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Petitioner: UZIN EXPORT IMPORT ENTERPRISES FOR FOREIGN TRADE VS Respondent: Messrs ASIA STEEL JUDGMENT
Court Name: Sindh High Court Judge(s): Syed Haider Ali Pirzada, Abdul Qadeer Chaudhry Title:UZIN EXPORT IMPORT ENTERPRISES FOR FOREIGN TRADE vs Messrs ASIA STEEL
JUDGMENT
Reported As: 1986 MLD 1356 Result: Order accordingly Judgment JUDGMENT ' ABDUL QADEER CHAUDHRY, J.--This order would dispose of the two appeals filed by the appellants against the same order of the learned Single Judge, dated 16-12-1985. ' For the sake of convenience Messrs. Asia Steel Industrial Aids Limited is referred to as ASIACON, Messrs M. Iftikhar and Company Limited is referred to as M.I.C. Uzin Export Import Enterprises for Foreign Trade is referred to as Uzin, Messrs Attock Cement Pakistan Limited is referred to as Attock Cement, Messrs MacDonald Layton and Co. Ltd. Is referred to as M.L.C. And Messrs Continental Engineering Services is referred to as Continental Engineering. ' The facts in brief are that Asiacon filed a suit against the five respondents namely, M.I.C., Uzin. Attock Cement, M.L.C. And Continental Engineering for recovery of Rs, 2,23,92,330. According to the plaintiff-defendant No,2 Uzin entered into a contract with defendant No,1 whereby defendant No,1 was appointed with the consent of defendants No,3, sub-contractors for civil construction and mechanical erection of the cement plant. By contract, dated 9-7-1983 the defendant. No,1 appointed the plaintiff as specialised sub contractors for mechanical erection and steel structure work. The plaintiff commenced work on 1-7-1983 and continued the contract work upto 12-1-1985 when the Chief Engineer of M.I.C. The defendant No,1 verbally asked the plaintiff to stop the work. Before commencement of the work, the plaintiff had brought on the site its own plant, machinery and equipment for mechanical erection and steel structure. Under the contract, the work had to be completed by the plaintiff by 31-10-1984. The defendants 1,2 and 3 failed to adhere to the schedule and the monthly programmer whereby neither the civil foundations were made ready according to the programmed nor equipment was delivered to the plaintiffs on the dates fixed in the Schedule
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and the programme. Further various equipment was wrongly fabricated and was not delivered in sequence or in time. The payments by the defendants to the plaintiff for the work done by the plaintiff were not all made in time in spite of plaintiff's ASIACON protest. In 1983 disputes developed between M.I.C. And Uzin. Uzin filed Suit No, 559/83 charing M.I.C. For slowing down the work and intending to sell the machinery. The M.I.C. Denied delays and charged the defendant No,2 itself as guilty for delay. The Uzin filed Suit No, 313/85 restraining the M.I.C. From encashing the Rent Guarantee and performance bond. The dispute was settled between the Uzin and M.I.C. Further dispute developed between the defendants Uzin and M.I.C. On 12-1-1985 the defendant No,2 exercised the power of entry contained in Article 37 of its contract with the defendant M.I.C. The defendant No,1 (M.I.C.) filed Suit No, 383/84 against Uzin for damages suffered by M.I.C. Due to delays attributable to the Uzin. Uzin on its part filed Suit No, 17 of 1985 alleging that M.I.C. Had abandoned the work on 10-1-1985 and claimed that since Uzin had exercised the power of entry M.I.C. Should be restrained from interfering in the completion of the work by the Uzin or their sub- contractors and from removing any machinery. In para. 13 of the plaint the plaintiffs have claimed from the defendants jointly and severally the following amounts:- Amount is respect of the outstanding Bills already submitted to the Defendants No.1Rs. 28,98,272 (b) Amount payable by the defendants in respect of job already costed but not paid to the plaintiff19,55,868 (c) On account of settlement with labour and staff due to the sudden and illegal exercise of the power of entry which stopped the work and wages paid for retaining them10,11, 456 (d) Compensation for illegal use of the plant, machinery and equipment of the plaintiff from 12th January, 1985 up to the date of the suit14,76,600 (e)Delivery of the plaintiff's plant machinery and equipment and failing that cost thereof amounting to1, 21, 80, 295 (f) On account of loss of profit in the event of the plaintiff had been allowed to complete the work28, 59, 834 Rs. 2,23,82,330 ' The following reliefs h'ave been claimed by the plaintiff ASIACON:- (a) Delivery of the plaintiff's plant, machinery and equipment and in the alternative the cost thereof amounting to Rs, 1,21,.80,295 with interest at the rate of 14 per cent per annum and an injunction restraining the defendants from using the plaintiff's plant, machinery and equipment or any part thereof; (b) A declaration that the defendant No,1 is not entitled to encash the Bank Guarantee of the United Bank Ltd. And performance Bond issued by Adamjee Insurance Co. Ltd. And permanent injunction restraining the defendant No,1 from encashing the said Bank Guarantee and performance Bond; (c) For balance of Rs, 1,02,02,035 with interest at the rate of 14 per cent per annum; (d) Further compensation at the rate of Rs, 3,21,000 per month until the delivery to the plaintiff of the said plant, machinery and equipment; (e) Cost of the suit; (f) any other/further/additional relief or reliefs which this Honourable Court may deem fit in the circumstances of the case." (g) Alongwith the suit the plaintiff ASIACON filed an application under Order XXXVIII, rule 5, C.P.C. And Section 151, C.P.C. And Order XXXIX, rules 1 and 2, C.P.C. Praying the following interim relief as under:-
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(h) "It is, therefore, prayed that this hon'ble Court be pleased to pass orders of attachment before judgment, of all the payments which are to be made by the defendant No,3 to the defendant No,2 with further order to the defendant No,3 restraining it from making payment of any nature whatsoever in respect of any bill to the defendant No,2. It is further prayed that defendant No,2 be restrained from repatriating any amount whatsoever outside Pakistan." (i) The plaintiff also moved an application under Order XL, rule 1 read with Section 151, C.P.C. And Order XXXIX, rules 1 and 2 praying that a Receiver be appointed for taking possession of the plaintiff's plant, machinery and equipment, which is lying at the site of Attock Cement Factory, Hub Chowki, District Lasbella. (j) The applications moved by ASIACON' in the suit filed by him were disposed of by the order, dated 16-12-1985 by the learned Single Judge. The operative part of the order is:- (k) "Nazir of thiS Court is appointed Receiver to take over all the plant, machinery and equipment of the plaintiff, which is lying at site, details whereof are given in Annexure 'C' to the plaint and prepare its inventory. This order appointing Nazir as Receiver will become effective on 1-1-1986. In case Uzin, defendant No,2 furnishes a security in the sum of Rs, 1,00,00,000 to the satisfaction of the Nazir of this Court by 31-12-1985, this order of appointment of Receiver shall stand automatically recalled. Such security will protect the interest of the plaintiff ASIACON in respect of its claim relating to plant, machinery and equipment." (l) The plaintiff ASIACON and the defendant No,2 UZIN aggrieved by the said order have filed separate appeals. (m) Mr. Muhammad Sharif, learned counsel for the appellant in High Court Appeal No, 90 of 1985 has raised the following contention: (n) That it has been held by the learned Single Judge that there is no privity of contract between the parties and therefore, the applications filed by the ASIACON should have been dismissed on such findings. (o) Inconsistent pleas have been taken by the plaintiffs. (p) The plaintiff has to succeed on the case set up in the plaint and no case has been set up by the ASIACON in the suit. (q) The order of appointment of Receiver is not justified as the conditions for appointment of Receiver as laid down under Order XL, rule 1, C.P.C. Do not exist and if the order of appointment of Receiver is not justified the conditions attached to such order also goes away. (r) The basic requirement of Order XL, rule 14is that it is just and convenient. The word 'and' has never been interpreted as 'or'. The plaintiff must establish a strong case for seeking injunction convenience of both the parties has to be seen and not one of the (s) parties to the suit. Reliance has been placed on AIR 1957 Nag. 1. ' In the same context it is further argued that the suit of the plaintiff is for money decree and in such suits appointment of Receiver must be sparingly used. Reliance has been placed on PLD 1965 Kar. 584, PLD 1977 Lah. 830 and 1980 CLC 494. The necessity of appointment of Receiver arises so that the property must be protected from the damages if the plaintiff ultimately succeeds. The movable property has not been claimed by the plaintiff against the other defendants and only money has been claimed against them. The amount of use of the machinery has been assessed in the suit. No prima facie case has been made out by the plaintiff and it is not a case of ASIACON that the UZIN is illegally using the machinery. He has referred to 1940 Appeal Cases (A.C.) 1014. Hudson's Building and Engineering Contracts and 1957 Volume NLR 1012 relevant page 1104. (vi) under Article 20 of the Main Contract the M.1.C. Has to provide the machinery and the machinery has been provided and the UZIN under the Contract is entitled to use the same. Reliance is placed on 1965 Volume 3 A E R 785.
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The question of security cannot be divested from attachment as the object of Order XXXVIII, rule 5, is attachment before judgment is to prevent an attempt on the part of the defendant to obstruct to delay the execution of any decree that may be passed against him. When there is a specific provision for dealing with such matter the the inherent power cannot be used. The facts and circumstances of the case do not justify for demand of security and unless security is demanded the attachment cannot be made. Reliance has been placed of AIR 1955 Bom. 251, AIR 1955 Kutch 14, AIR 1936 All. 438. Reliance has also been placed on AIR 1958 Mad. 411 in support of the plea that in every money suit a Receiver cannot be appointed. Reference has been made to 1940 A C 1019. It is further contended that there are no inherent powers to demand security. Reliance has been placed on AIR 1941 All. 212 which lays down that where the Code has specifically provided for the contingency which has arisen in a case there is no room for the application of power arising under inherent jurisdiction. Reliance has also been placed on AIR 1941 All. 212' AIR 1941 All. 219. Security can only be demanded when the conditions laid down under.,Order XXXVIII, rule 5, exist, and when there are expressed provisions providing reliefs to aggrieved party Court will not invoke inherent power. Reference has been made to PLD 1980 Kar. 926, PLD 1976 Lah. 298, PLD 1979 Kar. 734, PLD 1977 Kar. 722, PLD 1982 Kar. 701, 1982 CLC 1360. ' On the other hand, it has been urged by the learned counsel for ASIACON that privity of contract exists between the parties and, therefore, the application under Order XXXVIII, rule 5 read with section 151, C.P.C. Is maintainable and the purpose of such order would be that a Receiver may be appointed and the defendants be restrained from using the machinery of the plaintiff and the bills to be attached are in the hands of Attock and, they so restrained from making payment to Uzin. No complaint has been made against ASIACON that it had violated any terms of the contract. The suit for recovery of machinery and in the alternate for the decree or money is competent. Under the contract Uzin has not given any power to take possession of ASIACON's machinery. The right to take away machinery can only be by law or contract. There is no allegation that ASIACON has violated any terms of contract. Articles 20 and 37 of the Main Contract do not apply to ASIACON. Machinery belongs to ASIACON. The authorities cited by the learned counsel for Uzin have been distinguished by the learned counsel. It is stated that 1965 A E R would not apply. This was a case in which damages were claimed by one against the other. ASIACON has not brought the machinery on behalf of the M.I.C. The word 'provide' as defined in the dictionary would be applicable. So also reference to Hudson is not relevant. Reference has been made to Building Contract and Practice, Seventh Edition page 349 by William M. Gill, where the relation between the principal contractor and sub-contractor has been discussed. Clauses 20 and 21 of the Main Contract would not apply with regard to the machinery of the plaintiff. It is, therefore, contended that Uzin are trespassers to the movable goods of the plaintiff. Reference has been made to Halsbury's laws of England, Fourth Edition page 699, pars 1491 which contemplates that trespass to goods is an unlawful disturbance of the possession of goods by seizure or removal, or by a direct act causing damage to the goods. The subject-matter of trespass to goods must be a personal chattel which is the subject of lawful possession. ' The plaintiffs have been d6prived of its goods and if the defendant is holding some body's property the Receiver can be appointed. Reference has been made to AIR 1976 A J & K 30 and PLD 1976 Kar. 645. ' It is contended that Receiver can be appointed in money suit and the case of the plaintiff is not of simple money suit. Reference has been made to PLD 1983 Kar. 303.
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' The learned counsel has contended that ASIACON has made out a case for the appointment of Receiver without asking for security. ' The 'appeal filed by ASIACON against the same order challenging that part of the order whereby the Court allowed the application of Receivership but postponed the effective date of taking charge by 1-1-1986. The prayer made in the appeal is that the order dated 16-12-1985 passed by the trial Judge to the extent of dismissal of the application under Order XXXVII, Rule 5 read with section 151, C.P.0 and Order XXXIX, Rules 1 and 2, C.P.C. And grant the application with costs. ' In order to appreciate the respective contentions of the learned counsel it is necessary to refer to the main contract itself. UZIN entered into a Turn Key Contract with ATTOCK CEMENT for construction of a Cement Plant. UZIN was authorised under the main contract to appoint sub- contractors. According to the contract all the constructional plant/ machinery/equipment reserved for the construction on the site could be used for the completion of the project. M.I.C. Was authorised to appoint sub-contractors, for carrying out any part of the contract work. On 9-7-1983 M.I.C. Appointed ASIACON as their sub-contractors for carrying out jobs of mechanical erection and steel structure works. Certain provisions of the contract executed between M.I.C. And ASIACON are relevant for the termination of the controversy between the parties. ' Articles. 20 and 37 of the contract are relevant, which read as follows: - Article 20. Constructional Plan and Temporary Works. (a) The sub-contractor shall "provide" all constructional plan and temporary works required for the expeditions and satisfactory construction of the work in accordance with the sub-contract documents. In case of breakdown of or damage to any part of the constructional plant or temporary works, the sub-contractor shall take immediate steps for the repair or renewal or same so that any delay occasioned by such breakdown or damage shall be minimized to the fullest possible extent. Sub-contractor shall keep on the site an ample supply of spare parts of all constructional plant. Sub-contractor shall be held solely and entirely responsible for the safety and security of all constructional plant and temporary works, whenever provided or erected by the Sub- contractor. Neither the examinations by the Agent of proposals, drawings or documents relating to constructional plant and temporary works submitted by the Sub-contractor to the Agent for the approval expressed by the latter with regard thereto, whether with or without modifications, shall absolve the sub-contractor from any responsibility of liability imposed upon him by any of the provisions of the sub-contractor. All constructional plant and Temporary works and materials "provided" by the sub-contractor shall when brought on to the site be deemed to be exclusively intended for the construction and completion of the works and the sub-contractor shall not remove the same or any part thereof (save for the purpose moving it from one part of the site to another without the consent in writing of the contractor which shall not be unreasonably withheld. ' The sub-contractor shall at all times keep the constructional plant and equipment exempt from claims of third parties from legal attachment and shall not alienate/change or assign the same or any part thereof or allow any lien to arise thereon. The sub-contractor may remove any constructional plant, temporary works and surplus materials brought at site and belonging to the sub-contractor only if the same are no longer required for the works. (c) After having obtained the Agent's written consent the whole of the constructional plant, temporary works and unused materials shall be removed by the sub-contractor when they are no longer required and in such manner as the Agent may direct. Before the granting of the provisional Acceptance Certificates the site shall be left and in good order to the Agent's satisfaction. (d) If sub-contractor fails to remove any part of the constructional plant, temporary works or unused materials in accordance with sub-clause (c) of this clause within a reasonable period of time after the completion of works, as may be allowed by the Agent, then the contractor may sell the same and shall after deducting the cost charges and expenses of and in connection with such
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sale from the proceeds pay the balance, if any, to the sub-contractor. That Article 37 of the same contractor reads as follows: ARTICLE 37 POWER OF ENTRY. (a) In case (1) The sub-contractor does not commence the works without substantial reasons, in accordance with the provisions of the sub-contract documents, or (2) At any time in the Agent's opinion, based on communicated written substantial grounds, fails to carry gut the works in accordance with the provisions of the sub-contract documents or (3) At any time suspends work on the works for a period of 30 (thirty) days without authority from the Agent, or (4) At any time in the Agent's opinion, based on communicated written substantial grounds, fails to supply sufficient or suitable constructional plant, temporary works, labour or materials, or (5) Commits, suffers or permits any other breach of any of the sub-contract documents provisions and persists in any of those breaches for 14 (fourteen) days after notice in writing has been given to the sub-contractor by the Agent requiring such breach to be remedied, -or (6) Abandons the works, or (7) Sublet the work or any part of the work in defiance of the contractors instructions to the contrary, or (8) During the continuation of the sub-contract become bankrupt or after being declared insolvent makes any arrangements with his creditors or permits any execution to be levied/or enter into liquidation (not being merely a voluntary Ly,,,dation for the purpose of amalgamation or reconstruction). Then and in any such case, the contractor shall have the power to enter upon the works and operate in any of the following manner: (a) The contractor may himself complete the works or may employ any other sub-contractor to complete the works and may use for such completion so much of the constructional plant, temporary works and materials which have been deemed to be reserved exclusively to the construction and completion of the works under the provisions of this contract as the contractor may think proper and the contractor may at any time sell any of the said constructional plant, temporary works and unused materials and apply the process of sale in or towards the satisfaction of any sums due or which may become due to him from the subcontractor. (b) The contractor shall, as soon as may be practicable after any such entry and expulsion of the works, certify that amount has at the time of such entry and expulsion been reasonably earned by the sub-contractor in respect of the works then actually done by him and what was the value of any of the said unused or partially used materials, any construction plant and any temporary works which shall be considered for the settlement of the sub-contractor's accounts as hereinbefore mentioned. (c) If the contractor shall enter and take possession of the works and expel the sub-contractor under this clause, the contractor shall not be liable to pay to the sub-contractor any money on account of this contract until the expiration of the period of maintenance according to the contract provisions and thereafter until there have been ascertained the money paid to the sub-contractor prior to his expulsion from the contract, the cost of completion and maintenance of works, penalties for delays in completion and all other expenses incurred during the execution of the works. (d) The sub-contractor shall then be entitled to receive only such sum or sums as the contractor may certify would have been due to the sub-contractor upon due completion by him after deduction the said amount, but if such amount to be deducted shall exceed the sum which would have been payable to the sub-contractor on due completion by him after deducting the said amount but if such amount to be deducted shall exceed the sum which would have been payable to the sub-contractor on due completion by him then the sub-contractor shall upon demand pay
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to the contractor the amount such excess and it shall be deemed a debt due by the sub- contractor to the contractor and could be recovered on the basis of the contract that shall be executory. (e) If the contractor will be expelled from the contract by the employer on grounds for which the sub-contractor is not liable to the sub-contractor shall be released from day of his obligations under the contract and could not be compelled to bear any costs, compensation, damages, penalties or any other expenses which the contractor shall be held liable for by the employer. Third parties. If the contractor shall be expelled as aforesaid, the sub-contractor shall be expelled as aforesaid the sub-contractor shall be entitled to be indemnified by the contractor in respect of any expenses or damages incurred by the contractor in respect of any expenses or damages incurred by the sub-contractor arising from such events. (f) If any such case as aforesaid the contractor may assign the contract to any other company, the sub-contractor shall bear all costs incurred, further due to increased rates set by the new sub- contractor against the provisions herein contained. (g) Should the contractor by reason of its completing the works in accordance with this clause, incur any expenditure in excess of the expenditure which would have been incurred by the contractor if the works would have been completed by sub-contractor (due amounts being taken or any extra work or work omitted then the amount of excess as certified by the Agent and supported by documentary evidence shall be deducted from any money which may be in hand for work done. By the sub-contractor or any of the temporary works and any deficiency shall be reimbursed by sub-contractor. ' A bare perusal. Of Article 20 would show that under the terms of the contract the M.I.C. Had to provide all constructional plant which were required for the construction of the project and under Article 37 UZIN had a right of entry which has been used in the present case and according to this article all constructional plant machinery etc. Which were present at the site for the purpose of construction can be used by the appellant as per terms of contract after it exercised the right of entry. The contract between M.I.C. And UZIN was entered in 1980 and became effective in July, 1981. The M.I.C. Appointed ASIACON as a sub-contractor for carrying out the work mentioned in the said contract. ASIACON was appointed on 9-7-1983 and under Article 1.4.2 it was specifically provided that in case of exercise of right of re-entry by UZIN, ASIACON would only have claimed for damages against M.I.C. Under Article 8 of the contract between M.I.C. And ASIACON the terms of the main agreement between UZIN and M.I.C. Were adopted and under this contract it has been specifically provided that if there is anything inconsistent the provisions of this contract will prevail. The ASIACON while entered into the contract with M.I.C. Was fully aware of the terms and conditions of the contract between…
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