Stifling Freedom of Speech in Pakistan

Specific Performance Of Agreement And Willingness

In the year 2017, the Honourable Supreme Court in its judgment somersaulted the already stricken equitable remedy available to a promisee. The Honorable Supreme Court in its esteemed judgment titled as HAMOOD MEHMOOD Versus Mst. SHABANA ISHAQUE[1] and others was pleased to hold that

“It is mandatory for the person whether plaintiff or defendant who seeks enforcement of the agreement under the Specific Relief Act 1877, that on the first appearance before the Court or on the date of institution of the suit, it shall apply to the Court getting permission to deposit the balance amount and any contumacious/omission in this regard would entail in dismissal of the suit or decretal of the suit if it is filed by the other side”.

In simpliciter, if the promisee (purchaser) is willing to perform his part of the obligation, then he must express his willingness to perform agreement by way of deposit of remaining sale consideration before the court seized with the matter. The Honorable Court further elaborated that not only promisee is required to deposit but must move the application or offer on the first appearance before the court or on the date of institution. To understand the rationale behind such stringent law laid down by Honourable Court the peculiar facts need to be appreciated but not much have been provided in the said judgment.

The verdict of the Honourable Supreme Court is binding on all other courts of Pakistan as per Article 189 of the Constitution of Pakistan 1973. Thus, the above-mentioned dictum of the Honourable Supreme court has been followed religiously in all matters concerning the specific performance of the agreement, irrespective of unadorned distinction between the nature of the property. The failure to deposit the remaining sale consideration entails dismissal of the suit and seldom the orders reflected whether the same has been made under Order VII, Rule 11 of Order XVII, Rule 03 of CPC 1908.  However, this judgment where irked the business community and bonafide purchasers, simultaneously, also caused an outcry among the legal minds. On various occasions, efforts were made to take exception to this underlying principle of law but considering the hierarchy and binding nature of such precedents, many forums layoffs their hands from distinguishing the August court decision on facts as well as law. Often referred to as a difficult path to tread upon, the promisee was burdened to deposit the remaining sale consideration with civil nazirs of the court to show his willingness and readiness to perform his part of the contractual obligation. On the first appearance, taking the suit of the plaintiff/promisee on the face of it and requiring the promisee to reflect his willingness and bonafide is quite a rigorous requirement without taking into consideration the willingness of the promisor/vendor.

However, Honourable Lahore Hight court confronting with such a situation, dilated upon different legal aspects and nature of contracts, attempted to extricate itself from shackles while holding[2] that

“and in a bilateral contract, participating parties promise each other that they will perform or refrain from performing an act. This type of contract is also known as a two-sides contract, as stated above; thus, when the petitioner has already performed his first part of the agreement, it is the respondents who have to perform their part as agreed between them and the petitioner and when they refused to perform their part of agreement/settlement agreement, this thing prompted the petitioner to approach the Court so as to force them to perform their part. Thus, in this eventuality, the petitioner cannot be forced to deposit the whole sale consideration, especially when the agreement is bilateral as well as under certain terms and conditions and both the parties have to perform their parts step by step”.

While concluding his arguments to buttress his decision, the Honourable Court held that direction to deposit remaining sale consideration at the inception of trial is not tenable and such a direction will be issued only after the trial of the suit and at the time when the rights of the parties are being determined and such a direction will be issued at the time when the final decree is passed and not at this stage, keeping in view peculiar facts and circumstances of the case in hand. Lately, the Honourable Supreme Court of Pakistan ruled in reported judgment[3] about binding nature of the principle of law held by August court in the case of Hamood Mehmood. It was held that

“the case of Hamood Mehmood[4] is a leave refusing order and cannot be held to be an enunciation of law by this court as it has been settled by this court in number of cases that an order granting and/or refusing leave is not a judgment which decides a question of law and therefore, it should not be followed unnecessarily and imperatively. In the referred case, neither any assistance was provided by the bar nor any law was discussed and consequently, such order cannot be held to be a judgment of this court deciding a matter finally or laying a principle upon the basis of law”.

In order to ease the effects of Hamood Rehman principle, the August court lately hold that the remaining sale consideration deposited by the plaintiff seeking specific performance of agreement should be deposited in the Government protected security such as defence or National Savings certificate. Thus, it can be safely concluded at this stage that conduct of parties, tenor of agreement vis-à-vis bilateral obligations of the parties shall be considered while directing the promisee/purchaser for deposit of remaining sale consideration.

The taxonomy of case law on this issue invariably led to the conclusion that the willingness of the vendor/promisor and admission of execution of the agreement is also sin qua non for requiring the promisee for the performance of his part of the obligation. It would be disconcerting for a court of the first instance to direct the promisee/purchaser to deposit the remaining sale consideration where the existence of agreement in itself has been emphatically challenged by the opposite side. When the agreement whose performance has been sought through the intervention of court has been specifically denied by the vendor/promisor then, will the court also pass a decree to the extent of its valid execution upon deposit of remaining sale consideration? Upon failure to deposit the remaining sale consideration and eventual dismissal of the suit will encounter the aspect of return of earnest amount or the promisee will be expected to seek his separate remedy for recovery of the earnest amount, thus, leading to a multiplicity of litigation over and above the overburdened courts.
Such hasty decisions would inevitably lead to miscarriage of justice and multiplicity of claims without adjudicating the actual default. Having said so, the deposit of the remaining sale consideration will not take away the discretion enjoyed by the court under S.22 of Specific Relief Act 19877. The said provision of law clearly encapsulated that despite the presence of all formalities for the grant of specific relief, still it would be within the discretion of the court to grant specific performance being a discretionary and equitable relief.
Therefore, after the deposit of the remaining sale consideration, a sword of willingness & discretion of the court is still handing on the promisee. So, the promisee is not fraught with the willingness of only the promisor but also the willingness of the court. It would not be out of place to mention here that Honourable Lahore High Court[5] at another occasion, aimed to distinguish the Honourable Supreme Court decision while maintaining that recent decision of Honourable Supreme Court of Pakistan[6] requiring the promisee to deposit the remaining sale consideration is distinguishable on many grounds and courts have to consider the mundane circumstances of each case too.
In the above-referred decision of Honourable Supreme Court, promisee was directed for deposit of remaining sale consideration on the basis that other party has accepted the execution of the agreement and also unequivocally stated before the court of the first instance that they are ready to perform their part of the obligation provided the plaintiff (purchaser) shall deposit the remaining sale consideration before this court in order to exhibit his willingness and readiness.
Another distinguishing aspect that needs to be accounted for, is the very nature of the subject matter of agreement. In the above-quoted recent judgment of the Honourable Supreme Court of Pakistan, the subject matter of the agreement was not immovable property rather the deal was struck for purchase of shares, that too, based on a memorandum of understanding whose binding nature is also fragile. Nevertheless, the Honourable Lahore High Court while expressing its reverence to the dictum of August Court, humbly distinguished the law and facts while holding that

“The alleged agreement to sell is a bilateral document and its genuineness or otherwise as well as ascertainment who is at fault to perform his part besides to search readiness & willingness of either party is, indeed, a fact, which could only be determined after collecting evidence”.

The Honourable Supreme Court earlier was of the considered view in the case reported as Maksud Ali and others vs Eskandar Ali[7] held that though invariable for the vendee to expressly plead his readiness & willingness in the plaint, but omission thereto would not be enough to non-suit him. The apex court, indeed, focused in said judgment that sine qua non for the vendee to prove his readiness from the date of contract to that of hearing. The August court was of the view that the petitioner not only still to prove his case, but also to rebut the stance of his vendor, besides to shatter the claim of the third party. For these reasons, a deposit of the balance amount, in fact, will not be in aid of justice to either promote the case of the plaintiff or even beneficial to the other party, who till this time is disputing the settlement of sale, thus there will be no fun to force the vendee in this behalf. At the end, while maintaining the much veneration for the August Court decision, the glorious words of Hamoodur Rahman, Justice would be germane here. He opined[8] that

“I am not unmindful of the importance of this doctrine but in spite of a Judge’s fondness for the written word and his normal inclination, to adhere to prior precedents I cannot fail to recognize that it is equally important to remember that there is need for flexibility in the application of this rule, for law cannot stand still nor can we become mere slaves of precedents…”

Thus, the manifestation of the above discussion can be deduced that on the way to strict adherence to the precedents of August court, the factual aspects and business practices must be considered and each case must be dealt upon its own peculiar facts and circumstances. The ephemeral wait for admission of execution of the agreement by the vendor/promisor and his willingness to continue with the agreement will undoubtedly bring clarity and would help in the advancement of justice.

References:

[1] reported as 2017 SCMR 2022

[2] 2020 CLC 291

[3] 2021 SCMR 1270

[4] 2017 SCMR 2022

[5] Writ Petition No.56759/2020. Muhammad Jahan Zaib Khan. Vs. Muhammad Rafique Khan, etc.

[6] 2020 SCMR 171 Messrs Kuwait National Real Estate Company (Pvt) Ltd and others vs. Messrs Educational Excellence Ltd. And another

[7] PLD 1964 SC 381

[8] Asma Jilani v. Government of the Punjab (P L D 1972 SC 139)

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