AHMAD NADEEM ARSHAD, J. Petitioner/Province of Punjab filed the instant constitutional petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 by challenging the validity and legality of judgment/order dated 17.06.2008 passed by learned Revisional Court, whereby, the revision petition filed by respondents was allowed and resultantly application of petitioner under section 12(2) read with Section 151, C.P.C. was dismissed.
2. Facts in brevity are that respondent No.3 Muhammad Umer Ishaq son of Ch. Muhammad Ishaq instituted a suit for declaration and permanent injunction against respondent No.4/defendant on 11.05.1998 before the learned Civil Court, Sahiwal by contending that respondent No.4 was the owner of suit property measuring 18 kanal 04 marla situated at Khewat.No.1 khatoni Nos.1 to 8 (out of total khata comprising of 207 kanal 08 marla) and suit property measuring 161 kanal 16 marla situated at khewat No.2 khatoni Nos.9 to 20 (out of total khata comprising of 474 kanal 06 marla), at Chak No.90/9.L Tehsil and District Sahiwal according to the record of rights for the year 1992-93, and he sold out his total land measuring 180 kanal to him for a consideration of Rs.3,15,00,000/- and executed a deed dated 11.02.1996 in this regard. He further contended that respondent No.4 received Rs.1,70,65,000/- through different cheques and with regard to the remaining consideration amount of Rs.1,37,35,000/- he received 2,99,695 $ (US dollars) through cross cheque of United Bank Ltd., Sahiwal and in this way he received total consideration amount and nothing is outstanding against him. He also delivered the possession of suit property to him. He further alleged that in this way he became absolute owner of the suit property and sought a declaration that he be declared as owner in possession of suit property and respondent No.4/defendant has no concern with regard to it and also prayed for issuance of permanent injunction to the effect that respondent No.4/defendant be restrained to deny his ownership and also be restrained from interfering into his possession. Respondent No.4/defendant filed a consenting written statement on 18.05.1998 by contending that he sold land measuring 175 kanal 13 marla instead of land measuring 180 kanal and received the consideration of said land, actually land situated in Khewat No.2 is 157 kanal 09 marla instead of land measuring 161 kanal 16 marla, and on the same day he along with his learned counsel appeared before the learned court and recorded conceding statement by contending that a compromise has been effected between the parties and accepted the suit of respondent No.3 as correct and further narrated that respondent No.3/plaintiff be declared as the owner of the suit property in the light of written statement wherein suit property and consideration amount had been mentioned. The learned trial court, keeping in view the statement of respondent No.4/defendant, decreed the suit in favour of respondent No.3 vide judgment and decree dated 18.05.1998.
3. Feeling aggrieved from the collusiveness and fraud of respondents Nos.3 and 4, petitioner/Province of Punjab filed an application on 11.12.1998 under section 12(2) C.P.C., and section 151, C.P.C., for setting aside of judgment and decree dated 18.05.1998 with the contention that respondents Nos.3 and 4 got decreed the suit through fraud and collusiveness in order to evade payment of Government dues such as capital tax, value tax, registration fee and municipality fee etc. The amount of taxes, according to schedule, have to be paid to the Government Treasury up to Rs.75,60,000/-. It was also narrated that suit property falls within the jurisdiction of the Municipal Committee and according to the Government policy; it cannot be alienated without a registered deed. Further adds that no title existed in favour of respondent No.3, therefore, his suit for declaration was not maintainable and the learned trial court decreed the suit without jurisdiction.
The application was strongly opposed by respondents Nos.3 and 4 through filing its written reply by contending that the petitioner has no locus standi and cause of action to file the application; that decree has been passed according to law and within the jurisdiction; that instant application has been filed just to blackmail the respondents and prayed for dismissal of the application. Learned trial court, keeping in view the divergent stances of the parties, framed necessary issues on 12.10.1999 and recorded evidence of the parties, pro and contra, thereafter, providing them proper opportunity of hearing accepted the application vide order dated 30.05.2006. Feeling aggrieved, respondents filed revision petition which was allowed vide judgment/order dated 17.06.2008 and dismissed the application of the petitioner. During the pendency of application under section 12(2), C.P.C. respondent No.3 succeeded to get mutated suit property in his name by presenting the decree dated 18.05.1998 through a duly sanctioned mutation and it was incorporated in the revenue record. But when this fraud came into the knowledge, the revenue officer proceeded to review the said mutation and restored the old entries. Respondent No.3 challenged the acts of revenue officer through Writ Petition No.5494 of 1999 which was allowed vide order dated 10.08.1999 and mutation was restored in favour of respondent No.3. However, while deciding writ petition, this court also held as under: - "I am told that an application under section 12(2), C.P.C., has been filed by the District Collector in the Court which passed the decree. If this is so, the proper course was for the respondents to have waited for the decision of said application and in case the said court was to set aside the decree, only then, the mutation could have been revived and former entries restored. Learned Additional Advocate General on instructions from the officer present in the Court states that no interim order has been passed in the said application. Be that as it may, the impugned orders have been passed in exercise of jurisdiction not vesting in the respondents and as such liable to be declared without lawful authority, of course, if an order is passed in proceedings under section 12(2), C.P.C., the respondents can proceed to review the mutation or even to cancel it in accordance with law.
So long as such decree stands the mutation passed on the same cannot be revived or set aside.
The learned counsel for the petitioner has drawn my attention to the case of Ali Muhammad v.
Muhammad Fazil (1972 SCMR 322) wherein while upholding the judgment of a Division Bench of this Court reported as PLD 1973 SC 207 the Supreme Court has laid down that the revenue officers are bound by law to give effect to a decree of a Civil Court and to make a change in the revenue record in accordance with law. "
4. The main grievance of the petitioner is that respondents Nos.3 and 4, in connivance with each other, appeared, got recorded their statements and collusively got decreed the suit just to evade from payment of stamp duty etc., which is Rs.75,60,000/- according to the Government schedule and in this respect, respondent No.3 has played fraud, and the court, which passed the decree, has no jurisdiction to entertain the suit for declaration of respondents No.3 who does not possess any title, therefore, the decree is not maintainable on the ground of want of jurisdiction.
Conversely, the stance of respondents is that respondent No.3 purchased suit land for a consideration and got the possession of the land after payment of entire consideration amount, therefore, title and ownership, rights have been devolved upon him and as he became the owner of the suit property on the strength of agreement to sell, therefore, he rightly instituted the suit for declaration and permanent injunction which was decreed by the learned trial court on the basis of conceding statement of respondent No.4.
5. I have heard learned counsel for the parties and perused the record with their able assistance.
6. From the perusal of record, it appears that respondent No.3 claimed his ownership with regard to suit property measuring 180 kanal on the strength of agreement to sell but the land measuring 175 kanal 13 marla was decreed in his favour on the basis of statement of respondent No.4. Although, respondent No.3 paid the full consideration amount and got possession of suit property but neither any mutation was sanctioned nor any sale deed was executed in his favour with regard to the suit property, therefore, no title document existed and in this way, the sale was not completed. From the perusal of the record it appears that respondent No.3 sought declaration of his title on the basis of an agreement to sell by claiming himself the owner of suit property instead of filing suit for specific performance of an agreement as he cannot seek declaration merely on the strength of said document, therefore, the form of the suit was incorrect.
7. The 'sale' as defined in section 54 of the Transfer of Property Act, 1882 is as under:- "54 "Sale defined".--"Sale" is a transfer of ownership in exchange for a price paid or promised or part paid and part promised.
Sale how made.--Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immovable property, of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.
Deliver of tangible immovable property takes place when the seller places the buyer, or such person as the directs, in possession of the property.
Contract of sale. --A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties.
It does not, of itself create any interest in or charge on such property.
The essential ingredients of the sale are:- a) the parties; b) the subject matter; c) the transfer of conveyance; and d) the price or consideration.
The Government of Punjab issued Notification No.15246/74/ 2237/LR-V, dated 30-12-1974 by making section 54 of the Act ibid applicable in the whole Province of Punjab, therefore, no oral sale can take place after said notification, which means that transfer of immovable property worth Rs.100/- or more can only be transferred by a registered instrument of transfer. However, such requirement of compulsory registration has been dispensed with vide Notification No.3007-78/1511/LR1 dated 22.11.1978, whereby, application of compulsory registration has been restricted only to Municipalities and Notified Areas as declared and notified under section 214, Punjab Municipal Act, 1911. So far as agreement to sell of immovable property is concerned, the sale of such property shall take place in terms settled between the parties and rights arising out of that were to seek its specific performance.
8. An agreement to sell, per se, does not create title, interest or charge on the property, nor does it create ownership in the land under the agreement and so a person in whose favour such an agreement is made cannot claim a decree of title. Such an agreement only creates a right to obtain another document and that is why it does not require registration even though it contains the acknowledgment of the receipt of earnest or part payment of the price. A decree giving title on the basis of such an agreement to sell, being a nullity, is required to be recalled. It is also well settled proposition of law that agreement to sell does not amount to actual transfer of any interest in the property and it does not create any right, title, or interest in immovable property. However, when any person is put into possession in part performance of the contract, he can use the document as a shield to protect his possession and not as a sword to claim the title. No declaration can be granted on the basis of agreement to sell except grant of decree for specific performance as is evident from the provision of section 42 of the Specific Relief Act, 1977, which reads as under:- "42. Discretion of Court as to declaration of status or right. Any person entitled to any legal character or to right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right and the Court may in its discretion make therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any further relief: Bar to such declaration. Provided that no Court shall make any such declaration where the plaintiff, being able to seek further relief that mere declaration of title omits to do so."
9. According to said section, a person could seek a declaratory decree where his legal character, or any right to any property was either denied or necessity arose to deny any such claim or interest if raised by another person. A declaratory decree procured by any person on the basis of agreement to sell is void ab-initio; therefore, the same is of no avail to him to use as a plank. An agreement to sell would not confer any proprietary right on the vendee, therefore, a declaratory decree as envisaged by Section 42 of the Specific Relief Act, 1877 could not be awarded to a vendee because declaration could only be given in respect of a legal right of the character. An agreement to sell only allows to sue for a suit for specific performance and not a declaratory one, so a person in whose favour such an agreement is made cannot claim a decree of the title because such an agreement only creates a right to obtain another document. In cases, where a decree is challenged on the basis of fraudulent misrepresentation or without jurisdiction, the court has first to see whether the suit is maintainable under the law and then to see whether any fraud or misrepresentation is made out from the available record.
10. The petitioner moved an application under section 12(2), C.P.C., and it is appropriate and better to reproduce Section 12(2), C.P.C., which is as under: - "12. Bar to further suit.-- (1) Where a plaintiff is precluded by rules from instituting a further suit in respect of any particular cause of action, he shall not be entitled to institute a suit in respect of such cause of action in any Court to which the Code applies.
(2) Where a person challenges the validity of a judgment, decree, or order on the plea of fraud, misrepresentation, or want of jurisdiction, he shall seek his remedy by making an application to the Court which passed the final judgment, decree, or order and not by a separate suit."
There is no cavil with the proposition that a decree can be set aside if it was procured through fraud, misrepresentation and want of jurisdiction i.e. the grounds for setting aside the decree under section 12(2), C.P.C., are, (i) The decree has been passed without jurisdiction. (ii) The decree has been passed on the ground of misrepresentation of facts. (iii)The decree has been passed on the ground of fraud.
11. Before proceedings further it is appropriate to know the meaning of the word "fraud" and "misrepresentation" used in section 12(2) C.P.C. Although the word "Collusion" is not used in said section but is also a kind of fraud.
The term "fraud" has been explained in Black's Law Dictionary:-- An intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right. A false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations, or by concealment of a that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. Anything calculated to deceive, whether by a single act or combination, or by suppression of truth, or suggestion of what is false, whether it be by direct falsehood or innuendo, by speech or silence, word of mouth, or look or gesture. A generic term, embracing all multifarious means which human ingenuity can device, and which are resorted to be one individual to get advantage over another by false suggestions or by suppression of truth, and includes all surprise, trick, cunning, dissembling, and any unfair way by which another is cheated".
To elaborate the term "fraud", in context with the case in hand, I would like to refer to Ballantine's Law Dictionary, Third Edition, page 496 that:- "....Anything calculated to deceive another to his prejudice and accomplishing the purpose, whether it be an act, a word, silence, the suppression of truth, or other device contrary to the plain rules, of common honesty. In the same context, term "misrepresentation" has been defined as " the statement of untruth."
"Misrepresentation."
"Any manifestation by words or other conduct by one person to another that, under the circumstances, amounts to an assertion not in accordance with the facts. An untrue statement of fact. An incorrect or false representation That which, if accepted, reads the mind to an apprehension of a condition other and different from that which exists. Colloquially it is understood to mean a statement made to deceive or mislead." (Blacks Law Dictionary Fifth Edition).
"Collusion"
"An agreement between two or more persons to defraud a person of his rights by the forum of law, or to obtain an object forbidden by law. It implies the existence of fraud of some kind, the employment of fraudulent means or of lawful means for the accomplishment of an unlawful purpose." (Blacks Law Dictionary Fifth Edition).
12. It is a settled proposition of law that fraud cannot be directly proved; it has to be inferred from the surrounding circumstances and conduct of the parties. It is also well-settled law that fraud vitiates the most solemn proceedings.
13. Perusal of record reveals that respondent No.3, first of all, instituted suit for declaration instead of suit for specific performance of an agreement, only just to evade payment of Government dues, etc. which were Rs.75,60,000/- at the time of the decree of the suit and in this way from the conduct of respondent No.3 fraud is very much clear and instituting of a declaratory suit instead of suit for specific performance of the agreement will absolve respondent No.3 from the payment of Government dues such as registration fee, capital value tax, transfer of immovable property fee as well as Municipal Committee's fee etc. Furthermore, respondent No.4 in collusion with respondent No.3, appeared before the learned trial court, submitted conceding written statement and also got recorded his consenting statement by stating that he has no objection if the suit of respondent No.3 is decreed and accepted the suit of respondent No.3. In this way, collusion of respondents Nos.3 and 4 is very much clear that they both are in agreement to commit fraud by the forum of law and obtained an object forbidden by the law and to achieve such goal, they concealed facts knowing these facts. Hence, the learned trial court has rightly observed and set aside the impugned judgment and decree as the suit for declaration and permanent injunction was not maintainable in peculiar circumstances of the present case. It is also an admitted proposition that transfer of title under the garb of the consent decree on the basis of agreement to sell is void, ab- initio in the light of the mandatory provision of Section 54 of the Transfer of Property Act. In this way, the learned District Judge has wrongly concluded that the only grievance of the Province of Punjab is that of dues/duties which were to be paid by the parties to the sale on registered sale deed but the correct proposition is that respondent No.3 in the garb of declaratory suit intended to save these dues/duties fraudulently.
14. The proceedings of the suit were collusive in nature as respondent No.3 in collusion with respondent No.4 had entered into compromise dishonestly, by concealing the true facts from the Court, deliberately and knowingly to get the suit decreed. The Hon'ble Supreme Court of Pakistan in its reported judgment "Fazal Karim through legal heirs and others v. Muhammad Afzal through legal heirs and others" (PLD 2003 SC 818) while defining "Collusive" and "Fraudulent" proceedings held as under:- "11. Collusion in judicial proceedings is a secret arrangement between two persons where one institutes a suit against the other in order to obtain a judicial decision for some sinister purpose. In such case the claim is fictitious, the contest is unreal and the decree passed therein is a mere mask having the similitude of a judicial determination, with the object of confounding the third party. In a fraudulent proceedings the claim is untrue but the verdict of Court is managed to be obtained by practicing fraud on the Court. We have gone through this distinction laid down by Venkatarama Ayyar, J. in a Full Bench judgment of Indian Supreme Court in Nagubai Animal v. B.
Shama Rao (AIR 1956 SC 593).
12. We are also confronted with another phenomenon that at times of judicial proceedings do not commence with collusion or fraud but subsequently the parties resort to collusion as well as fraud in order to jeopardize the right or interest of a third party. The proceedings may not be collusive from the very inception but collusion, if resorted to subsequently, is as good a collusion as that intended from the very beginning. In Periamurugappa Asari v. Manicka Chesty AIR 1926 Madras 50, Venkatasubba Rao, J. observed, also with reference to a compromise, that decree passed in pursuance of a compromise does not exclude the application of section 52 provided that such compromise is not tainted with fraud or collusion. A genuine compromise is a normal conduct of the parties and is not taken to be collusive but a compromise entered into by collusion or fraud excludes the application of section 52 of the Transfer of Property Act. It is altogether immaterial as to whether the proceedings were collusive from the very inception or they became so at some subsequent stage. A suit may be collusive even at its very inception or a decree may be obtained by collusion in a suit which had initially started bona fide.
15. The respondents also challenged the maintainability of the application under section 12(2), C.P.C. on the ground that the petitioner has no locus standi as he neither party to the suit nor his rights were affected through the judgment and decree, therefore, did not fall within the category of the aggrieved person. In section 12(2), C.P.C. the word `person' has been used. If the lawmaker had intended to restrict the right of filing application only to the person who was party to the suit, then the word party ought to have been used. The august Supreme Court of Pakistan while relying upon "Ghulam Muhammad v. M. Ahmad Khan and 6 others (1993 SCMR 662) in its reported judgment titled as "Khawja Muhammad Yousaf v. Federal Government and others" (1999 SCMR 1516) has inter alia held as under: - "If a person adversely affected by an order or judgment of a Court or tribunal rendered in proceedings to which he is not a party and to which proceedings C.P.C. is applicable, he can file an application under section 12(2), C.P.C. for the reason that the word "person" and not judgment debtor or his successor in interest or the words "party to the suit" have been used as, highlighted in the above report."
Further reliance can be placed on "Ch. Jalal ud Din v. Mst. Asghari Begum" (1984 SCMR 584).
Through impugned judgment and decree, the petitioner was deprived of collection of government's dues, which were otherwise received if a decree for specific performance was passed or a sale deed was executed, therefore, valuable rights of the petitioner were directly affected through the decree under challenge and petitioner has every right to file an application under section 12(2), C.P.C.
16. Epitome of the above discussion is that by accepting this writ petition the judgment/order dated 17.06.2008 passed by learned District Judge is set-aside resultantly, the application filed by the petitioner under section 12(2) read with Section 151, C.P.C. is allowed and judgment and decree dated 18.05.1998 is hereby, set-aside. No order as to costs.