The petitioner challenges the order Annex. `B' by which the Deputy Secretary; Government of Pakistan, in exercise of powers conferred by rule 177 of the Defence of Pakistan Rules and Enemy Property (Continuance of Emergency Provisions) Ordinance, 1969 (I of 1969) cancelled the agreement dated 10th May, 1965. By that agreement the property No. S-66-R-10, Nila Gumbad, Lahore, had been agreed to be sold by the Punjab National Bank Limited to the petitioner.
2. Briefly, the facts of the case are that the property referred to above, owned by the Punjab National Bank Ltd. (now an enemy Bank), was agreed to be sold to the petitioner for a sum of Rs.
1,85,000, vide agreement dated 10th May, 1965. A sum of Rs. 20,000 was paid as earnest money. The balance was to be paid on the registration of the sale-deed.
3. In September, 1965, hostilities broke between India and Pakistan. The property in dispute was, therefore, declared to be enemy property under the Defence of Pakistan Rules and the State Bank was appointed its Deputy Custodian. On 14th May, 1969, the Central Government cancelled the agreement under rule 177 of the Defence of Pakistan Rules read with the Enemy Property (Continuance of Emergency Powers) Ordinance, 1969:
4. It is contended by the learned counsel that as according to rule 177 referred to above, an agreement could be cancelled only if it was injurious to public interest, the impugned order cannot be said to be with lawful authority. The reason advanced is that neither did such a consideration exist nor was it so stated in the order. He also made a grievance of the fact that though the petitioner had acquired a valuable right in the property, yet he was not heard. Reliance was placed on a number of precedent cases which may be discussed below.
5. In Ghulam J1Yani v. Government of West Pakistan (PLD 1967 SC 373), the Supreme Court held that the satisfaction of the detaining authority was justiciable. The same view was taken in Abdul Baqi Baluch v. Government of Pakistan (PLD 1968 SC 313), to hold that not only the jurisdiction of the executive authority, to make the order but manner of exercising jurisdiction also attracted judicial review. A Division Bench of the Sind High Court in Zarina Gauhar v. Province of Sind (PLD 1976 Kar.
1257), considered practically the entire available case-law and came to the conclusion that the satisfaction of the detaining authority must itself proceed upon reasonable grounds under section 3(2) of the Defence of Pakistan Ordinance, and in accordance with law due to Article of the Constitution.
6. The Dacca High Court which was dealing with a matter similar to the one in hand held that the Government while exercising power under rule 181 of the Defence of Pakistan Rules, must make a speaking order, fulfilling conditions laid down in sub-rule (1) of rule 181. See Rajendra Narayan Panday and 3 others v. The Government of East Pakistan andothers (PLD 1969 Dacca 836). The same Court in Malina Rani Das v. Government of L&st Pakistan (PLD 1968 Dacca 177), observed that an order passed under rule 181 of the Defence of Pakistan Rules, without application of mind to the facts and circumstances of case was not sustainable in law. To the same effect is the view in Daulatpur Jute Mills Ltd. v. Province of East Pakistan (PLD 1968 Dacca 33). The above view was upheld by the Supreme Court in appeal, as reported in Province of East Pakistan v. Daulatpur Jute Mills Ltd. (PLD 1968 SC 398).
7. Seen in the light of the rules laid down in the above judgments. The respondent was obliged to apply his mind to the facts of the case and see if the matter was covered by the consideration embodied in rule 177. Further, he should have passed a speaking order. Again, the division would, in any case, be justiciable and there being no reason given for, it could not be maintained. It is clear, on the face of it, that the agreement was not injurious to public interest. However, the above rules will apply to the case in hand only, if the agreement to sell was enforceable at law and it did confer any right on the petitioner.
8. The learned counsel for respondent No. 2 referred to the agreement Annex. `A' and stated that as the same was not only executory but also it empowered the vendor to terminate the contract at will, no right could accrue to the petitioner and there could be no grievance. He referred to clauses 1, 4, 5, 6 and 12 of the agreement in this regard, which may be reproduced with advantage : "(1) That subject to permission by the State Bank of Pakistan and/or other appropriate authorities in Pakistan, the Vendor agrees to sell and the Vendee agrees to purchase the aforesaid property for cash consideration of Rs. 1,85,000 (one lac eighty-five thousand) Pakistan Currency, out of which a sum of Rs. 20,000 (Rs. Twenty thousand) has been paid by .The Vendee to the Vendor as earnest money in cash on this day under clear receipt.
(4) That the Vendee shall get the sale deed executed and registered within three months of the Vendor's notifying that the abovesaid permission, sanction arid the certificates) whatever necessary had been duly obtained.
(5) That if the abovesaid pernussion, sanction and certificate(s) or any of them is not obtained for reasons whatever beyond the Vendor's control or these cannot be obtained this agreement will stand terminated without any obligation on either side except that the Vendor will pay back to the Vendee the aforesaid amount of Earnest Money without interest.
(6) That if the Vendor makes default in the performance of any of the conditions of this agreement, the Vendee shall be entitled without being obliged to do so to specifically enforce the agreement, and that if the Vendee commits ,default in the performance of the conditions of this Agreement, the Vendor shall be entitled to forfeit as damages the whole of the earnest money and the Vendees shall have no interest or claims under this agreement shall be considered as rescinded due to failure on the part of Vendee to perform his part of contract. If the Vendee elects not to enforce the agreement, in case of Vendor's default the Vendor will refund the earnest money to the Vendee without interest.
(12) That this agreement is subject to the permission of the State Bank of Pakistan and/or the Government of Pakistan and the Laws existing in Pakistan."
8. According to clause 1, the agreement was subject to permission by the State Bank of Pakistan and/or other appropriate authority in. Pakistan. It is admitted on both the sides that neither was any permission asked for nor was it at any time given. The sate deed was to be executed within 3 months of the Vendor's notifying that the abovesaid permission had been obtained. Clause 5 states that if the sanction provided in clause 1 is not obtained for reasons whatever beyond the Vendor's control or if the same cannot be obtained, the agreement shall stand terminated without any obligation on either side. The vendor, of course, would be liable to pay back the earnest money without interest. A right of specific performance was also granted under clause 6 to the vendee if vendor made default in performance of any of the conditions of the agreement. Obviously that question would arise only if condition No. 4 is fulfilled. Condition 12 is similar to condition No. 1.
9. The discussion made above does go to show that the performance of agreement, by the parties was dependent on prior fulfilment of conditions 1 and 12. Both were beyond the control of the original parties. The State Bank who had to grant sanction, itself became the Deputy Custodian and the property of the vendor vested in it. The State Bank thus could itself ask for or grant the requisite permission but it did not do so and was not even prepared to do when I inquired from its learned counsel. It shall, therefore, be deemed that the requisite sanction was refused.
10. In Rudra Das Chakravard v. Kamakhya Narayan 'Singh (AIR 1925 Pat: 259), it was held in view of section 24 of the 'Specific Relief Act that .Where the licensee under a prospecting licence is given an . Option to have a mining lease concluded within .a certain time and he does not exercise the option within the time, specific performance of the agreement to grant the lease cannot be decreed. Further, where the contents of the agreement show that, it was not the intention of the parties, if the agreement be considered a concluded contract until the draft licence and lease has been submitted to and .Sanctioned by the Board of Revenue, the plaintiff could not sue for. a decree for specific performance of the contract.
11. It was held in Pan Islamic Steamship Co. Ltd. v. Messrs General Imports & Exports Ltd. (PLD 1959 Kar: 750), that a contingent contract which was rendered impossible to be enforced could not be enforced. In Messrs Ashrafi (Pvt.) Ltd. And another v. Messrs Karachi Transport Syndicate Ltd., Karachi and another (PLD 1973 Note 119 at p. 184), a learned Single Judge of the Sind"High- Court held that agreements Which are dependent on acts of third parties or execution of a formal document to become concluded contracts have generally been held to be incomplete contracts and cannot bb specifically enforced. It was further held that relief of specific performance of a contract is discretionary. In Kirpal pas Jivraj Mal v. Manager etc. (AIR 1936 Sind 26), a Division Bench held that a contract which depended on measuring and demarcating the land agreed to be sold out of an undivided lane was dependent on a contingency which had not then happened. The suit was, therefore, premature and unenforceable specifically.
12. Thus the only . Right that could be enforced by the promisee in this case, was to compel the vendor to apply to the State Bank of Pakistan for the requisite sanction. This, however, could not be done in view of rule 170(f ) (i) which reads as under' :-- "170.-(1) No person shall, directly or indirectly-- (f ) enter into any new transaction, or complete any transaction already entered into, with an enemy firm in respect of any stocks, shares or other securities;" or
(i) enter into any other commercial or financial obligation or contract with, or for the benefit of, an enemy firm."
As obviously any further step in the matter would attract a financial Obligation for the benefit of the enemy firm, this was expressly prohibited The performance of the contract thus became impossible.
13. In any case, what the petitioner was pressing was only a contingent contract. Section 31 of the Contract Act defines it, as a contract to do or not to do anything, if some event, collateral to such contract, does or does not happen. Section 32 provides that if the event does not happen, the contract cannot be enforced. If on the other hand, the event becomes impossible, the contract becomes void. Section 34 of the Act provides that the event shall be considered to become impossible when such person does anything which renders it impossible that he should so act within any definite time or otherwise than under further contingencies.
14. Admittedly, the Punjab National Bank was concerned with its Head- office in India. It was for this reason that it was declared as enemy bank and its property enemy property. Any sale proceeds, therefore, would have to go to India. The performance of the contract was thus impossible in view of section 21 of the Foreign Exchange Regulation, 1947. The contract became void also under section 56 of the Contract Act. It, therefore, cannot be enforced specifically.