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Before Ibadat Yar Khan, J
YUSUF HABIB-Plaintiff
versus
MESSRS SARMAD ASSOCIATES AND ANOTHER-Defendants
Suit No. 450 of 1980, decided on 25th November, 1986,
(a) Foreign Exchange Regulation Act (VII of 1947)-
-- Ss. 4, 5, 21 & 23 - Acquisition of property in Pakistan by a foreigner-No legal bar existing-Foreigner not forbidden or stopped from acquiring or holding property in Pakistan (making investment and remitting foreign exchange for Pakistan)-Where a Pakistan national intermediary or counterpart to agreement who received sale consideration in foreign currency does not repatriate such amount to Pakistan, other laws would take care of that default by forcing such Pakistan national to bring foreign exchange into country which he received abroad- Contract as such, could not be frustrated because the foreigner had done nothing wrong in entering into such a contract.
(b) Foreign Exchange Regulation Act (VII of 1947)-
-- Ss. 4, 5, 21 & 23 -Contract violating any of terms or Foreign Exchange Regulation Act-Sanctity of such contract to be preserved-- Persons who had themselves been parties to a bargain should not be allowed to be relieved from their commitments and defeat legal rights and honest claims of their counterparts by confronting him with regulatory provisions of Foreign Exchange Regulation Act, 1947 which could be regularised by obtaining ex post facto sanctions of transactions from State Dank of Pakistan.
P L D 1958 Dacca 494 ref.
PLD1965SC425rel.
(c) Specific Relief Act (I of 1877)-
-- S. 27 -Civil Procedure Code (V of 1908), O. I, R. 6-Suit for possession-Impleading of intervenors as parties to suit-Where a second lessee in possession was not made a party to suit for specific performance by first lessee and had thus been prevented from putting up a defence that they were transferees for consideration without notice of earlier transfer, Court, held, could not pass a final decree for possession in their absence and would dismiss suit.
Sh. Barkat Ullah v. Khawaja Muhammad Ibrahim P L D 1970 S C 483 ref.
(d) Specific Relief Act (I of 1877)-
-- S. 27 (b)-Civil Procedure Code (V of 1908), O. I, R. 6-Suit for possession of shop-Impleading of parties -Intervenors-plaintiffs not joining intervenors as a party on basis of scanty and wholly inadequate information-Plaintiff, held, could not be non-suited in circumstances.
(e) Specific Relief Act (I of 1877)-
--- S. 27 (b)-Civil Procedure Code (V of 1908) O. I, R. 6-Suit for possession of shops - Intervenors, only second purchasers could not claim priority over plaintiff who was first purchaser and who claimed to have made full payments which had been acknowledged --Until such time that intervenors substantiated that they were bona fide purchasers for consideration without notice, plaintiff's interest, held, must be protected.
Ghulam Nabi and others v. Seth Muhammad Yaqoob and others P L D 1983 S C 344 rel.
(f) Civil Procedure Code (V of 1908)-
O. XXXIX, Rr. 1 & 2-Concept of relief during pendency of proceedings is to prevent further damage and arresting further mischief.
(g) Civil Procedure Code (V of 1908)-
-- O. XXXIX, Rr. 1 & 2-Prohibitory relief-Suit for possession of shop-Transfer of suit shop to intervenors under a registered sale- deed a fait accomplii rendering prayer for a prohibitory relief against defendants/vendors as infructuous-Held, putting plaintiff in posses sion of shop was neither just nor convenient but plaintiff who had already made full payment could not be kept away allowing defendant thereby to enjoy fruits of a collusive sale and advantage of utilising money paid to them in first sale by plaintiff till end of litigation-- Shops, which were sealed by a former order of High Court, allowed to remain in possession of defendant after desealing on payment into Court sale consideration received by defendant from plaintiffs and in case defendant or intervenor failed to make payment shops would remain sealed till further orders.
Karachi Gas Co. v. Fancy Foundations P L D 1977 Kan 191 ref.
Khalid Anwar for Appellant.'
I. H. Zaidi, M. G. Dastagir and Naseem Farooqi for Respondents.
Date of hearing : 30th October, 1986.
The defendant No. 1 are a partnership firm having their office at 210, Sarmad Road Saddar, Karachi. The business of the partnership was of builders, developers, contractor, estate agent, importers, exporters, commission agents etc. etc.
2. Before narration of events it is necessary in this case to take notice of the members of this partnership and the interest which they had indivi dually. At the relevant time this partnership consisted of two groups; (1) the defendant No. 2 and his family (wife and two sons Abdul Razzaq and Abubakar) holding 75% share in the partnership and the other group of Hisamuddin and his two sons (Arshad and Anwar) having the remaining 25 % share in the partnership. It is to be noted further that Plot No. 210 on which the building complex was to be erected exclusively belonged to Abdul Sattar defendant No. 2 in this suit.
3. Abdul Sattar defendant No. 2, by an agreement dated 25-3-1984 agreed to transfer and sell to the plaintiff Shops Nos. 10 and 11 on the ground floor of the building project which was to be raised on this plot for which the plans had been duly approved by the Karachi Development Authority (K. D. A.) and sanction was given in January 1984. The transfer was made through a document which has been described as an "under taking" written on a stamp-paper which was purchased from a Stamp Vendor at Karachi and executed at Karachi. The consideration for this sale was a sum of U. A. E. Darhams 3,82,260 which the defendant No. 2 had received from the plaintiff at Dubai. Actually the plaintiff and defendant Abdul Sattar were doing some business in Dubai and Abdul Sattar had become indebted to the plaintiff to the extent of this amount and had decided to adjust this loan liability towards the sale price of the two shops. In this undertaking' Abdul Sattar had held out several assurances and I may only quote one para. from this document to show how Abdul Sattar induced the plaintiff to have the shops in Karachi for writing off the liability which Abdul Sattar had incurred in Dubai. Paragraph 4 of the undertaking' runs as under :-----
"That I undertake and guarantee that Messrs Sarmad Associates will deliver the vacant possession of said shop Nos. 10 (ten) and 11 (Eleven) to Mr. Yusuf Habib or his duly authorised agent as soon as the construction of said shops is completed, without demanding from him any further payment on whatsoever account and in case the possession as well as ownership of the said shops is not given by Messrs Sarmad Associates for whatsoever reason, I shall be bound to repay my debt of U. A. E. Darhams 3,82,266 to Mr. Yusuf Habib."
4. It is admitted position that the plaintiff is a foreigner, perhaps resident of Dubai. This document was countersigned by Hisamuddin Khan and also by Yusuf Habib as witnesses on 25th March, 1984. On the same day Hisamuddin Khan signed and issued the provisional allotments of these two shops to the plaintiff Yusuf Habib on a printed form. These are two allotments relating to the two shops annexed as Annexures B' and B-1' to the plaint.
5. It is to be noted that in this manner both the partners of this partnership became a party to this deed (undertaking). It is contended that nothing remains to be done except the delivery of possession of the shops in terms of undertaking' and the execution of a proper document of title by the two defendants in favour of the plaintiff or his nominee.
6. By a notice dated 18-5-1986 the Advocate of the plaintiff called upon the defendant No. 2 to deliver possession of shops Nos. 10 and 11, within ten days of the receipt of the notice failing which he would pursue the remedies open to the plaintiff. A similar notice was issued by the same Advocate to the defendant No. 1 "Messrs Sarmad Associates". On 26-5-1986 the defendant No. 2 replied to this notice through his Advocate stating that "the so-called undertaking dated 25th March, 1984 obtained in the like manner in favour of Mr. Yousuf Habib, a foreigner is, illegal, without consideration and void. Our client is not liable on the basis of the said undertaking and/or even otherwise. Your principal is not entitled to the shops in question and/or the U. A. E. Darhams 3,82,266 from our client." A similar reply was received from the defendant No. 1 Sarmad Associates' through their Advocate. The Advocate wrote to say "I am instructed by my clients to deny having ever allotted shops Nos. 10 and 11 or for the matter of that any other shop in their project known as Sarmad Centre or having received any consideration whatsoever for the alleged shop, and any document, if any, issued without consideration is void ab- initio." The Advocate after mentioning that the plaintiff was a foreign national and if Abdul Sattar, an ex-partner, has any business relations with this foreigner, Messrs Sarmad Associates had no knowledge about it, the Advocate proceeded further to write "it may also be stated on instructions that my clients under their own right have already disposed of the said shop to the prospective buyer with execution of lease".
7. On receiving this reply the plaintiff Advocate contacted the plaintiff in Dubai and on his instructions have filed this suit for specific performance of the contract and claim that they are entitled to the possession of the shops which may be ordered to be delivered to plaintiff. They have also prayed that a "Receiver/Commissioner be appointed to take over the possession of the said shops or other shops/flats situated in the same building to safeguard and protect the plaintiff's interest." In the alternative the plaintiff have prayed for decree in the sum of Rs. 30 lacs with interest at the rate of 14 % till its realization. No written statement has yet been filed.
8. Civil Miscellaneous Application No. 3195 of 1986 was also filed by the plaintiff for an interim relief under Order XXXIX, Rules 1 and 2, Order XXXVIII, Rule 5 and Order XL, Rule 1 read with section 151, C. P. C. In this application it was prayed that the "defendant may be restrained from parting with possession, trans ferring, selling, leasing out the Shops Nos. 10 and 1 I situated on the Ground Floor of Sarmad Centre", and from "creating any charge, lien on the said shops". The plaintiff has also prayed in this application that "the said shops may be attached and Receiver may be appointed to take over the posse3sion thereof".
9. The plaint in the above suit and the application for interim relief were filed in Court on 5th July, 1985 and a learned Judge in Chamber, after hearing the Advocate for the plaintiff, passed the following order :-
"Notice for 6-7-1986. Till further orders parties shall maintain status quo in respect of the property which is subject-matter of the suit. Bailiff to be assisted."
10. The parties appeared in Court on 6-7-1986 and another order was passed by the same learned Judge after hearing the defendant's counsel. This order may also be reproduced below which runs as follows :-
"Both the learned Advocates for the defendants state that the defendants were served yesterday in the evening. They request for adjournment to enable them to take instructions and to file counter affidavit.
In the interest of justice I find it appropriate that the Nazir of the Court should inspect the site today and seal the premises which are subject-matter of the suit. To come up in Court on 9th July, 1986."
11. In pursuance of the above order the premises were sealed by the Nazir and a report has been submitted by him on 9-7-1986, a portion of which is worth reproducing which runs as under :-
"Accordingly, on 6-7-1986 the Deputy Nazir alongwith Mr. Fayaz representative of plaintiff with Mr. Vaswani, Advocate reached the site viz. Shops Nos. 10 and 11 Ground Floor, Sarmad Centre, Sarmad Road Off Shah reh-e-Liaquat, Karachi at 3-00 p. m. Mr. Hisamuddin Khan partner of defendant No. 1 was present at the site. Two other persons namely Chiraghuddin Khan son of Azmat Khan and Allaud din Khan son of Azmat Khan were also present at the shops. The shops were closed and locked. Mr. Chiraghuddin Khan informed the Deputy Nazir that the above two shops were purchased on owner ship basis by him and his brother Mr. Allauddin Khan from the defendants and the possession of the shops were received by them on 20-4-1986."
12. The Nazir has further described in his report the condition prevailing there and has stated that "the shops were vacant. There was no sign board of any type on the shops. However, the words "A.U ELECTRONICS" was written on the cover of shutters of shop No. 10 which looked to be new". The Nazir has further described that "there was no partition wall between the two shops".
13. The above order dated 6-7-1986 has now come up for confirmation before me. By now the two defendants namely, Abdul Sattar and Sarmad Associates have filed counter-affidavits and annexed some documents along with them. These affidavits have been filed on 9-7-1986.
14. The two purchasers of the shops namely Chiraghuddin and Allauddin Khan have filed applications under section 151, C. P. C. On 8-7-1986 for desealing of the shops, as they claim to be subsequent purchasers of the shops. It may be pointed out here that these two new purchasers Chiraghuddin and Allauddin Khan are no strangers. They are the real brothers of Hisamuddin Khan, the person who had signed the undertaking' as well as the allotment order in favour of the plaintiff and has a 25 % share in partnership of "Sarmad Associates" with his sons. These new purchasers have also filed two allotment orders dated 4-9-1985 in favour of Allauddin Khan and Chiraghuddin. These allotment orders are signed by Abdul Razzaq, who is the son of defendant No. 2. These purchasers have also obtained a sub-lease duly registered with the Deputy-Registrar on 28-4-1986. It is interesting to note that this document has been executed in favour of the new purchasers by Abdul Sattar himself (defendant No. 2) and Abdul Razzaq the son of Abdul Sattar.
15. It maybe stated here that Abdul Sattar and his sons have a controlling interest in Sarmad Associates'., They own 75 Y. of the share in the partnership. Hisamuddin and his sons hold shares to the extent of 25 and that the new purchasers are the brothers of Hisamuddin Khan. Now it would be easy to appreciate the contention raised by the learned counsel appearing for the parties.
16. Mr. I. H. Zaidi learned counsel for the defendant No. 1 has tried to argue that Messrs Sarmad Associates are not responsible for any dealings which Abdul Sattar may have had with the plaintiff and as such have rightly disposed of the shops to the new purchasers. When pointed out that in reality all the shareholders of the partnership are a party to the transaction because the original document/" undertaking" to transfer the shops was executed by Abdul Sattar and countersigned by Hisamuddin himself and the allotments were issued by Hisamuddin himself. the learned counsel had no answer.
17. Mr. M. G. Dastagir learned counsel for the defendant No. 2 found it difficult to meet the case of the plaintiff. The joint effort of the two counsel was to show that the plaintiff is a foreigner and the transaction is the result of some underhand dealings between the parties. To make such an allegation is easy but to substantiate it is difficult and in the present case the two learned counsel were unable to satisfactorily overcome this difficulty. Their main argument was that the. transaction is illegal ab initio because such a transaction, according to the counsel, is against the provisions of the Foreign Exchange Regulation Act VII of 1947. The two counsel were joined by Mr. Nasim Farooqui learned counsel appearing for the Intervenors Chiraghuddin and Allauddin Khan. All the three learned counsel tried to meet the case of the plaintiff on the basis of sections 5 and 21 of this Act.
18. Mr. Nasim Farooqui learned counsel for the Intervenors further contended that his clients were not aware of the first transaction and they have purchased the property for valuable consideration through a registered document and are in possession and their possession should not be disturbed. In other words the learned counsel tried to invoke in his client's favour doctrine of "innocent purchasers" for valuable consi deration without notice of the first purchase.
19. The counsel have placed reliance on section 5 of the Foreign Exchange Regulation Act which runs as under :-
"5. (1) Save as may be provided in and in accordance with any general or special exemption from the provisions of this sub section which may be granted conditionally or unconditionally by the State Batik, no person in, or resident in ,Pakistan shall-
(a) ...................... ....................... ....................... ...
(b) ............................... ...................... ....................... ....................... ...
(c) ............................... ...................... ....................... ...
(d) ...................... ....................... ....................... ...
(e) ............................... ...................... ....................... ...
(f ) draw, issue or negotiate any bill of exchange or promissory note, transfer any security or acknowledge any debt, so that a right (whether actual or contingent) to receive a payment is created or transferred in favour of any person as consideration for or in association with any matter referred to in clause (e)."
The learned counsel have also placed reliance on clause (1) of section 21 of the said Act, which runs as under : -
"21.-(1) No person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of this Act or of any rule, direction or order made thereunder."
20. These two provisions were read by all the counsel again and again and the contention of the learned counsel for the plaintiff was that to attract the bar under section 5 of the Act it was necessary that the contract ing party should be a person in or resident in Pakistan and should create a liability to be discharged outside Pakistan. In the present case all that has happened is that the defendants have agreed to sell property situated in Pakistan. The agreement has been executed in Pakistan. The allotments have been made in Pakistan and because the purchaser happens to be a foreign national, he has made payments to the defendant in foreign currency outside Pakistan. All that remains to be done is that the defendant should, with a clean conscious, repatriate this amount to Pakistan. Their failure to do so may invite the wreth of the prosecution agency dealing with foreign exchange, but the foreign purchaser cannot be penalised for the fault of the defendant, who have received full consideration in foreign currency, but have failed to repatriate it. The plaintiff should be honoured for making his investments in Pakistan by paying foreign currency for acquiring property in Pakistan.
21. Apparently there seems to be force in this contention. A foreigner is not forbidden or stopped from acquiring or holding property in Pakistan which means making investment and remitting foreign exchange for Pakistan. If the intermediary or the counterpart to the agreement does not repatriate this amount to Pakistan, there would be other laws to take care of that by forcing the Pakistani to bring the foreign exchange, which on his own showing the Pakistani has received abroad. The contract as such cannot b frustrated because a foreigner has done nothing wrong in entering into such a contract.
22. Before I go further, it is better to deal with the first point which has been the main weapon of defence of all the three counsel in the case. The learned counsel for defendants have relied for this part of the argument on a case reported in P L D 1958 Dacca 494. In this case a Promissory Note which was executed in Calcutta and the payment was to be made in Pakistan, was held to be a transaction contrary to the provisions of sections 4 and 5 of the Foreign Exchange Regulation Act and as such not enforceable in Pakistani Court. This case was cited in an unreported judgment in Suit No. 450 of 1986 but the view expressed in this case was not approved by Arfeen, J. of this Court. Even otherwise after the judgment of Supreme Court P L D 1965 S C 425 this case has lost its force.
23. The issue is fully clutched by very illuminating judgment of late Mamoodur Rehman Judge in the case reported in P L D 1965 S C 425. It is not necessary to give full facts of the case. The most relevant part of the judgment is the last paragraph of this judgment which is as under :-
"finally we would like to point out that there is an equally well accepted rule that where a person invoking the aid of a Court to invalidate a contract on the ground of illegality is himself implicated in the illegality the Court will not, as a rule, assist him. In the present case, it is clear from the record that the appellants themselves never raised this question of illegality before the arbitration. It was only raised on the 2nd of May, 1960, by the respondent No. 2. It is only after he found that the award had gone against him that he has come forward to raise this objection. In our view, neither law nor equity supports this claim of the appellants."
24. The argument of the learned counsel for the defendants that the transaction was hit by section 21 of the Foreign Exchange Regulation Act, was also answered by the learned counsel for the plaintiff by relying on the Supreme Court judgment noted above and particularly on the reasonings in this judgment which may be reproduced below and which have comprehensi vely examined sections 4, 5 and 21 of the Foreign Exchange Regulation Act alongwith section 23 of the Contract Act. Following observations were made :-
"Reading these provisions as a whole it would appear that the Foreign Exchange Regulation Act does not forbid the making of a contract which may contemplate doing a thing which is contrary to the provi sions of the Foreign Exchange Regulation Act, for, that thing can still be done by ex post facio permission of the State Bank of Pakistan. The scheme of the Foreign Exchange Regulation Act, therefore, is not to forbid the making of a contract but merely to insist that the contract shall be performed in a particular manner, namely, by taking the necessary permission of the competent authority. It cannot, therefore, in the circumstances, be said that a contract which violates any of the terms of the Foreign Exchange Regulation Act is ex facie or ab initio void or comes within the mischief of a contract prohibited by section 23 of the Contract Act. It is now well-settled that the provisions of section 23 of the Contract Act have to be construed strictly and the Courts should not invent new categories or new heads of public policy in order to invalidate a contract."
25. The ratio of the Supreme Court case is that sanctity of contract should be preserved. Those who have themselves been parties to a bargain l should not be allowed to be relieved from their commitments and defeat their legal rights and honest claims of their counterpart by confronting him with g the regulatory sections of the Foreign Exchange Regulation Act. In such cases the Court should hold the defaulters to their bargain and allow the other side to obtain ex post facto sanctions of the transactions from the State Bank.
26. In the present case both contracting parties have entered into a contract in Pakistan, the property is situated in Pakistan and the performance of the contract is to be carried out by the defendant in Pakistan.
27. Whether the defendant Sattar who had received the consideration in foreign currency in Dubai, has or has not brought that foreign currency into Pakistan as he was required to do under the Act is for him to explain if he is subjected to any legal action.
28. The plaintiff should be last person to know how this defendant has played with the foreign exchange earnings. The defendant in any event should be last person to be excused from performance on the plea that what be did was illegal and the other party should be. condemned for the defendant's own illegal act.
29. Learned counsel for the intervenors then argued that by notice dated 1-6-1986 Sarmad Associates had informed the plaintiff through their Advocate that "my clients under their own right have already disposed of the said shop to the prospective buyer with execution of lease." After this information: the plaintiffs were obliged to join the intervenors as party to the suit. Failure to do so must result in dismissal of the suit. In support of this argument learned counsel relied on a judgment of the Supreme Court Sh. B4rkat Ullah v. Khawaja Muhammad ibrahim (PLD1970SC483). But this case is distinguishable.
30. In the present case we are still at the starting point and have to go a long way to reach the stage of final decree. If a second lessee in possession has not been made a party in a suit for specific performance by the first lessee and has thus been prevented from putting up a defence that they were transferees for consideration without notice of the earlier transfer, the Court cannot pass a decree for possession in their absence and the suit should be dismissed. But as stated above these considerations would arise when the Court is passing a final decree as was the case before the Supreme Court. Moreover, the question of condemning the intervenors in absentia does not arise because they have themselves appeared and have applied to be joined as party and have indeed taken the entire brunt of attack on the defendants upon themselves.
31. In my opinion at this stage the plaintiff cannot be non-suited because they have not joined the intervenors as a party on the basis of scanty and wholly inadequate information in the reply of Sarmad Associates dated 1-6-1986.
32. I may also mention that the learned counsel made all efforts to show that the Annexure 'A' dated 25-3-1984 was a bond and was not properly stamped, as such hit by section 33 of the Stamp Act. Even if this debatable proposition is accepted, the two allotments in respect of the two shops would still come in the way of the learned counsel. In my opinion the allotments stand independently and bearing signature of a partner, who has signed on behalf of 'Messrs Sarmad Associates' in regular course of business, would be binding on the partnership and create full rights in favour of the allottee. This opinion is merely tentative and need not be used at the time of the regular hearing of the suit. For these reasons this argument also fails.
33. The second leg of the arguments of the learned counsel for the intervenors was that, after all, the intervenors have paid full consideration which is evidenced by the 12 receipts which they have filed alongwith their application as Annexures'B/1' to 'B/12' and also the registered lease-deed in favour of his clients, they should be placed in the category of 'innocent purchasers'.
34. Even if the two intervenors are 'innocent purchasers' without knowledge of the previous transaction, it is debatable that they are entitled to be protected. But the question is whether they are 'innocent purchasers' without knowledge The relationship between these purchasers and Hisamuddin tells a different story. Both are real brothers and at the time of the inspection by the Nazir were found together. Subject to what is revealed at the time of hearing of the suit, the attitude taken by Abdul Sattar and Hisamuddin and the manner in which the second transaction has been brought about, speaks volume about them. Even the payments by the two intervenors have not been made through any banking channel. They have been made over a period 10-7-1985 to 20-4-1986 for which receipts have been issued by Abdul Razzak and Hisamuddin Khan. Such receipts must be backed by the corresponding entries in the books of accounts and the balance-sheet of the partnership firm to show whether they were ever credited in the accounts of the partnership i.e. Messrs Sarmad Associates. All these questions should better be decided at the time of hearing.
35. I have most reluctantly mentioned these details because the learned counsel had chosen to argue these points in some depth. I have abstained from attempting an analytical appreciation, as far as possible, of the merits and effectiveness of the pleas based on these documents at this stage. Suffice to say that the intervenors are second purchasers and cannot claim a priority over the first purchaser, who claims to have made full payments which has been acknowledged by the senior partner Sattar in the document "acknowledgment" and acted upon by the other partner Hisamuddin by c issuing two allotment letters. Until such time that the intervenors sub stantiate that they are bona fide purchasers for consideration without notice the plaintiff's interest must be protected.
36. In this connection a reference to a case which came up in appeal before the Supreme Court would be pertinent. Ghulam Nabi and others v. Serh Mithammad Yaqoob and others (P L D 1983 S C 344). In this case similar argument was advanced by the second purchaser. Suit filed by the first purchaser for specific performance of the contract was decreed by the trial Court. Finally the case came before the Supreme Court in appeal by the second purchaser and the following passage from the judgment of the Supreme Court is very instructive :-
"A vendor who has not transferred his interest in the property though he entered into an agreement 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 sale-deed in his favour. It was held in Kali Charan v. Janak Deo 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 was that :-
"By reason of section 91 of the Act, the natural result of a person pur chasing 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 Faffur v. Bhikaji 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. 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 good 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 Elahi) and the respondent (Seth Muhammad Yaqub).' In this connection the High Court referred to the state ment of Abdul Latif (D. W. 7) who stated that the appellants had come to know on 20-5-1966 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 28-5-1966. In these circumstances the protection under section 27 (b) of the Specific Relief Act is also not available to the appellants."
37. For the purposes of this application the plaintiff's claim which is backed by documentary evidence cannot be rejected outright on the plea of the second purchaser. The plaintiff has made out a good prima facie case.
38. Now the question arises as to what protection should be given to the plaintiff till the suit is ripe for hearing and the merits of the contentions of each party are examined The learned counsel for the plaintiff desired that in view of the fact that half-hearted technical pleas were raised by, the defendants and no concrete case was raised on merits, the plaintiff should be put in possession subject to any condition that the Court may impose. To grant such a prayer would mean issuing a mandatory injunction to the defendants for dispossessing the intervenors, who have obtained possession and then to install the plaintiff in their place. It would not only be deciding the fate of the case, but would mean crossing the limitation prescribed for exercising the power under Order XXXIX of the C. P. C. The concept of a relief to be awarded to the plaintiff during the course of pending proceedings is only to prevent further damage and arresting further mischief.
39. As a matter of fact the transfer of shops by defendants to the intervenors under a registered sale-deed is a fait accomplii rendering the prayer for a prohibitory relief against the defendants infructuous.
40. In the present situation it is not just and convenient that the plaintiff should be put in possession of the premises which are now occupied by third parties to the litigation. This prayer, therefore, cannot be granted. At the same time there is force in the contentions of the learned counsel appearing for the plaintiff that the defendants and the intervenors being that chips of the same block, should not be allowed to thrive-at the expense of the plaintiff ;that during the long period that this litigation might take', the plaintiff, who has already made full payment, should not be kept away and the defendants should not be allowed to enjoy the fruits of a collusive sale and also the advantage of Rs. 16,00,000 which he has paid and which the defendants have so far utilised and would continue to utilise till the end of the litigations. The learned counsel. therefore, prayed that the order of r2sealing which was passed by the learned Judge in Chamber and is in the nature of custodia legus should be confirmed. This would, according to the learned counsel, amount to maintaining status quo.
41. Balance of convenience and irreparable injury to be caused to the parties are two other important considerations to be kept in mind while passing an order of temporary injunction. If the premises remain sealed, it would not benefit the plaintiff, but would cause inconvenience to the defendants and moreso to the intervenors. But at the same time, and assuming everything in favour of defendants and the intervenors and also assuming that the second sale is not a sham transaction, the fact remains that the defendants by selling the shops to two purchasers have pocketted two considerations in a row. If the shops are left with them, at least they should release the funds realised under the first purchase. They cannot be allowed to thrive on the money paid to them under the first purchase.
42. The shops may be unsealed but only on the defendants depositing in Court the sum of Rs. 16 lacs to be invested by the Nazir in consultation with the parties. If the defendants deposit with the Nazir a sum of Rs. 16,00,000 (Rupees sixteen lacs) within a month or even early, the Nazir should open the seal and deliver possession to the intervenors without t prejudice to the pleas that may be raised b the parties. If the defendants and/or the intervenors fail to deposit Rs. 16,00,000 with the Nazir, the order dated 6-7-1986 should remain operative and the shops should remain sealed till further orders.
43. For the order proposed above I seek support from earlier judgment of Zaffar Hussain Mirza, J. passed in similar circumstances 'and reported in Karachi Gas Co. v. Fancy Foundations (P L D 1977 Kar. 191).
44. In this case plaintiff had contracted to purchase a plot with some structures thereon and had paid 90% of the consideration to the defen dants/sellers at the tithe of agreement. The possession and marketable title in the property could not be given to the purchaser because the tenants who were occupying the building would not vacate their respective tenements.
45. This litigation between seller and his tenants continued for quite a number of years and finally ended at the stage of Supreme Court appeals whereby the tenants were ordered to be ejected. In the meantime the plaintiff became restless and even went to the extent of giving up the deal and demanded the return of the huge advance they had paid to the seller. The Court held that the conduct of the plaintiff' indicated that they were themselves willing to abandon the relief of specific performance and were content with the refund of the advance money with interest. They had prima facie jeopardised the chances of a decree for specific performance and moreso the claim for a temporary injunction. Thus, the injunction was refused. Nevertheless the defendants were directed to deposit in Court the sum of Rs. 30 lacs which they had received as advance. This amount was to be invested by the Nazir for the benefit of party succeeding in the suit.
In the circumstances a proper order should be that the defendants or the second purchasers may continue to remain in possession. The seal of shops should be removed subject to the condition that they should deposit with the Nazir Rs. 16,00,000 (sixteen lacs) within two weeks. This application) is disposed of in terms of para. 42 of the judgment.
M. Y. H./5085/K Order accordingly.
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