ABDUL MAJEED and others vs MUHAMMAD AKRAM and others
This petition for leave to appeal is directed against the judgment of the Lahore High Court, which accepted a civil revision, set aside the judgment and decree of the Additional District Judge, and restored those of the trial Court in a property dispute concerning land allotted to an Islamabad oustee. The core legal question involves the validity and enforceability of an agreement to sell executed by an attorney prior to the principal obtaining proprietary rights, and whether it constitutes an outright sale hit by statutory restrictions. The Supreme Court held that the agreement to sell executed by the authorized attorney, accompanied by earnest money and delivery of possession, was legally admissible and could not be equated with an outright sale, rendering the promisee entitled to specific performance. The key principle laid down is that an agreement to sell land prior to the acquisition of full proprietary rights by the vendor through their attorney is valid, enforceable, and distinct from an outright sale prohibited under colonization laws.
- Whether an agreement to sell executed by an attorney prior to the principal obtaining proprietary rights is legally admissible?
- Can an agreement to sell involving delivery of possession and receipt of earnest money be equated with an outright sale?
- Is a subsequent purchaser bound by a prior valid agreement to sell executed in favor of another party?
- Section 19, Colony Act
ORDER
1. ' JAVID IQBAL, J.--This petition for leave to appeal is directed against judgment of the Lahore High Court, Multan Bench, dated 9 July 1984 whereby .Civil revision of Muhammad Akram respondent was accepted, judgment and decree of the Additional District Judge were set aside and those of the trial Court restored.
2. ' Briefly the facts are that Mst. Rahim Jan respondent No,3 was allotted the disputed land as an Islamabad oustee. By means of general power of attorney executed and registered on 31 December 1968 at Rawalpindi she appointed Ghulam Rasul respondent No,2 as her attorney authorising him inter alia to sell the land in question. On 2 October 1972 respondent No,2 on behalf of respondent No,3 entered into an agreement with Muhammad Akram respondent No,1 to sell the land in dispute for Rs,45,000. He received earnest money of Rs,30,000 from him and handed over possession of the land to him. Thereafter respondent No,3 revoked the power of attorney executed in favour of respondent No, 2 on 1 November, 1973. Subsequently on 19 January 1974 respondent No,3 made an agreement with the present petitioners to sell the suit land to them for Rs,50,000 and received from them Rs,20,000 as earnest money. On 30 January 1974 the present petitioners filed suit against Muhammad Akram respondent for a declaration that the agreement, dated 19 January 1974 with them of respondent No,3 was binding upon her and that they were entitled to take possession of the disputed land and for the issuance of permanent injunction as against her restraining her from alienating the land except to them. On 6 February 1974 a consent decree was obtained to that effect and on the basis of the same mutation was sanctioned in favour of the petitioners on 8 May 1974 as owners of the disputed land. On 18 December 1974 respondent No,3 obtained proprietary rights of the land in question and on the same date the sale in favour of the petitioners was completed and agreement to sell was replaced by a registered sale-deed. In the meantime on 28 June, 1974 respondent No,1 instituted a suit as against respondent No,3 as well as the petitioners for specific performance of the contract of sale of the land in dispute made in his favour on 2 October, 1972 which was finalised on 18 December 1974 when respondent No,3 obtained proprietary rights and in consequence thereof declaring the mutation in favour of the petitioners of the said land as void and ineffectual on his rights as well as for the issuance of permanent injunction restraining the petitioners from interfering with his rights in and possession of the land.
3. The suit was decided against the petitioners on 18 March 1979. However their appeal was accepted on 1 April, 1982. The appellate judgment was challenged by Muhammad Akram respondent by way of civil revision which as stated above was accepted. Hence the present petition.
4. ' Learned counsel for the petitioners attempted to argue before us that respondent No,3 had not authorised respondent No,2 to enter into agreement to sell the disputed land to respondent No,1, and that the transaction made on 2. October, 1972 in favour of Muhammad Akram respondent by Ghulam Rasul respondent was outright sale which was hit by the provisions of section 19 of the Colony Act. It was further submitted that mere delivery of possession to Muhammad Akram respondent was in itself not conclusive of the fact that a sale had taken place and that the conclusion arrived at by the first appellate Court was correct.
5. We have heard learned counsel at some length but his arguments have no force. Evidently there was nothing on the record to show that Ghulam Rasul respondent had unauthorisedly entered into an agreement on 2 October 1972 with Muhammad Akram respondent. This was an agreement to sell whereunder the earnest money of Rs,30,000 had been received and the possession given to Muhammad Akram respondent. However, the sale was to be completed when the proprietary rights were to be obtained by respondent No,3 who was to receive Rs,15,000 as balance amount of the sale consideration. Therefore it was rightly held by the High Court that such an agreement was legally admissible to be entered into and that it could not be equated with an outright sale. In that view of the matter Muhammad Akram respondent was entitled to have the said agreement specifically enforced. Since this is the position we do not find any substance in this petition which is accordingly dismissed.