Mrs. QAISER IQBAL, J. - This High Court Appeal under Section 3 of the Law Reforms Ordinance, 1972, is directed against the judgment and decree dated April 21, 1982, passed in Suit No. 18/1972, whereby the appellant's suit for specific performance was dismissed.
2. The brief facts, as enunciated in the Plaint of the referred suit, are that respondent (since deceased) was allotted plot of land bearing No. 177/1-A, measuring 2000 square yards. Block 3, PECHS, Karachi (hereinafter called as the said property). On June 9, 1962, the said respondent entered into an Agreement with respondents Nos. 2 and 3, for valuable consideration, for the sale and transfer of the said Property, at the costs of respondents Nos. 2 and 3. The respondent No. 1, through his attorney obtained sub-lease deed of the said Property, which was got registered on August 6, 1965. On December 6, 1968, the respondent No. 1, with the consent of respondents Nos. 2 and 3, agreed to sale, transfer and convey the said property, with construction thereon, to the appellant, for the total sale consideration amounting to Rs. 152,000/- and in pursuance thereof the appellant paid to the respondents Nos. 2 and 3 a sum of Rs. 15,000/- as earnest money, for which a receipt was also issued by them in favour of the appellant. The balance was agreed to be paid to respondent No. 1 in presence of the respondents Nos. 2 and 3, at the time of execution and registration of Conveyance Deed of the said property and at the same time the appellant was required to pay the balance sale consideration and simultaneously the respondent No. 1 was required to hand over the vacant peaceful physical possession of the said property to the appellant. In the said agreement, it was also averred that time for completion of the transaction on or before February 28, 1969, was the essence of the said agreement.
3. It is pleaded that the appellant, orally, through letters and telegrams, called upon the upon the respondent No. 2 to perform his part of the contract under the said Agreement but he neglected and refused to perform his part of obligation, therefore, the appellant had resorted to i.e the above-referred suit.
4. In the written statement, filed on behalf of respondents (now deceased), through their duly constituted attorney Qazi Ibadur Rehman, set-up the case that the appellant had entered into four, agreements with the respondents: first agreement was executed on December 18, 1967 for consideration of Rs. 152,000/-, second agreement was executed on December 19, 1967 for consideration of Rs. 75,000/-, third agreement was executed on November 6, 1968 for consideration of Rs. 152,000/- and the fourth agreement was executed on December 7, 1968 for consideration of Rs. 75,000/-. It is denied that the respondents Nos. 2 and 3 were intermediary purchasers and they were not liable to bear the costs of stamp duty and registration charges. It is also averred in the written statement that the appellant had fraudulently concealed the above four agreements and their part performance. The time was the essence of the agreement as per clause 5 of the Agreements dated December 18, 1967. The transactions were to be completed within two months from the date of execution of the agreements and the respondents were required to obtain permission and necessary documents, which were required for completion of the transaction. The appellant after one year approached to the respondents for fresh agreement. The respondent obliged the appellant subject to amendment for seeking certificate of clearance of dues. He pleaded that under the instructions, the respondents had delivered the requisite documents to Mr. H.A. Rehmani, Advocate, for the purpose of completion of transaction. The respondent No'. 2 on the premise of the appellant for completion of the transaction and payment of Consideration entered into a transaction for purchase of an agricultural land in District Hyderabad. The respondents were busy in setting up some factory and did not show the interest to purchase the said property. The respondents approached the appellant's advocate for completing the transaction, which was avoided and ultimately appellant refused to perform his part of the obligation under the agreements. After one year had appellant addressed a letter to the respondents on account of escalation in the price of immovable properties in Karachi and emergency proclaimed in the year 1971, to perform their part of obligation under the agreements, which was not adhered to an account of appellant's avoidance to perform his part of obligation under the agreements.
5. The respondents had claimed damages to the tune of Rs. 70,000/- as a counter blast for loss sustained on account of non-performance of the contracts.
6. Upon pleadings of the parties, following issues were framed in the suit:-
(i) Whether the defendants delivered requisite papers to plaintiff in time in performance of their part of contract and the plaintiff failed to perform their part of the contract. If yes, what is its effect?
(ii) Whether plaintiffs were always ready and willing to perform their part of contract?.
(iii) Whether plaintiffs had specially, openly and clearly avoided the contract and the defendants had notice of that?
(iv) Whether the plaintiffs are putting up their plea in view of rise in property value in Karachi?
(v) Whether any cause of action has accrued to the plaintiffs? .
(vi) Whether the defendants are. Entitled to .Rs. 70,000/- as damages incurred by them due to non- performance of the contract by the plaintiffs?
(vii) To what relief, if any, the plaintiffs and defendants are entitled?
(viii) What should the decree be?
(ix) Whether the defendants are liable to pay Court on the amount of damages of Rs. 70,000/-, claimed by them in para 10 of their Written statement.
7. The perusal of i.e shows that this appeal was coming up for regular hearing since November.11, 1986 and on one ground of the other hearing of the appeal was adjourned. On May 26, 2006, the appeal was partly heard. On August 21, 2006, further arguments were heard in the appeal. On November 27, 2005, learned counsel for the respondents advanced further arguments and sought time to produce some case-law. Finally, on November 28, 2006, the appeal was heard at length.
8. During pendency of the Appeal, all the three respondents expired and their respective legal heirs were brought on record' by filing Amended Title Page in pursuance of Court's order dated January 17, 2003.
9. We have heard learned counsel for the respective parties and with their assistance have gone through the material available on the record.
10. Learned counsel for the appellant has contended that the predecessors of the respondents (since deceased) had agreed to sell the said property for the total sale consideration amounting to Rs. 152,000/- to the appellant and had paid a sum of Rs. 15,000/-, to the predecessors of the respondents, as earnest money for the same but neither conveyance/sale-deed was registered nor possession of the said property was delivered to the appellant. Consequent thereupon the appellant entered into an agreement of sale dated December 18, 1967, with predecessors of respondents Nos. 2(d) to (d) & 3(a) to (f), for the total sale consideration of Rs. 152,000/-. The transaction was required to be completed within two months thereof. In any view of the matter performance of the agreement sought was executed on December 19, 1967, re-affirmed the execution of the Agreement dated December 18, 1967 and December 19, -1967 shall be deemed to be subject to this agreement and priority shall remain with the first agreement. The findings of the learned Single Judge on Issue No. 1 that the requisite papers concerning the said property were delivered to the appellant within time and they had failed to perform their part of the contract is not in conformity with record as the documents were filed by the predecessors of the respondents on August 9, 1974 and March, 18, 1979. Twenty documents filed by the predecessors of the respondents were brought on record (Exhibits 5 to 24 to the affidavit-in-evidence of appellant), which were construed to be the documents delivered by the predecessors of respondents Nos.
2(d) to (d) & 3(a) to (f), to the appellant. Necessary documents were not delivered by the predecessors of the respondents to the appellant for completing the sale transaction of the said property. As a matter of fact, list of documents, filed by the predecessors of the respondents reflects that the original documents were in possession with the predecessors of respondents Nos.
2(d) to (d) & 3(a) to (f), therefore, by no stretch of imagination it can be held that the necessary documents required for completion of the transaction were delivered to the appellant, although he was ready and willing to perform his part of the obligation under the agreement.
11. Conversely, much emphasis has been laid by learned counsel for the respondents Nos. 2 & 3 that the execution of the consolidated four sale agreements by the parties connotes that it was against the public policy and the fraud had been played by the appellant upon the respondents as the Agreement for a sum of Rs. 75,000/- was executed with ulterior motives and to avoid the payment of income tax, stamp duty and other ancillary charges. In this context, reliance has been placed upon the Words and Phrases, Volume 35 (Proxy "Public System") and at page 476 the word "Fraud" has been defined, as follows:--- "Fraud: The status of frauds is not a mere "rule of evidence" but is a declaration of "public policy". Holland Furnace Co. v. Keystone Dehydrating Co., 30 A. 2d 872, 874,151 Pa. Super, 495."
12. On the same page it has been expressed that "where litigant has attempted to use the Courts for a fraudulent purpose and failed, "public policy" forbids prosecution of another suit involving the same subject-matter and parties, Le Furgey v. Beck, 13 So2d 179, 182, 244 Ala. 281.
13. It is next contended by (earned counsel for the respondents that "public policy" is a principle under which freedom of contract or private dealing is restricted by law for the good of the community and such contract if enforced would injuriously affected Substantial part of public, therefore, generally not enforceable being against the public policy for the reason its consideration is illegal and immoral. Thus, public policy is' a policy which must be, established either by law, by Court or by general governing consent.
14. As against the above proposition, learned counsel for the appellant has contended that the appellant has sought performance of the agreement on the basis that it contains highest consideration. The predecessors of respondents Nos, 2(d) to (d) and 3(a) to (f), were also signatories of the agreements,- sought to be enforced, therefore, it cannot be held that the agreement was without consideration and against public policy and no fraud had been played by the appellant with the Court as the predecessors of respondents Nos. 2(d) to (d) & 3(a) to (f), were conscious of the fact that consequences of execution of more than one sale agreement for the purpose of avoiding to pay stamp duty and income tax charges on lesser amount than contained in the agreement sought to be performed in the present lis. The testimony of Qazi Ibadur Rehman (Exhibit 30), attorney of the predecessors of respondents Nos. 2(d) to (d) & 3(a) to (f), reflects that the deal was actually settled for Rs. 152,000/- but the attorney wanted sale/conveyance deed to be executed for Rs. 75,000/- and had promised to pay the differential amount in cash. Defence witness-Makhdoom Noor Mustafa Shah, respondent No. 2 (since deceased) had also admitted execution of the sale agreement in the year 1968. Prior to it, two agreements, executed in the year 1967, were in line between the parties executed in the office of Mr. H.A. Rehmani, Advocate. In any view of the matter it is spelled out from the evidence adduced by the predecessors of respondents Nos. 2(d) to (d) & 3(a) to (f), that the previous two agreements were burnt followed by the third agreement for a sum of Rs. 152,000/-, while subsequent agreement was for Rs. 75,000/- for obtaining income tax clearance certificate from the Income Tax Officer at Rahim Yar Khan. The arrangement between the parties was on the basis of the convenience. The agreed sale consideration for the sale and transfer of the said property was Rs. 152,000/-.
15. Learned counsel for the predecessors of respondents Nos. 2(d) to (d) & 3(a) to (f), has relied upon the principle pari delicto portitor est condition possisdendi and contended that it is fundamental doctrines of all civilized systems of jurisprudence that a Court of law shall not lend its aid to enforce a transaction, which is tainted with fraud. In support of the above contentions, reliance is placed on the following case law:-
(a) Qadir Bukhsh v. Hakam (AIR 1932 Lahore 503); .
(b) Basheshar Nath and others v. Municipal Committee Moga (AIR 1940 Lahore 69);
(c) Bindeshari Prasad v. Lekhraj Sahu & others (AIR 1916 Patna 284);
(d) Puvvada Venkata Subbayya v. Attar Sheikh Mastan (AIR (36) 1949 Madras 252);
(e) Nooruddin and others v. Mst. Amiran Bibi (1999 SCM R 2878);
(f) Mir Hashmat Ali v. Birendra Kumar Gosh & others (PLD 1965 Dacca 56);
(g) Muhammad Amin, etc. v. Mian Muhammad (PLD 1970 BJ 5); and
(h) Abdul Hamid v. Abbas Bhai-Abdul Hussain Sodawaterwala (PLD 1962 SC 1).
16. In the case of QADIR BUKHSH (supra), it was held that a person, who has polluted his hands, by being a party or privy to a fraudulent transaction, shall not be allowed to approach the fountain of justice with his own infamy on his lips and obtain relief on the strength of such a transaction. The moment he relies on such an agreement he will be told nemo allegans suam turpitudinem audiences est.
17. It was observed in the case of BASHESHAR NATH (ibid) that Section 56(j) rests on the maxim that he who seeks equity must do equity and impies that a plaintiff seeking an injunction must come with clean hands, A plaintiff, who asks for an injunction, must be able to satisfy the Court that his own acts and dealings in the matter have been fair and honest and free from any taint of fraud of illegality and that if in his dealings with the person against whom he seeks relief or with third parties, he has acted in an unfair or inequitable manner, he cannot have relief.
18. The dictum laid down in the case of BINDESHARI PRASAD (supra) is that where an illegal purpose of a void contract has been executed in whole or in material part by parties, who were pari delicto in procuring and carrying out the illegality, Court of Equity will not only refuse to enforce the obligations created or to restore the property given away, under the illegal contract, but will al?o refuse to grant a relief by way of declaration, inasmuch as in principle there is no distinction between the declaratory relief and the other reliefs.
19. In the case of PUWADA VENKATA SUBBAYYA (above), it was held that an agreement being inherently illegal and opposed to the public policy and the parties being in pari delicto, the Court can render no assistance in enforcing it, hence is not entitled in any case of recover under Section 65 of the Contract Act, the money paid by him for the purpose of the shops.
20. The examination of the other remaining authorities suggests that all are identical on the rule enunciated that hewhole seeks equity, must do equity and Court of equity will refuse to enforce obligation under void agreement.
21. Adverting to the next contention whether time was the essence of the agreement in terms of Section 55 of the Contract Act, 1872 ("Act, 1872") much emphasis has been laid by the learned counsel appearing fdr the appellant that contract does not become violable by failure to do a thing at or before the specified time unless such was intention of the parties. It is borne out from the Sale Agreement (Exhibit 5) that as per covenant No. 8 that parties had agreed that the transaction if not delayed by some legal hindrance or unavoidable circumstances would be completed bn or before February 28, 1969. The covenant No. 9 of the said Agreement provided that in case any defect in the marketable and unencumbered ,title of the predecessors of the respondents (Vendors) and/or if any impediment or obstruction is found due to any reason due to the predecessor of respondent No. I (Vendor) or intermediary purchasers (predecessors of the respondents Nos. 2 & 3), on account of which or in consequence whereof the sale/conveyance deed was not executed and registered in favour of the Vendee (appellant), the predecessors of the respondents would severally and jointly indemnify fully the Vendee (appellant) for such loss. This would be without prejudice to the right of the Vendee (appellant) to get this Agreement specifically enforced and performed against the predecessors of the respondents. The right of specific performance of the agreement by the Vendee (appellant) would be considered on the basis of this agreement (and not on the afore-said subsequent agreement) in case of breach by the predecessor of respondent No. 1 and/or by predecessor of respondents Nos. 2 & 3 of the provisions of the agreement; In case the Vendee (appellant) make any breach of these presents or put any obstruction or due to any other reason they avoid unfaithfully in the due execution of the sale-deed they would fully indemnify the intermediary purchasers (predecessors of the respondents Nos. 2 & 3) severally and jointly for the loss which may be suffered by them through breach on part of the vendee (appellant).
22. It was vehemently contended by learned counsel for the appellant that time specified in the agreement cannot be presumed to be the essence of the contract as the true intention of the parties are required to be gathered from the terms of the contract and circumstances of the case.
It was further contended that the appellant was ready and willing to perform his part of the contract but on account of non-performance of the respondents Nos. 2 and 3 in terms of the covenants of the agreement time was extended.
23. Learned counsel for the respondents contended that on account of shortage of the money, the appellant' could riot arrange for execution of the sale/conveyance deed, which is not borne out from the record. Agreement does not contain any covenant relating to revocation of the agreement or forfeiture of the earnest money.
24. Conversely, the appellant was ready and willing to perform his part of the obligation under the agreement and had sent a telegram to Qazi Ibadur Rehman, attorney of the predecessors of respondents Nos. 2 & 3, two letters dated August 1, 1970, August 27. 1970, telegrams dated September 28, 1970 and November 26, 1971, which were not replied by the predecessors of the respondents but the predecessor of respondent No. 1 had promised to respondents in terms of Section 35 of Specific Relief Act, 1877 (Act, 1877), was to rescind an agreement and under Section 63 of .Act, 1872 promisee may dispense with or remit, wholly or in part, with performance of the contract or extend the time for such performance and Section 66 of Act, 1872, provides for communication or revocation of a proposal, The predecessors of respondents Nos. 2(a) to (d) and 3(a) to (f) had retained the earnest money, which also supports the existence of the contract' This factum has not been disputed by learned counsel for the respondents. Reliance is placed on the case of Karachi Port Trustees v. Ghulam AH Habib (PLD 1961 (W.P.) Karachi 623).
26. Adverting to the contentions raised by learned counsel for the appellant that the prices of immovable properties in Karachi have escalated to a greater extent. The question pertaining to the consideration tantamount to be reasonable is to be viewed with reference to the price prevailing at the time of completion of the agreement and not in context to the prices prevalent at the time of decision of the suit In this context, reliance has been placed on unreported cases in Suit No. 449/1969 decided on March 3, 1988 by learned Single Judge of this Court. Civil Petition No. K- 185/1983, decided by Hon'ble Supreme Court of Pakistan on January 23, 1984 and judgment dated March 31, 2001 in High Court Appeal No. 72/1988, passed by a Division Bench of this Court.
27. We are inclined to hold that simple increase in the value of the said property cannot be a ground for refusal of specific performance of the agreement as the subject is to be viewed with prices prevalent at the time when the parties entered into with the said Agreement. However, at this juncture learned counsel for the appellant, after obtaining instructions from the client, has submitted that the appellant would be ready in pay a sum of Rs. 1,000,000/- to the respondents in addition to the amount already paid.
28 In view of the above circumstances, the impugned judgment is set aside. High Court Appeal is hereby allowed. The Civil Suit No. 18/1972, stands decreed, as prayed, subject to payment of Rs. 1 million.
29. Above are the reasons of our short order dated November 28, 2006, by which we had allowed the High Court Appeal, in the following manner:- "For reasons to be recorded, the appeal is allowed, the impugned judgment is set aside and the suit is decreed as prayed subject to payment of an amount of Rs. 1 million rather than the original sale consideration as agreed by the learned counsel for the appellants. The parties to bear their costs.