Lawyers Directory Listing
Chat with us free on WhatsApp — tell us your city and legal matter and our team connects you with the right lawyer. No form, no fee.
Suit No. 192 of 1965, decided on 15th July 1967.
, Ss. 55 de 73‑Time fixed for execution of sale‑deed extended‑Purchaser sending notice to seller to complete sale by date extended‑ Time becomes essence of contract‑Seller failing to perform his part of contract‑Liable for damages for breach of contract.
Finkiel Raul v. Mohan 1949 L J R 1378 rel.
, S. 73‑Suit for breach of contract‑Plaintiff failing to adduce evidence to enable Court to make assessment of damages‑No damages awarded but only interest on earnest money.
, S. 12‑Conlract‑Specific performance‑Purchaser by his letters addressed to seller claiming only damages and refund of earnest money‑Letters establish waiver of agreement‑Specific performance disallowed.
Usman Ghani Rashid for Plaintiff.
Muhammad Hussain Khan for Defendant.
Dates of hearing : 1st and 29th March 1967.
This is a suit for specific performance and, in the alter native, for damages for breach of a contract for sale of land. The case set up by the plaintiff in the plaint is that on 11‑3‑1964, the parties executed an agreement, Exh. 5, by which the defendant agreed to sell to the plaintiff two agricultural plots of land bearing survey Nos. 92 and 93, Deh Drigh, Tapo Malir, Taluka Karachi, measuring 14 acres 22 ghuntas for the sum of Rs. 1,76,000.00. It is alleged that the defendant committed breach of this agreement by failing to establish his title to the suit land and continued to evade completion of the sale. The plaintiff also claims that he, in his turn, bad agreed to sell‑ this land to one Muhammad Jamil Khan to whom the plaintiff had to pay Rs. 10,C00.00 as damages on account of the defendant's failure to complete the sale. The plaintiff further states that he is ready and willing to perform the agreement, and that a decree be given directing the defendant to complete the sale in accordance with this agreement, or, in the alternative, to pay to the plaintiff Rs. 27,600 which sum is made up of the earnest money of Rs. 17,600 and damages in the sum of Rs: 10,000.00.
2. The defendant denies the plaintiff's allegations and states fn his written statement that it was the plaintiff who failed to complete the sale within the period stipulated in the agreement, and raised irrelevant objections to the defendant's title to the land and, contrary to the agreement, demanded that the defendant should obtain income‑tax and wealth tax clearing certificates. The defendant contends that the agreement Exh. 5 was properly rescinded by him on account of the plaintiff's default in completing the sale and that he, that is, the defendant is not liable either to refund, the earnest money, which stood forfeited to the defendant, nor to pay the sum of Rs. 10,000.00 alleged to have been paid by the plaintiff as damages to Muliamr9ad Jamil Khan.
3. On these pleadings the following issues were adopted by the Court with the consent of the parties:‑
"(1) Whether Rs. 17,600.00 were paid by plaintiff to the defendant as part payment of the sale consideration of land in agreement
(2) What were the terms of agreement dated 11‑2‑1964
(3) Who committed the breach of the agreement and to what effect
(4) Whether the plaintiff was prepared to perform his obligations under the agreement
(5) Whether the plaintiff paid Rs. 10,000 to Muhammad Jamil Khan on account of failure of the defendant to finalize the sale
(6) Whether the plaintiff is entitled to a decree for specific performance
(7) To what other relief if any is the plaintiff entitled
4. This suit came up before me on 1‑3‑1967 when Mr. Muhammad Hussain Khan, the learned Advocate for the defendant, admitted receipt by the defendant from the plaintiff of the sum of Rs. 17,600.00. Issue No. 1 was, accordingly, not pressed. On issue No. 2, the learned Advocate stated that the agreement, Exh. 5, is itself evidence of its terms. Mr. Usman Ghani Rashid, the learned Advocate for the plaintiff, agreed, with reference to issue No. 5, that the measure of damages, if the plaintiff was held entitled thereto, would be the difference between the contract rate of the land and the market rate on the date of breach. It was conceded that issue No. 5 was not relevant and would not, therefore, be pressed. Thus, the main issues to be determined now are issues Nos. 3 and 4, with regard to breach of the agreement Exh. 5, issue No. 6, which raises the question whether the plaintiff is entitled to specific enforce ment of this agreement, and issue No. 7, under which it has to be decided as to the relief the plaintiff is entitled to.
5. Before proceeding to determine these issues, it will be convenient to set out the various stages in the dispute between the plaintiff and the defendant with regard to the transaction in suit. The bargain between the parties with regard to the. sale of land in question is contained in the agreement Exh. 5, which was executed on llth March 1964. This agreement provided in clause 6 for completion of the sale within two months, or within such extended period as may be mutually agreed to between the parties, and within this period the defendant was required to prove to the plaintiff "subsisting, clear, valid, market able and unimpeachable title" to the property, and also to establish that both the defendants, as well as his predecessor‑in -title, were competent to sell and transfer this land. By clause 3, the defendant undertook to discharge this obligation by 4elivering to the plaintiff "all title deeds and documents" concerning this land. Clause 4, which contains a material condition, reads as under :‑---.
"The vendor will obtain at his costs permission from the Government of Pakistan through the Commissioner of Karachi for the sale of the said property and will comply with Martial Law Regulation No. 64, that is, he will make the required declaration that he does not own any agricultural lands other than those agreed to be sold and he will produce extract from the District Mukhtiarkar in respect of the said agricultural plots of land from the Property Register and a certificate that he does not own any other agricultural land. He will further produce extract from Khatonies of the latest years in respect of the said plots of land."
Under clauses 10 and 11, the parties agreed that the defendant would refund to the plaintiff the earnest money of Rs. 17,600.00 and also pay the plaintiff's losses in the event 'of the defendant's failure to establish his marketable title to the land or to comply with the provisions of clause 4 of the agreement, or to complete the sale for any reason whatsoever. The plaintiff, in his turn, agreed that if any default was made by him, the defendant would be entitled to forfeit the earnest money and also to claim damages for breach of the agreement.
6. The next material document ‑in the dispute between the parties is the defendant's letter Exh. 5/6, dated 27th April 1964, by which the plaintiff was informed that the land had been mutated in the defendant's name 'in the records of the Taluka Mukhtiarkar and that permission for sale of the land and the certificate under Martial Law Regulation No. 64 would be available by the end of the month, and that, accordingly the defendant could inspect the documents of title on 4th May 1964, at the office of the defendant's Advocates, namely, M/s. Fakhruddin & Co. This letter was replied to by the plaintiff on 2nd May 1964 by Exh. 5/7, in which the plaintiff complained that some material documents of title had not been made available to him for inspection, even though request in that behalf was conveyed to the defendant through broker Ghulam Hussain. The documents which were stated not to have been shown to the plaintiff included the bye‑laws of the Hide Merchants Co‑operative Society Ltd., from whom the defendant had purchased the land in. question, as also the resolution of this Society permitting sale of the land to the defendant permission for sale, and certificate under Martial Law Regulation No. 64 and the income‑tax and wealth certificates. The plaintiff took up the stand in this letter that these two certificates were necessary as the defendant was not an agriculturist. The defendant, in his letter dated 5th May 1964, which is Exh. 5/8, denied the allegation that he had failed to make available to the plaintiff necessary documents of title and stated that all these documents would be delivered to the plaintiff at the time of the completion of the sale. Thereupon, the plaintiff's Advocate requested ' the defendant by telegram Exh. 6/7 for photostat copies of the documents. This request was refused by the defendant by his letter dated 6th May 1964, which is Exh. 5/9, in which the plaintiff was invited to inspect the documents by previous appointment at the office of the defendant's Advocates, M/s. Fakhruddin & Co.
7. It appears that the parties then had a meeting on 7th May 1964 at the office of M/s. Fakhruddin & Co. The defendant's letter dated 8th May 1964, Exh. 5110, refers to this meting and states that the permission for sale had not till then been obtained but was expected to be available "in a day or two". The plaintiff's demand that the defendant should obtain income‑tax and wealth‑tax certificates was rejected, and it was complained that the plaintiff had failed to keep up his appointment to meet the Registrar, Co‑operative Societies, Karachi, who was stated to have raised objection with regard to the competence of the Hide Merchants Co‑operative Society to sell the land in question to the defendant. The letter went on to say that it had been agreed at this meeting that the time for completion of the, sale should be extended upto 5th June 1964 On 14th May 1964, the defendant wrote Exh. 5/11, in which it was stated that the Commissioner's permission for sale of land was being delayed due to the plaintiff's failure to file the prescribed declaration, and that the plaintiff should either attend the office of the City Mukhtiarkar to give this declaration, or, in lieu thereof, deliver to the defendant an affidavit containing the required particulars. In Exh. 5/12, dated 18th May 1964, the defendant complained that the plaintiff had not acknow ledged earlier letters, and again requested the defendant to make available the necessary declaration for the purpose of obtaining the permission for sale. The defendant then followed up by a telegram, Exh. 5/14, dated 20‑5‑1964, making the com pletion of the sale by 5th June 1964, of the essence of the contract. The defendant's letter, Exh. 5/13, which is also dated 20th May 1964, refers to this telegram and further states that the defendant will treat the plaintiff's failure to complete the sale by 5th June 1964 as breach of the contract by the plaintiff. All these letters were replied to by the plaintiff on 27th May 1964, by Exh. 5/15. Referring to clause 4 of the agreement Exh. 5, the plaintiff stated that it was incumbent on the defen dant to obtain the requisite permission of sale within two months of the agreement, but that despite assurances held out to the plaintiff from time to time, this permission had not been obtained till 17th May 1964. With regard to the defendant's complaint that the plaintiff had failed to keep up the appoint ment to meet the Registrar of the Co‑operative Housing Societies, it was stated that this meeting had been fixed for 11‑30 a.m. on 8th May 1964 for the purpose of inspecting the bye‑laws of the Hide Merchants Co‑operative Society Ltd., and copy of this Society's resolution permitting and authorising the sale of the land in question, but that when the plaintiff reached the office of the Registrar at the appointed time, he did not find the defendant's Advocate, Mr. Ghulam Ali, nor the Registrar, Mr. Ghiasuddin, and that accordingly the plaintiff met Mr. Mina, who was the next Senior Officer in the Department. The plaintiff then stated that the bye‑laws and the resolution of the Society were not available in the records of the office of the Registrar. As regards the plaintiff's attending the office of the City Mukhtiarkar, it was contended that this was an entirely new issue raised by the defendant after the expiry of the time fixed for sale. The plaintiff then complained that his request for delivery of the documents of the title, or the photostat copies thereof, was refused by the defendant. An allegation was made that the contract in suit had remained unperformed due to the obstructions raised by the defendant himself, who was, therefore, called upon either to enter into a fresh agreement for sale on mutually agreed terms and conditions, or to refund the earnest money received by the defendant from the plaintiff. All these allegations were repudiated by the defendant in his letter Exh. 5/16 dated 28th May 1964, which also informed the plaintiff that the defendant had taken‑ steps to obtain the requisite permission for sale without the prescribed declaration of the plaintiff, and called upon the plaintiff to submit the draft of the sale‑deed to the defendant 'so that the sale could be completed before the 5th of June 1964. On 6th June 1964 the defendant wrote another letter, Exh. 5/17 in which a reference was made to the alleged interview between the plaintiff and the defendant on 3rd June 1964, at which meeting, it was alleged, the plaintiff had agreed to complete the sale provided the defendant obtained the income‑tax clearance certificate. The plaintiff was requested to give his confirmation of this arrangement on this letter itself. No such confirmation, however, was given by the plaintiff who, on the other hand, made a written claim for damages on the defendant on 25th June 1964 by Exh. 5/18. The claim was repudiated by the defendant by letter dated 26th June 1964, Exh. 5/19, in which the plaintiff was called upon to complete the sale within a fortnight, and was also informed that this period for completion of sale was of the essence of the contract, and that if the plaintiff still made default, his earnest money would be forfeited without prejudice to the defendant's claim for damages. On 15th July 1964, defendant wrote another letter, Exh. 5/11, by which the plaintiff was informed that, the agreement Exh. 5 had been terminated and that the plaintiff's earnest' money had been forfeited to the defendant. Then, on 1st February 1965, the plaintiff sent notice Exh. 5/22 claiming refund of earnest money and damages of Rs. 11,500.00. The defendant refused this claim by his letter Exh. 5/23 written on 15th February 1965. On 16th May 1965, however, the plaintiff wrote another letter Exh. 5/25, offering to complete the sale so that litigation may be avoided. The defendant rejected this suggestion by letter Exh. 5/27', dated 2nd May 1967.
8. It was in these circumstances that the plaintiff brought the present suit for specific performance of the agreement and, in the alternative, for refund of the earnest money‑ and for payment of damages in the sum of Rs. 10,000.C0. The plaintiff only examined himself in support of his case. His evidence was confined to a reiteration of his case as set out in the correspondence between the parties. He complained that the defendant had neither obtained the permission from the appro priate authority for the sale of the land, nor the certificate under Martial Law Regulation No. 64, and had also failed to make available to the plaintiff the bye‑laws and the resolutions of the Hide Merchants' Co‑operative Society Ltd., to show that this Society was competent to sell the land to the defendant. The defendant did not come in the witness‑box himself but examined his lawyer, Mr. Ghulam Ali, who stated that he represented the defendant throughout the negotiations with the plaintiff with regard to the sale of the agricultural plots Nos. 92 and 93 of Deh Drigh, Tapo Malir, Karachi. According to Mr. Ghulam Ali, all title deeds had been shown to the plaintiff's father, Mr. Akhtar Ali Khan and to his Advocate Mr. Zia. With regard to the Commissioner's permission for sale, the witness stated that this permission was given on 23rd Juno 1944, by the certificate Exh. 7/1. Mr. Ghulam Ali had also represented the defendant in the transaction between him and the Hide Merchants Co‑operative Society Ltd., and in that connection, Mr. Ghulam Ali stated, he had then seen the resolution by which the Society decided to sell the land to the defendant. According to him this resolution was produced in the Registration Office at the time of the registration of the sale‑deed by which the defendant purchased the land from the Society. Mr. Ghulam Ali also retained a copy of this resolution, which, however, was misplaced in his office.
9. Now the position which emerges from the review of the parties' evidence is this. According to the stipulation contained in agreement Exh. 5, the sale of the land had to be completed by 10th May 1964, which time, however, appears to have been extended up to 5th June 1964. Within this period, the defendant had to establish a subsisting, valid and marketable title to the property in suit and the competence of his predecessor‑in‑title to alienate the land. The defendant bad also to obtain the Government's permission to sell the land, as also the certificate under Martial Law Regulation No, 64. It is common ground that without this permission the sale of the land could not be completed. It is also agreed that in cases of sales of land, time is not ordinarily of the essence of the contract, but that either party may make the date fixed for completion of the sale as of essence of the contract by serving notice on the other party. The agreement Exh. 5 provided that sale would be completed by 10th May 1964, and I am prepared to accept the defendant's contention, as given in his letter Exh. 5/10, that by oral agreement this date was extended to 5th June 1964. Either party could, therefore, serve notice on the other, treating this date as of the essence of the contract, provided the notice was reasonable. Such notice was given by the defendant to the plaintiff by telegram Exh. 5/14 dated 20‑5‑964, followed by a letter of the same date, Exh. 5/13; making 5th June 1964, as of the essence of the contract for completing the sale. No arguments have been addressed to me on the question that this was not a reasonable notice and accordingly I would treat this notice as reasonable notice for treating the 5th of June 1964 of the essence of the contract for completion of the sale.
10. Now the question is as to which of the two parties made default by not completing the sale by the 5th of June 1964. The defendant has attempted to fix this default on the plaintiff and in this connection his learned Advocate has at length dealt with the repeated written requests by the defendant to the plaintiff for completion of the sale by this extended date. But the question is, was the defendant in a position to complete the sale on this date It is agreed that the sale‑deed could neither have been executed nor registered in the registration office, without the Government's permission for sale of the land. But this permission, as shown by Exh. 7/1, and as stated by the defendant witness Mr. Ghulam Ali, was given only on 23rd June 1964. The certificate of course bears the date of 3rd June 1964, but it was signed by the Deputy Commissioner only on 23rd June 1964 and this last date, therefore, is the date when the permission to sell the land may be presumed to have come in the defendant's possession. Thus, the defendant could not in any case have completed the sale on 5th June‑ 1964. The defendant himself served notice, Exh. 5/14, on the plaintiff making the completion of the sale by the 5th of June 1964 as of the essence of the contract between the parties. It cannot be said that the defendant is not bound by this notice. If a reasonable notice is given to make time of essence the contract, this notice, in my opinion, would bind both the person and the purchaser, that is, both the person who gives the notice and the person to 'whom the notice is given. This view find's support from a decision cited in Pollcock & Mulla's Contract Act (VIII Edn. at page 341). The case referred to in this commentary is Finkiel Raut v. Mohan (1949 L J R 1375), in which the vendor, suspecting that the purchaser would not be ready, served a notice making time of the essence of the contract. But it turned out that the vendor himself was not ready to complete the sale on the stipulated date. Accordingly, the purchaser obtained recession of the contract and return of his deposit. Both Exh. 7/1, as well as the evidence of Mr. Ghulam Ali, make it clear that the defendant himself was not ready to execute or register a sale‑deed in the plaintiff s favour on 5th June 1964. I should say that the defendant, having made 5th June 1964 of the essence of the contract, without, however, obtaining the requisite. Government permission to sell the laud by this date, was himself in breach of the agreement. This certificate came in the defendant's possession only on 23rd June 1964, but even then the plaintiff was not given any information with regard to it. The defendant's letter Exh. 5/19, dated 26th June 1964 by which the date for completion for sale was again unilaterally extended by him for a further fortnight, is also silent with regard to this permission. The defendant s learned Advocate, Mr. Muhammad Hussain, made an attempt to show that the date for completing the sale was further extended by this letter. In this connection, my attention was drawn to the defendant's letter Exh. 5/17, dated 6th June 1964 in which a reference was made to a meeting between the plaintiff and Mr. Ghulam Ali on 3rd June 1964, at which, it was alleged, it had been agreed that the plaintiff would complete the sale if the defendant obtained income‑tax and wealth‑tat certificates. But as shown by this letter itself, the plaintiff had to confirm in writing this new arrangement. But no such confirmation was given. Nor was any question put to the plaintiff in cross‑examination with regard to this arrangement. The plaintiff was not asked whether time for completion of the sale had been further extended, and if so, up to what date. I am therefore, not prepared to accept the suggestion that time to complete the sale was further extended after 5th June 1964. The defendant himself had given notice that 5th June 1964 is of the essence of the contract. The defendant was, therefore, bound by this notice and was not competent to further extend the period for completion of the sale except with the consent of the plaintiff. There is no satisfactory evidence in support of this consent. The plaintiff's letter dated 25th June 1964 Exh. 5/18, claiming damages from the defendant; negative the suggestion that he consented to this further extension of time.
11. It has been noted that by clause 2 of the agreement Exh. 5, the defendant agreed to deliver to the plaintiff all the title deeds and other documents concerning the land in question before the date fixed for the completion of, the 'sale. The defendant; however, failed to comply with his condition. Ho refused, as evidenced by Exh. 5/8 dated 5th May 1964, and Exh. 5/9 dated 6th May 1964, either to deliver these documents or the photostat copies thereof to the plaintiff. The defendant did not deny that the bye‑laws and resolutions of the Karachi Hide Merchants Co‑operative Society Ltd., showing that this Society had validly and with authority sold the land in question to the defendant, bad to be made available to the plaintiff so as to satisfy him of the defendant's title to the property. Mr. Ghulam Ali admitted that the Society had in fact passed such a resolution, which resolution was produced before the Registrar, and a copy of which was‑ retained by Mr. Ghulam Ali himself. I have not been able to understand the defendant's failure to make copy of this resolution available to the plaintiff. This copy could have been obtained from the Registration Office. Even Mr. Ghulam Ali could have given affidavit to the plaintiff that he had seen the resolution, permitting sale of the land to the defendant.
12. On this evidence, I am satisfied that it was the defendant who was in breach of the agreement and that he neither obtained the Government's permission to sell the land by 5th June 1964, nor did he establish by this date valid and marketable title to the land in suit. In view of this conclusion, my finding on issues Nos. 3 and 4 is that the defendant committed breach of the agreement.
13. The plaintiff has claimed specific performance of the agreement Exh. 5. In my opinion, this claim cannot be sustained. By Exh. 5/15, dated 27th May 1964, the plaintiff treated this agreement as having come to an end, and accordingly claimed damages and refund of earnest money. The claim for damages was again made on 25th June 1964 by Exh. 5/18. These two letters establish that the plaintiff treated the agreement as having 'been terminated, and was no longer interested in specific performance of the agreement for sale of the land to him. It is not open to the plaintiff now to claim specific enforcement. I would, therefore, hold under issue No. 6) that the plaintiff la not entitled to the decree for specific performance.
14. Under issue No. 7, I would hold that as the defendant has been found to have been in breach of the contract, the plaintiff is entitled to refund of the amount of Rs. 17,600.00 (Rupees seventeen thousand and six hundred) which he had paid to the defendant as earnest money, as also damages. At the hearing of the suit before me on 1‑3‑1967, Mr. Usman Ghani Rashid,' the learned Advocate for the plaintiff, agree that the basis of the damages to which the plaintiff may be entitled would be the difference between the contract rate and the market rate on the date of the breach. But the plaintiff has not led any evidence to show the market rate of the type of land which be has agreed to purchase by Exh. 5 on the date of the breach namely, 5th June 1964. There is no material on the record to enable m. to make any assessment of damages. In the absence of this evidence, I can award to the plaintiff only interest on the earnest money from the date of the agreement Exh. 5, that is, 11th March 1964.
15. Accordingly, I decree .the plaintiff s suit Rs. 17,600.00 (Rupees seventeen thousand and sit hundred) proportionate costs, and interest at six per cent. per annum from 11th March 1964 until payment.
K. M. A. Suit dismissed.
Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.
🔍 Find a Lawyer