P L D 2002 Karachi 333

Before Wahid Bux Brohi, J

Mst. GUL SHAHNAZ---Plaintiff

Versus

ABDUL QAYYUM SOOMRO and another---Defendants

Suit No.670 of 1998, decided on 4th February, 2002.

(a) Civil Procedure Code (V of 1908)-------S. 11---Specific Relief Act (I of 1877); Ss. 12, 42 & 54---Res
judicata, principle of---Applicability---Earlier suit for declaration was rejected by Trial Court and
appeal against the judgment and decree was dismissed by Lower Appellate Court---Suit for specific
performance of agreement to sell was filed subsequently---Validity---Bar contemplated under S.11,
C.P.C. would not apply to subsequent suit for specific performance of contract and permanent
injunction---Dismissal of appeal by the Lower Appellate Court had no bearing on the subsequent
owing to distinct cause of action in both the matters---Principle of res judicata was not applicable in
circumstances.

(b) Specific Relief Act (I of 1877)------S. 12---Suit for specific performance of agreement to
sell---Cause of action---Agreement of sale which provided basis for institution of the suit was
admitted by the defendant and the contract evidenced by said agreement was sought to the
specifically enforced---Cause of action had accrued to the plaintiff to bring the suit.

(c) Civil Procedure Code (V of 1908)-------0. 11, R.2---"Cause of action"---Connotation---"Cause of

action" means every fact that will be necessary for the plaintiff to prove if traversed in order to
support his right to judgment---Cause of action has nothing to do with the defence set up by the
adversary more it should be confined to nature and character of the relief sought.

(d) Contract Act (IX of 1872)-------S. 55---Time as essence of contract---Determination---Terms of

the agreement themselves speak, if the time was of the essence of the contract-- Earlier events
demonstrating the conduct of parties might also be taken into account in this context.

Muhammad Nawaz Khan v. Farrah Naz PLD 1999 Lah. 238; Muhammad Anwar Khan Ghouri v.
Muhammad Taqi PLD 1977 Kar. 391; Faqir Muhammad v. Abdul Momin PLD 1995 Lah. 405; Ghulam
Nabi v. Muhammad Yaqoob PLD 1983 SC 344; Essabhoy v. Saboor Ahmed PLD 1973 SC 39; Ghulam
Jilani v. Munir Ahmed Khan PLD 1960 (W.P.) Kar. 517; Abdul Hamid v. Abbas Bhai-Abdul Hussain PLD
1962 SC 1; Haji Muhammad Yaqoob v. Shah Nawaz PLD 1998 Kar. 758 and Abdul Hameed v. Ghulam
Muhammad 1987 SCMR 1005 ref.

(e) Contract Act (IX of 1872)-------S. 55---Time as of the essence of contract---Applicability---Where

a condition in the agreement to sell showed that the specified. date was not inevitably the cut-off
date or the date of the execution of conveyance deed, then time was not of the essence of the
contract between the parties in circumstances.

(f) Contract Act (IX of 1872)-----Ss. 73 & 74---Breach of agreement to

sell---Compensation---Forfeiture of earnest money---Unconscionable
forfeiture---Determination---Court, in order to determine the unconscionable forfeiture, has to take
into consideration the nature of the contract, the conduct of the parties and proportion of the
amount of deposit towards sale price---Where the purchaser had not merely defaulted but had
repudiated the contract and his conduct suffered from impropriety, the Court would refuse to come
to his aid, because one who seeks equity must come with clean hands---Where seller had sharply
exercised his right or had obtained an unfair advantage, though acting within his right under law,
would be taken into consideration in favour of granting relief t6 the purchaser.

Karachi Port Trustees v. Ghulamali Habib PLD 1961 (W.P.) Kar. 623 ref.

(g) Specific Relief Act (I of 1877)-------Ss. 12 & 54---Specific performance of agreement to

sell---Forfeiture of earnest money ---Vendee had performed her part of contract and had paid more
than 5596 of the consideration amount to the vendor---Instead of performing his part of contract,
the vendor did not complete the formalities and failed to execute the necessary transfer documents
as per stipulation in the agreement, after receiving the balance consideration ---Validity--
Threatened action of vendor in forfeiting the amount was unconscionable as the he had received
more than 55 96 of the consideration amount---When there was no condition in the agreement
itself and the default in performance of the contract had been committed by the vendor, he was not
justified in equity to forfeit the amount unilaterally ---Vendee was entitled to the relief of specific
performance of contract and was also entitled to the relief of injunction as admittedly the vendor
had threatened the vendee with actions of cancellation of contract and forfeiture of the amounts
already paid much against the spin the contract---Suit was decreed in circumstances.

Muhammad Sharif for Plaintiff. Khalid Daudpota for Respondents.

Date of hearing: 16th January, 2002.,

JUDGMENT

Plaintiff Mst. Gul Shahnaz, through this suit, has sought specific performance of contract of sale for
which an agreement in writing was executed by defendant No. 1 Abdul Qayyum Soomro with
plaintiff on 11-7-1995 for sale of his 50% share of Plot No.35-C, 24-B, Commercial Street, Phase-V,
Pakistan Defence Officers Housing Authority, Karachi measuring 100 sq. yd., out of the total area of
200 sq. yd. for a total consideration of Rs.9,00,000. It is the case of plaintiff that on the day of said
agreement the defendant No. 1 received an amount of Rs.3,00,000 towards the consideration and
balance of Rs.6,00,000 was agreed to be paid at the time of execution of Conveyance Deed in favour
of plaintiff or her nominee or when Irrevocable General Power of Attorney is executed as required
by law. Later. On, another amount of Rs.2,00,000 was paid to defendant No. l towards consideration
for completion for documentation and only an amount of Rs.4,00,000 remained in balance.
Regarding possession of the plot in question it is stated by the plaintiff that at the time of Agreement
of Sale the possession of the plot with construction thereon was with Muhammad Afzal Chohan,
husband of the plaintiff, and continues to be with him. Explaining the background it was averred in
the plaint that originally the entire plot was leased in favour of Muhammad Afzal Chohan and one
Naushad Ali but the latter gifted his share to Abdul Qayyum, the defendant No. 1, thereby both of
them had become owners in equal shares. However, ultimately the defendant avoided to execute
Power of Attorney or Conveyance Deed in favour of plaintiff, therefore, a legal notice was issued to
him for performance of his part of contract and then this suit was filed. The defendant No. 1, in his
written statement, admitted execution of the agreement but took the plea that the plaintiff failed to
perform her part of contract the sale agreement, therefore, ceased to exist and was no more binding
on him and that he also cancelled the contract in the aforesaid circumstances.

2. The Administrator, Defence Housing Authority, in his written statement, explained that 50 % share
of property on plot in question was gifted away by Mr. Naushad Ali through his attorney in the name
of Abdul Qayyum and has been mutated by M.E.O., Karachi on 7th July, 1993. Abdul Qayyum
submitted the mutation documents on 26-1-1994, but it was found that area the plot in question
was 200 sq. yds., whereas in registered oral gift dated 3rd May, 1993 it was shown as 100 sq. yds. he
was, therefore, advised to forward rectification deed. He sent a letter on 26-2-1994 alongwith
registered oral gift in which the area was amended as 200 sq. yds. He was informed by D.H.A. that
the correction made in the oral gift was not acceptable, even then no action has been taken by
Abdul Qayyum; consequently, in these circumstances 50 .6 property on Plot No.35-C has not so far
been mutated in his name in the records of D.H.A,

3. On these pleadings the following issues were settled by the Court:--

(1) Whether the suit is barred by res judicata?

(2) Whether the suit is barred as no appeaVrevision is filed against judgment of VIIth Additional
District Judge, Karachi (South) in Civil Appeal No.44 of 1997?

(3) Whether the plaintiff has no cause of action to file this suit?

(4) Who committed breach of agreement, - the defendant No. l or the plaintiff?

(5) Whether the plaintiff is entitled to relief of specific performance of agreement dated 11-7-1998?

(6) What should the decree be?

4. On these issues parties led evidence before the Commissioner appointed by the Court. The
plaintiff and defendant No, l filed their affidavit-in-evidence and were cross-examined while no
evidence was 1,.!d br the defendant No.2. I have heard learned counsel for plaintiff and. defendant
No. 1. Nonc appeared for defendant No. 2.

5. The plea of bar of suit under the rule of res judicata taken by the defendant NO. I is founded on
the order dated 20-2-1998 passed by the VI11 Additional District Judge, Karachi South in Civil Appeal
No.44 of 1997 filed by Mst. Gul Shahnaz, the plaintiff, against the defendants Nos. l and 2 whereby
the-appeal was dismissed and the order of the trial Court namely 2nd Senior Civil Judge dated
10-7-1997 rejecting the plaint on the ground that the suit was barred under section 42 of the
Specific Relief Act and section 45 of the Transfer of Property Act was maintained. Mr. Khalid
Dawoodpota, -learned counsel for defendants did not agitate this point seriously at the titre of
arguments. However, Mr. Muhammad Sharif, learned counsel for plaintiff submitted that Suit No.
1332 of 1995 filed by the plaintiff against defendants Nos.l and 2 in the Court of 2nd Senior Civil
Judge, Karachi South was for declaration and permanent injunction and not for performance of
contract, as it is the case in the instant suit, therefore, the cause of action being manifestly different,
the- doctrine of res judicata envisaged under section 11, C.P.C. would not apply. Secondly, the Court
of Additional District Judge lacked inherent jurisdiction for the purpose of this matter as the
valuation of the present suit is Rs.9,00,000 which is much above the pecuniary jurisdiction of
Additional District Judge. I agree with I the learned counsel for plaintiff that on both counts stated
above the `:3r contemplated under section 11, C.P.C. would not apply to institution: of the instant
suit which is for specific performance of contract and permanent ! A injunction. No doubt, the order
passed by learned Additional District Judge: dismissing the appeal has not been challenged and as
such it has gained i finality but it would have no bearing on the instant suit owing to distinct cause of
action in both the matters. The plea of res judicata, therefore, fails.
6. As regards the cause of action learned counsel for plaintiff rightly argued that the Agreement of
Sale, which provides the basis for institution of the instant suit has been expressly admitted by the
defendant No.1 and the 113 contract evidenced by this agreement is sought to be specifically
enforced, therefore, the defendants cannot contend that cause of action has not accrued to the
plaintiff to bring the suit. Again, there was no remarkable contest on this point by the learned
counsel for defendant although the specific performance of contract was vehemently opposed. It is
important to note that the point whether the contract is to be specifically performed or not is
altogether different from the question whether the cause of action to file the suit had arisen to the
plaintiff. Under the law cause of action has different meaning and import from remedy or relief to be
granted, therefore, the two are not to be mixed up. In essence. as has been consistently held by
superior Courts, cause of action means every fact that will be necessary for the plaintiff to prove if
traversed in order to support his right to judgment. It has nothing to do with the defence set up by
the adversary more it should be confined to nature and character of the relief sought. The
agreement in the instant suit was enough to represent the case of plaintiff as it formed the
foundation of the factual aspect of the cause clearly laying down the tight accruing thereby to the
plaintiff for its specific petformancc. The plea that the cause of action had not arisen to plaintiff is,
therefore, without substance.

The Issue No.4 governs the main controversy and both parties were required to lead evidence on it.
The plaintiff produced her husband Muhammad Afzal Chohan as the only witness on her side. He
filed his affidavit-in-evidence wherein he stated that the plot in question was allotted to him and
Naushad Ali and lease on Form ' C' was duly executed and registered on 11-12-1989. Naushad Ali
gifted his share to Abdul Qayyum, defendant No.1 but the possession and control of the plot with
construction thereon remained with him. On 1.1-7-1995 Abdul Qayyum Soomro entered into an
agreement with plaintiff to sell 5036 of his share in the plot in question for a total consideration of
Rs.9,00,000 and received an amount of Rs.3,00,000. The balance of Rs.6,00,000 was to be paid at the
time of execution of Conveyance Deed or Irrevocable General Power of Attorney. Again, an amount
of Rs.2,00,000 was paid to Abdul Qayyum out of the balance consideration and only an amount of
Rs.4,00,000 remained in balance. Since the defendant No.1 avoided to execute Conveyance Deed or
Power of Attorney as aforesaid, a notice was given to him calling upon him to perform his part of
contract. It was stated that another Suit No. 1332 of 1995 was filed by plaintiff for declaration and
injunction, but the plaint was rejected and appeal preferred was also dismissed.-In the proceedings
of the said suit Abdul Qayyum accepted the Sale Agreement but alleged that since the plaintiff failed
to. make payment on due date he had revoked the agreement and forfeited the amount paid to him
by the plaintiff. It was further stated that the plaintiff was all along ready and willing to perform her
part of contract. He produced the relevant documents along with his affidavit namely; copy of
Declaration of Gift dated 3-5-1993, Agreement of Sale dated 11-7-1995, copy of receipt of
Rs.2,00,000, copy of notice dated 24-10-1495, copy of order dated 10-7-1997 rejecting the plaint in
Suit No. 1332 of 1995 and copy of appellate order dated 20-2-1998. He also clarified that original
documents had already been filed in Court. In cross examination he admitted that half of the plot,
which is the suit property, stands in his name. He stated that the amount of Rs.2,00,000 was paid on
20-7-1995. He admitted that he did not prepare the Sale Deed but he clarified that he would have
prepared the Sale Deed after the defendant would express his readiness to execute the same.
8. On the other hand Abdul Qayyum Soomro, the defendant No. 1, in his affidavit-in-evidence
admitted the execution of agreement in question but stated that in fact Muhammad Afzal Chohan,
husband of the plaintiff, had come in contact with him and he purchased the plot in the name of his
wife, the plaintiff. He also referred to earlier transaction between them. He stated that in the
agreement it was one of the conditions that on her failure to get transfer and to pay balanceshe will
pay Rs.10,000 per month and that such condition shall remain valid for two months only but the
plaintiff failed to avail this concession. He stated that the balance amount was not paid till October,-
1995, therefore, after some time the amount already paid was forfeited. In cross-examination he
admitted the receipt of Rs.5,00,000. He also admitted that mutation has not been made in his favour
in the Defence Housing Authority as yet and that he cannot effect transfer in favour of plaintiff in
absence of mutation. He further admitted that last amount of Rs.2,00,000 was received by him in
September, 1995. He stated that he did not give a notice in writing for cancellation of the
agreement. He admitted to have received notice issued by the plaintiff but stated that he did not
send any reply.

9. Both the learned counsel, in the light of above pieces of evidence vehemently advanced their
respective pleas for the purpose of establishing if the time was of essence of the contract or not. Mr.
Muhammad. Sharif, learned counsel for plaintiff submitted that basically no time was fixed for final
payment but even then the contract related to piece of land, time could, therefore, not be of
essence of contract, even if, prima facie, a time is fixed for completion of the transaction. He,
however, emphasized that intention of patties is the cardinal factor and for that initially the
agreement is to be looked into. He relied on Muhammad Nawaz Khan v. Farrah Naz (PLD 1999
Lahore 238), Muhammad Anwar Khan Ghouri v. Muhammad Taqi (PLD 1977 Karachi 391), Faqir
Muhammad v. Abdul Momin (PLD 1995 Lahore 405), Ghulam Nabi v. Muhantmad Yaqoob (PLD 1983
SC 344), Essabhoy v. Saboor Ahmed (PLD 1993 SC 39), Ghulam Jilani v. Munir Ahmed Khan [PLD 1960
(W.P.) Karachi 517] and Abdul Hamid v. Abbas Bhai-Abdul Hussain (PLD 1962 SC 1) in support of his
contention.

10. Mr. - Khalid Daudpota, learned counsel for defendant No. 1 urged that in this contract time was
of essence and the plaintiff failed to perform her part of contract on time, therefore, the contract
was cancelled and the

defendant No.1 was justified in forfeiting the earnest money. He placed reliance on Haji Muhammad
Yaqoob v. Shah Nawaz (PLD 1998 Karachi 758) and Abdul Hameed v. Ghulam Muhammad (1987
SCMR 1005).

11. The authorities cited by learned counsel for plaintiff quoted above invariably reflect the
consistent view that time is not of essence of contract in a transaction relating to land/immovable
property. In Ghulam Nabi's case (PLD 1983 SC 344) a number of precedents were referred to and it
was observed that though time is not ordinarily considered as being of essence of the contract
involving transaction of immovable property but the true intention of the parties can be gathered
from the terms of the contract and the facts and circumstances of the case and mere mention of
time in the contract for its performance does not necessarily mean that time was of the essence.
Reference was also made to Abdul Hameed's case (PLD 1962 SC 1) wherein it has been held that an
intention to make time of the essence of the contract must be expressed in unmistakable language
and it may be inferred from what passed between the parties, before but not, after, the contract is
made, Reference was also made to Essabhoy's case (PLD 1973 SC 39) wherein the rule laid down was
not different from what has been observed in the above authority. The principle Iluid down in the
other authorities: Muhammad Nawaz Khan v. Farrah Naz (PLD 1999 Lahore 238), Muhammad Anwar
Khan Ghouri v. Muhammad Taqi (PLD 1977 Karachi 391) and Faqir Muhammad v. Abdul Momin (PLD
1995 Lahore 405) is also the same. In Ghulam Jillani's case [PLD-1960 (W.P.) Karachi 517] subsequent
conduct of defendants was also considered but this view stands overruled in Abdul Hameed's case as
also in Ghulam Nabi's case (supra). The authorities: Haji Muhammad Yaqoob v. Shah Nawaz (PLD
1998 Karachi 758) and Abdul Hameed v. Ghulam Muhammad (1987 SCMR 1005) cited by learned-
counsel for defendant No. l also relate, inter alia, to the question as to in what circumstances time is
of essence of the contract.

12. Thus, without reservation, the terms of the agreement shall themselves speak if the time was of
essence of the contract and the earlier events demonstrating the conduct of parties may also be
taken into account in I I this, context. Keeping in mind these principles I have examined the
agreement. Para 1 of the agreement stipulates that the balance sum of Rs.6,00,000 shall be paid on
the day of execution of Conveyance Deed but no time is fixed for the last mentioned purpose. A
relaxation has been made in para. 2 to the effect that if the vendee fails to pay the balance amount
then she is liable to pay Rs.10,000 per month to vendor but that condition would remain valid for
two months. Although in the end at para. 8 a condition has been added to the effect that the
Conveyance Deed/General Power of Attorney shall be executed by the vendor within one month i.e.
10-8-1995 but it is Inconsistent with what has been provided in para. 2, discussed earlier.
Nevertheless, in substance, it is a warning to the vendor namely the

defendant No.1 and not vendee/plaintiff for executing Conveyance Deed within one month. In real
sense, the condition in para. 2 is, by itself, sufficient to show that 10-8-1995 was not inevitably the
cut-off date or the JE date for the execution of Conveyance Deed. It can, thus, be safely concluded
that time was not of essence of the contract between plaintiff and defendant l No. 1.

13. As regards forfeiture of the amount received by the defendant No. I it appears to be important to
mention that first receipt executed on 11-7-199.5 mentions fhe amount of Rs.3,00,000 as earnest
money in terms of the agreement but the agreement itself shows the balance amount to be
Rs.6.00,000 and it was, essentially, a part payment of the sale consideration. The subsequent receipt
produced along with the affidavit-in-evidence clearly mentions that Rs.2,00,000 was accepted as
part payment of this transaction. Ordinarily, the amount received by the vendor as advance payment
or earnest money is not liable to forfeiture unless there is manifest breach of contract on the part of
vendee in clear and unrebuttable infringement of the terms of the contract. In strict sense the true
import of earnest money coupled with the factors warranting its forfeiture was examined by a
Division Bench of this Court in Karachi Port Trustees v. Ghulamali Habib [PLD 1961 (W.P) Karachi
623] and it was held, after referring to a good number of foreign judgments, as under:--

"27 Having carefully considered the question in the light of the authorities and the recognized
principles of equity the conclusion that we have reached may now be summarized. Normally in a
contract of sale of immovable property the seller is, upon a breach by the purchaser, entitled to
forfeit the earnest money or a deposit of the same character. But in case it! which from the
consideration of all the relevant circumstances the forfeiture and the retention of the amount by the
seller would be unconscionable, the Court would upon equitable principles intervene and grant relief
to the defaulting purchaser. In order that this may be done it is not enough that the amount of the
deposit appears to be unreasonable having regard to its proportion to the sale price, because what is
reasonable must normally be determined by the parties at the time of the contract. Therefore, it
must be found that the retention of the amount by the seller would be unconscionable having
regard to all the circumstances of the case. It may be that iii a certain case the amount described as
a deposit may itself be so exorbitant that the inference may become irresistible that it is really in the
nature of a penalty in the event of default, for equity looks to the substance and not to the form. In
determining whether the forfeiture is unconscionable the Court will take into consideration the
nature of F the contract, the conduct of the parties and the proportion of the amount of deposit to
the sale price. Where the purchaser has notl merely defaulted but has repudiated the contract and
his conduct suffers from impropriety the Court will refuse to come to his aid. because one who seeks
equity must come with clean hands. On the F other hand-, the fact that the seller has sharply
exercised his right or has obtained an unfair advantage though acting within his right under law
would be taken into consideration in favour of granting relief to the purchaser."

14. Obviously, scanned from above point of view the threatened action of defendant No.1 in
forfeiting the amount in the instant case appears to be unconscionable. He has received more than
55 % of the consideration amount. He is, as such, not justified in equity to forfeit this amount I
-unilaterally when there is no condition in the agreement itself and in b particular, the default in
performance of the contract has been committed by him as would be shown in the discussion
herein-below. The defendant No.1 was, therefore, not justified under the law to threaten, the
plaintiff with forfeiture of amount already paid by him.

15. In order to ascertain precisely who committed the breach of contract the versions given by the
parties in their "evidence coupled with the documentary evidence are of immense importance. The
admission given by defendant No.1 in cross-examination in this context; is reproduced hereunder:--

"....It is correct that the mutation has not been completed in my favour in the Defence Housing
Authority as yet. It is correct that I cannot effect transfer in favour of Shahnaz till mutation is
effected."

16. The above statement by itself imparts a meaningful impression that the defendant No.1 could
not get the mutation in his name, he was, therefore, not in a position to transfer the property in
question. ,He had admittedly received a notice from plaintiff calling upon him to perform his part of
contract but he did not give any reply. Obviously, on account of lack of mutation in his name he was
helpless and unable to effect transfer, therefore, he kept quiet. He had earlier accepted the
additional amount of Rs.2,00,000 for the purpose of completion of the formalities yet he did not
respond in an appropriate manner to satisfy the plaintiff that he was willing to get the
documentation updated in his favour. A plea was, however, taken by learned counsel for defendant
No.1 that the property is already in the name of husband of plaintiff, therefore, only a little more
was to be done. This plea cannot be sustained in the eye of law as the property was not in the name
of plaintiff herself. The defendant No.1 was not relieved of his obligation to get mutation effected in
his name merely because it was in the name of plaintiff's husband. If, at all, it Was so what was the
necessity of executing a Conveyance Deed. The plea is beyond the scope of the transaction/contract
and is, therefore, rejected. Moreover, even execution of Irrevocable Power of Attorney would be
meaningless if in the record of rights, the property is not in the name of such person who grants the
power. The fact, therefore, remains that owing to the reasons, aforesaid, it was none else but the
defendant No. l who, by his conduct committed such acts as would be deemed to be his intention of
commission of breach of contract.

1,7. Since the plaintiff has performed her part of. contract the same is to be specifically enforced and
the defendant No. 1 is under an obligation to complete the formalities and execute the necessary
transfer documents as per stipulation in the agreement, after receiving the balance consideration of
Rs.4;00,000. The plaintiff is, thus, entitled to the relief of specific performance of contract. He is also
entitled to the relief of injunction as admittedly the defendant No. I, has threatened the plaintiff with
actions of H cancellation of contract and forfeiture of the amounts already paid much against the
spirit of the contract.

18. In view of the fording on Issues No.4 and 5 above, the suit is decreed for specific performance
and injunction. Defendant No.1 shall execute Conveyance Deed in terms of Sale Agreement in favour
of plaintiff within two months hereof, failing which the amount of Rs.4,00,000 may be deposited
with Nazir of this Court who may get the formalities completed and execute Conveyance Deed in
favour of plaintiff. Since the matter involved mostly legal points, the parties shall bear their own
costs.

Q.M.H./M.A.K./G-96/K Suit decreed.