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Before Haider Ali Pirzada, J
Mst. KHATOON BEGUM-Applicant
versus
Mst. BARKATUNNISA BEGUM
AND 6 others-Respondents
Revision Application No. 12 of 1986, decided on 11th December, 1986.
(a) Contract Act (IX of 1872)-
-- S. 62-Contract-Novation, revision and alteration of-Effect- Novation of contract would imply that there being contract in existence, some new contract had been substituted for it resulting in discharge of old contract--Substitution of a new contract being the core of novation, essential feature thereof, held, would be that a right under original contract was extinguished whereas new rights referable to new contract were created-Where new contract suffered from legal flaw such as want of registration, stamps etc. on account of which same became unenforceable, original contract would not be extinguished and rights and liabilities of parties would be determined Pit that basis.
Gilbert v. Hull (1831) 1 L J Ch. 15 ref.
(b) Contract Act (IX of 1872)---
-- S. 62-Novation of contract-Determination of nature of contract dependent on intention of parties-Contract would be rescinded by another contract between same parties where new contract, was inconsistent with, or rendered impossible the performance of the former contract-Where legal effect of both contracts i. e. new and the former one was the same though they differed in terms, even then it would be mere ratification of the former and both must be construed together-Whether an agreement was substitution of old contract or not was a question of fact depending on intent of parties-intention of parties could be inferred from contents of documents with reference to substance of matter and not to mere form of document.
(c) Civil Procedure Code (V of 1908)-
-- First Sched., Appendix A, Forms 47 & 48-Suit for specific per formance-Requirement-Suit for specific performance, has to conform to the requirements prescribed in Forms 47 & 48 given in Appendix A' of First Sched. of Civil Procedure Code, 1908.
(d) Specific Relief Act (1 of 1877)-
-- S. 12-Suit for specific performance-Requirements -In a suit for specific performance, it is incumbent on plaintiff not only to set out agreement on basis of which he sues in all details but to go further and plead that he has applied to defendant specifically to perform the agreement and his refusal thereon-Plaintiff is further to plead that he has been and is still ready and willing to specifically perform his part of agreement.
(e) Civil Procedure Code (V of 1908)-
-- S. 115-Specific Relief Act (I of 1877), S. 12-Revisional jurisdic tion, exercise of-Suit for performance relating to novation of contract-Finding of fact-Where both Courts have rightly held that novation of contract was in fact mock agreement between the parties, High Court declined to interfere in revisional jurisdiction to upset such factual finding.
Apdul Majeed Khan for Applicant
Zafar Alam Khan for Respondents.
Date of hearing : 5th November, 1986.
This revision petition arises out of the judgment and decree dated 4-12-1985 passed by the 1st Additional District Judge (West), Karachi confirming the judgment and decree dated 15-2-1982 in Suit No. 307 of 1969 passed by the XXXI Civil Judge Second Class, Karachi.
The facts which give rise to the above Revision are that on 31-10-1968 Dr. Saleemuddin had agreed to sell plot with structure thereon bearing No. 89, Block I, measuring 120 square yards, Sharifabad, Federal B' Area, Karachi to the petitioner for a consideration of Rs. 22,000 vide sale agreement dated 31-10-1961 (Exh. D. 1). In pursuance of the agreement the petitioner paid Rs. 11,000 as earnest money to the said Dr. Saleemuddin and the balance amount of Rs. 11,000 was agreed to be paid at the time of registration of sale-deed which was to be executed on or before 30-11-1968 which can be extended at the option of the vendor. As per clause (4) of the said agreement (Exh. D. 1) the petitioner was delivered possession of the said property. It is the case of the petitioner that on 27-11-1968 the parties executed another sale agreement (Exh. P. 1). It is the case of the petitioner that the petitioner had paid to tale said Dr. Saleem uddin Rs. 7,500 on 27-11-1968 and the balance of sale consideration of Rs. 7,500 was to be paid at the time of registration of sale-deed which was to be executed on or before 31-12-1968.
The case as set out in the suit is that the said Dr. Saleemuddin under took to finalise the execution of sale-deed on or before 31-12-1968 and on his failure to fulfil his commitment with regard to the said sale-deed before the stipulated date, the said Dr. Saleemuddin requested for extension of time and the time was extended up to 6-2-1969 but he failed to finalise the registration of the sale-deed within the extended time. The petitioner sent a notice dated 7-2-1969 calling upon him to finalise the registration of sale-deed within four weeks from the date of receipt of notice. The said Dr. Saleemuddin sent a reply dated 18-2-1969 stating therein that the petitioner had agreed to purchase the property for a total sale consideration of Rs. 22,000 and the said Dr. Saleemuddin was ready and willing to execute the sale-deed in terms of agreement dated 31-10-1968 (Exh. D. 1). The petitioner sent a notice dated 4-3-1969 and stated therein that agree ment dated 31-10-1968 was cancelled by both the parties. Thereafter the petitioner filed the suit bearing No. 307 of 1969. The said Dr. Saleemuddin filed the written statement. During the pendency of the suit he died and the present respondents were brought on the record. The trial Court dismissed the suit and in appeal the Additional District Judge affirmed the judgment of the trial Court.
Mr. Abdul Majeed Khan the learned counsel for the petitioner advanced his three-fold arguments in support of his contention that the suit as instituted ought' to have been decreed in favour of the petitioner/ plaintiff. His main contention is that Exh. P. 1 constitutes novation. The argument is that it was the intention of the parties that Exh. P. 1 shall extinguish all rights under the previous contract Exh. D. 1 and the document is inconsistent contradictory and cannot co-exist with the original contract.
According to the terms of the agreement dated 27-11-1968 (Exh. P. 1) the original amount of Rs. 22,000 was reduced to Rs. 15,000 and instead of execution of sale-deed on or before 30-11-1968, it was to be executed on or before 3.1-12.1968.
The first question that arises for decision is whether the agreement (Exh. P. 1) pleaded in the plaint is true or a real document. The first point, therefore, for my consideration, is whether Exh. P. 1 extinguished all rights and liabilities under the old contract to form the sole basis for an action against the respondents, in other words. whether Exh. P. 1 is a novation. The term novation implies that there being contract in existence some new contract has been substituted for it resulting in discharge of the old contract. This term appears in the marginal note to section 62 of the Contract Act which reads as below :-
"Effect of novation If the parties to a contract
rescission and alter- ; agree to substitute a new con
ation of contract. tract for it, or to rescind or
alter it, the original contract
need not be performed."
Substitution of a new contract is the core of novation. Its essential feature is that a right under the original contract is extinguished and new rights referable to new contract are created. The substituted contract, therefore, must be a valid and enforceable contract to be effective as novation. If the new agreement or- contract suffers from legal flaw such as want of registration, stamps etc., on account of which it becomes unenforceable, the original contract will not be extinguished and the rights and liabilities of the parties will be determined on that basis. The petitioner sent a notice dated 7-2-1968 and the said Dr. Saleemuddin sent a reply on 18-2-1969 wherein it was stated that agreement dated 27-11-1968 (Exh. P. I) was meant only a camouflage for showing to the Income-tax authorities for securing the clearance certificate as well as to secure reduction in the stamp duty it was at the suggestion of petitioner's son. The petitioner sent a reply dated 4-3-1969. In this reply the petitioner did not deny about the sale-agreement dated 31-10-1968 (Exh. D. 1) but stated that the said Dr. Saleemuddin regretted his inability to finalise the said deal as he was not in a position to secure the said clearance certificate of the Income -tax on account of some trouble the said Dr. Saleemuddin was facing with respect to the assessment of income-tax and under these circumstances the agreement of dated 31-10-1968 was cancelled by both the parties. It is pertinent to note that Dr. Saleemttddin was cross-examined at length but no suggestion was made to him that the original contract was cancelled due to his inability to obtain income-tax clearance certificate or there was g trouble about his income-tax assessment. I think that both the Courts below have rightly held that the agreement (Exh. P. 1) was a mock agreement and it was not to be acted upon.
I now proceed to consider whether Exh. P. 1 according to the terms, tenor and intent of the parties constitutes in fact a novation. Exh. D. 1 dated 31-10-1968, the original agreement between the parties, is an agree ment to sell. According to its terms, the said Dr. Saleemuddin had agreed to sell the house for Rs. 22,000. The petitioner paid Rs, 11,000 and the balance amount of Rs. 11,000 was to be paid at the time of execution of sale-deed which was to be executed on or before 30-11-1968.
Exhibit P. 1 does not bear reference to the original agreement to sell. It only refers to a sum of Rs. 15,000. The agreement only restricted only to some of the conditions viz. quantum and period of execution of sale-deed. As observed above, a novation is a substitution of the contract and not a mere variation of its terms. It should rescind or extinguish the previous contract. As laid down in Gilbert v. Hall ((1831) I L J Ch. 15), a new and independent agreement concerning the same matter as the previous agreement may be construed to discharge the former, only if the terms of the latter are so inconsistent with those of the former that they can stand together.
In other words, a contract will be said to be rescinded by another between the same parties when the latter is inconsistent with or renders impossible the performance of the former. If their legal effect is the same though they differ in terms, even then it will be mere ratification of the first and they must be construed together. Whether an agreement entered into is in substitution of an old contract or not is always a question of fact depending also on the intention of the parties.
The intention of the parties no doubt may be inferred from the contents of documents but in order to gather their intention one should look to the substance of the matter and not to the mere form.
It cannot, therefore, be said that Exh. P.1 is a rescission of the previous contract of sale. At the most it is no agreement varying the quantum of purchase money in view of saving stamps duty and for the purposes of securing income-tax clearance certificate. The execution of sale-deed was extended from 30-11-1968 to 31-12-1968. The term relating to possession is not altered. The term about forfeiture of earnest money was deleted, in this way. Exh. P. 1 and Exh. D. 1 are both put together, one complete subsisting contract. The plea of novation, therefore, must fail.
It may be noticed that the agreement (Exh. D/1) pleaded by late Dr. Saleemuddtn is wholly different from that pleaded by the petitioner. The late Dr. Saleemuddin pleaded that he had agreed to sell the property for a total sale consideration of Rs. 22,000 and the petitioner pleaded that the said Dr. Saleemuddin had agreed to sell the property for total sale consideration of Rs. 15,000. The petitioner did not at any stage accept the agreement pleaded by the said Dr. Saleemuddin as real agreement. The agreement pleaded by petitioner is said to have been entered into subsequent to the original agreement. The purchase price in both the agreements is different. The petitioner did not plead either in the plaint or at any subsequent stage that he was ready and willing to' perform the agreement pleaded in reply dated 18-Z-19613 sent by the said Dr. Saleemuddin or in the written statement filed by late Dr. Saleemuddin. A suit for specific performance has to conform to the requirements prescri bed in Forms 47 and 48 given in Appendix A' of the First Schedule of the Civil Procedure Code.
Para. 2 of Form 47 requires the plaintiff to state in the plaint that he applied to the defendant specifically to perform the agreement on his part but the defendant has done so. Para. 2 of Form 48 requires the plaintiff to state in the plaint that on such and such date the plaintiff tendered-- rupees to the defendant and demanded a transfer of the said property by a sufficient instrument. Para. 3 of Form 48 requires the plaintiff to state that on the--day of---19-, the plaintiff again demanded such transfer (or the defendant refused to transfer the same to the: plaintiff). In a suit for specific performance it is incumbent on the plaintiff not only to set out agreement on the basis of which he sues in all details, he must go further and plead that he has applied to the defendant specifically to perform the agreement pleaded by him but the defendant has not done so. He must further plead that he has been and is still ready and willing to specifically F perform his part of the agreement. Neither in the plaint nor at any subsequent stage of the suit the plaintiff has taken these pleas. In the present case the petitioner did not plead in the suit that he was prepared to purchase the property for Rs. 22 000 or the petitioner was prepared to purchase the property for the price which the respondent was prepared to sell the said property to the petitioner.
In the circumstances the Courts below dismis3ed the claim for specific performance on the consideration that the contract of sale was not established. The revision in the circumstances must fail.
The revision is accordingly dismissed with costs to the respondents.
A. A./5079/K Revision dismissed.
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