' This is a suit for recovery of Rs, 1,18,810 under Order XXXIV, C. P. C. And the facts material to the controversy are not in dispute. On 6th October, 1969, the defendant No, 1 was informed by the Settlement Department that his highest bids at an auction held on 30th September, 1969 for the building sites, bearing Survey Nos. 268/2, 268/3, 268/4, and 268/5 in Deli Thano, Tappa Malir, Karachi were accepted by the Additional Settlement Commissioner, and the defendant No, 1 was called upon to deposit one-fourth amount of the auction price within three days and the balance amount alongwith settlement fees within 30 days. The first instal ment was paid by the defendant on 4th October, 1971.
2. Under an agreement in writing dated 4th October, 1971, the defendant No, 1 agreed to sell to Eastern Federal Union Insurance Co. Ltd., the predecessors in interest of the plaintiff, the said building sites for a total gun of Rs, 1,68,704.25, free from all encumbrances. On execution of this agreement the defendant No, 1 as Vendor received a sum of Rs, 1,00,000 towards part payment of the sale consideration from the Vendee and the balance of Rs, 68,704.25 was to be paid by the Vendee "before the Sub-Registrar, Karachi at the time of execution of the registration by the Vendor of a proper conveyance deed of the said land in favour of the vendee, and on the vendor making over a clear valid, subsisting and marketable title of the said land with vacant possession. The defendant No, 1 vendor further agreed that he will complete the sale by obtaining necessary property documents from the Settlement Authorities and the possession of the lands from the Haris and removed of all unauthorised construction and cultivation thereof and that if he failed to register the deed in favour of the vendee within three months from the date of the execution of the agreement the amount of Rs, 1,00,000 paid to the Vendor will be refunded with interest at the rate of 9% per annum. As security for re-payment, the vendor executed and delivered a Promissory Note for this sum in favour of the vendee. The agreement further provided that the transaction shall be completed within three months from the date of the execution of the agreement (extendable by mutual consent). The Vendor further agreed to furnish guarantee for the performance of the agreement and for indemnifying the vendee for any loss or damage the vendee may suffer on account of breach of the terms of the agreement. The agreement contained a warranty and assurance by the vendor to the vendee that the said building sites shall be transferred to the vendee on his making payment of the balance of 75% of the price to the Settlement Department. In terms of this agreement the defendant No, 1 received from E. F. U. The sum of Rs, 1,00,000 for which he executed a promissory note and also procured a guarantee from defendant No, 2, his mother, who guaranteed the due performance of the agreement by defendant No, 1 and refund of the money advanced by E. F. U. To the defendant No, 1 on demand and without any objection "in the event of nun-performance of the said agreement for any reason whatsoever within the time stipulated in the said agreement". Additionally the defendant No, 2 deposited with E. F. U.
Documents of title of her property with an intent to create an equitable mortgage for the purpose of securing payment to the E. F. U. Of any amount to which the E. F. U. May become entitled to in terms of the guarantee executed by her for the performance of the agreement of sale by the defendant No, 1.
3. It is an admitted position that the sum of rupees one lac was received by defendant No, 1 to enable him to clear the dues of the Settlement Department for the balance of 75% price of the said building sites but instead he utilised about 50 to 60 per cent of this amount in his own business and the rest remained in his bank account. It is also an admitted position that the defendant No, 1 has obtained from the Settlement Department Transfer orders' in his favour for the said building sites but these will not become final until 1st July, 1974 by which time the defendant will have paid balance of 75% price in instalments. The defendant No, 1 has also not taken any steps to secure vacant possession of the land, which continues to be occupied by haris.
4. Now I. Will come to the correspondence between the parties. The E. F. U. By its letter dated 30th December, 1971 informed the defendant No, 1 that as per terms of the agreement he was to execute the said deed in respect of the building sites on or before 4th January, 1972, and accordingly, he was requested to expedite the execution and registration of the sale-deed before the expiry of this date. In his reply dated 21st ' January, 1972 the defendant No, 1 expressed his regrets that due to unavoidable circumstances and abnormal conditions in the country he could not complete the formalities required for execution of the sale-deed and requested that the time for completion be extended up to 31st April, 1972. In their next letter dated 24th February, 1972, E. F. U. Regretted that defendant No, 1 had not executed the sale-deed and, he was, therefore, again requested to please expedite the execution and registration of the sale-deed within seven days from the receipt of this letter." In reply to this letter the defendant No,
1. Stated that he was doing his best to complete the sale but on account of recently announced Land Reforms, the Revenue Authorities had completely stopped mutation of land and requested that the time be further extended to enable him to complete the formalities.
On 5th August, 1972 the defendant No, 1 was served with a legal notice in which it was allaged that he had failed to execute and register the requisite conveyance deed within the stipulated period inspite of repeated demands and that the land continued to remain in possession of-the harts accordingly the agreement was cancelled and the defendant No, 1 called upon to repay the sum of rupees one lac with interest at 9% per annum. The reply to this legal notice was that the completion of the sale had been delayed on account of unavoidable circumstances ; that time for completion stipulated in the agreement was not of the essence ; that the vendee had no right to cancel the agreement in this arbitrary manner and that the vendor was doing his best to get the formalities completed and to register the sale-deed and as soon as he was in a position to do so he will intimate the vendee accordingly. The reply concluded with a request for extension of time for a reasonable period. In another letter dated 16th September, 1972 the defendant No, 1 referred to some discussions he had with E. F. U. On 9th September, 1972 and requested that time be extended for a period of four months for completion of the sale and that Vendee's legal Advisors be advised accordingly and confirm the same. -On 2nd January, 1973 the defendant No, 1 again requested the vendee "to confirm the extension of time so that further proceedings should be carried out for finalising the sale transaction."
5. Oral evidence in this case of the Chief Engineer, E. F. U. And the defendant No, 1.
6. The following issues were framed by the Court with the consent of the parties and they read as follows :- "(1) Whether the suit is maintainable in its persent form ?
(2) Whether the defendant No, '1' committed breach of the agreement dated 4th October, 1971, and if so, what is its effect ?
(3) What should be the decree ?"
7. ISSUE No, 1.-The maintainability of this suit under Order XXXIV, C. P. C. Was questioned by Mr. Saeeduzzaman Siddiqui, the learned Advocate for the defendants on the ground that there was no consideration for the mortgage. The learned counsel contended that a mortgage must be supported by consideration and the consideration envisaged by law is loan advanced to the mortgagor and not for the benefit of a third person and since in this case the mortgagor, the' defendant No, 2, had received no part of the consideration, for the entire amount was admittedly received by defendant No, 1, there was no mortgage. The definition of mortgage in section 53 of the - Transfer of Property Act, however, does not provide that the loan secured must be advanced to the mortagagor. A mortgage, therefore, can be created for the purpose of securing a debt of a third person. In the present case the amount of Rs, 1,00,000 was paid to the defendant No, 1 on the guarantee of the defendant No, 2 and, there was, therefore, sufficient consideration for the mortgage by the guarantor in favour of the mortgagee. The issue is, therefore, decided against the defendants.
' ISSUE NO. 2.-This is the main issue in this suit. The plaintiff's case is that the time for the completion of the sale under agreement dated 4th October, 1971, was the essence of the contract, and since the defendant No, 1 failed to perform his obligation, under the agreement within the stipulated period of three months he has committed breach of the agreement. The law is well settled that in a contract for sale of land though the period is fixed by the contract the presumption is that the parties intended that the agreement should be performed within a reasonable time and that the fixing of the time limit in the agreement does not by itself rebut the presumption and lead to an inference that time was intended to be made the essence of the agreement. Mr, Mansoor Ahmad Khan, the learned counsel for the plaintiff, therefore, quite understandably relied on the surrounding circumstances which according to him rebutted the presumption that the time in this case was not of the essence. The circumstances referred to were the payment of a substantial sum of rupees one lac, representing more than 50 per cent of the entire sale consideration at the time of execution of the agreement to the defendant on condition that he will utilise the same towards payment of balance 75% price to the Settlement Department the assurance by the defendant No, 1 that the Department will transfer the lands in his favour on receipt by them of the balance 75% price on the delivery of demand promissory note to the plaintiff and the security given by defendant No,
2. It was argued that the plaintiff would not have parted with such a large sum of money if the sale was to be delayed beyond the stipulated three months period. The aforesaid circumstances, however, are equally compatible with the intention not to make the time the essence of the contract. The plaintiff was aware that the defendant No, 1 had no title to the property as on the date of the agreement and that the subject land was in occupation of the haris with unauthorised constructions thereon. It must have been in the contemplation of the parties that these matters which were at least partially dependant upon third parties may take more time. The plaintiffs may have apprehended that even in the extended reasonable time the defendant No, 1 may not be able to complete the transaction and it was to meet this situation, it was taking extra precaution to itself the refund of advance payment made. If it was the intention of the parties or at least that of the plaintiffs, that the time for completion was to be of the essence, such an intention should have been clearly and unmistakably so expressed in the agreement. I am inclined to agree with Mr. Saeedduzzaman Advocate for the defendants that the agreement is not only silent on the point but a contrary intention is discernible by the insertion of the bracketted words extendable by mutual consent" in clause 12 of the agreement. It may also be noted that neither in the plaint, nor in the deposition a distinct assertion was made on behalf of the plaintiff that the stipulated time was the essence. Such a plea at best can only be inferred from the allegation in paragraph 7 of the plaint that "the defendant No, 1 failed/refused/neglected to perform the agreement of sale and complete the sale transaction within the stipulated period, ending 4th January, 1972 or thereafter."
It may further be noticed that though according to the plaintiff the time was essence of the contract and this time expired on 4th January, 1972, the defendant No, 1 was on 24th February, 1972 called upon to complete the sale within seven days and the agreement itself was not cancelled by the plaintiffs until 5th August, 1972. The alternative argument of Mr. Mansoor Ahmad Khan was that the time was subsequently made the essence by the plaintiff by its letter dated 24th February, 1972 and the defendant No, 1 in spite of this failed to complete the sale within the extended period and thus committed breach of the contract. Now it is nowhere the case of the plaintiffs either in the plaint or in the evidence that time was subsequently extended and/or made of essence. The plaintiff's witness categorically asserted that the plaintiffs had never extended the time stipulated in the agreement. I do not think that the plaint which proceeded on the basis that time was of essence and the breach committed on the expiry of the period of three months on 4th January, 1972. Be that as it may, the letter dated 24th February, 1972 does not in unmistakable terms make the time the essence of the contract. If it is the requirement of the law that such an intention must be clearly demonstrated at the execution of the agreement, it should undoubtedly be so expressed in distinct and unequivocal language when a party seeks to engraft time so as to make it of essence of the contract when it has not originally been the essence. No doubt the defendant No, I had committed several defaults and caused unexplained delays as on that date, and in particular, he did not deposit the balance 75% price with the Settlement Department which would have enabled him to obtain immediate Final Transfer Order from the Department. The defendant No, 1 had also not taken any steps to obtain possession of the land. This conduct on the part of defendant No, 1 would have clearly entitled the plaintiff to give him a notice making . Time essence of the contract and making it known to him that if he failed to perform his part of the contract within the, extended reasonable period, the plaintiff will cancel the contract. No such action was, however, taken. The letter dated 24th February, 1972 contains only a request to please expedite the execution and registration of sale-deed within seven days of its receipt. It gave no further indication of the mind of the plaintiff. The occasion for the defendant No, I to commit breach of the agreement would arise only subsequent to making . The time of the essence of the contract by an express, distinct and unequivocal notice. Mr. Mansoor Ahmad Khan referred to Transfer Orders dated 30th June, 1974 under, which the defendant No,.1 will not become final transferee until he pays entire transfer price for which he has been given time up to 1st. July, 1975. The learned counsel in effect suggested that giving of reasonable notice making time of essence would be in the circumstances an exercise in futility making no material difference. The argument overlooks the possibility that the defendant may immediately on receipt of such notice make full balance payment to the Settlement Department and perform his agreement. It cannot, therefore, be said that the defendant No, 1 has committed breach of the agreement This issue is, therefore, answered against the plaintiff.
9: Issue No, 3.-The plaintiff's claim for refund of rupees one lac with interest against the two defendants is dependant upon the failure of defendant No, I to perform his agreement. Since my finding Is that defendant No, I cannot be said to have committed breach of the agreement, the plaintiff is not entitled to the relief claimed. The suit is, therefore, dismissed but in the circumstances of the case there will be no order as to costs.
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