KHILJI ARIF HUSSAIN, J.---By this order I intend to dispose of Nazir's report dated 2-1-2006 and C.M.A. No,6606 of 2005, filed by defendant No,1 in Suit No,126 of 2004, C.M.A. No,129 of 2004, filed by the Decree-Holder Ghulam Rasool in Execution No,39 of 2005 and C.M.A. No,1914 of 2005, filed by Decree-Holder Abdus Salam in Execution No, Nil of 2005.
Heard Mr. Qazi Faez Isa, learned Advocate for the Decree-Holder in Execution No,39 of 2005, Mr. Arshad Tayebaly learned counsel for the Decree-Holder in Execution No,Nil of 2005 and Mr. Naveedul Haq learned counsel for defendant No,3 Saudi Pak. Leasing Co. Ltd. The issue in the matter is as to who is entitled for the profit earned on the amount deposited by Decree-Holder Abdul Salam in Execution No, Nil of 2005 . To dispose of these applications along with Nazir's reference I would like to give brief facts of the case.
Mr. Abdus Salam, Decree-Holder in Execution No,Nil of 2005, filed suit for the specific performance of the contract dated 22-12-2003 with a prayer for delivering actual and physical possession of Plot No,F/424 situated at SITE free from any encumbrance or lien and executing documents of transfer/mutation in favour of the plaintiff with defendant No,2. The defendant No,1 agreed to sell the property in question along with the machineries etc. To plaintiff Abdul Salam for a sum of Rs,5,50,00,000 out of which s sum of Rs,5,500,000 was paid to defendant No,1 at the time of execution of agreement of sale and balance amount was payable within three months from the date of agreement. Vide order dated 12-2-2004, Nazir was appointed as Commissioner to prepare inventories of the machineries lying in the suit premises. On 20-2-2004, Nazir was directed to appoint guard at the expenses of the plaintiff on the property in question and plaintiff was directed to deposit 50% of balance sale consideration after adjusting 10% which has already been paid to defendant No,1 within two weeks from the date of order which amount was deposited by the plaintiff. On 12-4-2004, after having complaint from the plaintiff that despite order of the Court defendant has removed the machineries from the premises in question, the Nazir was directed to inspect the premises and verify the facts in terms of the inventories of plant equipment and machineries recorded by him earlier and to submit the report whether the factory premises is running or not. It was further ordered that in case if factory is not functioning or is not in a running condition, to put his lock. At this stage. Saudi Pak. Leasing Co. Came forward and stated that some of the machineries in factory premises subject-matter of agreement are leased out by them and without their consent the same cannot be transferred. On 12-4-2005 an application under Order XXIII, Rule 3 duly signed by the plaintiff, defendant No,1 and defendant No,3, Saudi Pak. Co. Ltd. Was submitted in Court and suit was decreed in terms of the said applications. To appreciate the respective contentions of the learned counsel for the parties, it would be useful to reproduce the terms of the application as follows:-- "1. That the defendant No,1 shall transfer the subject property being factory built on Industrial plot of land bearing No,F-424 measuring 0.65 acres plus extended land of 0.11 acres situated within the jurisdiction of SITE with complete construction thereon and machineries installed therein, as inspected and listed by the Nazir under his report dated 20-2-2004 (hereinafter referred to as the "Subject Property") to the plaintiff for the total agreed sale consideration of Rs,55,000,000 (Rupees Fifty Five Million only) (hereinafter referred to as the "Total Sale Consideration").
2. The defendant No,1 acknowledges that he has already received an amount of Rs,5,500,000.
(Rupees five Million Five Hundred Thousand only) as part payment towards the total agreed sale consideration of the Subject Property.
3. That an amount of Rs,31,100,140 (Rupees Thirty One Million One Hundred Thousand and One Hundred forty only) out of the total Sale Consideration shall be paid by the plaintiff to the defendant No,3 for settlement of the liabilities of defendant No,1 towards defendant No,3 in respect of the lease rentals for the leased assets, and on receipt of this payment by defendant No,3, the defendant No,3 undertakes to transfer the title and ownership of all the leased assets, and on receipt of this payment by defendant No,3, the defendant No,3 undertakes to transfer the title and ownership of all the leased assets in favour of the plaintiff. The defendant No,3 further confirms that on receipt of the said amount of Rs,31,100, 140 no further amount shall be paid by the plaintiff to defendant No,3, so as to ensure that the total amount paid to the defendant No,3 is Rs,31,100,140.
4. That the balance sale consideration of Rs,18,399,860 (Rupees Eighteen Million Three Hundred Ninety Nine Thousand Eight Hundred sixty only) shall be paid by the plaintiff to defendant No,1 on simultaneous transfer of the Subject Property, from all claims and encumbrances in favour of the plaintiff within a period of 25 days from the date of this compromise application. It is clarified that the amount of Rs,31,100,140 as suggested above, shall also be paid to the defendant No,3 simultaneously on the transfer of the subject Property in favour of the plaintiff.
5. That the break-up value of land and Building for the purpose of registration and transfer is a sunder:-- Rs,12,500,000(Rupees twelve Million Five Hundred Thousand only) for Land and Building for which a deed of Assignment will be registered by the defendant No,1 in favour of the plaintiff.
Rs,42,500,000Rupees Forty Two Million Five Hundred Thousand only) for Plant and Machinery.
6. That defendant No,1 shall assist and fully cooperate with the plaintiff for mutation of the Subject Property including extended land of 0.11 acres in favour of the plaintiff with defendant No,2 i,e, Sindh Industrial Trading Estate Limited, Karachi.
7. That the defendant No,1 shall clear all outstanding dues of the subject property and convey in favour of the plaintiff with clear and marketable title and hand over its vacant and peaceful possession together with original documents of title.
8. That costs of stamp duty, registration and transfer fees shall be borne by the plaintiff.
9. That on failure of the defendants to transfer the subject property in favour of the Plaintiff, the Nazir shall be empowered to take necessary steps for transfer of the Subject Property in favour of the Plaintiff on the plaintiff depositing the balance amount of Total Sale Consideration with the Nazir of this Hon'ble Court."
After passing of the decree, both plaintiff and defendant No,1 filed application requesting the SITE to transfer the plot in question in favour of the plaintiff.
Defendant No,1 filed application under section 151, C.P.C. (C.M.A. No,6606 of 2005) and prayed to amend the decree dated 17-1-2005 by adding the following sentence at the end of para.4 that: "In case the plaintiff failed to make payment of the balance amount as mentioned above the advance payment shall stand forfeited in favour of the defendant No,1 and the defendant will be at liberty to sell the subject property."
The said application was listed for order on 29-8-2005, when the learned Judge issued notice to parties for 2-9-2005, on 2-9-2005 the following order was passed: "It appears that this suit was decreed on 17th day of January, 2005 and the parties had performed their respective parts as stated in the said compromise decree. Grievance of Mr. Qazi Faez Isa is that deal is not being finalized. Mr. Asif Ali says that approval of the draft of sale-deed forwarded to SITE is still awaited. It appears that sufficient time has been passed and by now this exercise must have been done. SITE Authorities are directed to examine the said draft and return the same to the concerned party for further proceedings as per law, if there is no objection or other legal impediment in doing so. The objection, if any, should also be specified in writing and parties be intimated within ten days from today."
On 16-9-2005 in presence of the Advocates for the parties learned Judge directed the office to issue notice to Secretary SITE for his appearance on 21-9-2005. On 21-9-2005, Mr. Qazi Faez Isa stated that his clients have no objection and they are ready and willing to execute the required assignment deed in favour of the plaintiff on receipt of balance amount and the following order was passed: "Mr. Qazi Faez Isa states that his clients have no objection and they are ready and willing to execute the required assignment deed in favour of the plaintiff on receipt of the balance amount. However, this assignment deed is also to be assigned by the Secretary SITE as a consenting party and only thereafter it can be accepted by the SITE. Mr. S.A. Samad Khan counsel for the SITE states that Secretary is willing to sign this document if so ordered by this Court.
Secretary SITE was issued notice to appear in person today, but he is not present and there is no explanation for his nonappearance. However, in view of the statement made by Mr. S.A. Samad Khan learned counsel for the SITE and in order to ensure that the matter is resolved at the earliest, I will direct the Secretary SITE to sign the assignment deed under the SITE Rules, Regulations and practice. This exercise shall be completed positively within one week from today and compliance shall be reported on 3-10-2005."
On 27-10-2005, defendant No,3, Saudi Pak Leasing Co. Ltd., filed an application under section 151, C.P.C. (C.M.A. No,8724 of 2005) praying that Nazir be directed to release the amount in its favour and further to direct the Decree-Holder to make remaining payment directly to defendant No,3 in terms of the paragraph 3 of the decree dated 17-1-2005. Notice of the said application was ordered to be issued to the plaintiff as well as to the Nazir and on the said date Mr. Qazi Faez Isa pointed out that in terms of order dated 21-9-2005 plaintiff was directed to submit compliance report dated 3- 10-2005 and such compliance report has not been submitted by the Advocate for the plaintiff and accordingly office was directed to issue notice to the plaintiff for 8-11-2005. On 8-11-2005 learned Advocate for the plaintiff stated that the entire amount in terms of the decree has been deposited with the Nazir of Court and after execution of the sale-deed in favour of the plaintiff he has no objection if the Nazir releases the amount to defendant No,3 for his share and accordingly Nazir was directed to release the amount of share of defendant No,3 within two weeks from the date of execution of the Sale Deed after due verification in accordance with rules which amount was received by the defendant No,3 on 5-12-2005.
On the amount invested by the Nazir, substantial amount as interest has been accrued and now each party is claiming the same, which is the dispute in the matter.
From the Nazir's report dated 3-1-2006 it appears that a sum of Rs,34,03,5334 is required for the payment of electric charges, dues of EOBI, telephone bills, Income Tax, Profession tax and Property tax and Decree-Holder Abdus Salam requested the Nazir to pay said amount from the profit lying with him.
The question, which requires consideration, is whether plaintiff Abdus Salam required to deposit balance sale consideration in terms of Clause 4 of compromise decree within a period of 25 days from the date of compromise application irrespective to transfer of the subject property free from all claims and encumbrances in his favour or same became payable at the time when the property was transferred in his favour.
Before I examine this question, I would like to reproduce dates when the plaintiff/Decree-Holder deposited sale consideration:
(i) Rs,55,00,000 paid to Ghulam Rasool on 22-12-2003,
(ii) Rs,2,20,00,000 deposited on 11th March, 2004.
(iii) Rs,77,14,140 deposited on 1-11-2005
(iv) Rs,1,25,00,000,
(v) Rs,48,99,860,
(vi) Rs,3,07,000
(vii) Rs,20,79,000 on 6-12-2005.
(viii) Sale-deed executed on 19-12-2005.
From the facts stated hereinabove it appears that after passing compromise decree the parties filed application before the Secretary SITE for the transfer of the plot in favour of Abdus Salam but for one reason or other property in question could not be transferred in favour of the purchaser. On behalf of Ghulam Rasool, seller, an application under section 151, C.P.C. Being C.M.A. No,6606 of 2000 was filed with a prayer that consent decree may be modified/amended and at the end of para. 4 it may be inserted that "in case the plaintiff failed to make payment of the balance amount as mentioned above the advance payment shall stand forfeited in favour of the defendant No,1 and the defendant will be at liberty to sell the subject property." On 2-9-2005 the following order was passed:-- "It was observed that parties had performed their respective parts as stated in the said compromise deed and the grievance of Mr. Qazi Faez Isa is that the deal is not being finalized. Mr. Asim Iqbal learned advocate for the Abdus Salam stated that approval of the draft sale-deed forwarded to SITE still awaited. In view of above learned Judge directed the SITE authorities to examine the draft and return the same to concerned parties for further proceedings and if they have any objection they should specify such objection in writing to the parties within 10 days and matter was adjourned to 19-9-2005."
On 16-9-2005, Secretary of the SITE was directed to appear in person on the next date of hearing and on 21-9-2005 Mr. Isa stated that his client has no objection and they are ready and willing to execute the required assignment deed in favour of the plaintiff on receipt of the balance amount and further stated that assignment deed is also to be signed by the Secretary SITE as consenting party and only thereafter it can be accepted by the SITE Mr. S.A. Samad Khan learned counsel for the SITE stated that the Secretary is willing to sign these documents if so ordered by the Court. In view of this learned Judge directed the Secretary, SITE to sign the assignment deed under the. SITE Rules and Regulations within a week's time from the date of the order. The assignment deed was executed in favour of Abdus Salam on 19-12-2005.
From the facts stated hereinabove it appears that till 21-9-2005 at least seller has not asked for interest on the balance amount to be received by him and express his willingness to execute assignment deed on receipt of the balance amount. Be that as it may, clause 4 of the compromise deed provided reciprocal promises i,e, the balance sale consideration shall be paid by the plaintiff to the defendant on simultaneously transfer of the subject property free from all encumbrances within a period of 25 days. The balance amount in terms of the said clause was payable to defendant No,1 on transfer of the plot and that too subject to free from all claims and encumbrances. Admittedly for one reason or the other, property could not be transferred in favour of the plaintiff free from all claims and encumbrances till 19-12-2005 without any fault on the part of the plaintiff, whereas purchaser has paid the entire sale consideration much before the said date of transfer.
It is interesting to note that 50% of the sale consideration was paid by the purchaser on 11-3-2004 i,e, one year and nine months before .The execution of the sale-deed and about nine months before the compromise decree and remained out of pocket of such considerable amount without taking any benefit from the property. As regards the balance amount of Rs,2,54,21,000, a sum of Rs,2,51,42,000 was deposited by the purchaser about one and a half month before the execution of transfer deed and rest of the amount of Rs,2,79,000 was deposited about 15 days prior to the execution of the transfer deed.
The contention of Mr. Qazi Faez Isa, learned Advocate for the seller, that his client remained out of pocket of such considerable amount without taking any benefit from the property in question as the same remained in the custody of the Nazir of this Court and accordingly he is entitled for the interest on the amount deposited with the Nazir. I would like to observe here that from the record it appears that the factory in question was lying idle and after receiving the complaint about the removal of the machineries from the factory premises despite restraint order Nazir of the Court was directed to put his lock and key if he found that the factory is not functioning or not in running condition. The order to put lock and key was passed in presence of the learned Advocate for the seller and at no point of time any request was made to modify the order. In these circumstances when property in question was not in the use of the seller, Nazir had taken over the possession and the seller cannot complain that the property did not remain in his possession and he could not avail the benefit from it.
In the case of Pirzada Nazir Hassna v. Major (Retd.) Ejaz Ahmed Khan 1981 SCM R 684, while dealing with the question about the entitlement of interest accrued on the sale consideration deposited in the Court, Hon'ble Supreme Court held that: We have heard the learned counsel for the petitioner .Admittedly according to the basic agreement of sale executed between the parties, a sum of Rs,2 lakhs was paid in advance by the respondent to the petitioner against its execution on the 29th of June, 1974 and according to one of the terms of this agreement, the remaining sale price of Rs,6 lakhs had to be paid by the respondent to the petitioner at the value of registration of the sale-deed before the Sub-Registrar and, delivery of the possession of the Bungalow to him within 45 days. Evidently the petitioner had failed to exercise his part of the agreement and the respondent had to file suit for the enforcement of The agreement through Court. On the 22nd of November, 1974, the trial Court decreed the suit of the plaintiff-respondent for specific performance of the agreement on deposit of Rs,6 lakhs by him before 21st December, 1974. The respondent deposit the sum of Rs,6 lakhs due from him in Court.
But then the execution of the decree was stayed in appeal by the High Court at the instance of the petitioner. It was eventually on the 26th of July, 1978 in course of the execution proceedings that the necessary sale-deed was got executed and registered in favour of the respondent and the petitioner became entitled for the first time to receive the sum of Rs,6 lakhs lying in deposit as the balance of the sale price. Before this execution of the sale-deed through Court the petitioner was not entitled in law to withdraw the money from the Court without having executed the sale-deed in favour of the respondent. In this view of the matter therefore, we have no doubt in our mind that the petitioner was not entitled to the interest that had accrued on the sum of Rs,6 lakhs for the period before the 26th of July, 1978. In the circumstances the order passed by the High Court is unexceptionable. We, therefore, see no force in this petition which is dismissed."
In the case of Shaikh Muhammad Taqi v. Muhammad Anwar Khan Ghauri 1983 CLC 1085, a Division Bench of this Court held that:- "appellant/seller is still enjoying the possession of the property in dispute, although the moment the sale consideration was deposited by the purchaser in Court the possession should have been delivered to him, the appellant cannot allow benefit of possession of the property and also to appropriate interest which is accumulated on the amount of sale consideration."
Taking into consideration facts on record it appears that after passing of the consent decree all the parties in the matter made an effort to get the property in question transferred in favour of the purchaser, but due to inaction on the part of SITE, same could not be transferred, for which the purchaser alone cannot be blamed and cannot be penalized however at the same time the seller who was also willing to perform his part of obligation also remained deprived of sale consideration.
In terms of section 55(1)(g) of the Transfer of Property Act all public charges and rent accrued in respect of the property up to the date of the sale are to be paid by the seller, whereas subsection (5)(b) of section 55 of Transfer of Property Act provided that buyer is bound to pay or tender the amount of purchased money to the seller retaining the amount of encumbrances on the property.
No doubt owner/seller has to transfer the property free from all encumbrances on the date of execution of transfer deed but from the facts and circumstances of this case and since the seller was ready and willing to perform his part of obligation after the execution of compromise application, but due to reason beyond his control same could not be transferred within the stipulated period of time, to meet the ends of justice, Nazir is directed that out of profit earned from amount deposited he should first clear encumbrances on the property in question from 12-4-2005, i,e, up to the date of execution of transfer deed in favour of the purchaser (the date of performance of agreement of sale between the parties). After clearance of said encumbrances, if any amount remained with the Nazir, then purchaser is entitled for the interest accrued up to 19-12-2005, as despite he was out of pocket of money for considerable period of time he could not get benefit from the property till the execution of the transfer deed. Any interest accrued after 19-12-2005, i,e, date of execution of transfer deed till date be paid to defendant No,1 seller.
The Saudi Pak Leasing Co. Ltd. Filed application under section 151, C.P.C. (C.M.A. No,8724 of 2005) on 27-10-2005, i,e, after about 10 months of paying of claim, but did not claim any interest over the above the amount of Rs,31,100,140 and for the first time by listed application, filed on 4-2-2006, they are now asking that they are entitled for the profit by way of compensation. Since said party himself agreed to accept Rs,31,100,140 in full and final settlement of lease rentals for the leased assets and transferred the assets in favour of the purchaser on receipt of the amount and admitting SPL has not transferred leased assets till the transfer deed executed by SITE in favour of the purchaser, they are not entitled for any profit on the amount invested by the Nazir.
Nazir is directed to release the amount in terms of the compromise decree and, in terms of the order hereinabove disburse the same to respective parties.
The listed-applications and Nazir's Reference are disposed of in the above terms.