1999 Y L R 910
1999 Y L R 910
[Karachi
Before M. Shaiq Usmani, J
Mrs. RASHIDA‑‑‑Plaintiff
versus
Mrs. SHAHZAD KHANEM and others‑‑‑Defendants
Suit No.295 of 1981, heard on 29th September,
1998.
(a) Specific Relief Act (1 of 1877)‑‑‑
‑‑‑‑S. 27(b)‑‑‑Bona fide purchaser without notice‑‑‑Defendants/subsequent
purchasers of the suit property were not aware of the earlier agreement to sell
regarding the property, nor the defendants were aware of any pending litigation
or issuance of status quo order regarding the suit property‑‑‑Subsequent
purchasers were bona fide purchasers without notice.
(b) Transfer of Property Act (IV of 1882)‑‑‑
‑‑‑‑S. 52‑‑‑Registration Act (XVI of 1908), S.18‑‑‑Lis pendens,
doctrine of‑‑Applicability‑‑‑Where no notice regarding pendencey of suit or
proceedings was registered under S.18, Registration Act, 1908, principle of lis
pendens was not applicable.
Faiyaz Hussain Khan v. Munshi Prag Narain and others 34 IA 102
rel.
(c) Civil Procedure Code (V of 1908)‑‑‑
‑‑‑‑O. XXXIX, Rr. 1 & 2‑‑‑Interim injunction‑‑‑When
to be effective‑‑‑ Injunction becomes effective only upon notice being served
on the parties who are restrained from performing a particular act as opposed
to stay of proceedings in a Court or Tribunal which order becomes
effective the moment it is passed‑‑‑Mere existence of temporary injunction does
not render void the alienation of property in contravention of the injunction.
PLD 1978 Kar. 152 and AIR 1930 All. 387(2) rel.
(d) Specific Relief Act (I of 1877)‑‑‑
‑‑‑‑Ss. 12 & 27(b)‑‑‑Specific performance of agreement‑‑‑Plaintiff
filed a suit against defendant for enforcement of an agreement to sell the
property‑‑‑Defendant/owner of the property had transferred the same to the
defendant/subsequent purchaser, who was as such a bona fide purchaser without
notice‑‑Specific performance of such agreement, where the possession of the
suit property was not with the defendant/owner‑‑‑Validity‑‑where
defendant/subsequent owner had a valid title to the property, the possession
could not be disturbed‑‑Such an agreement could not be specifically enforced
and plaintiff was not entitled to specific performance of agreement in
circumstances.
Aziz A. Munshi for Plaintiff.
Ghulam Hussain Abbasi for Defendant No. 1.
Mansoor‑ul‑Arifeen for Defendant No.3.
Zaki Ahmed for Defendant No.4.
Dates of hearing: 19th, 27th, August; 3rd, 22nd and 29th
September, 1998.
JUDGMENT
Brief facts of the case are that the plaintiff No. l and her late
husband Muhammad Iqbal Maniar, entered into an agreement, dated 22‑5‑1979 with
the defendant No. l for purchase of plot of land bearing No. 10, Blocks 7 and
8, Modern Housing Cooperative Society Limited, Karachi measuring 1500 sq. yards
for a total sale consideration of Rs.8,25,000. The plaintiff No.1 and her late
husband paid Rs.1,00,000 in advance in part payment of the sale consideration.
The plaintiff contends that under the terms of the agreement, the defendant
No.1 undertook to complete all formalities of sale within 45 days and to
execute a registered general power of attorney in favour of the plaintiffs'
attorney Mr. Muhammad Hanif Maniar. It appears that the defendant No. 1 failed
to fulfil the terms and conditions of the agreement and the possession of the
property was not handed over to the plaintiffs even though the plaintiff No. l
and her late husband were ready and willing and were prepared to perform their
part of the contract and to pay the balance sale consideration of Rs.7,25,000.
The plaintiff caused various letters to be written to the defendant No. l
complaining to her about the failure to perform her part of the contract and
asked her to complete all requirements as laid down in the sale agreement but
to no avail. Amongst all the communications addressed to the defendant No.], she
only replied to letter, dated 15‑1‑1980 through her Advocate in Quetta. Through
this letter, dated 4‑7‑1980 the Advocate of the defendant No. l sated that she
was not in vacant possession of the said plot and was, therefore, unable to
transfer the possession thereof to the plaintiffs as the contract had become
impossible of performance. Thereafter, various attempts by the plaintiff No.1
to contact the defendant No.1 failed as she continued to evade all such
attempts. Through letter, dated 4‑7‑1980 which the defendant No. l had caused
to be sent to the plaintiff, the defendant No. I's Advocate contended that the
plaintiffs have not performed her part of the contract and as such the sale
agreement stood cancelled and in any case she did not have the possession of
the property and hence was unable to hand over the possession to the plaintiff
No. 1. The plaintiff maintains that the defendant No. l had no right to
terminate the contract and that the agreement is still valid and enforceable.
It appears that on 13‑12‑1981, the Court had passed a consent
order for maintenance of status quo, which was subsequently confirmed by order,
dated 2‑5‑1982 and in spite of this the defendant No.1 sold the property in
question to defendant No.2. The plaintiffs claim that they came to know of this
fact on or about 7‑11‑1985 upon receipt of a letter, dated 4‑11‑1985 from the
defendant No.4. Thereafter, the plaintiffs made an application to join the
defendant No.2 as party to the proceedings which was allowed and defendant No.2
was joined as a party. The plaintiff contends that subsequent sale of the
property by defendant No.1 to defendant No.2, was collusive in nature and was
undertaken to defraud the plaintiff. It seems that subsequently defendant No.2
sold the property to defendant No.3 and that the defendant No.3 is presently
trying to get the plot mutated in her name in the records of the defendant
No.4. It is for this reason that plaintiffs filed an application to join
defendants Nos.3 and 4 as party to the proceedings which application was
allowed by order, dated 24‑12‑1986. The plaintiffs now claim specific
performance of their sale agreement, dated 22‑5‑1979 with the defendant No. 1.
In her Written Statement the defendant No. l admits the signing of
the sale agreement, dated 22‑5‑1979 but states that the plot in question was to
the knowledge of the plaintiff, in occupation of trespassers at the time of
sale agreement and since it could not be vacated, its delivery could not be
given to the plaintiffs within the period stipulated in the agreement but the
delivery was subject to payment of balance sale consideration whether the plot
was vacated or not. The defendant No.1 contends that since the plaintiff No.1
failed to pay the balance sale consideration and was thus, in breach of the
terms of the contract the defendant No.1. could not take any step to complete
the formalities prior to execution of sale‑deed. In fact, the defendant No. l
states that she had at considerable expense managed to get the plot vacated by
the trespassers but since the plaintiffs failed to pay the balance sale
consideration and delayed the matter considerably the trespassers re‑occupied
the plot. The defendant No.1 admits of receiving only one notice from the
plaintiff i.e. 15‑6‑1980 in reply whereof she terminated the contract because
of failure of the plaintiffs to fulfil their terms of the agreement.
Consequently, the defendant No‑1 maintains that the contract cannot be
specifically enforced. The defendant No.1, denies any knowledge of the
confirmation of the status quo order on 2‑5‑1982 and states that it is only on
19‑10‑1985 i.e. nine months after the transfer of the plot by the defendant No.
1 to defendant No.2 that the plaintiff made, enquiries about the plot from the
defendant No.4. In fact the plaintiff made enquiries about the plot even after
the subsequent transfer from defendant No.2 to defendant No.3. Considering that
the defendant No.1, had no knowledge of any order from the Court for
maintenance of status quo, the act of transfer of plot by the defendant No. l
to defendant No.2 was valid and any title conferred on defendant No.2 was also
valid.
The defendant No.3 also has filed a Written Statement in which she
says that she has purchased the plot from defendant No.2 without any notice of any
defect in the title of defendant No.2 and that she had taken over the
possession of the plot from defendant No.2 on 13‑10‑1985. She also states that
before entering into agreement for purchase of the property with the defendant
No.2 on 1‑6‑1985, she had made all enquiries from the office of the defendant
No.4 and that there were no restrictions or encumbrance .on the sale of this
property. Indeed it was only on 19‑10‑1985 when the plaintiff informed the
defendant No.4 about the alleged agreement in existence and about the pendency
of the suit. The defendant No.3 contends that she has a valid title to the
property as she has paid major part of the consideration and has possession of
the property.
Based on the pleadings of the parties following issues were
framed:
(1) Whether defendant failed/neglected to carry out the conditions
of the said agreement that the possession of the suit property would be handed
over to the plaintiff? If so, what is its effect?
(2) Whether defendant breached, failed/neglected to perform her
part of the contract? If so, what is its effect?
(3) Whether the defendant No.2 was aware of any suit pending in
this Honourable Court or injunction when he purchased the property from
defendant No. 1?
(4) Whether the defendant No.2 is bona fide purchaser of property
and same was sold out to defendant No.3, without knowledge of any pending
litigation?
(5) Whether the defendant No.3 is bona fide purchaser for value
without notice of previous transaction and, therefore, protected under section
27(b) of Specific Relief Act?
(6) Whether plaintiff is entitled to specific performance?
(7) What should the decree be?
The plaintiffs examined one Muhammad Hanif Maniar, the father‑in‑law
and the paternal‑grandfather of .the plaintiffs Nos.2, 3 and 4, who acted as
the Attorney of all the plaintiffs whereas the main defendant i.e. the
defendant No.1 did not lead any evidence and it is only the defendant No.3, the
present alleged owner of the property, who examined herself. My findings on the
above issues are as under:
Issues No.1 Both parties i.e. the
plaintiff and the defendant No.1 blame each other for having violated the terms
of the agreement. Whereas the plaintiff states that the balance sale
consideration was not paid because the defendant No.1 had failed to hand over
the possession of the property within the stipulated period while the defendant
No.1, states that the possession of the plot was not handed over because the
plaintiff had failed to pay the balance sale consideration and also that later
the agreement became impossible of performance because of encroachment by
trespassers. However, what emerges from these contending assertions is that
there was an agreement, dated 22‑5‑1979 in existence and that there was a
mention in the agreement of the property having been encroached upon and that
there was a condition in the agreement that the encroachment would be removed
before possession would be handed over to the plaintiffs. In his evidence the
plaintiffs' witness had admitted that the agreement of sale was to be completed
within 45 days and that the time was the essence of the contract. The said
witness has also admitted that before the agreement was executed, he had seen
the plot in possession of the trespassers but states that it was because of
this reason that the agreement provided for delivery of vacant possession. The
witness was evasive about the signing of the general power of attorney by the
defendant No. l as provided for in the agreement. He admits to having sent a draft
of the general power of attorney to defendant No. 1, but then he did not seem
to remember whether such a general power of attorney was executed by defendant
No. l or not. The said witness admits that he had not informed the society
about the status quo orders passed by the Court with regard to the property and
also admits the fact that this suit was filed nine months after the expiry of
the period stipulated for completion of the sale in the sale agreement.
Considering that no evidence had been led by the defendant No. l and in her
written statement she admits not to have handed over the property to the
plaintiff my findings for this issue is that the suit property was not handed
over to the plaintiffs as per the terms and conditions of the agreement, dated
22‑5‑1979.
Issue No.2. It is an admitted position that the defendant No. t did not
perform her part of contract but, according to her Written Statement, which
obviously cannot take place as evidence, it is stated that she did not do so
because firstly the plaintiffs failed to perform their part of the contract
inasmuch as they did not pay the balance sale consideration in time and
secondly that the agreement in itself had become impossible of performance as
she was not in a position to hand over the land to the plaintiff No. l in view
of its occupation by trespassers. Considering that the fact of the agreement
being in existence is admitted, it is obvious that the defendant was in breach
of such agreement inasmuch as she failed to hand over the possession of the
property. Whether she did so because the plaintiff did not pay the balance sale
consideration or whether she did so because of the physical impossibility of
handing over the plot in view of its encroachment by trespassers is really of
no importance because she has brought no evidence to show that she had at any
time offered to the plaintiffs that the plot was ready for occupation and that
it could be handed over subject to payment of balance sale consideration. In my
view such notice was necessary because it is an admitted position that the plot
was subjected to encroachment by certain trespassers. Consequently, I have no
option but to find that the defendant No. l has been in breach of the
agreement. As to what is its effect is a different matter altogether because it
is also an admitted position that the defendant No.1 is no longer in possession
of the plot nor does she has any title to the plot. Consequently, its effect
will be discussed subsequently, in this judgment.
Issues Nos.3 and 4. The Court records show that the consent status quo order was
passed on 13‑12‑1981 and was subsequently, confirmed on 2‑5‑1982 but it is
recorded in the order that the counsel for the defendants was not present.
Consequently, it would seem that the defendant No. l was not aware of the
confirmation of the status quo order. It is also a matter of Court record that
the defendants Nos.2 and 4 were made party to the proceedings by order, dated
24‑12‑1986. It has also been brought on record through evidence that the plaintiffs
themselves informed the defendant No.4 of the existence of the filing of the
suit on 19‑10‑1986. It would, thus, appear that at the time that the defendant
No.1 entered into an agreement to sell the plot in question to the defendant.
No.2, the defendant No.2 would not be aware of the existence of the status quo
order of the Court nor would the defendant No.4 aware of the existence of the
status quo order. It is also a matter of record that the defendant No.2
subsequently, sold the property to defendant No.3 vide agreement, dated 1‑6‑1985,
which agreement too was entered into before either defendant No.2 or defendant
No.4 became aware of any pending litigation in respect of this property.
Consequently, defendant No.2 would appear to be a purchaser without notice and
hence by all standard a bona fide purchaser.
Issue No.5. As has been brought out in the discussion under the above
issues that on the date that the defendant No.3 entered into an agreement to
purchase the property from defendant No.2 i.e. 1‑6‑1985 neither the defendant
No.2 nor the defendant No.4 and obviously not even the defendant No.3 were
aware of any pending litigation regarding this property. The defendant No.3 has
brought evidence on record to show that she had purchased the property for
consideration and has stated that this was without notice of any defect in the
title of the defendant No.2 in the cross‑examination of the defendant No.3, she
has held her ground and, thus, I find that defendant No.3 is a bona fide
purchaser of the property.
Issue No.6. The question whether the plaintiff is entitled to specific
performance of the agreement is one that is not free of ambiguity. There is no
doubt that the agreement between the defendant No.1 and the plaintiff was in
existence and that it was capable of specific performance and I have already
held that the defendant No.1 was in breach of this agreement, consequently, by
all rights the plaintiff should be entitled to the specific performance of this
agreement. However, the question that arises now is whether the agreement can
now be specifically performed in view of the fact that the property has now
changed hands twice and I have already held that both subsequent sales are
without notice of the pending litigation. Now the doctrine of Lis Pendens I
which prohibits the alienation of property by any of the parties to litigation
is contained in section 52 of Property Act, 1882 and the classic case which
sets out the principle I succinctly is that of Faiyz Hussain Khan v. Munshi
Prag Narain and others (34 Indian Appeals 102) but in the Province of Sindh
this section has been amended by Transfer of Property and the Registration
(Sindh Amendment Act, 1939) which makes it mandatory that a notice of the
pendency of such suit or proceeding is registered under section 18 of
Registration Act, 1908". It is clear that no such notice is claimed to
have been registered by the plaintiffs. It would, therefore, appear that
principle of Lis Pendens should not apply in this case. But even. if the Sindh
Amendment is ignored it is clear that since defendants Nos.2, 3 and 4 had no
notice of pending litigation at the time of entering contract of sale, the
title of the defendant No.2 as well as the defendant No.3 would be valid. It
has also been discussed above that the fact of the status quo order in such
transfer would be of no consequence inasmuch as the notice of such order had
not been served on either of the parties including the defendant No.4, who were
mainly responsible for mutation in the records of their society. It is now well‑settled
that an injunction becomes effective only upon notice being served on the
parties that are restrained from performing a particular act as opposed to stay
of proceedings in a Court or a Tribunal which order becomes effective the
moment it is passed. There are a chain of authorities on this point but
reference may be had in particular to PLD 1978 Kar. 152. It is well‑settled
that mere existence of a temporary injunction does not render void the
alienation of property in contravention of the injunction. Reference may be had
to AIR 1930 All. 387(2), if need be. In this case it is a matter of record that
the confirmation order of the status quo was passed in the absence of the
defendant No. 1, consequently, the defendant No. l would be presumed not to be
aware of such order. No evidence has been brought on record by the plaintiffs
to show that any attempt was made to serve such notice on the defendant No. 1.
It is an admitted position and has been brought out from the record of evidence
before me that such notice was also not served on defendant No.4 or for that
matter defendant No.2. In fact it is an admitted position that the defendant
No.4 learnt about the existence of litigation regarding this property only on
19‑10‑1985 i.e. almost four months after two sales had already concluded. Since
now defendant No. 3 is bona fide purchaser for valuable consideration and
without notice of the agreement which the plaintiffs seek to specifically
enforce or for that matter of the pendency of this suit it is obvious that the
possession of the defendant No.3 cannot be disturbed now and that the defendant
No.3 has a valid title to the property. Consequently, it goes without saying
that the plaintiff's agreement could not be specifically enforced. My findings,
therefore, in respect of this issue are in the negative.
In view of the above discourse, I would hold that the plaintiffs
are not entitled to specific performance of the agreement, dated 22‑5‑1979, but
the defendant No.1 has been in breach of the agreement and as such plaintiff is
entitled to damages for such breach for which the plaintiff may seek such
remedy as are available to her under the law. This suit is disposed of in terms
hereinabove.
Q.M.H./M.A.K./R‑76/K
Order accordingly.
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