1. ' The respondent No,2 by an agreement dated 25-10-1956 agreed to sell to respondent No,1 an agricultural land described in the schedule attached to the plaint for a consideration of Rs,700 per Acre. The respondent No,1 paid Its.800 to the respondent No,2 as advance earnest money and the balance earnest money of lts.3,200 was to be paid on 25-11-1966. After the execution of this agreement, the respondent No,1 found that the disputed land was nut mutated in favour of the respondent No,2. Ile, however, went to respondent No,2 at his residence and tendered the balance amount of lts.3,200 before the stipulated time. The respondent No,2 refused to accept it and promised that he would transfer the property and execute the sale-deed after his name has been mutated. The respondent No,2, however, failed to mutate in the records of rights, the disputed land which had been allotted to him by the Settlement Authorities. The respondent No,1 therefore, filed a suit for specific performance of the contract on 18-5-1967. After the suit was filed the appellants filed an application that they have purchased the land bona floe and without any notice of the previous sale for valuable consideration and they should be joined as party. They were accordingly made as defendants in the suit. The respondent No,2 pleaded that he had agreed to sell the disputed land to the respondent No,1, but he failed to pay the money within the stipulated period, therefore, the agreement was cancelled and the earnest money was forfeited. Ile further pleaded that he has sold the land to the appellants. The appellants also filed their written statement in which they stated that they are bona fide purchasers for valuable consideration without notice of the previous sale and therefore, the suit should be dismissed. After the evidence of the parties had been recorded the respondent No,2 filed an application under Order XII, rule 6 C.P.C. admitting the claim of the respondent No,l. The learned trial Court on an assessment of the evidence as well as the admission made by the respondent No,2 decreed the suit by the impugned judgment.
2. ' The agreement (1:x11.65) dated 25-1(1-1966 was executed by the respondent No,2 in favour of fhe respondent No,1 in which it was stated that he is the owner and occupant of an area of about 80 Acres, survey numbers of which were mentioned. It further provided that besides this land whatever land in village Kandiaro belongs to respondent No,2 was also agreed to be sold to the respondent No,1 @ Rs,700 per Acre. The agreement further recited that Ra.800 were received by respondent No,1 as earnest money and the balance earnest money of Ra.3,200 was to be paid by the respondent No,1 by 25th of November, 1966 and the remaining amount was to be paid at the time of the registration of the sale which was to be made by the 5th Chat Shambat 2024. It was further provided that respondent No,2 is taking proceeding for change of Khata in his name and after it has been transferred in his name, he will transfer the Khata in favour of the respondent No,l. It further recited that if the respondent No,2 backs out from the above agreement, then beside the earnest money, Rs,4,000 shall be paid by him to the respondent No,1 and if the respondent No,1 commits breach, the earnest money shall be forfeited.
3. ' The second agreement Exh.104 was executed by the respondent No,2 on 2-5-1967 in favour of one Ghulam Nabi in respect of the agricultural land measuring 74.34 Acres in Deh Kandiaro. It provided that the respondent No,2 has received Rs,1,000 and further received Rs,29,000. The payment was made by the relatives of Ghulam Nabi as follows:
(1) Abdul Khaliq Rs.1,500
(2) Jan Muhammad Rajpar Rs.5,000
(3) Muhammad Morial PahwarRs.1,300
(4) Ali Nawaz Pahwar Rs.2,500
(5) Muhammad Pahwar Rs.3,500
(6) Sojhro Rs. 1,000 ' This agreement also provided that sale-deed shall be registered within a period of four months and if the respondent No,2 failed to execute the sale-deed he would pay Rs,30,000 received by him with a fine of Rs,30,000.
4. ' On 21st July, 1967 another agreement Exh.105 was executed by the respondent No,2 in respect of the same land. The respondent No,2 referred to the earlier agreement dated 2-5-1967 and admitted to have received Rs,30,000 under it and a further sum of Rs,2,500 from the vendees of this agreement Exh.105. It was also stated that the respondent No,2 admits to have received Rs,32,500 and on receipt of Rs,21,694 will register the agreement upto 31st December, 1967 in favour of the following vendees and if he fails he will repay Rs,32,500 and Rs,10,000 as fine. The name of the vendees and the amount received from them is as follows:-
(1) Abdul Khaliq Rs,1,500
(2) Jan Muhammad Rs,5,000
(3) Muhammad Morial Pahwar Rs, 1,300
(4) Ali Nawaz Pahwar Rs,2,500
(5) Muhammad Pahwar Rs,3,800
(6) Sojhro Rs,1,650
(7) Amir Bux Rs,16,750 ' Keeping these agreements in view it has to be considered whether the respondent No,1 is entitled to specific performance of his contract dated 25-10-1965.
5. ' Mr. Mushtaq Memon. the learned counsel for the appellant has contended that the respondent No,1 had committed default in payment of earnest money within the specified period, therefore, the agreement with him stood terminated and rescinded by the respondent No,2. In this regard the appellant has referred to the statement of D.W. Sojhro Khan who only stated that respondent No,2 told the appellants that the agreement of sale stood cancelled on account of non-payment of agreed amount on the due date. He has stated that at the time when Exh.104 was executed he was not aware of the agreement with respondent No,1. D.W. Ghulam Nabi has not stated anything about the cancellation of the agreement. The other two witnesses have only deposed regarding the execution of the agreement as one of them is a petition-writer and the other one is a Notary Public.
6. The respondent No,2 has not been examined. In fact in his written statement he has pleaded the cancellation of the contract with the respondent No,1 but during the proceedings he admitted the claim of the plaintiff. The statement made in the written statement and further-more as the respondent No,2 has taken a contra dictory stand in the proceedings no reliance can be placed on the written statement or the application admitting the claim. On the other hand MRs, Salima Nasiruddin, the learned counsel for the respondent No,1 has referred to the overwhelming evidence of the respondent No,1 to establish that respondent No,1 had offered the balance amount of earnest money within the stipulated period, but it was refused by the respondent No,2. Jalaluddin has stated that 5 or 7 days before the scheduled time the respondent No,1 had come to the village of the respondent No,2 with Abdul Ghani. They went to the B.D. member Sardar All where the respondent No,2 was called, but he refused to come. On his refusal respondent No,1 gave an application to Sardar All and obtained endorsement of refusal which was attested by Khushi Muhammad and Jalaluddin. This application was produced as Exh.80. P.W.Sardar All was examined who has corroborated the statement made by Jalaluddin.
7. ' Mr.Mushtaq Memon, the learned counsel for the appellant has pointed out that in the cross- examination Sardar All has stated that no application was given to him by Abdul Ghani and contended that this contradicts the statement of Jalaluddin that an application was given and that the document purporting to be an endorsement regarding 'refusal' is a cooked up document.
8. In, his statement Sardar All has admitted that he had affixed his thumb mark on the document (Exh.80). This document contains the facts relating to the offer and refusal as stated earlier. In his cross-examination Sardar Ali has stated that the writing was made by Khushi Muhammad on which he had affixed his thumb mark. He, however, stated that no application was given to him by Abdul Ghani. This statement cannot completely nullify document (Exh.80) on which Sardar had affixed his thumb impression and admits its contents. This is a memorandum addressed to Sardar All by Abdul Ghani and has been witnessed by Khushi Muhammad and Jalaluddin. This Exh.80 was written by Khushi Muhammad and was signed by both these persons. The respondent No,1 has also stated the same facts. It therefore, seems clear that the respondent No,1 had offered Rs,3,200 to the respondent No,2 within the specified time, and therefore, the question of his default or cancellation if any does not arise.
9. ' The next contention of the learned counsel for the appellants is that as in the agreement between respondents No,1 and 2 a clause for payment of compensation has been provided, specific performance cannot be granted. The agreement Exh.65 provides that in case of breach the respondent No,2 will refund the earnest money and shall also pay Rs,4,000 as penalty. In this regard reference has been made to section 21 of the Specific Relief Act which provides that a contract for non-performance of which compensation in money is an adequate relief specific performance shall not be granted. The question therefore, arises whether by providing a clause in the agreement for payment of penalty for breach the parties had in contemplation that this amount will be adequate compensation for the non-performance of the contract. Except this particular clause in the agreement none of the parties have led any evidence to establish that Rs,4,000 is the adequate compensation.
10. ' In the agreement the word (Tawan) has been used and in the paper book it has been translated as 'penalty'. The learned counsel for the appellant has contended that in fact the meaning of (Tawan) is 'damages' and not 'penalty'. In the Standard English Urdu Dictionary by Moulvi Abdul Hague the meaning of 'damage' has been given as follows:- ' The meaning of 'penalty' has been given as follows: {{URDU TEXT}} ' In John T Platt's "Dictionary of Urdu Classical Hindi and English" the meaning of datd (Tawan) has been stated as "satisfaction, compensation, re-compose, retaliation, penalty forfeit, fine for bloodshed." In S.W. Fallon's "Urdu and English Law and Commercial Dictionary" (Tawan) means penalty, forfeit, fine, damages, retaliation compensation. The word (Tawan) carries with it the concept of penalty and is technically used in that sense. The agreement therefore, provides for payment of penalty. In the absence of any evidence on record to show that the amount of Rs,4,000 provided in the contract as penalty for breach of contract is adequate compensation to the respondent No,1, it cannot be held that the suit is barred under section 21(a) of the Specific Relief Act.
11. ' In order to press section 21 (a) in service it should be speci fically established that compensation in money is an adequate relief. The presumption in law is that breach of an agreement to sell an immovable property cannot be compensated in terms of money. In this regard reference can be made to the 'Explanation' to section 12 of the Specific Relief Act which provides that "unless and until the contrary is proved the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compen sation in money". In this regard reference can be made to section 20 which provides that "a contract, otherwise proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same." In law the presumption is that the damage would not be adequate compensation therefore, unless it is established that damages would be adequate relief for breach, the Court would not refuse specific performance. Mere providing for a penalty clause is not sufficient to establish that it was intended to provide adequate relief to the aggrieved party. In Chultun Itasool v. hada(' Hussain PLD 1968 Lah. 501 the following observation was made: "7. It was next contended on behalf of the respondent that the compensation in money furnished an adequate relief to the appellant, and therefore, he was not entitled to decree for the specific performance of the contract. Under section 12 of the Act, "unless and until the contrary is proved, the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money". This would prima facie apply here but it is argued that, as there is a condition in the contract for the payment of damages in default of performance, whether by the vendor or by the vendee, it must be held that the parties considered that the enforcement of these damages would be adequate in case the contract is not performed. In section 20 of the Specific Relief Act it is provided though "A contract, otherwise proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default willing to pay the same. This is further explained by illustration to section 20 which reads; "A contracts to grant B and under lease property held by A under C, and that he will apply to C for a licence necessary to the validity of the under lease, and that if the licence is not procured A will pay Rs,10,000. A refuses to apply for the licence and offers to pay Rs,10,000. B is nevertheless entitled to have the contract specifically enforced if C consents to give licence." In Ranger v. Great Western Railway Co. 5 H L C 94, Lord Gran worth explained; "A Court of Equity is in general anxious to treat the penalty as being merely a mode of securing the due performance of the act contracted to be done and not as a sum of money really intended to be paid". Halsbury has expressed the rule thus: "where the contract contains a stipu lation that in the event of neither nonperformance a certain sum of money shall be paid, that fact is not in itself decisive in considering whether or not specific performance should be granted, nor does a distinction between penalty and liquated damages affects the answer to this question. The answer is to be found by considering intention of the parties, that is, whether the party bound to performance has an alternative choice given to him by the contract to perform or to pay the agreed sum, or whether he is bound to do a certain thing, with a penal sum or sum by way of liquidated attached as security. In the latter case the Court notwithstanding the penal clause enforces performance, if the contract be such that without the penal clause it would have been proper for specific performance. Whether the contract contains a penalty clause, the contract has his right in law upon the contract for the money payable, under the clause, and also his right in equity to specific relief; he can, at his election, obtain either form of relief but he cannot obtain both forms."
12. ' It was further observed as follows:- "The general rule of equity is that if a thing is agreed upon to be done, though there is a penalty annexed to secure its performance, yet the very thing itself must be done. On the other hand it is certainly open to parties entering into contracts to agree that in case of a breach of the contracts only a fixed sum of money shall be paid by way of compensation."
13. ' The respondent No,2 had agreed to refund earnest money and pay Rs,4,000 as penalty to respondent No,l. From this clause it cannot be construed that the respondent No,1 had agreed to give up his claim for specific performance, and accept Rs,4,000 in lieu of his right to specific performance or that .he would abandon the said right.
14. ' The learned counsel for the appellant referred to Hari Kristian v. K.C.Gupta A I it 1949 Ali.
44. In this case the plaintiff had offered to accept damages as adequate compensation, therefore, decree for specific performance was not granted. In Ranji Patel v. Rao Kishore Singh AIR 1929. P C 190 the District Judge in first appeal held that compensation in money was adequate relief to the plaintiff and his finding was affirmed by the Court of Judicial Commissioner, it was therefore,, observed that the presumption referred to in Explanation to section 12 stood rebutted. It was held that "in view of the finding that compensation in money is an adequate relief to the plaintiff and in view of the express provision of section 12 (c) and 21 (a) their Lordships are of the opinion that a decree for specific performance should not be made". In the present case there is no finding by the learned trial Court, nor a finding can be made that the parties had agreed the compensation shall be adequate relief for the breach of agreement. In Hari Crishan's case the facts were completely different as the plaintiff at one stage had offered to accept damages as adequate compensation.
15. There is no such assertion by the appellants or respondent No,2 that any offer was made by the respondent No,2. The burden was upon the appellant and respondent No,2 to show that the provision of agreement to pay penalty was adequate relief for the breach. This burden has not been discharged and moreover, as observed in Ghulam Rasool's case the provision for payment of penalty provided in the agreement cannot be stretched to mean that it is an adequate compensation for the breach of contract.
16. The learned counsel for the appellant next contended that an agreement in respect of non- specified property cannot be specifically enforced. In this regard the learned counsel has referred to the agreement Exh.65 which provides that the respondent No,2 is the owner of about 80 Acres of land situated in Deh Kaura Tapo Ghulam Shah Kandiaro, District Nawabshah survey numbers of which were given in details. This document further provides that whatever land of the respondent No,2 is situated in village Kandiaro is agreed to be sold to respondent No,l. The contention of the learned counsel is that in view of this provision the agreement is unspecific, and therefore, cannot be enforced. The agreement provides 24 survey numbers specifically, and therefore, the part of the agreement cannot be hit on the ground of uncertainty. So far the 'other part is concerned it is uncertain and unspecific. In the plaint the respondent No, 1 has given a schedule of land with survey numbers and area in respect of which relief has been sought. The schedule is as follows:- {{TABLE}} Name of Deh Tappa Taluka S.No, Area Kander Ghulam Shah Kandiaro 82/2 1-33 82/4 1-32 83 3-1 85 3-14 496 2-21 199/1 8-21 199/..! 2-04 1k0 0-37 84 2-38 129/3 0-22 230 2-25 228 7-17 76 2-12 77 4-04 61/1 0-33 61/2 1-39 138 3-03 215/1,2 8-24 217/1,2 7-35 197 2-04 250 4-12 507 2-13 508 1-23 214 3-15.
17. Total 80-2 ' According to the evidence of TAkedar Abdul Lateef who has produced the extract from Mutation Register (Exh.73) these survey numbers have been mutated in the name of respondent No,2. There are other survey numbers also which stand in the name of respondent No,2. However, the respondent No,1 will be entitled to specific performance in respect of survey numbers mentioned in the schedule to the plaint as he has asked for this relief, in respect of these lands only. In fact the respondent No,1 has not asked for any relief in respect of unspecified survey numbers which have been referred in the agreement and there fore, no relief can be granted in respect of such unspecified land.
18. ' The appellant's next contention is that they are the bona fide purchasers for valuable consideration in possession of the property, and therefore, the sale in 'their favour cannot be challenged. In this regard reference has been made to section 27(a) (b) of the Specific Relief Act which provides that a contract may be specifically enforced against either party or person claiming under him by the title arising subsequent to the contract except a transferee for value who has paid his money in good faith and without notice of the original contract. The appellants seek protection under this provision of law. A subsequent transferee can seek the benefit of this provision only if he establishes that he is a (1) bona fide purchaser, (2) for valuable consideration and (3) without notice of the previous agreement. Unless these three ingredients are proved the subsequent purchaser cannot claim benefit under section 27(b). Reference can be made to 1980 1960 and PLD 1969 Lah.
762. The application of section 27 (b) depends on the facts of each case which can be determined on the basis of the evidence of the parties. Therefore, it is to be seen whether the appellants have fulfilled these conditions.
19. ' The first agreement between the respondents Nos.1 and 2 was made on 25-10-1966 (Exh. 65).
20. Thereafter, second agreement Exh.104 was made between respondent No,2 and Ghulam Nabi which recited that the respondent No,2 has received money from six persons as detailed earlier.
21. This agreement is dated 2-5-1967 and provides that the sale should be registered within a period of four months. However, before the expiry of the stipulated period another agreement (Exh.105) was executed by the respondent No,2 dated 21-7-1967. In this agreement besides six persons who were vendees in the agreement Exh.104 Amir Bux was also added as the 7th party. It is significant to note that out of Rs,32,000 paid to the respondent No,2 Amir Bux had paid Rs,16,750 which is more than half of the amount. Sale deed under this agreement was to be completed before 31st December, 1967 and it further provided that if the respondent No,2 failed to get the sale-deed registered due to some legal objection then he would refund the amount and pay penalty of Rs,10,000. This agreement Exh.105 was therefore, in supersession of the earlier agreement Exh.104 because the amount paid under this agreement was adjusted in the second agreement and Amir Bux who was not a party in the first agreement was introduced as a new party having a major share. Therefore, in fact it was this agreement Exh.105 which was operative for the purpose of claiming right in the disputed property. This agreement was executed on 21-7-1967 after the suit had been instituted and the facts on record show that before the execution of this agreement, the appellants had notice of the previous sale. An application under Order 1, rule 10, C.P.C. was filed by appellants for joining Amir Bux, Sojhro appellant No,10 and Jan Muhammad. Again an application under Order 1, rule 10 was filed on 11-7-1967 Exh.20 for joining Noor Muhammad, Ali Nawaz, Muttu Morial and Muhammad Pahwar. The appellants had executed Vakalatnama in favour of their Advocate on 10-7-1967. These facts clearly establish that the appellants were fully aware of the proceedings in the suit and the previous sale made in favour of the respondent No,l. The appellants, therefore, cannot assert that they are bona fide purchasers for valuable consideration without notice of the previous sale. The fact that the appellants are in possession of the property will not change the character of the suit as the previous seller is entitled to seek specific performance of the agreement for sale of immovable property against seller or any person claiming title under him having purchased the property subsequently with notice of the previous sale.
22. ' MRs,Salima Nasiruddin the learned counsel for the respondent No,1 has contended that under Order XII, rule 6 the respondent No,2 has admitted the claim of the respondent No,1, therefore, on the basis of this admission the respondent No,1 was entitled to the specific performance of the contract.
23. ' An admission is not conclusive proof of the matters admitted and is not binding unless it also constitute estoppel as held in P L 1) 1960 Kar.
885. In cases where it is not safe to pass a judgment on admission, the Court may require the proof of the fact or may refuse judgment despite admission if the plaintiff has no case in law. In 1973 SCMR 228 it was held that when the cause is found to be false the suit cannot succeed despite the defendants admission. In the present case the conduct of the respondent No,2 has been far from being bona fide. In fact he has been dishonest and playing with both the parties, to his advantage.
24. In the written statement he denied the claim of the respondent No,1 but subsequently filed an application under Order XII, rule 6, C.P.C. admitting his claim. In such circumstances it is not safe to pass a decree entirely on the admission of the respondent No, (2). It is an admitted position that the respondent No,2 has subsequently sold the disputed land may be the appellants. He has therefore, created a third party interest in the land. In these circumstances his statement that he admits the claim of the respondent No,1 does not automatically entitle the respondent No, to obtain a decree for specific performance against the appellants. In such circumstances the Court has to look to the contesting claims of the parties particularly the claim of the third party who may have a valid claim. In these circumstances no decree can be passed against the appellants on the basis of the admission of the respondent No,2.
25. ' For the reasons stated earlier the respondent No,1 is entitled to specific performance of the contract in respect of the properties mentioned in the schedule to the plaint. The appeal is therefore, dismissed with cost to be borne by the respondent No,2.