The present suit has been filed by the plaintiff-Company against defendant No. 1 for specific performance of a contract for renting out to the plaintiff premises measuring 5,340 square feet located on the ground floor of defendant No. 1' s commercial complex on M. R. Kayani Road, Karachi. Defendant No. 2 has been impleaded as the estate and booking agent of defendant No. 1.
The case of the plaintiff is that a contract was concluded where under defendant No. 1, agreed to rent out the aforesaid premises to the plaintiff and that under the agreement a sum of Rs. 5,00,000 has been paid by the plaintiff as advance rent or security deposit and that defendant No. 1 illegally terminated the contract and have refused to honour their commitment. The defence of the defendants, as manifest from their Written Statement, is that no contract was concluded between the parties. The case was fixed before me on 11-1-1982 for hearing of the temporary injection application (C. M. A. 4013/80) when both the learned counsel stated that correspondence exchanged between the parties was admitted and as no oral evidence was required, the main suit be decided. Accordingly on the same day i. e. 11-1-1982 the following issues were framed:-
(1) Whether any contract was concluded between the parties? If so, what are its terms?
(2) Relief?
The case was then adjourned for arguments today. Photostat copies of 18 documents, which had already been filed by the parties alongwith their pleadings, by consent of learned counsel, have been brought on record as Exhs. 5 to 22.
2. I have heard Mr. Habibullah Jatoi, learned counsel for the plaintiff, and Mr. Abdul Aziz Khan, learned counsel for the defendants. It was first argued by Mr. Jatoi that the parties had concluded a contract under which defendant No. 1, through its estate and booking agent defendant No. 2, agreed to give on rent the aforesaid premises at Rs. 6 per square foot per month with an advance rent of Rs. 20,00,000 payable in 4 instalments. On being asked to refer to the specific correspondence or any other document on the basis of which such agreement could be said to have been reached or concluded between the parties, learned counsel took the position that there was a verbal agreement on the aforesaid terms between the parties. As no oral evidence was led, the parties having requested that this case be decided on documents, as observed earlier, this contention of learned counsel for the plaintiff is of no significance. Oral agreement, as contended, is not proved. Even otherwise, in the face of the documents on record,, there could not have been an agreement between the parties on the terms mentioned by learned counsel for the plaintiff. 'the first document is letter, dated 8-2-1981 Exh.5) of defendant No.2 addressed to the plaintiff and it reads as follows:- "This is with reference to the meeting the undersigned had with your Mr. J. K. Lodhi and we have pleasure to state that we would be most Happy to give you Ground Floor and first Floor space in the above Complex on the following terms:-
(A) In the case of fixed deposit terms a sum of Rs. 1,000 per sq. Ft. Refundable deposit will have to be paid for the Ground Floor on the Area booked by you. A rent of Rs. 6 per sq. Ft. Inclusive of Rs. 1 service charge will have to be paid yearly in Advance for the number of years for which a lease has been executed. Thereafter fresh lease can be drawn up on fresh terms mutually agreed upon.
(B) Similarly the First Floor can be booked on a refundable deposit of Rs. 800 per sq. Ft. And on terms as mentioned in (A).
(C) In the case of Advance rental terms the rent will be increased to Rs. 12 per sq. Ft. Inclusive of Rs. 1 service charges and an advance of 5 years rent will have to be paid with a lease of 10 years, and rent to be paid year in advance at 5 % of the agreed rent for 10 years, thereby completing the lease period with the amount of rent payable.
(D) Similarly for the first floor the rent will be at the rate of Rs. 10 per sq. Ft. 4nclusive of service charges and as per clause (C) as above.
We would like you to select the space required by you from the site plan sent with this letter, so that the same be reserved for you.
Thanking you to please let us have your reply early so that other details required can also be discussed with you if the main terms have been agreed upon."
Exh. 5 shows that agreement could be reached on refundable deposit basis where the rent was on the lower side or on advance rent basis where the rent was nearly double. Plaintiff's case that an agreement was reached on advance rent basis with rent at Rs. 6 per square Ft. Is contradicted by Exh. 5 according to which the rent was to be at Rs. 12 per square Ft. If the basis was advance rent, Exh. 7, which was a preformed of terms and conditions also goes against the contention raised on behalf of the plaintiff. Then Exh. 8 is the application form, signed by the plaintiff, for booking space in the building in question. It shows that the request for booking was being made on security deposit basis. It was urged by Mr. Jatoi that the application was got signed from the plaintiff in blank and at a later stage the words "security deposit" were unathorizedly added by the defendants where as it should have been "advance rent". It is again pointed out that no oral evidence has been adduced by the plaintiff and in the circumstances Exh. 8 is taken on its face as filed and which shows "security deposit" basis.
3. The plaintiff has made two payments to defendant No. 1 totalling Rs. 5,00,000. Rs. 2,00,000 were paid by cheque dated 1-4-1981 and remaining Rs. 3,00,000 by cheque dated 8-8-1981. Receipt of these payment is admitted by defendant No.1. Now defendants' case is that the negotiations between the parties had taken place on security deposit basis where as according to the plaintiff agreement was concluded on advance rent basis. Till 12-10-1981 it appears from the documents on record, neither of the parties had an occasion to realize that there was a misunderstanding, which could only mean that there was no contract concluded between them. Plaintiff was proceeding on the premise that the basis was advance rent and according to the defendants it was refundable security deposit basis. On 12-10-1981 defendant No. 2 wrote to the plaintiff (Exh. 15) asking for another instalment of "security deposit" and enclosed a copy of the lease need. This comes as a surprise to the plaintiff who replied by their letter dated 15-10-1981 (Exh. 16) stating that the agreement was on advance rent basis with monthly rent @ Rs. 6 per square ft. The plaintiff then stated as follows:- "In view of the foregoing we are returning herewith the draft copy of "Deed of Lease" for necessary changes. This agreement should be duly filled in according to the agreed terms and it should be sent to us for our signatures immediately."
As observed earlier, the oral agreement, as alleged to have been reached between the parties has not been proved and in the face of the documents on record, such an agreement could not be concluded, there being a vast difference in the rates of rent for the two types of arrangements. It may again be observed that in the circumstances it cannot be held that till this stage any binding agreement had been reached between the parties, there being no consensus between them.
4. At this stage defendant No. 1 addressed their letter dated 19-10-1981 (Exh. 17) to the plaintiff which may be reproduced here :- "Thanking you very much for your letter No. Nil, dated 15th October, 1981. I am sure there is some misunderstanding in the whole exercise. The correct position is that the ground floor is available on the following terms :-
(a) Security deposit system.-A refundable security deposit at therate of Rs. 900 per S. Ft. Plus a monthly rental of Rs. 6.50 per sq. Ft. Per month. .
(b) Advance rent system.-Five years advance rent at the rate of Rs. 15 per S. Ft. Per month.
2. The above rates decrease progressively for each higher floor. At the above rates we are booking space for various clients like Chase Manhattan Bank, Muslim Commercial Bank, IBM, Bank of Tokyo, etc. I am enclosing a photo-copy of your application for showing your agreement in principle of' booking the space on ground floor on security deposit system. It was on this expression of intent on your part that we agreed to a much lower amount of security deposit (since you desired to give only Rs. 20 Lacs ab initio. This you would agree is likely to disturb our other clients who are paying a much higher rate.
3. Since you now desire to convert the arrangement to advance rent system, we could convert the amount of Rs. 20 Lacs into advance rent of appropriate number of years calculated at the rate of Rs. 15 per S. Ft. Per month. (This we could reduce to Rs. 12 as a special case for your esteemed firm).
4. Notwithstanding the above, in case this arrangement does not suit you, we will be ready to refund your deposited amount of Rs. 5 Lacs. This we would naturally do with a heavy heart as we highly cherish the association of your, esteemed firm with the Shaheen Foundation.
5.I shall direct Mr. Thaver to be more prompt in his correspondence. As no contract was concluded prior to this letter, Exh. 17 is to be treated under 'the law as an offer from defendant No. 1 to the plaintiff. Offer was to accept one of the following two arrangements:-
(a) Security deposit system-a refundable security deposit @,. Rs. 900 per square foot (previously Rs. 1,000 per square foot as per Exh. 5) plus a monthly rental of Rs. 6.50 per square foot per month (previously Rs. 6 as per Exh. 5).
(b) Advance rent system.- 5 years advance rent @ Rs. 15 per square foot per month.
After Exh. 17, there are only three letters of the plaintiff i. e. Exh. 18, Exh. 20 and Exh. 21 and by none of them either of the two proposals was accepted by defendant No. 1. It may, however, be observed that by their letter dated 26-10-1981 (Exh. 18), plaintiff No. 1 agreed to treat the advance rent of Rs.
20,00,000 as security deposit, but asked defendant No. 1 to agree to Rs. 6 per square foot as monthly rent instead of Rs. 6.50 as mentioned in Exh.
17. The law, as laid down in section 7 of the Contract Act, requires that the acceptance of an offer must be absolute and unqualified. Exh. 18 does not fulfil the requirements of section 7 of the Contract Act. From the correspondence on behalf of the plaintiff it appears that some attempt was mad to resolve this difference, but, before anything final could be achieved, defendant No. 1 by their letter dated 18-11-1981 (Exh. 22) withdrew their offer and closed the issue in the following words:- "Inasmuch as you have declined to avail the opportunity of booking of space in Shaheen Complex on the terms and conditions clarified by us in our letter No. S F (PAF)/1/11/Complex, dated 19th October, 1981 and instead sought arbitrarily to advance counter proposal in the .Matter, we have no alternative but to treat the issue as finally closed. Whilst on the subject, we would like to emphasize that on enquiry we have gathered that it is not correct to insinuate that Mr. Mohammad Ali Thaver either had ever informed you that Rs. Twenty Lacs would be payable by you as an advance and a monthly rental of Rs. 6 per square foot would be charged, or that you bad signed on a blank application from given to you by him. Similarly, insinuations contained in your letter of November 12, 1981 too are incorrect and, may we say, un-business like.
You may collect the sum of Rs. Five lacs paid on account by you from our Office."
5. I have come to the conclusion that prior to the letter dated 19-10-1981 of defendant No.1 (Exh 17), there was no concluded contract between the parties. Exh. 17 can be treated as an offer but the same was not accepted of by the plaintiff and as the offer in Exh. 17 stood with drawn by letter dated 18-11-1981. (Exh. 22), no contract between the parties came into existence.
Issue No. 1 is decided in the negative against the plaintiff:
6. As a result, suit of the plaintiff for declaration, possession and specific performance is dismissed.
Defendant No. 1 is, however, liable to refund the amount of Rs. 5,00,000 to the plaintiff as no contract was concluded between the parties. Learned counsel for the defendant states that the defendant No. 1 had offered to refund the amount and they are still ready to do so. As the plaintiff is entitled to refund of Rs. 5,00,000. I pass a decree in favour of the plaintiff against defendant No. 1 for refund of Rs. 5,00,000. In case this decretal amount is not paid by 10-2-1982, defendant No. 1 shall be liable to pay interest on this amount 6 14% per annum with effect from 10-2-1982 till,: payment.
There shall be no order as to costs.
C. M. A. 4013/81 for temporary injunction stands dismissed.