livelawpk.com - The Presence of a Double Earnest Money Clause does not ---

The Presence of a Double Earnest Money Clause does not prevent Specific Performance --- Lahore High Court, Lahore

1 month, 3 weeks
73

The Presence of a Double Earnest Money Clause does not prevent Specific Performance --- Lahore High Court, Lahore

Islamabad 28-10-2024: The Lahore High Court has dismissed a second appeal filed by Malik Pervaiz Majeed Shahzada challenging the concurrent judgments of two lower Courts, which had ruled in favor of Rizwan Malik, granting him specific performance of an agreement to sell a plot of land. The Court upheld the judgments of the Additional District Judge, Wazirabad (dated 30.03.2015) and the Civil Judge, Wazirabad (dated 19.07.2011), affirming the respondent’s right to have the property transferred into his name.

The dispute originated from an agreement to sell a plot of land for Rs. 475,000/-. The respondent, Rizwan Malik, had already paid an advance of Rs. 200,000/- to the appellant, Malik Pervaiz Majeed Shahzada, with the remaining Rs. 275,000/- to be paid by February 15, 2005. When the transaction was not completed by the cut-off date, Malik Pervaiz argued that the respondent had failed to fulfill his obligations on time, particularly by not appearing before the Sub-Registrar for the sale’s completion.

However, Rizwan Malik filed a lawsuit on February 16, 2005, just one day after the deadline, seeking specific performance of the sale agreement. Both the Civil Judge and the Additional District Judge ruled in favor of Rizwan Malik, ordering that he pay the remaining balance and the property be transferred to him.

In the second appeal filed before the Lahore High Court, Malik Pervaiz argued that both lower Courts had failed to consider that time was of the essence in the contract. He contended that the respondent’s failure to appear before the Sub-Registrar on the specified date should disqualify him from receiving the relief of specific performance. Additionally, the appellant highlighted the significant increase in property prices since the agreement, arguing that enforcing the contract nearly two decades later would be unjust.

The Lahore High Court, presided over by Mr. Justice Sultan Tanvir Ahmad, upheld the lower Courts’ rulings, finding that Rizwan Malik had demonstrated both readiness and willingness to perform the contract. The Court noted that the respondent had withdrawn the necessary funds from his bank on the cut-off date, showing his intention to complete the transaction. His immediate filing of the lawsuit also indicated his commitment to the deal.

The Court dismissed the appellant’s argument regarding the increase in property prices, stating that the delay was not caused by the respondent but by the appellant himself. Moreover, the presence of a clause for double payment of earnest money did not bar the Court from granting specific performance.

Mr. Justice Sultan Tanvir Ahmad cited Section 22 of the Specific Relief Act, 1877, which gives Courts discretionary power to grant specific performance, provided it is equitable and based on sound judicial principles. The Court also referred to several key case laws, including Dr. Mian Anjum Habib and another Vs. Waseem Ahmed Khan and another (2014 SCMR 1621), which reinforced that the presence of a double earnest money clause does not prevent specific performance.

The judgment also reaffirmed that time is generally of the essence in property contracts, but this must be balanced with the conduct of the parties. In this case, Rizwan Malik’s prompt filing of the suit demonstrated his willingness to perform, as noted in the cases of Lehrasap Khan and 3 Others Vs. Muhammad Sarwar Khan and another (2002 YLR 3223) and Taj Deen Vs. Muhammad Tufail and others (2015 YLR 2562).

The Lahore High Court found no substantial error or defect in the judgments of the lower Courts and ruled that the second appeal did not meet the strict criteria for overturning the decision. As a result, the appeal was dismissed, with no order as to costs.

This ruling highlights the discretionary nature of specific performance in property contracts and underscores the importance of readiness and willingness to fulfill contractual obligations in disputes over real estate transactions.