2015 M L D 1468
[Balochistan]
Before Jamal Khan Mandokhail and Muhammad Ejaz Swati, JJ
RUKHSANA HIDAYATULLAH and 9 others ---Appellants
versus
Syed BAHAUDDIN and another ---Respondents
R.F.A. No.16 of 2006, decided on 4th June, 2015.
(a) Transfer of Property Act (IV of 1882) ---
----S. 55(1) (a) & (5) (d) ---Rights and liabilities of buyer and seller of the property ---Scope ---
Landlord and tenant ---Seller of the property was bound to disclose all the encumbrances,
charges, dues against a pr operty to the buyer ---Buyer had prerogative to purchase the property
after having knowledge with or without encumbrances ---If buyer had purchased a property with
all the liabilities then the encumbrances that were attached to the said property would
automa tically transfer to the buyer ---Tenant, in the present case, had paid 'pagri' to the previous
owners ---New owner had stepped into the shoes of previous owners after purchase of suit
property ---New owner was bound by all the deeds and agreements executed be tween previous
owners and tenant after purchase of property ---New owner became absolute owner of the
property after taking over possession and its charge and payment of entire consideration amount -
--New owner was entitled for every benefit of the property and at the same time was also
responsible for all encumbrances attached to the said property ---Ownership of property would
pass to the new owner on completion of sale transaction who was bound to pay all the
encumbrances attached to the property ---Previous owners had no more concern with the property
in question nor in any manner were responsible for any of its liability ---Tenant was occupying
the premises against payment of nominal amount as rent ---Liabilities attached to the property
was the reason of les ser amount of sale transaction of the same ---New owner despite having
knowledge of the liabilities attached to the property purchased the same ---New owner was
beneficiary of eviction of tenant from the shop in question whereas re -payment of amount of
'pagr i' was subject to such ejectment ---New owner of the property was responsible for payment
of the amount of premium received by the previous owners against the shop in question ---Had
the tenant not been evicted from the premises in question, there would have been no demand of
payment of premium ---New owner of premises himself opted to get eviction of the tenant ---Trial
Court had rightly decreed the suit to the extent of payment of amount of pagri to the tenant but
responsibility had been wrongly fixed ---Impug ned judgment and decree passed by the Trial
Court were modified ---Suit filed by the tenant for recovery of amount of premium was decreed
against new owner of the property who should pay the said amount within a specified period ---
Appeal was accepted partly .
(b) Words and phrases ---
----'Encumbrance' ---Meaning.
Black's Law Dictionary rel.
Muhammad Qahir Shah for Appellants.
Khushnood Ahmed for Respondent No.1.
Sher Shah Kasi for Respondent No.2.
Date of hearing: 13th April, 2015.
JUDGMENT
JAMAL KHAN MANDOKHAIL, J. ---The respondent No.2 was proceeded against ex
parte, where -after the appeal was finally decided on 21st October, 2010, by this Court. The
respondent No.2 filed a Civil Miscellaneous Application No.2607/2011 on the gro und that he
was not properly served. On scrutiny of the record, it was found that the respondent No.2 was not
personally served, as such, on 13th April, 2015, the application was allowed and the ex parte
judgment and decree were recalled. After re -hearing the parties including the respondent No.2,
the matter was reserved for judgment.
2. Briefly stated facts of the case are that the predecessor of the appellants Nos.1 to 9, 11 to
22 and the respondent No.10, being joint owners of the land (described in th e plaint), started
construction of a building over it, with the name and style of Asmat Plaza. the appellants
received an amount of Rs.5,50,000 (Rupees five Lacs & fifty Thousand Only) from the
respondent No.1 as premium (Pagri) in respect of a shop. On co mpletion of the building, the
shop was rented out to the respondent No.1 @ Rs.500 (Rupees five hundred only) per month.
3. After some time, the predecessor of the appellants sold out the entire building including
he shop in question to the respondent No. 2, who thereafter, filed an eviction application against
the respondent No.1. The, tenant contested the application, claiming therein that he had paid an
amount of Rs.5,50,000 to the previous owners, as such, he is owner of the superstructure of the
shop i n question. His eviction was ordered, wherein it was also held that the respondent No.1 had
paid the said amount as "Pagri" (premium). The matter went up to the Hon'ble Supreme Court of
Pakistan, where the eviction order and findings with regard to the amo unt of 'Pagri' was
maintained, however the respondent No.1 was allowed to avail proper remedy for recovery of the
said amount, hence the present suit for recovery of said the amount along with damages has been
filed by the respondent No.1 against the appel lants and the respondent No.2 (the purchaser). The
trial Court, out of the pleadings, framed the following issues:
"(1) Whether suit is not maintainable in view of legal objections B, C & E?
(2) Whether plaintiff has paid Rs.6,50.000 as advance for con struction to the defendants
Nos.1 to 6?
(3) Whether plaintiff is entitled to receive the advance Rs.5,50,0004 paid and damages of
Rs.1,50,000"
Both the parties led their respective evidence and also produced the documents. After
conclusion of the case , the trial Court decreed the suit only to the extent of the original amount
against the appellants vide judgment and decree dated 18th February, 2006, hence this appeal.
4. The learned counsel for the appellants stated that the property in question, inc luding the
shop of the respondent No.1, was sold out by the appellants to the respondent No.2 with all
liabilities and encumbrances, which is evident of the fact that lesser amount of consideration was
fixed. He stated that the appellants have received an amount of Rs.5,50,000 from the respondent
No.1 as Pagri, therefore, a nominal monthly rent was fixed. He added that after purchase of the
property, the respondent No.2 became its owner and landlord, whereas the respondent No.1
became his tenant, therefore, now it is up to the respondent No.2 to pay the amount of premium
to the respondent No.1.
5. The learned counsel for the respondent No.1 supported the contention of the learned
counsel for the appellants and stated that actually, the amount of Rs.5,50,00 0 was received from
him by the predecessor of the appellants. He contended that after purchase of the property, the
respondent No.2 filed an eviction application against the respondent No.1, which was allowed,
however, the claim of the respondent No.1 with regard to payment of the amount against the
shop in question was accepted by the Rent Controller, whose order was upheld by the Hon'ble
Supreme Court of Pakistan. He stated that since the respondent No.2 is the beneficiary of the
shop in question, therefo re, he is also responsible for the liabilities against this shop. The learned
counsel added that the respondent No.2 was when approached to pay the amount, he refused to
do so, hence the present suit has been filed against both the parties. The learned cou nsel stated
that his claim is attached with the shop in question, therefore, after eviction, the respondent No.1
is entitled for the recovery of the amount, either from the respondent No.2 or the appellants.
6. The learned counsel for the respondent No.2 opposed the contention and stated that the
appellants admit the fact that they have received the amount of Rs.5,50,000 from the respondent
No.1, then it is their responsibility to pay back the said amount to him. He stated that the
respondent No.2 purchas ed the property without liabilities and legally it is the responsibility of
the seller to clear all the dues, liabilities and encumbrances attached to the building, therefore,
the respondent No.2 is not responsible for the payment of the said amount.
7. We have heard learned counsel for the parties and have perused the available record,
which reveals that the payment of an amount of Rs.5,50,000 by the respondent No.1 to the
appellants is undisputed. It is the case of the appellants that lesser amount of t he consideration is
the proof of the fact that the property was sold out to the respondent No.2 along with all
encumbrances, including receipt of the amount of Rs.5,50,000 from the respondent No.1. The
only point for consideration in this appeal is that wh o is responsible for the payment of the
alleged amount to the respondent No.1.
8. The sale transaction in respect of the building including the shop in question between the
appellants and the respondent No.2 is undisputed. According to section 55(1)(a) o f the Transfer
of Property Act, (IV of 1982) ("the Act"), "The seller is bound": (a) to disclose to buyer any
material defect in the property or in the seller's title thereto of which the seller is, and the buyer is
not, aware, and which the buyer could no t with ordinary care discover". Similarly, according to
section 55(5)(d) of the Act, "The buyer is bound, (d) where the ownership of the property has
passed to the buyer, as between himself and seller, to pay all public charges and rent which may
become pa yable in respect of the property the principal moneys due on any encumbrances
subject to which the property is sold, and the interest thereon afterwards accruing due."
9. According to the above referred provisions of law, it is the responsibility of the seller to
disclose all encumbrances, charges, dues etc. against a property to the buyer. After gaining
knowledge, it is the prerogative of the buyer to purchase the property with or without
encumbrances. If he purchases a property with all the liabilities, then the encumbrances that are
attached to the property automatically transfers to the buyer.
10. The word "Encumbrance" has been defined in Black's Law Dictionary, as under: --
"A claim or liability that is attached to property or some other right an d that may lessen
its value, such as a lien or mortgage; any property right that is not an ownership interest. An
encumbrance cannot defeat the transfer of possession, but it remains after the property or right is
transferred."
Admittedly, the responden t No.1 was occupying the shop as a tenant after 'payment' of
Pagri to the appellants (previous owners). After purchase of said property, the respondent No.2
has stepped into the shoes of the previous owners, whereas the respondent No.1 became his
tenant. A fter purchase of the property, the respondent No.2 is bound by all the deeds and
agreements executed between the previous owners and the respondent No.1. After taking over
the possession of the property, taking over its charge and payment of entire conside ration
amount, the respondent No.2 became absolute owner of the property. Under such circumstances,
the new owner is now entitled for every benefit of the property and at the same time, is also
responsible for all encumbrances, attached to the said propert y. On completion of the sale
transaction, the ownership of the property passed to the new owner, who is bound to pay all the
encumbrances attached to the property. The previous owners are no more concerned with the
building in question, nor in any manner a re responsible for any of its liability. Keeping in view
the fact that the tenant was occupying the property against payment of nominal amount as rent,
the statements earlier given by the previous owners before the Rent Controller and the material
availabl e on the record, it is established that the liabilities attached to the property was a reason
of lesser amount of sale transaction of the property. The respondent No.2 despite having
knowledge about the liabilities attached to the property, purchased it on "as is where is" basis. As
the respondent No.2 is beneficiary of the eviction of the respondent No.1 from the shop in
question, whereas the re -payment of the amount of `Pagri' was subject to eviction of the tenant,
therefore, in such view of the matter, t he respondent No.2 is responsible for payment of the
amount of premium, received by the previous owners against the shop in question. Had the
respondent No.1 not evicted from the shop in question, there would have been no demand of
payment of premium by hi m. The respondent No.2 himself opted to get eviction of the
respondent No.1 from the shop in question, therefore, he is liable to pay the amount of premium
to the respondent No.1. The trial Court, while deciding the case, was right in decreeing the suit to
the extent of payment of amount to the respondent No.1, but the trial Court has erred by fixing
the responsibility upon the appellants.
Thus, in view of what has been stated and discussed hereinabove, the appeal is partly
allowed and the impugned judgm ent and decree dated 18th February, 2006, passed by the trial
Court are hereby modified. Consequently, the suit filed by the respondent No.1 for the recovery
of an amount to the extent of Rs.5,50,000 is decreed against the respondent No.2, who shall pay
the said amount to the respondent No.1 within a period of thirty days, w.e.f. 10th June, 2015. The
office to prepare a decree sheet accordingly.
ZC/66/Bal. Appeal partly allowed.This judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
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