MIANGUL HASSAN AURANGZEB, J. Through the instant regular first appeal the appellant, Muhammad Akram, impugns the judgment and decree dated 02.07.2018 passed by the Court of the learned Civil Judge, Islamabad, whereby the suit for specific performance and permanent injunction instituted by respondent No.1, Liaqat Ali Khan, was decreed.
2. The facts essential for the disposal of the instant appeal are that on 10.02.2016, the appellant (seller) and respondent No.1 (purchaser) entered into an agreement to sell (Exh.P/1) House No.192, Street No.7, Rawal Town, Islamabad ("the suit house") for a total sale consideration of Rs.1,00,00,000/-, out of which Rs.5,00,000/- was paid as earnest money whereas Rs.45,00,000/- was agreed to be paid by 10.03.2016 and Rs.50,00,000/- by 10.06.2016 by respondent No.1 to the appellant.
3. On 11.03.2016, another agreement to sell (Exh.P/2) was executed between the appellant and respondent No.1 for the sale of the suit house. As per the terms and conditions of the said agreement, out of the total sale consideration of Rs.1,00,00,000/-, an amount of Rs.5,00,000/- had been paid when the first agreement to sell was executed whereas Rs.45,00,000/- was stated to have been paid on 10.03.2016. The remaining amount of Rs.50,00,000/- was agreed to be paid by 10.06.2016. Clause 9 of this agreement to sell provided that if respondent No.1 was unable to arrange the balance sale consideration or does not perform his obligations under the agreement, the amount already paid would be forfeited by the appellant.
4. On 14.06.2016, respondent No.1's counsel is said to have issued a legal notice (Mark-C) to the appellant requiring the latter to receive the balance sale consideration and to transfer the suit house in respondent No.1's favour within a period of ten days. The appellant denies having received the said legal notice.
5. On 18.06.2016, a legal notice was issued on behalf of the appellant to respondent No.1 informing the latter that since he had not complied with his contractual obligation of paying the remaining sale consideration by 10.06.2016, the earnest money stood forfeited and the agreements to sell dated 10.02.2016 and 11.03.2016 stood cancelled.
6. On 03.10.2016, respondent No.1 filed' a suit for specific performance and permanent injunction before the Court of the learned Civil Judge, Islamabad. In the said suit, respondent No.1 had inter alia sought specific performance of the said agreements to sell dated 10.02.2016 and 11.03.2016. In the said suit, it was pleaded inter alia that respondent No.1 had been ready to perform his obligations under the said agreements to sell but it was the appellant who had backed out from the agreements. Furthermore, it was pleaded that the appellant had not fulfilled "the codal and essential formalities" required by the Capital Development Authority ("C.D.A.") for the transfer of the suit house.
7. The appellant contested the said suit by filing a written statement. In the said written statement, the position taken by the appellant was that he was ready to transfer the suit house to respondent No.1 but since the latter had not paid the balance sale consideration by 10.06.2016, the earnest money was forfeited and the agreements were cancelled. Furthermore, it was pleaded that the No Objection Certificate ("N.O.C.") was issued by the C.D.A to the appellant on 19.04.2016, and that on 20.04.2016, the appellant had applied to the Building Control Section of the C.D.A. for the issuance of an N.O.C. for the transfer of the suit house.
8. Along with the said suit, respondent No.1 had also filed an application for interim injunction to restrain the appellant from alienating the suit house. Vide order dated 30.01.2017, the learned Civil Court allowed the said application subject to the payment of the remaining sale consideration by the next date of hearing i.e. 20.02.2017. It is an admitted position that respondent No.1 had deposited the balance sale consideration amounting to Rs.50,00,000/- in the Court.
9. From the divergent pleadings of the contesting parties, the learned Trial Court framed the following issues:- "1. Whether the plaintiff did not pay remaining sale consideration as the defendant No.1 failed to fulfill a codal and necessary formalities of the CDA? OPP
2. Whether the defendant did not transfer the suit property in the name of the plaintiff due to non- payment of remaining sale consideration within due date and agreement dated 10.02.2016 rescinded/came to an end resultantly earnest money paid by the plaintiff is forfeited? OPD
3. Whether the plaintiff waived his right to file suit due to non-performing his part of agreement to sell dated 10.02.2016? OPD
4. Whether the plaintiff is estopped to file the instant suit by his words and conduct? OPD
5. Whether the plaintiff has come with unclean hands in court and concealed the material facts about suit? OPD
6. Whether the plaintiff is entitled for the decree prayed for on the basis of agreement to sell dated 10.02.2016 and 11.03.2016? OPP
7. Relief. "
10. Respondent No.1 gave evidence as PW.1 whereas the two marginal witnesses of the agreements dated 10.02.2016 and 11.03.2016 appeared as PW.2 and PW.3. The appellant appeared as DW.1 whereas Aamir-ul-Haq, in whose presence the terms and conditions of the said agreements had been settled, appeared as DW.2.
11. Vide judgment and decree dated 02.07.2018, the learned Civil Court decreed the said suit, and directed the appellant to transfer the suit house and hand over vacant possession of the same to respondent No.1 within a period of 30 days. Furthermore, it was ordered that the appellant could withdraw the remaining sale consideration deposited in the Court.
12. Learned counsel for the appellant, after narrating the facts leading to the filing of the instant appeal, submitted that the appellant had done all that was necessary for the transfer of the suit house to respondent No.1 but the latter failed to perform his obligation of paying the remaining sale consideration amounting to Rs.50,00,000/- by 10.06.2016; that respondent No.1 did not produce any evidence to show that he was in a position to pay the said amount by 10.06.2016; that time was the essence of the agreements; that respondent No.1 had neither produced his bank statement nor prepared a pay order for the remaining sale consideration; that respondent No.1 had not sent any legal notice to the appellant requiring the latter to receive the remaining sale consideration and transfer the suit house; that on 18.06.2016, a legal notice was sent on the appellant's behalf to respondent No.1 informing the latter that since the remaining sale consideration had not been paid by the target date of 10.06.2016, the agreements to sell stood cancelled and the amount paid stood forfeited; that in his cross-examination, respondent No.1 admits having received the said legal notice; that a No Demand Certificate regarding property tax, water and allied charges with respect to the suit house had been issued by the Directorate of Revenue, C.D.A. on 19.04.2016; that the appellant had deposited the outstanding property tax and water charges with respect to the suit house on 19.04.2016; that the suit for specific performance was instituted by respondent No.1 after a lapse of four months from the target date of 10.06.2016; and that no explanation was put forth for the, delay in the institution of the suit. Learned counsel for the appellant prayed for the appeal to be allowed and for the impugned judgment and decree to be set-aside.
13. On the other hand, learned counsel for respondent No.1 submitted that the factum as to the execution of the agreements dated 10.02.2016 and 11.03.2016 is admitted by the appellant; that respondent No.1 had proved the execution of the said agreements by producing their marginal witnesses; that the receipt of Rs.50,00,000/- has also been admitted by the appellant; that respondent No.1 was ready, willing and able to pay the remaining sale consideration of Rs.50,00,000/- by 10.06.2016; that on 14.06.2016, respondent No.1 had addressed a legal notice to the appellant requiring the latter to fulfill his obligations under the agreements; that the appellant was reluctant to perform his obligations under the agreements in that he did not make any arrangement for the transfer of the suit house; that respondent No.1 had deposited remaining sale consideration of Rs.50,00,000/- in the Court pursuant to the order dated 30.01.2017; that PW.2, in his examination-in-chief, had deposed that the appellant had sought some time so as to make necessary, arrangements for the transfer of the suit house; that the appellant had backed out from the deal due to the prices of real estate going higher; and that the judgment and decree passed by the learned Civil Court is well-reasoned and does not suffer from any legal infirmity. Learned counsel for respondent No.1 prayed for the appeal to be dismissed.
14. I have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance. The facts leading to the filing of the instant appeal have been set out in sufficient detail in paragraphs 2 to 11 above and need not be recapitulated.
15. The vital questions that need to be answered are whether it was the appellant who breached his contractual obligations by not making the necessary arrangements for the transfer of the suit house to respondent No.1 or whether it was respondent No.1 who breached his contractual obligations by not paying the remaining sale consideration by 10.06.2016 to the appellant.
16. In order to demonstrate that the appellant had made the necessary arrangements for the transfer of the suit house, he had produced a No Demand Certificate (Exh.D/1) regarding property tax issued by the Directorate of Revenue, C.D.A. with respect to the suit house on 19.04.2016. The C.D.A. requires all dues including property tax, water and allied charges with respect to a property to be cleared before such property could be transferred. The appellant also produced the receipt dated 19.04.2016 for payment of property tax (Exh.D.1/1) and the receipt dated 19.04.2016 for the water and allied charges (Exh.D.1/2) with respect to the suit house. Although the appellant did not produce his application to the C.D.A. for the issuance of the N.O.C. or for transfer of the suit house, he did produce as Exh.D/2, a copy of letter dated 19.04.2016 from the Directorate of One Window Operation of the C.D.A. regarding a request with respect to the suit house. This document shows that an N.O.C. had been submitted by the appellant along with his request.
17. The pleadings in the written statement are silent as to the stage when the appellant decided to back out from his obligations under the agreements. Where agreements for the transfer of immovable property for consideration as huge as Rs.1,00,00,000/- are made, the parties generally interact for making arrangements for the transfer and payment of the remaining sale consideration prior to the target date fixed in the agreements. No documentary evidence was brought on the record by respondent No.1 to demonstrate that he had the requisite funds to pay the balance sale consideration of Rs.50,00,000/- by 10.06.2016. Generally, pay orders or demand drafts are made prior to or by the target date fixed in the agreements to sell. It is an admitted position that in the case at hand, no pay order or demand draft or cheque for an amount of Rs.50,00,000/- had been prepared by respondent No.1 by the target date of 10.06.2016. In the case of Muhammad Abdur Rehman Qureshi v. Sagheer Ahmed (2017 SCMR 1696), one of the reasons why the relief of specific performance was declined by the Hon'ble Supreme Court was that there was no evidence on the record that by the target date fixed for the payment of the balance sale consideration, the purchaser had the requisite funds in his account, and that the bank drafts which had subsequently been prepared did not indicate that the same were either prepared or presented on/or before the target date.
18. Although the limitation for filing a suit for specific performance is three years from the date fixed in the agreement for performance, but since the relief of specific performance is a discretionary relief, the delay with which a suit is filed would play a role when the Court decides whether or not to grant such relief. In the case at hand, the suit was filed four months after the date fixed in the agreements for their performance. No plausible explanation was put forth on behalf of respondent No.1 for such delay. The remaining sale consideration of Rs.50,00,000/- was deposited in the Court by respondent No.1 pursuant to the order dated 30.01.2017. This deposit was made seven and a half months after the date fixed in the agreements for such payment. Indeed, respondent No.1 did have the requisite funds for paying the balance sale consideration in the month of February 2017 but in order to demonstrate that he was ready to perform the agreements or had the requisite funds to pay the remaining sale consideration, he ought to have produced his bank statements or prepared a pay order or demand draft for the said amount by the target date of 10.06.2016. This omission, in my view, disentitled respondent No.1 from the discretionary / equitable relief of specific performance.
19. Respondent No.1, in his statement as PW.1, deposed that he had contacted the appellant for transfer of the suit house in his favour and for this purpose, several jirgas were also held. Now, there is no pleading in the plaint about any jirga. Therefore, respondent No.1's deposition regarding a jirga is not worthy of any consideration.
20. In the case of Abdul Hamid v. Abbas Bhai-Abdul Hussain Sodawaterwalla (PLD 1962 SC 1), it has been held inter alia that an intention to make time as the essence of the contract must be expressed in unmistakable language, and that it may be inferred from what passed between the parties before, but not after, the contract is made. In the case of Muhammad Taj v. Arshad Mehmood (2009 SCMR 114), it was held inter alia that the mere mentioning of a specific date for performance of the agreement would not make time the essence of the contract, but such intention is to be gathered from the terms agreed amongst the parties contained in the contract in the light of the facts and circumstances of the case. Additionally, in the case of Liaqat Ali Khan v.
Falak Sher (PLD 2014 SC 506), a stipulation in the agreement to sell for the payment of the balance sale consideration with a consequential penalty clause of forfeiture of the earnest money and vitiation of the agreement was held to be sufficient for holding that the parties had agreed for time to be of the essence of the agreement. In the case at hand, the agreements to sell dated 10.02.2016 (Exh.P/1) and 11.03.2016 (Exh.P/2) explicitly provide 10.06.2016 to be the date for the payment of the remaining sale consideration amounting to Rs.50,00,000/-. The consequences for the non- payment of the balance sale consideration by 10.06.2016 are also clearly set out in the said agreements, i.e. the forfeiture of the amount already paid. An amount of Rs.50,00,000/- had admittedly been paid by respondent No.1 to the appellant when the said agreement dated 11.03.2016 was executed. Therefore, it would be safe to hold that time was agreed by the said parties to be of the essence. Even otherwise, given the rapidly increasing prices of real estate, if the balance sale consideration is not paid by an agreed date, an agreement to sell loses its efficacy.
This fact has been recognized by the Hon'ble Supreme Court in paragraph 9 of the judgment in the case of Muhammad Abdur Rehman Qureshi v. Sagheer Ahmad (supra), which is reproduced herein below:- "9. As far as the argument of learned counsel for the appellant that time was of the essence of the contract is concerned, we do not find ourselves in agreement with him for the reason that admittedly time for execution of the sale deed was extended on a number of occasions and at least on a few of the said occasions it was on the request of the appellant. However, in view of the commercial nature of the property business and a widespread trend of rapid increase in prices of immovable properties, a seller cannot be left at the mercy of the buyer to bind him in an agreement to sell and then delay completion of the contract for as long as he may wish hiding behind an archaic legal principle that in contracts involving immovable properties, time is generally not of the essence. This rule was settled many centuries ago when prices of real estate remained constant and stagnant for years on end. It is high time that this rule was revisited and revised keeping in view the changed circumstances and the ground realties of the real estate market. In this day and age, on account of rapid increase in population demand for real estate has increased. Further, on account of various reasons better financial resources are available with prospective purchasers. Big investors have also entered the fray to take the benefit of growing demand for real estate. On account of increasing demand and limited supply, property prices rise rapidly, at times in a matter of months. Therefore, the aforesaid principle that in real estate transactions, time is not of the essence cannot indiscriminately be applied. It must be interpreted and applied specifically considering the facts and circumstances of each case to balance equities, keeping the standards of reasonability in mind and ensuring that injustice is not done to either side."
21. The excuse put forth by respondent No.1 for not preparing a pay order or demand draft or cheque for payment of the balance sale consideration to the appellant by 10.06.2016 was that the appellant had not taken the preparatory steps for the transfer of the suit house. This stance of respondent No.1 does not appeal to reason. All that respondent No.1 had to do was to prepare a pay order or demand draft or cheque for payment of the balance sale consideration and attend the office of the C.D.A. where the transfer of the suit house was supposed to take place. Had respondent No.1 done so, he would have been successful in demolishing the appellant's case.
22. Respondent No.1 claims to have issued a legal notice to the appellant on 14.06.2016 requiring the latter to obtain an N.O.C. from the C.D.A. and transfer the suit house to the former failing which legal proceedings would be initiated. The appellant denies having received the said legal notice. He has put forth such denial as an excuse for not responding to the said legal notice. Since the appellant in paragraph 5 of the written statement had explicitly denied having received a legal notice from respondent No.1, it became incumbent on the latter to prove that such a legal notice was issued by producing its scribe. This respondent No.1 failed to do. On the other hand, respondent No.1/PW.1, in his cross-examination, admits having received legal notice dated 18.06.2016 wherein the appellant informed respondent No.1 that the agreement dated 10.02.2016 stands cancelled due to the non- payment of the remaining sale consideration, and that the payment already made stands forfeited. Respondent No.1 did not give any reply to the said legal notice. In the case of Liaqat Ali Khan v. Falak Sher (supra), it was held that a legal notice to which reply was given was a material document to show the conduct of the parties after the execution of the agreement and before filing the suit for specific performance.
23. One of the reasons which prevailed with the learned Civil Court in decreeing respondent No.1's suit was that the appellant had not obtained a No Demand Certificate from the C.D.A., which was held to have been a pre-requisite for the transfer of any property in the office of the C.D.A. The learned Civil Court did not refer to any provision of the law or a clause in the agreements to sell which obligated the appellant to obtain such a certificate before the transfer could be made. As mentioned above, the appellant had, on 19.04.2016, obtained a No Demand Certificate from the Directorate of Revenue, C.D.A. regarding property tax, water and allied charges.
24. The above discussion leads me to the conclusion that the suit for specific performance instituted by respondent No.1 ought not to have been decreed. Since the appellant has remained in possession of the suit house which has increased in value over the past 'few years, I am of the view that it would not be equitable for the appellant to retain the advance payment.
25. In view of the above, subject to the return of Rs.50,00,000/- by the appellant to respondent No.1, the instant appeal is allowed; the impugned judgment and decree dated 02.07.2018 is set-aside; and suit for specific performance instituted by respondent No.1 is dismissed. Respondent No.1 is at liberty to withdraw the amount of Rs.50,00,000/- deposited by him in Court. No order as to costs.