Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: AHMAD CORPORATION VS Respondent: MESSRS THE INTERNATIONAL FOOD GRAIN AND OIL JUDGMENT
Court Name: Sindh High Court Judge(s): Abdul Hayee Qureshi, Muhammad Haleem Title:AHMAD CORPORATION vs MESSRS THE INTERNATIONAL FOOD GRAIN AND OIL
JUDGMENT
Reported As: PLD 1973 Karachi 361 Result: Appeal accepted Judgment JUDGMENT ABDUL HAYEE KURESHI, J.-This is an appeal under Clause 10 of the Letters Patent directed against a Judgment and Decree of the learned Single Judge dated 8-2-1965 whereby a suit filed by the appellants (plaintiff's) for recovery of a sum of Z. 37,898-3-3 was dismissed. The suit was for recovery of the price of rice supplied by the plaintiff to the defendant. 2. The case of the appellant (plaintiffs) as set out in the plaint is as follows:- 3. That in the last week of July 1957, the appellant (plaintiffs) and respondent (defendan0 entered into an oral agreement whereby the appellants (plaintiff) were appointed Agents on payment of a commission of 1 per cant. For purchase of Joshi Rice of Sind No. 10 Challi, 1956/57 Crop. The case of the appellants was that the respondents engaged them to purchase 25 wagon loads of rice of the aforesaid quality and supplied the same to the respondents. Each wagon was to contain 200 bags of rice of the nett weight of 2-- maunds per bag. The supply as per the assertion of the appellant was to be as per the prevailing market rates. The appellant supplied 24 wagons containing 4,800 bags of rice of the contracted quality and the total price payable by the respondents was Rs. 2.22,715-14-3. This amount also included the expenses incurred on the purchase and the commission payable to the appellants. The price of rice together with the expenses and commission was payable by the respondents to the appellants on presentation of the railway receipts and invoices covering the relevant supply. Out of the amount due the appellant had received a sum of Rs. 1,85,115, on various dates. This amount also included a sum of Rs. 50,000.00 paid by respondents to appellants on July 13, 1957 as an amount "on account".
---
## Page 2
The appellant, therefore, claimed a balance of Rs. 37,898-3-3 which the respondents had refused to pay. 4. In the plaint filed by the appellants it was stated that the respondents with a view to avoid payment to the appellants had alleged that the rice supplied by the appellant to respondents was meant for supply to the Government of Pakistan to the knowledge of the appellants. It was further stated that the respondents had set-up a plea on ground of rice being different from the rice specified to be sold and for that reason the respondents had raised this false defence. It was, however, stated in the plaint that every consignment of rice was examined and inspected by the representatives of the respondents who were available for that purpose and supply had been made only after the goods had been examined and approved by respondent's representatives. 5. The respondents in their written statement which is a lengthy document stated that the appellants were not appointed' commission agents but were the principals and were to get no commission because they were to be paid at the prevalent market rate. It was further stated that in July 1957, the Government of Pakistan had invited tenders for supply of rice and both the parties agreed that the respondents should enter into a contract for supply of 1,000 tons of rice viz., 11,000 bags containing 21 maunds per bag. It was further stated by the respondents that the appellants were to deliver the rice in strict accordance with the specifications and the terms and conditions prescribed by the Government of Pakistan, and in case the goods supplied were not strictly in accordance with the specifications, all the losses and charges including charges for analysis of the goods would be borne by the appellate. It was further stated that a sum of Rs. 5,000.00 was paid in advance and further payments were to be made by the respondents to the appellants at the discretion of the respondents, and when payments in respect of the goods were made by Government. It was further stated that the appellants had to deliver 1,000 tons but had delivered only about 440 tons. With regard to the quality of rice supplied, it was stated in the written statement that the rice was over-broken, over-cooked, over-red, over-dark, over-wet, over-milled, damaged and far inferior to the quality specified in the contract that the respondents had entered into with the Government. It was further alleged that the contents of the bags were found to be less in weight than the weight which was shown fn the Railway Receipts. The actual weight of the al rice received by the respondents was 11,827 maunds and 29 seers and out of this 55 maunds was found to be dust. It was further stated that the Government had rejected the entire supplies and had decided not to accept the rice at the standard agreed rate of Rs. 53-8-0 per bag. It was further stated in the written statement that as the Government had not finally decided to accept or reject the whole or part of rice supplied by the appellants, no part of the amount claimed by the appellant was payable. It was however stated that the appellant had demanded payment of Rs. 37,898-3-0 from the respondents. 6. On the pleadings, the following issues were framed:- (1) What were the terms of the contract between the plaintiffs and the defendants? (2) Was there any failure on the part of the plaintiffs to deliver rice of the contracted quantity and the contracted quality, within the contracted time, and what is the effect thereof? (3) Are the plaintiffs liable for the losses, charges, shortages, allowances, deductions, interest and loss of profit, as claimed by the defendants by reason of the plaintiff's failure to perform their part of the contract? (4) Were the amounts due to or by the plaintiffs by or to defendants on account of the contract ascertainable at the date of the suit, and if not, what is the effect thereof? (5) What amount if any, is due to the plaintiffs from the defendants in respect of the contract in suit? (6) Have the plaintiffs 'any cause of action against the defendants? (7) Are the plaintiffs entitled to any relief and if so what?
---
## Page 3
(8) General." 7. The learned Single Judge while dealing with the aforesaid Issues, first considered Issues Nos. 1 and 2 together and decided both these issues in favour of the respondent and held that the appellant was guilty of breach of contract both in regard to quantity as well as Quality of the goods that he had to supply. Issues 3 to 8 were taken for consideration together and fn regard to these issues, the learned Single Judge reasoned that since at the time of filing of this suit the question of acceptance or rejection of the goods was still under the consideration of the Government and further that because the suit was not one for accounts, but for the price of the goods delivered, it was not open to consider the case in respect of reduction in value of goods as contemplated by section 50 of the Sale of Goods Act. In short the learned Single Judge held the view that since the suit was one under section 55 of the Sale of Goods Act for recovery of the price, the Court could not enter into the question regarding deminution or extinction of the price. In the result the suit was dismissed. 8. Regard being had to the nature of Issues 1 and 2, I am of the view that these two issues are separate issues and I v would, therefore, consider Issue No. 1 independently of Issue a No. 2. Issue No. 1 relates to the terms of the contract between the appellants and the respondents. In this case there was no contract between the parties in writing. The parties in their evidence have set up divergent case inasmuch as the case of the appellant is that they were acting only as commission agents for purchase of 25 wagons of rice and they claimed. The appellants' case further is that the value of goods together with actual expenses incurred for procuring and despatching the goods together with the commission of 1 per cent was payable by the respondent to appellant on presentation of railway receipts and invoices. It is further their case that they were to supply Joshi rice of the quality No. 10 Challi of 1956/57 crop. The case of the respondents is that the appellant was not a com--mission agent, but was a principal and was to supply rice at the market price. They further stated that the appellants had tempted the respondents to enter into this contract with the Government and had further undertaken to supply 1,000 tons of rice which was to be of the specification laid down by the Government. In regard to mode of payment, the case of the; respondents is that payment was to be made by the respondents at their discretion after the acceptance of goods by the Govern--ment; and payment for the same by the Government. 9. The learned Single Judge held that this was a case where the appellant had undertaken to supply the goods In accordance with the Government specifications and such under--taking amounted to a warranty as contemplated by section 16 of the Sale of Goods Act. The learned Single Judge further held that the contract was for supply of 1,000 tons. With regard to the mode of payment, the learned Single Judge has not given any clear-cut finding presumably because he had dismissed -the suit of the appellant and there was no counter-claim or separate suit by the respondents for damages or any other relief. 10. With regard to the quantity of rice that had to be supplied by the appellants to the respondents, there is no doubt that respondent had by his contract with the Government undertaken 2o supply 1,000 tons. But the question is whether the appellant had agreed to supply 1,000 tons. In the evidence of Muhammad Ahmad (P. W. 1), a partner of the appellants firm, it is stated that initially he had only agreed to supply 25 wagons of rice i.e. 5000 bags. He has further stated that he had made a commitment with another firm by name William Sons for supply of a huge quantity of rice and, therefore, owing to his Inability he had agreed to supply only 25 wagons. There is however evidence on the record that the respondent had made purchases from and through other merchants of Larkana District. Moreover, it is admitted by Abdul Shakoor (D. W. 1) that right from 8th August 1957 till 5th November 1957 the respondent did not express in writing that the appellants had agreed to supply 1,000 tons of rice. The same witness for the defendants/respondent who as per his own showing had an arrangement with Abdul Sattar, the main partner of respondents, has
---
## Page 4
admitted that between the 8th of August 1957 and 23rd of August 1957 the respondents had contacted two other dealers of rice and they did obtain rice from them and the supply by those two merchants was almost simultaneous with the supply by the appellants. Moreover, Exhs. 13 and 54-A show a quantity of rice much larger than the quantity of rice supplied by the appellants and these two documents also clearly show that be-4 sides the rice supplied by the appellants, the respondents had been purchasing rice from other sources also. Exh. 13 is the analysis result in respect of 37 wagons of rice supplied by the respondents to Government and Exh. 54-A Is again another letter from the Government addressed to the godown keepers of the Government asking them to return 10000 maunds viz. About 20 wagons of rice to the respondents. All these circum-- stances, clearly show that besides the appellants some other sources were also supplying rice to the respondents. Since the respondents had never objected In writing regarding any short supply by the appellants, I would hold that the quantity contracted to be supplied by appellants was not 1000 tons but 25 wagons of rice viz. 5000 bags. 11. With regard to quality of rice to be supplied by the appellants to respondents, the case of the two parties is divergent. However, the circumstances of the case provide sufficient material for coming to the correct conclusions. It is admitted case that the respondents were purchasing rice for supply to Government and it is further admitted that appellants were dealing in rice. In fact the evidence discloses that Abdul Sattar (D. W. 2), the main partner of respondents firm had recently migrated from India and wanted to set up profitable business. The case of the respondents is that they had specifically asked the appellants to supply goods which would conform to the specifications laid down by the Government and the appellants had agreed to do so. The quantity of rice that was being purchased by the respondents from the appellants was so large that the respondents must have informed the appellants in regard to the supply of rice in question to the Government. The respondent in order to safeguard his interest vis-a-vis the quality of rice must have informed the appellant accordingly and could not have made purchases from the appellant if the latter had not agreed to supply goods in accordance with the requirements of the respondents in respect of quality of goods. Although Muhammad Ahmad (P. W. 1) has stated in his evidence that the appellant had made no such contract with the respondent in regard to quality of goods I have no hesitation in saying that to that extent his evidence is not reliable. He admits that he knew that supply was for the Government. In ordinary course of events also a supplier to the Government would always inform the person from whom he was buying about the quality of goods required by the Government; and would rot agree to purchase from the seller unless the latter undertakes to supply in accordance with the requirements of the buyer. "I was aware that the defendant desired to purchase 25 wagons of Joshi rice from the plaintiff for supplying it to the Government because there can be no other purchaser of that quantity of rice. I, however, did mot know as to what was the specifications of the Government." He has also stated that from 15-8-1957 to 10-9-1957 the appellant's firm had despatched 24 wagons to the Director of Procurement of Food. The evidence discloses that the Director of Procurement of Food was the consignee as per agreement of the respondent with the Government. P. W. Haji Abdul Sattar has in examination-in---chief stated as follows:- "It Is true that the plaintiffs had informed us that all the rice was to be consigned to Director of Food Procurement, Government of Pakistan for the purpose of the Government. I was not told by the plaintiffs that this rice was meant for the Government, and, therefore, it must be of the quality which should be acceptable by the Government." He went on further to say as follows:- "I am supplying rice of this quality to the Government' even at present. I knew the quality of the rice and its specifications which are acceptable to the Government. It is not true that the plaintiff had
---
## Page 5
told me to send the rice of whatever quality that was available, no matter whether it was of the specifications acceptable to the Government (or not)." (The words in brackets are mine). Even P. W. 3 Abdul Rahman, an employee of the plaintiff firm has stated that the Railway receipts were prepared in the name of the Director of Food Procurement because the permit was also in his name. I, therefore, have no hesitation in holding that the appellant had agreed to deliver goods of such quality as would conform to the requirements of the respondents who had to supply the goods to the Government. The specifications in regard to the goods have been detailed in Exh. 28 which is a letter from the Government of Pakistan to the respondents intimating the respondents about the quality of goods that were to be delivered by the respondents to the Government. 12. With regard to the mode of payment, the case of the appellants is that the respondent was to pay the price at the pre--valent market rate together with the expenses and commission on delivery of railway receipts and invoices. On the other band, the case of the respondents is that initially an amount of Rs. 50,000.00 was paid "on account" and the balance was payable at the discre--petition of the respondents and in any case after acceptance of the goods by the Government and realisation of the price by the respondents. 7 he admitted facts are that in July and August 1957, the respondents had in addition to Rs. 50;000.00 paid initially a-- further sum of Rs. 1,35,150.00 to the appellants. Moreover. D. W. Abdul Sattar has also stated in his evidence that he had the full amount and had only withheld the balance of Rs. 37,000.00 (roughly equal to the amount in the suit) because he expected the Government to deduct some money on account of shortage in supply and inferior quality of the goods. Moreover, the things speak for themselves and the admitted position is that out of total amount of Rs. 2,22,715-14-3, an amount of Rs. 1,85,115 had been paid by respondents to the appellants in the months of July, August and September 1957, even though the question of acceptance of the goods was decided by the Government only in May 1958. These facts clearly show that the amount in respect of supply was to be paid as soon as the supply was made or within a short time after the presentation of railway receipts and invoices. I, therefore, hold that it was a condition of the contract that the price of rice supplied by the appellants to respondents was payable after each consignment was received by the respondents. Even otherwise in the circumstances of the case I cannot persuade myself to believe the case the respondent has set up in this regard because huge quantity was to be supplied. In the result my finding on this issue is that the contract was for supply of 25 wagons of rice and the quality to be supplied was in accordance with the specifica--tions laid down by the Government and the respondents were to pay the appellants on delivery and submission of railway receipts and invoices. 13. With regard to the second issue, the learned Single Judge has held that the appellants had failed to supply the goods both in regard to quantity as well as quality. 14. While dealing with issue No. 1, I have held that the contract was for supply of 25 wagons and not for 1000 tons as alleged by the respondents. Admittedly 24 wagons of rice were supplied by the appellant to the respondent and with regard to the remaining one wagon, the evi--dence of the appellants clearly is that representatives of the respondents rejected the goods before the same were transported to Karachi for delivery to respondents. In any case it appears that the case of the respondents with regard to the quantity to be supplied was set up on the basis that the contract was for supply of 1,000 tons and on behalf of the respondents there is a paucity of evidence in regard to circumstances regarding short supply of one wagon. No serious argument was raised by the learned Advocate in regard to this short supply of one wagon. It will, therefore, keep this aspect of the case out of consideration for the purpose of giving a finding on this issue.
---
## Page 6
15. Coming then to the quality of rice that was supplied, the evidence clearly discloses that out of 24 wagons of rice supplied by the appellants to the respondents 10 were rejected by the Government and returned to the respondents. Alongwith the written statement the respondents had filed an annexure marked as Schedule "A" which showed 24 items of supply, each item relating to one wagon. This annexure gives the number of the wagons together with number of railway receipt in regard to the consignment and other particulars in regard to weight of rice in each of the wagons. Abdul Shakoor (D. W. 1) has in his evidence produced an analysis report (Exh. 31) in regard to the analysis that were carried on by the Government with respect to the rice supplied by the respondents to the Government. This analysis report also gives the number of the wagon, weight of rice and analysis results. This Exh. Shows that 14 wagons of rice supplied by the respondents to the Government out of total quantity of rice supplied by the appellants to respondents were accepted. I have compared and checked the numbers of the wagons in Exh. 31 in juxtaposition with the list submitted by respondents along with the written statement, which has been referred to above, and I also find that 14 wagons of rice were accepted by the Government. Along with this evidence I have also considered Exh. 54-A produced by S. M. Ahmed, a Superintendent in the Ministry of Food, Govern--ment of Pakistan. This Exh. Is a letter dated 8th March 1958, written by the Director, Procurement and Distribution and is addressed to M/s. Jahana Sons directing the latter to return 10000 maunds of rice to the respondents. These documents therefore, conclusively show that out of 24 wagons of rice supplied by appellants to respondents, only 14 were accepted by the Government whereas 10 were rejected. The next circumstance for consideration is whether the 10 wagons of rice in question were rejected on account of their non-conformity with the specifica-- tions laid down by the Government in regard to supply. There does not appear to be any doubt that the 10 wagons of rice which were rejected by the Government were inferior in quality to the rice that the Government had to procure in this case. 16. Moreover, some telegrams were exchanged between the parties in regard to the supply and these telegrams have been brought on record as Exhs. 7 to 18. These documents were admitted by the parties. The first telegram in point of time is dated 7-9-1957 and was sent by the respondents to the appellants. This telegram reads as under:-- "Your supply Joshi Rice 1400 Larkana 600 Kamber A.I 200 Badeh over-broken, over-cooked, over- dark, over-red, over-- wet and most inferior. All rejected. Shortage follows. Please Note. International Food Grains." This telegram was followed by other telegrams which are Exhs. 10, 11, 13, 14 and 16 and in each one of these telegrams the respondents made a grievance in regard to the quality of rice and stated the fact that the rice had been rejected by the Government. The appellants also made replies to the telegrams of the respondents and these replies have been brought on record as Exhs. A/l, 9. 12, 15 and 17. The first telegram Exh. A/1 is dated 8-9-1957 and is in reply to the telegram Exh.7, the text whereof has been reproduced above. This telegram reads as follows :-- " Received your telegram, total consignment Builty cut here consignment fully examined checked; weighed and delivery taken here by your Manager Karimbhai and Rashid. Due to end of season everywhere rice of such quality." Even the other telegrams by the appellant to the respondents are couched in similar terms. A perusal of these telegraphic replies by the appellant to the respondent discloses that the appellants did not repel the grievance of the respondents in regard to quality of goods but set up a case to the effect that the goods. Have been inspected, checked and accepted by the representatives of the respondents and further that owing to the time of supply being the end of the season, good quality rice as may conform with Government specifications was not available anywhere. On a perusal of this correspondence in the form of telegrams that passed between the parties in September 1957 viz. The period when supply was proceeding, I am left in no doubt that
---
## Page 7
the goods supplied were inferior to the goods that the respondents had agreed to buy. Even at the time of arguments, Mr. Fakhruddin Ibrahim, the learned Advocate for the appellants did not seriously challenge that the goods were not of a quality as would conform to the Government specifications, but the case that the learned Advocate attempted to set up before us was that the appellants bad not contracted to supply goods which may be acceptable to Government and alternatively the respondent by sending his representatives to Larkana for the purpose of examining the goods before supply had not relied on the seller's skill or judgment as contemplated by section 16(1) of the Sale of Goods Act. 17. With regard to the actual terms of the contract, I have dealt with this aspect of the case above and held that the appellants had agreed to supply goods which were to be in conformity with the Government specifications. The next contention of the learned Advocate for the appellants with regard to reliance on skill and judgment of appellant would now require examination in the light of the provisions of section 16, Sale of Goods Act. 18. Section 16(l) of Sale of Goods Act reads as follows :- "Where the buyer, expressly or by implication makes known: to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment and the goods are of a description which it is the course of the seller's business to supply…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.