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Petitioner: JAVED IQBAL VS Respondent: PASSCO and another
Court Name: Lahore High Court Judge(s): Muhammad Ghani Title: JAVED IQBAL vs PASSCO and another Case No.: Writ Petition No,13372 of 2003 Date of Judgment:2003-12-23 Reported As: 2004 CLC 478 Result: Petition allowed
JUDGMENT
JUDGMENT ' On 31st of March, 2003, Pakistan Agricultural Storage and Services Corporation Limited (herein mentioned as respondent-PASSCO) entered into an agreement with Messrs The Exporters (Regd.), Birdwood Road, Lahore for sale of 25,000 metric tons of FAQ wheat (crop 2002) "for export through Sea Route." Since in order to resolve the present controversy, extensive reference will have to be made to the terms of the Agreement, therefore, the same is reproduced, for facility of reference:-- Agreement for sale of wheat for export. (1) Whereas Pakistan Agricultural Storage & Services Corporation Ltd. (PASSCO) desired to sell wheat (hereinafter called the FIRST PARTY) and Messrs The Exporters (Regd.), Birdwood Road, Lawrence Road, Lahore (hereinafter called the SECOND PARTY) desires to buy 25,000 M/Tons of FAQ wheat (crop 2002) ex-PASSCO storage points for export through sea route. (2) Whereas the parties through their authorized agents respectively have agreed to the terms and conditions given below for the performances of this agreement and in token hereof affix signatures. (3) This agreement shall come into force at once i.e, on 31st March, 2003 and shall remain valid for 60 days i.e, up to 30th May 2003 subject to the conditions as per succeeding paras. (4) The basic price of wheat stocks is fixed @ Rs,8,625 per M/Ton ex-storage points. Second Party will deposit @ Rs,6,538 per ton in cash for stock cost for every tranche and balance amount of Rs,2,087 per ton as refund claimed by the Second Party on account of upgradation/export expenses shall be furnished by the Second Party in the form of bank guarantee for the entire contracted quantity of wheat stocks. (Not more than two instruments). Bank Guarantee shall be returned by the First Party to the Second Party soon on submission of valid prescribed export documents by the Second Party claiming the refund and after realizing any recovery from the
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Second Party due from them on account of lifting of wheat at cascading refund rate or any other penalty etc. (5) Delivery/lifting order will be issued by the First Party (Field Wing) on confirmation of the deposit of stock cost @ Rs,8,625 per M/Ton in PASSCO's bank by the Second Party. (6) Delivery/lifting period shall be 60 days from the date of signing of the contract. Second Party shall be entitled for the refund on account of upgradation/export expenses @ Rs,2,087 per M/Toti for the quantity of wheat lifted. (7) The Second Party can take delivery in lots of 500 M/Tons (minimum) each either on upfront payment in cash at the rate of Rs,8,625 per M/Ton, or provide bank guarantee relating to refund amount on account of upgradation/export expenses @ Rs,2,087 per M/Ton for the entire contracted quantity of wheat and take delivery in lots of 500 M/Ton (Min.) each by depositing upfront the cost of wheat stock @ Rs,6,538 per M/Ton. (8) Sale of the Goods will mean and imply taking proforma invoice and actual delivery of the goods by the Second Party in parts (Tranches of at least 500 M/Tons of wheat) or whole contracted quantity/shipment load. (9) The First Party shall ensure availability of FAQ wheat crop 2002, as per attached specifications at Annexure "A", duly bagged in jute bags of sound condition at the mutually agreed/designated PASSCO storage points. As far as possible, however, the Second Party may be facilitated in this regard. (10) Loading charges will be borne by the Second Party. (11) The documents of export of wheat and/or wheat products i.e, Atta, Maida, Fine, Bran etc. Have to be submitted within 3 calendar months after completion of the lifting as per clause-3. Export quantity of bi-products/milling products in lieu of wheat shall correspond to established rate of recovery from grains thereof and Second Party can export wheat bi-products accordingly. (12) The Second Party shall provide Bank Guarantee as per the specimen enclosed vide Annexure "B" for the amount of upgradation/export expenses per M.Ton for the full contracted quantity to the First Party, release of which shall be arranged upon submission of valid export documents duly verified by the bank i.e, (a) Form-E (b) shipping bill/bill of export (c) B/L supported with MR/TR as applicable (d) Copy of Commercial Invoice (e) Copy of LC for export by sea route (f) Sale proceeds realization certificate issued by the bank (g) Customs Declaration or any other documents PASSCO may solicit in support of export etc. (13) If the Second Party fails to export and submit the prescribed approved export documents within the stipulated period, their Bank Guarantee will be encashed and forfeited in favour of PASSCO. (14) The Second Party shall complete the lifting of the total quantity of wheat within 60 days, failing which, the provisions of clauses 16 and 17, as the case may be, shall operate. (15) The Second Party has provided Performance Money in the shape of Bank Draft at the time of the signing of agreement @ 1% of the cost of quantity contracted in favour of the First Party. The same shall be released upon successful completion of the contract by the Second Party. (16) In case the Second Party fails to take delivery of the total quantity within the stipulated period, the First Party will be entitled to impose a penalty at the rate of 1% of the value of undelivered quantity for the first 10 days and at the rate of 2% for the next 10 days. Delayed lifting of wheat by the Second Party shall however no't affect the cut off date of submission of valid export documents claiming refund amount as per clause-11 (17) If the Second Party defaults but deposits in lump sum the cost of unlifted/undelivered quantity, then the penalty vide clause-16 will not be imposed and extension of 20 days may be granted. (18) Performance Bond/Security of Second Party shall stand forfeited in favour of the First Party on non-performance of the contract/agreement by the Second Party within the stipulated period. First
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Party then have the option, if deemed necessary, to rescind the agreement, arrange the sale/disposal of the wheat stock elsewhere and claim damages from the Second Party. (20) First Party may facilitate the Second Party in the performance of the agreement as far as possible, however, without compromising PASSCO's interest. Thus any provisions may be added subsequently with mutual consent of the parties in the agreement ensuring such facilitation and for avoiding bottlenecks. (21) Regarding the issue of jurisdiction in case of litigation between parties hereto, the Court at Lahore shall have the exclusive jurisdiction to entertain such dispute. (Sd.) (Sd.) First Party. Second Party. Col. (R) Shuja Ullah (Khalid Jamil) PASSCO HQ, Lahore For Messrs The Exporters (Regd.), (Sd.) Ijaz Ahmed Khan." Lahore. 2. It appears, Mian Khalid Jamil, representing Messrs The Exporters (Regd.) being short of funds could not lift the wheat as per Agreement, within the stipulated period, which expired on 30th May, 2003. However, he had the blessings of PASSCO, since it admittedly elected not to put an end to the Agreement soon after 30th of May, 2003 and in order to save his contract, Mian Khalid Jamil entered into an agreement, dated the 12th of June, 2003 with Javed Iqbal (petitioner herein) and Muhammad Abrar, for lifting of wheat stock of PASSCO, at a mutually agreed rate of Rs,7,600 per M/Ton. As the last date for lifting of wheat had already expired on 30th of May, 2003, the above- named intervenors agreed to pay to PASSCO price of wheat at the rate of Rs,8,797.50 per M/Ton, which amount was inclusive of 2% late delivery charges, levied in terms of afore-quoted Clause 16 of the Agreement. The excess amount payable by the petitioner was to be refunded to him by Mian Khalid Jamil, who had also executed an irrevocable Special Power-of-Attorney in favour of the above-named Muhammad Abrar for receiving the wheat from respondent-PASSCO. Moreover, by means of an amendment dated the 24th of June 2003, introduced in the original Agreement, at the request of Mian Khalid Jamil, PASSCO had reduced the quantity of wheat from 25,000 M/Tons to 15,000 M/Tons. Whereas the remaining terms of the original Agreement were to remain intact, the amendment introduced provided that "Messrs The Exporters shall remit the cost of the total/balance quantity of wheat upto 15,000 M/Tons (as the case may be) in cash @ Rs,8,625 per M/Ton alongwith 2% penalty and shall be bound to take delivery of stock/lifting from the designated PASSCO Storage points by 30th June 2003." Needless to point out that the period of 60 days, as originally stipulated in the Agreement, dated the 31st of March, 2003 for lifting of entire agreed wheat stock had expired on 30th of May, and, as per Clause 17, only a grace period of 20 days could be given. Moreover, PASSCO did not opt to exercise its power of forfeiture as contained in Clause 18 of the Agreement. Be that as it may, Messrs The Exporters did not lift the wheat stock and, it appears, the petitioner was allowed by PASSCO, of course with the consent of the original purchaser, to lift the wheat. The petitioner then deposited with PASSCO the price of the wheat lifted by him, including 2% penalty (liquidated damages) in cash. When the petitioner had already deposited the amount as afore-mentioned, and had also lifted some quantity of wheat, Mian Khalid Jamil cancelled the irrevocable Special Power-of-Attorney earlier executed in favour of Muhammad Abrar. This gave rise to a dispute between the parties and consequently Javed Iqbal (petitioner herein) and Muhammad Abrar filed on 28-6-2003 a suit for declaration and injunction, impleading Messrs The Exporters (Regd.), Mian Khalid Jamil and PASSCO, respectively as defendants 1, 2 and 3. Some of the averments in the plaint, relevant for the present purposes, were as follows:-- ' "Since the defendants No,1 and 2 did not have the financial resources, therefore, in order to save the contract with defendant No,3, the defendant No,1 through defendant No,2 entered into an
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agreement dated 12-6-2003 with the plaintiff No,1 for purchase of the above stated quantity of wheat at the rate of Rs,7600 per Metric Ton in terms of the agreement with the plaintiff. It was agreed between the parties that the party of the Second Part will be able to lift the wheat from the office of the defendant No,3 on behalf of the defendants No,1 and 2 after paying Rs,8797 per M.T which included 2% late delivery charges which stood levied in terms of the agreement of the defendants Nos.1 and 2 with the defendant No,3 on account of non-lifting of the stock of wheat from the defendant No,3 by defendants Nos:l and 2 within the stipulated period of time because of lack of financial resources of the defendants Nos.1 and 2. The defendant No,3 also in terms of the agreement with the plaintiff executed a special irrevocable power of attorney in favour of plaintiff No,2, the person nominated in the agreement by the plaintiff No,1 for being appointed as special irrevocable attorney of the plaintiff No,1 for receiving the wheat. ' "That per terms of the agreement of the defendants Nos.1 and 2 with the plaintiff, the plaintiff No,1 had to originally deposit price of wheat i.e, 8797.5 per M/Ton which included Rs,2087 per M/T on the amount to be deposited in the shape of bank guarantee. The plaintiff No,1 instead of depositing a bank guarantee, however, deposited the complete price of wheat in cash with the defendant No,3." ' "It is pertinent to mention here that soon after execution of agreement dated 12-6-2003 of the plaintiff with the defendants Nos.1 and 2, it was realized by the defendant No,2 that it would be difficult to replace the bank guarantee deposited by plaintiff No,1 with defendant No,3 on or before 20th August, 2003 in terms of the agreement, therefore, with the consent of the plaintiff No,1, the defendant acknowledged in black and white the alteration in terms of agreement whereby the defendants Nos.1 and 2 undertook to supply the bank guarantee to the defendant No,3. The defendant No,2 submitted a bank guarantee. However, the plaintiff learnt that the defendant Nd.3 did not accept the bank guarantee of the defendants Nos.1 and 2 for the reasons known to defendant No,3. As already stated above, the plaintiff No,1, therefore, in order to save his interest had to deposit the amount of bank guarantee in cash to the defendant No,3 provisionally as per the term of original agreement of the plaintiff No,1 with the defendants Nos.1 and 2 which stood revived on non-acceptance of the bank guarantee by the defendant No,3 submitted by defendants Nos.1 and 2. On the request of defendants Nos.1 and 2, the quantity of wheat was reduced from 25000 MT to 15000 MT by defendant No,3 which was mutually agreed between the plaintiffs and the defendants Nos.1 and 2." ' "That the plaintiff No,1 as per the terms of agreement received some quantity of wheat. However, the defendant No,2 on learning about the complete payment made by the plaintiff No,1 in order to defraud the plaintiff and to devour his amount illegally and fraudulently cancelled irrevocable power of attorney executed by him in favour of the plaintiff No,2 without issuing any prior notice to him bringing the same to his knowledge or notice. The plaintiffs have complete documentary proof of all the payments made by the plaintiff to the defendant No,3 in pursuance of the agreement dated 12-6-2003 of the plaintiff with defendants Nos.1 and 2. These are being enclosed alongwith the plaint." ' "That the plaintiff on learning about the fraud immediately through an express telegram sent to the defendant No,3 at 2 a.m. On 27-6-2003 requested the defendant No,3 not to allow lifting of the wheat stock by the defendants Nos.1 and 2. A detailed legal notice addressed to the defendant No,3 alongwith copies sent to defendants Nos.1 and 2 was also served on 27-6-2003. The plaintiff requested the defendant No,3 vide his notice to immediately stop the defendants Nos.1 and 2 from lifting the wheat on the basis of the permit issued by defendant No,3. On the one hand, declaration was sought that the cancellation of irrevocable Special Power-of- Attorney by Mian Khalid Jamil was illegal, and was binding on him and, on the other, injunction was sought against all the three defendants in the following terms:-
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' "It is also prayed that a decree restraining the defendants Nos.1 and 2 may kindly be passed from lifting the wheat from the godowns of defendant No,3 and the defendant No,3 may kindly be restrained allowing the defendants Nos.1 and 2 to lift the wheat from the godown of defendant No,3". ' When the suit came up before the learned Civil Judge, to whom it had been entrusted, he passed an interim injunctive order on 28-6-2003, restraining defendants "from lifting the wheat from PASSCO/from disputed zones". During pendency of the suit, the plaintiff-petitioner and the first two defendants entered into a compromise on 3rd of July 2003, some of the terms whereof took the following form:- ' "Whereas the party of the Second Part (petitioner herein) has offered for the total payment of Rs,61,56,250 to the party of the First Part (Messrs The Exporters through Mian Khalid Jamil) as consideration for purchase of the complete rights of the party of the First Part with Messrs PASSCO," ' "The party of the Second Part will be under obligation to export 15000 MT of wheat." ' "All the documentation in terms of the export of wheat and wheat products will be done by the party of the second part exclusively and the party of the first shall assist the party of the Second Part." ' The petitioner had inter alia agreed to purchase the reduced quantity of wheat as per terms of the Agreement, dated 31st of March, 2003, in consideration of Rs,61,56,250. The petitioner was made bound to export 15,000 metric tons of wheat of PASSCO and the documentation was to be in the name of the petitioner whereas defendants 1 and 2 were to assist him. Besides, as per the said agreement/compromise, an account was to be opened by the petitioner, though in the name of the firm "Messrs The Exporters", but it was to be operated "exclusively" by the petitioner. Mian Khalid Jamil unequivocally undertook and made himself "bound to intimate and get registered the newly opened account with Messrs PASSCO with a request in black and white to remit all amounts" in the said account which may be due to Messrs The Exporters under the original Agreement, dated the 31st of March 2003. The compromise was filed in Court and was recorded by the learned Civil Judge who passed decree in terms thereof on 5-7-2003, operative part of which reads as follows:- - ' "Learned counsel for the plaintiffs Nos.1 and 2 has stated that compromise Exh.C-1 has been effected between the parties and defendant No,1 has received pay order No 20 /441 of Rs,26,00,000 issued by the Habib Bank, Co-operative Branch, Lahore and Rs,24,56,250 through cross-cheque No,MIN6147891 to be drawn from Metropolitan Bank, Associated House, 7-Egerton Road, Lahore in the Court. ' In the light of the compromise Ex-C-1, the suit is accordingly decreed in terms of compromise Ex- C-1, because the defendant No,3 (PASSCO) is pro forma defendant. The defendant No,3 is directed to allow the plaintiffs to carry wheat within period of 5 days from today in terms and conditions of compromise Exh.C.l" 3. Doubtless, PASSCO (respondent herein), though defendant No,3 in the suit, was not a party to the afore-mentioned agreement/ compromise, in terms whereof the suit was disposed of, but PASSCO cannot plead lack of knowledge of the contents of the plaint in the suit of the petitioner or those of the agreement/compromise, dated the 3rd of July, 2003 between the petitioner and defendants Nos.1 and 2. Moreover, it is not the case of the respondent that the afore-quoted order, dated 5-7- 2003 of the learned Civil Judge was ever challenged by it. On the other hand, the decision of the Civil Court was accepted and given effect to in letter and spirit, by respondent-PASSCO inasmuch as it wrote the following letter on 17th of July, 2003:- Pakistan Agricultural Storage and Services Corporation Ltd. Comm. Wing, 54 Lawrence Road, Lahore FAX NO.6370296
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' No,PASSCO/Comm/977 Dated: 17 July, 2003 ' Muhammad Abrar son of Joil Bakhsh Provincial Line Street No,5 ' Bungalow No,4-1 Attock Oil Company Rawalpindi. ' Mr. Javed Iqbal son of Muhammad lqbal, House No,55-C, Jinnah Town Quetta. SUB: SALE OF WHEAT CROP 2002 FOR EXPORT TO MESSRS EXPORTERS . ' Reference agreement dated 31 March, 2003. ' In deference to the Court orders dated 5 July, 2003 you are allowed to lift 2,987.026 M/Tons wheat crop 2002. Lifting of wheat shall be completed up to 22 July, 2003 positively. (Sd.) General Manager (Comm.) Brig. (Retd.) Aftab Ahmed." ' Pursuant to the afore-mentioned letter, the petitioner lifted the remaining quantity of wheat on 17th, 18th and 19th of July 2003, after making payment to the respondent-PASSCO of its purchase price, plus 2% penalty. It was so averred in paragraph 6 of the writ petition which, for facility of reference, is reproduced:- ' "That in the meantime in pursuance of the Agreement dated 3-7-2003 the petitioner lifted the entire remaining quantity of 15,000 metric tons of wheat on 17th, 18th and 19th of July, 2003 after paying to the PASSCO the entire purchase price plus 2% penalty as per terms of Agreement dated 31-3-2003. ' In reply, the respondent has taken stance in the following terms:- ' "Admitted that wheat stocks were lifted after payment of penalty. All actions however, were in the wake of 31.03.2003 agreement and on behalf of the firm "The Exporters"/proprietor Mian Khalid Jamil. The petitioner as such did not figure in any individual independent capacity vis-a-vis PASSCO. He acted as an attorney." 4. The case of the petitioner is that he had then made all arrangements for export of the wheat to foreign countries as per spirit of the original Agreement, dated 31st of March 2003, but when approached, the respondent declined to accept export documents on the ground that the period of three calendar months, as stipulated in clause 11 of the said Agreement, had expired inasmuch as in terms of clause 3 thereof, the cut off date was 30th of May 2003, and the period of three calendar months reckoned from the cut off date, expired on 30th of August 2003. However, before expiry of the said period, the petitioner, through his counsel's letter, dated 28-8-2003, approached the Managing Director of respondent-PASSCO with the request to enable him to export wheat, but nothing having been heard from the respondent, the petitioner filed the instant Constitutional petition on 25-9-2003. 5. When the petition came up for hearing on the 25th of September, 2003, respondent-PASSCO was directed to depute some responsible officer to appear in this Court, alongwith the record. Khawaja Muhammad Akram, Advocate, entered appearance on behalf of the said respondent and sought adjournment to obtain instructions. On 6th of October, 2003, learned counsel for the respondent produced, before the Court, Minutes/Recommendations, dated the 30th of August, 2003 of Wheat Export Committee of respondent-PASSCO and the order of its Managing Director. The same are to the following effect:-- "Minutes/Recommendtions of Wheat Export Committee Meeting held on 30th August 2003. (1) The Committee proceeded to examine the request of the parties for extension in shipment period. It may be recalled that number of parties were given the contract for export of 3,00,000 M/Tons of wheat in various quantities and parties had sufficient period spread over about five months to complete the export of PASSCO's contracted wheat. Besides the element of force majeure conjured up by the parties do not seem to be tenable. The Committee does not recommend to accede to the request of the parties for extension in shipment period beyond the contracted period.
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(Sd.)Maj.(R) Muhammad Akram(Sd.) Brig.(R.) M. Parwaiz Akbar ' G.M.(Audit)/Chairman. G.M. (Field) (Sd.) Muhammad Shwkat Haidry, (Sd.) Brig. (R) Aftab Ahmed, ' GM (F&A) GM (Comm.). ' (Sd.) Ch. Abdul Majeed ' AGM (S&C) (2) Submitted for approval of para. 1 please. (Sd.) 30-8-2003. Brig. (Retd.) Aftab Ahmed, General Manager (Comm.). M.D. Para. 1 above approved. (Sd.) (Illegible) 30/8" ' A photostatic copy of the following letter statedly issued pursuant to the afore-quoted decision, was 'also produced by the learned counsel for the respondent:-- FAX NO.6370296 UMS ' No,PASSCO/Comm/3836 Dated: 1st September, 2003. ' Messrs The Exporters (Regd.) Mumtaz Abad ' Near Coca Cola Factory Multan. ' SUB:-- Sale of wheat for export request for extension in shipment period. ' Reference agreement dated 31st March, 2003 and your letter dated 25th August, 2003. ' It is to intimate you that your request for extension in shipment period beyond the contracted period was considered but has not been acceded to. (Sd.) General Manager (Comm)" ' When confronted with the above situation, learned counsel for the petitioner, on instructions, emphatically denied receipt of any such letter by Messrs The Exporters or by the petitioner. Be that as it may, in view of the changed position, learned counsel for the petitioner sought time to file an application to amend the writ .Petition. Consequently, the petitioner filed application under Order I, rule 10, C.P.C. And under Order VI, rule 17, C.P.C., for arraying Mian Khalid Jamil of the Firm Messrs The Exporters as respondent No,2 and for amendment of the writ petition, which was allowed, whereupon amended petition was filed, inter alia with the following prayer:-- ' "In view of the above submission, it is most respectfully prayed that it may kindly be declared that the petitioner is entitled to file the export documents within three calendar months after adjudication of the matter by this Hon'ble Court, in circumstances of the case". ' The writ petition was admitted to hearing and notices were issued to both the respondents. Respondent No,1 (PASSCO) has filed written statement. 6. I have heard the learned counsel for the parties and have perused the record. 7. Kh. Muhammad Akram, learned counsel for respondentPASSCO has raised a preliminary objection to the maintainability of this petition, by contending that the enforcement of contractual obligations through a Constitutional petition is not permissible. In support of this submission, reliance has been placed on Kaanay Construction Co. v. WAPDA 2001 YLR 734, Maj (Reid.) Shehzad Hussain Khan v. Government of the Punjab 2001 PLC (CS) 249, Mian Ansar Hayat v. Punjab Mineral Development Corporation 2001 YLR…
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