' This Regular Second Appeal is directed against the judgment and decree, dated 4th February, 1978 passed by a learned Additional District Judge, Sheikhupura.
2. The dispute relates to land measuring 58 kanals situate in village Jatri, Tehsil Nankana Sahib, District Sheikhupura, which was originally owned by Abdul Hayee respondent No, 3.
3. On 8th June, 1967 the said Abdul Hayee executed an agreement to sell (Exh. P. 1) in respect of the aforementioned land in favour of the appellant for a consideration of Rs, 3,625. Out of the sale price, Rs, 2,225 were paid as earnest money and the remaining sale price of Rs, 1,400 was to be paid on 16th November, 1967 when Abdul Hayee was to execute the sale-deed in favour of the appellant as per terms of the agreement.
4. The case of the appellant is that on 16th November, 1967 he paid the remaining sale price of Rs, 1,400 to Abdul Hayee who delivered possession of the suit land to the appellant. In the revenue records, however, Abdul Hayee continued to be recorded as owner. Subsequently, he again sold the said land in favour of respondents Nos. 1 and 2 namely Shah Muhammad and Muhammad Hadees. The date of the sale in favour of respondents Nos. 1 and 2 is not forthcoming from the records but it appears that it was the year 1968.
5. On 15th May, 1970 the appellant filed a suit against the respondents seeking a declaration to the effect that he was owner in possession of the suit land and that he had paid the entire sale price in accordance with the terms of the agreement to sell to Abdul Hayee, the original owner, and that the said owner had duly delivered possession of the land in dispute to him. In the alternative, the appellant prayed for decree for specific performance of the contract.
6. On 27th January. 1973 a joint written statement was filed by Abdul Hayee as also Muhammad Hadees and Shah Muhammad wherein execution of the agreement to sell was not denied but the appellant's suit was resisted on the ground that the mortgage money which was payable by the appellant was not paid by him, and, therefore, the agreement to sell came to an end and thereafter Abdul Hayee was within his right to sell the land in favour of respondents Nos. 1 and 2.
7. The learned trial Court framed the necessary issues arising out of the parties pleadings and the said learned Court after considering the oral as well as documentary evidence adduced before it by the parties, decreed the appellant's suit for the specific performance of the contract on 7th May, 1976. His prayer for declaration to the effect that he was owner in possession of the suit land was, however, not allowed.
8. Respondents Nos. 1 and 2 filed an appeal which has been accepted by the learned Additional District Judge, Sheikhupura, through impugned judgment and decree, dated 4th February, 1978.
Respondent No, 3 viz. Abdul Hayee of course did not challenge the order of the trial Court by any appeal or revision.
9. The appeal filed by respondents Nos. 1 and 2 has succeeded through the impugned order on two grounds. Firstly, that respondents Nos. 1 and 2 had no previous notice about the agreement of sale by Abdul Hayee in favour of the appellant and thus their title was protected under section 41 of the Transfer of Property Act as they were transferees for consideration 1 in good faith and secondly that the plaintiff had failed to prove that he was prepared to perform his part of the contract by the target date viz. 16th November, 1967.
10. As regards the first ground on account of which the appellant has been non-suited, it has been submitted on behalf of the appellant that the plaintiff/appellant's prayer for a declaration to the effect that he was owner in possession of the suit land having been disallowed by the learned trial Court and that decision having not been challenged by the appellant before the learned lower Appellate Court his (appellant's) case before the first Appellate Court was that on the basis of agreement to sell (Exh. P. 1) be was entitled to the decree for specific performance of the contract.
In these circumstances, therefore, section 41 of the Transfer of Property Act was not applicable and the respondents could possibly take up the plea of protection under section 27 of the Specific Relief Act but that protection has to be specifically pleaded and proved inasmuch as section 27 of the Specific Relief Act is an exception to the general rule. In the present case, however, no plea with regard to protection under section 27 of the Specific Relief Act has been raised in the written statement. No evidence has also been adduced to that effect. The onus in this behalf lay very heavily on the subsequent vendees viz. Respondents Nos. 1 and 2.
11. Section 41 of the Transfer of Property Act is applicable where a transfer has been made by an ostensible owner for consideration with the consent express or implied of the persons interested in the immovable property. Such real owner/owners cannot challenge transfer by the ostensible owner provided the transferee after taking reasonable care to ascertain that the transferor had power to make the transfer has acted in good faith.
12. In the circumstances of the under consideration case, the appellant was not yet the real owner and, therefore, Abdul Hayee who transferred the suit land in favour of respondents Nos. 1 and 2 cannot be termed as an ostensible owner. The claim of the appellant before the learned lower Appellate Court was that he was entitled to the decree for specific performance of the contract on the basis of the agreement to sell Exh. P.
1. In such circumstances, section 27 of the Specific Relief Act can be invoked, relevant part whereof reads :- "Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against :-
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract."
' Thus, under section 27(b) (ibid), a subsequent transferee for consideration in good faith has been protected against a suit for specific performance of a contract.
13. As already observed, respondents Nos. 1 and 2 have also not denied the execution of agreement to sell Exh. P. 1 by respondent No, 3 in favour of the appellant. The execution of the agreement to sell has been admitted by them in the written statement, dated 27th January, 1973 which they jointly filed with Abdul Hayee. In Mrs. Parveen Begum v. Raja Muhammad Sarwar Khan (1), the statement of law enunciated in Hadlay v. London Bank of Scotland (2) was accepted and followed which is to the following effect :- "I have always understood the rule of the Court to be that, in case where there is a clear and undoubted contract as to the validity of which no dispute arises for the sale of the property, the Court will not after that contract has been entered into permit the vendor to
(1) PLD 1956 Kar. 521 (2) 12 L T R 747 ' transfer the legal estate to a third person notwithstanding the lis pendens will operate against that third person, and I think that as well founded in principle, because the effect of the contract is to pass the whole equitable interest out of the vendor. So long as the contract is an undisputed contract the whole of the property is in equity transferred from the vendor to the purchaser ; the vendor then becomes a trustee for the purchaser and the trustee cannot be permitted to deal with the legal estate so as to inconvenience the purchaser."
14. In Muhammad Aslam Khan and others v. Feroze Shah (1) it was held : - "Where a transferee has knowledge of such facts which would put him on enquiry which if prosecuted would have disclosed a previous agreement, such transferee is not a transferee without notice of the original contract within the meaning of exception in section 27(b) of the Specific Relief Act."
15. In Bhup Narain Singh v. Gokul Chand Mahton and others (2) it was ruled that section 27 lays down a general rule that the original contract may be specifically enforced against a subsequent transferee but allows an exception to that general rule not to the transferor but to the transferee, therefore, it is for the transferee to establish circumstances which will allow him to retain the benefit of a transferee which prima facie he had no right to get.
16. Similarly, in Shankar Lal Narayan Das v. The New Mofussil Co. Ltd. And others (3) it was held that where after entering into a contract for the sale of a certain property with the plaintiff, the vendor subsequently contracts to sell the same property to the defendant, then in a suit by the plaintiff under section 27 for the specific performance of the contract in his favour, the burden of proving good faith and lack of notice of the contract lies upon the defendant..
17. In Said Habib v. Haji Matiur Rehman and 5 others (4) it has been observed :- "But it is also true and is well-settled by authority that to come under the exception to clause (b) of section 27, a subsequent vendee has to show that he is a purchaser (1) bona fides (2) for value and
(3) without notice of previous agreement. These are questions of facts pure and simple and in order to defeat the previous transferee, the subsequent transferee has to raise them in his written statement and thereafter has to lead evidence to substantiate them. In my view, a question of fact which for its decision depends upon evidence must be raised in the pleadings of the parties and unless it is so raised and debated in the trial Court, it cannot be raised in appeal."
18. In the present case, undoubtedly, no plea regarding protection under the exception to clause
(b) of section 27 of the Specific Relief Act has been pleaded by respondents Nos. 1 and 2 in the written statement nor any contention in this behalf was raised before the trial Court.
(1) AIR 1932 P C 228 (2) AIR 1934 P C 68
(3) R 1946 p C 97 (4) 1989 C C 1450
19. Even if it be assumed by any stretch of imagination that after the execution of agreement to sell the status of Abdul Hayee, respondent No, 3, was rendered as that of ostensible owner and, therefore, protection provided by section 41 of the Transfer of Property Act could be availed of by respondents Nos. 1 and 2, it may be observed that there is nothing on the record to suggest that respondents Nos. 1 and 2 before purchasing the suit land from Abdul Hayee took any reasonable care to ascertain that he had not already agreed to sell this property to the appellant and has not received the earnest money amounting to Rs, 2,275. As a matter of fact, in the written statement even respondents Nos. 1 and 2 have not denied the execution of the agreement to sell, dated 8th June, 1967 (Exh. P. 1). The only plea which has been raised in the written statement is that the appellant was obliged to pay the mortgage money but he failed to do so and, therefore, respondent No, 3 was justified in selling the suit land further in favour of respondents Nos. 1 and 2.
20. In the course of evidence, Shah Muhammad, respondent No, 1, who testified as D. W. 2 before the learned trial Court did not utter a single word in the examination-in-chief that respondents Nos. 1 and 2 had no knowledge of the previous agreement to sell in respect of the suit land executed by respondent No, 3 in favour of the appellant. In the cross-examination, he himself disclosed that the appellant had entered into an agreement of sale with respondent No, 3 and that he (respondent No, 1) knew about it but again said that he had no knowledge of the said agreement. The learned Additional District Judge was taken into consideration his second utterance to the effect that he had no knowledge of the agreement but he has ignored the first part of the statement that the appellant had entered into an agreement of sale with respondent No, 3 and this respondent (respondent No, 1) knew about it. In the light of such state of affairs, it cannot be considered by any stretch of imagination that respondents Nos. 1 and 2 purchased the suit land from respondent No, 3 after taking reasonable care to ascertain that the transferor had power to make the transfer and that they had acted in good faith. They cannot, therefore, avail of the provisions of section 41 of the Transfer of Property Act as well.
21. This is a common ground between the parties that agreement to sell Exh. P. 1 is an unregistered document but it is a settled proposition of law that suit for specific performance of the contract of sale can be competently filed on the basis of an unregistered agreement to sell. An agreement to sell undoubtedly is not required to be registered.
22. On behalf of the respondents, reliance has been placed on Muhammad Din and another v. Mst.
Sardar Bibi and others (1) and More Khan and others v. Imam Bakhsh and others (2), but both these authorities are distinguishable on merits because as already held above, the bona fide nature of the subsequent sale in favour of respondents Nos. 1 and 2 by respondent No, 3 has not been proved.
23. In Mst. Khair-ul-Nisa and 6 others v. Malik Muhammad Ishaquel and 2 others (3) it was held that under the provisions of section 27(b) of the Specific Relief Act, a contract can be specifically performed against any other c person claiming title to the property arising subsequently to the original contract but exception has been made in the case of transferee of value who has paid his money in good faith and without notice of the original con-
(1) AIR 1927 Lah. 666 (2) PLD 1959 Kar. 767
(3) P L 13 1972 SC 25 ' tract. It is, therefore, for the transferee to prove that he was a transferee in good faith and without notice of the original contract for valuable consideration. In a suit for specific performance of the contract, the onus lies heavily on the person whose title arises subsequently to the contract to sell and he must prove that he is a transferee for value and has paid the money in good faith and without notice of the original contract.
24. In the light of the above discussion, it is concluded that respondents Nos. 1 and 2 have neither pleaded nor have proved that they were transferees of the suit land for value in good faith without knowledge of the original agreement of sale executed by respondent No, 3 in favour of the appellant. The findings to the contrary recorded by the learned Additional District Judge are not based on records and are violative of the principles enunciated by the superior Courts as indicated above.
25. As already observed, the second ground on which the appellant's suit has been dismissed by the learned Additional District Judge is that the appellant had failed to show that he was willing to perform his part of the contract with regard to payment of the balance amount of Rs, 1400 particularly when he claimed a declaration to the effect that he was in possession of the suit land as owner and had already paid the balance amount.
26. The execution of the agreement to sell (Exh. P. 1) has not been: denied by Abdul Hayee, respondent No,
3. He has also admitted the execution of receipt Exh. P. 2 whereby he received a sum of Rs, 2,225 from the appellant in addition to another sum of Rs, 250. The plaintiff appellant no doubt has claimed declaration to the effect that he was owned in possession of the suit land and that he had already paid the balance amount of Rs, 1,400 to Abdul Hayee, respondent No, 3, when he delivered possession of the suit land to him but in the alternative he has also claime for a decree for specific performance of the contract on payment of Rs, 1,400. The alternative relief, as claimed by the appellant, could be legally aske for and when the appellant has not been found entitled to the declaration a prayed for by him, his case for the alternative relief required conside radon. While doing so, the learned trial Judge decreed the appellant' suit regarding the alternative relief of specific performance of the contract. No exception could be taken to such a decision of the learned trial Court particularly when respondent No, 3 Abdul Hayee expressly admitted the execution of the agreement to sell Exh. P. 1 and the receipt of Rs, 2,225 out of entire sale price of Rs, 3,625 as earnest money. The only defence pleaded by Abdul Hayee for not performing the contract was that the appellant as per terms of contract was under obligation to pay the mortgage amount which he failed to pay and, therefore, respondent No, 3 further sold the suit land in favour of respondents Nos. I and 2. This plea of respondent No, 2 is absolutely without any substance. In the agreement Exh. P. 1, there is no provision to the effect that any mortgage amount was payable by the purchaser i,e, the appellant It has rather been recited in the agreement to sell that there was no bar or lien of any kind on the suit land. Even if the land was under mortgage, Abdul Hayee could execute the sale-deed after receiving Rs, 1,400 from the appellant as per terms of the contract and thereafter it would have been for the appellant to get the mortgage redeemed. No plea has been advanced in the pleadings by the respondents that the appellant was reluctant to pay Rs, 1,400, the remaining sale price to Abdul Hayee or that he was not willing to perform his part of the contract.
Thus the findings recorded by the learned lower Appellate Court in this behalf are erroneous and not borne out by the material on the records.
27.
27. For the foregoing conclusions, this appeal is accepted and the judgment and decree passed by the learned lower Appellate Court is set aside while the judgment and decree passed by the learned trial Court on 7th July, 1976 is restored. The respondents shall bear the costs of this litigation throughout. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.