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Suit No. 191 of 1963, decided on 12th April 1966.

S. 83 read with Defence of Pakistan Rules, 1965, rr. 161 & 162 and Enemy Property (Custody and Registration) Order, 1965, r. S‑Contract made with "alien enemy", before unprovoked attack on Pakistan by India in September 1965, in respect of property belonging to such enemy‑Property subsequently vesting in Custodian of Enemy Property under r. 4, Enemy Property (Custody and Registration) Order, 1965‑Suit for specific performance of such contract‑Not maintainable.

(1915) 2 K B 379 and 1918 A C 250 distinguished.

33 Ch. D 493 and Halsbury's Laws of England, Vol. 39, 3rd Edn., p. 38 ref.

Reference No. 1 of 1965 rel.

S. Ashfaq Hussain for Plaintiff.

Dingomal, Haider Ali Pirzada, and A. A. Fazeel for Defendants.

Dates of hearing: 3rd, 8th, 10th, 14th September 1965, 11th, 13th, 14th, 18th, 19th, 31st January, 1st, 2nd, 3rd, 4th, 11th, 16th, 18th February and 2nd March 1966.

Plaintiffs have prayed for specific performance of the contract for lease of the plot in suit and recovery of a sum of Rs. 6,20,000 as damages on the basis of the following fats:

2. Julian Hoshang Dinshaw is attorney of Dr. Eddie P. Bharucha (Defendant No. 1) who is owner of the Plot in suit bearing Survey No. 29 sheet SB‑5 measuring 2,724 sq. yards, Saddar Bazar, Karachi and this property has always be enmanaged by the above‑stated attorney. This plot of land was on lease with defendants 2 and 3 for a period of 10 years commencing from 16tb August 1948 and they carried on the business of an open air cinema commonly known as Mayfair Cinema. Julian Dinshaw, as a result of negotiations with late Manakji Dastur, (predecessor‑in‑interest of the Plaintiffs) agreed to give a lease of this plot in suit for 23 years with option to purchase "in case they purchase the lessee rights of defendants Nos. 2 and 3". In view of this oral agreement, late Manekji Dastur and Plaintiff No. 1 entered into a contract with defendants 2 and 3 on 10th May 1956 'for the purchase of their lessee rights and other interest in the land in Suit and all their buildings, fixtures, appurtenances and interests in the land at a very high price'. The terms and conditions on which defendant No.1 had agreed to grant a lease for 25 years from 16th August 1958 to the Plaintiffs are mentioned in Paragraph 5 of the Plaint. Term No. 5 appears to be material and relevant and it reads as follows:

"A regular lease deed will be executed by us on other terms and conditions as may be advised by our Legal Advisors; the costs of which will be payable by you. The lease would be in favour of yourself, your successors and assigns."

The possession of this plot was given to the Plaintiffs by defend ants 2 and 3 in September 1955 and the deed of conveyance was executed by them on 26‑3‑57 in favour of Plaintiff No. 1 and his father 'conveying to them their lessee rights, buildings, materials and all other rights and interest as against defendant No. 1 in respect of land in suit'. Thereafter Plaintiffs instructed their architect to prepare a plan for a covered cinema and later on it was submitted to the Karachi Development Authority for approval which was conveyed to them towards the end of December 1960 or beginning of January 1961. But defendant No. 1 instituted a suit (No. 47 of 1960) in this Court against the Plaintiffs "for inter alia ejectment from the land in suit on the ground of alleged non‑payment of rent which prayer of ejectment has been refused by this Hon'ble Court and appeal (L. P. A. No. 15/62) has been filed by defendant No. 1". Their further case is that they received a notice from the K. D. A. (Karachi Development Authority) in April 1961 "preventing them from starting construc tion of the said building because it bad been represented to it that the lease of the above‑mentioned plot had been terminated and a suit had been filed for their ejectment in this Court". In Suit No. 47/60 a statement was made on behalf of defendant No. 1 that:

"In view of the breach committed by the defendants (Plaintiffs in this suit) we are not prepared how to execute the lease‑deed contemplated in Exh. 5."

In view of the refusal of defendant No. 1 to execute the lease‑deed plaintiffs have found it necessary to pray for specific performance of contract by executing a lease‑deed in their favour in respect of the plot in suit. Defendant No. 1 in order to defeat the plaintiff's claim filed another suit (No. 122/62) in this Court for ejectment and also instituted proceedings (No. 2976 of 1963) before the Rent Controller claiming same reliefs, i.e. ejectment of the Plaintiffs. Plaintiffs allege that they have always been and are still ready and willing to perform their part of the contract in question. Their further case is that in view of the facts stated above they have been prevented from building a cinema and a betel on the plot is suit with the result that they have suffered lasses in the shape of income which according to them would be Rs. 20,000 per month.

3. Subsequently they amended their plaint and joined Defendants Nos. 4, 5 and 6 alleging that it had come to their knowledge that defendant No. 1 in order to illegally defeat their rights had entered into some contract or is about to complete it in respect of the plot in suit with these three defendants.

4. After the hostilities commenced on 6th September 1965 defendant No. 7 (Custodian of Enemy Property) has been joined as defendant No. 1 is an enemy. Consequently one more amended plaint was filed.

5. The contesting defendant (Defendant No.1) has disputed the claim of the Plaintiff's for various reasons. His legal pleas are in respect of non‑maintainability of the suit, limitation and res judicata. He has also pleaded that this suit is misconceived as there is no complete or concluded agreement and consequently relief regarding specific performance cannot be granted. Accord ing to him Plaintiffs have no right to sue and further that this suit is champarteous.

6. Defendant No. 1 has admitted to be the owner of the plot in suit. He has also admitted the lease of this plot with defendants 2 and 3 and has further added that there was no registered lease‑deed in respect of it. According to him there was merely an agreement purporting to be lease for 2 years extended by another 5 years which was in case carried out'. His further case is that defendant No. 2 had approached his attorney with a proposal to extend the lease period by 25 years and on that occasion certain terms and conditions were settled. Thereafter his attorney addressed a letter dated 30th August 1956 to defendant No. 2 mentioning some of those terms and conditions and expressing that a regular lease‑deed will be executed by the parties on other terms and conditions as may be advised by the Legal Adviser of this defendant. Even under the terms proposed, there could be no transfer, assignment or subletting of the lease of the premises to any one without the written permission of this defendant . . . . . . The aforesaid letter of the alleged acceptance thereof did not amount to any concluded contract even between the parties thereto. The Plaintiffs were not parties thereto. Further until other terms and conditions were settled and a lease- deed executed and registered no agreement of lease would come into force including the option to purchase the plot until all the terms and conditions were finalised and deed executed'.

7. He has further pleaded that Plaintiff No. 1 and his father who were carrying on negotiations for the transfer or the lease of the plot with defendants 2 and 3 intended to conclude the agreement of lease with his attorney in accordance with letter dated 30th August 1956. Defendants 2 and 3 accompanied by these two Plaintiffs had met M. N. E. Dinshaw and requested him that these two Plaintiffs be treated as lessees in place of Defendants 2 and 3. Dinshaw had informed them that he would consider their request favourably and had directed the Plaintiff's to put in writing their proposal. Thereafter defendants 2 and 3 wrote a letter in September 1956 signed by these two plaintiffs and addressed "wrongly" to Messrs Edulji Dinshaw stating that the terms of (case as offered in letter dated 30‑8‑56 were acceptable and that in place of defendants 2 and 3 the names of these two plaintiffs be incorporated as lessees who had signed this letter. This letter was received by his attorney on 9th October 1957. By this time there were arrears of taxes payable to Karachi Municipal Corporation in respect of this property and this tax was payable by defendants 2 and 3. Accordingly Plaintiff No. 1 was informed by a letter dated 3‑12‑57 that the question of transfer of lease of this plot to these two plaintiffs would be considered after the taxes had been paid. In addition to the arrears of taxes payable to the K. M. C. by Defendants 2‑3, there were also arrears of rent payable to defendant No. 1. Plaintiff No. 1 was therefore addressed a letter on 3‑12‑57 and was told that all such rents also must be satisfactorily settled. He has denied that there was any agreement with plaintiffs in pursuance of which contract dated 10‑5‑56 was entered into with defendants 2 and 3 for the purchase of their lease hold rights and otter interests. He has shown ignorance of the deed of conveyance dated 25‑3‑57, whereby these two Plaintiff's have alleged to have purchased from defendants 2 and 3 their rights as lessees. He has also shown ignorance about the possession of this plot by these two Plaintiffs from defendants 2 and 3. He has pleaded that hg was not a party to this deed of conveyance. Towards the end of 1958, Martial Law Authorities disallowed the use of the plot as an open air cinema and had the buildings on it demolished with the result that the business was stopped and the plot was lying vacant. His further case is that he had treated defendants 2 and 3 as tenants even after 16^th August 1958 and rent was being demanded from them at the old rate of Rs. 538‑4‑0 up to 16‑8 58 and thereafter at the increased rate of Rs. 1,958 per month in accordance with the letter dated 30‑8‑56. At no time plaintiffs were treated as tenants by him though such request had been made by them to his attorney. As no rents were paid by these two plaintiffs, the two suits were filed in addition to ejectment proceedings before the Rent Controller. It is also pleaded by him that plaintiffs had no right or authority to submit any plans without getting it previously approved by him in writing. According to him plaintiffs had no means at all to raise the structure for cinema and hotel. It was held in Suit No. 47/60 that the Plaintiffs were only monthly or statutory tenants and that there was no agreement of lease on the terms of his letter dated 30‑8‑56 as it had not been finalised. According to him this finding is binding upon the Plaintiffs and they are precluded by res judicata.

8. Defendant No. 2 (Khan G. M. Khan) is ex‑ruler of Sardar Garh State and defendant No. 3 is his wife. Suit against them has been withdrawn and hence there appears no necessity for referring to the pleas raised by them in their written state ment.

9. Defendant No. 4 had adopted the written statement filed by defendant No. 1 and had further pleaded that suit for specific performance filed after long delay is not maintainable. He has admitted that he has entered into agreement of lease with defendant No. 1 which is bona fide.

10. Defendants 5 and 6 had filed no written statements and they are ex parte.

10‑A. Defendant No. 7 was joined after the parties had led their evidence and were being heard as defendant No. 1 was declared enemy and the property in suit had vested in this defendant. He adopted the written statement filed by Defendant No. 1 and had argued that the suit was not maintainable.

11. On these pleadings following issues have been raised:

"(1) Is the suit incompetent and not maintainable

(2) Is the suit time‑barred

(3) Is the suit barred as res judicata by judgment and decree in Suit No. 47/60

(4) Is the suit champertuous and not entertainable

(5) Is the contract between the Plaintiff and the defendant No. 1 for lease with option to purchase not final and concluded If so, can it be specifically enforced against all or any of the defendants

(6) Can the option for purchase be exercised by the plaintiff without first obtaining from the defendant No. 1 a duly executed lease‑deed for 25 years

(7) Is the suit for specific performance barred by time as alleged

(8) Is the plaintiff entitled to any damage from the defendant No.1 with reference to the said contract If so, to what amount

(9) What matter, if any, are res judicuta between the plaintiff and the defendant No. 1 in view of the judgment of the Trial Judge in Suit No. 47/60 and that of the Division Bench in L. P. A. No. 15 of 1961

(10) Are the defendants 2 and 3 proper parties to the suit If not, to what effect

(11) Are the defendants 2 and 3 entitled to any special cost under section 35‑A, C. P. C. If so how much

(12) Did the Plaintiff fail to pay rent and to carry out the terms contained in the letter dated 30‑8‑56 and have they disentitled themselves to claim specific performance as alleged in paras 15, 18 and 26 of W. S. of defendant No.1

(13) Did the Plaintiff get plans prepared and passed by the K. D. A. If so, did they have right or authority to do so as alleged in paras. 19, 20 and 22 of W. S. and what is the effect thereof

(14) Was the Plaintiff about to start construction on the Plot in April 1961 If so, did they have right or authority to do so (covers para 22 of W. S. of Defendant No. 7).

(15) Is any agreement at the option of one party not valid and not enforceable as alleged in para. 27 of W. S.

(16) To what other ralief, if any, is the Plaintiff entitled in the present suit "

My findings and reasons are as follows:

12. Issue No. 1.‑Admitted position is that defendant No. 1 is an enemy and further that the property in suit has now vested in defendant No. 7. I have already pointed out that he was joined after unprovoked war was declared by India on Pakistan. Mr. A. A. Fazeel, the learned counsel representing defendant No. 7, had argued that Plaintiffs were not entitled to relief in respect of specific performance of contract as it had become "avoided" after the declaration of emergency. Rule 161 (of Part XV of the Defence of Pakistan Rules with heading control of trading with enemy') defines enemy' for the purpose of this part. Its clause B lays down that enemy is "any individual resident in enemy territory". There is no doubt about the fact that defendant No. 1 is residing in India which is an enemy territory. Rule 162 deals with prohibition of trading with enemy. Its clause (1) lays down that a person shall be deemed to have traded with the enemy if he has had any commercial financial or other intercourse or dealing with, or for the benefit of any enemy, and, id particular, but without prejudice to the generality of the foregoing provisions, if he has;

"(i) supplied any goods to or for the benefit of an enemy, or obtained any goods from an enemy, or traded in, or carried, any goods consigned to or, from any enemy or destined for or coming from enemy territory,

(iii) performed any obligation to, or discharged any obligation of, an enemy, whether the obligation was undertaken before or after the commencement of the Ordinance."

Its clause (3) punishes a, person who trades with the enemy with imprisonment for a term which may extend to 7 years or with fine, or with both. It was, therefore, argued on behalf of defen dant No. 7 that he cannot perform any obligation to or discharge any obligation of any agreement alleged to have been entered into between defendant No. 1 and the plaintiffs, and if he does so he would commit an offence, which is punishable under clause (3) of rule 162. At this stage I would refer to the order called Enemy Property (Custody and Registration) Order, 1965 issued on 9th September 1965 (Vide Page 974 of the Gazette of Pakistan Extra ordinary issue dated 9th September 1965). Rule 2 (i) defines 'Custodian' and its sub‑clause (iii) defines enemy as a person whose property is for the time being vested in the Custodian by an order made under sub‑rule (i) of rule 182. After such an order is made, the property of an enemy is vested in the Custodian under Rule 4 and under sub‑rule (2) (iv) he may "institute, defend or continue any suit or other legal proceeding, refer any dispute to arbitration and compromise any debts, claims or liabilities". Under rule 5 all enemy property vested in the Custodian is "exempt from attachment, seizure or sale in execu tion of a civil court decree or orders of any other authority". Notification regarding the appointment of Custodian appears at page 5089 of the Gazette of West Pakistan, Extraordinary, issue dated 22‑9‑65. Reference has also been made to the vesting of the property in suit in him. As this property under Rule 5 of this order is exempt from attachment and seizure it eras urged before me that even if plaintiffs succeed in obtaining a decree in their favour it could not be executed as laid down under Order XXI, rule 32, C. P. C. Reliance was placed by him in a case reported in 33 Ch. D. 493 where it was held that:

"The delivery of land of a judgment debtor in execution by the Sheriff under a writ of elegit is a "seizure" of the land .o as to make the execution of the judgment creditor "complete" within section 45, subsection (2) of the Bankruptcy Act, 1883, and a receiving order in bankruptcy made against the debtor after the delivery in execution, but before the return of the writ, does not oust the right of the Judgment creditor."

I was also referred to Note 30 at page 38 (Halsbury's Laws of England 3rd Edition Vol. 39). It refers to the contracts made before the outbreak of war and it is reproduced below:

"The effect of the declaration of War upon a contract made before the outbreak of War with an alien enemy depends upon whether the contract is executory or executed. If it is executory when war is declared, it is normally, avoided and both parties are at once absolved from any performance of it. Even where the contract contains a term purporting to suspend its operation in the event of war, effect will not be given to the term unless this can be done without involving the continuance of contrac tual relations between the parties, but the contract will be altogether dissolved. Where, however, a contract has been executed before the outbreak of War, it is not thereby avoided. The remedy only is suspended and revives on the restoration of peace. A contract is executed for this purpose if it has been so far carried out that no further intercourse with the enemy is required for its completion and it has been completely performed on one side so that all that remains is payment of a liquidated sum by the other."

On the basis of it and the legal aspect already explained it was argued by Mr. A. A. Fazeel that even if it is held that there is a concluded contract between the parties the Plaintiffs case for specific performance of contract remained suspended. It was further urged by him that in the other case, i.e. if the contract is executory, i.e. non‑complete it is avoided and both the parties are at once absolved from any performance of it. On the other hand Mr. Ashfaque Hussain, the learned counsel for the Plaintiffs, had argued that there was no official declaration of War, secondly hostilities have ceased and, lastly, that this suit is not barred. I find very little force in these arguments. The first argument, advanced by him, is dealt with in the Judgment of the Division Bench of this Court passed on a reference (No. 1 of 1965) made by the office in respect of cases in which enemies were whether plaintiffs or defendants, and it was held that this objection is groundless. Apparently if the Plaintiffs succeed in obtaining their relief in respect of specific performance of contract defendant No. 1 who is an enemy would benefit from it. He had referred me to cases reported in 1915 (2) Kings Bench 379. It deals with the question of contract which was executory till the outbreak of war and its effect on such contracts. It was held that:

"The buyers were entitled to refuse the tender inasmuch as at the date of tender the documents had by considerations of public policy, become void and unenforceable as regards any obligations of performance after the outbreak of war; and to carry out their original obligations would involve entering into contractual relations with king's enemies."

The second case is reported in 1918 A C 260. It also deals with the case of trading with enemy. There was a contract for the sale of goods to be delivered by instalments and war was declared during the currency of contract. It was held that:

"Apart from the suspensory clause, the contracts were abrogated on the outbreak of war inasmuch as they involved trading with enemy (2) that the suspensory clause assuming that it applied to a war between the contracting parties, was void as against public policy as tending to tile detriment of this country and the advantage of the enemy country."

It is apparent that both these cases do not improve the case of the Plaintiffs. As a result of this discussion I hold that the suit is not maintainable at this stage. Finding accordingly.

13. Issues 2 to 15.‑In view of my finding on Issue No. 1 I do not propose to give my findings on these issues.

14. Issue No. 16.‑Suit is dismissed. In view of the position stated above I make no order as to costs.

K. B. A.

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