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Criminal Miscellaneous Application No.2525 in Suit No.370 of 1987, decided on 25th June, 1987.

---O.XXXIX, Rr.l & 2--Temporary Injunction--First defendant agreed to sell plot in question to plaintiffs and received a part of sale consideration but later on sold plot to defendants 3 to 6--Transfer of plot in favour of plaintiffs was first approved by second defendant/ Co-operative Housing Society, who formerly agreed to transfer plot from the name of first defendant to the names of the plaintiffs, but said Society also later on backed out from approval--A prima facie case existed in favour of plaintiffs in the sense that they had raised a fair question for trial--Conduct of Co-operative Housing Society also not above board as it backed out from approval of transfer of plot in name of plaintiffs--Great damage was likely to be caused to plaintiffs and they would be seriously prejudiced and embarrassed in case interim injunction was not granted--Balance of convenience in view of circumstances of case lying in favour of granting injunction- Temporary injunction granted and defendants restrained from selling, damaging or mortgaging property, developing or raising any building, with condition that balance of consideration was deposited with Nazir of Court.

---O.XXXIX, Rr.1 & 2--Interim injunction--Grant of ad interim injunction, held, discretionary but discretion had to be exercised on sound judicial principles--In case it was established that plaintiffs had prima facie case and they were likely to suffer irreparable injury before their legal rights could be established and that mischief done to them by withholding injunction was greater than that which was likely to arise from granting it, then Courts would grant interim injunction.

---O.XXXIX, Rr.1 & 2--Specific Relief Act (I of 1877), S.42--Injunc tion--Doctrine of lis pendense---Grant of injunction during pendency of a suit for specific performance of a contract--When there is a clear valid contract for sale, Court, held, would not permit vendor afterwards to transfer legal estate to a third person although such third person would be affected by lis pendense.

Hadley v . London Bank of Scotland 12 Law Times 747 rel.

---O.XXXIX, Rr.1 g 2--Interim injunction, grant of--Object of granting interim injunction, held, was to maintain status quo and not to disturb it.

Muneer A.Malik for Plaintiffs.

Abdul Hameed Puri for Defendant No.1.

Rustam .J. E. Kaikabad for Defendant No.2.

Khalid M. Ishaque for Defendants Nos. 3,4,5 and 6.

Date of hearing: 25th June, 1987

This is an application under Order .XXXIX; Rules 1 and 2, C.P.C.

The facts leading upto the suit and the prayer for interim injunction are that on or about 1st September, 1986 the plaintiffs contacted with the defendant No.1 to purchase plot No.442, Block C, Ademjee Nagar, Kathiawar Co-Operative Housing Society Limited, measuring 1500 sq. yards for a total consideration of Rs.30,.50,000 and in partial execution of the said agreement the plaintiffs paid to the defendant No.1 an amount of Rs.4,50,000. Thereafter, by letter dated 2-9-1986 the plaintiffs deposited with the defendant No.2 a sum of Rs.77,500 by way of transfer fee against the said plot which amount was to be paid by the plaintiffs in terms of the agreement between the plaintiffs and the defendant No.1 on or about 10-.11-1986 the managing committee of the defendant No.2 agreed to the transfer of the plot from the name of the defendant No.1 to the names of the plaintiffs. Copy of the minutes of the said meeting is annexed to the plaint as Annexure 'B'.

It is the case of the plaintiffs that sometime in the month of December 1986 the defendant No.1 resiled from the aforesaid agreement and in collusion with the defendant No. 2 surrendered the plot back to the defendant No.2 after receiving Rs.26 lacs from the defendant No.2. The defendant No.2 returned to the plaintiffs the pay order for Rs.77,500. It is the further case of the plaintiffs that the defendants 3 to 6 have at all material times known of the agreement of sale between the plaintiffs and the a afendant No.1 and have in fact always been aware of the minutes of he meeting dated 10-11-1986 of the managing committee of the defendant No.2.

It is the case of the plaintiffs that the defendant No.2 acting in collusion with the defendants 1 and 3 to 6 issued a fresh allotment order of the plot in favour of the defendants 3 to 6 on or about 21-1-1987. It is the further case of the plaintiffs that the allotment has been procured through fraud and collusion with a view to defeat the rights of the plaintiffs and is liable to be delivered for cancellation. On these allegations the plaintiffs have filed the suit for cancellation and specific performance.

The defendant No.1 filed counter-affidavit wherein he stated that the transfer form had been duly signed and submitted by him to the defendant No.2 and the defendant No.2 had approved the transfer of plot in favour of the plaintiffs in their meeting held on 10-11-1986. The defendant No.1 stated that since he had introduced the plaintiffs to the defendant No.2 and all necessary procedure/formalities for the transfer of the plot had been complied with, he. in good faith and acting bona fidely received the balance sale consideration of Rs.26 lacs from the defendant No.2 and surrendered the plot to the defendant No..2 on the given understanding that it would in ordinary course be transferred to the plaintiffs.

The Honorary Secretary of the defendant No.2 filed counter affidavit wherein he stated that there is no privity of contract between the defendant Society and the plaintiffs. The defendant No.2 stated that at the meeting of the managing committee of the defendant Society it was decided by resolution of 10-11-1986 by which transfer was permitted subject to compliance of conditions laid down in the said Resolution. It is alleged that the formalities required for surrendering of plot in suit were not complied with. It is further alleged that "without prejudice, to the foregoing, and for all intents and purposes the receipt of the mutual broker of the plaintiffs and the defendant No.1 and their posidve acts and omissions confirmed that whatever transaction that was entered into between plaintiffs and defendant No.1 was cancelled and or rescinded and that the plaintiffs were no longer interested in acquiring the plot in suit from defendant No.1". It is further alleged that the plot was legally and validly allotted to the defendants 1 to 6 for valuable consideration and the possession thereof handed over to defendants 3 to 6 by 21-1-1987.

The defendant No.3 filed counter-affidavit wherein he stated that defendants 3 -to 6 are bona fide purchasers for value and had no notice of the alleged transaction.

It is contended by the learned counsel for the plaintiffs that the defendant No.1 had agreed to sell the plot in suit to the plaintiffs and had introduced the plaintiffs to the defendant No. 2. His submission is that the managing committee of the defendant No.2 had agreed to the transfer of the suit plot from the name of the defendant No.1 to the names of the plaintiffs.

On the other hand, the learned counsel for the defendants 3 to 6 has forcefully argued that the defendants 3 to 6 are bona fide purchasers for value and had no notice of the alleged transaction. His submission is that the defendants 3 to 6 have been allotted the plot in suit for consideration by the defendant No.2 and are in possession thereof.

Mr.Rustam J.E.Kaikabad, the learned counsel for the defendant No. 2 has submitted that there is no privity of contract between the plaintiffs and the defendant No.2 and the defendant Society is not responsible for any liability consequential or otherwise arising thereform. His submission is that the defendant Society had paid Rs.26 lacs to the defendant No.1 and thereafter he had surrendered the plot in suit to the defendant Society. His further submission is that the estate broker of the plaintiffs had accepted the pay order and endorsed on the receipt that the plaintiffs were not interested in the plot in suit.

I have been addressed to great length by the learned counsel for the parties on the question of a prima facie case as also on the other questions involved. It is, I think, unnecessary to state again the principles which have to be kept in mind in granting or refusing to grant temporary injunctions under the provisions of Order XXXIX, Rules 1 and 2, Civil Procedure Code. These principles have been stated and re-stated in several decisions of superior Courts. It is not disputed that the defendant No.1 had agreed to sell the plot in question to the plaintiffs. It is also not in dispute that the defendant No.1 had agreed to sell the plot in question to the plaintiffs. It is also not in dispute that the managing committee of the defendant No.2 had approved the transfer of the plot in favour of the plaintiffs. From the documents and conduct of the defendants Nos.l and 2, it is evident that the plaintiffs had agreed to purchase the suit plot from the defendant No.1 and the defendant No.2 had approved the transfer of the plot in favour of the plaintiffs. I am in agreement with the learned counsel for the plaintiffs and hold that the plaintiffs have raised a fair question for trial. The two principal points which are urged before me on behalf of the defendants 2 to 6 in this connection are (1) that there was no privity of contract between the plaintiffs and the defendant No.2 and (2) that the defendants 3 to 6 are bona fide purchasers for value and had no notice of the alleged transaction. In my view, it is unnecessary to decide these questions at this stage. These are questions which will fall for decision at the trial. It is sufficient to state that in view of the pleadings of the parties, the minutes of the meetings of the managing committee and the legal notice and its reply, there is a prima facie case in the sense that the plaintiffs have raised a fair question for trial. I desist, therefore, from expressing any opinion on the questions mooted before me in this connection.

No doubt granting of ad interim injunction is discretionary but the discretion has to be exercised on sound judicial principles. In case it is established that the plaintiffs have prima facie case that g they are likely to suffer irreparable injury before their legal rights can be established and that the mischief done to them by withholding the injunction is greater than that which is likely to arise from granting it, then the Courts grant interim injunction. In the present case, in my view, the plaintiffs have got a prima facie case as the defendant No.1 has received part payment of sale consideration, defendant No.2 had approved the transfer in favour of the plaintiffs. Thus, if interim injunction is withheld, great damage will be caused to the plaintiffs. The conduct of the defendant No.2 is not above board as it backed out from the approval of the transfer. There is nothing on the record that the minutes of the meeting held on 10-11-1986 were conveyed to the plaintiffs and the defendant No.1. C It is also not in dispute that prior to recalling the minutes any notice for compliance was served upon the defendant No.1. However, it is on the record that the defendant No.1 had surrendered the plot and the documents to the defendant No.2. The learned counsel for the defendants 3 to 6 has submitted that the defendants have spent a huge amount and are prepared to develop it and will not part with it. The proposition on its face value seemed to be attractive but it is not acceptable and it will cause serious complications resulting in multiplicity of proceedings and the plaintiffs will be unnecessarily harassed.

Mr.Khalid Ishaq has drawn my attention to the Sind Amendment of Section 52 of Transfer of Property Act. His submission is that injunction should be refused during the pendency of a suit for specific performance of a contract on the ground that the purchaser would be bound by the doctrine of lie pendense. In Hadley v. London Bank of Scotland (12 Law Times 747) Justice Turner observed as follow: -

"I have always understood the rule of the Court to be, that if there is a clear valid contract for sale, the court will not permit the vendor afterwards to transfer the legal estate to a third person, although such third person would be affected by lis pendense."

The object of granting interim injunction is to maintain the status quo and not to disturb it. The defendants 3 to 6 therefore cannot be allowed to sell, alienate or deal in any manner whatsoever or develop or to construct a building or to change the entire situation to the disadvantage of the other party.

From the facts and circumstances of the case if the status quo of the property is changed, it is likely to affect either of the parties and irreparable loss will be caused to them. If the property is allowed to be sold away, alienated or developed or is allowed to raise building during the pendency of the suit, the plaintiffs would be seriously prejudiced and embarrassed. The balance of convenience thus also lies in granting injunction. I would therefore grant injunction restraining the defendants from selling, damaging and/or mortgaging the property, developing or raising any building subject to the condition that the balance of sale consideration amounting to Rs.26 lacs is deposited with the Nazir of this Court within one month from this date. In case the plaintiffs deposit the amount in Court, the same would be deposited by the Nazir of this Court in the Habib Bank, Court Road Branch, Karachi, as a time deposit at the maximum available interest, failing which the injunction granted shall stand vacated.

I consider that this is a fit case in which the rights of the parties should be determined as soon as possible. I would accordingly direct the defendants to file written statement within three weeks. This suit shall be fixed for the regular hearing within three months from this date.

M.Y.H./G-42/K Interim injunction granted.

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