SECRETARY, MINISTRY OF HEALTH, LABOUR AND SOCIAL WELFARE GOVERNMENT OF PAKISTAN, ISLAMABAD Versus Mst. FAROOQ JAHAN BEGUM
1. On 21-3-1985 the plaintiff entered into an agreement with the defendant for purchasing Shop No.192, Khalid Cloth Market Liaquatabad, Commercial Area, Karachi of which he was a tenant on monthly rent of Rs.300/-. The sale consideration was settled at Rs.1,95,000/- and the plaintiff paid Rs.25,000/- on 21-3-1985 against a receipt executed by the defendant. As the defendant did not pursue the matter further the plaintiff issued notices dated 12-6-1985 and 29-9 1985. The defendant replied by letter dated 13-7-1985 stating that the transaction was to be completed within 15 days and as the plaintiff has failed to carry out his 'Part of the obligation the contract has been cancelled and the earnest money of Rs.25,000/- has been forfeited. The plaintiff then filed the suit for specific performance of the agreement.
2. The defendant filed written statement admitting that she had entered into an agreement to sell the shop but sale was to be completed within a fixed period of 15 days. However due to default on the part of the plaintiff the agreement was cancelled and earnest money has been forfeited. On the basis of the pleadings following issues were framed:
(1) Whether the plaintiff is entitled to decree for specific performance of sale of premises Shop No.192, Khalid Cloth -Market, Liaquatabad, Commercial Area Karachi for a total agreed consideration of Rs.1,95,000/-?
(2) Whether the time was of the essence of the deal of sale of the abovesaid premises?
(3) Whether plaintiff is entitled to damages, if issue No.1 is held in negative 10, If yes, to what extent?
(4) Whether the defendant has rightly cancelled the agreement under the circumstances?
(5) Whether the plaintiff has any cause of action to file the suit?
(6) What should the decree be?
(7) Costs of the suit?
3. Issues Nos.1 & 2 .--The agreement between the parties is admitted. The defendant does not deny that the plaintiff had paid Rs.25,000/- and a receipt was executed by her. This is the only written document which evidenced the contract between the parties. 1t has been stated in the receipt that the defendant has sold the shop for Rs.1,95,000/- and has received Rs.25,000/- as earnest money. The rest of the sale consideration will be paid afterwards. The defendant however pleaded that the time was of the essence of the contract. From the evidence it is clear that after 21-3-1985 when receipt was executed till such time the plaintiff served a notice dated 29-6-1985 no action was taken by the plaintiff or the defendant in the matter. This notice (Ex.7/2) was replied by the defendant on 13-7-1985 in which the same plea was taken which has been stated in the written statement. The main contention of the defendant was that the transaction was to be complete within 15 days and as the plaintiff has failed within the specific period, time being essence of the contract, the same was cancelled. In this regard both the parties have admitted the transaction and agreement made in the presence of one Afzal who is a witness to the receipt. The plaintiff has examined Afzal who has stated that the receipt was executed in his presence, bears his signature and that -no time limit for execution of sale-deed was fixed by the parties. The case of the defendant is that the time limit was fixed by an oral agreement and in this regard she has examined herself and her son have stated that the parties had agreed to complete the transaction of sale within a period of 15 days. There can be no doubt that Afzal is an independent witness who has clearly stated that no time was fixed by the parties for registration of the sale-deed. From the record it is clear that the defendant did not serve any notice on the plaintiff calling upon him to perform his part of contract within 15 days. She remained quiet and when notice dated 29-6-1985 was served she replied it by letter dated 13-5-1985 Ex.5/2 in which for the first time the plea was raised that time was the essence of the contract.
4. Now from these facts it is to be considered whether the time is of the essence of the contract. There is no documentary evidence to substantiate this plea. The independent oral evidence goes against the defendant. In this regard Mr. Anwar Tariq the learned counsel for the plaintiff has referred to Abdul Hamid v. Abbas Bhai Abdul Hussain Sodawaterwala (P L D 1962 SC 1) in which the following observation of Privy Council (43 I A 26) regarding contract of sale was relied upon:
5. 'Specific performance of a contract of that nature will be granted although there has been a failure to keep the dates assigned by it, if justice can be done between the parties and if nothing in (a) the express stipulation of the parties, (b) the surrounding circumstances, make it inequitable to grant relief. An intention to make time of the essence of the contract must be expressed in unmistakable language; it may be inferred from what passed between the parties before but not after the contract is made.'
6. It was further observed in that case that:
7. `equity will not assist where there has been undue delay on the part of one party to the contract, and the other has given him reasonable notice that he must complete within a definite time.'
8. While reproducing the above observation it was laid down that:
9. `That principle, that if time is not originally made of the essence of a contract for sale of land one of the parties is not entitled afterwards, by notice, to make it of the essence, unless there has been some default of unreasonable delay by the other party.'
10. The learned counsel has also referred to Ghulam Jilani v. Munir Ahmad Khan (P L D 1960 Kar. 517) where following observation was made:
11. `The question therefore whether time is of the essence of the contract depends upon the intention of the parties, the surrounding circumstance and the nature of the property. The mere fact that certain time is specified for the payment of the amounts in consideration of which the property is transferred will not show that time is of the essence of the contract. So far as the contracts relating to land are concerned, it is well-settled that time fixed for the completion of the transaction is not considered to be of the essence of the contract. The presumption in such contracts, though speed time is mentioned within wh i ch completion is to take place, is that the parties really and in substance only intended that it should take place within a reasonable time. This presumption, however, is rebuttable. Thus the burden is on the defendants to satisfy me that the time fixed for the payment of the amounts in clause 1 of the agreement was of the essence of the contract and any failure to observe it entitled them to terminate the agreement."
12. Reference has also been made to P L D 1983 S C 344 Ghulam Nabi and others v. Muhammad Yaqoob and others where it was observed that 'though time is not ordinarily considered as being the essence of the contract involving transaction of ,unmovable property but the true intention of the parties can be gathered from the terms of the contract and the facts and circumstances of the case and mere mention of time in the contract for its performance does not necessarily mean that time was of the essence.' Reference can be made to Haji Abdullah Khan and hers v. Nisar Muhammad Khan and others (P L D 1965 S C 690).
13. From these authorities the principle which can be deduced is that in a contract for sale of immovable property ordinarily time is not the essence of the contract and even if time for completion is prescribed in the agreement the question whether the time is essence of the contract can be determined by looking to the intention of the parties.
14. In the present case the receipt did not provide for making time the essence of the contract. According to the defendant it was oral agreement between the parties but no independent witness has been examined by her to prove the oral agreement. D.W. Afzal was a witness in the receipt but he has clearly stated that no time was fixed for completing the contract. So far intention of the parties is concerned, according to Mrs. Salima Nsiruddin the learned counsel for the defendant it is proved by the facts that the defendant was in need of money to start business for her son and further that it was on the persuasion of the plaintiff that she had agreed to sell the shop otherwise she wanted to establish her son in the said shop. These facts hardly prove that time was essence of the contract. If the time ,was essence of the contract then on expiry of 15 days the defendant should have immediately called upon the plaintiff to perform the agreement otherwise the agreement shall be cancelled. No such step was taken by the defendant although her son has deposed that he had orally told the plaintiff that as he has failed to complete the transaction within the specified time the contract has been cancelled. Mere words of the D.W.2 are not sufficient to substantiate this allegation.
15. The other aspect is that if the intention of the parties was to complete the transaction within 15 days then at lest the defendant should have acted with despatch and obtained all such documents which were necessary for registration of the deed. There is no evidence on record that defendant had obtained such documents within 15 days informed the plaintiff. In these circumstances in my view time was not the essence of the contract.
16. The question arises whether the plaintiff was ready and willing to perform his part of the contract. From the oral evidence it is clear that Afzal was approached by the plaintiff, and both went to the defendant to ask her to get the sale-deed registered but she avoided to meet them and was said to have gone out Karachi. In this process hardly three months had passed when the plaintiff issued a legal notice dated 12-6-1985 which was returned back with the endorsement that the defendant has gone out of Karachi. However, notice dated 29-6-1987 was served and thereafter the suit was filed. These facts establish that. the plaintiff had not committed any unreasonable delay. It is not the case of the defendant that after unreasonable delay the defendant called upon the plaintiff to perform the agreement and also fixed time for such performance. As held in Abdul Hamid's case P L D 1962 S C 1 no party can unilaterally fix time for performance of the contract and such fixation of time will not make it essence of the contract. However, if no time is fixed, and the purchaser unreasonably delays the matter and there is impropriety on his part then the vendor may call upon the purchaser to complete the transaction within a reasonable time. In these circumstances the vendor can limit the. time and make it essence of the contract. The defendant has not established that the plaintiff had committed any impropriety and she had called upon him to complete the transaction within a fixed time. My findings on
17. Issue Nol is in the affirmative. ,
18. Issue No.2. In the negative.
19. Issue No.3. In view of finding on issue No.1 my finding is in negative.
20. Issue No.4. So far cancellation of the agreement is concerned it has been discussed while dealing with issues Nos.1 and 2. The defendant has taken the plea that time was of the essence of the contract and as the plaintiff failed to complete the transaction the agreement was cancelled. This plea has not been accepted and, therefore, the finding is in the negative. ]sue No.5. In view of the above discussion the plaintiff has cause of action.
21. Issues Nos.6 & 7. The suit is decreed for the specific performance of the contract. The defendant should execute the deed within a period of one month failing which the Nazir shall execute the sale-deed on her behalf. The plaintiff has already deposited the balance of the sale consideration in Court which the defendant will be entitled to withdraw after execution of the sale-deed. Parties to bear their own costs.
22. AA./F-48/K Suit decree