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Civil Appeal No. 41 of 1980, decided on 24th April, 1983.

(From the judgment dated 26-11-1977 of the Lahore High Court, passed in Regular First Appeal No. 57 of 1969).

(a) Civil Procedure Code (V of 1908)-- O. II, r. 2 read with Specific, Relief Act (I of 1877), S. 56(1)-Object of r. 2, O. 11-To avoid splitting of claims and to prevent multiplicity of suits-Rule 2, O. II, does not apply where relief claimed in first suit had been incompetent or suit itself barred by S. 56(1) of Specific Relief Act-Breach of contract-Relief of injunction claimed in suit-Held, could not be granted in a matter of breach of contract and specific performance being proper and equally efficacious relief, such suit was hit by S. 56(1) of Act.

Holland-Bombay Trading Co. v. Essardas Dhramchand A I R 1925 Sind 175 ; Sardari Mal v. Hirde Nath A I R 1925 Lab. 459(2) and Nasira Sultana v. Habib Bank Ltd. etc. P L D 1975 Kar. 268 ref..

Muhammad Hafiz v. Mirza Muhammad Zakariya A I R 1922 P C 23 ; Sher Ali v. Torap Ali A I R 1942 Cal. 407.; Amir Din Shah Din v. Shiv. Dev Singh A 1 R 1947 Lah. 102 ; Muhammad Khalil Khan v. Mahbub Ali Mian P L D 1948 P C 131 ; Mukhtar Ahmad v. Inamul Haque P L D 1957 Kar. 622 ; Serajul Islam. v. Abdur Rahman P L D 1957 Dacca 99 ; Shafiq Ahmad v. Muhammad Anwar Beg P L D 1968 Lab. 367 and Fazal Muhammad v. Muhammad Noor P L D 1975. Pesh.,17 distinguished.

(b) Civil Procedure Code (V of 1908)-

0. XXIII, r. 1-Withdrawal of suit-Fresh suit already instituted and pending at time of withdrawal of earlier suit-Held, not barred,

Ram Mal v. Upendra Datt A I R 1928 Lab.. 710 ; P. Surja Reddi v.

Subba Reddi (1916) 39 Mad. 937 ; Mungi Lai v. Radha Mohan A I R 1930 Lab. 599 ; Abdullah v. Bashiran Bibi P L D 1981 Lab. 336 ; Commissioner of Income-tax v. Ashfaq Ahmad P L D 1973 S C 406 ; Ashfaq Ahmad Khan v. Custodian of Evacuee Property P L D 1966 Kar. 597 and Irshad Ali v. Islamic Republic of Pakistan 1981 C L C 111 ref.

(c) Civil Procedure Code (V of 1908)-

S. 11 - Res judicata - Principle of - Applicability as between co-defendants in a suit-Conditions to be fulfilled.-[Res judicata].

Phillips v. Mitchell A I R 1932 Cal. 889 ; Muhammad Salim v. Mohiuddin

1968 S C M R 557 and Bakhtawar v. Amin 1980 S C M R 89 not relevant.

Ramchandra Narayan v. Narayan Mahadev and another I L R 11 Bom.

216 ; Mt. Munni Bib and others v. Tirloki Nath and others A I R 1931 P C 114 ; Kishun Prasad v. Durga Prasad A I R 1931 P C 231 ; Maung Sein Done v. Ma Pan Nyun A I R 1932 P C 161-; Kedar Nath v. Munshi Ram A I R 1935 P C 139 ; Muhammad Saadat Ali v. Wiquar Ali A I R 1943 P C 115 ; Chandu Lai Agarwalla v. Khalil-ur-Rahman P L D 1949 P C 239 ; Ramaswami lyer v. Thumboyasami A I R 1922 Mad. 452 ; Sukh Dial v. Mt. Bhopi A I R 1923 Lab. 186 ; Bhola v. Sheo Chand A I R 1933 Lab. 569 ; Radharani v. Binodamoyer A I R 1912 Cal. 92 ; Kuppan . Chettiar v. Ramaswami Chettiar A I R 1946 Mad. 472 ; Allah Bakhsh v. Taggla P L D 1953 Lab. 199; Sana Ullah v. Ghulam Qadir P L D 1958 Pesh. 213 and Fazal Dad v. Ahmad Ali P L D 1960 Lab. 106 ref.

(d) Civil Procedure Code (V of 1908)-

-- S. 11 read with O. XXIII, r. I-Res judicata-Principle of-Mere withdrawal of a suit-Held, does not operate as res judicata.-[Res judicata].

Ram Lal v. Upendra Datt A I R 1928 Lab. 710 and Nand Lai v. Mt.

Lakhmi A I R 1939 Lab. 414 ref.

(e) Limitation Act (IX of 1908)-

Art. 113-Suit for specific performance of contract for sale of immovable property- Second clause of Art. 113 not to be resorted to where case falls within first clause thereof-Contract not performed by date given in original agreement-Defendant after expiry of stipulated time, accepting another amount as advance and extending such time for two months-Plaintiff addressing letter to defendant, explaining delay in making payment and requesting tointimate his availability and to enable him (plaintiff) to keep amount ready and transfer property in his name, followed by remittances of amounts to defendant - Defendant, keeping silent and withholding from plaintiff factum of his transaction with another party-Held, conduct of plaintiff not amenable to inference of abandonment of his right and that mere delay in making payment would not non-suit him if period of limitation still available-Parties not shown to have intended that time would be of essence of contract-Limitation in case would start from date of expiry of rAtended time for performance.

Lakha Singh v. Ghulam Muhammad A I R 1930 Lab. 1020 ; Maksud Ali v. Eskandar Ali P L D 1964 S C 381 ; Lekh Singh v. Dwarka Nath A I R 1929 Lab. 249 ; Muhammad Wazir v. Jahangiri Mal A I R 1949 Lab. 72 ; Suryaprakasarayudu v. Lakshminarasimhacharyulu A I R 1914 Mad. 462 ; Osmond Beeby v. Khitish Chandra A I R 1915 Cal. 13 ; Kissen Gopal Sadaney v. Kally Prosonno Sett I I: R 33 Cal. 633 ; Mt. Batulan v. Nirmal Das A I R 1918 Pat. 630 ; Allah Ditta v. Jamna Das A I R 1929 Lab. 679 ; Muhammad Shafi v. Lahore Improvement Trust P L D 1959 Lab. 1 ; Pakistan v. Lodhi House P L 0 1968 Lab. 123 ; Eskandar Ali v. Alhamra Begum P L D 1969 Dacca 214 ;'Essabhoy v. Saboor Ahmad P L D 1973 S C 39 ; Abdul Hamid v. Abbas Bhai-Abdul Hussain P L D 1962 S C 1 ; Abdul Jalil v. Muhammadi Steamship Co. P L D 1961 S C 340 ; British India Steam Navigation Co. Ltd. v. Abdul Razak-Abdur Kader P L D 1967 S C 68 and United -Electric & Rej4geration Co. v. Veb Deutsche Seeree Derex, Rostock 1980 C L C 921 ref.

(f) Limitation--

-- Laches-Party cannot be non-suited for mere laches when period of limitation is yet to expire.-[Laches].

Suryaprokasarayudu v. Lakshmiharasimhacharyulu A I R 1914 Mad. 462 ; Osmand Beeby v. Khitish Chandra A I R 1915 Cal. 13 ; Kissen Gopal Sadaney v. Kally Prosonno Sett I L R 33 Cal. 633 ; Mt. Batulan v. Nirmal Dos A I R 1918 Pat. 630 and Allah Ditta v. Jamna Das A I R 1929 Lab. 679 rej:

(g) Contract Act (IX Df 1872)-

- , S. 55-Contract for sale of immovable property-Time, in such transaction, not ordinarily considered as being essence of contractIntention of parties, in such behalf, can be gathered from terms of contract and facts and circumstances of case-Mere mention of time in contract for its performance-Held, does not necessarily mean that time was of essence.

(h) Transfer of Property Act (IV of 1882).--

. J S. 53-A read with Specific Relief Act (I of 1877), S. 27(b)-Contract for sale of immovable property-Specific performance of-Protection under S. 53-A of transfer of Property Act-Does not affect rights of a transferee, for consideration, having no notice of contract or of performance thereof -Vendor without transferring his interest in property entering into an agreement with another to sell same-Can confer title on a third party by executing a sale-deed in his favourPerson in whose favour prior agreement exists can, however, specifically enforce his agreement under S. 27(b), Specific Relief Act and compel vendor to. execute a sale-deed in his favour-Held, section 53-A of Transfer of Property Act does not apply where a plaintiff claiming possession of property under a good and genuine contract of sale earlier in date to defendant's contract and latter taking his contract with knowledge of plaintiff's earlier title.

Kali Charan v. Janak Deo A I R 1932 All. 694 Sathiraju v. Venkalia A I R 1935 Mad. 333 and Gaffur v. Bhikaji 3 Bom. L R 596 ref.

(i) Specific Relief Act (I of 1877)-

5. 22-Specific performance of contract-Discretionary jurisdiction of Court cannot be claimed as a matter of right-Exercise of such jurisdictio4 npt to be arbitrary but sound and reasonable, guided by

judicial principles and capable of correction by a Court of appealExercise of jurisdiction to grant or refuse to grant relief-Held, depends upon circumstances of case and conduct of parties.

Ch. Khalil-ur-Rehman, Senior Advocate Supreme Court instructed by S. fajid Hussain, Advocate-on-Record for Appellants.

Zaki-ud-Din Pal, Senior Advocate Supreme Court instructed by Muhammad Astam, Advacate-on-Record for Respondents.

Dates of hearing : 15th, 16th, 19th, 20th, 21st and 22nd February, 1983.

JUDGMENT

M. S. H. QURAISHI, J.-This appeal is directed against the judgment and decree of' the Lahore High Court, dated 26-11-1978, dismissing R. F. A. No. 57 of 169 filed by Ghulam Nabi etc. appellants and Sh. Fazal Elahi, the predecessor-in-interest of respondents 2 to 5, and affirming the judgment and decree for specific performance passed against them by the trial Court on 29-7-1969.

2. The dispute relates to a house known as Fazal Manzil bearing No. S. E.-73-R-18, Dil Muhammad Road, Lahore, belonging to the aforesaid Sh. Fazal Elahi. He entered into an agreement to sell the property with Seth Muhammad Yaqub (plaintiff and present respondent No. 1) and one Muhammad Yousaf on 26-10-1961 for the consideration of Rs, 1,35,000 of which he received Rs. 10,000 at the time of the agreement and the balance was to be paid before the Sub-Registrar and the sale-deed was to be executed within three months' time, i.e., by 25-1-1962. According to the agreement, if the intending purchasers, in spite of fulfilment of all the conditions on the part of the owner, would not pay the balance amount within that period and get the deed registered, the deed would stand cancelled and the amount of advance forfeited in favour of the owner. The deed was, however, not executed as stipulated but on 13-7-1964, Sh. Fazal Elahi received another sum of Rs. 10,000 and by a letter dated 14-7-1964 agreed to extend the time, according to him, by two months. On 6-3-1966, the plaintiff addressed a letter to Sh. Fazal Elahi at Dacca where the latter used to reside, assuring him that he would arrange for the balance amount on his next visit to Lahore and asking him to inform at least ten days in advance about his visit to Lahore "enabling us to keep the amount ready and transfer the. property in my name". On 16-4-1966, be remitted by bank draft a sum of Rs. 60.000 in favour of Sh. Fazal Elabi and on 18-5-1966 deposited another sum of Rs. 50,000 in the United Bank Limited for payment to him. Sh. Fazal Elahi came to Lahore on 20-5-1966 and the next day, that is on 21-5-1966, purchased stamp paper worth Rs. 5,400 ostensibly for sale of the property in favour of the plaintiff Seth Muhammad Yaqub.

3. It, however, appears that Sh. Fazal Elahi had in the meantime, on 15-3-1966, entered into a sale agreement at Dacca in respect of the same property in favour of Ghulam Nabi etc. appellants, for a similar consideation of Rs. 1,35,000 and had received in that connection Rs. '10,000 the same day. On coming to know that Sh. Fazal Elahi had come to Lahore and was likely to execute a sale-deed in favour of the plaintiff, Ghulam Nabi etc. appellants brought a suit on 21-5-1966 for a permanent injunction for restraining Sh. Fazal Flahi from selling the property to Seth Muhammad Yaqub or anyone else. However, Sh. Fazal Elahi executed sale-deed in favour of the appellants on 24-5-1966 and in his written statement dated 15-6-1966 conceded the suit and admitted that he had already executed

a sale-deed in their favour which was pending registration. At the request of the appellants' counsel, the suit was dismissed on 16-6-1966.

4. On the other band, the plaintiff Seth Muhammad Yaqub bad also brought a suit on 28-5-1966 against Sh. Fazal Elabi and the appellants for a mandatory and perpetual injunction restraining Sh. Fazal Elahi from selling the property to anyone except himself. He withdrew the suit on 27-6-1966, but before that be bad on 15-6-1966 instituted the present suit for specific performance of the agreement dated 26-i.0-1961 and subsequent oral agreement to sell the property in his favour. His case was that Sb. Fazal Elahi had come from Dacca to Lahore for execution and registration of the sale-deed in his favour and had even got non-judicial stamp paper purchased for the purpose, but the appellants, in spite of knowledge of the transaction, bad prevailed upon him to sell the property to them instead of the plaintiff and that Sh. Fazal Elabi bad disappeared and had executed the sale-deed in favour of the appellants. He asserted that he was willing to pay the balance price Rs. 5,000 and that he was entitled to specific performance of the agreement. The suit was resisted both by Sh. Fazal Elabi and the appellants. Sh. Fazal Elabi admitted having entered into the agreement to sell dated 26-10-1961. He also admitted having received the second payment of Rs. 10,000 on 13-7-1964 but pleaded that he bad extended the time only by two months from that date and that the plaintiff not having paid the balance amount within that period, he was no longer bound under the agreement. He further pleaded that the payment of Rs. 20,000 earlier received had been forfeited in terms of the agreement. He denied having received the subsequent remittances of Rs. 60,000 and Rs. 50,000. In regard to the stamp paper having been purchased purportedly for sale of the property in favour of the plaintiff, his explanation was that the same was on account of misrepresentation by the latter. The appellants in their written statement pleaded that as the plaintiff had failed to fulfil the terms of his agreement, Sh. Fazal Elahi was free and entitled to deal with them and that their contract of sale with Sh. Fazal Elahi was "in good faith", "for value" and without any notice of previous agreement" between the plaintiff and Sh. Fazal Elabi. Objection, inter alia, was also taken to the maintainability of the suit in view of the provision of section 21 of the Specific Relief Act, and of order II, rule 2 and Order XXIII, rule 1 of the Code of Civil Procedure.

5. The contentions of the parties led to the framing of the following issues

"(1) Whether the suit is not maintainable in view of the preliminary objections Nos. 1, 2, 6, 7, 8, 9 and 10 in the written statement O. D..

(2) Whether Muhammad Yousaf is a necessary party If so, to what effect O. D.

(3) Whether the suit is time-barred O. D.

(4) Whether the plaint discloses any cause of action O. P.

(5) Whether the suit is properly valued for the purposes of' court-fee O. P.

(6) Whether the plaintiff is estopped from filing the suit O. D.

(7) Whether the plaint is not properly verified in accordance with law If so, to what effect O. D.

(8) Is the plaintiff entitled to the specific performance of the agreement to sell dated 26th October, 1961 and the alleged oral agreement

entered into between the plaintiff and defendant No. 1 subsequently If .so, on what terms O. P.

(9) Whether defendants 2 to 15 are bona fide purchasers for value without notice O. D.

(10) Are the defendants entitled to receive costs under section 35-A of the Code of Civil Procedure O. D."

Issues Nos. 5 and 7 were conceded by the appellants but the remaining issues were decided by the trial Court in favour of the plaintiff, resulting in the decreeing of suit in his favour.

6. In appeal, the High C9urt, on issue No. 1 relating to the bar under

Order 11, rule 2, C. P. C., held that it applies to a situation where one cause of action entitles a person to more than one relief and he at first sues . only for one relief and not for others and later on brings a suit for the other reliefs as well ; that the earlier suit was not competent as the relief by way of injunction could not be stated to have flowed out of the cause of action on the basis of which the present suit was filed and that, therefore, the relief claimed in the present suit was not barred under Order II, rule 2, C. P. C.

For the same reason that the first suit was not competent, the learned Judges also ruled out the objection on account of the bar imposed by Order XXIII. rule 1, C. P. C. The plea of res judicata was repelled for the reason that "it is not possible to interpret the prayer made in the earlier suit which was clearly for restraining Fazal Elabi from selling the property to any one other than the plaintiff., as one for specific performance of the contract" and that the earlier suit had not been heard and finally decided. Another objection to the maintainability of the suit in the absence of a prayer for possession, was rejected by reference to Momtazul Karim v. Abu Hussain and another (1970SCMR816). The learned Judges further held that time could not be regarded as being of the essence of the contract as Sh. Fazal Elahi "by his conduct showed his willingness right up to 21-5-1966, to sell the property to him (Seth Muhammad Yaqub)" and that as such the contract was still subsisting when the present suit was filed. On this view the plea of limitation, too, failed. The plea that the appellants were bona fide purchasers for value without notice, which formed the subject-matter of Issue No. 9, was rejected upon the finding that . the appellants "were already aware, from a date prior to 21-5-1966, that there was a subsisting contract" between Sh. Fazal Elahi and Seth Muhammad Yaqub. Consequently the High Court maintained the findings recorded by the trial Court and dismissed the appeal with costs.

7. Learned counsel for the appellants has argued against the maintain ability of the suit on the basis of the provision of Order II, rule 2, C. P. C. The rule enjoins that every suit shall include the whole of the claim which thelA plaintiff is entitled to make in respect of the cause of action and bars, except with the leave of the Court, any subsequent suit in respect of any portion of his i claim which the plaintiff omits or intentionally relinquishes in the first suit. Thel object of the rule is to avoid splitting of claims and to prevent multiplicity of suits and is based on the principle that the defendant should not be vexed twice for the same cause. The argument of learned counsel proceeds on the assumption that both the suits brought by Seth Muhammad Yaqub having been on the same cause of action and the relief byway of specific performance of the contract having not been included in the first suit, the second suit for the specific performance was hit by the provision of this rule. But it has not been shown that the rule applies even where the relief claimed in the

first suit had been incompetent or the suit itself had been barred by section 56(1) of the Specific Relief Act. A relief of injunction as claimed in the first suit could not be granted in a matter of breach of contract and specific performance being the proper and equally efficacious relief, the first suit was hit by the provision of section 56(1) of the Specific Relief Act. It had been held in Holland-Bombay Trading Co. v. Essardas Dhram,-hand (A I R 1925 Sind 175) that under section 56(1) no injunction should be granted when equally effcacious relief can certainly be obtained by any other usual mode of .proceeding except in case of breach of trust. The cases cited by learned counsel, namely, Muhammad Hafiz v. Mirza Muhammad Zakariya (AIR 1922 P C 23) Sher Ali v. Torap All (A I R 1942 Cal. 407) Amir Din Shahab Din v. Shiv Dev Singh (A I R 1947 Lab. 102), Muhammad Khalil Khan v. Mahbab All Mian (P L D 1948 P C 131 ), Mukhtar Ahmad v. Inamul Haque (P L D 1957 Kar. 622) Serajul Islam v. Abdur Rahman (P L D 1957 Dacca 99) Shafiq Ahmad v. Muhammud Anwar Beg (P L D 1968 Lab. 367) and Fazal Muhammad v. Muhammad Noor (P L D 1975 Pesh. 17), are of no help as they are not attracted to the facts of the present case. In Sardarl Vial v. Hirde Nath (,A I R 1925 Lab. 459(2)) in the matter of an agreement to sell certain plot of land, a suit for permanent injunction had been brought which bad been dismissed on the ground that such suit did not lie and plaintiff had then brought a suit for specific performance of the agreement. It was held that he was not debarred from doing so. In this connection, the Court had observed

"I do not think it necessary to decide whether or not the cause of action in the two suits is the same, for it is quite clear that a suit for a permanent injunction did not lie. The plaintiff was not entitled to come to the Courts - for such a relief in respect of the present cause of action. This is quite clear from the provision of section 56(i) of the Specific Relief Act, which provides that 'an injunction cannot be granted when equally efficacious relief can certainly be obtained by any other usual mode of proceeding, except in case of breach of trust'. The usual mode of proceeding on breach of a contract for the sale of lands is to bring a suit for specific performance of the contract. The plaintiff, therefore, was not entitled to two reliefs in respect of the breach of a contract. one by way of injunction and the other by specific performance. He was entitled only to the one relief, namely, a suit for specific performance, in which he could have added a claim for compensation: Order 11, rule 2, therefore, is no bar to the present suit."

In Nasira Sultana v. Habib Bank Ltd. etc. (P L D 1975 Kar. 268), where the plaintiff, a purchaser of the lessee's rights of allotment had filed a suit for declaration and injunctton to restrain further sale by the lessee and had subsequently filed a suit for specific performance against the lessee, it had been held that the subsequent suit was not barred under Order 11, rule 2, C. P. C.

8. The next objection to the maintainability of the suit based on the provision of Order XXIII, rule 1, C. P. C. is that the earlier suit having been B withdrawn without permission of the Court to institute a fresh one, the subsequent suit being for the same subject-ratter' is barred. Under this rule, where the Court is satified that (1) the suit must fail by reason of some formal defect or (2) there are other sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of the suit or part of the claim, it may grant the plaintiff permission to withdraw such suit but where the plaintiff withdraws the suit without such permission, then he is precluded from instituting a fresh suit in respect of such subject-matter or such part of the claim. A fresh suit envisaged in the rule is one filed subsequent to the withdrawal of the earlier suit. On the question whether the rule barred a suit which at the time of the withdrawal of the earlier suit had already been instituted and pending, we find that in Ram Mal v. Upendra Datt (A I R 1928 Lab. 710) relying on P. Surja Reddi v. Subba Reddi ((1916) 39 Mad. 937), it was held that a second suit will not be barred in the case of withdrawal of a previous suit unless conditions of Order XXIII rule 1, C. P. C. are fully satisfied and that if the subsequent suit was already pending at the time of the withdrawal of the previous suit, the provision could not be attracted. A Division Bench of the Lahore Court in Mungi Lal v. Radha Mohan (A I R 1930 Lab. 599) held that "Order XXIII, rule 1 refers to permission to withdraw a suit with liberty to institute a fresh suit after the first one has been withdrawn. It appears to me that the section cannot be read so as to bar a suit which has already been instituted before the other suit had been abandoned or dismissed."

This judgment had been followed in Abdullah v. Bashiran Bibi (P L D 1981 Lab. 336) and it bad been held that a fresh suit which bad been pending at the time of with drawal of a previous suit was not barred. The view taken in Mungi Lal's case had also been followed by this Court in Commissioner of Incometax v. Ashfaq Ahmad (.P L D 1973 S C 406), wherein it had been held that where one writ petition had been filed during the pendency of a previous writ petition, the. withdrawal of the previous writ petition before reaching the stage of hearing on merit would not affect the maintainability of the second petition which could legally proceed in spite of the withdrawal of the previous petition. The Sind High Court has also been of the same view which is reflected in its judgments reported as Ashfaq Ahmad Khan v. Custodian of Evacuee Property (P L D 1973 S C 406) and Irshad Ali v. Islamic Republic of ' Pakistan (1981 C L C lit). We are, therefore, not inclined to agree that the suit in question was affected by Order II, rule 2 or Order XXIII, rule 1, C. P. C.

9. Another objection to the maintainability of the suit proceeds fro the contention that the matter had become res judicata in the appellants' suit.IC This suit, as already stated, had been filed against Sh. Fazal Elahi and respondent Seth Muhammad Yaqub for a permanent injunction. Sh. Fazal Elahi having conceded the suit in his written statement filed on 15-6-1966 the appellant's counsel prayed to the Court on 16-6-1966 that the suit be dismissed ",.r>>h vl-u"without any further proceeding, whereupon the suit was dismissed the same day in the following words

It is submitted that the order in terms it was made was, though not a decree, an executable order and that Seth Muhammad Yaqub who had notice of the suit but had stood-by and let the order be passed was bound by it and could not collaterally bypass it. His failure to object to the withdrawal of

the suit as having borne fruit operated as res judicata in _ regard to his interest in the property qua the appellants as also his co-defendant Sb. Fazal Elabi and as such his present suit was barred by the ptinciple of res judicata particularly of constructive res judicata. Refeience was made to Phillips v. Mitchell (1), ,in which it had been held that a ground of attack in a subsequent suit, if could have been alleged as ground of defence in a former suit but was omitted, was hit by the principle of rzs judicata. It was also submitted in this connection that at least Sh. Fazal Elalii who had conceded the suit was bound by the order and as such any decree for specific performance passed against him for transferring the property would be ineffective. It was further submitted that for the matter to be res judicata it was not necessary that there must have been passed a judgment or decree but that even an order passed by consent, express or implied, binds the parties. Reliance for this was placed on Muhammad Salim v. Mohiuddin (2) and Bakhtawar v. Amin (3). But the same as we will presently see have no relevance.

10. It is to be noted that in the appellants' suit, Seth Muhammad Yaqub had filed a written statement contesting the suit and the validity of any deal in regard to the property between Sh. Fazal Elahi and the appellants. Obviously his interest was in conflict with that of his co-defendant Sh. Fazal Elahi. The applicability of the principle of res judicata as bteween co-defendants in a suit has been repeatedly and consistently held by the Privy Council and the Courts in the sub-continent to be dependent upon the fulfilment of the following conditions

(1) The co-defendants were necessary and proper parties in the previous suit;

(2) there was conflict of interest between them;

(3) there was a necessity of decision on that conflict in order to give the plaintiff the appropriate relief; and

(4) there was a final decision on that conflict.

The principles, on the point bad been laid down as early as 24-7-1886 by West, J., in Ramchandra Narayan v. Marayan Mahadev and another (4) in the following words

"Where an adjudication between the defendants is necessary to give the appropriate relief to the plaintiff, there must be. such an adjudicationCottingham v. Earl of Shrewsbury, 3 Hare.'s Rep. 627, and in such a case the adjudication will be res judicata between the defendants as well as between the plaintiff and defendants. But for this effect to arise, there must be a conflict of interest amongst the defendants and a judgment defining the real rights and obligations of the defendants inter se. . "

The above view has prevailed. throughout and a number of cases decided

subsequently not only followed the principles set forth by West, J., but

also elaborated on it, See Mt. Munni BIN and others v. Tirloki Nath and

others (5), Kishun Prasad v. Durga Prasad (6), Maung Sein Done v. Ma Pan

Nyun (7), Kedar Nath v. Munahi Ram (8), Mohammad Sandat All v. Wiquar

(1) A I R 1932 Cal. 889 (2) 1968 S C M R 557

(3) 1980 S C M R 89 (4)1 L R 11 Bom. 216

(5)AIR1931PC114 (6)AIR1931PC231

(7) A I R 1932 P C 101 (8) A I R 1935 P C 139

Ali (1), Chandu Lal Agarwalla v. Khalil-ur-Rahman (2), Ramaswami lyer v. Thumboyasami (3), Sukh Dial v. Mt. Bhop' (4), Bhola v. Sheo Chand (5), Radharani v. Binodamoyer (6), Kuppan Chettiar v. Ramaswami Chettlar (7), Allah Bukhsh v. Taggia (8), Sana Ullah v. Ghulam Qadir (9), and Fazal Dad v. Ahmad All (10). The written statements filed by Seth Muhammad Yaqub and Sh. Fazal Elahi in the appellant's suit made it clear that there was conflict of interest between them and that in order to give relief to the appellants, a decision in regard to the same was necessary but this was not done and no adjudication took place. The order of the Civil Court dismissing the appellant's suit was neither a decree nor a decision because no adjudication had taken place. Much stress was laid on the use of the words "c,..; " in the order, but those words had appeared in the order merely because such statement had been made by the appellant's counsel and not that the Court itself had cone to any such finding. In fact the order was complete even without a mention of those words and all that the civil Court meant was to dismiss the appellant's suit as withdrawn. Obviously the order does not meet the requirements laid down as aforesaid for the applicability of the principle of res judicata. It is established law] that a mere withdrawal of a suit does not operate as res judicata for the /o reason, if for nothing else, that there was no adjudication on merit )Js See Ram Mal v. Upendra Datt (11) and Nand Lal v. Mt. Lakhmi (12). The order, therefore, passed in the appellant's suit on 16-6-1966 did not operate as res judicata and the suit of the Seth Muhammad Yaqub was as such not barred under section 11, C. P. C.

11. The limitation of the suit is governed by Article 113 of the Limitation Act which prescribes a period of three years from (() the date fixed forlE the performance or (2) if no such date is fixed when the plaintiff has notice that performance is refused. Where the case falls within the first clause,i the second clause is not to be 'resorted to. See Lakha Singh v. Ghulam Muhammad (13). The case of the appellants is that as the contract was to be completed by 25-1-1962, the suit filed on 15-6-1966 was clearly time-barred. The case of the plaintiff was that Sh. Fazal Elahi's subsequent agreement dated.14-7-1964 amounted to novation of the contract inasmuch as Muhammad Yusuf had been dropped and the new agreement was only between Seth Muhammad Yaqub and Sh. Fazal Elahi and that time had been extended by two years. It was, therefore, contended that the suit was within time. Sh. Fazal Elahi's letter dated 14-7-1964, a copy of which was produced as Exh. D. 12, was neither relied upon by the plaintiff nor admitted by Sh. Fazal Elahi but the latter did admit that he had by a letter written in this regard, extended time by two months beyond that

date and had also received Rs. 10,000 on that date for "-0

It was argued on behalf. of the appellants that this was only an extension of time and in no manner amounted to a new 'contract in substitution of the previous one. It was farther argued that the plaintiff not having

(1) A I R 1943 P C 115 (2) P L D 1949 P C 239

(3) A I R 1922 Mad. 452 (4) A I R 1923 Lab. 186

(5) A I R 1933 Lab. 569 (6) A I R 1942 Cal. 92

(7) A I R 1946 Mad. 472 (8) P L D 1953 Lab. 199

(9) P L D 1958 Pesh. 213 (10) P L D 1960 Lab. 106

(11) A I R 1928 Lab. 710 (12) A I R 1939 Lah, 414

(13) A I R 1930 Lab. 1920

complied with the term of the extension of the time, the parties reverted to the previous agreement with the result that terminus a quo remained 25-1-1961.

12. The letter Exh. D. 12 even if true did not amount to a novation of the contract. It was basically for extension of time and not for changing any of the other terms of the original contract. There is also no propel. material to show that the parties had consciously agreed to drop Muhammad Yousaf as a co-purchaser. In Maksud All v. Eskandar Ali (1) where there had been an agreement to sell containing the averment that property agreed to be sold included land and basatbari thereon, and a second agreement had been executed for the purpose of granting =further time for completion of the sale, but mentioning property to be sold as "my own possessed land within District Dacca" and further declaring that other terms and conditions of'- the original document remained unaltered, it was held that there was no novation. The effect of extension of time in the present case was that the contract which had not been performed by 25-I-1962, as per the original agreement, could now be performed within two months from 14-7-1964. There is no reason to accept the plaintiff's claim that the time had been extended by two years as he had himself not relied upon Exh. D. 12.

13. The question now arises as to what is the starting point for the limitation, i. e., 25-1-1962 or 14-9-1964. Learned counsel for the appellants, while maintaining that the extension of time allowed by Sh. Fazal Elahi not having. been availed of by the plaintiff, the starting point remained 25-1-162, also contended that a party whose conduct did not justify the grant of the discretionary relief of specific performance, particularly when change of conditions had been brought about on that account, could be non-suited even though the period of limitation had not yet expired. Reliance was placed on Lekh Singh v. Dwarka Nath (2) where it had, been held that even if mere delay does not disentitle a plaintiff to claim specific performance of a contract, nevertheless delay is one of the facrors to be considered in giving the discretionary relief and inordinate and unexplained delay coupled with the change of conditions is a sufficient ground for refusing specific performance. The view had been followed though not in an unqualified manner in Muhammad Wazir v. Jahangiri Mal (3) and it bad been held that where a statute of limitation imposes a bar, mere inaction by a claimant within the time allowed by the statute cannot be treated as evidence that he has waived or abandoned his right, but on the other hand where a claimant knows that a party against whom he has a claim is altering his position in the belief that the claimant has abandoned or will not enforce his claim and even then, the claimant does nothing, his inaction may bar his claim for specific performance even within the Period of limitation. . Ordinarily, the rule is that a party cannot be non-suited fo

mere laches when the period of limitation is- yet to expire. In Suryapral. kasarayudu v. Lakshminarasimhacharyulu (4) it was held that as mere laches or delay. short of the period of limitation is not always evidence of waiver or abandonment of claim, even where it is up to the hilt of the limitation period, that is .no ground for refusing specific performance. See also 0smona Beeby v. Khitish Chandra (5). In the matter of relief ;ry way of specific performance, the latter Court had in. Kissen Gopal Sadaney

(1) P L. D 1964 S C 381 (2) A I R 1929 Lah. 249

(3) A I R, 1949 Lah. 72 (4) A I R 1914 Mad. 462

(5) A I R 1915 Cal. 13

v. Kally Prosonno Sett (1) held that the delay which is short of the period prescribed by Limitation Act and which is not of such a character as to give rise to an inference of abandonment or right is no bar to a suit for specific performance unless it is shown to have prejudiced the defendant. This view had been followed in Mt. Batulan v. Nirmal Das (2) which was again a case of specific performance and it bad been held that the failure of the plaintiff' to obtain compulsory registration of the deed in his favour is not of itself sufficient to prove abandonment. The Lahore High Court had in Allah Ditta v. Jamna Das (3) held that in no case does mere lapse of time deprive the plaintiff of his right to specific performance, unless it be held that there has been abandonment, acquiescence or waiver, or at the least, an alteration in the position of the defendant in that the other party has been put in a situation in which it would not be reasonable to place him, if the remedy were afterwards to be asserted.

14. The circumstances of the present case do not show that Seth Muhammad Yaqub plaintiff was guilty of conduct amounting .to abandonment of his rights. He had addressed a letter (Exh. D. 8) to Sh. Fazal Elahi at Dacca on 6-3-1966 (when the appellants had not yet come into the picture) explaining the delay in making the payment and requesting him to "intimate at least ten days in advance about your visit to Lahore and enable us to keep the amount ready and transfer the property in my name". He had followed this up by two remittances, one of Rs. 60,000 on 16-4-1966 and the other of Rs. 50,000 on 18-5-1966. All this while, Sh. Fazal Elahi had only kept silent and withheld from him the factum of his transaction with the appellants made on 15-3-1966. Even on arrival at Lahore, he had while purchasing the required judicial papers described the purpose to be the execution of sale deed in favour of Seth Muhamrr.ad Yaqub. The explanation offered by him that he had done so under misre= presentation hardly sounds reasonable as be could have verified the real facts from the appellants. Even otherwise, his assertion is belied by para. 13 of the appellant's plaint in which they had stated that Sh. Fazal Elahi who had come from Dacca on 20-5-1966, was on receipt of Rs. 60,000 from Seth Muhammad Yaqub staying in Lahore in connection with the sale of the property to him (Seth Muhammad Yaqub). In Lahore, Sh. Fazal Elahi had stayed at the Hotel Ambassador but had thereafter quietly shifted to Hotel Imperial for a day and thereafter left for Dacca. Seth Muhammad Yaqub's .evidence in this regard is that Sh. Fazal Elahi had told him in the hotel that he had entered into a transaction about the property with the appellants in whose favour there was a stay order and that after getting the same cancelled he would get the deed registered but that when he (Seth Muhammad Yaqub) went to the hotel two days after, Sh. Fazal Elabi had disappeared from the hotel. The conduct of Seth Muhammad Yaqub is not, therefore, amenable to an infer8nce of abandonment of his right and as such mere delay in making the payment would not non-suit him if the period of limitation was still available.

15. Though time is not ordinarily considered as being of the essence of the contract involving transaction of immovable property but the tt

intention of the patties can be gathered from the terms of the contract and the facts and circumstance of the case and mere mention of time in the contract for its performance does not necessarily mean that time was of th

(1) I L R 33 Cal. 633 (2) A I R 1918 Patna 630

(3) A I R 1929 Lah: 679

essence. In Muhammad Shafi v. Lahore Improvement Trust (1) where the Improvement Trust had allowed time beyond the period of 18 months originally stipulated for construction of a building, it was held that by allowing further time the Trust had waived its right of forefeiture and in law it was not entitled to take action against the petitioner on the basis of its earlier decision. See also Pakistan v. Lodhi House (2) Eskandar All v. Alhamra Begum (3) and Essabhoy v. Saboor Ahmad (4). The contention, therefore, that the contract stood frustrated for non-performance by the plaintiff of his part of the contract within the period stipulated therein is not tenable. No doubt, the contract did mention. that if the balance amount was not paid and the sale deed executed by 25-1-1962 the agreement would stand revoked and the money advanced forfeited, but Sh. Fazal Elahi did not enforce this provision and on the. other hand received another sum of Rs. 10,000 on 13-7-1964 and extended the time by at least further two months. He admits to have received Seth Muhammad Yaqub's letter dated 6-3-1966 as already mentioned above but he did not reply to say that the agreement had stood revoked. It would, therefore, be not correct to bold that the parties had intended when the original contract was made that time was of the essence of the contract. It had been ruled by this Court in Abdul Hamid v. Abbas bhai-Abdul Hussain (5) that "An intention to make time of the essence of the contract must be expressed in unmistakable language; it may be inferred from what passed between the parties before, but not after, the contract is made."

16. The contention that terminus a quo for limitation was 25-1-1962, the date fixed for performance of the contract, has no force in view of the time for such performance having been extended till 14-9-1964. The effect of extension was that the new date became the starting point. In Abdul Jalil v. Muhammadi Steamship Co. (6) which was a case under the Carriage of Goods by Sea Act read with section 63 of the Contract Act, it was held that extension of time after the expiry of the original period would give a fresh cause of action and a fresh terminus a quo for limitation. Same view had been expressed in another case also under the Carriage of Goods by Sea Act, i. e., British India Steam Navigation Co. Ltd. v. Abdul Razak-Abdur Kader (7). Again, in the matter of a contract of affreightment, the Sind High Court bad in United Electric & Refrigeration Co. v. Veb Deutsche Seeree Derex, Rostock (8) held that extension of time for delivery of goods would prove a fresh terminus a quo for. limitation. The startin H point in the present case on the facts admitted by Sh. Fazal Elahi wouldl

thus be 14-9-1964 and as such the suit was not barred.

17. The plea of protection under section 53-A of the Transfer of, Property Act was based upon the assertion that the appellants were bonafide'

pknowledge of their transaction and the part performance of the contrac't

urcbasers for valuable consideration and that as the plaintiff had ful

by them, they could successfully defend the suit. The protection under

section 53-A is, however, subject to the proviso that nothing in the section

shall affect the rights of a transferee for consideration who has no notice

of the contract, or of the performance thereof. A vendor who has not

transferred his interest in the property though he entered into an agreement

(1) P L D 1959 Lab. 1 (2) P L D 1968 Lab. 923

(3) P L 'D 1969 Dacca 214 l4) P L D 1973 S C 39

(5) P L D 1962 S C 1 t6) P L D 1961 S C 340

(7) P L D 1967 S C 68 (5) 1980 C L C 921

with another to sell the same can certainly confer title on a third party by executing a sale-deed in his favour. In such situation there is a transfer of ownership between the vendor and the subsequent purchaser and the title to the property vests in the latter but the person in whose favour . there was a prior agreement can specifically enforce his agreement under section 27(b) of the Specific Relief Act and compel him to execute a saledeed in his favour. It was held in Kali Charan v. Janak Deo (1) that

"When a person with knowledge of the previous contract of sale, purchases the property, the purchase is voidable at the option of the prior promisee and the contract with him can be enforced specifically against the subsequent purchaser. In such a suit the Court should declare the second purchase as null and void and cancel it, and order the original promisor to carry out his contract by executing a sale-deed in favour of the prior promisee."

Similarly, the view taken in Sathiraju v. Venkanna (2) was that

"By reason of S. 91 of the Act, the natural result of a person purchasing a property with notice of a prior contract in another person's favour is, that the purchaser holds the property for the benefit of the latter to the extent necessary to give effect to the contract."

In Gaffur v. Bhikaji (3) it was held that the plaintiff was entitled to possession. The second defendant having bought with notice of the plaintiff's contract held the property for the benefit of the plaintiff to the extent necessary to give effect to that contract. Where a plaintiff claimed possession of property under a good and genuine contract of sale earlier in date to the defendant's contract and the latter had taken his contract with the knowledge of the plaintiff's earlier title, section 53-A has no application.

18. Section 27(b) of the Specific Relief Act no doubt bars a specific performance of a contract against the transferee for value who has paid his money in gcod faith and without notice of the original contract. The High Court has held that the appellants "were already aware from a date prior to 21-5-1966 that there was a subsisting contract between appellant No. 1 (Sh. Fazal Elabi) and the respondent (Seth Muhammad Yaqub)." In this connection the High Court referred to the statement of Abdul Latif (D. W. 7) who stated that the appellants had come to know on 20-5-1956 of the contract made in favour of Seth Muhammad Yaqub when they visited Sh. Fazal Elahi in the hotel and found him present there. The High Court also noted that a far greater portion (rupees one lac) of the consideration had been paid by the appellants after this knowledge on 23-5-1965. In these circumstances, the protection under section 27(b) of the Specific Relief Act is also not available to the appellants.

19. And lastly it was urged that the jurisdiction of the Court to decree specific performance being discretionary under section 22 of the Specific Relief Act, the Court ought not to have, considering the plaintiff's conduct, granted such relief: The jurisdiction under section 22 is discretionary only, in the sense that it cannot be claimed as a matter of right. As enjoined by the section itself, the exercise of the discretion is not to be arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal. The exercise of the discretion to grant or refuse to grant relief will, therefore, depend upon the circumstances of the case and

(1) A I R 1932 All. 694 (2) A I R 1935 Mad. 333

(3) 3 Botn. L R 596

the conduct of the parties. The Courts below have not found the circumstances of the case or the conduct of the plaintiff to justify a denial of the relief to him, and we see no reason to hold otherwise. ,

20. In view of the discussion above, the appeal must fail and is accordingly dismissed. Since a number of legal points had been involved, we make no order as to costs.

s. Q. Appeal dismissed.

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