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Petitioner: MUHAMMAD SADIQ VS Respondent: MUHAMMAD FAZIL
P L D 1960 (W
P L D 1960 (W. P.) Karachi 630
Before A. S. Farooqi, J
MUHAMMAD SADIQ‑Plaintiff
Versus
MUHAMMAD FAZIL AND OTHERS‑Defendants
Suit No. 209 of 1954, decided on 31st March 1960.
(a) Contract‑--
Sale of goods‑--Suit for recovery of price of goods supplied‑--Defendants taking delivery of shipping docu ments and invoices from Bank on execution of promissory notes of same value as shown on invoices‑Suit not based on pro missory notes‑--Liability of defendants to be determined upon proof of actual value of goods‑--No contract of sale or terms upon which goods supplied proved by plaintiff‑Actual value of goods not to be determined upon face value of invoices‑Value of goods be determined upon other evidence on record:
(b) Evidence Act (I of 1872),
S. 67‑--Pay orders (Hawalas) addressed by plaintiff to defendants‑--Pay orders and receipts in token of payments made to persons named in pay orders produced by defendants in evidence‑Presumption arises that amounts have been paid under pay orders--‑Direct proof of execution of documents may be dispensed with.
(c) Evidence‑---
Chart prepared by counsel showing particulars of documents brought on record‑May be exhibited by Court for purpose of referring to relevant documents.
(d) Estoppel‑--
Invoices‑---Examination of consignments reveal ing that goods not of value as shown in invoices‑--Defendants not estopped from challenging value of goods appearing on face of invoices.
Riaz Ahmad for Plaintiff.
Mohsin Raza for Defendant No. 1.
Wahid Farooqi for Defendant No. 2.
Tejani for Defendant No. 3.
Dates of hearing: 12th, 16th, 24th, February 1960, 1st, 10th and 15th March 1960.
JUDGMENT
The plaintiff Muhammad Sadiq is carrying on business and residing at Bahrain (Persian Gulf) since 1935. His two brothers defendant 1 Muhammad Fazil and the defendant 2 Muhammad Sabir were in Delhi, from where they came to Karachi after Partition. The defendant 3 is the Eastern Bank Limited, Bahrain Branch.
2. It is the plaintiff's case that the defendants 1 and 2 were at the material time jointly carrying on business as importers & exporters at Karachi under the name and style of the Eastern En gineering and Automobile Works with its office at Marston Road; that on the instruction of these defendants he sent to them from Bahrain in April 1951, three consignments containing iron and other metal scraps, welding plant, generator and old gunny bags of the total value of Rs. 3,62,155 (Indian) that he sent the relative shipping documents of these goods on 16‑4‑51 to the Eastern Bank, Karachi, through the Eastern Bank, Bahrain, to be delivered to the said Eastern Engineering and Automobile Works upon collection from them of the sum‑of Rs. 3,62,155; that on 24‑4‑51 the plaintiff asked the defendant 3 to instruct the Karachi Branch of the Eastern Bank to deliver the documents to the defendants against their acceptance of draft for full amount; that on 30th April 1951, the defendant 2 Muhammad Sabir executed four promissory notes payable on various dates for the total amount of Rs. 3,62,155 (Indian) Exh. 7/5 to Exh. 7/8 and received all the documents from the bank including the three invoices Exh. 7/1 to Exh. 7/3 which related to the three consignments. The defen dant 2 signed these promissory notes as the proprietor of the Eastern Engineering and Automobiles Works. The plaintiff' goes on to aver that on 14‑5‑51 the Eastern Engineering and Automo biles Works wrote to the Eastern Bank at Karachi informing them that they will not make payment against these promissory notes until the goods were cleared and exchange control copies were given to them by the authorities; that thereafter several extensions were granted to the defendants but they made no payment and ultimately the present suit was instituted on 23‑1‑54 for the recovery of the aforesaid sum of Rs. 3,62,155 (no attempt was made to convert it in Pakistani rupees) and interest from the date of suit. The defendant 3 viz. the bank was made a proforma defendant and no relief was sought against them. The suit was instituted by the attorney of the plaintiff, one Muhammad Shafi, who also happens to be his father‑in‑law.
3. The defendant 1 in his written statement claimed to have been the sole owner of the Eastern Engineering and Automobile Works at the relevant time and said that the defendant 2 had nothing to do with it. He thus assumed the sole responsibility in respect of this transaction. On the merits he stated that the goods had been sent by the plaintiff on consignment basis and were not sent on the instructions or request of this defendant or the Eastern Engineering and Automobile Works. By consign ment basis it was meant that the defendant 1 was to receive the goods and sell them at Karachi. He further alleged that the invoices of these goods were grossly over‑valued; that the actual value of the goods which were received in these three consignments was Rs. 1,15,000 (Indian) which would approximately be equal to Rs. 79,971 (Pakistani); that as against this he paid a total sum of Rs. 1,68,028‑2‑0 to various persons on the order of the plaintiff and on his account. He also pleaded that the plaintiff further owed to him a large sum of money on account of a consignment of rice which this defendant had sent to the plaintiff at Bahrain and in respect of which this defendant had sought permission of this Court to sue the plaintiff in forma pauperis (J. Miscellaneous No. 64/52), with regard to the execution of the promissory notes in favour of the Eastern Bank, Karachi Branch it was alleged by this defendant that these had been executed at the request of the plaintiff who was his brother and who had said that this was necessary to save his face with the bank of Bahrain because he had already taken money from that bank and the execution of such promissory notes by the defen dant in favour of the bank at Karachi would give the plaintiff some breathing time. It was further alleged that these promissory notes were without consideration.
4. The defendant 2 contended himself by completely denying all liability in the matter on the ground that he had nothing to do with the Eastern Engineering and Automobile Works and that he had executed the promissory notes on behalf of the defendant 1 Muhammad Fazil, who was the proprietor of that concern and who was absent from Karachi at the time when the documents had been received in the bank. The defendant 3 pointed out that no cause of action had been disclosed against them, nor was it shown as to why they were impleaded as a defendant in this suit.
5. The following issues were framed:‑
(1) Are the defendants No. 1 and 2 jointly carrying on business under the name and style of The Eastern Engineering and Automobile Works?
(2) What was the value of the goods despatched by the plaintiff?
(3) On what terms were the goods despatched?
(4) Were the promissory notes issued for consideration?
(5) Has the defendant No. 1 already paid to or on account of the plaintiff a sum of Rs. 1,68,028‑2‑0. If so, what is its effect?
(6) Is the suit maintainable in its present form?
(7) Is the suit maintainable against defendant Nos. 2 and 3 for lack of cause of action?
(8) General.
Of these, the issues Nos. 4 and 6 were dropped by the learned counsel for the parties and therefore they do not call for any decision.
6. Issue No. 1 does not present much difficulty. Evidence has been led on behalf of the defendants to show that the defendant 1 was the sole proprietor of the Eastern Engineering and Automobile Works and that the defendant 2 had only the authority to operate upon his account of this concern in the bank and that he did not have any further interest therein. I do not believe that the defendant 2 was a mere clerk or manager of the defendant I in respect of the affairs of the Eastern Engineering and Automobile Works. That in one of the banks the defen dant 1 was shown as the proprietor of this concern does not necessarily establish that the defendant 2 did not have anything to do with it. In fact from the evidence on record the inference becomes inescapable that both these brothers were acting jointly in respect of this concern though they were maintaining appear ances from which it might be found convenient at the time of any crisis to throw the burden only upon the defendant 1. I have closely watched both these defendants in the witness box and have noticed that it is the defendant 2 who was the real brain behind these ventures while the defendant 1 appeared to be somewhat of a simpleton. But be that as it may, with regard to the liability in respect of the transaction in suit there is no doubt that the defendant 2 must share the responsibility if any with the defendant 1. It was this defendant who took delivery of the documents relating to the consignments in question and it is he who signed the four promissory notes as the proprietor of the Eastern Engineering and Automobile Works. He wrote the bjiy of most of the debit vouchers Exhs. 28/1 to 28/37 and he admittedly made certain payments in respect of some of them. He would therefore obviously be liable to the plaintiff if his claim succeeded. I answer the issue accordingly. In view of this finding and also because no relief is claimed against defen dant 3 any reference to defendants in this judgment hereafter would be intended to mean the defendants 1 and 2 and not defendant 3.
7. Issue Nos. 2 and 3.‑--Strangely enough the plaintiff has not been examined in this case and the only oral evidence on his side is that of Muhammad Shafi his attorney who lives at Karachi and does not have any personal knowledge of the transaction. His evidence is of no assistance either on the question of valuation of the goods or as regards the terms upon which the same had been sent to Karachi by the plaintiff. There is no written contract nor is there any correspondence on record from which the terms of this transaction could be ascertained. Nor is there any oral or documentary evidence on the side of the plaintiff regarding the actual value of the goods, apart from his own invoices Exhs. 7/1 to 7/3. On the side of the defendants how ever there is the evidence of Mohd. Fazil (defendant No. 1) who says that the plaintiff had come to Karachi in August 1955, and it was then that be told him that he would send these consignments to Karachi and that this defendant should deliver the same and sell them here at Karachi and pay the proceeds of that sale to such people at Karachi who would produce Havala (pay order) from the plaintiff. He further goes on to say that the plaintiff had told him that he would send the goods through the bank in whose favour he (Muhammad Fazil) will have to execute hundies but that these bundles would be later on with drawn and that he would not be required to pay to the bank on those hundies.
8. Reliance is placed on behalf of the plaintiff on the fact that admittedly be sent the three consignments and the defen dant 2 on behalf of the Eastern Engineering and Automobile Works took delivery of the shipping documents and the invoices from the bank on execution of 4 promissory notes of the same value t which was shown on the invoices, and that thereafter time for" payments of these promissory notes was extended by the bank on several occasions and the defendants 1 and 2 did not during the course of the correspondence set up the defence which is now put forward. It is true that the total amount of these three invoices Exhs. 7/1 to 7/3 comes to Rs. 3,62,155 (Indian). Of these invoices, Exh. 7/1 is for Rs. 24,000 (Indian ), Exh. 7/2 for Rs. 2,60,000 (Indian) and Exh. 7/3 is for Rs. 78,155 (Indian). Of the four promissory notes Exhs. 7/5 to 7/8, the first is for Rs. 1,00,000 payable within 15 days from the date of execution. The second is also for Rs. 1,00,000 payable within 30 days. The third again is for Rs. 1,00,000 payable within 45 days and the fourth is for Rs. 62,155 payable within 60 days from the date of execution which in all cases was the 30th April 1951. But it must be remembered that the suit is not based on these promissory notes and therefore the liability of the contesting defendants must be determined upon the proof of the actual value of the goods, and this value cannot be established merely by the face value of the invoices or the amounts of the promissory notes which had been executed by the defendant 2 for the sums equivalent to the amounts shown in the invoices. No contract of sale or the terms upon which these goods were sent has been proved by the plaintiff. It has further to be noted that the plaintiff and the defendants I and 2 are real brothers, and there is evidence on the side of the defendants that until march 1950, the plaintiff was one of the three partners of the Eastern Engineering and Automobile Works at Karachi which evidence has not been challenged in cross‑examination. There is also the admission of the plaintiff's attorney that the plaintiff had come to Karachi in August 1950, which was the time at which, according to the defendant 1, this deal was arranged. But by far the most important circumstance in favour of the defendant 1's version on this point is the fact that there are as many as 36 pay orders (havala) which are admittedly in the hand of the plain tiff directing the defendants 1 and 2 to make payments to the persons mentioned in the said pay orders. A large number of these pay orders are undated, but the dated ones show that they pertain to the period between April and July 1951. I shall revert to these pay orders while dealing with issue No. 5. But I must say here that the circumstances of this case clearly suggest that this was not a normal transaction, and whatever may be the true reason it appears that in spite of the promissory notes it was not intended by the parties that the defendants 1 and 2 would pay to the bank at Karachi. Apart from the fact that this position would be completely inconsistent with the fact of payment by the defendants of large sums of money to the plaintiff's' nominees, there are other circumstances which suggest that payment by the defendants under the promissory notes was not really contemplated. For instance, normally the documents should have been delivered by the bank at Karachi against cash payment, but we find that soon after the documents had been despatched from Bahrain the plaintiff sent a letter (Exh. 11/1) to the Eastern Bank at Bahrain to instruct the bank at Karachi to deliver the documents against the acceptance of draft. And though 4 pro missory notes were executed not one of them was honoured and the plaintiff kept on writing to the bank asking them to extend time for payment. Such letters are Exh. 11/4 dated 13‑5‑51, Exh. 11/3 dated 18‑6‑51, and Exh. 11/5 dated 17‑8‑51. As against this there is not a single letter from the defendants to the plaintiff asking for time for extension of payment. If these defendants had to make payments to the bank and were wanting time for doing so there surely would have been some letters from them to the plaintiff asking for such accommodation. On the contrary in his letter to the defendant No. 2 Exh. 7/43 dated 1 1‑7‑51, it is the plaintiff who was asking for accommodation. It is true that on 27‑10‑51, the plaintiff wrote to the bank Exh. 12/4 to take legal action against the defendants, but it is reasonable to believe that he did not expect the bank to embark upon a litigation against the defendants 1 and 2. And again there are a large number of letters from the bank to the plaintiff showing considerable impatience about keeping these documents collection any more with them. These are Exh. 12/7 dated 20‑11‑51, (in which the bank says "we are unable to take any action ourselves"), Exh. 12/6 dated 22‑11‑51, Exh. 12/10 dated 6‑12‑51, Exh. 12/8 dated 10‑2‑52 and Exh. 14/1 dated 9‑10‑52. Then there are further reminders Exhs. 12/11, 12/12 and 12/0 dated 22‑11‑52, 3‑8‑53 and 9‑9‑53 respectively. The plaintiff then replied by Exh. 13/1 dated 13‑9‑53, saying that he had filed a suit at Karachi. We however know that the suit was not filed Until 23rd January 1954, and before this there were yet three more letters from the bank in the same strain. These are Exhs. 14/3, 14/4 and 14/5 dated 12‑10‑53, 18‑10‑53 and 3‑11‑53, respectively. During all this time there is not a single letter from the plaintiff to any of the defendants asking for payment on account of the sale proceeds of these goods nor is there a single letter from the defendants to the plaintiff asking for time to do so. The question is why not? The explanation suggested by the defendant 1 is that the plaintiff was keeping up appearances with the bank from whom he had borrowed and that he (defendant No. 1) did not like to tell the bank the true state of affairs for fear of injuring his brother's position. There is however no material on record from which it could be inferred with any reasonableness that the plaintiff had borrowed from the bank and that he was making it appear that he was not able to repay them because the proceeds of these consignments had remained unpaid. The more reasonable explanation, which neither party has ventured to give, appears to be that payment at Karachi by the defendants 1 and 2 to the holders of the pay order (who must have paid the plaintiff in Indian currency at Bahrain) was a more profitable method though in contravention of Foreign Exchange Regulations. Exhs. 7/42 and 7/43) clearly support such an inference. These holders of the pay orders were obvi ously people from Pakistan working at Bahrain or near‑about in some other part of the Persian Gulf and who while on a visit to Karachi found it convenient to be paid here in Pakistani currency and then adjust it with the plaintiff according to the unofficial rate at Bahrain, Exh. 7/42 actually mentions that Qawat Ali Shah had gone to Pakistan for his marriage and was returning to Bahrain. If this was the true nature of the arrangement it is not difficult to understand the peculiar conduct of both the parties and that may be the explanation why the plaintiff had not ventured to enter the witness‑box.
9. If, therefore, the actual value of the goods is not to be determined upon the face value of the invoices it will be necessary l to determine it upon such other evidence that is on record. The first two consignments represented by the invoices Exhs. 7/1 and 7/2 came by SS `Orna'. Of these Exh. 7/ 1 is for Rs. 24,000 (Indian) and the description and the quantity of the goods of this invoice are as follows:‑
" Eighty tons of cast iron and steel scraps for remelting purposes at Rs. 300 per ton."
The other consignment covered by the invoice Exh. 7/2 is shown to be of the value of Rs. 2,60,000 (Indian) and contained 100 tons of metal scraps (brass and copper) in 738 drums at Rs. 2,600 per ton. The third consignment which came by SS. ' Dumra ' is shown in the invoice Exh. 7/3 of the value of Rs. 78,155 (Indian) and contained welding and lighting set and second‑hand gunny bags. The total value of the goods of all these consignments according to the plaintiff's invoices in Pakistani rupees would amount to Rs. 2,52,043‑8‑0. This would be the equivalent of Rs.3,62,155 (Indian). According to the defendant 1 the total sale proceeds of the goods of all these three consignments amounted to Rs. 1,20,000 but for this figure we have only his word. However with regard to the consignment which according to the invoice Exh. 7/2 is shown to be of the value of Rs, 2,60,000 there is evidence of the actual value. The most important of this evidence is that of Mr. T. Howell, D. W. 1. (Exh. 17) who is the principal appraiser in the Custom House Karachi. This witness was an appraiser in the year 1951, when this consignment was cleared and the bill of entry. Exh. 18 relating to this consignment bears his signature, so that there is no doubt that this bill of entry had been passed by this officer. The quantity of the goods of this consignment as shown in the bill of entry Exh. 18 is 100 tons which is the same as in the invoice Exh. 7/2 and the description of the goods is metal scrap (iron, copper and lead). The value of these goods as assessed by the custom authorities is given as Rs. 61,805‑2‑0 (Pakistani), the equivalent of which in Indian currency would at that time be Rs. 87,500. This witness has stated that as an appraiser it was his duty to see that the goods were passed at their proper value having regard to the prices in the local market. The practice was that the value of the goods was declared by the importer and then that value was compared with the figures available in the local market. He has admitted that there was no duty on these goods in which case the checking is more rigid but there was a question of foreign exchange involved. According to him these goods were lying for about three months in the customs house and it is common ground that they were cleared sometimes about 24th July 1951, having arrived here in April. From this the witness infers that these goods must have been detained in the process of checking. He further says from his recollection of the prices as prevalent in April 1951, that the value of the goods as shown in the invoices Exh. 7/2 was much too high. He has given the prices of iron bars and other metal which was prevalent about that time. He is corrobo rated by the evidence of Shamsul Hasan, D. W. 7 (Exh. 31) who was employed in the Helal Clearing Agency which firm has cleared this consignment. According to this witness the ship containing this consignment had reached Karachi on 19‑4‑51 and the delay in the clearance of the goods was due to the fact that they were under the examination of the Intelligence branch of the Customs authorities. According to him these goods were cleared on revised invoice which would bring the price in con sonance with the one given in the bill of entry Exh. 18. Accord ing to him this clearing agency was closed in the year 1953, and of the two partners one was a very old man who probably died and the other went back to Bombay where he is employed as a film actor. As against this there is no other evidence. Muhammad Shafi, P. W. 1, has said nothing about the value of these goods. The plaintiff has not entered the witness box and no trader from Karachi has been examined to controvert the evidence of the appraiser with regard to the prevailing prices in the market of these goods. There is another circumstance which supports the inference that the goods of these consignments were detained probably because the value at which they were sought to be cleared in the first instance was not accepted by the Customs authorities. It is admitted that the other two consign ments were cleared in the first week of June 1951. Why should this consignment be held up until the 21st of July unless there was some trouble about its clearance. Upon the evidence there fore on record I must held that the correct value of the goods of this consignment was Rs, 61,800‑5‑0. With regard to the other two consignments to which the invoices Exh. 7/1 and Exh. 7/3 relates the defendants have neither produced the relative bills of entry nor have given any evidence with regard to the actual value of the goods contained in those two consignments. I do not believe the version of the defendant 1 that the plaintiff had sent revised invoices in respect of these consignments as well as of the other. The defendant 1 has produced a copy of a letter (Exh. 27) which he says he wrote to the plaintiff to the effect that the value as shown in the invoices Exhs. 7/1 to 7/3 were inflated, and that the plaintiff replied by Exh. 24 saying that he was sending revised invoices. I do not believe that the plaintiff wrote such a letter nor do I believe that he sent any such revised invoices. It would not be safe for him to do so and if he had sent revised invoices the defendant 1 should have been able to produce it. I cannot accept his statement that the revised invoices and the relevant bills of entry in respect of these two consignments were lost or misplaced. In the absence of any other evidence I accept the invoice value of the goods of these 2 consignments and hold that the value of the goods of the first consignment was Rs. 24,000 (Indian), which would be equivalent to Rs. 16,702‑14‑9 (Pakistani) and the value of the goods of the third consignment was Rs. 78,155 (Indian) which would be equivalent to Rs. 54,392‑5‑6 (Pakistani). The total value of the goods of these three consign ments would therefore be Rs. 1,31,386‑15‑3. I hold accordingly. On Issue No. 4 I hold that the promissory notes would be for consideration only to the extent of the actual value of the goods.
10. I shall now proceed to deal with issue No. 5. The defendants have produced 36 pay orders (Hawalas) from the plaintiff asking either the defendant 1 or the defendant 2 to make payment to the various persons named therein. The name of the…
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