ZAFFAR HUSSAIN MIRZA, J.-The petitioner by five separate Agreements dated 22-1-64, agreed to purchase from Messrs Tarachand Ghanshamdas, a partnership firm carrying on business at Balessis Street, Off South Napier Road, Karachi through their Attorney Mr. Shankar Lal Sharma then residing at Karachi, agricultural land bearing Survey Nos. 26, 27, 31., 32 and 260 totally admeasuring 29-25 acres situate in Deh Digh, Taluka Karachi for a total consideration of Rs. 1,43,385. The petitioner also paid by cheque a total sum of Rs. 50,000 by five cheques as earnest money in part payment of the consideration at the time of execution of the said Agreements. It is alleged by the petitioner that pursuant to these Agreements he was put in possession of the land and was authorised to obtain physical possession directly from the occupants. Subsequently on 28-9-64 the petitioner succeeded in obtaining vacant possession of the land from the occupants after paying them compensation. After obtaining physical possession of the land, the Attorney of the vendors moved the Deputy Commissioner, Karachi (respondent No. 5) for permission to sell the said land under the provisions of the Land Control (Capital of Federation) Act and the said respondent duly granted the required permission by his order dated 18-8-64. By notice dated 24- 2-65 the petitioner called upon the sellers to complete the transaction, whereupon the vendors while agreeing to execute the formal Sale Deeds requested for sometime. The Attorney of the vendors in Pakistan, however, died suddenly and the transaction, therefore, remained incomplete.
Ultimately, on 19-1-67 the petitioner filed Suit No. 25 of 1967 against the vendors in the High Court for specific performance of the contract of sale which was decreed on 2-6-67. The petitioner then filed execution application on 31-8-67 and a learned Single Judge of this Court ordered execution to issue by his order dated 18-9-68 whereby the Nazir of the Court was directed to execute the Sale Deeds in favour of the petitioner. On 26-2-68 the petitioner deposited the balance of consideration in the sum of Rs. 93,385 in Court. However, before the Nazir could execute the Sale Deeds, the West Pakistan Enemy Property Manage--ment Board, respondent No. 3, in pursuance of the powers conferred on it by clause (b) of sub-rule (1) of rule 182 of the Defence of Pakistan Rules issued notification dated 30-9-68, purporting to vest the agricultural lands in question in the Additional Custodian of Enemy Property for West Pakistan as the owners Messrs Tarachand Ghanshamdas were enemy subjects.
2. In view of the aforesaid vesting order issued by respondent No. 3, the petitioner moved the High Court in the execution proceedings, for impleading the Deputy Commissioner/Additional Custodian Enemy Property as a party in the proceedings and prayed that notice of the execution be issued to the said respondent. The petitioner also obtained ad interim orders of injunction restraining respondents Nos. 2 to 4 from disturbing his possession. Respondent No. 4 entered appearance in the execution pro--ceedings and filed objections. Pending the decision of the objections, however, the Government of Pakistan, respondent No. 1 by notification dated 16-4-69, cancelled the agreements of sale between the petitioner and the vendors in purported exercise of the power conferred upon it by rule 177 of the Defence of Pakistan Rules. By the present petition the petitioner seeks to challenge the legality of the two notifications dated 30-9-68 and 16-4-69 respectively.
3. Mr. A. A. Fazeel, learned counsel appearing for the petitioner in support of this petition has urged the following contentions; As regards the notification dated 16-4-69 issued by respondent No. 1---
(1) That the contracts purported to be cancelled had already merged in the decree passed by the Court by 16-4-69 and, therefore, nothing remained to be cancelled.
(2) That no show-cause notice was given to the petitioner before cancelling the contracts rendering the order void being in violation of the rule of natural justice.
(3) 'that the contracts were "executed contracts" and not "executory contracts" and as such remained unaffected by the war.
As regards the notification dated 30-9-68 issued by respondent No. 3----
(4) That with the passing of the decree and payment in Court of the balance of consideration the property stood vested in the petitioner irrespective of execution of a formal Deed of Transfer.
(5) That before the vesting order the property did not vest in the Custodian and, therefore, it was subject to legal process whereby it was passed on to the petitioner.
(6) That the immunity from process of Court comes into play only after a proper vesting order has been passed and not prior.
(7) That rule 182 of the Defence of Pakistan Rules does not affect specific performance of contract as the Custodian does not have better rights than the enemy.
4. There seems to be no dispute that Messrs Tarachand Ghanshamdas was an enemy firm on the outbreak of hostilities between Pakistan and Bharat in 1965. It was pointed out by Mr. Yousuf Rafi, learned counsel appearing for the respondents that the petitioner bad addressed a letter dated 15-11-65 through his Advocate to the Deputy Controller of Enemy Properties, Karachi wherein the latter was informed about the contracts in this case in terms of the Defence of Pakistan Rules and expressed his readiness to pay the outstanding balance of consideration if a proper Conveyance Deed is executed in his favour. The Defence of Pakistan Rules (hereinafter called the D. P. R.) were issued by the Central Government under section 3 of the Defence of Pakistan Ordinance, 1965 on 6- 9-65. Rule 182 of the D. P. R. As amended until the relevant date of the issue of the impugned notification, so far as it is necessary for the present purposes, and rule 177 may be set out as under : ---- "182. Collection of debt of enemy firm and administration of property.--(1) With a view to preventing the payment of money to an enemy firm, and to provide for the' administration and disposal by way of transfer or otherwise of enemy property and matters connected therewith or incidental thereto, the Central Government may appoint a Custodian of Enemy Property for Pakistan and one or more Additional Custodians, Deputy Custodians and Assistant Custodians of Enemy Property for such local areas as may be prescribed and may by order----
(a) require the payment to the prescribed Custodians of money which would but for these rules be payable to or for the benefit of an enemy firm or which would but for the provisions of rule 177 and rule 180 be payable to any other person, and upon such payment the said money shall be deemed to be property vested in the prescribed Custodian--
(b) vest or provide for and 'regulate the vesting in the prescribed Custo--dian such enemy property as may be prescribed ;
(c) ---------------------------
177. Contracts with enemy firms.---Where it appears to the Central Government that a contract entered into, whether before or after the commencement of the Ordinance, with a person or body of persons who at the time of such contract was, or subsequent to such contract became, an enemy as defined in rule 161 or an enemy subject or an enemy firm, is injurious to the public interest, or was entered into with a view to, evade the provisions of this part, the Central Government may by order cancel or determine such contract either unconditionally or upon such conditions as it thinks fit."
5. As stated earlier the petitioner assails the notification dated 16-4-69 under rule 177, in the first instance on the ground that upon his obtaining judgment in Suit No. 25 of 1967 ordering specific performance of the contracts for sale in question, the contracts stood merged in the judgment of the Court and did not survive so as to be cancelled under rule 177. The principle of discharge of contracts by merger is well established. The principle of merger has been discussed by Anson in his Principles of English Law of Contract" (23rd Edn.). The learned Author stated the principle in the following words;----- "If a higher security is accepted in the place of a lower, the security which in the eye of law is inferior in operative power, in the absence of a contrary intention manifested by the parties, merges and is extin--guished in the higher."
As to discharge by judgment of a Court the learned Author observed at page 499 as follows;---- "The judgment of a Court of competent jurisdiction in the plaintiff's favour discharges the right of action arising from breach of contract. The right is thereby merged in more solemn form of obligation called a Contract of Record."
Chitty in his monumental work on Contracts (23rd Edn.) in paragraph 1386 on page 641 of vol. I has observed : "But when a prior action has already been successfully brought by the plaintiff against the defendant in a Court of record for the identical demand, and judgment has been recovered thereon, the cause of action is changed or merged into matter of record and the inferior remedy is merged in the higher. In such a case, therefore, if the plaintiff sues upon the original promise or demand (even although it accrued upon a specialty), it will be a good defence that he has already recovered judgment against the defendant for the same cause of action." The principle has been well-recognized and followed in England. In Economic Life Assurance Society v. Usborne (1902AC147) Earl of Halsbury, L: C. Quoted the principle of merger in the following words;----- "When there is a covenant for the payment of a principal sum, and a judgment has been obtained upon the covenant for that sum, it is plain that the covenant is merged in the judgment, and, if there is a covenant to pay interest which ii merely incidental to the covenant to pay the principal debt, that covenant also is merged in a judgment as the covenant to pay the principal debt."
Hamoodur Rehman, C. J. In Muhammad Saleem v. Muhammad Akram (PLD1971SC516) while considering the assailibility of an agreement to settle a dispute incorporated in an award by the arbitrator, approved the application of the principle of merger and observed that : "If the document was an award then there can be no doubt that the agreement would merge in the award and would have no independent existence ofits own after such merger".
6. From what has been stated above, we find great force in the contention that by the date of the impugned notification, the contracts in question had already converted and merged in the judgment of the Court, and were, therefore, out of the reach of the long arm of D. P. R. To hold otherwise would result in irrational consequences, in so far as the cancellation of the contracts would not ipso facto wipe off the judgment of the Court. There is nothing in rule 177 which authorises the Central Government to quash or cancel the judgment of the Court. In a situation like the facts of the present case presented, however, the Central Government was not powerless to avoid the effects and consequences of the judgment of the Court. It is quite plain that the effect of the decree of the Court was to compel the vendors to execute a proper instrument of sale and in default of their doing so under Order XX1, rule 34, C. P. C., the instrument cowl 'A be executed by the Court as a statutory agent for the judgment-debtors. But the effect in law is that such an instrument would be deemed to be an instrument executed by the judgment-debtors themselves.
This being the position, upon the execution of the decree and of a Conveyance Deed, the transfer of enemy property of the enemy firm would have been complete and, therefore, under rule 178 the Central Government would have been amply empowered to avoid the transfer if the conditions prescribed by that rule were fulfilled. Before that event took place, what remained in the field was not the contract entered into by the enemy firm (the same having merged) but the judgment of the Court which, as already stated, was beyond the reach of rule 177.
7. On behalf of the respondents, the only answer to this contention was that the decree obtained by the petitioner was a nullity in law as despite his knowledge that the property in dispute had already vested in the Custodian or the Central Government no effort was made by the petitioner to implead them as parties to the suit. However, subject to the decision of this question in the pending execution proceedings, for the present purposes suffice it to say that this submission overlooks the provisions of rule 182 which clearly provide that an enemy property can vest in the Custodian by an order in that behalf by the Central Government. In this case g the vesting order was passed on 30- 9-68 whereas the suit was decreed on 2-6-67. Clearly, therefore, the Custodian of Enemy Property was not concerned with the property before that date. We have not been shown any provision in the D. P. R. For vesting of the property of an enemy firm, ipso facto on the declaration of the hostilities, in the Central Government.
8. We also find great force in the next submission of the petitioner that before the impugned order under rule 177 was passed, he was entitled to be heard as the order adversely affects substantial rights accrued to him under the contracts. The rule is now well laid down that no statutory functionary can pass an order affecting the rights of a citizen in property or person without providing him an opportunity of being heard. Observance of the rule of natural justice has been held to be a fundamental requirement in such cases even in absence of an express provision to that effect in the statute. There is no doubt that the Central Government was aware of the fact that the petitioner had acquired the rights under the contracts in question which is evident from the corpus of the contracts in question, besides the information expressly laid by the petitioner in his application dated 18-11-65. It was contended by Mr. Yousuf Rafi on behalf of the respondents that the question whether any contract with an enemy or enemy subject or firm was injurious to the public interest, was in the sole discretion of the Central Government and, therefore, it was not necessary to give an opportunity of heating to the petitioner. Further it was contended that the petitioner, by not impleading the Government in the suit filed by him had disentitled himself for notice. Both these contentions are devoid of force. The word "appears" occurring in rule 177 clearly imports the requirements of objective determination by the Central Government on the basis of materials available with it whether a particular contract was injurious to the public interest. The statute does not seem to vest unbridled arbitrary and subjective power to declare a contract to injurious to the public interest. Therefore, it is reasonable to import the application of rule of natural justice. As already pointed out, the non-impleading of the Government as a party in the suit in absence of a vesting order at the relevant time would not deprive the petitioner of the valuable right of hearing before the order of cancellation of the contracts was passed.
9. In view of the foregoing reasons, we are inclined to hold that the order passed by the Central Government dated 16.4-69 cancelling the contracts in question was passed without lawful authority.
10. As regards the challenge directed against the other notification dated 30-9-68, however, in our view the position is different. It will be recalled that the Custodian has been impleaded as a party in the execution proceedings of the decree obtained by the petitioner. The contention 'advanced by the petitioner to assail the vesting order would clearly be available to the petitioner in the execution proceedings, in connection with the objections filed by the Custodian to the execution of the decree. The main contention seems to be that upon the passing of the decree and the payment in Court of the balance of consideration the property stood vested in the petitioner and, therefore, the power under rule 182 could not be exercised as the property had ceased to be enemy property.
Whether on passing of a decree for specific performance of a contract for sale the property stands vested without execution of the decree is a question not free from doubt. Mr. Fazeel has referred to some decisions but none is directly in point. In a case from the Indian, Jurisdiction reported as Jay Parkash v. Lila Bat (AIR 1963 Born. 100 ), it was held that till the Transfer Deed is effected in pursuance of Order XXI, rule 34 of the Code of Civil Procedure, there is no valid transfer. However, as the High Court on the Original Jurisdiction is already seized of the jurisdiction to entertain and decide this question, we do not consider it proper to enter upon and decide this question which must be appropriately left to be decided in the execution proceedings. To this extent the petitioner has adequate alternate remedy before a competent Court of law. Any decision on the question raised in this behalf, in the constitutional jurisdiction would have the effect of disposing of the pending execution proceedings. We would, therefore, not decide upon the validity of the second notification dated 30-9-68 impugned in this petition.
11. In view of the foregoing reasons and subject as stated above, we allow this petition partly and declare notification dated 16-4-69 as having been passed without lawful authority and being of no legal effect. In the circumstances of this case, the parties to hear their own costs.
1. MAHMUD, J---I agree.