CH. MUSHTAQ AHMAD KHAN, J.~Briefly stated facts of the case out of which this second appeal has arisen are that on the basis of an agreement for sale dated 2.2.1980, Ch. Nazir Ahmad, appellant in this regular second appeal filed a suit to seek specific performance of the said agreement for sale, in respect of property bearing No. II-II-R-5 situate in mohallah Beroon Kot Usman Khan, Kasur on the grounds that respondents are illegally refusing to execute a sale deed in favour of plaintiff although the plaintiff has always been ready and willing to perform his part of contract, in pursuance whereof Rs.25,000/- was paid as earnest money, and the balance was to be paid at the time of registration of the sale deed. The execution of the agreement for sale has been denied in the written statement and it has been stated that in fact the signatures of the predecessor of the respondents Nos. 1 to 13 and that of 14 were obtained on a stamp paper on the pretext to get the premises in dispute vacated from its occupants and for purposes of preparing a deed of special power of attorney but instead that of, the alleged document of agreement of sale has been prepared which is not valid.
2. On the basis of the pleadings of the parties, the learned trial court framed the following issues:-
1. Whether the plaintiff is entitled to decree for possession on the basis of an agreement to sell? OPP
2. Whether the suit is not maintainable for want of registration of agreement to sell? OPD
3. Whether the plaint has not been verified according to law. If so its' effect? OPD
4. Relief: and after recording of evidence decided issue No.1 in favour of the plaintiff and decreed the suit holding that there is a valid agreement for sale in favour of the appellants, and, hence, he is entitled to a decree for specific performance of contract, on payment of Rs.75000/- the balance sale price. Issues No.2 and 3 were not pressed by the respondents, Aggrieved by the said judgment and decree, an appeal was filed before the District Court of Kasur which has been accepted by the learned Addl: District Judge, Kasur vide judgment and decree dated 14.3.1987. Learned Addl: District Judge has confirmed the findings of the learned trial court on the only contested issue No.1 which has been decided in favour of the appellant by the learned trial court, however, it has been held that as the learned appellate court has discretion to grant or refuse the decree for specific performance of the contract, a decree for specific performance of the contract cannot be granted and hence has passed a decree for payment of damages amounting to Rs.1,00,000/- by way of damages in pursuance of the alternate prayer contained in the plaint. This judgment and decree has been challenged by the appellant in this appeal.
3. Mr. Muhammad As1 am Nagi, Advocate, learned counsel for the appellant has argued that after holding that an agreement for sale had been validly executed between the parties, and that the appellant is entitled to the grant of decree for possession while upholding the findings of the learned trial court on issue No.1, learned first appellate court did not have jurisdiction to refuse to pass a decree for specific performance of the contract merely on the ground that under section 22 of the Specific Relief Act, the court possessed a discretion to pass or not to pass a decree in favour of the appellant. Learned counsel argued that the discretion cannot be exercised arbitrarily and merely on the basis of whims. It is to be exercised judiciously and in this case the discretion having been exercised in favour of the appellant by the learned trial court, learned first appellate court could not have interfered therewith and could not have set aside the judgment and decree passed by the learned trial court merely because the appellant has claimed in the plaint, the payment of damages as an alternate relief.
4. Syed Qurban Ali Gilani, learned counsel for the respondents has argued that as there is no specific term in the agreement for sale that in case of refusal to execute sale deed by the defendant respondents, the appellant can get a decree for specific performance of the contract by filing of a suit, hence no decree could have been granted in favour of the appellant and the learned first appellate court in exercise of a discretion has rightly refused to pass decree for specific performance of the contract in favour of the appellant and has granted him the decree for payment of damages which are rather much more to which he was legally entitled to. In support of his arguments learned counsel has relied upon cases of Messrs Karachi Gas Co. Ltd., Karachi, vs. Messrs Fancy Foundation-PLD 1977 Karachi and case of The King versus Paulson and others-A.I.R 1920 Privy Council 190.
5. I have considered the arguments addressed by the learned counsel for the parties and have also perused the record. It is now admitted and settled decision rendered by both the courts below that an agreement for sale as alleged by the appellant was executed by the predecessor in interest of the respondents No.1 to 13 and 14. Issue No.1 has been decided in favour of the appellant by the 'earned trial court which finding has been upheld even by the learned lower appellate court.
There is no cavil with the proposition that grant of a decree for specific performance of the contract is discretionary in nature yet discretion is to be exercised in accordance with the settled judicial principles and cannot be exercised arbitrarily. Even otherwise exercise of discretionary jurisdiction of the Court cannot be claimed as a matter of right by a party in his own favour. If discretion is exercised arbitrarily and without sound and reasonable grounds and is not guided by judicial principles, the same is liable to be interfered with. In case of Ghulam Nabi and others versus Seth Muhammad Yaqub and others-PLD 1983 S.C. 344 regarding scope of rule of exercise of discretion to grant or refuse a decree for specific performance of contract, it has been held as under:- "And lastly it was urged that the jurisdiction of the court to decree specific performance being discretionary under section 22 of the Specific Relief Act, the court ought not to have, considering the plaintiffs conduct, granted such relief. The jurisdiction under section 22 is discretionary only in the sense that it cannot be claimed as a matter of right. As enjoined by the section itself, the exercise of the discretion is not to be arbitrary but sound and reasonable, guided by judicial principle and capable of correction by a court of appeal. The exercise of the discretion to grant or refuse to grant relief will, therefore, depend upon the circumstances of the case and the conduct of the parties." In the case in hand there is absolutely no ground for exercise of discretion against the plaintiff- appellant. He has categorically proved that there was an agreement for sale in his favour and he has been ready and willing to perform his part of the contract. It is also not denied that it is the respondents who have failed to execute the sale deed in favour of the appellant and, hence, have failed to perform their part of the contract. Consequently, it is a fit case where discretion is to be exercised in favour of the appellant in whose favour it has been exercised by the learned trial court. Exercise of discretion by the learned appellate court had to be on the basis of sound and judicial reasons. There are absolutely no sound and judicial reasons for interfering with the by the learned trial court and for refusing a decree for specific performance of the contract to the appellant merely because the court feels that decree for specific performance may not be passed.
Omission of the term in the agreement for sale, to the effect that contract can be specifically enforced through a court of law and the decree for specific performance can be obtained by filing of a suit is not a valid and lawful ground for refusing the grant of such decree.
Arguments of the learned counsel for the respondents of the effect that as there is specific penalty provided in the deed of agreement of sale itself in the shape of payment of damages and there is alternate prayer for grant of damages in the plaint, hence, prayer for the grant of decree for specific performance of contract has been rightly refused by the learned first appellate court, is also misconceived. Learned counsel has sought support for the argument from the cases of Messrs Karachi Gas Company, Limited Karachi vs. Messrs Fancy Foundation PLD 1977 Karachi 191 and Ramji Patel vs. Rao Kishore Singh AIR 1929 P.C.
190. In the later judgment at page 193 and 194 of the report, it has been held as under:- It was found as already mentioned by the learned District Judge that compensation in money was an adequate relief to the plaintiff and his finding was affirmed by the court of the Judicial Commissioner.
Their Lordships have already stated that there was evidence before the learned District Judge who was the first appellate Court, which would entitle him to arrive at such a finding.
Consequently, it must be taken for the purpose of this appeal that the above-mentioned finding stands. Their Lordships desire to add that they seen no reason for thinking that the finding of the courts in India in this respect was in any way incorrect.
The material provisions of the Specific Relief Act (Act 1 of 1877) are Ss 12(c) (d) and the Explanation thereto, 19 21 (a) and 22 and are as follows: "12. Except as otherwise provided in this Chapter, the specific performance of any contract may in the discretion of the Court be enforced; "(c) When the act agreed to be done in such that pecuniary compensation for its non- performance would not afford adequate relief; or "(d) When it is probable that pecuniary compensation cannot be got for the non-performance of the act acceed to be done.
"Explanation-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, and that the breach of a contract to transfer movable property can be thus relieved."
"19. Any person suing for the specific performance of a contract may also ask for compensation for its breach, either in addition to, or in substitution for, such performance.
"If in any such suit the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant and that the plaintiff is entitled to compensation for that breach, it shall award him ompensation accordingly.
"If in any such suit the court decides that specific performance ought to be granted but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly.
"21. The following contracts cannot be specifically enforced:
(a) A contract for the non-performance of which compensation in money is an adequate relief.
"22. The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because k is lawful to do so; but the discretion of the court is no arbitrary, but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.
"The following are cases in which the court may properly exercise a discretion not to decree specific performance; Where the circumstances under which contract is made are such as to give the plaintiff an unfair advantage over the defendant, though there may be no fraud or misrepresentation on the plaintiff's part."
Reliance was placed by the learned counsel for the plaintiff on the explanation to S.12 and urged that the learned District Judge was right in making a decree for specific performance.
The obvious answer is that in this case the presumption referred to in the explanation was rebutted because it was proved and found that the breach of the contract could be adequately relieved by compensation in money.
It was further argued that it was probable that pecuniary compensation could not be got for the non-performance of the act agreed to be done, and that consequently, the case feel within S.12 (d).
This point as far as their Lordships can discover, was not taken in the courts in India, nor was it mentioned in the reasons set out in the plaintiff-appellants case on appeal to this Board.
The learned counsel for the plaintiff was not able to draw their lordships' attention to any evidence which would justify them in holding that there is a probability that pecuniary compensation if awarded, cannot be recovered. If there were any substance in this point, it would undoubtedly have been relied upon by the plaintiff, because, if proved, it would have afforded a good ground for obtaining the decree for specific performance which he desired.
In view of the finding that compensation in money is an adequate relief to the plaintiff and in view of the express provisions contained in Ss. 12(c) and 21 (a), their Lordships are of opinion that a decree for specific performance of the contract should not be made".
The case of Messrs Karachi Gas Co. Ltd., Karachi vs. Messrs Fancy Foundation FLD 1977 Karachi 191 is not at all relevant for the purpose of decision of the controversy in question as it relates to the applicability of the principle of lis-pendence to the suits of specific performance of the contract while deciding the question of issuance of interim injunction against alienations pendete-lite. The case of Ramji Patel vs. Rao Kishore Singh AIR 1929 PC 190 is distinguishable on facts as is clear from the portion of the judgment which has been reproduced above. Some of the distinguishing feature of the case in hand are that it has been held by the two courts that the appellant is entitled to the grant of a decree for possession of the land in question as he has proved his case. There is absolutely no evidence or finding which could being the case within the scope of exceptions contained in section 21 of the Specific Relief Act.
Learned trial court has passed a decree for specific performance of contract in his favour. Learned first appellate court has interfered with the exercise of discretion by the learned trial court without any lawful and valid grounds. Alternate plea to claim damages is not a valid ground for refusing the decree for specific performance of the contract, in case of Abdul Karim vs. Muhammad Shafi (1973 SCMR 225) it has been held as under:- "We are unable to accept this contention in view of the clear provisions of the Specific Relief Act which is applicable in this country. Section 12 provides that the Specific Performance of the contract may be enforced in the discretion of the court. Explanation to section 12 of the Act clearly states 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 compensation in money and that the breach of contract to transfer movable property can be thus relieved. Section 19 provides that any person suing for specific performance of a contract may also ask for compensation for its breach, either in addition to or in substitution for, such performance. Section 20 says 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. Section 22 provides that the jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal."
It is clear from the ratio of the above-cited case that merely because there is a penalty clause in the agreement and there is a prayer for the payment of damages as an alternate relief is not a ground to refuse a decree for specific performance of the contract. Consequently, this authority is squarely applicable to the facts and the circumstances of the case in hand and, hence, I hold that the decree for the specific performance of contract granted by the learned trial court could not have been interfered with the learned First Appellate Court who has exercised his jurisdiction illegally and with a material irregularity.
Resultantly, this regular appeal is accepted, the impugned judgment and decree passed by the learned lower appellate court is set aside and that of the learned trial court is restored with costs throughout.