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Petitioner: AIJAZ AHMAD VS Respondent: MESSRS AMIN FABRICS LTD.
Court Name: Sindh High Court Judge(s): Nasir Aslam Zahid Title: AIJAZ AHMAD vs MESSRS AMIN FABRICS LTD. Case No.: Suits No, 302, 303 and 304 of 1972 Date of Judgment:1982-06-26 Reported As: PLD 1983 Karachi 63 Result: Suit decreed
JUDGMENT
JUDGMENT ' This judgment will dispose off three suits, namely Suits Nos. 301/72, and 304/72. Plaintiff in Suit No, 302/72 is Aijaz Ahmad son of Haji Abdullah, in Suit No, 330/72, Ahmed son of Haji Abdullah, and in Suit No, 304/72, Bhesania Trading Company. In all the plaints in these suits, the plaintiffs have been referred to as commercial agents and exporters of jute and jute products. The defendants in all these three suits are the same, namely, Amin Fabrics Limited, an industrial concern manufacturing jute and jute products. These suits have been filed by the plaintiffs for recovery of damages on account of breach of contracts. In these suits, in all eleven contracts were entered into between the parties whereby the defendants had agreed to supply various quantities of hessian cloth bales to the plaintiffs. Details of these contracts are given hereinbelow :- {{TABLE}} Number No. Contract 100 yards period 1 2 3 4 5 6 7 SUIT No. 302/1972 Rs. 311 5/2 4-10-71 122.50 55 bales 67,375 Nov.71 313 5/3 4-10-71 111.50 60 bales 66,900Nov.71 320 5/4 21-10-71 122.50 120 bales 1,47,000 Dec.71 SUIT No. 303/1972 99 5/20 22-9-71 120.00 220 bales 2,64,000 15-10-71 to
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15-11-71 300 5/21 22-9-71. 120.00 220 bales 2,64,000 15-11-71 to 15-12-71 310 5/22 4-10-71 122.50 130 bales 1,59,250 Oct. 71 312 5/23 4-10-71 122.50 185 bales 2,26,625 Nov. 71 314 5/24 4-10-71 111.50 460 bales 5,12,900 Nov. 71 315 5/25 5-10-71 96.00 200 bales 96,000 Oct. 71 of 5 maunds , each 325 5/26 8-1141 96.50 200 bales 96,500 Nov. 71 per maund SUIT No. 304/ 1972 321 Ex. 5/36 21.10.71 122.00 120 bales 1,64,000 Dec. 71 {{TABLE}} ' No, 310 (Ex. 5/22) which was for the supply of 130 bales out of which 110 bales were supplied by the defendants to the plaintiff in suit No, 303/72, against no other contract any supply was made by the defendants. According to the plaints in the three suits, the plaintiffs in their turn had sold the goods to their principals in Iran, who were pressing for shipment and delivery. It is the plaintiffs' case that the defendants. On account of rise in the prices of goods, did not honour their commitment under the contracts and as such committed breach of contract and they were liable to pay damages. The plaintiffs have claimed damages on the basis of difference between the contract prices and the market prices prevailing at the time of the filing of the suits. In Suit No, 302/72, the claim for damages if Rs, 2,06,225, in Suit No, 303/72, the plaintiff has claimed Rs, 13,59,975 and in Suit No, 304/72 the claim is for Rs, 1.05,600. 3. Written statements were filed by the defendants in all the three suits firstly taking the plea that the contracts had not been concluded between the parties ; secondly that the plaintiffs had not fulfilled certain conditions required by the contracts to be fulfilled and as such the defendants were not liable to perform their part of the contracts ; thirdly that the contracts ad frustrated ; and finally that the plaintiffs have not suffered any damagesd are not entitled to the damages as claimed by them. 4. As suggested by consent of the parties, following issues were adopted this Court on 18-12-1977 :- (1) Whether the contracts to supply the plaintiffs---bales of hessian cloth were not concluded, as alleged by the defendants ? (2) Did the plaintiffs fail to comply the formalities necessary for the performance of the contracts, as alleged by the defendants ? (3) Were the contracts in suit frustrated and became impossible of performance, as alleged by the defendants ? (4) What was the market price at the relevant time and to what damages, if any, are the plaintiffs entitled ? (5) Reliefs ? 5. Common evidence was recorded in three suits as the facts and points of law in all the three suits were identical. On behalf of the plaintiffs the following witnesses were examined :- (i) P. W. 1. Ibrahim (Eh. 5). He is the attorney of all the plaintiffs in these suits, (ii) P. W. 2 Ghani Haider Jamal (Exh. 6). He produced 4 bulletins regarding the market price of the goods. He was working as an employee of the Control Statistical Office.
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(iii) P. W. 3. Zubair Ahmed (Exh. 7), an employee of DAWN newspaper, who also produced copy of his daily newspaper wherein jute prices are mentioned. (iv) P. W. 4. Ashfaq Ali, Circulation Manager of newspaper Business Recorder, produced copy of his newspaper in which market prices of jute were published. (v) P. W. 5 Yaqoob (Exh. 9). He was the common broker of the two parties in all the contracts. Defendants examined the following two witnesses :- (1) D. W. 1 Haji Hashim (Exh. 10). He is the Manager of the defendant. Company. (ii) D. W. 2. Abba Ali (Exh. 11), a broker. 6. Issue No, 1 is that whether the contracts in question were not concluded as alleged by the defendants. The burden of this issue is on the defendants. It is an admitted position that the 11 contracts that have been produced by the plaintiffs in these suits bear the signatures of both parties to the contracts. However, the stand of the defendants with regard to this issue is contained in para. 2 of their written statement in which it is pleaded that the contracts in question, which were on the standard F. O. B. Contract forms of the Pakistan Jute Mills Association, after signatures of the defendants, were sent to the plaintiffs for their acceptance but as the plaintiff failed to return the said contract forms duly signed by the plaintiffs, the plaintiffs did not acquire any rights under the said contracts and the same cannot be enforced against the defendants. The stand of the defendants is, therefore, that the contracts were not concluded between the parties as the acceptance by the plaintiff of the contracts was not communicated to the defendants and according to the defendants, the procedure for communicating this acceptance was by signing the contracts and returning the signed copies to the defendants after retaining copies for the plaintiffs. In this connection Mr. Mohsin Siddiqui, learned counsel for the plaintiffs invited my attention to applications filed in all the three suits under section 34 of the Arbitration Act, 1940 by the defendants. The numbers of these applications are C. M. A. 283/73 in Suit No, 302/72, C. M. A. 282/73 in Suit No, 303/72 and C. M. A. 284/73 in S No, 304/72. All these three applications were supported by affidavits of Hashim, Commercial Manager of the defendant-Company (D. W. 1). In his affidavits, Haji Hashim, on behalf of the defendants, disputed the alleged breach of contracts on the part of the defendants and stated that the breach of contract was in fact committed by the plaintiffs because they failed to pay the advance and because they failed to give dispatch or shipping instructions as per clause 6 of the contract. In para. 6 of his said affidavits, Haji Hashim stated that the parties had agreed to refer to Arbitration all matters, questions, disputes, differences and/or claims whatsoever arising out of the contracts in terms of clause 18 of the contracts. It was contended by Mr. Mohsin Siddiqui, learned counsel for the plaintiffs, that in view of the position taken on behalf of defendants at the first opportunity after the filing of the suits in the said affidavits of Haji Hashim that contracts were concluded between the parties, the defendants cannot later on take the contradictory stand that the contracts had not been concluded. The contention of learned counsel for the plaintiffs is correct. If contracts had not been conclude between the parties, as alleged later by the defendants in their writ statements, defendants would not have filed earlier the application under section 34 of the Arbitration Act, 1940. The fact that they had filed such applications amounts to an admission on their part that contracts had in fact been concluded between the parties. In the circumstances, issue No, 1 is decided in the negative against the defendants and I find that the 11 contracts, subject-matter of the 3 sits, were concluded between the parties. 7. Issue No, 2 relates to compliance of the formalities necessary for the performance of the contracts. In paras. 2 and 3 of their written statements, defendants have raised the following
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defences :- (a)Advance as per clause 9 of the contract was not paid by the plaintiffs ; (b)Plaintiffs failed to furnish the defendants with particulars of the plaintiffs' export registration certificates issued by the Chief Controller of Imports and Exports ; (c) Plaintiffs failed to furnish the sales-tax exemption licences issued by the concerned department ; (d)Export permits were not furnished ; and (e) Despatch instructions were not given. ' In view of the above, it was pleaded on behalf of the defendants that the plaintiffs failed to comply with the requirements and, therefore, the plaintiffs were themselves responsible for non- performance of the alleged contracts. 8. A perusal of the 11 contracts in question shows that the goods were meant for export to Zahidan (Iran). It was contended by Mr. M. B. Kazmi, learned counsel for the defendants, that as the goods were meant to be exported to Iran, it was a condition precedent for the fulfilment of the contacts that the plaintiffs furnished the export registration certificates, sales tax exemption licences and the export permits. The contracts have been perused and I do not see any term in the contracts that such permits/certificates/licences were to be shown or copies thereof furnished by the plaintiffs to the defer Jants. Furthermore, admittedly there is no letter or notice from the defend As addressed to the plaintiffs requiring the plaintiffs to show such in As/certificates/licences or furnish copies of the same to the defendp," If the objections in this regard had any substance or weight, the defendents would have informed the plaintiffs that they were ready to make livery of the goods in question and asked the plaintiffs to inform the delendants that the necessary documents were ready or available with the plaintiffs enabling them to export the goods to Iran. ' As regards the despatch instructions, Exhs. 5/15/4, 5/28, 5/29 and 5/30 have been admitted by the defendants to be despatch instructions in respect of some of these contracts. In fact D. W. 1 has admitted his signatures and signatures of his assistant on such despatch instructions. This documentary evidence together with the evidence of P. W. 1 Ibrahim (Exh. 5) to the effect that he wanted to give despatch instructions for other contracts in suit but the same were not accepted, goes to show that there was no default on the part of the plaintiffs in so far as giving of despatch instructions relating to the contracts in suits was concerned. ' The other point raised on behalf of the defendants relates to clause 9 of the contracts. Clause 9 in each contract is as follows :- "9. Advance Rs, 50 per bale" ' It was contended on behalf of the defendants that as advance of Rs, 50 per bale was not given by the plaintiffs to the defendants, there was no obligation on the part of the defendants to perform their part of the contracts. From the conduct of the parties as is evident from the evidence on record it can safely be presumed that this condition of advance was not a condition precedent. Firstly, no complaint or grievance was made in writing or orally by the defendants to the plaintiffs that they would not honour the contracts as advance had not been paid. Secondly, in case of one contract i,e, Contract No, 310 (Exh. 5/22), out of 130 bales to be delivered, in fact 110 bales were delivered by the defendants so the plaintiffs. As regards delivery of these 110 bales against contract No, 310, it was contended on behalf of the defendants that for such consignment of 110 bales the amount equivalent to the advance as per clause 9 of the contract was lying as credit to the plaintiffs and as such 110 bales were supplied by the defendants to the plaintiffs. This plea on behalf of the defendants appears to be an afterthought as, if it were so, the defendants would have informed the plaintiffs that they were delivering only 110 bales as advance in respect of only 110 bales was available with them as credit to the plaintiffs and that as advance had not been given for the balance 20 bales against contract No, 310 and against all other contracts, the defendants
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would not make any other deliveries. No such intimation was given either in writing or orally by the defendants to the plaintiffs. Thirdly, despatch instructions for some of the contracts had been accepted and acknowledged by the defendants. If advance was a condition precedent, defendants would not have accepted the despatch instructions. I am, therefore, of the view that in the facts and circumstances of the instant cases and in view of the evidence on record, clause 9 of the contract regarding advance @ Rs, 50 per bale was not a condition precedent and non- fulfilment thereof did not entitle the defendants to avoid their obligations under the contracts in suits. As observed earlier, the plea in this behalf taken by the defendants is an afterthought. Issue No, 2 is accordingly decided in the negative against the defendants. 9. Issue No, 3 relates to frustration of the contracts on the ground that they had become impossible of performance. The burden of this issue was on the defendants. Mr. S. M. Kazmi, learned counsel for the defendants, did not press this issue. Issue No, 3 is, therefore, decided in the negative against the defendants. 10. Issue No, 4 relates to damages. The basis on which damages have been claimed by the plaintiffs in these suits is the difference between the contracts prices and the market prices of the type of the goods in question at the time of the institution of these suits. The defendants have contested on two counts the claim of damages as made by the plaintiffs. Firstly, it was contended by Mr. M. B. Kazmi, learned counsel for the defendants, that the plaintiff's could only be entitled to actual damages, if any, suffered by the plaintiffs and from their pleadings and evidence it is manifest that the plaintiffs withheld all evidence in their possession which would have proved the damages actually sustained by them. It was contended that in the circumstances of the instant cases the plaintiffs could not claim damages on the basis of difference between the contract and market prices but only on the basis of actual damages and as evidence to that effect was not adduced but withheld, plaintiffs have deprived themselves of obtaining any decree for damages. Second ground on which the claim for damages was contested was that in any case the market prices of the relevant dates had not been proved. ' On the other hand it was argued by Mr. Mohsin Siddiqui, learned counsel for the plaintiffs, that in a case of breach of contract where one party defaults in supplying the contracted goods, the difference between the contracted price and the prevailing market rate is "the safest, most reasonable and normally acceptable criteria for assessing the quantum of damages" and that the principle restitutio in integrum is always applicable in such cases. It was contended that in the instant cases it was not necessary for the plaintiffs to prove actual damages suffered by them. Learned counsel for the plaintiffs referred to the following reported judgments in support of his contention :- (i) W. P. I. D. C. v. Aziz Qureshi PLD 1973 SC 222. (ii) Muhammadi Cotton Factory Ltd. v. Pakistan Industries Ltd. 1968 SC MR 1198. (iii) Province of West Pakistan v. Saaz and Co. PLD 1964 SC 625. (iv) Zamindar Cotton Factory v. Burma Oil Mills Ltd. PLD 1967 Kar. 388. (v) Suleman Ibrahim Co. v. Eastern Rice Syndicate PLD 1966 Kar. 289. (vi) Muhammad Amin Muhammad Bashir Ltd. v. Muhammad Amin Brothers Ltd. PLD 1969 Kar. 233. (vii) Michal Assely v. Abdul Sattar and Brothers PLD 1960 Kar. 346. (viii) Cantonment Board Sialkot v. Nazir Ahmad PLD 1953 Lab. 400. (ix) Mehtab Din v. Fazal Hussain PLD 1954 Lah.
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451. (x) Abdul Hamed v. Odhavji Anandji and Co. Ltd. PLD 1957 P C 61. (xi) Joseph v. Skew Bux AIR 1918 P C 149. (xii) Ramdhan Dc: v. Kishori AIR 1954 Orissa 254. (xiii) Vishwanath v. Amarlal AIR 1957 Madh. Bha. 190. ' In PLD 1973 SC 222, after referring to section 73 of the Contract Act, 1872, case law and standard works, Supreme Court of Pakistan summed up the legal position on the point of damages as follows "Compensation is payable for the actual loss or damage caused : the loss or damage must be the proximate result of the breach, and foreseeable by the defendant. In estimating the loss or damages, the means which existed of remedying the inconvenience caused by the nonperformance of the contract must be taken into account. Speaking generally the underlying principle is restitutio in integrum. There is no specific rule upon the matter, and it is left to the good sense of the Court to assess as best it can what it considers to be an adequate recompense for the loss suffered by the plaintiff. Every injuria, although without loss or damage, would entitle the plaintiff to judgment. It is not always necessary that actual damage should be proved in order that damages may be awarded. In actions for breach of contract nominal damages are recoverable although no actual damages can be proved." ' In 1968 SCMR 1198, Supreme Court of Pakistan held that on account of delay in the resale of goods it did not follow that the plaintiffs were not entitled to claim any compensation and that the only consequence would be that the plaintiffs were not entitled to claim compensation on the basis of difference between the contractual price and the resale price, but on the basis of difference with the market price on a date within reasonable time of the period fixed for delivery. ' In PLD 1964 SC 625, Mr. Justice Hamoodur-Rehman, after referring to section 73 of the Contract Act, 1872, observed as follows :- "This section embodies the same principles as those given in section 50 of the English Sale of Goods Act, where it is stated in subsection (3) that the measure of damages is to be estimated, where there is an available market for the goods in question. "by the difference between the contract price at the time or times when the goods ought to have been accepted, or, if no time was fixed for acceptance, then at the time of the refusal to accept." ' In PLD 1967 Kar. 388, a learned Single Judge held that in cases of breach of contract for sale of goods, damages have to be calculated on the basis of the difference between the contracted rate and the best market rate available on the date of the breach of the contract. ' In PLD 1966 Kar. 289, it was held that where there was no evidence available as regards market rate on date of breach, rate prevailing on the next nearest date is to be taken into consideration for purposes of assessing damages. ' In PLD 1969 Kar. 233, it was observed as follows :- "We are in respectful agreement with the point of view that difficulties in estimating damages should not be excused for shirking the duty of solving the problem that may be before a Court and that the material which may be before the Court should be scrutinised and examined for purposes of finding what relevant and sound inference can be drawn from it. This attitude is however to be accompanied with the obligation that failure of a party to produce the best evidence should be reckoned against him. Their Lordships have gone to the length of saying that every presumption should be made against such a party. In the present case we find that there is no evidence at all of the price prevailing at the time at which the alleged purchase was made by the plaintiff-appellant, nor is there anything to indicate the condition of the market on 30th June, 1959, on which date the breach took place. Moreover, oral statement has been made without any documents to support it,
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which we do not consider to be the best evidence and feel justified in drawing the conclusion that adverse presumption should be made against the plaintiff-appellant. In these circumstances, we are of the view there is no material before us to enable us to hold that the plaintiff-appellant has suffered any monetary loss." ' In PLD 1960 Kar. 346 it was held that in a case of breach of contract for sale of goods, quantum of damages suffered is to be determined by comparing the market prices of the goods prevailing on the date on which the goods had to be supplied with the contract prices and not the contract prices with those prevailing on the date of the renunciation of the contract. ' Section 74 of the Contract Act, 1872, was under the consideration of the Lahore High Court in PLD 1953 Lab. 400 and it was observed there that this section has done away with the difference between liquidated damages and penalty and it is the duty of the Court to assess and award only reasonable compensation. ' In PLD 1964 Lah. 451, S. A. Rahman, J. Observed that the underlying principle by which Courts are guided in awarding damages is restitutio in integrum which means that the Courts will endeavour, so far as money can do it, to place the injured person in the same situation as if the contract had been performed. ' PLD 1957 P C 61 is a judgment of the Privy Council in appeal from the Supreme Court of Ceylon. Section 49 of the Ceylon Sale of Goods Ordinance read as follows :- 49.-(l) Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him for damages for non-acceptance. (2)The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer's breach of contract. (3)Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted, or, if no time was fixed for acceptance, then at the time of the refusal to accept." ' Privy Council observed as follows :- "Subsection (3) is of course a prima facie application of the principle laid down in a subsection (2). If there is no market price within subsection (3) then he prima facie measure is the difference between the contract price and the value at the date of the breach. If the rejected goods could be sold at the time or times referred to in subsection (3) then it may well be academic to consider whether there was a market price within subsection (3). The realisable price whether "market" or not will give the figure to be subtracted from the contract price. There are cases of which it is said by the respondents this is one, in which the goods in question could not (reasonably) be sold at the date of the breach. In such cases the amounts realised, later, if reasonable steps are taken, will be the best measure of, their value at the relevant date." ' AIR 1918 P C was a judgment of the Privy Council in appeal from the Chief Court of Lower Burma. An action was brought for damages for not taking delivery of the contracted goods. Breach of contract was established but the Chief Court of Burma took the view that plaintiff had not proved his damages sufficiently and was, therefore, only entitled to nominal damages. Privy Council, allowing the appeal of the plaintiff, granted a decree for Rs, 18,502 for damages on the basis of the evidence on record taking the view that where in a suit for damages a Court finds in favour of the plaintiff that there was a breach then simply because the plaintiff has not given sufficient evidence to show certain details of damages and that he has made one or two small mis-statements as regards some of his expenses, it is not proper to grant only nominal damages. ' In AIR 1954 Orissa 254 it was held that where for calculating damages for breach of contract to supply goods the market price on the date of the breach is not available as no transaction took
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place on that date the rate that was prevalent just before and just after that date can be taken into consideration. ' In AIR 1957 Madh. Bha. 190, it was held that in a suit for damages for breach of a contract for sale of goods it is not necessary for the plaintiff to prove that he purchased the goods from other sources at a price exceeding the contract price and sustained a loss as the fact that the buyer sustained no actual loss from the seller's failure to deliver the goods is no ground for awarding nominal damages to the buyer. It was further held that the buyer was entitled, as indicated by illustration (a) to section 73 of the Contract Act…
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