1. The plaintiff has brought this suit for specific performance of an alleged agreement of sale dated 10-4-1976 or in the alternative damages and permanent injunction. The facts material to the suit as disclosed in the plaint are that Plot No. A-25-4 situated on Sunset Boulevard Road; Phase, II, Pakistan Defence Officers Co-operative Housing Society' Ltd., Karachi was allotted to the husband of the defendant. ' This plot was later on bifurcated and sub-divided with the permission of the Society into Plots No. A-25-B/I and No. A-25-B/ll and out of these sub-divided portions. Portion bearing No. A-25-B/I ad-measuring 1000 Sq. Yds. Was gifted to the defendant by her husband and was accordingly transferred in her name by the Society on 17-6-1974. A double storey bungalow was thereafter constructed by the defendant on the aforesaid plot. The plaintiff, it is alleged, came to know in or about the first week of April, 1976, that the defendant was interested in selling the plot with building constructed thereon and having come to know this, he contacted the husband of the defendant and a meeting was fixed between the plaintiff and husband of the defendant and the defendant on 10-4-1976, at the site of the bungalow for negotiation and settlement of the terms and conditions of sale. It is alleged that in the meeting on 10-4-1976 the defendant agreed to sell the plot with construction thereon to the plaintiff for a sum of Rs. 4 lacs and upon settlement of the bargain the plaintiff paid a sum of Rs. 5,000 which was duly acknowledged by the defendant through a receipt of the same date It is also alleged that at the time of receipt of the sum of Rs.
2. 5,000, the defendant asked the plaintiff to pay earnest money amounting to Rs. 40,000 being the 10% of the total sale consideration and also execute a formal agreement of sale incorporating the agreed terms and conditions by 19th April, 1976. The plaintiff accord--ingly, it is alleged, obtained on 19-4-1976 a pay order bearing No. OAG--067371 in the sum of Rs. 35,000 payable to defenant drawn on Habib Bank Ltd., Defence Housing Society Branch, Karachi, and also got prepared an agreement of sale incorporating the agreed terms and conditions. The plaintiff, it is further alleged as the defendant's husband at his Office alongwith his sons Nasiruddin Ahmed Bhatti and Zia Ahmed Bhatti handed him over the sale agreement and the pay order of Rs. 35,000 for passing it on to the defendant for her signature. The defendant's husband, it is alleged, kept one set of agreement and promised to see the plaintiff alongwith the defen--dant to execute the agreement but instead of doing that, the defendant sent a letter dated 17-5-1976 to the plaintiff; returning the sum of Rs. 5,000 received by her on 10-4-1976 in cash in connection with the sale of bungalow through a cheque. The plaintiff thereafter served a legal notice through his Advocate calling upon the defendant to especially perform the contract of sale and also returned the cheque to her. On failure of the defendant to com--plete the sale, the plaintiff instituted the present suit on 10-6-1976.
3. The defendant in her written statement admitted execution of the receipt dated 10-4-1976, but took the stand that the plaintiff had approached the defendant with a proposal to purchase the disputed property for and on behalf of an undisclosed purchaser as estate broker and prevailed upon her to accept the sum of Rs. 5,000 as an advance promising to bring the alleged undisclosed purchaser alongwith the balance amount of earnest money amounting to Rs. 35,000 within a week of the execution of the above receipt. It was denied that the defendant agreed to sell the property to the plaintiff. It was further alleged by the defendant that as the plaintiff did not bring the undis-- closed purchaser and the balance of the earnest money amounting to Rs. 35,00,) by 17-4-1976, the deal between the parties came to an end and accordingly the amount of Rs. 5,000 received by the defendant on 10-4-1976 was returned to the plaintiff. On the above pleadings of the parties the following issues were framed by the Court on 22-4-1979 :-
(1) Whether there was any concluded sale agreement ?
(2) Whether the plaintiff was acting as an agent for an undisclosed pur--chaser or was acting in his personal capacity?
(3) Which of the parties has committed breach of the contract?
(4) Whether the plaintiff is entitled to specific performance of the sale agreement ?
(5) What should be the decree ?
4. The plaintiff in support of his case has examined himself (Exh. 8), Ishtiaq Ahmad, an employee of Habib Bank Ltd. Defence Society Branch (Exh. 9), his son Nasiruddin Ahmad-Bati (Exh. 10), while the defendant has examined herself (Exh. 11), her husband Shahid Hussain Fathi (Exh. 12) and one S. A.
5. Raheem (Exh. 13).
6. I heard Mr. Haider A.I Pirzada, the learned counsel for the plaintiff and Mr. Mustafa Lakhani, the learned counsel for the defendant on the above issues. My findings on the issues are as follows :-- issues Nos. 1 and 2: I will deal both these issues together as they are inter-connected and can be conveniently disposed of together.
7. From the oral evidence and the documents produced by the parties on record it is clear that the defendant does not dispute that she had agreed to sell the property for a sum of Rs. 4 lacs and that she received the sum of Rs. 5,000 on 10-4-1976 from the plaintiff towards the sale price of the pro--perty. The defence of the defendant in the suit are two-fold. It is firstly contended that the receipt dated 10-4-1976 is not a concluded contract as it was to be followed by execution of a formal agreement of sale and pay--ment of balance of the earnest money amounting to Rs.
8. 35,000 within 7 days of execution. Secondly it is asserted that the plaintiff did not act in his, personal capacity in the bargain but acted only as a broker for some undis--closed purchaser and as such cannot apply for specific performance of such it contract. In order to appreciate the point fully it is necessary to reproduce here the disputed receipt which is produced as Exh. 4 in the evidence and it is as follows :- "RECEIPT I, Mst. Masooda Fatimi who Lt.-Col. (Rtd.) S. H. Fatimi, Muslim, adult, resident of B-3, P. M. P. F. Landhi- Karachi, do hereby acknow--ledge having the cash receipt of Rs. 5,000 (Rs. Five thousands only) as advance payment of the total agreed sale consideration amounting totally to Rs. 4,00,000 (Rs. Four lacs only) of our bungalow built on Plot No. A-25-B/I on the main Sunset Boulevard Road, situated in the territories of Pakistan Defence Officers Co-operative Housing Society Ltd., Karachi, from Major Ahmed Khan Bhatti (Retd1 son of Khan Nawab Khan, Muslim, adult, resident of 50-F/6, PECH Society Karachi-29.
9. Mst. Masooda Fatimi.
10. Witnesses
1. (Sd.) S. H. Fatimi Lt.-Col. Retd.
11. 10-4-1976
2. (Sd.) . Naseeruddin A. Bhatti 10-4-1976."
12. The above receipt is signed by the defendant and witnessed by her husband and the son of the plaintiff. The payment of Rs. 5,000 is shown as an advance- payment out of the total agreed sale consideration of Rs. 4 laes in respect of the sale of the bungalow constructed on Plot No. A-25-B/I situated on main Sunset Boulevard Road, Pakistan Defence Officers Co-ope--rative Housing Society, Karachi. The amount is shown to have been received by the defendant from Major Ahmad'
13. Khan Bhatti (Retd.) son of Khan Nawab Khan, Muslim, adult, resident of 50-F/6, PECH Society, Karachi-29. It- is not disputed in the case that the plaintiff is an Estate Broker. The defendant has contended that the plaintiff contracted her in his capacity as a broker to purchase the bungalow for some undisclosed purchaser and in that con--nection be paid the sum of Rs. 5,000 to her. The plaintiff on the other hand has contended that he was in need of a house for himself as he had committed with his landlord to vacate the premises where he was then living, in the proceedings instituted for his ejectment by his landlord and therefore when he came to know of the sale of the bungalow by the defendant, he approached her to purchase the same for himself and not for any of his clients. I will therefore, before considering whether the receipt was a concluded contract of sale capable of being specifically enforced, first determine, whether the plaintiff acted in the deal for himself or for some other person as a Estate Broker. 1: In support of his assertion that the plaintiff had acted in this deal personally to acquire the bungalow for himself, the plaintiff has relied on his own evidence, the evidence of his son and the certified copy of the compromise dated 8-3-1976 filed in IInd .Appeal No. 175 of 1976. Both plaintiff and his son in their evidence categorically stated that they visited the house to purchase for themselves as they were to vacate the house by 31-10- 1976 under a compromise arrived at in Court between the plaintiff and the landlord of the premises where they were residing. The certified copy of the compromise which is dated 8-3-1976, and was recorded by this Court in IInd Appeal No. 175 of 1976 filed by the plaintiff against one Mst. Amina Khatoon, do show that the plaintiff had undertaken to vacate the premises on or before 31-10-1976.
14. The receipt executed by the defendant, on 10-4-1976 shows that the amount was received by the defendant from the plaintiff towards part payment of the sale consideration of her bungalow. The receipt nowhere mentioned that the amount was paid by the plaintiff on behalf of some one else or as a Estate Broker. On the contrary the description of plaintiff in the receipt (Exh. 4) alongwith his father's name and his full residential address lend support to the contention of the plaintiff that be was acting personally and not as a Estate Broker for any one else in the deal. The plaintiff was a Estate Broker to the knowledge of defendant, and there appears to be no reason why he should not have described himself as such in the receipt, if the money was advanced to defendant on somebody else's behalf. The only reason, to my mind, to describe the plaintiff in the manner as was done in Exh. 4, could be that the deal was between the defendant and the plaintiff personally. It is also not without significance that in her letter dated 17-5-1976 (Exh. 11/1), which the defendant wrote to plaintiff returning the amount of Rs. 5,000 neither plaintiff is described as a Estate Broker nor deal was mentioned as having been made by the plaintiff on behalf of any other person. On a careful consideration of the evidence and the circum--stances under which the deal was made I hold that the plaintiff acted in the bargain in his personal capacity and not as an agent on behalf of any one else.
15. The learned counsel for the defendant has urged that the execution of this receipt (Exh. 4) was only a step in the bargain and the execution of a formal agreement of sale between the parties and payment of balance of earnest money on a later date were the essential terms of bargain and non-compliance thereof by the parties rendered the whole transaction void. The learned counsel in this connection relied upon the evidence of plaintiff in the case where he stated that he had to pay the balance of the earnest money amount--ing to Rs. 35,000 and also to execute a formal agreement of sale incorporat--ing all the conditions at a later date It is accordingly contended by the learned counsel that even if the assertion made by the plaintiff is to be believed then the receipt dated 10-4-1976 (Exh. 4) was to be followed by a further pay--ment of Rs. 35,000 and execution of a formal agreement of sale between the parties and therefore, it necessarily follows that the receipt did not constitute a concluded agreement between the parties. It is true that the plaintiff in his evidence as well as in the plaint admitted that after the execution of the receipt (Exh.
16. 4) dated 10-4-1976, it was agreed between him and the defendant that the plaintiff will pay a further sum of Rs. 35,000 towards earnest money on execution of a formal agreement of sale but this does not necessarily mean that the parties had in their contemplation that until and unless the later agreement was signed, no valid contract came into existence. In such circumstances, where a document which is relied upon as a contract, contemp--lates execution of another document, it is really a question of construction of the document whether the execution of the later document is a condition of the terms of the bargain or is merely an expression of desire on the part of the parties as to the manner in which the agreed transaction is to take place: If the execution of later contract is found to be a condition of the term of the bargain' then no contract comes into existence until the later agreement is executed between the parties, but if the execution of the later agree--ment is held to be only an expression of desire on the part of the parties to state the manner in which the. Agreed transaction is to go through, then the non-execution of the later agreement may be ignored and the transaction as evidenced by the original document may be given effect to as a binding contract. The law with regard to the construction of such document was laid down by Parker, J. As late as in the case of Hatzfeld Wildelburg v. Alexander (1) -and I will do no better than to reproduce the following relevant passage from the above case which has been consistently quoted with approval by the Privy Council in the cases of Harichand Mancharam v. Govind Luxman Gokhale. (2), Seth Hukam Chand and others v. Raja Ram Bahadur Singh and another (3); Currimbboy & Co. Ltd. v. L. A. Creet and others (4) and Shankarlal Narayandas .Mundade v. The New Mofussail Co. Ltd. (5)
17. "It appears to be well settled by the authorities that if the documents or letter relied on as constituting a contract contemplate the execution of a further contract between the parties it is a question of construction whether the execution of the further contract is a condition of term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. Its the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. 1n the latter case there is a binding contract and the reference to the more formal document may be ignored."
(1) (1912) 1 C H 284 (2) AIR 19231i`Q 47
(3) AIR 1924 P C 156 (4) AIR 1933 P '1.5.29
(5) AIR 1946 P C 97 On examination of the document Exh. 4, in the light of the above enunciation of law, there is no. Difficulty to find out that it contained the essential' terms of a binding agreement to sell the immovable property. The total sang consideration for which the property was agreed 'to be sold is stated ash Rupees four lacs. The amount of Rs. 5,000 was shown to have been received' as advance by the defendant towards sale of the property, full description whereof is given in the document. The names of vendor and the vendee are given with precision. Section 10 of the Contract Act provides that all agree--ments which are made by free consent of the parties competent to contract, for lawful consideration and with lawful objects are contracts. Similarly a contract for sale of immovable property as defined in section 54 of Property Act, is a contract for sale of such property on terms settled between the parties. There is nothing in the document Exh. 4, which offends against any of the above-quoted provisions of Contract Act and the Transfer of Property Act, so as to disqualify it to be treated as a contract for sale of the immovable property.
18. The learned counsel for the defendant contended that the receipt Exh. 4, does not show when the balance price is to be pald and how and by whom the other formalities required in connection with the completion of sale are to be performed. Absence of these stipulations in my view, cannot render the contract void or unenforceable, as in such cases the rights . And liabilities of the buyer and seller will be governed under the statutory provisions of Transfer of Property Act which became applicable in the absence of a contract to the contrary between the parties.
19. The learned counsel for the defendant has relied upon the cases of Govind Laxman Gokhale v.
20. Harichund Mancharan (1) and the case of Shree Ambaranath Corporation v. D. B. Godbole (2) to contend that where the initial document executed between the parties contemplated execu-- petition of a further document, which the parties did not execute, no binding agreement between the parties capable of being enforced came into existence In so far the first mentioned case is concerned, the learned counsel failed to notice that the decision of Marten, J. In AIR 1919 Bom. 154 was re--versed in appeal by a Division Bench of same Court consisting of Mcleod C. J. And Heaton J. And the judgment of the Division Bench was upheld on appeal by the Privy Council.. Although the decision of the Division Bench is not reported but the appellate decision of the Privy Council is repor--ted as Harichand Manachararn v. Govind Luxman Gokhale (3). The other case reported in AIR 1957 Bom. 119 relied by the learned counsel is hardly of any assistance to him. In this case the plaintiff who was a displaced person having verified claim, had entered into an agreement to take on lease certain evacuee property from the Custodian of Evacuee Properties and the agreement between him and the Custodian provided that the market value of the property will be determined by an expert to be appointed by the Government of India. Government of India who was not a party to the suit was found by the Court under no obligation to appoint such a person and accordingly the Court held that the determination of the market price of the properties depended upon the volition of a person other than the party to the suit. It was also found in that case by the Court that the quantum of property to be conveyed to the plaintiff in suit was indefinite and that even the purchasers were not definite persons since it was provided in the agreement between the plaintiff and Custodian that in the event of market value determined under the agreement exceeded the verified claim of plaintiff, other displaced persons could be associated for payment of same. It was on consideration of these circumstances, the Court found the agreement to be indefinite and incapable of being enforced. No such situation prevails in the present case before me. In my view, fairly construed, the document Exh. 4, relied upon by the plaintiff contained all the essential and necessary characteristics of a duly concluded contract for sale of immovable property, and the mere fact that the parties had agreed at that time also to execute another formal agreement setting forth the manner and mechanism in which the agreed terms and conditions were to be given effect to, and which was C not executed, is not sufficient to detract the document Exh. 4, from being considered as a concluded contract for sale of the suit property. I accord--ingly hold that Exh. 4 was a concluded sale agreement between the plaintiff and the defendant.
(1) AIR 1919 Born. 154(2) AIR 1957 Bom. 119
(3) AIR 1923 Bom. P C 47 Issue No. 3: This issue relates to the breach of the contract. The defendant has contended that the sum of Rs.
21. 35,000 was to be paid within 7 days of the execution of Exh.
4. Exhibit 4 is dated 10-4-1976 and therefore, according to the contentions of the defendant the balance of earnest money was to be paid by 17-4-1976 and on failure of plaintiff to pay the same the contract came to an end. The plaintiff on the other hand contended that he was to .-nay the balance of the earnest money amounting to Rs. 35,000 by 19-4-1976. Although it is contended that the condition for payment of balance of the earnest money was to be performed by 14-4-1976, but it is an admitted post-- petition that until 17-5-1976, when the amount was returned to plaintiff, no step was taken by the defendant to repudiate the contract. On the contrary the plaintiff has brought on record sufficient evidence to show that he had obtained a Pay Order for Rs. 35,000 in the name of defendant from Habib Bank Ltd. Defence Society Branch, and also got typed the agreement which was to be signed between the parties on 19-4-1976. The plaintiff has alleged that these formalities were to be completed by 19-4-1976. The document Exh. 4 does not contemplate any time limit as to the payment of balance of earnest money amounting to Rs. 35,000. Ishtiaq Ahmad an employee of Habib Bank Ltd. Defence Society Branch, Karachi who was examined by the plaintiff stated in his evidence (Exh. 9) that a Pay Order in the sum of Rs. 35,000 payable to the defendant was obtained by the plaintiff from the Defence Society Branch of Habib Bank Ltd. On 19-4-1975 after &positing a sum of Rs. 35,000 in' cash and this pay order was later cancelled on the application of plaintiff on 12-10-1976. This witness also produced the original deposit slip of Rs. 35,000 made by plaintiff, the original pay order and the application of plaintiff for cancellation of the pay order. In the absence of a stipulation in Exh. 4 as to the time for payment of balance of earnest money and keeping in view the conduct of the parties I am of the view that there was no breach on the part of plaintiff. It may also be mentioned here that in transaction relating to sale of immovable properties time for performancein not the essence of the contract unless the parties so specially provide in the contract. The plaintiff in his evidence asserted that be had gone to the husband of defendant alongwith the pay order and the typed agreement and one set whereof was retained by him and he promised to come to plaintiff with his wife (defendant) to execute the agreement. "It is also claimed by the plaintiff that when the defendant and her husband did not contact him he called on the defendant and was informed by the defendant and her husband that due to some death in the family they could not show the agreement to their counsel for advice and promised to complete the same soon. The defen--dant's husband in his cross-examination though did not admit receipt of docu--ment from the plaintiff but stated that was during 17-4-1976 to 17-5-1976 the plaintiff might have contected him on telephone and his wife was ill and he was pre-occupied in his office work. He also admitted that there might have been some death in his family.
22. Considering the over all evidence in the case and the conduct of the parties, the evidence on record supports more to the to the plea of plaintiff than the defence raised by the defendant. The defen--dant was admittedly not willing to perform the contract after 17-4-1976 and repudiated the same by sending the letter dated 17-5-1976 (Exh. 11/1). I accordingly bold that defendant committed breach of the contract.
23. Issue No. 4: The agreement for purchase of property was entered into on 10-4-1976. The plaintiff got a pay order issued by the Bank in the name of defendant on 19-4-1976. Immediately in the repudiation of the contract by the defendant on 17-5-1976, the plaintiff sent the legal notice dated 21-5-1976 and the present suit was brought within two months of the agreement. The plaintiff, therefore, did not delay the matter in the least and took prompt action to show that he was ready and willing to perform his part of the contract. The defendant has not denied that she bad agreed to sell the property for Rs. 4 lacs. No undue advantage is ,therefore, like to be gained by the plaintiff. Even otherwise the defendant has not contested the grant of specific perfor--mance except on the two grounds which I have found against her. 1, have fore, see no reason to refuse the specific performance of the contract. I accordingly decree the suit of the plaintiff for specific performance and direct that the defendant shall convery her right title-in-interest in the building constracted on Plot No. A 25-6/I, Sunset Boulevard Road. Phase-II, Pakis--tan Defence Officers Co-operative Housing Society, Karachi by executing a proper and valid sale-deed upon payment .By the plaintiff of a sum of Rs. 2,95,000. The stamp duty and other charges for registration of the sale deed shall be paid and borne by the plaintiff. In case the defendant fails to shall be completed by the Nazir in favour of the plaintiff in accordance with law upon deposit of. The balance of sale consideration amounting to Rs. 395,OC0 by the plaintiff. The plaintiff will also be entitled to the costs of the suit.