Saif Ullah Khan through LRs Vs Joint Director, SIDB, Peshawar

.V

JUDGMENT SHEET

IN THE PESHAWAR HIGH COURT,

BAI{NU BENCH

(Judicial Department)

CR No.86-B/2023

Saif Ullah Khan through LRs Vs Joint Director, Small Industrial Development Board, Peshawar, etc.

JUDGMENT

Date of hearing: 27.01.2025

For petitioner(s):

For respondent(s): Pir Nadeem UIIah Shah Advocate rl.******

Dr. Khurshid lobal. J.-

L. By this single opinion, the instant revision petition (# 86-B/2023) and revision petition (# 168-812023) are taken up for disposal, as both involve identical questions of law and fact, and their genesis lies in a consolidated judgment and decree, dated 29.05.2021, passed by the learned Civil Judge- IX, Bannu, upheld by the learned Additional District Judge- IV, Bannu, as per the judgments and decrees, both dated

2.The brief facts leading to the filing of these revision petitions are that Saif Ullatr Khan, the predecessor of the present petitioners / plaintiffs, instituted civil suits (#7311, 741t, and 7l/l of 2015) against the Joint Director, Small Industries Development Board, Peshawar and others, the present respondents in this revision petition. In suit # 73/l,he asserted that suit plots # 85 and 86-,4. were allotted to him on lease for 99 years for setting up a factory under the title "l[/s Inam Cement Pipe Indust y" in the Small Industrial Estate of Bannu Township, vide a lease agreement, dated 09.08.2006, and that he had been regularly paying its rents. However, the respondents, due to mala /ide, subsequently canceled the allotment vide the impugned office orders, dated 13.03.2015. Therefore, he sought a declaratory decree with a permanent injunction to hold the impugned office orders as illegal, without jurisdiction, and of no legal effect, being violative of the lease agreement, referred to above.

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3.In suit # 7411, he challenged the validity of an affidavit, dated 02.11.2005, seeking its cancellation on the ground that it was fake and bogus.

4.In suit # 7lll, he challenged the validity of the office orders, dated O2.Og.2Ol5, vide which the suit plots were to be allotted to new lessees. He prayed for a declaration that the office orders were passed in violation of the lease agreement and were, therefore, liable to be declared of no legal effect.

5.As the parties and subject matter in all the three suits were the same, therefore, they were consolidated by the trial court as per the order dated 23.07.2020. Subsequently, the respondents / defendants were summoned. They appeared and contested the suits by filing a written statement. Their stance was that the plots were leased to the plaintiff in the industrial area solely for the construction of a building to set up a factory within one yeax. However, since the plaintiff failed to abide by the terms and conditions of the lease agreement, dated 09.08.2006, specifically the requirement to construct a building and set up a factory within the stipulated period, the allotment was liable to be canceled and had been rightly canceled through the impugned office orders.

6.The divergent pleadings of the parties culminated in the framing of consolidated issues. After recording evidence and hearing the arguments of the learned counsel for the parties, the trial court ruled that since the one-year period was the essence of the contract, as per the lease agreement, the plaintiffs failure to construct a building and set up a factory within that time justified the cancellation of the allotted plots. It was also ruled that since the genuineness of the affidavit, dated 02.11.2005, had been denied by the plaintiff, the failure on the part of the respondents / defendants to adduce evidence in proof of its validity and execution as per the requirement of law, established the plaintiffs plea of its being fake and bogus. Consequently, suits # 73ll and Tlll were dismissed, while suit # 74ll was decreed as per the consolidated judgment and decree, dated 29.05.2021. This decision, regarding the dismissal of the two suits, was appealed against by the petitioners / plaintiffs in Civil Appeal # 24113 of 2021, while the respondents / defendants filed Civil Appeal # 34113 of 2021against the decretal of suit # 7411. However, both the appeals were dismissed by the learned Additional District Judge-IV, Bannu, as per the impugned judgments and decrees. Hence, these revision petitions.

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7.Arguments heard. Record perused.

8.There is no dispute with regard to ttre validity or execution of the lease agreement, dated 09.08.2006, between the parties. Both the parties admitted the genuineness and execution of this lease agreement, whereby, the suit plots were allotted to the predecessor of the present petitioners / plaintiffs, namely Saif Ullah Khan, on lease for 99 years. It is also an established fact that as per clause (a) of paragraph 4 of the lease agreement, the plaintiff was required to construct a building and set up a factory thereon within a period of one year. It is an admitted fact that the plaintiff has been regularly paying the monthly rents as per the lease agreement.

9.The petitioners / plaintiffs were non-suited by the Courts below primarily on the ground that since time was of the essence of the confract, the failure of the petitioners / plaintiffs to establish a factory on the suit plot within one year rendered the lease agreement liable to cancellation under section 55 of the Contract Act, 1872 and, therefore, it was rightly cancelled by the respondents / defendants.

10.Now, the questions that need consideration in the attending circumstances are: what legal recourse did the respondents / defendants have for the cancellation of the lease agreement when the plaintiff allegedly failed to establish a factory on the suit plot within one year? And did the respondents / defendants have the authority to unilaterally issue the impugned office orders (dated 13.03.2015) to cancel the allotment of the leased plot, if, in fact, time was of the essence of the contract?

11.In this context, the relevant provisions are section 55 of the Contract Act, t872 and section 39 of the Specific Relief Act, 1877. For the proper adjudication of the /rs, it would be pertinent to separately reproduce these provisions and discuss their combined effect.

12.Section 55 of the Contract Act,1872, reads:

55.Effect of failure to per{orm at fixed time, in contract in which time is essential.-When a party to a contact promises to do a certain thing at or before a specified time, or certain things at or before a specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the

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intention of the parties was that time should be of the essence ofthe contract.

Effect of such failure when time is not essential.-If it was not the intention of the parties that time should be of the essence of the conffact, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

Effect of acceptance of per{ormance at time other than that agreed upon.--If, in case of a contact voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.

13.The language of the above quoted provision is clear and easily understandable. It addresses the consequences of failing to perform a conffact on time. If time is of the essence and the promisor fails to perform, the contract becomes voidable at the option of the promisee. Conversely, if time is not of the essence, the promisee cannot render the contract viodable, but may claim compensation for any loss caused by the delay. If the promisee accepts late performance without any reservation, he / she forfeits the right to claim damages unless, at the time of such acceptance, he / she gives notice to the promisor of his intention to do so.

14.Section 39 of the Specific Relief Act,1877, deals with the cancellation of written instruments. It reads:

39.When cancellation may be ordered. Any person against whom a written instrument is void or voidable, who has reasonable apprehension that such instrument, if left outstanding,may cause him serious injury, may sue to have it adjudged void or voidable; and the Court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.

15.The language of the above quoted provision is clear and unambiguous. It explicitly provides a remedy for a person who is subject to a written instrument that is either void or voidable and fears that its continued existence may cause

serious injury. It allows such a person to file a suit for the cancellation of the instrument. The key conditions for seeking the cancellation of the instrument are: firstly, the document must have no legal effect (void) or can be invalidated at the option of one party (voidable). Secondly, the person seeking cancellation must demonstrate that leaving the instrument in effect could result in substantial injury. If these conditions are met, the Court, and the Court alone has the authority to declare the instrument void or voidable and order its cancellation.

16.A combined reading of both the above quoted provisions indicates that where a contract is voidable due to the failure of the promisor to perform within the stipulated time, and if the promisee has suffered a legal injury due to the continued existence of such a contract, the remedy of cancellation under section 39 of the specific relief law should be invoked. In cases where time is of the essence, and the promisee opts to rescind the contract under section 55 of the law of contract, the legal stafus of the contract becomes voidable, making it susceptible to cancellation if its continued existence could cause harm. Similarly, if time was not of the essence, but the delay resulted in substantial financial or legal consequences, the promisee may claim damages under section 55 while also seeking cancellation under section 39 if the continued existence of the contract poses a serious injury. The core principle underlying both provisions is the protection of the aggrieved pW from unjust harm-+ither through rescission and damages in contracfual disputes or through complete cancellation when the document itself is prejudicial. The court, in its discretion, must determine whether the facts of a given case justiff merely awarding damages for delay or necessitate the complete cancellation of the contract, as the case may be. Therefore, these provisions operate in harmony to provide a multi-faceted remedy to an aggrieved party.

17.In the given circumstances, this Court is of the view that if the lease agreement was voidable, but remained in existence, and the respondents / defendants had a reasonable apprehension that the continued possession of the lessee might cause harm to public interest associated with the establishment of the factory, the respondents / defendants could file a civil suit for cancellation of the instrument under section 39 of the specific relief [aw.

18.In these circumstances, I feel no hesitation in holding that if, indeed, time was of the essence of the contract, and the respondents / defendants had a reasonable apprehension that the continued existence of the lease agreement would cause harm to the public interest, they should have sued to have it adjudged void or voidable only and only by filing a civil suit under the provisions of section 39 of the Specific Relief Law. The cancellation of the lease deed could not have been done unilaterally by simply issuing the impugned office orders in an arbitrary manner, without following the due process of law for the purpose.

19.As noted above, the respondents / defendants did not follow the procedure prescribed by section 39 referred to above, for the cancellation of the lease agreement. Rather, they simply canceled the lease agreement by issuing the impugned office orders. Therefore, the impugned office orders lacked any legal sanctity and were liable to be declared of no legal effect. Pertinently, the case of Mohammod Ibrahim through Duly Constituted Sub-Attorney v. Sindh Industrial Trading Estate Ltd. (Site) through Secretary (2019 CLC 817 Sindh) involved a somewhat similar issue, which was addressed as follows:

The plaintiff in this case is in possession of the land, which is not in dispute and such possession as well as ownership is based on registered instruments i.e. the Assignment Deed and Lease Deed. It is trite law that cancellation of a registered document can only take place through a declaration of the Court and not by means of executive orders, as has been done in this case. Moreover, as observed earlier, this is not a case of allotment of which the cancellation could be made in the manner the defendant has attempted to.

20.The case of Syed Sajid Raza through Registered Attorney v. City District Government (KDA Wing) through District Coordination Officer and 05 others Q0l7 YLR 2197 Sindh) also involved identical facts and circumstances. In this case, the Court ruled:

X'rom the evidence available on record, it transpires that the ptaintiff purchased suit property from defendant No.5n namely, Muhammad Anis, transferee of the suit property by virtue of pre-lease transfer, and thereafter the same was transferred by way of pre-lease transfer vide Transfer Order bearing No.A-376lSector

ll-B,/240 Sq. YdsJIttKT/ Resett-T-Brll58 dated 13.09.1988 [Exh.PA]. Subsequently, KDA executed a 99-years in favour of the plaintilf vide Lease Deed Registered No.4455, Book No.I, dated 29.0E.1990, Il{"F. Roll No.l286 dated 04.09.1990 [Exh.P/2]. This fact has not been disputed by any of the defendants in the present case. The pre-lease transfer in the name and favour of plaintilf upon execution of 99-years lease registered lease has been merged into the registered lease, hence the transfer order let alone was not available to defendants I and 2 for cancellrtion. Since the defendant-authority have not denied the prelease transfer of plot in favour of the petitioner, receipt of the lease money and execution of 99-years registered lease deed in favour of the plaintiff, therefore, these admitted facts shall lead to only one result that the transaction in respect of the suit property which commenced with the pre-lease transfer of suit property in favour of the plaintiff was complete in all respects on the execution and registration of the lease deed and nothing remained to be done by the defendant-authority. This being so, all the decisive steps having been taken, no power was left with the defendanUauthority to undo the completed transaction as the same had taken legal effect, clothing the plaintiff with the rights of r lessee. Reliance is placed in the case of Pakistan through the Secretary, Ministry of X'inance v. Muhammad Himayatullah Farukhi (PLD 1969 SC 407) wherein it is held that on the basis of principle of Iocus poenitentiae, the Government or other relevant authorities which are competent to pass an order are also competent to undo that order. However, the order passed and the action taken cannot be withdrawn or rescinded once it has taken legal effect and certain righh created in favour of any individual

In the light of the dictum laid dom in the afore stated judgment of the Hon'ble Supreme Court, the alleged cancelhtion of Transfer Order could not have been ordered through the impuped letter, as aforesaid decisive steps had been taken pursuant to the pre-lease transfer and transaction had attained linality. Furthermore, since, the 99-year lease is in favour of the plaintiff is registered by the concenred authority' hence presumption of truth is attached to them, until and unless they are rebutted through strong and cogent evidence and the Defendants have failed to bring any such evidence orr the record. Therefore, no reason, cause or justification to hold the said documents

otherwise. In this regard, reliance can be made to the cases of Mirza Muhammad Sharif arnll2 others v. Mst. Nawab Bibi and 4 others (1993 SCMR 462) and 'Abbas AIi Shah and 5 others v. Ghulam AIi and another Q004 scMR 1342).

Besides above, it is also a well-established principle of Iaw that a reeistered instrument can onlv be cancelled which in the present case has admittedly not been done by any of the defendants who have challenged the same being obtained through fraud. Sulfice it to observe that public functionaries and Departments of the Government are expected to act in such manner that their actions and conduct should reflect fairness and reasonableness. To deprive someone of his property except by following due process of law is not contemplated by the Constitution and the law. In the circumstances, the impugned cancellation of pre-Iease transfer is illegal and an encroachment on the rights of the plaintiff and hence the same is declared to be without lawful authority and of no legal effect.

(Underline is mine for emphasis)

2L. Similar views were also taken in the cases of Hatiz Muhammad Aslam v. Province of Sindh through Secretary Government and 16 others (2015 MLD 1156) and Messrs Watan Construction Compony Government Contractor v. Government of Khyber Pakhtunkhwa through Secretary Public Health Engineering Department and 04 others (2013 CLC 1028 Peshawar). Similarly, in the case of Mrs. Zaibun Nisa through Attorney v. Karachi Development Authority and 05 others (PLD 1998 Karachi 348), the Court emphasized the requirement of a declaration from the Court in the case of cancellation of a registered lease deed. Also, the Supreme Court in Mst. Hamida Begum v. Mst. Murad Begum (PLD 1975 SC 624) and Majlis-i-Intizamia, famia Masjid v. The Secretary to Governmenl of Pakistan (PLD 1975 SC 355) clearly laid down that the cancellation of a registered document can only take place through a declaration of the Court.

22.As mentioned earlier, the lease agreement was admittedly canceled by the respondents / defendants by simply issuing the impugned office orders, and not in terms of section 39 of the specific relief law, therefore, the impugned office orders are found to be against the settled law

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on the subject, and the edifice built on it, namely the subsequent office orders, dated 02.09.2015, is also liable to fall to the ground.

23.Insofar as the impugned findings qua the affidavit, dated 02.11.2005, are concerned, suffice it to say that the appeal filed by the respondents / defendants against the same was barred by the law of limitation, as it was filed beyond 30 days. Moreover, since the plaintiff Saif Ullah Khan passed away during the pendency of the suits, and his legal heirs, the present petitioners, were arrayed in the panel of plaintiffs, the appeal should have been filed against them. However, the respondents / defendants did not do so. Instead, they filed the appeal against Saif Ullatr Khan, a dead person, which was not maintainable. Even otherwise, the learned counsel for the petitioners / plaintiffs pointed out that since the burden of proof rested on the respondents / defendants to prove the genuineness and execution of the affidavit, dated 02.11.2005, as per the requirement of law, and as they failed to adduce any evidence, no exception can be taken to the findings rendered by the trial Court on this particular aspect of the case. The learned counsel for the respondents / defendants, however, was unable to point out any exception that may be taken in this regard.

24.In these circumstances, the impugned findings to the extent of the dismissal of suits # 73ll and Tlll are not sustainable for being contrary to the settled law on the subject. Therefore, upon acceptance of this revision petition (# 86-812023), the impugned judgments and decrees are modified to the extent that both the referred suits are decreed as prayed for, while the findings to the extent of the acceptance of suit # 74ll warant no interference, and they are accordingly upheld. As a result, the revision petition # 168- 812023 is dismissed.

Announced 27.0r.2025 (Ghrfoor Zrmrn) J qtaxnrEu (S.B.) Justice Dn Khurshid lqbal

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