' SAEEDUZZAMAN SIDDIQUI, J.---The above appeal through leave of this Court is directed against the judgment of Lahore High Court dated 30-7-1988, passed in R.F.A. No, 227 of 1984, whereby the appeal ,filed by the appellant against the judgment of the trial Court rejecting the suit for specific performance against the respondents was confirmed. The leave granting Order in the case is as follows:-- "In support of this petition it is submitted that the High Court erred. In holding that the petitioner had abandoned the right to seek specific performance of the agreement to sell by claiming damages because the mere fact that the damages had been claimed could not be a ground for non-suiting the petitioner as regards the prayer for specific performance. Moreover, the Notice Exh.
1)/5 was addressed to respondent No, 1 when she had already sold the property to respondent No,
2. The non-mention for specific performance in the notice Exh. D/5 did not, therefore, lead to the conclusion that the petitioner had abandoned his claim for specific performance. These submissions, inter alia, require further consideration. Leave granted. Security Rs,5,000.
' The appeal shall be made ready on the present record with liberty to the parties to add further documents if necessary and placed for hearing on an early date."
' The appellant entered into an agreement with respondent No, 1 to purchase property bearing No, S.E. 24-R-42, commonly known as 41-Empress Road, Lahore, measuring about 12 Kanals at the rate of Rs,42,500 per Kanal with building and structure standing thereon, on 6-8-1971. At the time of execution of agreement of sale respondent No, 1 received a sum of Rs,30,000 from the appellant by way of advance and the balance amount was agreed to be paid by the appellant to respondent No, 1 at the time of registration of the final sale deed in favour of the appellant. The appellant further paid a sum of Rs,20,000 to respondent No, 1 on 5-4-1972. It is an admitted position that at the time the agreement for sale was entered into between the appellant and respondent No, 1, the property was occupied by respondent No, 2 as tenant of respondent No,
1. According to clause No, 3 of the agreement, respondent No,1 had undertaken to convey the property in favour of the appellant alongwith vacant possession of the property. Clause 5 of the agreement further provided that the agreement was irrevocable and in case respondent No, 1 failed to convey the property, the appellant could get the sale completed through Court at the costs of respondent No,
1. It was further provided in the said clause that in case respondent No, 1 failed to get the property vacated from respondent No, 2, the appellant will have the option either to cancel the sale agreement and claim back the earnest money, but for that account respondent No, 1 could not compel the appellant, meaning thereby, that the appellant could ask for the conveyance of the property without vacant possession on fulfilment of other term and condition of the agreement. It has come in the evidence of the case that after execution of agreement of sale, respondent No, 1 time and again requested respondent No, 2 who were occupying the property as tenant, to vacate the same so that the property may be conveyed in favour of the appellant in accordance with terms of the agreement of sale. Respondent No, 2, in reply to various letters written by respondent No, 1, always held out that they would vacate the premises as soon as a suitable accommodation is available to them. In one of her letters addressed to the Chief Minister, Province of Punjab, on 8-12-1972, respondent No, complained that in spite of her repeated demands since August 1971, respondent No, 2 failed to vacate the premises causing untold hardship to her and making it impossible for her to complete the sale of the property in favour of the buyer with whom negotiations were already finalized. She finally requested the Chief Minister, Province of Punjab, in her above letter to issue necessary direction to respondent No, 2 to hand over vacant possession of the building to her so that she may comply with the demands of the buyer. In reply to her above letter respondent No, 1 was once again informed by respondent No, 2 on 19-1-1973 that efforts were being made to acquire some suitable premises for the offices of respondent No, 2 and for that purpose advertisement was made in the newspaper and as soon as some suitable accommodation was made available to respondent No, 2, vacant possession of the building will be handed over to respondent No, 1.
Thereafter, on 22-3-1973, in reply to another letter of respondent No, 1 dated 2-2-1973 demanding vacant possession of building, respondent No, 2 informed respondent No, 1, that the Government has decided to purchase the building in question and she was asked to wait for some time.
Respondent No, 1, through her letter dated 11-4-1973 reminded respondent No, 2 to expedite the decision regarding the purchase of the suit property by the Government. In reply, on 24-4-1973, respondent No, 2 informed respondent No, 1 that the decision has been taken by the Government to purchase the building in occupation of respondent No, 2 and that respondent No, 1 was asked not to enter into negotiation regarding the sale of the property with any other party. On 25-4-1973 respondent No, 1 requested respondent No, 2 to make payment of 50% of the sale price in favour of respondent No, 1 to enable her to pay Government dues namely Gain Tax, Wealth Tax, Property Tax and Income Tax, etc. Thereafter, on 12-5-1973, respondent No, 2 addressed a letter to the Collector, Lahore District, requesting him to issue notification, under section 4 of the Land Acquisition Act, in respect of the property in their occupation. The Collector Lahore District, accordingly, on 17-5-1973, issued a notification under section 4 of the Land Acquisition Act, for acquisition of the property in suit. After issuance of notification, under section 4, respondent No, 2 entered into negotiation with respondent No, 1 and finally a sum of Rs,7 lacs was agreed between the parties as the sale consideration of the property. The Government of Punjab accorded its sanction for the transaction on 6-6-1973 and in pursuance thereof a sale deed was executed in favour of respondent No, 2 by respondent No, 1, on 16-6-1973.
' The contention of respondent No, 1 before the trial Court was that before completion of above sale in favour of respondent No, 2, on 10-6-1973, she served a notice on the appellant terminating the agreement of sale and requesting him to collect his earnest money. The appellant on the other hand denied receipt of the letter dated 10-6-1973 and pleaded that the copy of this letter was sent to him by respondent No, 1 alongwith her notice dated 22-6-1973. The appellant in reply to respondent No, l's letter dated 10-6-1973 and 22-6-1973, through his counsel's letter called upon respondent No, 1 to complete the sale of the property in favour of the appellant in accordance with the terms of agreement of sale, dated 6-8-1971, within a fortnight failing which it was threatened that a suit for specific performance, in addition to criminal prosecution of the respondent No, 1 will be lodged. Simultaneously, the appellant also served a notice, dated 7-7-1973, on respondent No, 2 warning them that any negotiation between them and respondent No, 1 for purchase of the property would not be binding as they have already entered . Into an agreement of sale with respondent No, 1 in respect of the property occupied by them. In reply to notice of appellant, dated 7-7-1973, the counsel of respondent No, 1 through his letter dated 1-8:1973 informed the appellant that after the issuance of the notification under section 4 of the Land Acquisition Act, the property has been sold out by respondent No, 1 to respondent No, 2 and the sale has been finalized on 18-6- 1973: It was in the above stated background that appellant's counsel finally served notice, dated 13- 8-1973, on respondent No, 1 before institution of the suit for specific performance against the respondents. We would like to reproduce here the contents of the above notice as it has an important bearing on the point urged before us by the learned counsel for the appellant and also because this document was considered by the High Court as evidence of abandonment of relief of specific performance by the appellant. It reads as follows:-- "Under instructions from my client Mr. Bilal Ahmed Malik son of Haji Malik Abdul Karim, Bilal Carpet Industries, 16 Empress Road, Lahore I hereby give you the notice of the following subject:
(1) That the said Mst. Amtul Haseen herself personally entered into a contract with my client for the sale of Bungalow alongwith the land beneath it and grassy plot etc. Having a total area (as it was disclosed by Mst. Amtul Haseen) of 11 Kanals 8 Marlas 125 Sq. Ft. Alongwith the four walls and compounds bearing property No, S.E. 14-R-41 known as 41 Empress Road, Lahore @ Rs,42,500 per Kanal including the land and the structure over it and paid Rs,30,000 through cheque which was subsequently got encashed by Mst. Amtul Haseen and the rest of the amount was required to be paid before the Sub--Registrar at the time of the registration of the sale deed.
(2) That the agreement was executed on 6-8-1971 when the property was already in occupation of the Directorate of Social Welfare, and it was incumbent upon Mst. Amtul Haseen to have it got vacated before the registration of the sale deed.
(3) That my client was responsible for sharing half of the expenditure for the purchase of the stamp paper, registration fee and its drafting charges.
(4) That you had undergone in lieu of the Bungalow in question and was under obligation to get the property free from all encumbrances.
(5) That the said agreement is irrevocable and in case of refusal or causing delay tactics by you my client is authorised to effect the completion of the sale-deed through specific performance and in that case you are responsible for all the expenditure of the Court which would be incurred by my client.
(6) That it has further been made clear that you shall not compel my client for cancelling the agreement for sale. In this manner the conditions precedent for the registration of the sale deed is the vacant possession of the Bungalow in question.
(7) That you wrote a letter to the Assistant Director (Administration), Directorate of Social Welfare, Punjab, Lahore on 12-8-1971 whereby in reply vide memo No, S.W. (B) 12-49/70-1174 dated 10-9-1971 was sent by the said Assistant Director with these words:-- "It is not possible for us to locate suitable accommodation at this short notice. The building will, therefore, be vacated as and when some suitable accommodation is available."
' Finally vide Letter No, S.W. (B) 12-49/70-1190 dated 19-1-1973 the Assistant Director (Administration) for Director of Social Welfare, Lahore replied in the following words to you in reply to your letter: "You are informed that the building in question would be vacated when some suitable accommodation is available for which an advertisement is being issued."
(8) That from the abovementioned facts it is clear that the premises in question were not got vacated and the conditions precedent for the registration, of the sale-deed were not fulfilled.
(9) That on 5-4-1972 Mat. Amtul Haseen requested for some amount on the pretext for the purchase of non-judicial paper whereby my client paid Rs,20,000 through cheque which was got encashed by you and a note at the foot of the receipt was given to this effect that subject to the agreement dated 6-8-1971 Rs,50,000 has been received by you and the rest would be paid at the time of registration of the sale-deed.
(10) That the Director of Social Welfare, Government of the Punjab, Lahore was fully aware about the abovementioned transaction and Haji Mutin Ahmed in connivance with the abovementioned Director maliciously got a notification No, LAC/10520 dated 17-5-1973 issued by the Collector, Lahore District, Lahore under the provisions of section 4 of the Land Acquisition Act, 1894 according to which the area has been shown of the bungalow in question as 12 Kanals 9 Marlas and 194 feet.
(11) That you sent a notice dated 22-6-1973 through your counsel in which you concealed all the facts deliberately and did not disclose that sale-deed in respect of the building has been got registered in the office of the Sub-Registrar, Lahore on 18-6-1973 and you have already received Rs,7 lacs through Cheque No, A-719121 dated 16-6-1973 drawn at State Bank of Pakistan, Lahore which was got encashed by you.
(12) My client sent notices to you, to your counsel Mr. S.M. Hamid Ali, Advocate, Director Social Welfare, Government of the Punjab, Lahore, 41-Empress Road, Lahore. A proclamation was also got issued in the Pakistan Times, Lahore, as well but it was only in the reply of the notice dated 1-8-1973 it was disclosed that the property has been acquired by the Provincial Government and further it was also not disclosed deliberately that you had already received Rs,7 lacs.
(13) On the basis of the agreement dated 6-8-1971 you are not entitled to receive the amount more than it was to be paid by my client and the rest of the amount, amounting to Rs,2 lacs (approximately) was to be paid by the Provincial Government to my client if you would have disclosed your transaction with my client. This has all been done maliciously by you in connivance with the Director Social Welfare, who is also a party in this mischief.
(14) That the acquisition is a mala fide one ,for which the separate proceedings are being initiated before the Collector, Lahore District.
(15) That my client intended to construct a building and for using it for multifarious purposes and if the possession would have been delivered in 1971 then my client would have earned a huge amount in the form of profits but he was deprived on account of your connivance with the Director Social Welfare Government of the Punjab, Lahore who did not vacate the premises and made lame excuses and my client has to suffer a huge loss apart from mental torture.
(16) That the damages are being assessed as follows:-- (a)) Rs,50,000 was received by you in advance about 2 years ago for which you- are liable to pay interest at the prevalent rate apart from the principle amount.
(b) Rs,2 lacs (approx.) which you have received in excess than the stipulated amount which vide agreement by my client to be paid up to the time of the registration of the sale-deed.
(c) Rs,10 lacs as damages which would have incurred in the form of benefits which would have arisen if the possession would have been delivered and the property would have been got registered in 1971 according to the terms of the agreement dated 6-8-1971.
' You are therefore given this notice of a fortnight duration to pay the abovementioned principal amount, interest thereto and the damages as mentioned above to my client through cross cheque. In default thereof my client will be constrained to seek his remedy in a Court of law and in that event you will be responsible for all costs of the suit.
' Note: Copy kept for further reference. Yours etc. Etc. (Sd.)
(C.M. Lauf Rawn), Advocate, Supreme Court 5 Turner Road, Lahore."
' The appellant, thereafter, instituted Civil Suit No, 141/84 before the Senior Civil Judge, Lahore, claiming specific performance of the contract of sale, dated 6-8-1971, against the respondents and in the alternative damages amounting to Rs,18 lacs with interest at the rate of 13% from the date of institution of suit till the amount is realized. The suit was resisted by the respondents and on the pleadings of the parties, the trial Court framed the following issues:-- "(1) Whether the plaintiff is estopped by his conduct to file this suit? OPDI
(2) Whether the suit is not maintainable in its present form? OPDI
(3) Whether the agreement dated 6-8-1971 is not enforceable under the law? OPDI
(4) Whether the suit for claiming damages is not maintainable in law? OPD.
1.
(5) Whether the suit is not competent as the suit property has been acquired by defendant No, 2 under Land Acquisition Act 1894? OPD.2
(6) Whether the plaintiff is entitled to the specific performance of agreement dated 6-8-1971? OPP
(7) Whether the defendant No, 2 is bona fide purchaser of suit property without notice of prior agreement? OPD.2.
(8) Relief."
' Issues Nos. 1 to 5 were decided in favour of the appellant. Under issue No, 7, the trial Court held that respondent No, 2 was a bona fide purchaser for valuable consideration without notice of the prior agreement of sale, by respondent No, 1 in favour of the appellant. Accordingly, while deciding issue No, 6, the trial Court held that appellant was not entitled to the relief of specific performance of agreement for sale. However, relying on the case of Anwar Ali Khan v. Abdul Sattar Abu Bakar (PLD 1968 Karachi. 154), the trial Court directed that the earnest money amounting to Rs,30,000 paid on 6-8-1971 and Rs,20,000 on 5-4-1972 be returned to the appellant with compound interest on both the amounts at the rate of 10% per annum from their respective dates of payment till its realization.
' The appellant challenged the above judgment and decree of the trial Court in F.R.A. No, 277/84 before the Lahore High Court. The learned Judges of High Court while upholding the findings of the trial Court on issues Nos. 1 to 5, did not agree with its conclusions under issue No, 7 and after reviewing the evidence on record held that the respondent No, 2 at the time it purchased the property from respondent No, 1 was fully aware of the fact that respondent No, 1 had entered into an agreement for sale for this property to appellant and accordingly reversed the findings of trial Court on issue No, 7.
' The learned Judges of the High Court, however, while dealing with issue No, 6 held that there was abandonment of the claim of specific performance by the appellant and as such he was not entitled to specifically enforce the agreement dated 6-8-1971 against the respondents. In arriving at the above conclusion the learned Judges took note of the demand of damages and absence of claim of specific performance in the final notice dated 13-8-1973 served on respondent No, 1 by the appellant, immediately before the institution of the suit. The learned Judges also took into consideration the statement on oath of the appellant's attorney in Court who stated that the appellant was not willing to get the sale-deed registered in his favour unless and until the property was got vacated from respondent No, 2.
' Mr. Fakharuddin G. Ebrahim, the learned counsel for the appellant while assailing the judgment of Lahore High Court contended before us that the evidence on record did not establish the abandonment of claim of specific performance by the appellant. The learned counsel also contended that the appellant was all along ready and willing to perform his part of contract and the failure, if any, was on the part of respondent No, 1 to convey the property. The learned counsel further contended that the absence of claim of specific performance in the notice preceding the filing of suit, was for the reason that the appellant was under the impression that the property was acquired by the Government under the provisions of the Land Acquisition Act and as such this omission under a mistaken belief on the part of appellant could not defeat the claim of the appellant for specific performance of agreement, dated 6-8-1971. The learned counsel finally submitted that in view of the reversal of the findings of the trial Court on issue No, 7 by the High Court and the observation that respondent No, 2 had purchased the property with notice of the prior agreement of sale by respondent No, 1 in favour of the appellant, the appellant was entitled to the decree of specific performance against the respondents. The learned counsel for the respondents, on the other hand, supported the judgment of the High Court and prayed for dismissal of the appeal.
' After hearing the learned counsel for the parties, at length, we are of the view that the appellant is not entitled to enforce the agreement of slae, dated 6-8-1971, specifically against the respondents, in the circumstances of the case. We are, however, of the view that as the respondent No, 2 had purchased the suit property from respondent No, 1 with notice of the prior agreement of sale in favour of appellant, the High Court should have granted a decree for damages in favour of appellant to the extent of the difference in the sale price which was admitted by the parties before the Court.
' It is an admitted position in the case that at the time the appellant entered into the agreement of sale with respondent No, 1, the property was occupied by respondent No,
2. It was specifically provided in the agreement of sale that respondent No, 1 will get the property vacated from respondent No, 2 before execution of final sale deed in favour of the appellant. The appellant, however, had the option under the above agreement, either to get the property conveyed by respondent No, 1 in his favour without vacant possession or cancel the agreement and claim back the earnest amount from respondent No, 1, in the event of failure on the part of respondent No, 1, to get the vacant possession of the property from respondent No,
2. The evidence on the record clearly show that right from the date of agreement of sale respondent No, 1 was continuously pressing respondent No, 2 to vacate the premises so that property could be conveyed to appellant in accordance with the terms of agreement of sale. Respondent No, 2, however, did not comply with the demand of respondent No, 1 and kept on postponing the vacation of premises on the ground that they were trying to get a suitable accommodation. It was, therefore, quite clear from the evidence on record that there was no failure on the part of respondent No, 1, to comply with the terms of agreement of sale, dated 6-8-1971. It was also established on record that respondent No, 2 though promised to respondent No 1 on a number of occasions to hand over the vacant possession of the building but they failed to honour their commitments. The appellant under the agreement of sale had an option either to take the property without vacant possession or to cancel the agreement of sale in the event of failure of respondent No, 1 to get the building vacated from respondent No, 2, and claim back the earnest money. The evidence on record shows that during the period from 6-8-1971, the date of entering into the agreement of sale with the respondent No, 1 until 7-7-1973, when the appellant's counsel served notice on respondent No, 1 asking for specific performance of the agreement of sale, all that the appellant did, was to make a further payment of Rs,20,000 to respondent No, 1 on 5-4-1972. The appellant, at no stage, called upon respondent No, 1 to convey the property in his favour without vacant possession. On the contrary, even in the notice dated 7-7-1973, served by appellant's counsel on respondent No, 1 asking for the specific performance of the agreement of sale, dated 6-8-1971, it was insisted that the condition precedent for sale, namely vacant possession of the premises was not complied by the respondent No,
1. It is true that respondent No, 1 was all along pursuing the matter with respondent No, 2 as well as Government of Punjab to get the vacant possession of the property but this did not prevent the appellant from asserting his right under the agreement of sale to get the property without vacant possession if he was keen to acquire the property. It is, therefore, quite clear to us that until 7-7-1973, the appellant was not willing to get the sale of the property registered in his favour without vacant possession of the building. It is pertinent to mention here that in reply to the notice of the appellant's counsel, dated 7-7-1973, respondent No, 1 through her counsel's letter dated 1-8-1973, informed the appellant that after issuance of notification under section 4 of the Land Acquisition Act, respondent No, 1 had finalizaed the deal on 18-6-1973, which was the date on which the sale was registered by respondent No, 1 in favour of respondent No, 2.
After service of the notice, dated 1-8-1973, the appellant, even if he was not aware of the sale in favour of respondent No, 2 by respondent No, 1, became fully aware of the transaction with particulars of the date of such transaction and as such it is not open now to the appellant to argue that when he served the notice, dated 13-8-1973, on respondent No, 1 he omitted to ask for the specific performance of the contract of sale on a mistaken notion that the property has been acquired by the Government. The omission of the demand of specific performance of the agreement of sale on the part of appellant in the notice, dated 13-8-1973 served on respondent No, 1, in the circumstances of the case was a conscious and deliberate act after acquiring full knowledge of the transaction between respondents 1 and 2. In these circumstances, the learned Judges of the High Court rightly inferred that by omitting to ask for the specific performance of the agreement of sale, dated 6-8-1971, in the notice dated 13-8-1973 served on respondent No, 1, the appellant abandoned the claim of specific performance and confined his remedy only for the damages. Apart from it the attorney of the appellant in his statement before the Court unequivocally stated that appellant was not willing to get the property conveyed' in his favour unless the property was offered with vacant possession which also lend support to the findings of the High Court that the appellant had abandoned his claim for specific performance and had elected to confine his remedy to only damages. In these circumstances we agree with the conclusion of the learned Judges of Lahore High Court that the appellant having given- up/abandoned the claim for specific performance could not ask for the relief of specific performance of the agreement of sale, dated 6-8-1971. However, we are of the view that as the property was conveyed by respondent No, 1 to .Respondent No, 2, during the subsistence of the agreement of sale, dated 6-8-1971, the appellant should have been awarded damages. It is an admitted case of the parties that respondent No, 1 had agreed to sell the property to appellant for a sum of Rs,5 lacs while it was sold to respondent No, 2 for a sum of Rs,7 lacs. In these circumstances, the High Court, in our view, should have awarded the damages equal to the difference of the sale price to the appellant. We, accordingly, partly allow this appeal and while maintaining the judgment of the two Courts below refusing the specific performance of the agreement of sale, dated 6-8-1971 and ordering refund of earnest money, decree the suit of appellant for damages in the sum of Rs,2 lacs with proportionate costs against respondent No, 2 only, as the property was purchased by respondent No, 2 from respondent No, 1 with notice of the agreement of sale between respondent No, 1 and the appellant.