Find a Lawyer

Second Civil Appeal No.78 of 1979, decided on 9th April, 1986.

‑‑‑S.100‑‑Contract Act (IX of 1872), S.25(3)‑‑Agreement‑‑Question whether a separate and independent agreement came into existence to pay time‑barred debt within S.25(3), Contract Act being a question of fact required not only to be pleaded specifically but to be established by leading evidence‑‑Plea neither raised specifically in plaint nor in issues‑‑Case remanded back to Trial Court with option to appellant to amend suit suitably to bring his case within meaning of S.25(3), Contract Act.

Nizam Ahmad for Appellant.

Syed Iqbal Ahmad for Respondent.

Nemo for Respondents Nos.2 to 4 called absent.

Date of hearing: 9th April, 1986.

This second appeal under section 100, C . P. C . is filed by the plaintiff appellant against the judgment of the first appellate Court in Ist Civil Appeal No.314 of 1977 whereby the judgment and decree passed by the trial Court in favour of the appellant was reversed and the suit instituted by the appellant against the respondent was dismissed with costs. The following facts may be stated here which are not in dispute.

The appellant instituted Suit No.172 of 1965 for recovery of a sum of Rs.9,655.45 under Order XXXVII, of C.P.C. against the respondent No.1 alone on the allegation that the aforesaid amount is due to the appellant from respondent No.1 against a promissory note which was executed by the respondent No.1 on 1‑7‑1959. It appears that subsequently the respondents Nos.2 to 4 were also added in the suit was guarantors and thereafter a request was made to the Court to try the suit as ordinary money suit. The suit was consequently registered as suit No‑1404 of 1968 and was tried by the 14th Civil Judge, 2nd Class, Karachi. Only respondent No.1 appeared and contested the suit while respondents Nos. 2 to 4 were ex parte. The respondent No.1 in his written statement besides taking other pleas mainly contended that the suit instituted by the appellant was time‑barred as it was instituted after expiry of 3 years from the date of execution of the promissory note, dated 1‑7‑1959. Several issues were framed by the trial Court on the basis of the pleading of the parties and after recording evidence the trial Court reached the conclusion that the suit instituted by the appellant was within time as the letter, dated 20th March, 1963 (Exh.P‑7) written by respondent No.1 to the appellant and reply of the appellant's Advocate, dated 16‑1‑1964 (Exh.P‑9) amounted to a fresh agreement within the meaning of section 25(3) of the Contract Act to pay time‑barred debt and, therefore, the suit was within the time having been instituted on 20th August, 1965. On appeal the learned first appellate Court, however, reversed the judgment and decree of the trial Court solely on the ground that the suit of the plaintiff was time‑barred as the alleged payment of Rs.500 made by the respondent No.1 in the account was not within the period of limitation and, therefore, it could not have the effect of extending the limitation period within the meaning of sections.19 and 20 of the Limitation Act. The first appellate Court also disagreed with the trial Court on the conclusion that the two letters namely Exhs.P‑7 and P‑9 amounted to a fresh agreement within the meaning of section 25(3) of the Contract Act as according to the learned first appellate Court these letters did not fulfil the requirement of said sections Mr. Nizam Ahmed, learned counsel for, the appellant has challenged the judgment of the first appellate Court in this second appeal and has contended that the two letters, dated 20th March, 1963 and 16‑1‑1964 read together will amount to a fresh agreement within the meaning of section 25(3) of the Contract Act and, therefore, even, if it is held that the suit is instituted was time‑barred on the basis of the promissory note, dated 1‑7‑1959 the suit was well within time from 20th March, 1963 on which date a fresh promise was made in writing by the respondent No.1 to pay time‑barred debt. To meet this argument learned counsel for respondent No. 1 invited my attention to various paragraphs of the plaint and contended that neither it is pleaded in the plaint that a fresh cause of action on the basis of a fresh agreement within the meaning of section 25(3) of the Contract Act had arisen to the appellant nor any such evidence was brought on record to show that the case of the appellant was based on the basis of the fresh agreement as contemplated in section 25(3) of the Contract Act. Learned counsel also referred to the cause of action clause in the plaint to contend that even in this clause it was nowhere alleged that any fresh cause of action arose to the appellant on 20th March, 1963 on the basis of such an alleged new promise by the respondent No.1. Learned counsel for the appellant tried to meet the above argument by contending that since both the Courts below considered the contention of the appellant on the basis of a fresh agreement between the parties which came into existence by virtue of letters Exh.P‑7 and P‑9, this Court can go into the question that whether the suit is within time on the allegation that there was a fresh agreement by respondent No.1 to pay time‑barred debt within the meaning of section 25(3) of the Contract Act. It is true that both the Courts below have considered the argument with reference to section 25(3) of the Contract Act but from pleadings of the parties and issues it is no where spelt out that such a plea was raised by the appellant before the trial Court. It appears that only during the course of arguments in order to meet the plea of limitation raised by the respondent No.1 in his written statement a reply was made by the appellant both before the trial Court as well as first appellate Court in this regard. The question whether there came into existence a separate and independent agreement to pay time‑barred debt within the meaning of section 25(3) of the Contract Act is a question of fact which was required not only to be pleaded specifically but should have been established by leading evidence on this score. As neither in the plaint nor in the issues this plea was specifically raised, learned counsel for the respondent No.1 is justified in making a grievance that this plea should not be decided without allowing respondent No.1 to meet this new case. However, keeping in view the fact that both the Courts below have considered this aspect of the case I feel it only appropriate to remand the case back to the trial Court with the option to the appellant to amend the suit suitably to bring his case within the meaning of section 25(3) of the Contract Act and thereafter the trial Court may frame appropriate issue in this regard and after allowing opportunity to the parties decide the case on the basis of evidence which may be brought on record. I accordingly allow this appeal, set aside the judgment and decree of both the Courts below and remand the case to the trial Court for disposal in accordance with law in the light of the above observations. The appellant will be entitled to amend the plaint in the manner observed above and thereupon the suit will be proceeded as directed above. There will be no order.

S.Q. Case remanded.

Civil Miscellaneous Applications Nos. 1757, 2145, 4520 and 1765 of 1985 in Suit No.345 of 1985, decided on 6th May, 1986.

‑‑S.55‑‑Sale of land--‑Time not essence of contract‑‑Failure to perform contract‑‑Effect‑‑Parties although agreeing to schedule of payment of price, seller himself extending same from time to time without buyer's consent‑‑No time fixed for registration of sale‑deed‑‑Time, held, not essence of contract in circumstances.

‑‑S.12‑‑Suit for specific performance of contract‑‑No unreasonable delay in filing suit‑‑Plaintiff not debarred from seeking discretionary relief‑ Civil Procedure Code (V of 1908), O.XXXIX, R.1.

P L D 1965 S C 83 and A I R 1945 Cal. 44cited but not examined.

‑O.XXXIX, Rr.l & 2‑‑Temporary injunction‑‑Action of‑defendant likely to cause irreparable injury to plaintiff‑‑Balance of convenience also in favour of plaintiff‑‑Defendant restrained from embarking upon proposed action.

P L D 1983 Kar. 387 ref.

M.G. Dastagir for Plaintiff.

Aziz Khan for Respondent No.1.

Wajihuddin for Respondent No.2.

All the four applications will be disposed of by this order. The plaintiff's entered into an agreement to purchase from the defendant No.1 his 14 Annas 3 Paisas share in agricultural land bearing Surveys Nos.2, 3, 4 and 91 approximately measuring 23 Acres 32 Guntas situated in the Block No.6, K.D.A. Scheme No.41, Deh Surjani Taluka District Karachi at Rs.1,40,000 per Acre. The plaintiff paid Rs. 1,00,000 on 21st August, 1984, as part payment of sale consideration against receipt executed by the defendant No.1. It is alleged that the defendant No.1 had assured that the aforesaid land was free from all encumbr4nces, he has a marketable title and permission to sell the land. It was further represented to the plaintiffs that the defendant No.1 had applied for consolidation and allocation of the above land in K . D . A . Scheme No.1 and that it will be demarketed by the K.D.A. who will hand over its physical possession after the fulfilment of formalities and by bifurcating the share of the defendant No.1, according to the letter, dated 6th October, 1983 issued by the K.D.A. It was agreed that the formal agreement was to be executed on 31‑8‑1983 when the payment of Rs.9,00,000 will be made, Rs.10,00,000 to be paid on 30th September, 1984, and the balance shall be paid at the time of registration. The plaintiffs issued a public notice in daily Jang, dated 23rd August, 1984, inviting objection to this transaction. Karim Housing Enterprises limited filed their objection, that they have an agreement with the shareholders of the aforesaid survey numbers and litigation was pending before the High Court for mutation of name in the records of right and that during the pendency of the suit any transaction of this nature would be illegal. The plaintiffs made enquiries from defendant No.1 by letter, dated 29‑8‑1984 and asked him to clarify the same. The defendant No.1 replied on 30‑8‑1984, asking the plaintiffs to take back their advance amount as they have doubt about the title of defendant No.1. The plaintiffs, however, insisted that the defendant No.1 should clarify the objections raised by the objector, make out a clear unencumbered title and fix a definite dates for registration of the sale‑deed to complete the transaction. The defendant No.1 informed that Karim Housing Enterprises Limited has withdrawn their objections and his title to the property is clear. He asked the plaintiffs to sign the agreement and pay Rs.9,00,000 within three days failing which the agreement will be cancelled and defendant's money will be forfeited. The plaintiffs, however, insisted on disclosing the nature of the litigation referred in objector letter and that they are ready to perform their part of contract. They also enclosed certificate of Habib Bank Limited to show that they had sufficient funds to pay the sale consideration. On 4th October, 1984, the plaintiffs received a letter of the defendants in which it was stated that the litigation is not in respect of share of the defendant No.1, and showed his willingness to complete the transaction provided Rs.19,00,000 are paid within seven days, agreement is entered into by the defendant No.1 and sale‑deed shall be registered as soon as possible. The plaintiffs pointed out that the defendant No.1 should get his share demarcated' and bifurcated for delivery of possession. The defendant No.1 was called upon to supply information and documents and perform his part of the agreement according to law within a week and the plaintiffs were ready and willing to perform their part of the agreement. The defendant No. l by letter, dated 27‑10‑1984 informed that the chapter may be considered closed and Rs.1,00,000 stand forfeited. This followed correspondence with no result. The plaintiffs learnt that the defendant No.1 was transferring the property to some other person, therefore, they filed notice with the Deputy Commissioner (West) Karachi, informing him about the agreement of 4th April, 1983. The plaintiffs then filed this suit for specific performance of the agreement and, alternatively for damages. After filing the suit they came to know that defendant No.1 has entered into an agreement, dated 18‑11‑1984 for the sale of the land to defendant No.2 whereupon application under Order I, rule 10, C.P.C. was made and the purchaser has been joined as defendant No. 2.

The learned counsel for the plaintiffs Mr. Dastagir has contended, that there is no dispute between the parties that the plaintiffs had agreed to purchase the land for the defendant No.1 for Rs.33,00,000 and, therefore, it was the duty of the defendant No.1 to have made out a clear marketable title to the property. It was further contended by the learned counsel that the defendant No.1 was bound to perform his obligation of consolidation of the land and bifurcation of the share before executing the sale‑deed and delivery of the possession in that manner. The plaintiffs allege that defendant No.1 had undertaken that the several scattered survey numbers agreed to be purchased by the plaintiffs, will be consolidated and after bifurcation the land shall be delivered to the plaintiffs. In this respect reference has been made to a letter, dated 6‑10‑1983 of K.D.A. which was delivered to the plaintiffs by the defendant No. 1. It seems that K . D . A . had approved the allocation of land in compact block measuring 26 Acres and 31 Guntas in lieu of the lands of the defendant No.1 comprising survey Nos.2, 3, 4 and 91 in Deh Surjani. The key plan Nos.41/20, showing its allocation and area in Sector 6 was also enclosed and demarcation was to be made by the Executive Engineer, who was to hand over possession of the land involved in due course of time on completion of formalities by the defendant No.1. The fact that this letter was handed over to the plaintiffs, shows that they were informed about this development and this would have been an important consideration for purchasing it. The plaintiffs had been insisting on this aspect of the matter and were demanding the defendant No.1 comply with the agreement in material terms. Prima facie it seems that the permission of K . D . A . and consolidation of land in a compact area would have been material consideration for the plaintiffs as one would like to have a compact area rather than scattered one. Mr. Aziz Khan, learned counsel for, the defendant No.1, contended, that there was no concluded agreement between the parties and whatever agreement was, it is witnessed by the receipt, dated 21‑8‑1984 which gives the survey numbers, rate of land and schedule of payment. The learned counsel for the defendant No.1 contended that first the agreement was to be made and secondly time was the essence of the contract and the plaintiffs failed to execute an agreement and pay according to schedule. So far the first contention is concerned the parties have never disputed that there was no agreement between them for sale of the land. It is true that in terms of receipt, dated 21‑8‑1984 the parties were to execute an agreement containing detailed terms and conditions on 31‑8‑1984. But before that the plaintiffs issued a public notice which was manifestly wrong as it related to the entire survey numbers although the defendants have sold their share. The other share‑holders, therefore, raised objection. Although it was the mistake of the plaintiffs no allegation has been made that such notice was published intentionally to cause delay. When the plaintiffs asked for certificate and details of litigation mentioned in the objection the defendant No.1 instead of clarifying it made a vague reply and asked to close the chapter. This attitude continued for quite some time and no sooner it was clarified the plaintiffs showing their willingness asked for consolidation and bifurcation of land. In these circumstances if a detailed agreement was not executed it prima facie cannot be treated as a breach of agreement already existing between the parties. The next contention that time was the essence of the contract prima facie does not seem to be correct. Although the parties had agreed to a schedule of payment of Rs.19,00,000 out of Rs.33,00,000 the defendant No.1 himself had extended it from time to time, without the consent of the plaintiffs and without obtaining a compact area bifurcated and delivered to him by K . D . A . The learned counsel for the defendant No.1 contended that although there was no time fixed for registration as two dates were fixed for payment of Rs.19,00,000 and at least to the extent of these payments .time was essence of the contract. The time for payment of money was extended by defendant No.1 and as no time was fixed for registration of the sale‑deed and payment of the balance, I am unable to accept the contention that time was the essence of the contract. Mr. Wajihuddin Ahmed, the learned counsel for the defendant No.2 contended, that even if time was not the essence of the contract, the defendant No.1 by notice had fixed time for completing the transaction, therefore, time becomes essence of the contract. In view of the dispute between the parties, the nature of the transaction, mode of payment and as no time was fixed for registration of the sale‑deed, Prima facie it is not possible to hold that time was essence of the contract.

The learned counsel for the defendants have stated, that through out the defendant No.1 had been honest, straight‑forward and has approached with clean hands, but the plaintiffs conduct was not above board, therefore, no discretionary relief can be granted them. In this regard reference has been made to the correspondence between the parties. The underlying dispute does not seem to be payment of the money or execution of agreement but the demand of the plaintiffs for consolidation of the land in a compact area duly transferred as required by K. D. A. Therefore, for the purposes of considering, whether cancellation of agreement by defendant No.1 was legal and proper, the question will arise what were the terms and conditions for the sale and whether the defendant No.1 had agreed to obtain a compact area in lieu of the scattered survey numbers and deliver it to the plaintiffs. Prima facie it seems reasonable to assume such a transaction but no definite finding can be given before the parties have led their evidence. The plaintiffs have made out a prima facie and arguable case.

Mr. Wajihuddin Ahmed, learned counsel for the defendant No.2, has contended, that the conduct of defendant No‑2 was bona fide and clean and he has acted innocently believing the words of defendant No.1 that the dispute between him and the plaintiffs was not of any significance. This may be so but the fact remains that the defendant No.2 was aware of the dispute between the plaintiffs and defendant No.1. As a prudent purchaser when he was embarking upon a transaction involving more than three millions of rupees, he should have made proper enquiries to ascertain the correct facts, instead of rushing to the transaction on the representation made by the defendant No.1. From the agreement it is clear that defendant No.2 was aware of the dispute and for that reason the defendant No.1 had agreed to indemnify him for the risk and consequences. The defendant No.2, therefore, entered into transaction with open eyes to purchase a property in dispute merely relying upon the representation of the defendant No.1 without making proper enquiries; such conduct will not mean that prima facie he is a bona fide purchaser without notice of the plaintiffs' claim or has acted in good faith as he did not enter the agreement with due care and caution. The learned counsel for the defendant No.2 contended that there has been delay of six months in filing the suit and, therefore I, the plaintiffs are debarred from seeking discretionary relief. In this regard the learned counsel has referred to P L D 1965 S C 83 and AIR1945 Ca1.44. In the present case, there does not seem to be unreasonable delay which is fatal to the plaintiffs' claim. The learned counsel contended that from the agreement between the defendants it is clear that the defendant No.2 has purchased the property for construction of houses for P.A.F.Co‑operative Housing Society, therefore, in the absence of the society no relief can be granted. The defendant No.2 and not the Society, has agreed to purchase the property from defendant No.1, therefore, the Society does not come into the picture. Mr. Dastagir, the learned counsel for the plaintiffs pointed that defendant No.2 is advertising to sell the disputed land by bifurcating it in smaller plots. According to learned counsel for defendant No.2, the letter relied upon by the plaintiffs was obtained from the defendant No.2 by a person planted by the plaintiffs by misrepresentation: However, without going into the details of these allegations the property has been purchase by defendant No.2 for construction of houses for P.A.F. Housing Society. Therefore, third party interest will be introduced by implementing such scheme which will cause irreparable injury to the plaintiffs. In the circumstances, the balance of convenience is in favour of the plaintiffs. Reference can be made P L D 1983 Kar. 387. For these reasons the applications were disposed by the following short order:

"For reasons to be recorded, on plaintiffs' depositing in Court, sum of Rs.35,00,000 within two weeks, the defendants are restrained from completing the transfer of survey Nos.2, 3, 4, 8, 91, measuring 23 Acres 32 Guntas situated in Block No.6 K.D.A. Scheme No.4, Deh Surjani, Taluka and District Karachi.

The parties shall also maintain status quo."

S.Q. Status quo maintained.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.