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Suit No. 1001 of 1954, decided on 13th May 1959.
Vest‑Vesting of plot of land in person connotes such person's possession of land and his exercising control over it.
Ss. S & 7‑Proposal‑Re vocable before completion of communication of its acceptance--Acceptance of proposal‑Absolute and unqualified‑Revocation of proposal and communication of acceptance‑Controllable by terms of agreement.
Shah Jamil Alam for Plaintiffs.
Muzaffar Hassan for Defendants.
Date of hearing: 6th May 1959.
The Trustees of the Port of Karachi have filed this suit against Messrs Muhammad Bakhsh & Sons for the recovery of Rs. 54,428‑6‑0 as damages suffered by the plaintiffs and interest on the amount of damages claimed by them.
The facts are that the plaintiffs made a public auction of leasehold rights of certain plots of land on the 2nd of December 1951. The plots were situated near the Beach Luxury Hotel and included plot No. 26. The defendants gave the highest bid for plot No. 26. Their bid was to purchase the rights at the rate of Rs. 61 per sq. yard. The area of the plot which they wanted to purchase was 1,450 sq. yards. The auction was made subject to the conditions which are contained in Exh. 10. According to condition No. 2 the successful bidder had to deposit 25 per cent of the purchase price immediately after the auction. The plaintiffs therefore gave a cheque dated the 2nd of December 1951, drawn on the Mercantile Co‑operative Bank Limited, Karachi, for Rs. 22,112‑8‑0, which was one‑fourth of the price of the lease rights calculated at the rate of Rs. 61 per square yard. The cheque was presented to the drawee Bank and was dishonoured on the 4th of December 1951. The plaintiffs there upon demanded the amount of the cheque from the defendants and in default of payment, threatened to re‑auction the plot at the risk and cost of the defendants. The defendants did not pay the money and have raised various objections from time to time. Ultimately, the plaintiffs re‑auctioned the plot on the 30th of March 1952, and were able to sell the leasehold rights of the plot at the rate of Rs. 26 per square yard only. The difference between the contract price and the price at which the plot was re‑auctioned comes to Rs. 50,750. The plaintiffs have claimed this amount and interest at the rate of 6% per annum on the amount of the dishonoured cheque and on the amount of the difference in prices. They have thus brought this suit for the recovery of Rs. 54,428‑6‑0, and have claimed costs of the suit and interest from the date of the suit until recovery of their claim at the rate of 6% per annum.
The defendants had raised a number of objections on the basis of which 14 issues were framed on the 22nd of August 1955. The case came up for hearing before me today and learned counsel for the parties looked into the documents which were produced by the parties and came to the conclusion that there were only two substantial issues in the case. They have, therefore, by consent dropped all the issues that were framed in the suit and have agreed that the suit should be disposed of on the basis of the following two issues only:‑
(1) Whether the plot in dispute vested in the plaintiffs.
(2) Whether there was a completed and binding contract between the parties. If not, what is the effect
Issue No. 1.‑The area in which the plots auctioned by the plaintiffs were situated is a reclaimed area' which means that at one time it was under water. The plaintiffs claim that it was reclaimed from the sea, and that it is vested in them in terms of section 27 of the K. P. T. Act, 1886. They have parcelled it out into plots for the purpose of selling leasehold rights in them to intending buyers and have sold by auction a large number of those plots. The defendants' contention is that the ownership of the area never vested in the plaintiffs and that as such they had no right to auction them. The plaintiffs have produced only one witness to prove with the help of a few documents that the area did vest in them, and the defendants have not produced any evidence to the contrary. The plaintiffs' witness, Abdul Karim, P. W. 1. Superintendent of Survey of Pakistan, has stated that the property which was transferred to the plaintiffs by section 27 of the K. P. T. Act included this area. He has referred to paragraph No. III of Schedule "A" of the Act and stated that the words: "other property whatsoever not here in before particularly described; heretofore in the charge of the Port Officer of Karachi, the Port Engineer of Karachi, or of the Karachi Harbour Board" included the land in dispute. He has produced a copy of the Karachi Port Trust Act, 1886, Exh. 6, and referred to page 62, Exh. 6‑A, at which the above mentioned description of the property is given. He has also stated that at the time of the constitution of the Trust under the Karachi Port Trust Act the boundaries of this property were defined by fixing pillars and that they are shown on the Plan, Exh. 7. On sheet Exh. 7‑A of the Plan, Exh. 7, the land in dispute is shown according to the witness. This land was parcelled out into plots and was put to auction with the previous sanction of Government under section 18 of the K. P. T. Act. The sanction was granted by Government by their letter Exh. 9. It was granted with reference to a Plan No. 3172 dated the 25th of March 1951. The plan is Exh. 8. Plot No. 26 is shown on that plan, but according to it the area of the plot is 1,834 sq. yards though the area of the plot in dispute is 1450 sq. yards only. Counsel for the defendants has contended that the sanction of the Government and Plan Exh. 8 do not relate to the plot in dispute because the area of the plot shown on the plan Exh. 8 and the area of the plot in dispute are different.
The defendants attended the auction and gave their bid for purchasing the plot in dispute from the plaintiffs. Their cheque has been dishonoured. Their objection that the plot never vested in the plaintiffs places the burden of proof on them to show that it did not vest in the plaintiffs. Moreover, the defen dants have produced no evidence to rebut the evidence produced by the plaintiffs. I have no reason to disbelieve the witness, particularly because the plaintiffs had the possession and the, control of the plot and nobody has come forward to lay a claim of the land. The witness has explained that the area of plot No. 26 is not correctly given in Exh. 8 because it was a tentature plan. The area was reclaimed according to P. W. 1 during the period extending from 1929 to 1934 and the plaintiffs have exercised full control on it since then. I am, therefore, satisfied that the plot in dispute vested in the plaintiffs, and decide the issue against the defendants.
Issue No. 2.‑Counsel for the defendants has relied on con ditions No. (1) and No. (6) of the Conditions of Auction which are contained in Exh. 10. Condition No. (1) is as follows:‑
"The sale by public auction of the leasehold right of the plot shown in the attached plan is subject to the approval of the K. P. T. Board of Trustees and the sanction of Government."
Condition No. 6 runs as under:‑
"If the sale is not approved by the K. P. T. Board or is not sanctioned by the Government, all gums paid by the purchaser shall be refunded to him without any interest."
His contention is that the offer made by the defendants at the auction was accepted by the auctioneer on behalf of the plaintiffs as the highest bid, but it was not binding until it was approved by the plaintiffs and sanctioned by Government. It was discretionary with the plaintiffs and the Government to approve and sanction the bid or to reject it in the exercise of their own discretion. The sales made at the auction were placed before the Board of Trustees for approval in pursuance of condition No. (1) of the Conditions of Sale. The minutes of the Board, a copy of which has been placed on the record and exhibited as Exh. 21, show that the sale of lease rights in plot No. 26, purporting to have been made on the 2nd of December 1951, was not sanctioned by the Board of Trustees. There was thus no completed sale. Mr: Jamil Alam, counsel for the plaintiffs, has contended in reply that the sale could not be approved by the Board of Trustees and sanctioned by; Government because the defendants had failed to perform the preliminary conditions of sale in as much as they did‑not paid one‑fourth of the sale price. He relied on condition No. 3 of the Conditions of Sale, which runs as follows:‑
"Failing immediate payment of the deposit of 25%, the leasehold right of the land will be put up to auction again at once, at the risk and cost of the original bidder."
He argued that irrespective of the approval or sanction contemplated by condition No. (1) this was a condition which was binding on the parties and therefore the plaintiffs could re‑auction the plot at the risk and cost of the defendants merely for their failure to pay 25 per cent of the price. This argument must be ultimately subject to the provisions of sections 5 and 7 of the Contract Act. Under section 5, a proposal may be revoked at any time before the communication of its acceptance is complete B as against the proposer, and under section 7, the acceptance of a proposal must be absolute and unqualified. The manner of revoking a proposal and of communicating acceptance might be controlable by the terms of agreement, yet it was necessary that the offer should have been accepted at least ultimately in an absolute and unqualified manner. But it was never accepted.
Moreover, the plot was not re‑auctioned "at once" in terms of condition No. 3. The plaintiffs demanded payment of 25 percent of the price after the cheque was dishonoured as admitted by them in paragraph 4 of the plaint. The demand was made on the 18th of December 1951, and the plot was re‑auctioned on the 30th March 1952. The grounds for claiming damages are stated in para. 11 of the plaint. They are as follows:‑
" That as the defendants had repudiated their clear liability and given false excuses for issuing a bogus cheque, the plaintiffs had no option but to re‑auction the plot at the risk and cost of the defendants as pointed out by the Chief Accountant in his letter dated the 19th March 1952. (Correct date is 18th March 1952, See Exh. 12)."
It is, therefore, clear that the damages are being claimed for breach of contract, and not to enforce condition No. 3 of the Conditions of Sale.
This brings me to the question as to whether condition No. 3 can be enforced independently of the completion of the contract. I think that in the absence of a completed contract the enforce ment of one of the conditions of the contract as an independent contract will be illogical and inherently inconsistent with the conception of a binding contract. The present stand of the plaintiffs amounts to a claim that though the plaintiffs were not prepared to sell the land to the defendants on account of their failure to perform the preliminaries yet they are entitled to recover the difference between the contract and resale prices for failure of the defendants to perform the preliminaries. The stand of the plaintiffs might have been logical and legally enforceable if the sale made to the defendants was at some time approved and sanctioned in terms of condition No. (1) so that there would have been a completed and binding contract. In the present situation the defendants are supposed by the plaintiffs to be liable to pay damages although there is no consideration for it. I decide issue No. 2 against the plaintiffs.
The conclusion of the above discussion is that the suit is dismissed. I would not allow costs to the defendants because they have taken a number of frivolous pleas.
K. M. A. Suit dismissed.
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