Pakistan Case LawAMJAD JAVED Versus MAQSOOD AHMAD
ORDER
MIANGUL HASSAN AURANGZEB, J.--- Through this judgment, we propose to decide Civil Appeals Nos. 173-L/2020 and 284-L/2020, as both have been filed against the judgment and decree dated 04.03.2020 passed by the Lahore High Court. Through Civil Appeal No. 173-L/2020 the appellant, Amjad Javed, seeks to have the said judgment set aside in its entirety, whereas through Civil Appeal No.284-L/2020 the appellants, Maqsood Ahmad and others, have challenged the judgment only to the extent whereby they were directed to return double the amount of earnest money received from the appellant. In this judgment, Amjad Javed, the appellant in Civil Appeal No. 173-L/2020 shall be referred to as the appellant whereas Maqsood Ahmad and others, the appellants in Civil Appeal No.284-L/2020, shall be referred to as the respondents .
2.By the impugned judgment dated 04.03.2020, the Lahore High Court allowed the civil revision petition filed by the respondents against the judgment and decree dated 15.01.2018 passed by the appellate court, and consequently dismissed the suit for specific performance and permanent injunction filed by the appellant. The appellate court had earlier allowed the appellant s appeal against the trial court s judgment and decree dated 20.01.2015, whereby the suit had been dismissed.
3.The record reveals that on 11.03.2014, the respondents agreed to sell 5 kanals and 4 marlas of land in khasra No. 6012/1, khewat No. 294, khatooni No. 365, situated in Revenue Estate Urban Chowinda, Tehsil Pasrur, District Sialkot the suit property to the appellant for a total sale consideration of Rs. 7,280,000/-. Out of this amount, Rs. 800,000/- was paid as earnest money while the remaining Rs. 6,480,000/- was to be paid by 27.07.2014 at the time of registration of the sale deed. According to the judgments of the courts below, the respondents issued a notice dated 09.09.2014 to the appellant demanding payment of the balance consideration and expressing readiness to transfer the property. The appellant has not placed a copy of this notice on record.
4.On 25.09.2014, the appellant filed a suit for specific performance of the said agreement to sell before the court of the Civil Judge, Pasrur. On the same date, the trial court restrained the respondents from alienating the suit property. On 18.12.2014, the trial court recorded the statements of respondent No.2 (Aamir Mustafa) and respondent No.l (Maqsood Ahmed), who was also the general attorney of respondent No.3 (Mst. Fauzia Khanam) and respondent No.4 (Mst. Kaneez Fatima) to the effect that they would have no objection to the appellant s suit being decreed provided he deposits the balance sale consideration of Rs.6,480,000/-. The appellant did not deposit the said amount on 05.01.2015, which was the date fixed by Court for said deposit, and instead sought an extension in time. The trial court granted the said request and directed the appellant to deposit the said amount by 20.01.2015 and also to submit the latest jamabandi showing the respondents ownership of the suit property.
5.Since the appellant did not deposit Rs.6,480,000/- despite having been granted two opportunities, the trial court turned down the appellant s request for yet another extension in time. Furthermore, on 20.01.2015 the trial court, by invoking the provisions of Order XVII, Rule 3 of the Code of Civil Procedure, 1908, dismissed the appellant s suit.
6.The appellant assailed the trial court s order and decree dated 20.01.2015 in an appeal, which was allowed by the appellate court vide judgment and decree dated 15.01.2018. In the appellate court s judgment, it was observed that the trial court had not given a fair opportunity to the appellant to deposit the balance sale consideration. It was also held that since the respondents had admitted the execution of agreement to sell as well as the receipt of the earnest money, and since the trial court had recorded the respondents statements to the effect that they would have no objection to the suit being decreed if the balance sale consideration was deposited by 05.01.2015, the trial court ought to have decreed the suit on the basis of such statements, even if the appellant was absent.
7.The respondents assailed the appellate court s judgment and decree through a civil revision petition before the High Court, which vide judgment dated 04.03.2020 allowed the same by setting aside the judgment and decree passed by the appellate court and restoring the order and decree passed by the trial court with the modification that the respondents were directed to return double the earnest money.
8.The High Court s judgment and decree dated 04.03.2020 has been assailed by the appellant in Civil Appeal No.l73-L/2020 before this Court. The respondents, through Civil Appeal No.284-L/2020, have also assailed the said judgment and decree only to the extent whereby they were directed to return Rs. 1,600,000/- to the appellant.
9.Learned counsel for the appellant, after narrating the facts leading to the filing of the instant appeals, submitted that time is generally not of the essence in contracts relating to the sale of immovable property; that the mere failure on the appellant s part to show compliance with the trial court s orders for the deposit of the balance sale consideration ought not to have resulted in the dismissal of the suit, but since the respondents had admitted the execution of the agreement to sell and had also made a statement to the effect that they would have no objection if the suit is decreed upon the deposit of the balance sale consideration, the trial court ought to have decreed the suit; that the High Court ought to have taken account of the fact that on 24.01.2018, the appellant had deposited Rs.64,80,000/- in the court; and that the judgment and decree passed by the appellate Court was well reasoned and did not warrant any interference by the High Court. Learned counsel for the appellant prayed for Civil Appeal No.l73-L/2020 to be allowed and for Civil Appeal No.284-L/2020 to be dismissed.
10.On the other hand, learned counsel for the respondents submitted that the High Court s judgment is consistent with the law laid down by this Court in a number of judgments; that by not paying the balance sale consideration by 27.07.2014, which was agreed to be the deadline for such payment, the appellant disentitled himself from the grant of discretionary relief; that the appellant could not claim to have been ready, willing and able to perform his obligations under the agreement to sell as he had failed to comply with the directions contained in the orders dated 18.12.2014 and 05.01.2015 passed by the trial court for the deposit of the balance sale consideration; and that since the judgment and decree passed by the appellate Court was not consistent with the law laid down by this Court on the subject, the High Court did not commit any illegality by setting aside the said judgment and decree and restoring the order and decree passed by the trial court.
11.Furthermore, learned counsel for the respondents submitted that in the agreement to sell it was explicitly mentioned that failure on the appellant s part to pay the balance sale consideration would entitle the respondents to forfeit the earnest money and have the said agreement enforced through a court of law; and that the High Court ought not to have rewritten the terms of the contract between the parties by directing the respondents to pay double the amount of the earnest money to the appellant. Learned counsel for the respondents prayed for Civil Appeal No. 173-L/2020 to be dismissed and for Civil Appeal No.284-L/2022 to be allowed.
12.We have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance. The facts leading to the filing of the instant appeals have been set out in sufficient detail in paragraphs 2 to 8 above and need not be recapitulated.
13.We first propose to deal with the ground taken by the appellant regarding time not being the essence of the agreement. It is an admitted position that the agreement to sell dated 11.03.2014 was executed between the appellant and the respondents. Earnest money amounting to Rs.800,000/- was paid at the time of the execution of the said agreement, whereas the balance sale consideration of Rs.6,480,000/- was agreed to be paid by 27.07.2014 when the suit property was transferred to the appellant. It was explicitly provided in the said agreement that in the event the appellant fails to pay the balance sale consideration by 27.07.2014, the respondents would be entitled to forfeit the earnest money and have the said agreement enforced through a court of law. On account of such a stipulation in the said agreement, we are of the view that the time fixed in the agreement for the payment of the balance sale consideration was of the essence. In the case of Liaqat Ali v. Falak Sher (PLD 2014 SC 506) , a stipulation in the agreement to sell for the payment of the balance sale consideration with a consequential penalty clause of forfeiture of the earnest money and vitiation of the agreement was held to be sufficient for holding that the parties had agreed for time to be of the essence of the agreement. Additionally, in the case of Mst. Gulshan Hamid v. Kh. Abdul Rehman (2010 SCMR 334) , it has been held as follows:-
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."
(Emphasis added)
14.Unlike the bygone era when the value of real estate would appreciate at a snail s pace, in this day and age real estate value appreciates with a rapidity. Courts must interpret such agreements in light of current economic realities. Given the rapid increase in real estate values in modern times, delay in payment undermines contractual efficacy. This fact has been recognized by the Supreme Court in paragraph 9 of the judgment in the case of Muhammad Abdur Rehman Qureshi v. Sagheer Ahmad (2017 SCMR 1696) , which is reproduced herein below:-
"9. 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."
15.It is trite that the remedy of specific performance is purely an equitable remedy. The continuous readiness and willingness on the part of a plaintiff to pay the agreed consideration is a condition precedent for the grant of relief of specific performance. To adjudge whether a plaintiff is ready and willing to perform his part of the contract, the Court is to take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances.
16.In the suit for specific performance instituted by the appellant on 25.09.2014, it has been pleaded inter alia that the appellant was at all material times ready for the performance of his obligations under the agreement to sell, and that the respondents were avoiding to receive the balance sale consideration and transferring the suit property to the appellant. If there was any truth to what was pleaded by the appellant in his suit, he would have complied with the orders dated 18.12.2014 and 05.01.2015 passed by the trial court whereby he was directed to deposit the balance sale consideration. The mere fact that the appellant failed to comply with the trial court s said directions shows that he was neither ready, nor able or willing to pay the balance sale consideration by the deadline fixed in the agreement to sell, which deadline was months before the directions of the trial court for the deposit of the balance sale consideration.
17.The failure on the appellant s part to comply with the directions given for the deposit of the balance sale consideration caused the trial court to dismiss the suit by invoking the provisions of Order XVII, Rule 3, C.P.C., which reads thus:-
Where any party to a suit to whom time has been granted fails to produce his evidence or to cause the attendance of his witnesses, or to perform any other act necessary to the further progress of the suit, for which time has been allowed, the court may, notwithstanding such default, proceed to decide the suit forthwith.
(Emphasis added)
18.As mentioned above, the trial court had, vide orders dated 18.12.2014 and 05.01.2015, directed the appellant to deposit the balance sale consideration. The performance of this act, i.e. the deposit of the balance sale consideration, for which adequate time had been allowed by the trial court on two occasions, was of utmost importance for the further progress of the suit for specific performance as it would have prima facie shown the appellant s readiness, willingness and ability to pay the balance sale consideration for the suit property. A plaintiff seeking the equitable remedy of specific performance must always be ready, willing and able to perform his part of the contract. If a plaintiff does not deposit the balance sale consideration amount within the time stipulated by the trial court, the presumption would be that the plaintiff was not serious in prosecuting his remedy.
19.A suit for specific performance has to conform to the requirements in Forms 47 and 48 in Appendix A in the First Schedule to the C.P.C. Form 47 requires the plaintiff/seller in a suit for specific performance to plead that he has been and still is ready and willing specifically to perform the agreement on his part of which the defendant has had notice , whereas Form 48 requires the plaintiff/purchaser to plead that he is still ready and willing to pay the purchase-money of the said property to the defendant . A. plaintiff/purchaser, in his suit for specific performance, cannot be said to have a cause of action against the defendant/seller where the former has not been able to demonstrate his readiness and willingness to pay the balance sale consideration to the latter. Although in his plaint, the petitioner has pleaded that he is ready and able to pay the balance sale consideration, his failure to comply with the direction for the deposit of the balance sale consideration ipso facto renders such pleading to be untrue leaving him without a cause of action to seek the relief of specific performance.
20.The appellant s conduct suggests speculative litigation and abuse of equitable jurisdiction. We say so because he had filed the suit for specific performance having no intention to pay the balance sale consideration to the respondents or deposit the same in the Court. The appellant s failure to comply with court directions to deposit the balance amount demonstrates a lack of readiness and willingness to pay the balance sale consideration. The deposit of the balance sale consideration of Rs.64,80,000/- on 24.01.2018 (i.e. almost three and half years after a date fixed in the agreement for such payment) does not, in any way, improve the appellant's case as the contractual deadline for making such payment had long passed.
21.Specific performance is a form of equitable relief and supposed to be granted in aid of equity and justice. It is well settled that he who seeks equity must do equity. It is an admitted position that the appellant neither paid the balance sale consideration to the respondents on or before the date stipulated in the agreement to sell, nor showed compliance with the trial Court s directions to deposit the same in the Court. By failing to pay the balance sale consideration in accordance with the terms of the said agreement or in compliance with the trial court s directions, the appellant cannot be considered to have done equity. This conduct of the appellant stripped him from bona fides and disentitled him from the grant of equitable relief. Given the said default on the part of the appellant, we are of the view that the learned civil Court did not commit any illegality by dismissing the appellant s suit for specific performance. In the case of Adil Tiwana and others v. Shaukat Ullah Khan Bangash (2015 SCMR 828) , the plaintiff had failed to pay the balance sale consideration within the period specified in the agreement to sell. Even when the suit for specific performance was filed, the plaintiff did not seek to deposit the balance sale consideration in the Court. The direction of the trial court to the plaintiff to deposit Defence Saving Certificates for an amount equal to the balance sale consideration within a period of one month was also not complied with by the plaintiff. In the ultimate analysis, the plaintiff had failed to comply with the orders/directions of the trial court despite several opportunities. In such circumstances, the plaintiff s suit for specific performance was held to have been correctly dismissed. In the said judgment, this Court made the following observations:-
...We may also add at this stage that the remedy by way of specific performance is equitable and it is not obligatory on the Court to grant such a relief merely because it is lawful to do so. Section 22 of the Specific Relief Act expressly stipulates so. It is axiomatic that one who seeks equity must do equity. In the present case all equities are squarely in favour of the appellants/defendants and stacked high against the respondent/plaintiff.
22.As for the respondents challenge to the High Court s judgment and decree to the extent of directing them to return double the amount of the earnest money to the appellant, the sole reason why we are not inclined to interfere with the direction is that the respondents counsel before the High Court had submitted that the respondents were ready to return such amount to the appellant. There is a presumption of correctness as to facts expressly mentioned in the judgment as well as the decree of the High Court, and such presumption cannot be dislodged simply because the respondents say, without swearing an affidavit, that their counsel had not made such submission.
23.In view of the above, both the appeals are dismissed. The appellant shall bear the respondents costs in Civil Appeal No.l73-L/2020.
UN/A-5/SC Appeals dismissed.
Judges on this bench
- Shakeel Ahmad452 judgments
- Miangul Hassan Aurangzeb1,092 judgments