SALEEM AKHTAR, J-The relevant facts leading to this High Court Appeal may be briefly summarised.
The appellant/defendant, a P. T. O.-holder to respect of immovable property bearing No. III-A-155 R.
B. 7/14-G/1 and I/1 situated at Robson Road, Karachi agreed to sell it to the respondent for a consideration of Rs. 50,000. In part performance of the contract, on 18-4-1961 the respondent paid a sum of Rs. 2,000 to the appellant who execut--ed a receipt acknowledging the payment as advance towards the sale considera--petition and also swore an affidavit Exh. 5-A containing the terms of the contract. It inter alia provided that the Sale Deed for the said property will be executed immediately on receipt of such rights from the Government. On 21st June, 1965 the appellant acknowledged receipt of a further sum of Rs. 3,500 towards the sale price of the said property.
Again by an affidavit sworn on 31st January, 1966 the appellant reiterated the terms of agreement and acknowledged receipt of Rs. 5,500 as advance towards the sale consideration. On 15th April, 1966 the appellant received Rs. 1,500 from the respondent as further advance towards the sale price and executed a receipt. The appellant thus received a total sum of Rs. 7,000 as advance towards the sale consideration. On 1-5-1969 P. T. D. Was issued in favour of the appellant and immediately thereafter by a legal notice dated 7th May, 1969 (Exh. 5/7) the appellant admitting the factum of agreement cancelled it and returned Rs. 7,000 through a cheque. The appellant also filed a suit for declaration and injunction but the plaint was rejected by the Civil Judge on I-8-1969. In these circum--stances the respondent filed a suit for specific performance of the contract.
2. The appellant in his written statement denied the agreement and pleaded that he had taken a loan of Rs. 2,000 from his neighour B. A. Siddiqui in whose favour a receipt was executed by him. But thereafter the loan was transferred to the respondent. The affidavits Were executed to secure the repayment of loan taken from time to time. While denying the agreement the appellant alternatively pleaded that as the respondent had got an undue advantage over the defendant, decree for specific performance of the contract should not be granted. The learned trial Court, however, on consideration of the evidence decreed the suit.
3. Mr. Akhtar Mahmood, the learned counsel for the appellant has contended that the trial Court had wrongly placed the burden of proof upon the appellant. He also contended that there was no valid contract for the sale of the property as the documents referred above evidencing the contract were not signed by both the parties. He further contended that as in law a P. T. O: holder was not permitted to alienate the property, the agreement, if any, was against public policy and could not be specifically performed. Lastly, he submitted that in the facts and circumstances of the case the Court should not have exercised its discretion for grant of specific performance of the agreement.
4. The most significant aspect of the case is that all the documents referred by the respondent to establish the contract for sale of the property, namely, Exh. 5/2, 5/3, 5/4, 5/5, 5/.6 and 5/ 7 have not been denied by the appellant. The appellant admitting the execution of these documents has submitted that the real transaction between the parties was different from the one which is spelt out by these documents. In these circumstances, the learned trial Judge was justified in placing the burden of proof upon the appellant. The grievance of the learned counsel for the appellants does not seem to be justified as parties had filed consent issues on 10th November 1969 and as the appellant bad agreed to discharge the burden, which even otherwise was proper, he cannot assail the impugned judgment on this ground. It is well settled that the question of onus does not remain of material significance particularly in this case, where positive finding of fact has been, given after considering the entire evidence on record.
5. The appellant has contended that there was no valid agreement for sale of the property. We are not impressed with this plea as it does not seem to be honest and bona fide. The overwhelming documentary evidence enumerated above clearly establishes that the appellant had entered into an agreement for sale of the property. The oral evidence produced by the appellant does not support his contention. B. A. Siddiqui from whom the appellant alleged to have taken loan was examined as a witness on behalf ,f the respondent and he has not supported the appellant's version. 'The ;earned trial Judge has rightly remarked that it was remarkable that no question was put to the respondent in his cross-examination in relation to zither the first affidavit or receipt. The solitary evidence of the appellant in his own favour is contrary to the documents executed by him.
Besides this the conduct of the appellant belies his contention. Immediately after obtaining the P. T.
D. When it was the right time to execute the sale deed in favour of the respondent, the appellant served a legal notice cancelling the agreement and refunded the sum of Rs. 7,000. In this notice no reference has been made to the alleged loan. On the contrary it refers to the agreement for sale of the property and has notified its cancellation. The appellant's --plea is, therefore, not sustainable.
6. Mr. Akhtar Mahmood, the learned counsel for the appellant contended that as none of the documents were signed by both the parties the agreement, if any, lacked mutuality and consensus between the parties, and, therefore, there was no agreement at all: None of the documents mentioned above were signed by the respondent. Exhs. 5/3 and 5/5 are two documents containing statement of the appellant made on solemn affirmation reciting the terms of agreement. The receipts Exhs. 5/2, 5/4 and 5/6 acknow--ledging the payments make pointed reference to the terms of agreement. In the circumstances agreement between the parties is established. For a valid agreement it is not necessary that it should be in writing. There can/. Be valid, legal and binding oral agreement between the parties. Exhs. 5/3 and 5/5 are evidence of oral agreement between the parties which was acted upon by the patties. In this regard Mr. A. A. Fazeel, the learned counsel for the respondent, has invited our attention to section 10 of the Contract Act, and contended that the agreement fulfils all the conditions required by law. All the agreements are contracts whether oral or in writing if they are made by the free consent of parties competent to contract for a lawful object and are not expressly declared to be void. It is not necessary that a valid agreement should be signed by both the parties. Mr. A. A. Fazeel. The learned counsel for the respondent has relied upon the case of Jugal Kishore Rameshwardas v. Mrs. Goolbai Hormusji (1) where a contract note containing an arbitration clause was signed by one party and delivered to another and accepted by him. When the dispute between the parties was referred to arbitration, objection was raised that as under law the arbitration agreement should be in writing and because contract note had not been signed by both the parties there was no valid arbitration agreement. It was held that for a valid binding agreement it was not necessary to be signed by both the parties.
Mr. A. A. Fazeel, the learned counsel for the respondent has further relied upon the case of Jamal Jute Baling & Co., Dacca v. M/s. M. Sarkfes & Sons, Dacca (2). In this case the award was challenged on the ground that as the person signing the contract was not authorised to do so, no valid reference could he made. In these circumstances, referring to AIR 1955 SC 812 and AIR 1963 SC 1417 it was held that if the agreement between the parties was reduced to writing and proved to have been accepted and acted upon by both the parties then the agreement is proper and valid even if one party had not signed such agreement.
7. An oral agreement by which the parties intended to be bound is valid and enforceable. However, an oral agreement requires for its proof clearest and most satisfactory evidence. In the present case as discussed above there is no iota of doubt that the agreement did not exist. The C appellant had agreed for the sale of the property for valuable consideration which was reduced in writing and was acted upon. Merely because to respondent had not signed any of the documents or that no document was duty signed by both the parties will not lead to the inference that a valid agreement did not exist.
(1) AIR 1955 SC 812(2) PLD 1971 SC 784
8. Mr. Akhtar Mahmood, the learned counsel for the appellant has next contended that as transfer of property was prohibited under law as well as in terms of P. T. O. Issued in favour of the appellant, the contract was void and against public policy, and therefore, it could not be specifically enforced.
It is true that condition No. 3 of P. T. O. And clause 37 of the Settlement Scheme No. I provide that pending the permanent transfer of the property the transferee shall not alienate the property in any manner but be may lease it out or mortgage it to any person subject to such conditions as may be laid down by the Chief Settlement Commissioner. It has, therefore, to be considered whether the contract violated this restriction. In this regard the terms and conditions of the contract for sale have to be examined. Clause (4) of Exh. S/3, provides that the sale deed shall be executed immediately on receipt of such rights from the Government. The sale was, therefore, contingent upon the grant of such rights. It was not the intention of the parties to sell the property before the grant of such right or in any manner violate the provisions of law. This contract for sale did not create any right in the property as section 54 of the Transfer of Property Act clearly provides that a contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties and it does not of itself create any interest in or charge on such property. In this regard, the learned counsel for the respondent, Mr. A A. Fazeel haf invited our attention to a case of Muhammad Ghulam Muhammad v. Custodian of Evacuee Property (1) where it was held that an agreement to sell does not create any right, title or interest in immovable property. Mr. A. A. Fazeel, learned counsel for the respondent has also relied upon a case of Haji Abdullah v. Nisar Muhammad Khan (2). In this case in a suit for specific performance of agreement for sale of immovable property the validity of the agreement was challenged on the ground of want of sanction as required by section 4 of the Kabul River Project (Control and Prevention of Speculation in Land) Act, 1948. It was held that "if there is some condition precedent to the validity of transfer it is open to the parties to enter into an agreement subject to compliance with the condition precedent. The attack on the agreement for sale on the ground of public policy could only succeed if it were shown that the intention of the agreement was to defeat the law. If the parties that enter into an agreement for sale contemplate only a sale with requisite sanction, they are not making any effort to defeat the law". In the present case also from the terms of the agreement it is/D clear that the parties never intended to violate any provision of law, a and therefore, it is neither void nor against public policy.
9. Mr. Akhtar Mahmood, the learned counsel for the appellant relying upon section 22 of the Specific Relief Act contended that as consideration for sale was inadequate the trial Court exercising its jurisdiction in equity should not have ordered for specific performance of the agreement. Reliance was placed on the case of Abdul Hameed v. Abbas Bhai Abdul Hussain Sodawaterwalla (3) in which specific performance of contract of immovable property was claimed and the following principle was laid down :- "In conclusion I would like to add that the dominant principle in such cases has always been that equity will only grant specific performance,. If under all the circumstances, it is just and equitable so to do."
Mir Hashmat A.I v. Birendra Kumar Ghosn (4) relied upon by the appellants the principles for grant of decree for specific performance have been dealt with exhaustively. In this case a suit was filed for Specific Performance of Contract for sale of immovable property which was registered after its execution. In the suit the Government of East Pakistan made an application under Order I, rule 10, C.
P. C. To be joined as a defendant on the ground that the alleged contract was a collusive transaction, the purpose of which was to evade the provisions of various enactments and to contravene the Foreign Exchange Regulation. Murshed, J. (as he then was) after discussing the authorities made the following observations :--
(1) PLD 1966 Lah. 953(2) P L R 1965 SC 481
(3) PLD 1962 SC 1(4) PLD 1965 Dacca 56 "In the: first place, it should be remembered that specific performance . Is an equitable relief notwithstanding the statutory provisions of the Specific relief Act. It is not granted as a matter of course merely because there is a contract. The relief is in the nature of an indulgence peculiar to jurisdiction of equity. It is not a matter of right in the party seeking such relief but of discretion of the Court . . . . . . . . . Specific performance will be granted or refused on consideration of equity and not merely on the terms of the contract, even though the contract may be free from any legal defect."
Relying upon these authorities the learned counsel for the appellant argued that in the present case discretion should not be exercised in favour of the respondent. He mainly relied upon the ground that the consideration was inadequate and with the passage of time the value of property has appreciated, whereas the value of money has depreciated.
10. We are in agreement with the observations quoted above. Specific performance is an equitable relief which is not granted as a matter of course or as a matter of right in the party seeking such relief but of discretion o the Court to be exercised on the basis of established sound judicial principles and upon a consideration of all the circumstances of each particular case. The jurisdiction conferred under section 22 of the Specific Relief Act is not compulsory but subject to discretion and the relief will not be refused unless sound and reasonable principles justify the same.
11. The contention of the appellant that the price was inadequate has to he considered by looking into all the facts and circumstances of the present case. The agreement was entered into in the year 1961 for Rs. 50,000. The transfer value of the property in P. T. D. Has been shown as Rs. 18,000.
The Excise & Taxation Authority while assessing the property has termed its condition as poor. D. W.
2, an estate broker, has stated that in 1961 he had communicated an offer of Rs. 1,50,000. However, on his own admission in 1961 he was a young boy studying in Class VIII, and therefore, no reliance can be placed upon his statement. Further the register said to contain the offer made to appellant maintained by his employer was not produced. No evidence was produced to show the price of similar property in the same locality. The evidence on record does not prove inadequacy of consideration at the time of agreement. The inadequacy of price can hardly be a ground for refusing specific performance. In the case of Manakchand v. Puma (1),/F it was held that where the price is so grossly inadequate as to shock the conscience of the Court and either by itself or in conjunction with other circumstances such as illiteracy, oppression etc. It evidences fraud or that undue advantage was taken by the other sido, the Court will refuse specific performance. At this stage we would refer to the following obser--vation of Sir Edward Fry in his book "A Treatise on Specific Performance of Contracts" at page 210 --- ------...Inadequacy of consideration, if only amounting to hardship or even great hardship, is no ground for relieving a man `from a contract which he has wittingly and willingly entered into', but that it may be so enormously great as to be a conclusive evidence of fraud, and that it is then aground for setting aside the transaction affected by it. --- Referring to the case of in Coles v. Trecothic (2), Fry has relied upon the following passage of the judgment of Lord Eldon;
(1) AIR 1960 Madh. Pra. 235(2) 9 Ves. 246 "Unless the inadequacy of price is such as. Shocks the conscience and amounts itself to conclusive and decisive evidence of fraud in the transaction. It is not itself a sufficient ground for refusing a specific performance."
Reliance has also been placed upon the case of The Administrator General of Bengal v. Juggesh war Roy and others (1). The Privy Council while considering the defence of inadequacy of consideration, relied upon the judgment of Lord Westbury in the case of Tenant v. Tenants (2) and quoted his observations in the following manner; "Lord Westbury very shortly and clearly stated the law upon this subject. He says, `it is true that there is an equity which may be founded upon gross inadequacy of consideration, but it can only be where the inadequacy is such as to involve the conclusion that the party either did not understand that he was about, or was the victim of some imposition."
12. The appellant has not alleged any of the afore stated circumstances , except that due to rise in price hardship will be caused to him. The question of hardship must be judge as on the date of transaction and no m the light of subsequent events. Section 22 (ii) of the Specific Relief Act refers to hardship which should be collateral to the contract and not in relation to a term of contract. In the case of Bijoy Krishna Saba v. Dukhiram Karmaker (3) where subsequent to the date of the contract to sell land and before the time of its purchase Partition of India took place which brought about a phenomenal rise in the price of landed property, the Court refused to apply section 22 (2) of Specific Relief Act and specific performance was granted. Reference can be made to AIR 1959 Pat. 132, AIR 1956 Trav.--Co. 93 and AIR 1933 Mad. 735. To the same effect is the following passage appearing in para. 434, at page 303 in Vol. 36 of Halsbury's Laws of England, 3rd Edition; "It is now established that mere inadequacy of consideration is not in itself a ground for resisting the Specific Performance unless it is so gross as to amount to conclusive fraud, or there are other circum--stances which, combined with the inadequacy, will induce the Court not to enforce the contract." and again, "Where the question of inadequacy of consideration is raised it must be determined as at the date of the contract, and not in the light of subsequent events."
To the same effect observations were made in the case of S. v Sankaralinga Nadar v. P. T.
Ratnaswami Nadar (4). Mr. A. A. Fazeel the learned counsel for the respondents has relied upon the case of Mulla Badruddin v. Master Tufail Ahmad (5), where it was observed as follows :- "If the transaction was for proper consideration at the time it was entered into and the value of the property had considerably risen subsequently, that does not affect the enforceability of the contract. The validity of a transaction should on principle be judged as on the date of transaction."
(1) I L R 3 Cal. 192(2) L R 2 Scot Ap. 6
(3) 1 L R 1955 Cal. 63(4) AIR 1952 Mad. 389
(5) AIR 1963 Madh. Pra. 31
13. In the absence of (1) any circumstance which is so enormously great as to be a conclusive evidence of fraud, or (ii) misrepresentation on the part of the plaintiff which induced the defendant to enter into a contract for sale, or (iii) circumstance under which the plaintiff took an imprope advantage of his position or the difficulties of the defendant making hi victim of imposition, specific performance should be granted even if the contract is onerous but not unconscionable.
Considering the facts of the case mere subsequent rise in the price by itself can not be made a ground fo refusing specific performance of the contract. The grant of specific perform--ance is a matter of discretion of the Court capable of correction by the Court of appeal. In the present case the trial Court has exercised its discretion on sound, judicial and equitable principles which is neither arbitrary nor capricious.
14. We, therefore, dismiss the appeal with no order as to costs.
ZAFFAR HUSSAIN MIRZA, J. -1 agree.