' This is plaintiff's revision petition who has failed before learned two Courts in his suit for specific performance.
2. The facts giving rise to the revision petition are that on 26-11-1963 (Exh..P.1) Nazir Ahmad, predecessor-in-interest of respondents Nos.1 to 6 and Mst. Atto entered into an agreement to sell the land in dispute to the deceased petitioner for a consideration of Rs,2,400 out of which an amount of Rs,1,100 was received by them as earnest money. The land was under mortgage with the Central Government and it was covenanted that the sale-deed shall be executed after redemption of the land in dispute. The balance amount of Rs,1300 was to be paid at the time of registration of the sale-deed. Mst. Hamidan Bibi and Mst. Aziz Bibi, real sisters of Nazir Ahmad, were also co- owners in the land in dispute but had not signed this agreement, Nazir Ahmad and his mother Mst.
Atto had undertaken responsibility for execution of the sale-deed on their behalf.
3. After getting the land redeemed, the vendors transferred the land to Ghulam Muhammad, respondent No,7, herein vide oral sale attested through mutation No,15 on 8-5-1974 (Exh.P4).
Meanwhile, on 14-3-1974, the present suit had been filed and the learned trial Court had directed maintenance of status quo.
4. Respondents Nos.1 to 6 and their mother Mst. Atto did not deny the agreement but pleaded that the petitioner had refused to get the sale-deed registered in his favour and, therefore, he was not entitled to seek specific performance. Ghulam Muhammad, respondent No, 7, filed a separate written-statement. He resisted the suit on a number of grounds including the objection that the suit was barred by time and that he was a bona fide purchaser for value without notice of the prior bargain.
5. Necessary issues were framed and the suit was tried. Vide judgment and decree, dated 30-10- 1977, the suit was dismissed. An appeal taken by the petitioner was also dismissed by the learned First Appellate Court on 12-11-1984. He then approached this Court in Civil Revision No,2099 of 1984 which was allowed on 3-3-1986 and the case was remanded to the learned First Appellate Court for fresh decision on the following points:-- "(i) Mst. Hamidan Bibi and Mst. Aziz Bibi are not parties to the agreement of Sale Exh.P.1. Its effect may be determined by the Additional District Judge, in the light of provisions of sections 14, 15, 16 and 17 of the Specific Relief Act, 1877.
(ii) The Additional District Judge may frame an issue regarding violation of M.L.R. 64 and then decide the issue after giving an opportunity to the parties to produce evidence.
(iii) The Additional District Judge, has not recorded any findings in respect of the plea of respondent No,8 that he is bona tide purchaser for value and without notice. He should record his finding in this behalf."
6. On remand the learned Additional District Judge again dismissed the appeal by determining the question on which it was remitted to him in the following manner:--
(a) That the share of Mst. Hamidan Bibi and Aziz Bibi was 7/16 and that section 16 of the Specific Relief Act covered the case. However, since the agreement itself contemplated return of the earnest money with equal amount as penalty/damages the petitioner was held entitled to receive the amount of Rs,2,200 instead of specific performance of the contract.
(b) It was held that since the petitioner was also a landowner in the estate and the two vendors were alienating their entire holding the agreement was not hit by M.L.R.
64.
(c) Respondent No,7 was held to be a bona fide purchaser for value without notice. The appeal filed by the petitioner was, accordingly, dismissed on 14-5-1986.
7. From the perusal of the judgment of A the learned First Appellate Court it is clear that discretion to refuse specific performance has been exercised against the petitioner on the grounds that the agreement contemplated a penalty equal to the amount of earnest money and this was so claimed by the petitioner in the suit as an alternate relief and secondly that respondent No,7 was a bona fide purchaser for value without notice of the prior agreement.
8. The learned counsel for the petitioner contended that the petitioner is prepared to take the share of the two vendors for the sale consideration agreed to by the parties to the agreement to sell and further contends that the discretion to refuse specific performance has been exercised on an irrelevant consideration. Reliance was placed on Abdul Karim v. Muhammad Shall and another (1973 SCMR 225). He further contended that mere denial of respondent No,7 that he had no knowledge of the earlier bargain was not enough to lend him the protection of section 27 of the Specific Relief Act.
9. On the other hand, the learned counsel for the respondent No,7, contends that the matter stands concluded by concurrent finding of fact of the learned two Courts. According to him since compensation was agreed to be an adequate relief, specific performance of the contract was rightly declined. He further contended that since the petitioner had insisted on the performance of the contract as a whole, it was rightly refused because partial performance of the contract was not permissible. In any case, according to him since Ghulam Muhammad respondent No, 7 was held to be a bona tide purchaser for value without notice he was protected. He next contended that Mst.
Atto who was a necessary party has not been impleaded to this revision petition and, therefore, in the absence of a necessary party no effective decree could be passed
10. I have considered the submission made by learned counsel for the parties. As far as the first consideration to refuse specific performance of the contract is concerned, explanation to section 12 of the Specific Relief Act to the effect 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, escaped the notice of the learned Courts. Provisions of section 20 of the said Act also escaped consideration of the learned Courts. The said section is reproduced hereunder for facility of reference:- "(20) Liquidation of damages not a bar to specific performance.--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, 'Ind the party in default is willing to pay the same."
' Reference may also be made to the case of Abdul Karim (supra). In the said precedent case an agreement provided for penalty. The suit was decreed by the learned trial Court, which decree was maintained. The vendor's plea before the Supreme Court was that since the contract provided for a specific amount as damages its specific performance could not be granted. It was not accepted by the Honourable Supreme Court.
11. The grant or refusal of specific performance of a contract is discretionary but this discretion must be exercised on sound judicial principles as held by the Hon'ble Supreme Court in Mrs. Mussarat Shaukat Ali v. Mrs. Safia Khatoon and others (1994 SCMR 2189). In this case the facts established are that agreement to sell had not been denied by the two vendors. The mortgage money due on the land in dispute was paid on 25-2-1974 and mutation of sale in favour of Ghulam Muhammad was entered on 12-3-1974 while the present suit was filed on 14-3-1974. This mutation was ultimately attested on 8-5-1974. The petitioner acted promptly in the matter after the mortgage money due on the land in dispute had been paid. Therefore, it could not be said that the equities favouring the vendors disentitled the petitioner to seek specific performance. The following observations of the Hon'ble Supreme Court may be reproduced with advantage:- "It is true that grant of relief of specific performance is discretionary with the Court but this discretion cannot be exercised arbitrarily. The relief of specific performance being an equitable relief, it can be refused. By the Court only if the equities in the case are against the plaintiff. The Court while refusing to grant a decree for specific performance to a plaintiff must find something in the conduct of plaintiff which disentitled him to the grant of equitable relief of specific performance, or the Court reaches the conclusion that on account of delay in seeking the relief, the circumstances have so materially changed that it would be unjust to enforce the agreement specifically: The specific performance of a contract cannot be refused merely because it is lawful for the Court to refuse it." (Underlining is mine).
Therefore, I am of the view that refusal to grant specific performance on the ground that the agreement provided for penalty is not c sustainable.
12. The finding of the leaned two Courts that respondent No,7 was a bona fide purchaser for value is also not sustainable. The basis to reach this finding is that respondent No,7 had denied knowledge of the earlier agreement and the petitioner had failed to prove that the said respondent had the requisite knowledge.
13. In reaching this conclusion, the learned two .Courts assumed that the petitioner was to prove that respondent No,7 had knowledge of prior agreement. They kept but of consideration that it was for respondent No,7 to show that he acted in good faith by making a diligent inquiry before purchasing the land in dispute. The learned two Courts ignored from consideration that according to D.W.1 the land was being cultivated by the petitioner. D.W.2 stated that the petitioner was cultivating the land in dispute for 5/6 years. Respondent No , , appeared as D.W.3 and stated that he did not know since when the petitioner was in possession of the land in dispute but admitted that he was paying 'Batai'. A casual inquiry by respondent No,7 would have posted him with the knowledge of the prior agreement. Therefore, the assertion of respondent No,7 that he was a bona fide purchaser for value without notice of the prior agreement was not sufficient to non-suit the petitioner.
14. The extent and scope of protection available to a. Subsequent purchaser under section 27 .Of the Specific Relief Act was examined by this Court in a number of judgments. Reference may be made to Haji Abdul Rehman and 3 others v. Noor Ahmad and 3 others (PLD 1974 B.J. 25), Muhammad Safdar Ansari and another v, Abdul Majeed (PLD 1988 Lahore 216) and Muhammad Shafi v. Muhammad Sarwar and ID others (1997 CLC 1231).
15. In the case of Abdul Rehman (supra) it was observed:- "It would appear that in order to succeed of this issue, the subsequent vendees must establish, apart from payment of value, that--
(a) they acted in good faith;
(b) they had no notice of the original contract; and
(c) in the above two aspects, they took reasonable care.
' In order to prove the above requirements, it would not be enough to say that mere denial in this behalf by the subsequent vendees would be enough to discharge the onus. Even if it be assumed that the absence of notice could be affirmatively established by denial and relevant negative evidence, the other requirements will have to be established by positive material. It would be for the subsequent vendees to show that they acted in good faith and with reasonable care. It cannot be said that a mere 'denial' in this behalf would be enough to prove something positive in the nature of reasonable care and good faith. I, therefore, am unable to accept the argument of the learned counsel that mere denial and negative evidence in such-like cases would be enough to discharge the onus."
' It was further observed "The land being already with the plaintiffs the possession could not have been obtained from them without their knowledge. If the defendants would have exhibited due care and would have made diligent inquiry, it is unbelievable that the plaintiffs would not have told them about the earlier agreement."
16. In the case of Muhammad Safdar Ansari (supra) plea of the subsequent purchaser, based on denial of the earlier agreement was repelled with the following observations:-- "In Mummidi Reddi Papannaagari Yella Reddy v. Salla Subbi Reddy and another (AIR 1954 Andhra Pradesh 20) it was held that notice contemplated by section 27(b) cannot be confined to actual notice but executed to constructive notice as well as and that where the subsequent transferee had the knowledge of actual possession of certain person as a tenant over the property he cannot be said to be a person purchasing the property without notice. Therefore, when a person who takes a transfer without enquiry as to the terms on which a tenant was in possession cannot enforce his transfer against him if he happened to be in possession of a prior sale agreement."
17. The following passage from Shah Muhamamd v. Inayat Ullah and others (PLD 1953 Lahore 87) was also relied upon in the case of Muhammad Safdar Ansari (supra):-- "There is abundant authority for the proposition that possession is tantamount to notice of title of the party in possession. He may have acquired possession under one title and may at the same time possess a document entitling him to have another interest transferred. The person, who purchases the property, shall be deemed to have notice of all his right."
18. In the case of Muhammad Shafi (supra), the judgment in the case of Abdul Rehman (supra) was followed.
19. As far as the objection of the learned counsel regarding non-impleadment of Mst. Atto is concerned, it is untenable. I sent for the record of Civil Revision No,2099 of 1984. A perusal thereof showed that Mst. Atto had died during pendency of the said revision petition and Civil Miscellaneous No,3008-C of 1985 was moved to bring on record her legal representatives. No order was passed on this application but the fact remains the she had died and respondents Nos.1 to 6 are her legal representatives. Thus, she is duly represented in this revision petition.
20. The contention of the learned counsel for respondent No,7, that the petitioner had asked for performance of the contract as a whole which cannot be granted has merit. These two ladies were not party to the agreement and, therefore, specific performance could not be granted to the extent of their share. However, the contention that the suit was liable to be dismissed because partial performance was not possible has not impressed me. The learned first Appellate Court has rightly found that the case fell under section 16 of the Specific Relief Act and the petitioner is prepared to take the share of Nazir Ahmad and Mst. Atto for the entire sale consideration i,e, Rs,2,400.
21. In extending protection of section 27 of the Specific Relief Act, to respondent No,7 and exercising discretion against the petitioner, the learned two Courts acted illegally. Accordingly, this revision petition is allowed; the impugned judgments and decrees are set aside and the suit of the petitioner is decreed to the extent of the share of Nazir Ahmed and Mst. Atto on payment of Rs,2,400, the balance sale consideration i,e, Rs,1,300 will be deposited by the petitioners on or before 1-12-1999.