Law: Contract Act, 1872

Section: 29, 70

Law: Code Of Civil Procedure, 1908.

Section: 34, 34-A, 7

Law: Qanun-e-Shahadat Order, 1984

Section: 17, 117, 118

Case Summary

Facts:
The plaintiff filed a suit for specific performance of an alleged oral agreement for the sale of Plot No. 26, Ramna-6, Islamabad, claiming he paid Rs. 2.8 million as advance towards a total sale price of Rs. 52.8 million. The defendant denied the existence of any concluded sale agreement and asserted that the payments were merely a pre-advance before execution of a future written agreement. The trial court dismissed the suit for specific performance but ordered refund of the amount received with markup. Both parties filed appeals.

Held:
The appellate court held that the plaintiff failed to prove the oral agreement because:

• No independent witness of the alleged oral agreement was produced.
• Material receipts containing the alleged terms were not proved after the defendant denied his signatures.
• The plaintiff, being an experienced property dealer, could not reasonably claim to have entered into a transaction worth over Rs. 5 crores without a written agreement.
• Under the Qanun-e-Shahadat Order, the burden of proving the oral agreement and its terms rested upon the plaintiff.

However, the Court held that the defendant could not forfeit the advance money because no agreement authorizing forfeiture was proved. Retaining the money would amount to unjust enrichment. Applying Section 70 of the Contract Act, 1872, the Court ordered restitution with reasonable compensation. The Court modified the decree by awarding Rs. 16,901,525 (including compensation based on compound KIBOR calculations) payable within 30 days, with further daily interest thereafter.