MUHAMMAD LATIF KHOKHAR Versus ABDUL LATIF KHAN
ARSHAD MAHMOOD TABASSUM, J.--- This appeal is directed against judgment and decree dated 24.06.2009, passed by a learned Civil Judge Ist Class, Rawalpindi, whereby he decreed suit of respondent No.1/plaintiff for possession through specific performance of agreement to sell and permanent injunction.
2. Briefly the facts of the case are that respondent No.1 on 08.09.2004, instituted suit for possession through specific performance of agreement to sell and permanent injunction, averring in the plaint that he entered into an agreement to sell dated 08.09.2003, with the appellant/defendant No.1, in respect of house No.124, Asghar Mall Scheme, Rawalpindi (double storey measuring 10 marlas size 76 x 36 ft) for an amount of Rs.44,00,000/-; that he paid an amount of Rs.500,000/-, to defendant No.1, as earnest money, which was acknowledged by him through receipt; that the remaining sale consideration of Rs.39,00,000/- was to be paid to defendant No.1, on or before 06.03.2004, at the time of execution of sale deed; that he (plaintiff) was ready to pay the remaining sale consideration within a month of the execution of agreement to sell, but defendant No.1, had to clear some dues of defendant No.2 (Rawalpindi Development Authority, hereinafter referred to as the RDA) and was to obtain clearance certificate therefrom by making payment of surcharge; that on the request of defendant No.1, date was extended to 06.09.2004, and in continuation of the first agreement to sell, yet another agreement to sell dated 06.03.2004, was also executed between the parties. However, defendant No.1, again failed to perform his part of contact; that the plaintiff again approached defendant No.1, on 10.08.2004, with the request to do the needful as the stipulated date was approaching, but defendant No.1, backed out from his commitment on the plea that by the time the price of property had escalated, hence he was not going to honour his commitment; that the plaintiff then served upon defendant No.1, a legal notice through registered envelope AD on 10.08.2004, which was received by him on 13.08.2004, and ultimately the plaintiff instituted the suit. The suit was contested by defendant No.1, through filing his written statement wherein he maintained that in view of section 21(a) of the Specific Relief Act, 1877, (hereinafter referred to as the Act), he was ready to pay compensation as per term of the agreement by refunding double the amount of earnest money and that he was prevented from performing his part of contract due to the circumstances which were beyond his control as defendant No.2, had failed to carry out the required formalities within the stipulated time fixed for execution of the sale deed. However, defendant No.1 admitted both the agreements to sell having been entered into between the parties.
3. The divergent pleadings of the parties, led the learned trial Court to frame the following issues:
Issues
1. Whether plaintiff is entitled to the decree for specific performance of contract dated 08.09.2033 with regard to the suit house? OPP
2. Whether the plaintiff is entitled to decree for permanent injunction restraining the defendants from transferring or alienating the suit house in any manner? OPP
3. Whether the suit is barred by section 21(a) of Specific Relief Act? OPD.
4. Relief.
Both the parties produced their pro and contra evidence and ultimately the learned trial Court decreed the suit as prayed for vide judgment and decree dated 24.06.2009. Being aggrieved of the said judgment and decree, the appellant has preferred the instant appeal.
4. Learned counsel for the appellant has argued that it was specifically stipulated in the initial agreement to sell that in case of failure of defendant No.1, in performing his part of contract, he will return double the amount of earnest money i.e. Rs.10,00,000/ - to the plaintiff and that in the body of the agreement to sell itself the compensation in case of non-performance of the contract has been provided, hence, the respondent/defendant No.1, could only claim recovery of the said amount instead of specific performance of the agreement. He has further maintained that the appellant/ defendant No.1, was prevented due to the conduct of defendant No.2, from performing his part of agreement and the time being essence of the contract on elapse of the stipulated time, the appellant was not obliged to perform the contract. As such the learned trial Court has mis-construed the law on the subject and has illegally decreed suit of respondent No.1. He has, therefore, prayed for setting aside the impugned judgment and decree.
5. Conversely, learned counsel for the respondent has fully supported the impugned judgment and decree.
6. We have heard learned counsel for the parties and perused the record with their able assistance.
7. The agreements to sell executed between the parties (Exh.P1 and Exh.P2), are the admitted documents, therefore, what is to be seen by this Court is as to whether the appellant had any justification for not performing his part of contract and as to what should be the relief. The excuse put forth by the appellant for not performing his part of contract is two fold; in one place he has taken shelter under the provisions of section 21(a) of the Act by maintaining that since in the agreement to sell it has been provided that in case of non-performance on the part of the appellant, he will make payment of double the amount of the earnest money, hence by making payment of Rs.10,00,000/- (Rs.500,000/- being the earnest money and Rs.500,000/- being penalty), he should be relieved of his responsibility to perform the agreements to sell specifically while on the other hand pleaded that the performance of the agreements to sell was subject to completion of certain formalities in the office of defendant No.2 (RDA) and that since the RDA had failed to issue the necessary documents and clearance certificate, he could not be blamed for violating the terms of agreements to sell. It is also claim of the appellant that time was essence of the contract and since the RDA failed to issue the necessary documents, etc within the stipulated time, he should be absolved of his responsibility to perform the contract specifically.
8. Taking the first plea of the appellant with regard to the enforcement of the penal clause of the agreement to sell, it is observed that the respondent No.1, has insisted upon specific performance of agreement to sell without agreeing to receive additional amount of Rs.500,000/- and for that purpose he has instituted the suit seeking a decree for possession of the house through specific performance of agreement to sell. Section 21 of Act, enumerates the contracts which cannot be specifically enforced. As per clause (a) of the said provision of law, a contract for the non-performance of which compensation in money is an adequate relief cannot be specifically enforced. However, Explanation to section 12 of the Act provides as under:
"Explanation.- Unless and until the contrary is proved, the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer movable property can be thus relieved".
Evidence produced by the appellant is absolutely silent as to how the payment of Rs.500,000/ - could be considered to be an adequate compensation for relieving him of his responsibility of performing agreement to sell specifically, hence the presumption would be that the breach of contract cannot be adequately relieved by compensation in money. Reliance in this regard may be placed on the case titled "Abdul Karim v. Muhammad Shafi and another" (1973 SCMR 225). The relevant portion whereof at page 227, reads as under:
"We are unable to accept this contention in view of the clear provisions of the Specific Relief Act which is applicable in this country. Section 12 provides that the specific performance of the contract may be enforced in the discretion of the Court. Explanation to section 12 of the Act clearly states that unless and until the contrary is proved, the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer movable property can be thus relieved. Section 19 provides that any person suing for specific performance of a contract may also ask for compensation for its breach, either in addition to, or in substitution for, such performance. Section 20 says that a contract, otherwise proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same. Section 22 provides that 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 aforesaid provisions thus clearly empower the Court to decree a specific performance of the contract even though a sum be named in the contract as the amount to the paid in case of its breach."
9. As regards the second plea of the appellant, it is observed that it was mentioned in agreement to sell (Exh.P1) as under:-
Thus it was responsibility of the appellant to get clearance from the RDA within the stipulated time. In this regard Abdul Rauf (DW.1), during cross-examination has stated as under:-
He further states:
It was claim of the appellant that RDA was unjustifiably claiming Rs.150,000/-, which he was not ready to pay, however, during cross-examination he states:-
Thus the claim of the appellant that he failed to perform his part of agreement due to non-issuance of the relevant documents by the RDA appears to be ill-founded, when he himself maintains that even if the plaintiff/respondent No.1 paid the amount of Rs.150,000/- to the RDA, even then he was not ready to give the house in dispute to him.
10. With regard to third plea of the appellant that time was the essence of the contract, it is observed that in the agreements to sell (Exh.P1 and Exh.P2), there is no such mention that the time was essence of the agreements nor the circumstances so suggest. A meagre amount was being claimed by the RDA that too on account of certain fees and penalties, which the appellant did not pay and delayed the completion of the bargain for an indefinite time and thereafter came up with the plea that since time was essence of the contract he should be absolved of his responsibility to perform the agreement specifically. It has been ruled in the case titled "Muhammad Taj v. Arshad Mehmood and 3 others" (2009 SCMR 114) that section 55 of the Contract Act, 1872 stipulates the contracts where time is essence of contract, which is generally not attracted to transactions involving sale of immovable properties. Relevant portion of the said judgment at page 116 reads as under:
"The question of time being essence of contract has to be decided with reference to the facts of the each case. By virtue of section 4 of the Transfer of Property Act, 1882, transactions involving sale of immovable property are subject to the relevant provisions of the Contract Act, 1872. Section 55 of the Contract Act, 1872 stipulates the contracts where time is essence of contract, which is generally not attracted to transactions involving sale of immovable property. Merely mentioning of a specific date for performance of the agreement would not make time the essence of the contract but such intention is to be gathered from the terms agreed amongst the parties contained in the contract in the light of the facts and circumstances of the case as held by this Court in the case of Ghulam Nabi (supra)."
11. In the instant case the delay in performing the agreement to sell has not been attributed to respondent No.1/plaintiff. For this reason also the appellant/defendant cannot claim that since time was essence of the contract, hence by efflux of time the contract should not be performed specifically. In fact the delay in performance of the agreement to sell is solely attributable to the appellant himself, who cannot be allowed to reap benefit of his own fault.
12. The upshot of the above discussion is that the learned trial Court has properly appreciated the evidence produced by the parties and correctly applied the law applicable thereto and rightly decreed suit of the respondent No. 1/plaintiff to which no exception can be taken. This being so, this appeal has no merit, which fails and the same is hereby dismissed leaving the parties to bear their own costs.
HBT/M-59/L Appeal dismissed.