Mst. KHAIR-UL-NISA AND 6 Other vs Malik MUHAMMAD ISHAQUE AND 2 Other

1. WAHEEDUDDIN AHMAD, J.-This appeal by special leave is directed against the judgment of the former High Court of West Pakistan, Lahore, in R. S. A. No. 228 of 1966, dated the 22 April 1969. By this judgment the appeal was allowed and 5the parties were left to bear their own costs.

2. The facts leading to this appeal are that the plaintiff-respon--dent No. 1 entered into an agreement for sale in respect of land measuring 8 marlas bearing Khasra No. 2403/1, situate in Ihata Bibi, Misri Shah, Lahore, with Mirza Almas Ali Beg, respondent No. 3. At first he agreed to purchase the land for Rs. 2,500 on the 24th April 1957, and paid Rs. 500 as earnest money, but as respondent No. 3 delayed the completion of the sale, the price was raised to Rs. 3,500 on the 18th December 1957. A fresh agreement of sale, Exh. P. 4, was executed between the parties. In spite of this agreement, respondent No. 3 sold the property in dispute to Mohammad Hussain Shah, the predecessor-in- interest of the appellants for Rs. 4,000 by sale deed, dated the 29th March 1958. This led respondent No. 1 to file Suit No. 119/1 of 1959 in the Court of Mr. Salahuddin Mirza, Civil Judge, Lahore, for specific performance of the contract. He alleged that respondent No. 3 has committed breach of the contract and has illegally transferred the property to the predecessor-in-interest of the appellants.

3. The predecessor-in-interest of the appellants and respondent No. 3 resisted the suit on various grounds. Respondent No. 3 pleaded that respondent No. 1 did not perform his part of the contract.

4. He had no money and therefore, he delayed the performance of the contract. The predecessor-in- interest of the appellants pleaded that the contract was not enforceable against him because he was a transferee for value in good faith without notice of the original contract. He relied on thend Exception mentioned in section 27 (b) of the Specific Relief Act. On the pleadings of the parties, the following issues were framed :-----

(1) Whether the plaintiff was ready and willing to perform his part of contract of the sale, dated 18th December 1957 ?

(2) Whether defendant No. 1 was ready and willing to perform his part of the contract referred to above ?

(3) What are the conditions of the contract, dated the 18th December 1957 ?

(4) Whether the plaintiff is estopped on account of laches, from filing this suit for specific performance ?

(5) Whether defendant No. 1 is entitled to forfeit the earnest money ?

(6) Whether defendant No. 2 is vendee without notice and bona fide transferee for valuable consideration ? If so, its effect ?

(7) Whether defendant No. 2 has effected any improvements in the land? If so, whether he is entitled to any compensation, and if so, to what extent ?

(8) Relief.

5. Mohammad Hussain Shah, the predecessor-in-interest of the appellants died during the pendency of the suit. He could not be examined as a witness in the case and his legal representatives, who are the appellants is this case, were brought on the record. On the evidence produced by the parties, the learned trial Court found that the subsequent transferee had not purchased the property in dispute without notice and in good faith and decreed the suit with costs on the payment of the balance amount of Rs. 3,000. The appellants filed an appeal before the Additional District Judge, Lahore, who accepted the same and reversed the finding of the trial Court and held that the deceased Mohammad Hussain Shah purchased the property in good faith without notice of the original contract. In view of this finding, the suit of the respondent No. 1 was dismissed by judgment, dated the 3rd February 1966, in Appeal No. 154 of 1964. The matter was then taken to the High Court. A Division Bench of the former High Court of West Pakistan, Lahore, by judgment dated the 22nd April 1969, held that Mohammad Hussain Shah was not a transferee in good faith and without notice and restored the decree of the trial Court.

6. Special leave was granted in this case to consider the question whether in a suit for specific performance of contract for sale of immovable property brought by a person in whose favour a prior agreement to sell exists the defendant-vendee must lead affirmative evidence to prove that he is a bona fide purchaser for valuable consideration without notice.

7. It is unnecessary in this case to consider the question whether the breach was committed by respondent No. 3 or by respondent No.1. There is a concurrent finding of fact that the breach was committed by respondent No. 3. The only point that was urged in this appeal is that the prodecessor-in-interest of the appellants was a vendee without notice and transferee for valuable consideration. This point is covered by Issue No. 6, reproduced above.

8. In support of the appeal Raja Mohammad Anwar, learned counsel for the appellants, has urged two points. In the first place, he has contended that the appellants have discharged the onus of Issue No. 6 and the finding of the District Judge that Mohammad Hussain Shah deceased was a transferee in good faith, without notice and for valuable consideration is based on proper appreciation of the evidence led by the parties. He further contended that Mohammad Hussain Shah died during the pendency of the suit and, therefore, could not be examined as his own witness. According to the learned counsel, the deceased, in his written statement, has denied the factum of notice and this was sufficient to discharge the onus of Issue No. 6.

9. Before dealing with the points raised by the learned counsel for the appellants, it will be useful to reproduce here section 27 (b) of the Specific Relief Act. It is as under :---- "27. Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against-

(a) --------------------------------------------------------.

(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.

(c) --------------------------------------------------------.

(d) --------------------------------------------------------.

(e) --------------------------------------------------------."

10. It will be noticed that under this provision of law, a contract can be specifically performed against any other person claiming title to the property arising subsequently to the original contract but an exception has been made in the case of transferee for value who has paid him money in good faith and without notice, of the original contract. 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. This provision of law has been the subject of interpretation in two decisions of the Privy Council, namely, Bhup Narain Singh v. Gokul Chand Mahton and others (AIR 1934PC68) and Shankarlal Narayandas Mundade v. The New Mofussil Co. Ltd. And others (AIR 1946PC97). The question whether a subsequent transferee can resist the suit on ground of good faith and without notice was also considered in the case of Varden Seth Ram v. Luckpathy Royjee Lallah (9 Moore's I A 307). On this subject, the Privy Council observed in the case of Bhup Narain Singh as under :---- "In their Lordships' opinion, the section 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, and, in their Lordships' opinion, it is clearly for the transferee to establish the circumstances which, will allow him to retain the benefit of transfer which prima facie he had no right to get. Further the subsequent transferee is the person within whose knowledge the facts as to whether he has paid and whether he had notice of the original contract lie, and the provisions of sections 103 and106, Evidence Act, 1872, have a bearing on the question."

11. In the case of Shankarial Narayandas Mundade v. The New Mofussil Co. Ltd., the Privy Council observed as under ;---- "Their Lordships have found it unnecessary to examine the evidence which was called on behalf of the plaintiff to show that these defendants in fact had notice of the earlier contract, since a decision of this Board is clear authority for the proposition that the burden of proving good faith and lack of notice lay upon the defendants."

12. It is thus quite clear that in a suit for specific performance of contract the onus lies heavily on the person whose title arises subsequent 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.

13. Raja Muhammad Anwar, learned counsel for the appellants, referred us to two other decisions, namely, Kirtarath Rai and others v. Sripat Rai and others (AIR 1928 All. 307) and Haji Abdullah Khan and others v. Nisar Muhammad Khan and others (PLD 1959 Pesh. 81). In the first case, Sulaiman, J.

14. While interpreting section 27 (b) of the Specific Relief Act observed as under :---- "As regards the question of burden of proof, it seems to me that under section 27, sub-clause (b), Specific Relief Act, a contract can be enforced not only against a party thereto but also against any other person claiming under him by a title arising subsequently to the contract. There is, however, an exception in favour of a transferee for value who has paid his money in good faith and without notice of the plaintiffs' contract. From the language of this section it is clear that any person who wishes to bring himself within the exception must in the first instance show that he is entitled to that exception. I expressed the same view in my dissenting judgment in First Appeal No. 183 of 1919, decided on the 25th May 1923, where I quoted cases of all the High Courts in support of that view.

15. Out of these I may only refer to the case of Naubat Rai v. Dhaunkal Singh (1916) 38 All.

184. Since then these rulings have been followed in several other cases. In this view of the matter it is correct to say that the burden of proving want of notice, in the first instance, lies on the defendant- transferee. But this he can do by merely denying the fact on oath, and, therefore, the question of burden of proof loses much of its importance."

16. He further observed as under :---- "Both parties have, therefore, led evidence before the Court and the question of mere burden of proof has lost almost all its importance. We have to weigh the evidence as it stands and come to conclusion whether the fact of notice has or has not been established."

17. Similarly, in the case of Haji Abdullah Khan and others v. Nisar Muhammad Khan and others, at page 100, it was observed as under :---- "The question, however, still remains if the defendant-appellants were transferees in good faith and without notice of the previous contract. The negative is easier to prove than positive. There is an authority for the view that the subsequent transferee can effectively discharge the onus placed upon them by section 27 of the Specific Relief Act, by just appearing in Court and stating on solemn affirmation that they had no knowledge of the previous contract. The onus would then shift on to the plaintiffs to show that they had such a -knowledge."

18. It was further observed as under :- "It is a settled law that it is the bounden duty of a party personally knowing the whole circumstances of the case to give evidence on his behalf, and to submit to cross-examination. His non-appearance as a witness would be the strongest possible circumstance going to discredit the truth of his case."

19. The principles of law enunciated in these decisions appear to me to be quite correct. It seems to me that under section 27 (b) of the Specific Relief Act negative is to be proved by the sub--sequent transferee. If he appears in Court and states on oath that he had no knowledge of the transfer that would be quite sufficient to discharge the burden and the onus will then shift to the plaintiff to prove that the subsequent transferee had the notice of the original contract.

20. In the present case, unfortunately, Mohammad Hussain Shah died during the pendency of the suit before his evidence was recorded. He, therefore, could not appear in person to state whether he had notice of the original contract or not. There is, therefore, no negative evidence on behalf of the appellants to discharge the burden which lay so heavily on them. Raja Mohammad Anwar, learned counsel for the appellants, has contended that the deceased had denied the factum of the notice in the written statement and this should be considered as evidence in the case under section 32 of the Evidence Act. The contention of the learned counsel is not well founded. Written statements cannot be the exhibits in the case without the person who filed the same being examined in the Court. The statements made in the written statement are not on oath. They are only verified and therefore, they cannot be treated as evidence in the case. This view finds support from the case of J. B. Ross & Co. v. C. R. Seriven and others (AIR 1917 Cal. 269 (2)) and Muhammad Siddique v.

21. Bhupendra Narayan Roy Chowdhury (PLD 1962 Dacca 643). It was held in the former case as under :---- "A verification is required with a view to discourage, if not 'to prevent, the institution of false suits; the Legislature never contemplated that verified statements should be treated as evidence on behalf of a plaintiff against a defendant. 'The inference may legitimately be drawn from the language used in section 191 read with section 193, I. P. C., that a verified statement would not be "evidence" but for the special provision of section 191 which has been enacted for a special purpose."

22. In the latter case it was held that written statement cannot be an exhibit if defendant dies without being examined. The learned counsel for the appellants was unable to cite any authority in support of his contention that the written statement is an evidence in the case. In view of this the denial by deceased Mohammad Hussain Shah in the written statement is of no avail and cannot be of any assistance in the discharge of the onus which lay on the appellants to prove that the deceased was a transferee for valuable consideration in good faith and without notice.

23. Raja Mohammad Anwar, the learned counsel for the appellants, has contended that the parties have led evidence and, therefore, the question of onus is not of much importance. In this connection, he has relied on the decision of the Allahabad High Court referred to above. The contention of the learned counsel is not without substance. In the present case, the plaintiff- respondent No 1 has led evidence in the beginning to show that deceased had notice of the original contract. The appellants have also led evidence to show that they had no knowledge of the contract. The learned counsel for the appellants has contended that the sale in favour of Muhammad Hussain Shah was for the benefit of the legal heirs. He did not negotiate the sale and the agreement of sale was orally settled between Arshad Hussain D. W. 8 and respondent No. 3.

24. This point has been raised for the first time in appeal before us. The appellants have not taken any plea that the contract was entered into on behalf of the legal heirs of the deceased Mohammad Hussain Shah.

25. It will be noticed that the appellants have not led any evidence to show that deceased Mohammad Hussain Shah had no knowledge of the sale. Arshad Hussain Shah who is one of the heirs of deceased Mohammad Hussain Shah has stated that he purchased the land in suit during July 1958. Registered deed was executed and he had absolutely no knowledge that, respondent No. 3 had sold the property in suit in favour of the plaintiff. Plaintiff-respondent No. 1 has, on the other hand, led 'some evidence to show that deceased had' knowledge of the transaction in his favour. P.

26. W. 6 Nizamuddin stated as under :- "I know defendant No. 2 Muhammad Hussain who had on several times told me that he had knowledge about the agreement of sale between the plaintiffs and defendant No. 1."

27. He further stated as under :- "I had come to know from the Mohallah that Muhammad Hussain was negotiating the sale with Almas Ali Beg. For this reason I had forbidden him saying that bargain in respect of this land had already been struck."

28. P. W. 7 Mohammad Siddiq stated that "when the plaintiff' struck the bargain of sale he went to Mohammad Hussain Shah and constrained him that as be had purchased the plot, therefore he should not raise construction. Mohammad Hussain Shah was,, in possession of the land in suit as a tenant.""

29. P. W. 11 Malik Fateh Muhammad stated as under :- "After striking the bargain I had informed Muhammad Hussain that he should not raise construction on this land because we had struck the bargain."

30. In cross-examination he admitted that he had no talk with Muhammad Hussain Shah.

31. Malik Mohammad Ishaq (P. W. 13) respondent No. 1, stated as under :- "Defendant No. 2 is the vendee of the land in question. He was tenant of the defendant No. 1. I told the defendant/ vendee that he should not raise any construction on the spot as I was about to file the suit."

32. The only other evidence on the point is the statement of Mirza Almas Ali Beg P. W. 12 who was examined as plaintiff's witness. He stated that "Mohammad Hussain was not told any thing about the negotiation that had taken place with the plaintiffs."

33. Munawar Ali Beg, who was examined as D. W. 4 also stated fin cross-examination of the appellant that he did not inform Mohammad Hussain before or at the time of sale in this connection that he had settled the bargain with the plaintiff previously.

34. After carefully considering the evidence led by the parties, it appears to me that appellants have failed to discharge the onus that lay very heavily on them that Mohammad Hussain Shah had no notice of the original contract. The evidence led by the parties also shows that Mohammad Hussain Shah was informed about the original contract by the plaintiff' witnesses. In these circumstances, the High Court was perfectly justified in coming to the conclusion that the appellants have failed to prove that the deceased Mohammad Hussain Shah purchased the property in dispute for value and in good faith and without notice. In that view of the matter I find no force in the appeal which is dismissed. In view however, of the fact that important question of law was involved in the case, the parties are left to bear their own costs.

35. HAMOODUR RAHMAN, C. J.-I agree.

36. MUHAMMAD YAQUB ALI, J.-I agree.

37. SALAHUDDIN AHMED, J.-I agree.