' MUHAMMAD ZAHOORUL HAQ, J.-This is an appeal by the Karachi Municipal Corporation against the judgment and decree passed by a learned Single Judge of the West Pakistan High Court, Karachi Bench, Karachi in Suit No, 1020/1965 dated 21st June 1968, by which the suit of the Karachi Municipal Corporation for specific performance of the agreement for the purchase of Karachi Tramways Company with the buildings, stores and rolling stock connected therewith was dismissed in favour of Messrs Muhammad Ali Shaikh Isma il jee, who were the transferees of the said Tramways in Karachi.
2. The facts leading to the suit were that on or about 21st of April 1882, the Commissioner of Karachi Municipal District, predecessor of Karachi Municipal Corporation, by an agreement granted to Edward Davis Mathews, who later assumed the name of East India Tramways Company, the right to construct and maintain Tramways in Karachi upon the terms and conditions prescribed thereunder. Statutory authority for the same was provided in "The Karachi Tramways Act, 1883. The relevant clauses 20 and 21 of the said agreement are reproduced hereunder.
"The Municipality shall have the right of purchasing the said tramways with the plant, buildings, stores, rolling stock and everything connected therewith upon the expiration of twenty-one years from the date of opening the first section of traffic upon declaring its intention so to do by notice in writing to be given to the Grantee less than six months before the expiration of the said 21 years and shall have a renewed right of purchase at the end of every seven years after the expiration of the said 21 years upon similar notice being given and the consideration for such purchases shall be a cash payment of one and two-fifths of the amount of the invested capital of the Guarantee or securities of the Government of India, or Securities the interest whereon shall have been guaranteed by the Secretary of State for India in council of such amount as to produce at the rate of interest current on such securities seven per cent per annum on the said invested capital, and if the consideration for such purchase shall be given in such securities as aforesaid the Grantee shall be entitled to have in addition a first mortgage of all the property, assets and profits of the Tramways which shall have been purchased from him.
(2) In the event of the Municipality failing to declare its intention as above provided to purchase the property of the Grantee the terms of this contract shall continue in force."
3. The right to repurchase the Tramways by Municipality was also provided under section 29 of the Karachi Tramways Act, 1883 which is produced below :- Section 29.-"The Municipality shall have the right of purchasing the tramways, with the plant, building, stores, rolling stock and everything connected therewith, upon the expiration of twenty- one years from the commencement of this Act, upon declaring its intention so to do in writing not less than six months before the expiration of the said twenty-one years, and shall have a renewed right of purchase at the end of every seven years after the expiration being given, and the consideration for such purchase shall be a cash payment of one and two-fifth of the amount of the invested capital of Grantee or the securities of the Government of India, or securities the interest whereon shall have been guaranteed by the Secretary of State of India in Council of such amount as to produce at the rate of interest current on such securities, seven per cent, per annum on the amount of the said invested capital and, if the consideration for such purchase shall be given in such securities as aforesaid, the guarantee shall be entitled to have in addition a first mortgage of all the property assets and profits of the tramway or tramways which shall have been purchased from him."
' Another relevant provision of the Agreement upon which reliance was placed by the learned counsel for the appellant Mr. Muslim Naqvi, is clause 19 of the Agreement which is also reproduced below :- "Clause 19.-From and after the commencement of 15th year of this contract to the end of the twenty-first, the Grantee shall not be at liberty to enter upon any fresh engagements or expenditure which would increase his capital account in connection with this contract without first notifying his intention to the Municipality and obtaining their approval thereof and sanction thereto in writing."
4. Section 30 of the Tramways Act allowed Tramways Company to sell their rights or privileges or assets to anyone and it is alleged that the present respondent purchased the said tramways in 1949. It seems that the Karachi Municipal Corporation was also intending to purchase the Tramways from the owner for sometime before and after Partition but they finally decided to take over the Tramways in 1949, and therefore, they got a notice published in the newspapers on 16-3- 1949, expressing their intention of acquiring said Tramways. They served a notice upon the respondent on 8-10-1952 as required by 'section 29, Karachi Tramways Act, declaring the intention of the Karachi Municipal Corporation, to purchase the Tramways and also sought information from them to state the consideration the respondents claimed for the transfer. This was done by their Letter dated 15-12-1952, Exh.
18. By Exh. 19 dated 27th December 1952, respondent informed the appellant that the compensation payable will amount to Rs, 72,000. The respondent elaborated the details of Rs, 72,000 by their letter dated 4th February 1953 by Exh.
20. The appellant however, did not agree with that figure and therefore in accordance with clause 26 of the agreement, they wanted to refer the matter to arbitration and by their latter dated 4-4- 1953, Exh. 21 they appointed Mr. Azhar as their arbitrator. Thereafter some correspondence ensued between the parties and on 19th April 1953, the Karachi Municipal Corporation by their letter Exh. 25 informed the respondent that the right to purchase the Tramways has accrued today and the respondent will be informed as soon as the consideration has been fixed finally in the arbitration proceedings, whether it has been decided to exercise the right or not to exercise it. By their letter dated 29th April 1957, Exh. 26, the respondent appointed their arbitrator namely Khawaja Nazeer Ahmad but thereafter nothing seems to have been done for good deal of time. Karachi Municipal Company probably slept over the matter as it is apparent from the letter Exh. No, 28 dated 16-2-57 addressed by the Municipal Commissioner to the Chief Commissioner, Karachi.
5. However, the Karachi Municipal Corporation again gave notice to respondent on 15th October, -1959 under section 29 of Karachi Tramways Act, of their intention to purchase Tramways on 19th April 1960. The consideration for the purchase was to be in accordance with section 29 of the Karachi Tramways Act. This was done by Exh.
29. However, nothing happened between 15th October 1959, till 30th October 1961, when the appellant by their letter Exh. 30 demanded from the respondent to supply copy of the last audited balance-sheet and accounts of the Tramways Company, whereupon further correspondence ensued between the Tramways Company and Karachi Municipal Corporation. On. 18th June 1963, vide Exh. 33, the respondent informed the Karachi Municipal Company that the right of purchase by Karachi Municipal Corporation will only secure now in April 1969, as Karachi Municipal Company had failed to take necessary steps in pursuance of the notice of 15th Oct., 1959 for purchase of the undertaking. Thereafter, the appellant filed suit for the specific performance of the contract on 2nd October 1964. Written statement was filed by the respondent on 23-10-1965. The claim of the appellant was denied and it was asserted that the appellant was not serious in their intention to purchase and thereafter issues were framed. But while the suit was pending, on 18th October 1966, the appellant vide Exh. 28/1 gave another notice to the respondent under section 29 of the Karachi Tramways Act of Karachi Municipal Corporation's intention to purchase the Tramways on the 19th April 1967. This notice was given as an abundant precaution lest the suit already filed by Karachi Municipal Corporation may not succeed on any technical ground.
6. In pursuance of this notice, the application for amendment of plaint was made by the appellant and the same was granted by the Court and consequently an amended plaint was filed, adding para. 5-A to the plaint. The amended written statement was also filed, the validity and factum of notice dated 15-10-1966 was denied. The issues were amended by consent sent on 21-3-1967. And the final issues framed were to the following effect :- "(1) Is the suit maintainable under the terms of the Agreement and statutory provisions relied upon by the plaintiffs in paras. 2 and 3 of the plaint?
1-(A) Has the plaintiff served on the defendant any valid notice on 18-10-1966.
If so, its effect?
1-(B) Has the plaintiff served on the defendant a valid notice on 18-10-1966.
If so, its effect?
(2) Has the defendant wrongfully failed and neglected to complete the sale as allegedly by the plaintiff?
(3) Has any cause of action accrued to the plaintiffs?
(4) Is the defendant entitled to the amount claimed in para. 7 of the written statement?
(5) On payment of what amount is the plaintiff entitled to a decree for specific performance?
(6) To what relief, if any, is the plaintiff entitled?"
7. The appellant examined P. W. 1 Mr. Shabbir Ahmad who is clerk in the prosecution branch of the Karachi Municipal Corporation, who proved that notice Exh. 38/1 dated 18-10-1966 was issued by the prosecution branch of the Karachi Municipal Corporation. He stated nothing beyond that of any significance. The appellant also examined P. W. 2 Pir Muhammad Siddique the Town Inspector of Central Telegraph and P. W. 3 Tasneem-ul-Hassan, Clerk in Karachi Kutchari Sub-Post Office, P. W. 4 Akram Ali Rizvi, bailiff of Karachi Municipal Corporation, P. W. 5 Tughral Khan of the Law Department, Karachi Municipal Corporation. All these witnesses have been examined only to prove that the notice Exh. 38/1 dated 18-10-1966 had been issued by Karachi Municipal Corporation and received by the respondent and also on the point that a telegram similar to notice Exh. 38/1 had also been issued by the Karachi Municipal Corporation. The appellant Karachi Municipal Corporation also examined Abdul Waheed Khan, Assistant Engineer Roads Karachi Municipal Corporation who stated that no permission had been obtained for addition and alteration by the respondent from the appellant. These witnesses also made a statement about discontinuance of user of some of the routes of the tramways. The respondent had examined D. W. 1 Mr. Anwar Muhammad Ali, who is partner of the respondent. He filed large number of photostat copies of the audited balance of the Company. He also produced a large number of documents and correspondance between the parties. He has tried to prove the investments made by the company. He has also tried to prove a claim for damages against the Karachi Municipal Corporation on account of their Order of cancelling some of the routes of the Tramways. In this state of evidence, the learned Judge examined the evidence and the documents and correspondence on record and then he dismissed the suit of plaintiff/appellant on 21st of June 1968. He held that the defendant-Company did not wrongfully fail and neglect to complete the sale as alleged by the plaintiff. This was a decision on Issue No, 2 which was the most important issue as far as the specific performance of the agreement was concerned. He also held that the consideration for purchase of the Tramways was to be Rs, 72,000 and that the defendant/respondent would be entitled to this amount if the plaintiff succeeded in their claim for specific performance of the contract. He however, disallowed the claim of the defendant/respondent for Rs, 58,000 and Rs, 20,000 on account of losses and damages as there was no proof about it.
8. In respect of the issues 1-A and 1-B, the learned Judge held that the plaintiff/appellant had served notice on the defendant on 18-10-1966 but he did not determine the effect of the same. The Karachi Municipal Corporation, therefore, filed the present Latters Patent Appeal.
9. Mr. Muslim Naqvi, learned counsel for the appellant had vehemently argued that the judgment of the learned Single Judge is completely wrong and unjustified. He has particularly attacked the finding in respect of the issue No, 2 and he says that the learned Judge should not have taken into consideration whatever happened before October 1959 as the Karachi Municipal Corporation had a right in law to exercise their option of purchase after every 7 years. He has stated that the letter dated 12-10-1963 Exh. 49/21 could not be taken into consideration by the learned Judge as the same had not been proved. Mr. Muslim Naqvi had further contended that learned Judge should not have taken into consideration the cost of any alterations and additions made by the company towards investments made by the company as the same had been made without the approval of the Karachi Municipal Corporation in writing and the same was therefore in breach of clause 19 of the agreement and the Karachi Municipal Corporation could not be called upon to pay compensation as consideration for the transfer of the Tramways which was based on such additions and alterations. Mr. Muslim Naqvi also attacked the impugned Judgment as incomplete as the affect of the notice dated 18-10-1966 had not been determined by the learned Single Judge.
10. We however, find that the learned Single Judge has thoroughly gone into the matter and after considering the evidence and various documents produced he has come to the finding that the Karachi Municipal Corporation was not serious in its intention to purchase the Tramways. The learned Judge was quite justified in taking into consideration the conduct of the Karachi Municipal Corporation right from 1949 as the genuineness of the intention expressed in 1959 had to be seen in the light of the intention previously expressed but not pursued to its logical end. The Karachi Municipal Corporation intended to purchase the Tramways Company in 1949 and they had started making some effort in 1952 for the purchase of the company and in 1953 they in fact appointed an arbitrator to go into the question of the compensation which should be paid to the Tramways Company but after the exit of Mr. R. A. F. Horway the then Municipal Commissioner, the matter seems to have been completely forgotten by Karachi Municipal Corporation and the arbitration was not pursued. The respondent by their letters Exhs. 19 and 20 respectively dated 27th December 1952 and 4th February 1953 had given the information that their investments had amounted to Rs, 52,000 and based on the formula of Article 20 of the Agreement the consideration for purchase would amount to Rs, 72,000. If the Karachi Municipal Corporation did not agree with the said figure, it could be resolved only through the process of arbitration or through Court, but none was seriously pursued till 1959.
11. Again after giving the notice of intention to purchase on 15th October 1959, vide Exh. No, 29 the Karachi Municipal Corporation did nothing thereafter to offer the price which had been demanded by the respondent but on the other hand they simply stated that the consideration will be strictly in accordance with the provisions of section 29 of the Karachi Tramways Act. This again meant the opening of the same controversy about the ascertainment of the costs of the investments of the Tramways Company and thus uncertainty of the final consideration. If the Karachi Municipal Corporation did not agree with the sum of Rs, 72,000 then it should have immediately pursued the arbitration under clause 26 of the agreement and got the consideration finally determined but without doing any such thing they slept over the matter for 2 years and then even on 30th October 1961 by Exh.
30. They merely demanded a copy of the last audited balance-sheet of the account. Some correspondence has ensued thereafter between Tramways Company and Karachi Municipal Corporation about valuation of the Tramways but nothing was finalised as the respondent/defendant were resisting the attempt of the Karachi Municipal Corporation at soliciting different information. On 8th May 1963, Karachi Municipal Corporation finally called upon the respondent to finalise the sale within 6 weeks from the receipt of the notice and made time of the essence of the contract. But since the consideration had not been finalised and the Karachi Municipal Corporation had been objecting to the figure of Rs, 72,000 therefore the logic of this final notice is difficult to comprehend. This letter does show that Karachi Municipal Corporation was insisting in purchasing the property but it hardly shows any genuineness on their part to acquire the same as they had not made any serious effort to finalise the consideration to be paid for the purchase of the Company. After all they could not insist that the Tramways be given to them for nothing. There was a delay of about 4 years between 15th October 1959 and 8th May 1963. The reply of the respondent to this letter of the Karachi Municipal Corporation Exh. 36 was quite obvious.
Therefore, on 18th June 1963, vide Exh. 33 the respondent clearly told the appellant that they had failed to take the necessary steps in pursuance of the notice for purchase of the undertaking and therefore, they could exercise their right of purchase only in April 1967. The appellant Karachi Municipal Corporation has examined 6 P. Ws. And no one has deposed in respect of the genuine intention on the part of the Karachi Municipal Corporation to pay the consideration in fact P. W. 1 to 5 examined only to prove despatch and receipt of notice dated 18-10-1966. Only P. W. 6 was somewhat a responsible Officer of the Karachi Municipal Corporation but he confined himself only to stating that no permission had been obtained by the Tramways from the Karachi Municipal Corporation for any additions or alterations. No responsible Officer has come forward to state that they were prepared to pay the consideration in accordance with the formula prescribed in clause 20 of the agreement or such investment as was determined by the Court. In fact on the other hand Karachi Municipal Corporation had been challenging the investments without making any efforts to obtain a final decision. They had not even made any unequivocal declaration of purchase on the relevant date viz. 7-4.1960 that they have decided to exercise their right of purchase.
12. In these circumstances, the learned Single Judge was right in deciding Issue No, 2 against the appellant Karachi Municipal Corporation.
13. Mr. Muslim Naqvi's contention that the letter Exh. 49/21 dated 12-10-1953 written by H. S. M.
Ishaque for Commissioner, Karachi to the respondent was not proved according to law and it could not be considered by the learned Judge had pursuaded us to scrutinize the record. This letter stated that it has been decided to maintain status quo in the matter till an elected body of the Karachi Municipal Corporation has been instituted. This letter has received attention of the learned Single Judge and he has based his finding about the genuineness of the Karachi Municipal Corporation's intention to purchase the Tramways on this letter as well as other correspondence.
We however find the objection of Mr. Naqvi untenable. When this letter was produced by D. W. 1 Anwar Muhammad Ali along with certain other letters there was no objection from the plaintiff's counsel for the said production and on the other hand, the learned counsel for the Karachi Municipal Corporation Mr. Hyder Ali has stated before the Court that he had brought the file containing the documents and wished to produce the same through cross-examination of the said witness Anwar Muhammad Ali. It is, therefore, now futile for Mr. Muslim Naqvi to argue that this letter could not have been produced or taken in consideration.
14. The 3rd point which Mr. Muslim Naqvi strongly contended that any alteration or addition made by the Tramways Company without approval of the Karachi Municipal Corporation should have been ignored in arriving at the compensation figure as clause 19 clearly requires approval to be obtained by the Karachi Tramways Company before making additions and alterations. The argument seems to be quite attractive but on close scrutiny, we find that this clause 19 was operative only from the commencement of 15th year of the contract between the Karachi Municipal Corporation and Tramways Company to the end of the 21st year of the contract and since the said contract was executed on 21st April, 1882, therefore, this bar of taking approval from Karachi Municipal Corporation came to an end on 21st April 1903 and thereafter the Tramways Company was completely free to make any additions or alterations without the approval of the Karachi Municipal Corporation. This submission of Mr. Muslim Naqvi is therefore, of no force.
15. The last contention of Mr. Muslim Naqvi, which is vehemently argued is that the learned Single Judge has failed to determine the effect of the service of notice dated 18-10-1966. We find that learned Judge had framed an issue about the service of the notice and its effect. He came to the conclusion that the notice had been served but he gave no finding as to what is the effect of the said notice. We however, find that apart from serving of this notice dated 18-10-1966, the Karachi Municipal Corporation had done nothing to put their intention of purchase into effect. They did not declare on 17th April 1967, that apart from their intention as expressed on 18-10-1966 they had now decided to purchase the property in April 1967. Moreover, they did not take any step to get the consideration of purchase finalised but on the other hand they again insisted on stereotype repetition of compliance with the provision of section 29 of the Tramways Act in respect of purchase price. They did not even offer that they would be willing to pay whatever price is determined by the Court. They have challenged the figure of Rs, 72,000 even in this appeal without furnishing any proof in rebutta of the same. Thus, there was no serious intention on their part and the had taken no overt act to show that they were serious and sincere in their desire to purchase the Tramways and they were prepared to pay reasonable compensation for the same, although the respondent company as early a February 1953, as clearly had given the figure of Rs, 72,000 as the considerstion for purchase of the Tramways. Its letter of 18-10-1966, was therefore, mere pious wish on the part of the Karachi Municipal Corporation to acquire the Tramways, without any serious efforts on their part to back their intention. The Karachi Municipal Corporation has not examined any or evidence in respect of their intention in 1966 through any senior Officer an hence there was hardly any effect of this letter. In fact the previous conduct of the Karachi Municipal Corporation about which the learned Judge' finding is that the Karachi Municipal Corporation was not serious in taking over the property, has adverse effect upon this intention expressed o 18-10-1966 as well and makes it mere hollow intention.
16. In view of these circumstances, the appeal is dismissed. There would however be no order as to costs as one contention of Mr. Muslim Naqvi, was found to be correct that the effect of notice dated 18-10-1966, had not been determined. We may mention that Mr. Mohsin Tayabali, learned counsel for the respondent had stated that parties had compromised the matter and had filed an application to that effect. But Karachi Municipal Corporation had refuted this position and had contended that the then Minister concerned had taken certain action without caring for the interest of the Karachi Municipal Corporation since the consideration of this application would have involved recording of evidence and consequent delay we have therefore ignored the alleged compromise and have decided the appeal on merits. The decision of this appeal would not bar the right of Karach Municipal Corporation, if any, to exercise the option of purchase of Tramwa in 1981, if there is any property left by that time.
1. MAHMUD, J.-I agree.