' MUHAMMAD ATHAR SAEED, J-. This appeal has been filed impugning the judgment of the learned Lahore High Court, Multan Bench dated 7-12-2000 in R.F.A. No,98 of 1987 whereby the learned High Court had allowed the appeal filed by the present respondents against the judgment and decree of learned Senior Civil Judge, Muzaffargarh dated 16-11-1987 passed in Civil Suit No,403 of 1978.
2. Brief facts of the case are that present appellants entered into registered agreement to sell with Syed Muzaffar Hussain son of Syed Atta Hussain Shah and Mst. Sardar Bibi widow of Syed Atta Hussain Shah who have been arrayed as respondents Nos.22 and 23 in this appeal on 2-3-1974 for the purchase of the land in dispute for a consideration of Rs,350,000 out of which a sum of Rs,252,000 had been received by respondents Nos.22 and 23 as earnest money and the remaining amount was to be paid by the present appellant on various dates as per sale agreement and the culminating date for getting the sale deed registered in favor of the appellants was 30-11-1974.
However, later on without waiting for 30th November 1974 and after allegedly cancelling the agreement to sell mentioned above, the respondents Nos.22 and 23 sold the property to predecessor-in-interest of respondents Nos.1-21 on 26-8-1974. The appellants immediately filed a suit for specific performance of contract against respondents Nos.22 and 23 before the Senior Civil Judge, Muzaffargarh on 28-8-1974 and later on respondents separately filed written statements before the trial Court. In the year 1977, the predecessors-in-interest of respondents Nos.1-21 were impleaded as party to the suit and they also filed joint written statement contesting the suit. Initially the trial Court framed eleven issues but later on three additional issues were also framed. After recording evidence of the parties and giving findings on various issues the trial Court accepted the claim of the appellants and decreed their suit for specific performance of contract entered between the appellants and .Respondents Nos.22 and 23 for a consideration of Rs,350,000.
3. Being aggrieved by the judgment and decree passed by the trial Court the respondents Nos.1-21 filed R.F.A. No,98 of 1987 before learned Lahore High Court, Multan Bench and in the impugned judgment it was held that the only issue relevant to the present appellants was issue No,10-B which reads as under:-- "Issue No,10-B ' Whether the defendants Nos.3 to 9 are bona fide purchasers for valuable consideration without notice? OPD 3 to 9" and on the basis of the record and arguments made before them, the learned Lahore High Court held that the present respondents were bona fide purchaser for valuable consideration without notice and thus reversed the finding given by the trial Court on this issue and allowed the appeal and set aside the judgment and decree of the trial Court. Hence this appeal.
4. We have heard Mr. Muhammad Munir Peracha, Advocate Supreme Court learned counsel for the appellants and Mr. Abdul Rashid Awan, Advocate Supreme Court learned counsel for respondents Nos. 1-20.
5. Learned counsel for the appellants attacked the impugned judgment and submitted that trial Court had decreed the suit of the appellants in accordance with law bur the learned High Court has fallen in error by setting aside the same. He took us through the registered agreement to sell dated 2-3-1974 wherein it has been mentioned that the payment of Rs,49,000 will be made uphill 30-11-1974 and then the sale-deed and mutation will be registered. He further argued that the appellants were paying the installments in accordance with the schedule provided in the agreement and on 6-6-1974 they had approached the respondents Nos22 and 23 to pay an amount of Rs,25,000 but the respondents Nos.22-23 had refused to accept it, therefore on 20-6- 1974 they sent a notice through their advocate to the respondents asking them to honor the agreement and in paragraph 3 of this notice it was stated that the appellants offered the payment of Rs,25,000 to the respondents on 6-6-1974 which was, however, refused to be accepted by them.
He submitted that he also got a public notice published in daily "Imroz" on 22-8-1974 wherein it was stated that the appellants had entered into an agreement with respondents Nos.22 and 23 for the purchase of the suit property and had warned the prospective buyers not to enter into any agreement for the purchase of the subject property with the respondents. He submitted that despite this notice the predecessors-in-interest of the respondent Nos.1-20 entered into agreement to buy the property on 26-8-1974. He also drew our attention to a telegram sent by the advocate of respondents Nos.22-23 on 21-6-1974 whereby the appellants were given notice that since they had failed to pay Rs,25,000 in terms of the agreement to sell dated 2.3-1974, the said agreement stood cancelled and the amount of Rs,52,500 paid by them had been confiscated. He submitted that,, however, the contention made in their letter mentioned above that they tried to pay Rs,25,000 has not been denied up to date. He further submitted that one of the defense witnesses Syed Sajjad Hussain Gillani, Advocate who was counsel of respondents Nos.22-23 had deposed that he got public notice published in daily "Imroz" on 29-6-1974 whereby the respondents had proclaimed that their agreement with the appellants stands cancelled. Learned counsel submitted that exceptions to section 27 of the Specific Relief Act, 1877 are (i) that the person is a purchaser in good faith, (ii) that he had paid the sale consideration and (iii) that he had no notice of the previous contract. Learned counsel submitted that the case of the respondents did not fall within the category of the above exception under section 27 of the Specific Relief Act, 1877 as they did not fulfil the ingredient of this exception. He submitted that purchaser cannot be said to have purchased the property in good faith and the sale is tainted with mala fide because the price of the property on which they had agreed to purchase the subject property was Rs,350,000 whereas as per the sale-deed dated 26-8-1974 entered into between the respondents Nos.1 to 20 and respondents Nos.22-23, the price of the property was mentioned as Rs,200,000 along with Rs,74,000 development charges and no evidence had been brought on the record that the price of the property had fallen between the first registered agreement to sell and the sale deed executed on 26-8-1974. He further submitted that the respondents Nos.1 to 20 are related to respondents Nos.22-23 and it is not possible that they were not aware of the registered sale agreement entered into by respondents Nos.22-23. He further submitted that two notices one by respondents Nos.22- 23 dated 29-6-1974 cancelling the agreement and second the appellants on 22-8-1974 warning the prospective buyers not to enter into any agreement for the purchase of such property with the respondents were published in daily "Imroz" and the presumption is that the respondents would have seen these notices. Without prejudice to the above arguments, he submitted, that the respondents if they had proceeded carefully and were diligent, could have found the correct information about the previous contract. He submitted that even the learned High Court has not given a finding that the respondents were not aware of the contract but has given the finding that the respondents entertained an honest belief that agreement between the appellants and respondents Nos.22-23 was over and done with and the land was available for purchase by the respondents. He further submitted that other observations made by the learned High Court are extraneous of the case in hand but apparently had played a major role in formation of the opinion of the learned Judges of the Bench. In support of his contentions he relied on the following judgments:- ' Hafiz Tassaduq Hussain v. Lal Khatoon and others (PLD 2011 SC 296), ' Muhammad Anwar v. Muhammad Aslam and others (2012 SCM R 345) and
(iii) Mst. Rubina Badar through LR v. Messrs Long Life Builders and 4 others (2012 SCM R 84).
' On the basis of the above arguments the learned counsel prayed that the impugned judgment of the learned High Court may be set aside and that of the trial Court be restored.
6. Mr. Abdul Rashid Awan, Advocate Supreme Court learned counsel for respondents Nos.1-20 strongly opposed the arguments of the learned counsel for the appellants and supported the impugned judgment. He submitted that the trial Court had given erroneous finding on issue No,10- B which has been reproduced above and the learned High Court has rightly reversed this finding.
The learned counsel took us through the statements of defense witnesses and submitted that Qazi Muhammad Baths had specifically stated in his deposition that he had no knowledge that respondents Nos. 22-23 had entered into an agreement to sell with the appellants nor he learnt about this from any other source. He further submitted that apparently the sale consideration mentioned in the registered agreement to sell dated 2-3-1974 has been over stated perhaps to deter claim of pre-emption and this according to him can be gauged from the record. He submitted that according to the agreement an amount of Rs,252,000 has been paid but in the telegram cancelling the agreement sent by respondents Nos.22-23 the confiscated amount is stated to be Rs, 52,500 and therefore the sale price mentioned in the registered agreement to sell entered between the predecessor-in-interest of the respondents Nos.1-20 and respondents Nos.22-23 relates to the market value and is actual price and there is no mala fide in the transaction. He therefore submitted that he was a purchaser in good faith, had paid the entire sale consideration' and he had no knowledge of the previous agreement, therefore his case fell squarely within the exception of section 27 of the Specific Relief Act 1877. He also read out section 41 of the Transfer of Property Act, 1882 and submitted that since there was no question that the vendors i,e, respondents Nos.22-23 were owners of suit property and the transfer was made for a consideration, it cannot, therefore, be declared voidable. In this connection he relied on the judgment of this Court in the case of Kanwal Nain and 3 others v. Fateh Khan and others (PLD 1983 SC 53). He, therefore, prayed that appeal being meritless be dismissed.
7. We have examined the case in the light of the arguments of the learned counsel and have carefully perused the records of the case including the impugned judgments, the contents of the plaint, written statements and the depositions of the parties.
8. We have seen that the trial Court had framed as many as 15 issues including the additional issues which were numbered 10-A, 10-B, 10-C and 10-D and has given reasons for arriving at the findings on these issues. However, the learned High Court while hearing the appeal had come to the conclusion that the only issue relevant to the appellants before it was issue No,10-B and only adjudicated on that issue. The reason given by the learned High Court was that the respondents Nos: 22-23 before us had not filed any appeal against the judgment and decree of the Senior Civil Judge, Muzaffargarh and only supported the appeal filed by the present respondents Nos. 1-20.
Thus the learned High Court had impliedly upheld the findings of the trial Court on the other issues which were all in favor of the present appellants, however, the learned High Court had reversed the finding of the trial Court on issue No,10-B.
9. Although issue No,10-B has already been reproduced above, but for the sake of convenience it is being reproduced again as under:-- "Issue No,10-B ' Whether the defendants Nos.3 to 9 are bona fide purchasers for valuable consideration without notice? OPD 3 to 9" Giving reasons for reversing the finding of the trial Court on this issue the learned High Court had observed that the revenue record pertaining to the land in dispute had remained un-altered and admittedly no indication was available on the revenue record pertaining to the said land regarding any agreement so as warn any prospective buyer. The learned High Court also referred to the telegram sent by Mr. Azhar Hussain Hamdani, Advocate counsel for respondents Nos.22-23 on 21-6-1974 informing the present appellants about cancellation of the agreement on account of non-fulfillment of the condition to paying Rs,25,000 on 6-6-1974 and the public notice published in the daily "Imroz" by Syed Sajjad Hussain Gillani on 29-6-1974 to the effect that agreement to sell has already been cancelled. The learned High Court also acknowledged that the notice was published in the daily Imroz" on 22-8-1974 by the present appellants. On the basis of these documents the learned High Court reached to the conclusion that the agreement between the present appellants and respondents Nos.22-23 has ceased to exist and the publication of the notices by the present appellants was meant only to scare away any prospective buyers of the suit land. The learned High Court then came to the conclusion that respondents Nos.1-20 had purchased the suit land while entertaining an honest belief that the earlier agreement between the appellants and respondents Nos.22-23 was over and done with and the land in dispute was available for its purchase by the respondents. The learned High Court also made erroneous assumption that Qazi Muhammad Bakhsh who was one of the appellants before the High Court, was a respondent and had stated before the High Court that he cannot assert about the existence and subsistence of the original agreement. The learned High Court thus observed that the land in dispute was Banjar Qadeem and they had toiled hard to make it cultural and cultivatable. According to the learned High Court the claim of the respondents Nos.1-20 having entered into the bargain with nothing but bona fide on their part had remained unrequited in this case.
(10)the reason which persuded the trial Court to dispose of issue No 10.B in favorer of the present appellant are reproduced as under; Issue No, 10 B Since the defendants Nos.1 and 2 sold away the suit-land on 26-8-1974, before the expiry of the terms i,e, 30-11-1974 therefore, clearly the defendants Nos.1 and 2 were acting in mala fide manner.
Although, through the agreement Ex.P.1 the suit land was agreed to be sold for a sum of Rs,3,50,000 but vide Exh.D.2, read with the statement of D.W.3 it appears that the same was subsequently sought to be sold for a sum of Rs,200,000. It has been deposed to by D.W.3 in cross-examination, ' His admission when seen in the light of the proclamation in the news-paper Exh.P.5 proved by P.W.6 it clearly transpires that he defendants have got notice of the previous sale in favor of the plaintiffs and they could not be said to be acting bona fide. It was held in PLD 1959 Dacca 604 that, "... In a suit for specific performance of the contract against a transferee who too subsequent to the consideration sued upon, the burden of proving good faith and lack of notice is upon the defendant...".
' Issue is answered against the defendants Nos.3 to 9."
11. Having examined the reasons given by both the Courts below we find ourselves in agreement with the reasons advanced by the trial Court and are unable to concur with the reasons stated by learned High Court. The learned High Court has rejected the findings of the trial Court on mere surmises without giving any finding as to whether the basic ingredients of section 27(b) of the Specific Performance Act have been fulfilled or not. We consider that it will be appropriate to first reproduce section 27(b) of the Specific Performance Act and then consider whether the ingredients of this section were fulfilled by the present respondents:- "27. Relief against parties and persons claiming under them by subsequent title. Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against: (a)
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who .Has paid his money in good faith and without notice of the original contract;
(c) ''''''''''''''..
(d) .
(e) .. .. .......................
12. This section has very ably been discussed by this Court in the case of Tassaduq Hussain quoted supra and we would like to reproduce the relevant extract from this judgment:-- "5. Be that as it may, the subsequent vendee thus has to discharge the initial onus as follows:--
(1) that he acquired the property for due consideration and thus is a transferee for value, meaning thereby that his purchase is for the price paid to the vendor and not otherwise;
(2) there was no dishonesty of purpose or tainted intention to enter into the transaction which shall settle that he acted in good faith or with bona fide;
(3) he had no knowledge or the notice of the original sale agreement between the plaintiff and the vendor at the time of his transaction with the later.
' From the above it is depicted that the section merely enacts the English equitable rule which allows later legal title to prevail over an equitable interest in case of bona fide purchaser for value without notice (emphases supplied). And this principle has to be kept in view by the Courts while analyzing and appreciating the evidence on the record for the discharge of the requisite burden.
6. ' In the afore-noted context, it is thus required that a subsequent vendee should adduce in evidence his sale instrument or the mutation of his transaction, if not otherwise on the record having been brought by the plaintiff himself, or any other proof in this connection such as the receipt of payment made to the vendor or the bank record etc. Or should lead credible oral evidence in this behalf; these are some conceivable modes of proving the transfer for value and shall be a sufficient discharge of onus in this respect in ordinary cases. If however, a specific attack hip been made in the plaint or the replication by the plaintiff that the subsequent transaction is without consideration, or the value given is colorable, understated, underpaid and illusionary, it becomes the bounden duty of the subsequent transferee to establish through positive evidence that adequate price was paid, because this factum shall also have a close nexus to the good faith and the bona fides of the said transferee as well; when it is so done, the onus shall switch over to the plaintiff to prove otherwise.
7. ' The second ingredient "good faith" is the term which reflects the state of mind and according to section 3(20) of the General Clauses Act, 1897 "a thing shall be deemed to be done in 'good faith' where it is in fact done honestly, whether it is done negligently or not". While interpreting this, it was held in Nannu Mal v. Rani Chander (AIR 1931 All 277 (FB)) that good faith as defined above is equivalent to honesty of dealing and does not entail upon the purchaser the necessity of searching the registry, even assuming that there were facts indicative of negligence in investigating 'title, that by itself was not predicative of a lack of bona fides. Therefore, the second condition shall stand settled if the subsequent vendee has acted_ as a man of ordinary prudence in making inquiries expected from a purchaser who wants to acquire a good title for the price/value he is paying. This may include the checking of the Revenue Record or obtain the copies thereof to verify about the title of the vendor or any third party in right, interest or charge over the property or any endorsement in such record about any pending litigation or an injunctive order etc; this may be a good and adequate exercise of investigative, process, in case of rural/agriculture property. And for the same purpose, regarding urban property, the Excise and Taxation record may be examined coupled with the verification and obtaining the original documents of title from the vendor, if those are available. However, the subsequent vendee is not obliged to run from the pillar to post in conducting rowing and .Fishing inquiries, to ascertain if a third party has any interest etc. In the property which otherwise is visibly lacking. But if there exist some overt, prominent and conspicuous indicators about the third party interest, which are so patently noticeable and manifest that those could not and should not be missed and ignored by a purchaser, such as the possession not with the vendor but some One else, who if approached or its nature investigated would lead to discover such interest, the purchaser is obliged to probe about it, otherwise he may not be able to take resort of the noted equitable rule.
' If therefore a subsequent vendee has taken due care in the above manner and there are no indicators to put him to a notice of third party interest, he shall be said to have acted in good faith, thus satisfying the second condition of the rule.
8. The last and the utmost important ingredient of section 27(b) is the lack of knowledge or the notice of the subsequent vendee about the original contract between the plaintiff of the case and the vendor. This undoubtedly is the negative fact which cannot be conclusively, proved in positive terms, as it is inconceivable that such fact could be established by affirmative means. To illustrate the point; if the marriage between the parties is an admitted fact but due to the subsequent assertion of the husband that it has been terminated on account of divorce pronounced by him; the wife who refutes it and in order to safeguard her marital status and the rights flowing therefrom is constrained to institute a suit for jactitation, in which the man sets out (obviously) the defense of divorce; the factual proposition with reference to the noted facts which would emerge for the resolution and determination of the Court would be whether the plaintiffs is still the wife of the defendant? And/or whether the defendant has divorced the plaintiff? Viewing it from any angle the fact that the marriage on account of divorce by the husband stands dissolved is a negative fact for the wife to prove. Another example may further elucidate the point, in an ejectment petition, the landlord seeks the eviction of his tenant on the ground of default in the payment of rent, which fact is denied by the tenant, now it shall not be possible for the landlord to prove in the positive term that the rent has not been paid, which again is a negative proof of fact, thus the landlord shall be said to have discharged the initial burden of proof by making statement on oath about the lack of payment of rent, which shall be subject to cross-examination by the other side, thereafter, the onus shall be on the tenant to prove in positive terms that the rent has been paid. The above example shall also be true with reference to the first illustration, because if a wife makes a statement on oath about the subsistence of marriage between the parties and deny the divorce, she shall be considered in law to have discharged the initial onus, which shall switch over to the husband for the proof otherwise, by positive evidence. Because such a negative fact the law of evidence universally recognizes is not capable of proof positively"
13 We will now examine as to whether the above ingredients of section 27(b) have been fulfilled as detailed in the above extract in the case before us. The first ingredient is that the party has acquired the property for due consideration and this' Court in the above noted judgment in Para 6 has observed that if the value given in the subsequent transaction is colorable, understated or underpaid and illusionary it become the bounden duty of the subsequent transferee to establish through positive evidence that adequate price was paid, because this factum shall also have a close nexus to the good faith and the bona fide. However, the perusal of the record reveals that the price of the subsequent transaction was almost 60% of the price mentioned in the first registered agreement. No evidence has been adduced to assert that the price had over stated in the first agreement due to fear of preemption. No evidence has been brought on the record to prove that the price mentioned of the property in the sale deed was the market price A prevailing at the time of the subsequent sale and the price had fallen between the first agreement and subsequent agreement. In our view therefore the first ingredient has not been fulfilled.
14. Now we come to the second ingredient it has been stated by Qazi Muhammad Baths that he knew respondents Nos.22-23 for a long time and his acquaintance was to the extent that respondent No,23 did not even observe parda from him. It has also not been brought on record that the respondent has acted as a man of ordinary prudence in making effort expected from a purchaser who want to acquire title for price value he is paying. The, agreement in question was registered with the Registrar, two advertisements had already been published in the newspaper in respect of such agreement in the daily "Imran" which is well known paper of the locality but despite that, the respondents feigned ignorance of the agreement We, therefore, are of the view that the respondent had not acted bonafidely while purchasing the above property.
15. Now we come to the last and important ingredient of section 27(b). In this connection we would first like to observe that the learned High Court in its judgment has nowhere held or observed that the present respondents were unaware of the earlier agreement but had only stated that they had entertained an honest belief that the earlier agreement was over and done with and the subject land was available for purchase. Although in his deposition Qazi Muhammad Bakhsh, respondent No,1 has denied that he knew the existence of the agreement or respondents Nos.22-23 had informed him about such agreement but in his written statement he has not specifically denied lack of knowledge regarding earlier agreement but has just mentioned that even if there was an agreement between the appellants and respondents Nos.22-23 it had ceased to exist because of default on the part of the present appellants. We would also like to observe that registration of agreement to sell under the Registration Act, 1908 was in itself a notice to general public. We are also of the view that the publication of the public notices in the newspaper are to be considered as source of information to the existence or cancellation of the agreement and any prudent man would have inquired from the vendor about their stand on the validity and cancellation of the agreement.
16. We are therefore of the opinion that preponderance of evidence suggest that subsequent agreement was not executed in good faith without notice and therefore, the judgment of the learned High Court upholding otherwise cannot be sustained.
17. On the basis of the above discussion, we allow this appeal, set aside the impugned judgment of the High Court and restore the judgment of the trial Court and hold that such restoration will be subject to all the consequences emanating from the judgment of the trial Court.
' No order as to costs.