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Suit No. 466 and Civil Miscellaneous Applications Nos. 2263 and 2264 of 1985, decided on 26th May, 1986.

‑‑‑O XXXVIII, R. 5 & O XXXIX Rr. 1 & 2‑‑Specific Relief Act (I of 1877), S. 12‑‑Suit for specific performance‑‑Applications for attachment and injunction‑‑Plaintiff claiming that land in dispute, belonging to defendants 1 and 2 was to be sold to him by them under an agreement of sale, for which they were paid part consideration, through defendant No.3 who was their attorney under registered general power of attorney but said land had been sold to defendant No.5 by a registered deed which was a collusive and fraudulent transaction depriving plaintiff of his rights‑‑Defendants 1 & 2 on the other hand contending that agreement of sale with plaintiff as well as receipt about consideration was executed by defendant No.3, when his power of attorney had already been revoked and he had no authority to enter into an agreement with plaintiff on their behalf and that agreement in favour of defendant 5 was made with active participation of defendant No.3‑‑Held, participation of defendant No.3 in deal with defendant No.5 prima facie established that defendant No.2, in collusion with defendant No.3, arranged sale to defendant No.5 because if power of attorney of defendant No.3 had been cancelled in real sense then there was no need to seek his participation in agreement with defendant No.5‑‑Plaintiff though making out a prima facie case yet he failed to satisfy ingredients of O. XXXVIII, R. 5, C.P.C. for purpose of attaching of property‑‑Since both parties i.e. plaintiff as well as defendant No.5, were claiming same land and had paid part of sale consideration to defendants 1, 2 and 3, maintenance of status quo was ordered.

‑‑‑O XXXVIII, R. 5‑‑Attachement of property before judgment‑‑Merely by establishing a prima facie case by plaintiff, attachment before judgment, held, could not be granted unless necessary ingredients of O. XXXVIII, R. 5, C.P.C. had been satisfied

J.H. Rahimatoolah for Plaintiff.

Zafar Hadi Shah for Defendants Nos. 1 to 4.

Mansoorul Arfin for Defendant No. 5

The Plaintiff has filed this suit for specific performance of the agreement for sale of land bearing survey No.8 and 9 measuring 33.37 acres situated in Deh Surjani, Taluka and District Karachi. The allegations are that the defendants No.l and 2 appointed defendant No.3 as their attorney under registered general power of attorney dated 11‑6‑1984. In October, 1984 defendant No.l and 2 through defendants No.3 and 4 entered into a contract with the Plaintiff for the sale of land for a price of 32 lacs on terms and conditions mentioned therein. The defendant No.3 received Rs.5 lacs from the Plaintiff acknowledging this receipt. In terms of contract the Plaintiff requested the defendant No. 3 to get the lay out plan and map approved from defendant No.6 and obtain no objection certificate and signified readiness and willingness in terms of agreement. On request made by the defendant No.3 the plaintiff paid through Habib Bank Limited two pay orders in the sum of Rs.1,89,600 and Rs.20,000 to the Defendant No.3 for payment to defendant No.6, in terms of the agreement. It is alleged that the defendant No.3 did make payment to defendant No.6 on behalf of the plaintiff. The plaintiff paid an expended additional sum of Rs.20,000 and on or about 4‑6‑1985 at the: request of the defendant No.3 paid a further sum of Rs.30,000 towards and on account of contract for sale, for which a receipt was issued by the defendant No.3. Thus in all, the plaintiff had paid and expended Rs.7,59,600 in respect of which the plaintiff claims a statutory charge on the property in dispute. The defendants No. 1, 2, 3 and 4 failed and neglected to perform their part of the agreement and did not obtain 'No Objection Certificate' and lay out plan from the defendant No.6 although the plaintiff was ready and willing to perform his part of the agreement. On 7‑7‑1985 the plaintiff learnt that defendants No.l, 2, 3 and 4 have sold the land to defendant No.5 by registered deed dated 3‑6‑1985. According to the plaintiff it is a collusive and fraudulent transaction to deprive the plaintiff of his rights, the sale was with notice of the contract and the rights of the plaintiff and intended to delay and defeat the plaintiff's right. The plaintiff then filed this suit and applied, by these two applications, for attachment before judgment of the disputed property, and injunction restraining the defendants No.l to 5 from entering into contract by or selling, disposing of, or in any manner charging, encumbering or creating any interest on the property in suit. In the second application the plaintiff seeks remedy for appointment of receiver of the property.

Mr. J.M. Rahimatoolah the learned counsel for the plaintiff has contended that the plaintiff had entered into a valid agreement, with the defendants No. 1, 2, 3 and 4 for valuable consideration and that the defendant No.5 had full notice of this sale. The subsequent sale made between the defendants Nos. 1, 2 and 5 is collusive and fraudulent. The learned counsel further states that the plaintiff is ready and willing to deposit the entire sale consideration in Court.

Mr. Mansoorul Arfin the learned counsel for the defendant No. 5 has contended that the agreement relied upon by the plaintiff was not an agreement between defendants Nos. 1 and 2 the owners of the property, but it was with the defendants No.3 and 4 who had no authority to sell the property on behalf of the defendants No.l and 2. In this regard the learned counsel has pointed out that Power of Attorney on the basis of which the defendants Nos. 3 and 4 had sold the property was cancelled on 5‑9‑1984 and another cancellation of Power of Attorney was made on 28‑5‑1985 which was registered on 3‑6‑1985. Therefore, it seems that although by a deed dated 5‑9‑1984 the Power of attorney was cancelled the deed of cancellation was separately registered by a subsequent deed on 3‑6‑1985. During this period the defendants No.3 and 4 had entered into an agreement with the Plaintiff and sold the property. The question will arise whether in the absence of a registered deed of cancellation of power of attorney till 28‑5‑1985, the plaintiff could have made inquiries about its cancellation. This particular aspect of the case will reflect upon the bona fides and good faith of the plaintiff who had only knowledge of a registered power of attorney executed in favour of the defendants No.3 and 4. The defendants No. 1 and 2 have denied that they have entered into an agreement with the Plaintiff and received any consideration. The learned counsel for the plaintiff has also contended that the sale agreement between the defendants No.l, 2 and 5 is a collusive agreement as the sale consideration is far less than the amount of sale consideration mentioned in the agreement with the Plaintiff. While referring to these facts and documents the Plaintiff's counsel has contended that prima facie case has been made out and as the amount paid to the defendant No.3 is in respect of the land in dispute in terms of section 65 of the Transfer of Property Act it would be treated as a charge on the property. The learned counsel contended that right of the Plaintiff can be protected by attachment of the property or by appointment of a Receiver and injunction restraining the defendants from transferring the property.

Mr. Mansoorul Arfin and Mr. Zafar Hadi Shah the learned counsel for the defendants have contended that the agreement between the plaintiff and defendant No.3 was executed by the defendant No.3 and none of the other defendants have signed it. It has further been pointed out by the learned counsel that the agreement and the receipt executed by defendant No.3 are alleged to have been made on behalf of defendants No.l and 2, but they were all executed after the power of attorney had been cancelled by the defendants No.l and 2 had revoked the power of attorney by a deed dated 5‑9‑1984 but another deed of cancellation of the same power of attorney was executed and registered on 28‑5‑1985. It was during this intervening period that the defendant No.3 as attorney of the Defendants No.l and 2 executed the agreement Jin favour of the Plaintiff: If the defendants No.l and 2 had got the deed of cancellation of power of attorney registered before the execution of the sale agreement in favour of the plaintiff, it was possible to argue that the plaintiff has not acted with due diligence and in good faith, because on proper search he would have known that the Power of Attorney in favour of the defendant No.3 does not exist.

Mr. Rahimatoola has contended that the defendant No.5 should have made inquiries from the defendants No. 1 and 2 whether any transaction has been made under it or not, and as they have avoided to make such inquiry they should be burdened with the knowledge of transaction and, therefore, they cannot be a bona fide purchaser without knowledge of the agreement. It was also pointed out that before entering into agreement the defendant No.5 did not publicise the sale inviting Objection, therefore the transaction lacks bona fides. Mr. Mansoorul Arfin the learned counsel for the defendant No.5 has pointed out to various discrepancies in the agreement between the plaintiff and the defendants No.l, 2 and 3. It is stated that the agreement bears no date and that it was executed by the defendant No.3 without even mentioning that he has done so as an attorney of the defendants No.l and 2. Then the receipt Annexure 'C' refers to agreement dated 15‑4‑1984 and the second receipt Annexure 'F' to the plaint refers to agreement dated 14‑10‑1984 with the Plaintiff and the area of land is given as 19.97 acres. These may be some of the discrepancies but if the agreement is proved to be legal and binding such discrepancies may not render it invalid. The sale deed in favour of defendant No. 5 has been executed by the defendants No. 1 and 2, who have also filed their written statement in which it is stated that the transaction with defendant No.5 was settled by the defendant No.3 and the sale deed was executed by them as required by the defendant No.3 who had informed them that the defendant No.5 had agreed to pay to defendants No.l and 2 Rs.17 lacs as against Rs.15,35,500 which was payable to them under the agreement with defendant No.4. Therefore, it seems that the agreement in favour of defendant No.5 was made with active participation of the defendant No.3 whose authority is alleged to have been cancelled. This prima facie establishes that the defendant No. 2 in collusion with the defendant No.3 arranged sale to the defendant No.5 because if the power of attorney of defendant No. 3 has been cancelled in the real sense then there was no need to seek his participation in this agreement. In these circumstances, the Plaintiff has made out a prima facie case.

However, merely by establishing a prima facie case attachment before judgment cannot be granted unless necessary ingredients of order XXXVIII rule 5 have been satisfied. The plaintiff has failed to make out such a case. Even appointment of Receiver will not be proper as the defendants are not wasting the property of trying to alienate or transfer it. Mr. Mansoorul Arfin the learned counsel for the defendant No.5 has stated that the defendant No.5 is in possession of the property and has no intention to transfer or dispose it of. He has stated that the defendant No.5 will first apply for the conversion of land into sikni land as he has purchased it as an agricultural land and only after conversion, he will make a scheme for its disposal. This scheme is yet to come, as no permission by the Karachi Development Authority has so far been accorded to the defendant No.5. In these circumstances as both the parties are claiming the same land and have only paid part of the sale consideration to defendants No. 1, 2 and 3 it would be just and proper that all the parties to the suit should maintain status quo as today.

M.Y.H./M‑134/K Status quo granted.

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