1. ' Defendant No,1, who owned Plot No, 73, Khayaban-e-Bukhari, Phase VI, Pakistan Defence Officers'
2. Housing Authority, Karachi, measuring about 2,000 square yards, on 27-7-1986, had agreed to sell it to the plaintiff through defendant No,2 as his agent, for the total sale consideration of Rs,8,00,000.On 10-8-1986, the plaintiff paid a sum of Rs,25,000 to defendant No,2 as earnest money, remaining sale consideration being payable after one week of the receipt of the original documents from defendant No,1, who was then posted in United Kingdom. A receipt of the aforesaid amount was executed by defendant No,2 on behalf of defendant No,
1. On 16-8-1986, defendant No, 2 sent the transfer documents to defendant No,2, which were received by him on .
3. 23-8-1986. The plaintiff thereafter contacted defendant No,2 to find out if the documents were received from defendant No,1. He was informed that the documents were not received as defendant No,1 had gone out of London. Defendant No,2 also assured the plaintiff that he would be writing letter to defendant No,1 requesting him to come to Karachi personally to transfer the plot in favour of the plaintiff. Subsequently the plaintiff came to know that defendants Nos.1 and 2 were planning to sell the property to some other person and, therefore, he filed the present suit for specific performance of the agreement dated 10-8-1986 with directions to defendant No,3, the Pakistan Defence Officers' Housing Authority, Karachi, to finalise the transfer of the plot in favour of the plaintiff, etc. In the alternate the plaintiff has also prayed for damages in the sum of Rs,3,00,000.
4. ' Defendants Nos.1 and 2 have filed their joint written statement stating that no power of attorney was executed in favour of defendant No,2 to sell the property in suit. Defendant No,2, being a relative defendant No,1, was asked to look after the interest of defendant No,1, who, at that time, was serving in United Kingdom, to find out the market value of the plot and prospective buyer. The plaintiff as well as the estate agent were also informed by defendant No,2 that he was not legally entitled to sell the plot and receive consideration and the most that he could do was to inform defendant No,1, who will finally decide the matter. The plaintiff as well as the broker insisted on making payment of Rs,25,000 to defendant No,2 fully agreeing that if defendant No,1 did not approve the deal, it would be end of the matter. Specific clause was added in the receipt by way of abundant caution that in case the deal did not go through, the money would be refunded with no liability on the seller. About the telephonic conversation, it is stated that when defendant No,2, informed defendant No,1 about the offer of the plaintiff, the latter told him that he could not decide the matter at the moment and would consider the proposal. In the written statement all other allegations made by the plaintiff also have been denied by the said defendants and have specifically stated that he property was sold to defendant No,4 by defendant No,1 on 21-9-1986 for consideration of Rs,10,00,000 and the plaintiff was asked to collect the amount deposited by him but instead of collecting the amount, he started writing and sending intimidating letters and telegrams.
5. ' Defendant No,4 was joined as such on his application under Order I, rule 10, C.P.C., as he claimed to have purchased the property from defendant No,1 under agreement dated 21-9-1986.
6. ' In the written statement, filed by defendant No,4, it is disclosed that he had agreed to purchase the property after ascertaining from the records of defendant No,3 that the property stood in the name of defendant No,1. According to him, he had agreed to purchase the property on 21-9-1986 and the entire sale consideration was paid on 13-10-1986. Defendant No,1 had executed the full set of transfer documents which were attested by Pakistan Embassy in England and were submitted to defendant No,3, but the transfer letter could not be issued because of the prohibitory order passed by this Court on the application of the plaintiff. The notices were also published in respect of the transaction.
7. ' It is further alleged that the suit is collusive and has been filed with a view to defeat entitlement of defendant No,4 who is bona fide purchaser for valuable consideration, without notice of claim of the plaintiff or any other person. It is further submitted that after taking full consideration from defendant No,4, on 13-10-1983 and execution of all the documents in his favour by defendant No,1, defendant No,2 has instigated the plaintiff to institute the suit. It is alleged that telegraphic notice and the notice published in the newspaper are part of the game, played by defendants Nos.1 and 2 and the plaintiff, having full knowledge of the rights of defendant No,4, who had paid the entire sale consideration.
8. ' On the pleadings of the parties, the following issues were framed:-- "(1) Whether the receipt dated 10-8-1986 constitutes a concluded contract between the plaintiff and defendant No,1 ?
(2) Whether defendant No,4 is a bona fide purchaser for value without notice of the suit transaction ?
(3) Are any of the parties in collusion?
(4) Whether the plaintiff is entitled to specific performance of the claimed contract ?
(5) In the alternative, is the plaintiff entitled to damages? If so, to what extent?
(6) What should the decree be ?"
9. ' It may be pointed out that the evidence in the matter was recorded on commission appointed at the request of the parties. The plaintiff filed his affidavit in evidence and produced (i) P-1, the photostat copy of the allotment order, issued by defendant No,3 in favour of defendant No,1, (ii) P-2, the receipt dated 10-8-1986, (iii) P-3, statement of account issued by defendant No,3, (iv) P-4 and P-5, telegrams dated 16-10-1986 alongwith receipt sent by the plaintiff through his advocate to defendants Nos.1 and 2 and defendant No,3 respectively and (v) P-6, public notice of plaintiff's advocate published in the Morning News of 20-10-1986.
10. ' The plaintiff also filed affidavit in evidence of the estate broker Habib Kassim.
11. ' Defendant No,4 with his affidavit in evidence has also produced the documents relating to sale of the property to Shahid Saleem, the estate broker of defendant No,4 and Agreement of Sale between defendants Nos.1 and 4, several receipts relating to payment of the dues to defendant No,3 and copies of the documents submitted to defendant No,3 for transfer of the plot in favour of defendant No,4 and the receipt executed by defendant No,1 acknowledging payment of the entire sale consideration from defendant No,4, certified copies of orders granting injunction in this suit and the order passed in High Court Appeal No, 27/1987, Transfer Order issued by defendant No,3 in favour of defendant No,4. Lastly, the statement of account showing uptodate payments made to defendant No,3. It may be pointed out that the documents have not been correctly marked as exhibits. None of the parties have taken any exception to the above omission. However, the documents filed by the parties have been referred to in their respective affidavits in evidence. The said defendant also filed affidavit in evidence of Shahid Saleem, through whom the property was purchased.
12. ' Before coming to the above issues, the following two pertinent factors are to be considered:--
(1) The receipt, under which the plaintiff allegedly purchased the property, reads as under :-- "Received 25,000 Rs, only from Mr. Mussarat Khan c/o Dawood Real Estate Consultant of 58C, Defence Market A Karachi. This advance of 25,000 Rs, is earnest money against Plot No,73 Khayaban-i-Bokhari, Phase VI, measuring 2000 sq. Yds. Or thereabout. Total sale consideration is Rs, 8 Lacs. Balance to be Rs,7,75,000 be paid to seller on receiving of documents from original owner (Air Cdr. Shafique Haider) after one week of receiving paper and OK from defence authority.
13. All dues whatever may be deducted from total sale. In case this deal does not go through then the earnest money will be refunded and no liabilities to seller either." (Emphasis supplied).
14. ' The above receipt is being termed as an agreement and is the sheet anchor of the plaintiff's case.
15. It is specifically provided that in case the deal does not go through, the plaintiff will be entitled to refund of the amount and the receipt does not create any liabilities as against defendant No,1.
(2) During pendency of the suit, prohibitory injunction was granted in favour of the plaintiff.
16. Defendant No,4 on becoming party to the suit, applied for recalling the order of injunction. The prayer was declined. The order was assailed by defendant No,4 in High Court Appeal No, 57/1987, which was dismissed by order dated 12-5-1987 with following observations:-- "We enquired from Mr. N. A. Faruqui, learned counsel for respondent No,3 whether his client would be willing to deposit the balance consideration in order to show his bona fide as to the sale transaction, his reply was that his client was ready to deposit the balance of the sale consideration.
17. We are not inclined to admit the above appeal but will order that respondent No,3 would deposit the balance consideration within a period of two weeks with the Nazir of this Court and the Nazir will deposit the same in Khas Deposit Certificates."
18. ' The plaintiff, however, did not deposit the amount to show his bona fide in the transaction.
19. The only interpretation of the above stipulation in the receipt would be that the plaintiff at the very inception of the contract had agreed to abandon his right to seek specific performance of the contract and also absolved defendant No,1 of all his liabilities under the contract A whatsoever in case the transaction of sale was not completed by reserving for himself only right of refund of the amount paid by him as earnest money to defendant No,1.
20. ' The plaintiff having failed to show his bona fide in failing to deposit the amount of balance sale consideration in Court, is again not entitled to decree of specific performance of the contract.
21. ' Section 22 of the Specific Reliefs Act 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 further provided that where the performance of the contract would involve some hardships on the defendant, which he did not foresee, whereas his non-performance would involve no such hardship on the plaintiff, the Court would be exercising the discretion properly by refusing to order decree for specific performance.
22. Clauses (a) and (h) of section 24 of the Specific Relief Act provide that specific performance of a contract cannot be enforced in favour of a persons who cannot recover compensation for its breach or who has become incapable of performing or violates any essential term of the contract that on his part remains to be performed. In the instant case as the entire sale consideration was not paid by the plaintiff to defendant No,1 and it has been demonstrated during the present proceedings that the plaintiff was not ready and willing to deposit the sale consideration; in case the decree is granted in favour of the plaintiff, defendant No,1, who has submitted the documents for transfer and defendant No,4, who is bona fide purchaser without notice will be confronted with hardship will be caused to the plaintiff, who, as shown above, had agreed to receive back the earnest money paid by him in case the transaction is not completed. In view of the above stipulation, the defendant is not entitled and cannot recover compensation for breach of the contract.
23. ' Section 22 further provides that the Court would be exercising the discretion properly by granting decree for specific performance, when the plaintiff has done substantial acts or suffered losses in consequence of a contract, capable of specific performance. As noted above, the only involvement of the plaintiff, is to the extent of Rs,25,000 only. The plaintiff has neither done any substantial act, nor has disclosed to have suffered any losses in consequence of contract. Failure in depositing the sale consideration is indicative of defendant's' incapacity of performing the essential terms of the contract that on his part remained to be performed. His above failure also demonstrates want of bona fide on his part, despite having agreed to deposit the balance sale consideration while the matter was in appeal. Under the above circumstances the plaintiff is ex fade debarred from seeking specific performance of the contract.
24. Coming to the issue, it may be noted that the first issue arises from the averment made by defendants Nos.1 and 2 in their joint written statement to the effect that defendant No,1 had not executed any power of attorney in favour of defendant No,2 and that defendant No,2 was not authroised to sell the property and such fact was communicated to the plaintiff as well as his estate broker. It is further stated that sale was subject to approval thereof by defendant No,1. Since the suit has been filed by the plaintiff for specific performance of the contract, the burden of proof that receipt dated 10-8-1986 constitutes a concluded contract is on his shoulders. The plaintiff and his witness in their examination-in-chief have not controverted the above averments made in -the written statement. Defendants Nos.1 and 2 did not enter the witness-box. However, the plaintiff in his cross-examination by the learned advocate for defendant No,4 stated that he had paid the amount to defendant No,2 knowing that he was not owner of the property but he had shown .To him a letter of authority. His witness Habib Kassim in his cross examination deposed that defendant No,2 had shown him a power of attorney executed on a stamp paper. The above contradictory statements do not inspire any confidence. On the contrary lead to the inference that the plaintiff was aware of the fact that defendant No,2 had no authority from defendant No,1 to sell his property in suit. Exhibit P/2 also does not disclose as to in what capacity the amount was received by defendant No,2. In case defendant No,2 was appointed as attorney, the receipt would have reflected that it was being executed by him in his such capacity. There is again lot of difference in letter of authority and power of attorney. The plaintiff and his witness are estate broker and they cannot be so naive as to not keep with them or ask for a copy of the alleged power of attorney, if such document was in possession of defendant No,2, as alleged by them. Defendant No,2 having no authority from defendant No,1, was not competent to execute the said receipt or to bind down defendant No,1 in respect of the so-called sale transaction. The above finding also finds support from the construction Exh.P/2, dilated upon hereinabove. Neither the learned advocate for the plaintiff was also to point out any reason for incorporating unnovel clause in the said document, absolving defendant No,1 from contractual liability, nor any reasonable cause is available on record, except the one that defendant No,1 had no authority from defendant No,1 to enter into sale transaction in respect of the suit property and that it was subject to approval of defendant No,1. It, therefore, cannot be said that the said receipt constitutes concluded contract between the plaintiff and defendant No,1.
25. In so far as second issue is concerned, it has all along been case of defendant No,4 that he is bona fide purchaser without notice, but the plaintiff or his witness in their evidence have not deposed a word to rebut the above plea. Defendant' No,4 and his witness in their respective evidence have specifically asserted that they were unaware of the transaction between the plaintiff and defendant No,1. The public notice was got published in the Morning News on 20-10-1986, whereas the sale agreement was executed between the first and the fourth defendants on 13-10-1986, on which date the entire sale consideration was paid to the first defendant, who delivered the possession of the plot to defendant No,4. The said issue is accordingly replied affirmatively.
26. ' The third issue arises from the averments made by defendant No,4 in his written statement terming the suit to be collusive and that it has been filed with a view to defeat his entitlement. It is alleged that after payment of full consideration by defendant No,1, defendant No,2 had instigated the plaintiff to file the suit. In his evidence he deposed that the plaintiff has been set up by the first two defendant and the estate broker Habib Kassim to blackmail him. The above deposition was not challenged although it was got reasserted in the cross-examination, to be true. Nonetheless, looking at the pleadings and the overall effect of the evidence, it cannot be said that any of the parties were in collusion. The issue is accordingly replied in negative.
27. ' With regard to the fourth issue, on construction Exh.P/2 and unwillingness and reluctance on the part of the plaintiff to deposit the balance sale consideration, it has been found that the plaintiff had abandoned his right to such specific performance of the contract and is not entitled thereto.
28. ' While considering evidence on record, it is found that the plaintiff has also admitted that in case the transaction of sale did not mature in completion, his only entitlement in terms of Exh.P/2 was to refund of the earnest money. He so affirmed in reply to the question put to him by the learned counsel for defendant No,4, wherein he stated, "It is correct to suggest that under Exh.P/2, if transaction is not completed, then I shall be entitled (to) the refund of Rs,25,000. However, the learned counsel for the plaintiff relying upon Mussarat Shaukat Ali v. Safia Khatoon (1994 SCM R 2189), contended that notwithstanding the condition provided for refund of the amount in Exh.P/2, the plaintiff having demanded specific performance of the contract in his telegraphic notice, is entitled to such relief. The submission of the learned counsel overlooks the fact that apart from the above condition, the said documents specifically pronounces that it does not create any liability as against defendant No,1, by stating, "no liability to seller either. " To put in other words, the plaintiff had agreed that defendant No,1 was not liable to perform the contract of sale specifically and that the plaintiff would not seek the relief of performance of the contract specifically. The above authority is E distinguishable on facts and does not advance the plaintiff's case. Additionally, as noted above, the plaintiff has not been ready and willing to perform his part of the contract. Such conduct by itself is sufficient to exercise discretion in refusing the specific performance of the contract. The issue is replied accordingly.
29. ' In regard to issue No,5, it may be pointed out that the plaintiff has claimed damages in the sum of Rs,3,00,000, being the difference of the price agreed upon to be paid by him and the market value of the property at the time of institution of the suit. The plaintiff would be entitled to damages only if it could be shown that he had entered into transaction with all bona fide intentions to complete the same. The plaintiff having proved by his conduct to the contrary, is not entitled to any damages.
30. The stipulations referred to above in the agreement also come in his way, he having opted to receive refund of the earnest money paid by him. The plaintiff is, therefore, entitled to receive Rs,25,000 only from defendant No,1. . ' In view of the above, the suit is decreed only to the extent of Rs,25,000 as against defendant No,1 and the suit, in so far as it relates to specific performance of the contract and consequent prayers contained therein, is hereby dismissed with costs to defendant No,4.