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Contractual Obligations are Mutual Responsibility of the Parties and Clear Evidence is Necessary before Penalizing any Party for Non-Performance --- Lahore High Court

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Contractual Obligations are Mutual Responsibility of the Parties and Clear Evidence is Necessary before Penalizing any Party for Non-Performance --- Lahore High Court

Islamabad 28-06-2024: In a recent judgment, the Lahore High Court has ruled in favor of Raja Muhammad Khubaib in a case concerning the specific performance of an agreement to sell a property. The case [Civil Revision No. 23551-2023] involved the petitioner challenging the imposition of an additional payment beyond the agreed sale price.

The dispute arose from an agreement to sell dated November 30, 2020, with multiple extensions for the completion of the transaction. The trial court had decreed the petitioner’s suit for specific performance but imposed an additional payment of Rs. 6,769,350/-. The appellate court upheld this decision, prompting the petitioner to seek revision from the Lahore High Court.

Mr. Justice Asim Hafeez presided over the case and concluded that the Trial Court had erred in penalizing the petitioner alone for the mutual failure to perform the contract within the extended timelines. The Court noted that both parties were responsible for the delays and that the respondent No.3’s absence from Pakistan until July 2021 significantly contributed to the issue.

The Court found that the petitioner had made necessary arrangements for the balance payment within the agreed timelines and that there was no evidence of unwillingness on the petitioner’s part to complete the transaction. Consequently, the imposition of the additional payment was deemed unjustified.

The Lahore High Court set aside the additional payment order and decreed the petitioner’s suit, subject to the payment of the remaining consideration of Rs.24,500,000/- within 30 days. Failure to comply would result in the forfeiture of the earnest money and dismissal of the suit.

This judgment underscores the importance of mutual responsibility in contractual agreements and the necessity of clear evidence before penalizing any party for non-performance. The Court’s decision highlights the need for context and mutual agreement in determining the essence of time in contractual obligations.