FAISAL ARAB, J.---The defendant is owner of suit property bearing No,B-43, Block-1, admeasuring 416 square yards, situated at KDA Scheme No,24, Gulshan-eIqbal, Karachi. On 18-5-2005 the parties entered into an agreement to sell in respect of suit property for a total sale consideration of Rs,15,400,000. The plaintiff paid Rs,3,000,000 at the time of execution of sale agreement and the remaining balance sale consideration of Rs,12,400,000 was to be paid on or before 15-8-2005.
Thereafter from 12-8-2005 to 28-8-2005 correspondence ensued between the parties, each blaming the other for not fulfilling its part of the obligations under the sale agreement. On 28-9- 2005 the plaintiff filed the present suit keeping specific performance of contract, declaration, damages and permanent injunction.
2. The defendant contested the suit and filed their written statement. The main reasons for denying the claim of the plaintiff, as pleaded in the written statement, was that it was the plaintiff, who on account of non-availability of finances, failed to complete the transaction within the stipulated period on the false pretext that the defendant has not supplied the copies of the title documents so as to enable the plaintiff to draw up the sale deed.
3. This court, upon pleadings of the parties, settled following issues:--
(1) Whether the suit as framed and filed is barred by law of limitation?
(2) Whether the plaintiff has failed to perform his part of obligation under the contract dated 18th May 2005?
(3) Whether the defendant had informed the plaintiff her willingness to execute the conveyance deed in favour of the plaintiff before the date specified in the sale agreement?
(4) Whether the time was the essence of the contract admittedly executed between the parties?
(5) Whether the plaintiff had failed to arrange balance sae consideration amount within the time stipulated in the agreement?
(6) Whether the defendant was entitled to forfeit 50% from the earnest money in consonance with the terms of the contract dated 18th May 2005?
(7) Whether the plaintiff is entitled to the relief claimed?
(8) What should the decree be?
Issues Nos. 1 and 4.
4. These issues being not pressed need no discussion. Issues Nos. 2, 3 and 5.
5. The question which first needs to be examined is whether at all material times the plaintiff was ready and willing to perform his part of the contract. In order to examine this question the documentary evidence needs to be examined.
6. On 12-8-2005 the counsel for the plaintiff dispatched a legal notice (Exh.P/10) asking the defendant to make available 17 documents in original on 15-8-2005 in order to scrutinize their genuineness, failing which transaction would not be completed. It appears that before receiving legal notice, dated 12-8-2005 the defendant had sent a reminder notice dated 14-8-2005 (Exh.P/9) to the plaintiff asking him to ensure that the transaction is completed by 15-8-2005. The defendant then replied the legal notice dated 12-8-2005 through her counsel's notice dated 17-8-2005 (Exh.P/8). It was stated therein that the defendant has completed all the required documentation which are readily available with her, copies whereof have already been supplied to the plaintiff for preparation of the sale deed and that it was the plaintiff, who is avoiding to complete the sale transaction. Thus, plaintiff was called upon to make payment of the balance sale consideration within three days and complete the transaction, failing which the sale agreement shall stand cancelled and the 50% of the advance amount of Rs,3,000,000 shall stand forfeited. The defendant's notice dated 17-8-2005 was responded by the plaintiff vide his letter dated 21-8-2005 (Exh.P/5), wherein he denied the receipt of the copies of the documents, however it was acknowledged by the plaintiff in the said letter that the property has been duly mutated in the name of the defendant. The plaintiff however went one step further and stated in his letter dated 21-8-2005 that he shall be paying only Rs,10,900,000 and not the entire balance of Rs,12,400,000 as he will be deducting Rs,1,500,000 on account of failure of the defendant to complete the transaction within the stipulated period. This letter clearly demonstrate that the plaintiff on his own showing was not ready and willing to pay the entire balance sale consideration of Rs, 12,400,000.
The defendant responded to the said letter of the plaintiff through her counsel's letter dated 23-8- 2005 (Exh.P/4), wherein she refuted the contents of letter, dated 21-8-2005 by terming them ill founded and misconceived and stated that photocopies of all the required documents had already been delivered and originals whereof shown to the plaintiff. The defendant also stated in the said letter that the plaintiff is not prepared to execute the sale deed as he has no finance to make payment of the balance sale consideration, therefore, the agreement stands cancelled and the 50% of the advance amount stands forfeited. This letter of the defendant was responded by the plaintiff vide his letter dated 28-8-2005 (Exh.P/2), wherein the previous demand of supplying complete set of documents was reiterated. After exchange of the above correspondence, the plaintiff has filed the present suit on 28-9-2005.
7. Apart from the parties, who have examined themselves, the defendant has also examined as her witness, the estate agent of the plaintiff, who acted as broker in the transaction in question. He in his examination-in-chief has stated that as an agent of the plaintiff he received copies of the property documents after four days of the execution of sale agreement, which he handed over to the plaintiff except the mutation order, however he acknowledged that the defendant has obtained mutation order in her name before the date fixed for the performance of the contract. In the cross- examination, the estate agent though has stated that he do not remember whether copy of the mutation order was handed over to the plaintiff by him but atleast he acknowledged the fact that he has received copy of the mutation order from the defendant and this aspect of receiving the mutation order by the agent was not disputed by the plaintiff during the cross-examining of the agent. The statement of the agent that copies of the documents, which were received by him from the defendant four days after the execution of sale agreement and were handed over to the plaintiff also went unchallenged. It is also important to note that the agent of the plaintiff in his examination-in-chief has also stated that it was the plaintiff who had requested the defendant to grant further time for making payment of the balance sale consideration which was refused by the defendant. This statement of the agent has also gone unchallenged in the cross-examination, which shows that the plaintiff at a certain point of time was not ready to perform his part of the obligation and therefore was seeking time to arrange payment. In a suit for specific performance a buyer has to demonstrate that at all material times he was ready and willing to perform his part of contract. The plaintiff had first sought extension in the period of payment, which is evident from the deposition of his own estate agent. Secondly, when the defendant through her counsel wrote letter dated 17-8-2005 (Exh.P/8) and asked the plaintiff to complete the transaction and make balance sale consideration, the plaintiff in response sought deduction of Rs,1,500,000 as penalty and stated that he would only be paying Rs,10,900,000 instead of the Balance sale consideration of Rs,12,400,000. The whole case of the plaintiff resolves around his plea that on account of failure of the defendant to supply documents that transaction could not be completed, but his own agent, who appeared as witness has admitted that copies of the documents were earlier supplied to the plaintiff, the original whereof were also shown and thereafter mutation order was also supplied and this aspect of the agent's deposition went unchallenged by the plaintiff while cross-examining the agent.
8. Taking into consideration the evidence on record in its totality, it is quite apparent that the basis of plaintiff's claim that transaction was not completed owing to non-supply of the copies of documents was not established from the evidence. Secondly, the plaintiff vide his letter dated 21- 8-2005 even sought reduction in the balance sale consideration which further proves that the plaintiff was not ready and willing to perform his part of the obligation in its entirety. Thirdly, the plaintiff sought extension in the period for making payment of the balance sale consideration, which establishes that he failed to arrange funds within the stipulated time to complete the transaction. Thus, it become evident that the plaintiff disentitled himself from seeking relief of specific performance. The issues Nos. 2, 3 & 5 are answered in the affirmative. Issues Nos. 6, 7 & 8.
9. In a contract for sale, if a purchaser fails to perform his part of obligation and a contract provides that upon such failure the earnest money to whatsoever extent mentioned therein would be liable for forfeiture, then the seller is entitled to forfeit the same. This right to forfeiture is a kind of liquidated damages arising from the failure of the purchaser to honour the contractual obligations.
The purchaser must face the consequences of his breach by paying monetary compensation for such breach as provided in the C agreement. If the forfeiture is not allowed then the purchasers would go on entering upon contracts and keep the sellers bound at their own sweet will and then put an end to the contract whenever they so choose without any consequences. On account of failure of the purchaser to complete the transaction, the seller may have also suffered some losses and forfeiture entitles the seller to forfeit a specified sum without proving such losses. As the defendant has not established that she suffered any loss, this Court asked the counsel for the defendant whether the defendant is ready and willing to return the entire amount received as advance back to the plaintiff along with interest accrued thereon to which he stated that the defendant is ready and willing to return the entire amount of Rs,3,000,000 to the plaintiff within 30 days but not the interest as he has no instructions in this behalf from his client.
10. Keeping in view the above, this Court has held in its short order that the relief for specific performance should be declined and the entire amount i.e, Rs,3,000,000 be ordered to be returned to D the plaintiff along with simple interest at the rate of 12% per annum. The counsel for the defendant had sought 30 days time to make payment in Court. Hence, 30 days time is granted to the defendant for deposit of such advance amount along with 12% simple interest. In case the advance amount of Rs,3,000,000 is not deposited within the period of 30 days, the relief for specific performance, as sought in the plaint, shall stand granted and thereafter the plaintiff shall be liable to deposit the balance sale consideration of Rs,12,400,000 in Court within the next 30 days. Issues No,6, 7 and 8 are answered accordingly.
11. Foregoing are the reasons for the short order dated 2-3-2010 whereby the suit was partly decreed.