' FAISAL ARAB, J.--- These 2nd appeals are continuation of the proceedings that started with the filing of a suit seeking the relief of specific performance of the contract in relation to 95 acres of land situated in Deh Khanto, Landhi, Karachi. The suit was filed by a private limited company Haji Suleman Goawala and sons Limited through its Managing Director, Iqbal Suleman Goawala against owners of the above mentioned 95 acres of land belonging to Dawood family.
2. The suit was originally filed in this Court and numbered as Suit No,101 of 1975. Upon change of pecuniary jurisdiction of this Court, the suit stood transferred to the Civil Court, Malir and re- numbered there as Suit No,339 of 1996. The suit was dismissed on 29-4-2004, against which appeal was preferred which was allowed by the Additional District Judge, Malir vide his judgment dated 23-12-2005. This judgment passed in first appeal is being impugned in these three separate 2nd appeals that have been preferred by the owners of the lands and are being disposed of through this common judgment.
3. For convenience sakes, the appellants of these appeals, who are owners of 95 acres and were defendants in the suit, shall be described in this judgment as 'the defendants' and the respondent, who was plaintiff in the suit, shall be described as 'the plaintiff'.
4. The case of the plaintiff in the suit was that negotiations between Mr. Iqbal Suleman Goawala, the Managing Director of the plaintiff and Mr. Ahmed Dawood, the head of the Dawood family culminated in a deal for the sale of 95 acres of land at a price of Rs,3,000 per acre i,e, for Rs,285,000 for the entire 95 acres. Mr. Goawala paid an advance payment of Rs,100,000 to Mr. Ahmed Dawood through Cheque No,CBY-447371 dated 31-10-1974. It was also the case of the plaintiff that transaction was agreed to be completed within 15 days. According to the plaintiff, this deal was struck with Mr. Ahmed Dawood after all other defendants who owned the land concurred with the transaction. The cheque dated 31-10-1974 for Rs,100,000 paid towards advance, was cleared by the Bank on 4-11-1974 and upon such clearance, a receipt dated 4-11-1974 was issued to the plaintiff. It was also the case of the plaintiff that in spite of several reminders, when the defendants failed to complete the transaction within the stipulated period of 15 days, the plaintiff became suspicious, which led to serving of legal notice dated 17-12-1974 on the defendants. In the notice, the plaintiff called upon the defendants to get the transaction completed within the next 15 days, failing which legal action for seeking specific performance of the contract as well as for damages would be initiated.
5. The plaintiff's legal notice dated 17-12-1974 was replied by the defendants though their counsel's letter dated 31-12-1974. In the reply, the defendants disputed the sale consideration amount and claimed that it was settled at Rs,6,00,000 and not Rs,2,85,000. It was also claimed in the reply that the balance sale consideration amount of Rs,5,00,000, was to be paid by the plaintiff within seven days from the date of the issuance of the cheque dated 31-10-1974 and as time was made the essence of the contract, hence according to the defendants, upon plaintiff's failure to make the payment by 7-11-1974, the contract came to an end and the advance amount in terms of the oral agreement was to be returned back to the plaintiff. In the defendants' reply dated 31-12-1974 it is clearly mentioned that Cheque bearing No,CBW 574892 dated 8-11-1974 for Rs,1,00,000, received as advance payment was returned under covering letter dated 8-11-1974 and handed over at the shop of the plaintiff on 9-11-1974.
6. On 24-2-1975 the plaintiff filed the suit for specific performance of the contract against the defendants wherein damages were also claimed in the alternative.
7. After going through the impugned judgment and the pleadings, basically following questions need to be examined by this Court:---
(I) Whether the parties had reached a concluded contract and if yes on what terms and was it binding also on defendants No,3 namely Suleman Dawood?
(II) Which of the two contracting parties committed breach of the contract?
(III) Whether the contract came to an end upon plaintiff's receiving back the advance payment of Rs,100,000 that it paid to the defendants on 31-10-1974 i,e, at the time of finalizing the deal?
(IV) Whether the Managing Director of the plaintiff company was legally competent to file the suit?
8. Mr. Farogh Naseem and Mr. Abid S. Zuberi, appearing for the defendants in 2nd Appeals Nos.9 of 2006 and 31 of 2006 respectively argued that there was no concluded contract between the parties. They submitted that firstly the receipt dated 4-11-1974 does not disclose as to what was the sale consideration that was settled between the parties and secondly it does not mention the time within which the transaction was to be completed. They therefore argued that there was no concluded and binding contract between the parties and it was for this reason the receipt dated 4-11-1974 was described as "Katcha receipt". Apart from the argument that the receipt did not evince a concluded contract, they further argued that receipt was executed 1 y a person who is not the exclusive owner of 95 Acres of land and submitted that a person who himself does not hold proprietary interest or authority on behalf of other owners, cannot lawfully bind them with the contract that he entered into with the plaintiff, if at all there was any concluded contract. They further contended that the burden of proof to establish a binding and concluded contract was on the plaintiff company, which it failed to discharge and the relief of specific performance being discretionary ought not to have been granted by the 1st Appellate Court. In this regard they relied upon the cases reported in 1979 CLC 280 relevant pages 341 and 344.
9. The defendants' counsel next argued that Mr. Asif Iqbal, who was one of the directors of the plaintiff company and appeared as its witness was only 14 years age at the time of the alleged transaction of sale and admittedly he was not even present at the time of negotiations. Therefore, they submitted that his statement is of no evidentiary value.
10. The defendants' counsel then argued that no board resolution was passed by the plaintiff company, authorizing its managing director to file suit against the defendants, therefore in absence of authorization to file suit, it was not maintainable in law and liable to be dismissed on this score alone. They contended that the minutes of board meetings that were produced by the plaintiff as Exh.6/14 nowhere make mention of the resolution authorizing its Managing Director to file the suit on behalf of the plaintiff company. They therefore submitted that the impugned judgment is liable to be set aside and the judgment and decree passed by the Civil Court whereby the suit was dismissed may be restored.
11. Mr. Mushtaq A. Memon, who appeared in 2nd Appeal No,9 of 2006 on behalf of the plaintiff argued that when the receipt dated 4-11-1974 is read with the contents of the defendants' letter dated 31-12-1974, it becomes quite apparent that a binding contract having all the ingredients of a concluded contract came into existence. He further submitted that defendants' letter dated 31-12- 1974 is duly acknowledged and owned by the defendants in their written statements while making reply to paragraphs 6 to 17 of the plaint and therefore the only controversy that remained to be decided was as to what was the actual sale consideration settled between the parties i,e, whether it was 2,85,000 or 6,00,000 and this can be ascertained by appreciating the evidence that has come on the record of the case. He then submitted that evidence clearly establishes that fact that the sale consideration was settled at Rs,3,000 per acre i,e, Rs,2,85,000 for the entire lot of 95 acres and not Rs,600,000 as claimed by the defendants. With regard to the defendants' argument that the receipt dated 4-11-1974 was not a binding and concluded contract, Mr. Mushtaq A. Memon relied upon the cases reported in 2004 MLD 1778 and 2005 MLD 1745 at page 1748 in order to show that receipt by itself can be termed as contract if it has all the ingredients of a concluded contract.
12. Mr. Mushtaq A. Memon also argued that the defendants during the pendency of the suit sought certain amendments to the written statements which were allowed subject to all just exceptions but this permission does not mean that under its garb the defendants can improve upon their case. He submitted that law does not permit a party to improve upon its case and deviate from its original pleadings as in proving ones case a party has to confine its case to its original pleadings.
He therefore submitted that any evidence that was led by the defendants beyond the original pleadings is not to be looked into.
13. Mr. Mushtaq A. Memon next argued that those defendants who have filed their separate written statements ought to have produced their witnesses and failure to do so means that they have no defence to offer. In support of this contention, he relied upon the cases reported in PLD 1970 SC 25, PLD 1975 SC 598, PLD 1977 SC 109 at page 133, 1979 CLC 338, 2003 MLD 205 at page 209, 2008 CLD 85 at page 91.
14. This is not a case where no one has appeared as witness on behalf of the defendants.
Defendant No,4 appeared as his own witness but due to his advance age and mental incapacity he was unable to continue with his deposition. On behalf of rest of the defendants, defendant No,1 appeared as witness. Where there is common cause or common defence then it is not necessary that each of the defendants should appear to defend their stand. Any of them can appear as witness.
15. In reply to the defendants' argument that suit was not competently filed, Mr. Mushtaq A. Memon referred to the provisions of Order XXIX, rule 1, of Civil Processed Code and relied upon the cases reported in 2003 SCMR 318, 1996 CLC 1064 at page 1067, 2003 CLD 1497 at page 1503, AIR 1937 Nagpur 379, PLD 1990 Lah.208 at page 210 and contented that suit was competently filed.
16, Mr. Khalid Anwar, who appeared for the plaintiff in Appeal No,31 of 2006 argued that in the second appeal filed under section 100, C.P.C., the questions of fact are not to be gone into and only questions of law are to be examined. He argued that the defendants in their respective written statements have owned the contents of the letter dated 31-12-1974, wherein the contract has been admitted and the only dispute that was raised in the letter dated 31-12-1974 was that the sale consideration was settled at Rs,6,00,000 and not Rs,2,85,000. He argued that the issue with regard to the actual sale consideration has already. Been decided by the 1st Appellate Court on the basis of evidence on record and therefore this question of fact cannot be gone into in this 2nd Appeal.
Mr. Khalid Anwar further argued that the defendants in support of the averments made in the written statements have not led any evidence to establish that the sale consideration was Rs,6,00,000 and the version of the plaintiff that the sale consideration was settled at Rs,2,85,000 having gone unchallenged, the same would not be open to question in 2nd Appeal. He supported this argument by submitting that when the plaintiff's witness P.W.1 deposed in his cross- examination that the sale consideration was Rs,2,85,000 i,e, Rs,3,000 per acre, no question was put to him in cross-examination. He submitted that when a party is not cross-examined on any point then such point is deemed to have been admitted by the other party.
17. Mr. Khalid Anwar next argued that absence of board resolution was not fatal to plaintiff's case as Article 31 of the Articles of Association of the plaintiff company duly authorizes its board to appoint any director to act as its Managing Director for a period of three years and Article 30 authorizes the managing director to run the affairs of the plaintiff company. He therefore submitted that on account of authorization contained in Articles 30 and 31 of the Articles of Association, there was no need for any resolution from the Board in order to authorize its Managing Director to file suit. He placed reliance on the cases reported in 1996 CLC 1064 at pages 1067, 2003 CLD 1497 at pages 1053, 2004 MLD 1778 at pages 1780, 2008 CLD 727 at pages 730, Muhammad Siddiq v. Australiasia Bank Ltd. PLD 1966 SC 684 at page 1067, Iftikhar Mamdot v. Ghulam Nabi Corp. PLD 1971 SC 550, Central Bank of India v. Taj-ud-Din Abdur Rauf 1992 SCMR 846, Pemco International v. Hubei Machinery Corp. 2005 CLD 74.
18. Mr. Khalid Anwar lastly argued that all the defendants have not preferred second appeal against the judgment passed by the appellate Court and, therefore, in so far as their cases are concerned, the impugned judgment has attained finality against them and is not open to challenge.
19. Mr. Farogh Naseem, who appeared in Appeal No,9 of 2006 for defendant No,3, in reply submitted that defendant No,4 never owned the transaction in his written statement which he filed separately and therefore in so far as the land belonging to defendant No,4 is concerned, there was no privity of contract between the plaintiff and the said defendants.
20. Mr. Farogh. Naseem and Mr. Abid Zubairi also contended that none of the Articles of Association authorize its Managing Director to file, suit on behalf of the company, therefore the case-law referred to by plaintiff's counsel is of no help to the plaintiff's case. They submitted that as Articles 30 or 31 of the Articles of Association, nowhere give authorization to any one to file suit on behalf of the plaintiff company, therefore it was necessary that board should have passed resolution, without which the suit was incompetent in law and liable to be dismissed. They submitted that the first appellate Court committed error by totally ignoring this aspect of the case and did not give any findings on the maintainability of the suit.
21. In reply to Mr. Khalid Anwar's argument that under section 100 of the Civil Procedure Code, a Court hearing 2nd appeal cannot examine the questions of fact and only questions of law are to be examined, Mr. Abid S. Zuberi contended that the construction of documents is always a question of law and not of fact and therefore this Court in second appeal can examine the documents and interpret their true meaning and import in order to resolve the controversy. He relied upon the cases reported in PLD 1974 SC 204, 1996 CLC 1616, 1986 MLD 206, 1985 PLC 1321 and PLD 1966 CLC 486.
In the case of Gulzar Khan v. Shahzad Bibi reported in PLD 1974 SC 204 it was held by the Honourable Supreme Court that proper construction of a document is a question of law and not of fact. Hence in my view the interpretation of documents around which whole transaction in question revolves is nothing but to decide a question of law in terms of the ratio of the above referred judgment of the Supreme Court. In the case of Ahmad Khan v. Rasul Shah and others reported in PLD 1975 SC 311 it was held that right construction of documents has always been regarded as question of law which the High Court is not precluded from considering in second appeal. There has been a flood of case-law in support of this proposition. In the case of Gulzar Khan v. Mst.
Shahzada Bibi and others reported in PLD 1974 SC 204, it was held as under:--- "While it is undoubtedly correct that an inference drawn from evidence amounts to a finding of fact, yet it is well-settled that the question of the proper construction of document is a question of law and not of fact. In the present case, the questions turns solely on the construction of the documents by which the transaction was evidenced and therefore, the High Court was right in regarding this as a question of law and giving its own interpretation, an interpretation with which we agree."
22. With regard to the argument that some of the defendants have not filed their own appeals, Mr. Abid Zubairi contended that under Order XLI, rule 32 of Civil Procedure Code the Court can grant the relief to a respondent who has not preferred appeal. He relied ugon cases reported in PLD 1965 SC 15 and PLD 1992 SC 590.
23. Mr. Khalid Anwar, learned counsel in response to the arguments of Mr. Abid S. Zuberi in respect to applicability of Order XLI, Rule 32 has placed reliance on the cases reported in Hasan Muhammad v. Jan Muhammad PLD 1982 Lah. 132, Shah Muhammad v. Muhammad Bakhsh PLD 1972 SC 321, Kanwal Nain v. Fateh Khan PLD 1983 SC 53, 1996 SCMR 1862, PLD 1973 SC 295 and AIR 1927 Bombay 128 and submitted that no such relief can be granted.
24. The contents of the plaint and the contents of the written statements are basically the reflection of the stands which the plaintiff and the defendants have respectively taken with regard to the transaction in question in the legal notice dated 17-12-1974 and its reply dated 31-12-1974. The only exception is that defendant No,4 i,e, Mr. Suleman Dawood in his written statement has taken the plea that he neither gave his consent nor authorized anyone to enter into any sale transaction in relation to his 10 acres out of disputed 95 acres of land and unlike other defendants he did not own the contents of the letter dated 31-12-1974 that was sent on behalf of the defendants in reply to plaintiff's legal notice dated 17-12-1974.
25. After the disclosure of the respective positions of the parties in their pleadings, no evidence which deviates from or is contrary to the pleadings is to be looked into. Rights and obligations of the respective parties are always to be determined keeping in view only such pleas that have been taken by them in their respective pleadings. The evidence that is adduced by the parties is also to be looked into only to the extent it supports or opposes the pleas that have been taken by the parties in their pleadings. Any piece of evidence which is beyond the scope of the pleadings cannot be considered while deciding a controversy. This is a well-established legal principle. A division bench of this Court in the case of Ehteshamuddin Qureshi v. Pakistan Stpel Mills reported in 2004 MLD 36 held that a party cannot be allowed to lead evidence contrary to its pleadings, nor could a party be permitted to take a plea different than the plea which it has taken in its pleadings and any part of the evidence which is beyond the pleadings is ought to be overlooked as improvement of the nature being afterthought and impermissible in law.
26. I would now examine the argument that failure to adduce evidence is fatal to ones case. A plaintiff has to adduce evidence in support of his pleas that he has taken in his plaint. However, no evidence is required to establish a plea which is either admitted or remained uncontroverted by the defendant in his written statement. Similarly, unless a plea which a defendant has taken in his written statement is admitted or has not been controverted by the plaintiff in his evidence, then too, applying the same principle, requires no evidence from the defendant to prove such a plea.
Adducing evidence is not a legal requirement which is to be fulfilled in every eventuality. Evidence is required to be adduced by a party, be it a plaintiff or defendant, only to establish disputed questions so that the Court is able to resolve conflicting claims. Where record of the case reflect that a party's plea has either been admitted or has remained uncontroverted by the other side, either in its pleadings or in the evidence, then adducing evidence to establish an admitted or uncontroverted plea would obviously be an exercise in futility.
27. A closer examination of the pleas that have been taken in the plaint and the written statements by the respective parties show that the controversy with regard to the disputed transaction basically revolves around four documents. The first of these documents is receipt dated 4-11-1974 (Exhibit 5/1). The second document is letter dated 8-11-1974 written by Osman Suleman on behalf of the defendants to the plaintiff. The third document is plaintiff's legal notice dated 17-12-1974 (Exhibit 6/12) and the fourth is reply dated 31-12-1974 (Exhibit 6/13) that was made to plaintiff's legal notice dated 17-12-1974. The second of these four documents i,e, defendants' letter dated 8-11-1974 to the plaintiff though was never produced in evidence but its contents have been reproduced by the defendants in Exhibit 6/13.
28. The first document is the receipt dated 4-11-1974 that was executed by Mr. Osman Suleman on behalf of the defendants acknowledges the receipt of advance payment of Rs,1,00,000 which the plaintiff paid through a cheque dated 31-10-1974. In the receipt dated 4-11-1974, neither the sale consideration nor the time for completion of the transaction is mentioned.
29. The second document is defendants' letter dated 8-11-1974 with which defendant enclosed Cheque No,CBW 574892 dated 8-11-1974 for Rs,1,00,000 towards the return of the advance amount received by them at the time of entering into the transaction. The defendants delivered this letter along with the cheque to the plaintiff on 9-11-1974. This letter dated 8-11-1974 that was delivered to the plaintiff though was not produced in evidence by the plaintiff but its contents have been reproduced by the defendants in their letter dated 31-12-1974 that was produced in evidence as Exhibit 6/13. In the letter dated 8-11-1974, the defendants while addressing the plaintiff have stated the circumstances in which the advance payment was being returned. The defendants state "Please find enclosed a cheque No,CBW 574892 dated 8-11-1974 for Rs,1,00,000 which you had given to us in respect of sale of land. Since you have not fulfilled the conditions of sale we had agreed upon, this amount is being returned to you". It is surprising to note that the advance payment of Rs,1,00,000 was received back by the plaintiff on 9-11-1974 yet in its legal notice dated 17-12-1974 as well as in the plaint the factum of receiving back the advance payment has not been mentioned.
The contents of letter dated 8-11-1974, which were reproduced in defendants' letter dated 31-12- 1974 (Exhibit 6/13) were not denied by the plaintiff in its evidence. The return of the advance amount back from the defendants was also admitted by plaintiff's witness Haji Sharif during his cross-examination. If at all there was any plausible justification for the plaintiff to receive back the advance payment and yet maintain its right to seek enforcement of the contract some explanation ought to have been given by the plaintiff in its evidence but there is none.
30. The third document is the legal notice dated 17-12-1974 that was sent by the plaintiff to the defendants through Osman Suleman. In this document it is stated that all defendants of 95 acres had agreed to sell the land at the rate of Rs,3,000 per acre and as the defendants failed to complete the transaction within 15 days as agreed between the parties, they should complete the same within 15 days failing which legal action would be taken.
31. The fourth document is letter dated 31-12-1974 sent on behalf of the defendants in reply to plaintiff's legal notice dated 17-12-1974. In the said reply it was claimed that the total sale consideration was settled at Rs,600,000 and not Rs,285,000 and the balance sale consideration of Rs,500,000 was payable within one week of the issuance of the cheque for advance payment of Rs,100,000 i,e, one week from 31-10-1974. It was also claimed in this letter that as the plaintiff failed to complete the transaction by 7-11-1974, the advance payment was returned to it vide Cheque No,CBW 574892 dated 8-11-1974 with covering letter dated 8-11-1974 that was delivered to the plaintiff at his shop on 9-11-1974. As stated earlier, the contents of the covering letter dated 8-11- 1974 are reproduced in the reply dated 31-12-1974 and have never been denied in any manner by the plaintiff at any stage of the proceedings.
32. Now the first document i,e, receipt dated 4-11-1974 is not executed by all the defendants nor it was established in evidence that Mr. Osman Suleman who executed the receipt and made reply to plaintiff's legal notice dated 17-12-1974 was holding any written authority on defendants' behalf to enter into sale transaction with the plaintiff. Except for defendant No,4 i,e, Mr. Suleman Dawood, the contents of the reply dated 31-12-1974, that was made to plaintiff's legal notice dated 17-12-1974, have been acknowledged and owned by all the defendants in their written statements. When the contents of the receipt dated 4-11-1974 are read with the contents of the fourth document i,e, letter dated 31-12-1974, it becomes quite apparent that undoubtedly parties had entered into a contract and its existence has been acknowledged by all such defendants who have owned and adopted the contents of the letter dated 31-12-1974 in their written statements. Therefore, it cannot be said that there was no concluded contract between the parties and the contentions of the defendants counsel in this regard have no force. Only defendant No,4, Mr. Suleman Dawood has totally denied that he gave any concurrence or authorization to enter into and such transaction in relation to the land owned by him and therefore to the extent of his land only it can be said that contract was not binding on him.
33. The absence of time for the performance of the contract in the receipt dated 4-11-1974 is also of no legal consequence for the reason that when time for the performance of a contract is not specified, it has to be performed within a reasonable time. Section 46 of the Contract Act provides for such eventuality. Therefore, even if parties have not specified any time for the performance of a contract, the same does not make it unenforceable in law. A Court can read into such contracts a time such it deems reasonable for its performance, keeping in view the circumstances of each contract. However, in order to find out as to which of the two parties were at fault in the performance of contract, keeping in view their respective pleadings as to the time for performance, it is necessary to first examine the evidence on record. I shall therefore proceed to examine the question as to what was the time that was settled for the performance of the contract.
34. The cheque for the advance payment is dated 31-10-1974 and in terms of defendants' letter dated 8-11-1974, the transaction was to be completed by 7-11-1974, i,e, within one week from the issuance of the cheque dated 31-10-1974. In defendants' letter dated 31-12-1974 it is stated that time was made the essence of the contract and upon failure to make payment within stipulated time, the advance amount was to be returned back to the plaintiff. Hence, according to defendants' letter dated 31-12-1974 the time for completing the transaction ended on 7-11-1974 and as by then the plaintiff did not make payment of the balance sale consideration, the contract stood terminated and for this reason defendants returned the advance payment of Rs,1,00,000 back to the plaintiff on 9-11-1974. All these assertions are contained in the defendants' letter dated 31-12- 1974 that was produced in evidence as Exh.6/13. Hence it has undisputedly come on record that the defendants returned the advance payment through a cheque dated 8-11-1974 which was delivered to the plaintiff on 9-11-1974 i,e, on the 9th day of entering into the contract and the plaintiff on its part accepted the return of the same without any objection. This return of the advance payment and its acceptance by the plaintiff appears to be quite in consonance with the stand taken by the defendants in their letter dated 31-12-1974 and shows that the parties had agreed to complete the transaction within a very short period of time otherwise there was no occasion for the plaintiff to receive back the advance payment of Rs,100,000 on 9-11-1974 i,e, on the ninth day of striking the deal for the purchase of the land without any protest.
35. The fact that the transaction was to be completed within seven days from the issuance of the cheque dated 31-10-1974 or in other words by 7-11-1974 is also established from the fact that plaintiff's own witness Mr. Sharif in his cross-examination has stated that when he gave the receipt dated 4-11-1974 to Mr. Goawala, he pointed out that neither the price of the land nor the balance sale consideration is mentioned in the receipt to which the witness replied that as the transaction would be completed within two three days, Mr. Goawala should not be worried about such omissions. The statement of plaintiff's witness at least goes to show that when the receipt was delivered there were only two three days left for the completion of the transaction. When seven days for the completion of the transaction, as claimed by the defendants, are counted from the date of tendering the cheque for advance payment i,e, 31-10-1974, or the two three days, as stated by plaintiff's witness Mr. Sharif, are counted from the date of the issuance of the receipt dated 4-11- 1974, the time for completion of the transaction invariably comes to 7-11-1974. This was precisely the case of the defendants in their letter dated 31-12-1974 as well as in their written statements. On the other hand, the plaintiff in the plaint has taken the plea that the transaction was to be completed within fifteen days i,e, by 15-11-1974. If that was so then why the plaintiff received back the advance payment of Rs,100,000 from the defendants on 9-11-1974 i,e, on the ninth day of the transaction and that too without any protest. If at all there was any justification for receiving back the advance payment before the time for completion of the transaction has expired then the plaintiff should have stated so and explained his position at any subsequent stage. However, for unknown reasons, the plaintiff in its legal notice dated 17-12-1974 made no mention of the defendants' letter dated 8-11-1974 or of the cheque that was enclosed with it. When the return of the advance payment and its acceptance by the plaintiff without any objection on 9-11-1974 is taken into consideration, it becomes absolutely clear that the plaintiff accepted the return of the advance payment on the ninth day of entering upon the contract only for the reason that it was unable to complete the transaction before the return of the advance payment and the time for performance was certainly before the return of the advance payment. No other conclusion could be drawn when the plaintiff itself choose not to give any explanation of its own in its pleadings or even in its evidence for the examination of the Court.
36. The return of advance payment and its acceptance by the plaintiff on 9-11-1974 has also established another plea of the defendants that it was also agreed between the parties that in case of plaintiff's failure to complete the transaction by 7-11-1974, the advance payment was to be returned back to the plaintiff. The defendants' letter dated 31-12-1974 contains reference to defendants' earlier letter dated 8-11-1974. In fact the contents of letter dated 8-11-1974 have been reproduced in letter dated 31-12-1974. In the letter dated 8-11-1974, the circumstances in which the advance payment was returned are clearly mentioned. The defendants in the letter dated 8-11- 1974 while addressing the plaintiff has stated "Please find enclosed a Cheque No,CBW 574892 dated 8-11-1974 for Rs,1,00,000 which you had given to us in respect of sale of land. Since you have not fulfilled the conditions of sale we had agreed upon, this amount is being returned to you". There is absolutely no denial of the contents of the letter dated 8-11-1974, hence there is absolutely no reason not to believe its contents. The cumulative effect of the return of the advance amount on the ninth day of entering into the contract and its acceptance by the plaintiff without any protest is that the parties from their own conduct demonstrated that they intended to terminate the contract.
37. Where a purchaser accepts the return of the earnest money without any protest, then this fact by itself amounts to putting an end to the contract, irrespective of the fact that the time fixed between the parties for the performance of the contract has expired or not. The plaintiff therefore, by receiving back the advance amount, had in fact given up all his rights that he possessed under the contract. Such being the position emerging from the conduct of the plaintiff itself, it matters not whether time was the essence of the contract or what was the actual sale consideration that was settled between the parties. The plaintiff from its own conduct of accepting the return of the advance payment has amply demonstrated that whatever were the terms of the contract, it has put an end to it on 9-11-1974.
38. Even in contracts where time is not of the essence, the purchaser has to demonstrate that at all material times he was ready and willing to H perform his part of the contract. I have also noticed that the plaintiff's witness Mr. Ismail in his deposition has stated that after four-five days of reaching the contract, Mr. Ahmed Dawood demanded from Mr. Goawala the balance sale consideration and when the said witness took the amount of Rs,2,00,000 from Mr. Goawala and offered the same to Mr. Ahmed Dawood he refused to accept the same and thereafter parties exchanged legal notices. This witness i,e, Mr. Ismail does not say what was the reason given by Mr. Ahmed Dawood for not accepting the balance sale consideration when according to this witness, the demand for payment of the balance sale consideration came from Mr. Ahmed Dawood himself. If Mr. Ahmed Dawood, after making demand refused to accept the same only because he demanded more than what was agreed upon, then plaintiff's witness ought to have stated so in his deposition, which he has not. On the other hand if Mr. Ahmed Dawood never demanded more than the agreed sale consideration, then why would he refuse to receive the balance sale consideration offered to him just after four-five days of entering into the contract when he had himself demanded the same to be paid to him. The only reasons one can think of is that the plaintiff failed to offer the balance sale consideration within the time stipulated for the performance of the contract. When such refusal, if there was any, is looked at in the context of defendants' plea that the transaction was to be completed by 7-11-1974, it proves the fact that defendants' refusal was on account of plaintiff's failure to offer the balance sale consideration within seven days of entering into the contract. It also demonstrated that the plaintiff was not ready and willing to complete the transaction within the stipulated seven days. Not only thus, the plaintiff on its part then accepted the return of the earnest money which he paid to the defendants as advance payment. This too clearly demonstrated that it was no more willing to get the transaction completed and was agreeable to put an end to it by accepting the return of the advance payment. In order to retain its right to seek enforcement of the contract, the plaintiff ought to have demonstrated that he was ready and willing to perform its part of the contract at all material times and should not have received back the advance payment. After accepting the return of the advance amount, nothing was left to be enforced. Thus the contract simply stood terminated by the conduct of both the parties which appears to be the mutual intent at the relevant time.
39. With regard to the dispute as to what was the actual sale consideration, the plaintiff claimed that the sale consideration was settled at Rs,2,85,000. The defendants on their part claimed that sale considerations was Rs,6,00,000. Though the sale consideration is not mentioned in the receipt dated 4-11-1974, one thing is clear. At the time of making advance payment of Rs,1,00,000 the parties had agreed to a certain definite price. If the price was to be determined at some subsequent stage after making the advance payment, then the defendants ought to have taken such plea in their letter dated 31-12-1974 or in their written statements. But they have not pleaded so. Therefore, it is clear that price was settled but for some reason it was not mentioned in the receipt. In any case, as the plaintiff, from his own conduct i,e, by accepting the return of the advance payment has put an end to the contract, it matters not whether the sale consideration was settled at Rs,2,85,000 or 6,00,000. The question as to what was the actual sale consideration in such eventuality looses its significance and is to be regarded as of no legal consequence.
40. There is also yet another aspect of the matter. Both in the legal notice dated 17-11-1974 as well as in plaint it is stated that plaintiff sent repeated reminders' to the defendants to complete the transaction but the defendants failed and neglected to complete the transaction. Hence the plaintiff has, taken only the plea that there was failure and neglect on the part of the defendants to complete the transaction. There is no plea in the plaint that the balance sale consideration was offered to the defendants which they refuse to accept. There is a vast difference between seller's failure to perform within the stipulated time and seller's refusal to receive the sale consideration upon it being offered by the buyer. In the evidence though, the plaintiff has attempted to establish that its representative took the balance sale consideration to the defendants within three- four days of the issuance of the receipt dated 4-11-1974 and the defendants refused to accept the same, but nowhere in the legal notice dated 17-12-1974 or in the plaint it has been stated by the plaintiff that it offered the amount to the defendants which they refused to accept. Had the offer of balance sale consideration been true, the plaintiff would have at-least stated this in its legal notice dated 17-11-1974 or in the plaint. There is no such plea at all and has been taken for the first time in evidence. As the plea of refusal to accept the amount is not there in the plaintiff's pleadings, it cannot be considered as any attempt to establish such a plea in evidence would be allowing the plaintiff to travel beyond the scope of its pleadings. Even otherwise, no suggestion on this new plea taken at the evidence stage has been put to defendants' witness i,e, Osman Suleman (defendant No,1) when he appeared in the witness box for his cross-examination. The effect of not taking such a plea in the plaint leads to the presumption that the event of offering the balance sale consideration never took place. Therefore, this plea of making an offer of balance sale consideration taken at the belated stage of recording of the evidence could only be regarded as an afterthought.
41. When admittedly the advance payment was returned back to the plaintiff on 9-11-1974, then in this background plaintiff's offer of balance sale consideration or defendants' refusal to accept the same at best would be considered as a unilateral attempt to revive a dead contract, in case the offer was made after the return of the advance payment. On the other hand if the offer was made prior to the return of the advance payment, even then too the refusal on the part of the defendants would not help plaintiff's case as subsequently the plaintiff had itself received back the advance payment, thereby putting an end to an otherwise enforceable contract. Hence the refusal of the defendants, if at all there was any, is looked at from any angle, it becomes inconsequential as the plaintiff by receiving back the advance payment had itself put an end to the contract. Therefore, the trial Court rightly dismissed plaintiff's suit for specific performance though in doing so, different reasons have been given. On the other hand the 1st Appellate Court failed to examine the oral and documentary evidence in its true perspective which resulted in the erroneous judgment resulting in miscarriage of justice and thus not sustainable in law.
42. I would now proceed to examine the question with regard to the maintainability of the suit. The trial Court in its decision has held that the suit was incompetently filed. In the grounds taken in the memo. Of appeal this finding was only vaguely attacked by the plaintiff. Then, the appellate Court in its decision failed to give any finding on this issue.
43. The counsel for the plaintiff argued that Order XXIX, rule 1 of Civil Procedure Code by itself authorizes a director to file suit on behalf of the company and therefore the suit was competently filed. The scope of Order XXIX, rule 1 of Civil Procedure Code is limited only to the signing and verification of the pleadings by certain named officers of a company or corporations who are able to depose to the facts of the case. This rule neither deals with the frame of the suit nor does it grant authority to these named officers to institute suit on behalf of a company or corporation. It is only an enabling provision and enables certain persons to sign and verify pleadings of a suit which should have otherwise been validly instituted under requisite authority of a company or corporation granted either by the board of directors or under the authority derived from Articles of Association.
44. Furthermore, as admittedly no resolution authorizing the managing director to institute the suit was produced in evidence, it is to be seen whether Articles of Association of the plaintiff company grants such authorization as has been argued by Mr. Khalil Anwar. In Article 30 of the plaintiff's Articles of Association it is stated that the affairs of the company are to be managed by its directors. Article 31 authorizes the directors to appoint any director from amongst them to act as Managing Director in order to manage the affairs of the company. Article 32 provides that the management of the plaintiff vests in its Board of Directors. The effect of these three articles when read together is that the affairs of the plaintiff are to be managed by a Managing Director to be appointed through the collective decision making process that is to take place before its board of directors. No director in his individual capacity can manage the affairs of the plaintiff which under Article 32 exclusively vests with its board.
45. Now the authority of the managing director to do any specific act such as to enter into a contract to purchase a property on behalf of the company or file suit to enforce a contract has to stem either from the decisions of the board of directors or from the Articles of Association itself.
Where the Articles of Association does not specifically authorize the Managing Director to purchase or sell properties on behalf of the company, then in order for the managing director to exercise any power or do anything on behalf of the plaintiff, he has to have authorization from the plaintiff's board of directors. Articles of Association authorize the Managing Director only to run the business of the plaintiff company. They do not authorize him to invest plaintiff's capital in the purchase of the real estate or for arguments sake sell the properties of the company. If a managing director is given free hand to take such major decisions without any authorization from the board or under the Articles of Associations, he can play havoc with company's assets and capital.
46. There also had to be specific authorization to the managing director either from the board or under any Article of Articles of Association to file suit on behalf of the plaintiff company. In the present case, suit was filed by the plaintiff through its managing director. Now at the time of filing of the suit, did the managing director possess the authorization from the board to do so, admittedly he did not. Now does any Article of the Articles of Association of the plaintiff company empowers the managing director to act on his own and file suit on behalf of the plaintiff, certainly not. In such circumstances, before a suit could be termed as competently filed, it was necessary that authorization in this regard must have come from plaintiff's board of directors. Thus, as held by the Honourable Supreme Court in the cases reported in Iftikhar Mamdot v. Ghulam Nabi Corp. PLD 1971 SC 550 the absence of authorization to file suit becomes fatal to the maintainability of, the suit.
In the present case, the, suit being filed without proper authorization, is to be treated as not maintainable and liable to be dismissed on this score alone.
47. In view of the above discussion, these appeals are allowed, the impugned judgment and decree dated 23-12-2005 passed by the Additional & District Judge is set aside and the judgment and decree dated 29-4-2004 passed by the Civil Court, Malir in Suit No,339 of 1996 (Old Suit No,101 of 1975) is restored.