Buyer who failed to pay balance sale consideration not entitled to transfer of property: SC

ISLAMABAD, Jun 22 (APP):The Supreme Court (SC) of Pakistan has ruled that the remedy of specific performance is an equitable relief that could only be granted to a party that continuously demonstrates readiness, willingness and financial capacity to fulfill its contractual obligations.

The Court held that a purchaser who failed to pay the balance sale consideration within the agreed period could not claim entitlement to such relief.

According to the detailed judgment approved for reporting, a two-member bench comprising Justice Shakeel Ahmad and Justice Mian Gul Hassan Aurangzeb disposed of civil appeals filed against a Lahore High Court (LHC) judgment concerning the sale of a 5-kanal, 4-marla property in Sialkot.

The Court noted that under an agreement executed on March 11, 2014, purchaser Amjad Javed had paid Rs 8,00,000 as earnest money, while the remaining amount of Rs 6.48 million was required to be paid by July 27, 2014.

The judgment observed that the agreement expressly provided that the earnest money could be forfeited if the balance amount was not paid by the stipulated date. The Supreme Court held that such a clause made time an essential term of the contract, making it mandatory for the purchaser to complete payment within the agreed period.

The purchaser subsequently filed a suit for specific performance seeking enforcement of the agreement. However, despite being granted two opportunities by the trial court, he failed to deposit the balance consideration in court and repeatedly sought additional time. As a result, the trial court dismissed his suit.

The Supreme Court held that had the purchaser genuinely been ready and willing to perform his part of the contract, he would have complied with the court’s directions and deposited the outstanding amount. The Court emphasized that a mere assertion of readiness and willingness in pleadings is insufficient; a claimant must also establish actual financial ability and seriousness in completing the transaction.

The judgment further noted that in contemporary circumstances, where property values rise rapidly, courts could not blindly apply the traditional principle that time was generally not of the essence in transactions involving immovable property. According to the Court, a purchaser could not keep a seller indefinitely bound to a contract without fulfilling his own obligations.

The Court also observed that the purchaser deposited the balance amount nearly three and a half years later, a step that did not improve his position because the contractual deadline and the timelines fixed by the court had long expired.

The Supreme Court concluded that the purchaser’s conduct demonstrated a lack of the diligence, readiness and willingness required to obtain the equitable relief of specific performance. Consequently, he was not entitled to enforcement of the agreement.

Upholding the LHC’s judgment, the Supreme Court dismissed the purchaser’s appeal.