour
of specific performance. Rather, these, illustrations were held to be not exhaustive and the
Courts were at liberty, in the circumstances of each case, to visualize any other circumstances as
falling within the purview of S.22 of Specific Relief Act. So far as the case in hand is concerned,
it is directly and squarely hit by illustration I of section 22.

8. The evidence shows that the three plaintiffs belonging to Sialkot and having the blessings of
local property dealers brought a lady-owner around in such a manner so as to take unfair
advantage. They kept themselves immune from any future claim of the opposite party by not
signing the deal at all. It is admitted in the evidence that the plaintiffs had tampered with the
document. It is admitted in the evidence that the document was executed by the lady at
Islamabad. It is surprising to observe that it was attested on 18-6-1986 by an Oath Commissioner
at Sialkot, in the absence of the deponent executant. The plaintiffs have, thereby, resorted to
forgery as well. We are of the firm view that in the very construction of the agreement, it was not
mutually enforceable and hence no decree of specific performance could be granted.
9. In order to avoid all the above circumstances and others, the plaintiffs never appeared in the
witness box in order to avoid being cross-examined. Only some attorney was produced and
subsequently one of the plaintiffs appeared in rebuttal of evidence. This tells upon the mala fide
intention of the plaintiffs. The discretion does not require to be exercised in their favour.

10. For what is to be discussed hereinafter, it is important to reproduce some of the relevant
extracts:--

11. Towards the furtherance of the agreement, the first job to be performed by the owner-lady
was to obtain an NOC from the GHQ. Secondly, she was to convey in writing the issuance of
NOC to the vendees and, thirdly, it was thereafter that the vendees were bound to make
remaining payment and to get the sale registered within 15 days. The plaintiffs case is that such
information was not furnished in writing and hence they, being not in the knowledge, were not
bound by the given limitation of 15 days and also that time in the given agreement was not of the
essence of contract.

12. On the other hand, it was claimed by the defendant-appellant that the vendees were well
aware of the grant of NOC, that out of the total area 4 Kanals was to be surrendered in favour of
the Cantonment authorities/Government but still they did not perform the contract, made no
payment of the remaining amount of Rs.10,00,000 and never initiated to get the sale registered.
It was further claimed, in the given circumstances, that the time was of the essence of the
contract.

13. If one adverts to the agreement, the restriction of registration within 15 days even after the
intimation and writing to the vendees, cannot be enforced against the vendees because they never
signed the document and are never bound by any of their liabilities. Here it is that the provisions
of section 22 of the Specific Relief Act come into play. No judicial mind would be prepared to
exercise discretion in favour of such a party who accepted no liability and claimed all the rights.

14. The provisions of furnishing of information about NOC in writing, is placed, for the benefit
of the vendees, so that the limitation of 15 days should not start running against them in the
absence of their knowledge. Once knowledge is obtained, the limitation of 15 days is for the
benefit of the owner who is to receive the amount within that period and thereafter to sign the
registration of sale-deed. It is abundantly clear from the evidence of the parties that the vendees
had well-high received information about the issuance of NOC. It was thereafter that the lady-
owner along with her husband, at the expense of the vendees, visited Sialkot but due to the non-
arrangement of sale price or for one reason or the other, the sale could not be materialized. It is
also in the evidence that the vendees had been trying to demarcate the to-be-surrendered 4
Kanals in a manner that both the properties fall on the front and not that the Government should
take entire 4 'Kanals in the front. All this is indicative of the fact that they had complete
knowledge of the issuance of NOC. They did not make payment and failed to get the sale
registered within 15 days thereafter. The adjustment on spot, of 4 Kanals was also not an issue
relating to the owner because even after the completion of sale, it could have been settled by the
vendees with the Government.

15. It is a settled principle of law that, to hold as to where time is of essence of the contract, it is
always to be determined from the circumstances of each case and of each contract. If it is simply
written that some agreement is to be performed with a certain period, this by itself cannot be
considered to be of essence of the contract. But when the non-performance within such period
entails upon certain consequences and such consequences are also given in the contract, the time
becomes of essence. In the instant case, it was specifically provided that if the contract is not
completed within 15 days and balance amount is not paid, the advance money would stand
forfeited and above all the contract would stand cancelled. Here the time was, therefore, of the
essence of the contract and vendees failed to perform. Rather, from the evidence it appears that
they were the ones who caused delay. They first exploited the owner due to the marriage of her
son for which she needed money and thereafter they delayed because they could not arrange for
the payment of consideration.

16. The so-called agreement itself provided that even if the owner failed to perform the
agreement after obtaining NOC, the vendees would receive double the amount of advance
money as compensation. When the compensation was already provided and when consequences
of non-performance were already determined in the agreement, the party would stand well
compensated and the same would be a good ground for refusal of specific performance; all the
more, in the peculiar circumstances of the present case.

17. The issuance of NOC by the GHQ is an act of third party which is not impleaded in the
instant case the GHQ/Cantonment authorities are neither party to the contract nor to the suit and
hence their act or omission remains binding upon the parties. Qureshi Muhammad Anwar v. S.A.
Qureshi 1994 CLC 733 and Muhammad Ishaq v. Mst. Sufia Begum 1992 SCMR 1629 can be
referred to in this behalf. The crucial aspect of the present dispute is that the GHQ having issued
NOC on 4-9-1986 had withdrawn the same on 25-4-1998, only 15 months after the institution of
suit. Thus the trial Court or any other Court was not in a position to direct the specific
performance 'which could not be materialized, now or ever, without the NOC alluded to in the
so-called agreement itself.

18. Last but not the least, it is abundantly clear from record that the vendees had no intention to
make payment. They got a pay order on 8-12-1986 from United Bank Limited Sialkot for a sum
of Rs.10,00,000 in the name of Mst. Gulshan Hamid. They informed the owner on 13-12-1986
that pay order had been issued but it was intriguing on the part of the vendees that they had
already withdrawn such pay order on 10-12-1986. This is indicative of the mala fide intention
that by hook or by crook they should get the sale-deed attested by throwing the bait of pay order
withdrawn only two days after its issuance.

19. Learned counsel for the respondents relied upon the case' of Barkat Ullah v. Wall
Muhammad 1994 SCMR 1737 in support of their arguments that even if the plaintiffs seek
alternative remedy in the plaint, the relief of specific' performance cannot be denied. The
authority is distinguishable, in that, when we referred to alternate remedy, it was with reference
to the agreement where it was specifically provided as a consequence of non-performance. We
observed to resort to such remedy,' in the given and attending circumstances of this case
irrespective of what the pleadings are. In the present case anti in the wake of the evidence, we
are of the view that it were the vendees who had nit performed their part of the agreement. The
question as to what are the implications of alternate remedy, is immaterial for the purpose of the
instant ease because the conduct of vendees has never remained above board and the very
agreement is not materially enforceable.

20. Mst. Amina Bibi v. Mudassar Aziz PLD 2003 SC 430, is also not applicable because the bar
placed on transfer of plot of a housing society cannot be equated with the bar related to the NOC
to be issued by the GHQ. It may be kept in mind that the real owner of Cantonment property is
Federal Government and the ostensible owners on the spot are merely lessees. Learned counsel
further relied upon Muhammad Taj v. Arshad Mahmood 2009 SCMR 114, where it is held that
the question of time being essence of contract has to be decided with reference to s facts of each
case, which are in favour of the appellant, as already determined in the earlier part of this
judgment that according to the undertaking in hand, the time was of the essence of the contract.
One should never keep out of mind the fact that the disputed one is a huge bungalow measuring
2.55 acres in the heart of Sialkot Cantonment. The price of such property escalates by leaps and
bounds and hence no vendee should be allowed to cause unreasonable delay.

21. As a sequel to the above discussion, we hold that the unilateral agreement not signed by the
respondents was not mutually enforceable; that, no decree could be granted because of the
withdrawal of NOC; that, it were the respondents who mala fidely exploited the situation,
tampered with the deed, forged the same through an Oath Commissioner in the absence of
executant, failed to perform within 15 days despite the positive knowledge of the NOC and
above all were guilty of misrepresentation about the pay order which they had already
withdrawn. Resultantly, the appeal is accepted, the impugned judgment dated 9-7-1999 of the
learned High Court is set aside and that dated 31-7-1993 of the learned Trial Court is hereby
resorted.

S.A.K./G-27/S???????????????????????????????????????????????????????????????????????? A
ppeal accepted.
2022 S C M R 918
[Supreme Court of Pakistan]

Present: Maqbool Baqar and Qazi Muhammad Amin Ahmed, JJ

Mst. NOOR JEHAN and another---Appellants

Versus

SALEEM SHAHADAT---Respondent

Civil Appeal No. 601 of 2019 and C.M.A. No. 2953 of 2019, decided on 1st March, 2022.

(Against the judgment dated 13.02.2019 of the Lahore High Court, Lahore passed in R.S.A. No.
42077 of 2017)

(a) Specific Relief Act (I of 1877)---

----S. 12---Suit for specific performance of an agreement to sell immoveable property---Token

receipt---Whether the token receipt qualified as an agreement to sell---Held, that document titled
"token receipt" contained all the necessary ingredients essential for it to qualify as a valid and
lawfully enforceable contract---Said document unambiguously contained the identity of the
seller and the purchaser; the property to be sold had been described accurately in a well-defined
manner; it spelled out the agreed sale consideration amount, and stipulated the manner of
payment thereof---Parties who executed the document were at consensus ad idem---Document
clearly manifested the intention of the appellants to sell and that of the respondent to purchase
the subject property---Nothing crucial was left to be settled which could have adversely affected
the validity of the contract---Specific performance of the document titled token receipt in the
circumstances could not have been avoided on the pretext that it provided for executing a formal
agreement---In the present case, the "token receipt" was in itself a complete, and a lawfully
enforceable agreement to sell---Appeal was allowed.

Sheikh Akhtar Aziz v. Mst. Shabnam Begum and others 2019 SCMR 524 ref.

(b) Qanun-e-Shahadat (10 of 1984)---

----Art. 75---Specific Relief Act (I of 1877), S. 12---Suit for specific performance of an

agreement to sell immoveable property---Balance consideration instalment---Pay order---
Proof---Vendee had not been able to prove that he tendered to the vendors the payment due, as in
the first place neither has he been able to prove that he in fact obtained the pay order, or that he
offered the same to the vendors---Neither had the vendee produced the original pay order in his
evidence as required in terms of Article 75 of Qanun-e-Shahadat, 1984 nor had he laid before the
Court any other evidence, or material that he in fact obtained the pay order from the Bank as
claimed, and/or that the same was lost or destroyed, though it was imperative for the vendee to
have proved the loss of the original, as an essential prerequisite for seeking to produce a
photocopy of the pay order---Vendee also did not move an application for permission to produce
and exhibit a photostat copy of the pay order before the Court; he also did not bother to explain,
as to when, how and under what circumstances the pay order was lost, destroyed or misplaced---
Vendee could have summoned the relevant record and the concerned officer from the payer
Bank which he choose not to; he had also not claimed having lodged any complaint or FIR
regarding the loss or theft of the pay order---Document which was not lawfully produced and
exhibited in the Court was not worthy of being considered as evidence/proof of a fact---Even
otherwise the vendee's evidence with regard to his tendering the pay order to the vendors did not
sound credible as there were contradictions in the statements of vendee and his witnesses
regarding the date and person/s who went to deliver the pay order to the vendors---Not only the
vendee failed in proving that he tendered the payment due, but also did not deposit the balance
sale consideration in court, or even the instalment due at the time of filing of his suit for specific
performance---Contents of an application filed by the vendee before the High Court to restrain
the vendors from alienating or encumbering the suit property showed that the vendee never had
the money to pay or deposit in court as required of him---Vendee was not entitled to the
discretionary relief of specific performance sought by him---Appeal was allowed, suit for
specific performance filed by the vendee was dismissed and the vendors were directed to refund
the token/earnest money paid by the vendee.

State Life Insurance Corporation of Pakistan and another v. Javaid Iqbal 2011 SCMR 1013 and
Imam Din and 4 others v. Bashir Ahmed and 10 others PLD 2005 SC 418 ref.

(c) Specific Relief Act (I of 1877)---

----S. 12---Suit for specific performance of an agreement to sell immoveable property---Vendor

refusing to accept the sale consideration amount from the vendee---In such circumstances, the
vendee seeking specific performance of the agreement to sell is essentially required to deposit
the amount in the Court---Vendee has to demonstrate that he is and has at all relevant times been
ready and willing to pay the amount, and to show the availability of the amount with him---
Vendee cannot seek enforcement of reciprocal obligations of the vendor, unless he is able to
demonstrate, not only his willingness, but also his capability to fulfil his obligation under the
contract.

Muhammad Jamil and others v. Muhammad Arif 2021 SCMR 1108; Muhammad Yousaf v.
Allah Ditto 2021 SCMR 1241; Muhammad Yaqub v. Muhammad Nasrullah Khan and others
PLD 1986 SC 497; Hamood Mehmood v. Mst. Shabana lshaque and others 2017 SCMR 2022;
Inayatullah Khan and others v. Shabir Ahmad Khan 2021 SCMR 686; Messrs Kuwait National
Real Estate Company (Pvt.) Ltd. and others v. Messrs Educational Excellence Ltd. and another
2020 SCMR 171 and Muhammad Shafiq Ullah and others v. Allah Bakhsh (decd.) through LRs
and others 2021 SCMR 763 ref.

Syed Najamul Hassan Kazmi, Advocate Supreme Court for Appellants.

Maulvi Anwar-ul-Haq, Advocate Supreme Court for Respondent.

Date of hearing: 18th November, 2021.

ORDER

MAQBOOL BAQAR, J.---A suit filed by the respondents for specific performance of an
agreement for sale of an immoveable property was dismissed by the Trial Court, so was the first
appeal against such dismissal. The Lahore High Court through the impugned judgment however
allowed the respondents' second appeal and set aside the said two concurrent judgments.

2. The respondents' case as set out before the Trial Court was that on 23.04.2004, the appellants
who are the owners of a property, being Bungalow No. 10, Plot No. 14 measuring 1318.50 sq
yards, Shami Road, Lahore Cantt. ("the suit property), in terms of an agreement, titled "token
receipt", agreed to sell the suit property to the respondent for a sale consideration of Rs.
2,30,00,000/-. Receipt of Rs. 5,00,000/- paid by the respondents to the appellants by way of
earnest money on the said date i.e. 23.04.2004, was duly acknowledged by the appellants
through the said "token receipt". The balance sale consideration amount, as stipulated in the
"token receipt", was to be paid in three instalments as follows:

(i) Rs. 35,00,000/- on 26.04.2004, on which date a formal agreement to sell was to be executed
between the parties;

(ii) Rs. 25,00,000/- within six weeks from 23.04.2004;

(iii) Rs. 1,65,00,000/- within 13 weeks from 23.04.2004.

3. The "token receipt", according to the respondent, was duly signed by the appellants and the
respondent, and also by the witnesses of the execution thereof, and of the payment
acknowledged therein, namely, Muhammad Ashraf and Liaquat Khokhar, respectively, who also
were the estate agents through whom the deal was made. However, when the respondents
requested the appellants to execute a formal agreement to sell, the appellants asked the
respondents to pay Rs. 40,00,000/- instead of Rs. 35,00,000/- as agreed to be then paid in terms
of the "token receipt". The respondents thus obtained a pay order in the sum of Rs. 40,00,000/-,
bearing No. 0402186521 dated 24.04.2004, drawn on PICIC Commercial Bank Limited,
Gulberg Lahore, and also purchased a stamp paper of Rs. 100/- for drawing a formal agreement
to sell, but when on 26.04.2004, the respondents approached the appellants for execution of the
document, the appellants refused to execute the same, and instead told the respondent that they
shall sell the suit property to some other party at a higher price. Through a legal notice dated
29.04.2004 served by the respondents through his counsel, the respondents called upon the
appellants to honour the agreement, but to no avail.

4. Through their written statement the appellants denied that there has been any agreement to sell
between the parties. It was averred that only verbal negotiations, through a property dealer,
Muhammad Ashraf were held for the sale of the suit property, but no written agreement was
executed and signed by the appellants. Although receipt of token amount of Rs.5,00,000/- was
admitted, but it was claimed that the same was paid by Muhammad Ashraf and not the
respondent. It was further claimed that the "token receipt" acknowledging such payment was not
signed by the respondent and his signatures appearing on the photocopy of the said receipt,
annexed to the plaint have been appended subsequently. It was averred that the appellants were
to execute a formal agreement to sell, which was to contain the terms of sale, but was subject to
payment of an instalment of Rs.35,00,000/- on 26.04.2004. The appellants further claimed that
they did not know as to whether or not any pay order was prepared as the same was never
delivered to them, rather the property dealer, Muhammad Ashraf, has asked for extension in
time, as according to him, the buyer he was representing, has not been able to arrange the
amount, which request was declined. It was denied that Muhammad Ashraf contacted the
appellants, and claimed that in fact it were the appellants, who on 26.04.2004 contacted and
requested Muhammad Ashraf for payment of the instalment of Rs. 35,00,000/-. However, after
two days Muhammad Ashraf contacted the defendants and requested for refund of the token
amount as, according to him, his client was not able to arrange further payment. It was denied
that the appellants requested for enhancement in the amount of instalment from Rs.35,00,000/- to
Rs.40,00,000/-.

5. The respondent in his evidence before the Trial Court deposed that he negotiated the deal for
the purchase of the suit property with the appellants through Ashraf Estate property dealers, and
after long drawn negotiations, he along with the property dealers, Muhammad Ashraf and
Liaquat Khokhar, on 23.4.2004 at 6 pm, went to the residence of the appellants, being the suit
property, where the deal was struck for a price of Rs. 2.3 million, and he then paid to the
appellant a token amount of Rs.5,00,000/-, in presence of Muhammad Ashraf and Liaquat
Khokhar. The respondent also stated the manner in which the balance sale consideration amount
was to be paid in three instalments, as is stipulated in the "token receipt", and produced a
photocopy of the "token receipt", as the original thereof has been lost. The token receipt was
exhibited, Ex-P-1. He also explained as to how and why he got prepared a pay order of
Rs.40,00,000/- instead of Rs. 35,00,000/-, as explained in the plaint, and noted hereinbefore. The
respondent further deposed that he also purchased a stamp paper for drawing a formal agreement
to sell, and on 26.04.2004 he along with Muhammad Ashraf visited the appellants at their
residence, however, the appellants refused to receive the pay order and told them that they have
received a higher offer.

6. Muhammad Ashraf appeared as PW-2 and deposed that he is engaged in the property business
under the name of Ashraf Estate since 1976, and that the appellants have requested him to sell
the suit property, whereas the respondent who was his client wanted to purchase a house of about
2-1/2 kanals in the cantonment area, and after seeing a number of houses through him, the
respondent showed his interest in buying the suit property. The witness thereafter narrated the
details of the meeting arranged by him between the appellants and the respondent on 23.4.2004,
where the deal for the suit property was made between the parties before him and his partner
Liaqat Khokhar, and the respondent paid to the appellants an amount of Rs. 500,000/- by way of
earnest money. He deposed that the "Token receipt" Ex P-1 was signed by the appellants and the
respondent, before him and Liaqat Khokhar, and that he and Liaquat Khokhar also signed the
document as witnesses thereto. However on 24.4.2004, the appellants called him on telephone
and asked for a pay order of Rs.40,00,000/- instead of the agreed amount of Rs. 35,00,000/-, as
they were in need of that much amount. The respondent thus obtained a pay order of
Rs.40,00,000/-, but when they went to the appellants to deliver the pay order, the appellants
refused to accept the same and demanded increase in the price as according to them they had
received a higher offer. The appellants, according to the witness, despite persuasion remained
adamant, and declined to honour the agreement.

7. Liaquat Khokar, PW-3, deposed that he is a property deafer and has been working in
partnership with Muhammad Ashraf for the last 21 years. According to him at the time of the
agreement in April 2004, the parties, being the appellants and the respondent, were present, the
witness verified his signatures and that of Muhammad Ashraf appended on the token receipt, as
witnesses thereof. He further deposed that the document was signed by the appellants and the
respondent in his presence and that he and Muhammad Ashraf have facilitated the deal as Estate
agents. He also deposed that at the time of the agreement, the respondent has paid Rs.500,000/-
to the appellants. He explained the purported circumstances under which the pay order of
Rs.40,00,000/- was obtained by the respondent. The witnesses claimed that

and offered them the pay order, but the appellants declined to accept it, and refused to honour the
agreement, and said that they (the appellants) have received a higher offer. However, during his
cross-examination he contradicted himself and stated that it were the respondent and Muhammad
Ashraf who went to deliver the pay order. He made a further contradiction when he stated that it
was on 23.04.2004 that they last went to the appellants.

8. Though appellant No.2 Asifa Bano (DW-1), during her evidence denied having agreed to sell
the suit property, but admitted having received the token amount. She stated that the "token
receipt" was signed by her and her sister, the appellant No.1, and by Muhammad Ashraf and
Liaquat Khokhar, but was not signed by anyone else before them, She further deposed that as per
the "token receipt" the agreed sale consideration amount was Rs.2,30,00,000/-. She claimed that
the token amount was paid by Muhammad Ashraf but also said that Muhammad Ashraf and
Liaquat Khokhar were property dealers. The appellant No. 2 further deposed that since no further
payment was made, they asked for the payment due, but were told that the amount could not be
arranged. She stated that she has never seen the respondent and claimed they never entered into
any agreement with the respondent. During her cross-examination, she disclosed that she is a
matriculate and can read Urdu. She admitted her signature and that of her sister, the appellant
No.1, on the token receipt, Ex.P-1, and that they signed the document at their own volition. She
admitted that they accepted the token money, as they agreed to sell the suit property, and that
they had read the contents of the "token receipt" before signing it. She also admitted that the
name of the respondent is mentioned in the "token receipt". Appellant No.2 further admitted that
the property was not being purchased by Muhammad Ashraf himself. She did not deny the
suggestion that as per the token receipt, Ex.P-1, the respondent was obliged to pay
Rs.35,00,000/- within 6 weeks, and also to pay to them Rs.1,65,000/- within 13 weeks. She
refused to respond to the suggestion that had the respondent paid to them the agreed sale
consideration amount they would have conveyed the suit property in favour of the respondent,
but voluntarily said that Ashraf did not proceed in the matter further. The witness also did not
deny the suggestion that, as per the token receipt, the agreement to sell the suit property was
between the appellants and the respondent, but said that the appellant neither meet nor had seen
the respondent.

9. The position that now emerges from the foregoing is that the respondent through his evidence,
and that of his witnesses, Muhammad Ashraf and Liaquat Khokhar, has proved the execution of
the document described as "Token Receipt", and has likewise also proved the payment of the
token amount to the appellants.

10. On the other hand, the appellants also have admitted the execution of the "Token Receipt".
The appellant No. 2, who is the only witness examined on behalf of the appellants, admitted that
the "Token Receipt" was written at her residence, and that she has read it before she and her
sister the appellant No.1, signed the same. She disclosed that she is a matriculate and can read
Urdu, and further that they, the appellants, have signed the document at their own volition. She
admitted that as per the 'Token Receipt' the agreed sale consideration amount was 23 million.
She also admitted having received the token amount of Rs. 5,00,000/-, but claimed that the same
was paid by Muhammad Ashraf, whom she described as a property dealer. She also admitted
that the name of the respondent is mentioned in the token receipt and further that the property
was not being purchased by Muhammad Ashraf himself. The appellant No. 1, did not deny the
suggestion that as per the token receipt, Ex.P-1, the respondent was obliged to pay Rs. 3.5
million on 26.4.2004; Rs.2.5 million within 6 weeks, and Rs.10.65 million within 13 weeks. She
refused to respond to the suggestion that in the event the respondent would have paid the sale
consideration amount the appellants would have conveyed the suit property in favour of the
respondent. She also did not deny the suggestion that in terms of the "token receipt", the
agreement to sell the suit property was between the appellants and the respondent. She however
said that the token receipt was not signed by the respondent before them and the signatures
appearing thereon were appended subsequently.

11. It can therefore be seen that not only the execution of the "token receipt" was admitted by the
appellants, but so also were admitted its contents, as well as the receipt of the payment
acknowledged thereby. The appellants did not deny that in terms of the "token receipt", the
balance sale consideration amount was to be paid to them in three instalments as noted herein
before, and further that the receipt also contained the name of the respondent. So not only the
execution of the "token receipt" between the appellants and the respondent, the contents thereof
and the payment acknowledged thereby, were proved by the respondent through his evidence
and that of the marginal witness of the document, but all the above has been admitted by the
appellants as well. Indeed, the appellants have claimed that the signature of the respondent has
been made on the "token receipt" subsequently, they have however not been able to support this
claim in any manner.

12. The document titled "token receipt" contains all the necessary ingredients essential for it to
qualify as a valid and lawfully enforceable contract. The document unambiguously contains the
identity of the seller and the purchaser. The property to be sold has been described accurately in
a well defined manner. It spells out the agreed sale consideration amount, and stipulates the
manner of payment thereof. The parties who executed the document are at consensus ad idem.
The document clearly manifests the intention of the appellants to sell and that of the respondent
to purchase the subject property. Nothing crucial was left to be settled which could have
adversely affected the validity of the contract. The specific performance of the document in the
circumstances could not have been avoided on the pretext that it provided for executing a formal
agreement. The "token receipt" was in itself a complete, and a lawfully enforceable agreement to
sell. The judgment in the case of Sheikh Akhtar Aziz v. Mst. Shabnam Begum and others (2019
SCMR 524) may be referred to in this regard.

13. However the respondent has not been able to prove that he tendered to the appellants the
payment due, as in the first place neither has he been able to prove that he in fact obtained the
pay order, or that he offered the same to the appellants. Neither has the respondent produced the
original pay order in his evidence as required in terms of Article 75 of Qanun-e-Shahadat Order,
nor has he laid before the Court any other evidence, or material that he in fact obtained the pay
order from the bank as claimed, and/or that the same was lost or destroyed, though it was
imperative for the respondent to have proved the loss of the original, as an essential prerequisite
for seeking to produce a photocopy of the pay order. The respondent also did not even move an
application for permission to produce and exhibit a photostat copy of the pay order before the
Court. He also did not bother to explain, as to when, how and under what circumstances the pay
order was lost, destroyed or misplaced. The respondent could have summoned the relevant
record and the concerned officer from the payer bank which he choose not to. He has also not
even claimed having lodged any complaint or FIR regarding the loss or theft of the pay order.
The document was thus rightly not exhibited. The following judgments may be referred to in this
regard, State Life Insurance Corporation of Pakistan and another v. Javaid Iqbal (2011 SCMR
1013) and Imam Din and 4 others v. Bashir Ahmed and 10 others (PLD 2005 Supreme Court
418).

14. It hardly needs any emphasis to convey that a document which has not been lawfully
produced and exhibited in the Court is not worthy of being considered as evidence/proof of a
fact. Even otherwise the respondent's evidence with regard to his tendering the pay order to the
appellants does not sound credible. On the one hand he claims to have visited the appellants with
Muhammad Ashraf and offered them the pay order on 26.4.2004, whereas on the other his
witness Liaquat Khokhar's narration in that regard conveys that it was not just the respondent
and Muhammad Ashraf who went to the appellants to deliver the pay order to the appellants but
he too accompanied them, and it was in his presence that the pay order was offered and the
appellants refused to accept it; in fact this witness gave a detailed account as to what transpired
on that occasion on 26.4.2004. A further damage was caused to the credibility of the whole story
regarding the pay order, when Liaquate Khokhar further contradicted the respondent, and
contradicted himself also; and stated that it was on 23.4.2004 that they last went to the
appellants' house.

15. In the circumstances discussed above, we are of the firm view that the respondent has failed
to prove that he honoured his commitment and fulfilled his obligation under the "token receipt",
and has, in fact, failed to tender the payment of the very first instalment that he was required to
in terms of the "token receipt". Even otherwise, it is now well settled that where the vendor
refuses to accept the sale consideration amount, the vendee seeking specific performance of the
agreement to sell is essentially required to deposit the amount in the Court. The vendee has to
demonstrate that he is and has at all relevant times been ready and willing to pay the amount, and
to show the availability of the amount with him. A vendee cannot seek enforcement of reciprocal
obligations of the vendor, unless he is able to demonstrate, not only his willingness, but also his
capability to fulfil his obligation under the contract. Reliance may well be placed on the
following judgments in this regard; Muhammad Jamil and others v. Muhammad Arif (2021
SCMR 1108), Muhammad Yousaf v. Allah Ditto (2021 SCMR 1241), Muhammad Yaqub v.
Muhammad Nasrullah Khan and others (PLD 1986 SC 497), Hamood Mehmood v. Mst.
Shabana lshaque and others (2017 SCMR 2022), Inayatullah Khan and others v. Shabir Ahmad
Khan (2021 SCMR 686), Messrs Kuwait National Real Estate Company (Pvt.) Ltd. and others v.
Messrs Educational Excellence Ltd., and another (2020 SCMR 171) and Muhammad Shafiq
Ullah and others v. Allah Bakhsh (decd.) through LRs and others (2021 SCMR 763).

16. However, in the instant case, not only the respondent failed in proving that he tendered the
payment due, but also did not deposit the balance sale consideration, or even the amount due at
the time of filing of his suit for specific performance in May, 2004, and obtained an injunctive
order, without depositing any amount. The respondent, as can be seen from the Trial Court's
order dated 07.07.2004, in terms whereof the injunctive order was confirmed, rather resisted the
request/prayer for an order directing the respondent to deposit the balance sale consideration
made by the appellants through their reply to the former's injunction application. Such was done
on the flimsy ground that the respondent cannot be burdened with the deposit of the amount as
the subject property was in possession of the appellants.
17. The respondent thus enjoyed the benefit of the injunctive order so obtained by him till the
time the suit was dismissed for want of evidence, which dismissal he ultimately challenged
before the Lahore High Court through R.F.A. No.134 of 2010, where on 17.02.2010, through an
application, bearing No.1-C/2010, he obtained an order restraining the appellants from alienating
or encumbering the suit property, but this time the order was subject to deposit, of Rs.11.25
million, being fifty percent (50%) of the balance sale consideration amount within three weeks
thereof, so that it may be invested in some profit bearing scheme. The order further provided that
in case the amount is not deposited within the time prescribed thereby, the interim order shall
stand vacated. However the respondent still failed to deposit the amount, and instead made an
application, being C.M. No. 2-C/2010, that the amount be allowed to be deposited by some
Faisal Younas, and also to be invested in the name of said depositor, so that in the event of the
amount being refunded, it may be refunded to Faisal Younas, and in case of his demise to his
legal heirs, and none else.

18. It is not only the above request/prayer made by the respondent, but also the other contents of
his application, that clearly show that the respondent never had the money to pay or to deposit as
required of him. As the application stated that the respondent "was to pay the balance amount
from sale of his own house, whereafter he would have shifted to the purchased house under the
agreement but presently there is no house to move into". It is also relevant to note here that
neither the agreement/token receipt provided for delivery of possession of the suit property to the
respondent before payment of the entire sale consideration amount, and/or transfer of the
property in his favour, nor has he ever pleaded that he had any such understanding/arrangement
with the appellants. It is interesting to note that the respondent neither disclosed any particulars,
or the value of the property that he claimed, he would have sold, nor submitted any document
pertaining thereto. The respondent's request for deposit of the sale consideration amount in the
name of the depositor Faisal Younas, and in a manner that in the event of its being refunded, it
be refunded to Faisal Younas, and in case of his demise to his legal heirs, and none else, leaves
one wondering, as to under what arrangement the said depositor agreed to deposit the amount,
and as to how and in what manner he secured his amount and/or interest in the matter, in case of
the suit property being ordered to be conveyed to the respondent; as a person who was not ready
to rely upon the respondent for refund of his money and had deposited the amount under an
order securing its refund to him only, as noted above, can hardly be expected to leave his money
or interest in the matter unprotected and insecure in such an event. However, the respondent's
application was allowed and the amount was thus deposited in the Court on 28.2.2019.

19. In the facts and circumstances of the case as discussed hereinbefore, there remains no doubt
that the respondent has not only failed to tender the sale consideration amount due to the
appellants, but has also failed/avoided to deposit the amount in Court as of required of him. The
respondent was therefore not entitled to the discretionary relief of specific performance sought
by him. The appeal is accordingly allowed and the impugned judgment is set aside. The
appellants shall within a month from the date hereof refund to the respondent the token
amount/earnest money paid by him to them under the "token receipt". C.M.A. No. 2953/2019
stands disposed of.

MWA/N-12/SC Appeal allowed.