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Petitioner: TRADING CORPORATION OF PAKISTAN (PVT) LTD. VS Respondent: Messrs PUNJAB TRADING JUDGMENT
Court Name: Sindh High Court Judge(s): Arshad Hussain Khan Title:TRADING CORPORATION OF PAKISTAN (PVT) LTD. vs Messrs PUNJAB TRADING
JUDGMENT
Reported As: PLD 2017 Sindh 276 Result: Suit dismissed Judgment JUDGMENT ARSHAD HUSSAIN KHAN, J.-- This suit was initially filed by Rice Export Corporation of Pakistan [RECP] on 15.01.1997 against the defendant for Accounts and Recovery of Rs,23,45,77,337/-[Rupees twenty-three crore, forty-five lac, seventy-seven thousand, three hundred and thirty-seven only] with the following prayer:- (1) Decree for a sum of Rs, 234,577,337/= against the defendants with interest and for mark up at 14% per annum from the date of suit till recovery plus cost of the Bardana found short at the time of final account. (2) In the alternative the plaintiff prays for a judgment and decree against the defendant to render true and faithful account of the stocks of rice and bardana entrusted to defendant as mentioned in the plaint and to pass final decree for amount ascertained on rendition of account. (3) Cost of the suit. (4) Any other relief which this Hon'ble Court may deem fit and proper in the circumstances of the case. 2. Subsequently, upon applications of the parties, this court vide its order dated 01.10.2001, allowed substitution of Trading Corporation of Pakistan as plaintiff in place of RECP as the RECP was merged with Trading Corporation of Pakistan and accordingly amended title was filed on 01.1.2002. Thereafter, this court by its order dated 25.08.2003 allowed yet another amendment in the plaint and consequently para 14-A was inserted in the plaint and accordingly the amended plaint was filed on 03.09.2003 with following prayers:-
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1) Decree for a sum of Rs,252,513,749/- against the Defendant with interest / Mark-up 14% p.a. from the date of suit till recovery plus cost of the bardana found short at the time of final account. 2) In the alternative the Plaintiff prays for a judgment and decree - against the Defendant to render true and faithful account of the stocks of rice and bardana entrusted to Defendant as mentioned in the Plaint and to pass final decree for the amount ascertain in rendition of account. 3) Cost of the suit. 4) Any other relief which this Hon'ble Court may deem fit and proper in the circumstances. 3. The case of the plaintiff as averred in the plaint is that the plaintiff for handling of crop 1988-89 at its godown at Bin Qasim [QRG] awarded the contract No,RECP-5/M&M/88-89/5 dated 14.1.1990 to the defendant. Pursuant to the contract the defendant firm was appointed as the Handling Agents for handling the rice of 1988-89 crop at QRG of the Plaintiff as well as for handling any other rice stocks which the plaintiff may entrust to the defendant during the currency of the contract. As per terms of the contract the defendant had to exercise all care in respect of stock including its by- product etc., entrusted to them and were liable for and make good any loss or damage therein howsoever caused or arising. The contract was awarded and accepted on the basis of Book Balance and defendant signed the documents accepting that he had received the stocks mentioned in it. It is also averred that pursuant to the said contract the defendant was entrusted with large quantities of rice of various qualities, gunny bags and dunnages in connection with the performance of the contract. The period of contract was upto 07.01.1991 from the date of acceptance but since the considerable amount of rice crops 1988-89 could not be exported, the plaintiff management extended validity period of contract from time to time upto 30.09.1995. It is also averred that the services rendered and work performed by the defendant throughout the handling of rice crops 1988-89 was found unsatisfactory. Despite . plaintiff's request/demand the defendant failed to carry out the physical verification and submit R.S. Account and also failed to point out the position of the stocks in his possession. It is also averred that the defendant failed to submit Account of 21,957 M.Ton Basmati Rice and 24,324 M.Ton of other varieties of rice. As per terms of the contract the defendant was liable to render account for the stocks entrusted to them and they are also liable to pay to the plaintiff a sum of Rs,239,234,184/= being the value of shortage and cost of rice which was entrusted to the defendant and remained unaccounted for. It is also averred in plaint that after adjustment of security and retention money of 86-87 and 87-88 crop and cost of shortage in 1983-84 crop and security money/retention money of 1988-89 crop, the defendant is liable to pay Rs,234,577,337/= The defendant failed to render the account of 286,287 B Twill /P Twill bags, 704,566 Hessian Bags and 41,003 Heavy Cess Bags (Total 1,031,846 bags). The defendant as haridling agent under the terms and conditions of contract is liable to render account for the bags entrusted to them and hence is liable to pay Rs,17,936,412/= being the value of bags found short. 4. Upon service of the notice of this case the defendant firm initially filed their written statement on 17.03.1998 however, upon amendment in the plaint, allowed by this court, the defendant also filed their amended written statement on 24.12.2003. In the written statement while denying the allegations leveled therein the defendant stated that in fact tender was only to take over the stock of 1988-89 crops in respect of which an earlier contractor namely M/s. Behri Enterprises had already defaulted. In this regard Clause-2 of the Tender Notice was referred which says that the successful bidder will be required to takeover the stocks of 1988-89 crop already received in RECP Godown of QRG/Landhi, prior to the award of this contract and previous crop on the basis of BOOK BALANCE certified by Reserve Stock Account of the Corporation. The subject tender was not fresh tender but in respect of stock left by the previous contractor at QRG on Book Balance for the remaining period. As per the terms of the contract the Defendant had deposited with the with Plaintiff an amount of Rs,17,00,000/= as security money besides this, 2% of the amount of each
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running bill as retention money which according to the defendant during the currency of the contract comes to Rs,33,56,944/= has been retained by the plaintiff which amount shall be required to be refunded to the defendant on completion of the contract. It is also averred that the liability of the defendant under the said contract by virtue of the Book Balance clause was very limited. It is also averred that the defendant firm were satisfactorily performing their contractual obligation, resultantly the plaintiff time and again renewed / extended the contract from 1991 to 1995. It is also the case of the Defendant that since beginning of the contract the Defendant had been requesting the plaintiff to conduct survey so as to avoid the complication at the time of final accounts but the plaintiff has failed to do so. It is also averred that because of the plaintiff's unfair conduct the previous contractor abandoned and the plaintiff by misrepresentation persuaded the defendant to take contract on `Book Balance' basis. Further averred that the contract was awarded to the defendant on the 'Book Balance' basis at the risk and cost of defaulting contractor, therefore, the defendant firm is not responsible for any loss. The security and retention money pertaining to the contracts of 1983-84 crop, 1986-87 crop and 1987-88 bear no nexus to the subject matter of the present suit. It is also averred that the plaintiff does not have right to adjust/claim security and retention money of 1983-84 crop, 1986-87 crop and 1987-88 crop total amount whereof comes to Rs,1,21,65,050/= which amount the plaintiff is liable to refund to the defendant. The Defendant in this regard also made complaint to the `Wafaqi Mohtasib'. It is also averred that the claim of the plaintiff is baseless and after thought based on mala fide intentions to avoid payments of retained amount towards security deposit and retention money lying with the Plaintiff in respect of the earlier contracts, to the Defendants. 5. It is imperative to mention here that this court on 14.09.1998, while deciding the C.M.A. 6437/1998 (application under Order XXXIX, rule 10 Read with Section 151 of C.P.C. filed 'by the Defendant) ordered, operative part whereof, for the sake of reference is reproduced as under: "Under the circumstances, I feel it would be in the interest of justice if the plaintiff keep the retention money amounting to Rs,1,21,65,050/- separately from the amount claimed from the defendants and are not to adjust it against the claimed amount. This amount is to be kept in separate account till such time that this suit is disposed of. This CMA is disposed of." ' The Plaintiff did not file any appeal against the said order however, the Defendant preferred High Court Appeal bearing H.C.A. No,299 of 1998 which HCA was disposed of on 2.09.1999. The said order is reproduced as under: "Mr. Aril Hussain Khilji, Advocate submits letter issued by the Allied Bank of Pakistan Ltd., dated 26.08.1999 which shows that Rice Export Corporation of Pakistan Ltd has deposited a sum of Rs,12,472,959/- in separate A/C No,9-9. ' The amount shall remain in the Bank and may not be withdrawn by Respondents with decision of the suit. ' The appeal stands disposed of. Copy of order may be sent to the bank." 6. Out of the pleadings of the parties the following issues were framed/settled by this Court on 12.10.1998 which is as follows:- "1. Whether contract for 1988-89 was given on "BOOK BALANCE" basis at the risk and cost of the defaulting contract. If so, its effect? 1.A. Whether defendant rendered the account; if not, its effect? 2. Whether the performance of the contract or the part of defendant was unsatisfactory? 3Whether plaintiff can adjust security deposit and retention money for the contracts of the years of 1983-84, 1986-87 and 1987-88 lying as trust with plaintiff? 4.Whether plaintiff has not issued N.O.C., Clearance certificates as to completion of earlier contracts? 5.Whether the suit is maintainable?
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6.Whether plaintiff is entitled to suit money? 7.What should the order be?" 7. Subsequently, on 09.02.2004 an additional Issue was also framed by this Court which is as follows:- "Whether the Defendant is liable to account / pay the claim of the Plaintiff relating to the bags as mentioned in Para 14(A) of the amended plaint?" 8. On 16.12.2004, the Commissioner was appointed to record evidence in the matter. The said commission was completed and the learned commissioner through his report dated 21.04.2005 placed on record the evidence of the parties recorded by him in the matter. 9. The plaintiff in support of its case has examined one witness, his Deputy Manager (Godowns) CSD namely, Muhammad Atiq Khan as P.W.1. Whereas the defendant in support of its stance in case has also examined one witness, its Managing Partner namely; Rashid Akbar as D.W-1. 10. The plaintiff filed affidavit-in-evidence of Muhammad Atiq Khan [Exh. P] And produced the following documents: SR.# DESCRIPTION OF DOCUMENTS DATE EXHIBITS 01 Attested copy of Contract No.REC P-5/M&M/88-89 between the Plaintiff and Defendant along with Tender Notice and its Annexures (i) to (iv) (25 Pages)14.01.1990 P/3 02 Attested copy of Plaintiff's Letter No,RECP-5/M&M/88-89-91/Ext. to Defendant19.10.1995 P/4 03 Attested copy of Plaintiff'sMemo No,RECP/QRG/PHY VERI./88-9213.11.1995 P/5 04 Attested copy of Plaintiff's letter No,RECP/ORG/PHY VERI./88-92 to Defendant15.06.1996 P/6 05 Attested copy of Plaintiff's letter No,RECP/QRG/PHY VERI./88-92 to Defendant18.06.1996 P/7 06 Attested copy of Plaintiff's letter No,RECP/QRG/ (8)90-91 to defendant and others03.12.1991 P/8 07 Attested copy of plaintiff's letter No,RECP/QRG/A- 1(10)9203.10.1992 P/9 08 Attested copy of plaintiff's letter No,RECP/QRG/A- 1(10)92 to defendant and others20.10.1992 P/10 09 Attested copy of plaintiff's letter No,RECP/QRG/ 4(8)92 to defendant07.11.1992 P/11 10 Attested copy of plaintiff's letter No,RECP/QRG/ 4(8)92 to defendant16.11.1992 P/12 11 Attested copy of plaintiff's letter No,RECP/QRG/ 4(8)92 to defendant21.11.1992 P/13 12 Attested copy of plaintiff's letter No,RECP-5/M&M/ 88-92/Shortage31.10.1996 P/14
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to defendant 13 Attested copy of Office Order of the plaintiff for appointment of Enquiry Officer.14.01.1999 P/15 14 Attested copy of plaintiff's Enquiry Report on shortage of Gunny Bags24.05.1999 P/16 15 Attested copy of Resolution of Board of Directors of the plaintiff26.02.2003 P/2 The said witness (P.W.1) was subsequently cross-examined by the counsel of the defendant, whereafter the side of the plaintiff was closed. 11. The defendant filed affidavit-in-evidence of its witness namely, Rashid Akbar [Exh. D] and produced following documents: SR.# Description Exhibits 01Letter dated 22.8.1989 from plaintiffs offering for handling left over stock by Bahri Enterprises for the year 1988/89 on ad hoc basisD/1 02Letter dated 12.11.1989 from plaintiffs to defendants informing that defendant's offer dated 22.10.1989 in respect of tender notice dated 9.10.1989 has been scrapped.D/2 03Letter dated 10.1.1990 from the plaintiffs to defendants informing acceptance of defendants' offer in respect of tender opened on 30.11.1989.D/3 04Defendant's letter dated 15.5.1991 to plaintiffs informing loss of rice.D/4 05Letter dated 30.4.1992 by defendants to plaintiffs apprising in loss in weight and requesting survey.D/5 06Letter dated 10.8.1992 by defendants to plaintiffs showing apprehension of heavy loss in weight requesting immediate survey.D/6 07Letter dated 17.9.1992 by defendant to plaintiffs informing loss of weight due to lengthy storage, moisture and infestation requesting immediate survey.D/7 08Letter dated 6.10.1992 by defendant to plaintiffs requesting immediate survey to assess loss.D/8 09Letter dated 16.11.1992 by plaintiffs to defendants advising to furnish stock position of 1988/89 crop.D/9 10Letter dated 18.11.1992 by defendant to plaintiffs in reply to letter dated 16.11.1992 again requesting surveyD/10 11Letter dated 22.11.1992 by defendant to plaintiffs repeating request to conduct survey.D/11 12Letter dated 03.4.1993 to plaintiffs by defendants showing willingness to bear the expenses of S.G.S. in respect of survey and other allied functions.D/12
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13Letter dated 19.6.1994 by defendants to plaintiffs laying down procedure for delivery of rice facilitating survey and assessing loss in weight.D/13 14Letter dated 08.9.1994 by plaintiffs to defendant agreeing to adopt the procedure for delivery as detailed in defendants' letter dated 19.6.1994.D/14 15Letter dated 15.11.1995 by defendants to plaintiffs regarding physical verification of 1988/89 crop adopting procedure laid down in plaintiffs' letter dated 08.9.1994.D/15 16Letter dated G7.01.1996 by defendants to plaintiff to physically verify 1988/89 crop rice requesting to adopt procedure already agreed on 8.9.1994.D/16 17Letter dated 22.01.1997 by defendant for handling of rice 1988/89 crop at QRGD/17 18Letter dated 12.11.1996 by defendant in reply to letter dated 31.10.1996D/18 19Letter dated 04.3.1997 by plaintiff to defendants in reply to defendant' s letter of 22.01.1997D/19 20Letter dated 13.05.1995 by defendants to plaintiff in respect of transfer of Bags from new to serviceable De-charketed account 1988 89 cropD/20 21Letter dated 14.11.1996 by defendants to plaintiffs in reply to their letter dated 03.11.1996D/21 22Statement of lots of bags for local disposal from Sr. No,1 - Lot No,882 PTA (with location) to Sr. No,183 - Lot No,1137 PTA by the defendants.D/22 23Letter dated 02.8.1992 by plaintiff to defendants. D/23 24Letter dated 10.3.1991 by plaintiff in reply to defendants letter dated 10.1.1990D/24 25Photocopy of Letter dated 30.01.19_ by defendants to plaintiffD/25 26Photocopy of Rice handling contract D/26 The said witness of the Defendant was subsequently cross-examined by the counsel of the Plaintiff. 12. I have heard Mr. Muhammad Safdar, learned Advocate for the Plaintiff and Mr. Khalid Daudpota, learned Advocate for Defendant, perused the submissions in writing filed by them and with their assistance also examined the evidence. 13. The learned counsel for the plaintiff has argued that the contract was entered into between Plaintiff Corporation and Defendant being proprietary concern signed by one Chaudhary Muhammad Yousuf as sole proprietor, whereas the written statement was filed by a partnership firm, furthermore, the written statement filed on behalf of the Defendant by an unauthorized person as no authority letter and/or power of attorney of the other partners, which could authorizes the person who signed the written statement, was filed in the case, hence in the circumstances, the written statement is liable to be discarded and the defence of the Defendant cannot be looked into. It is also urged that Plaintiff was legally entitled to appropriate the Security Deposit and Retention Money deposited in respect of the subject contract as well as relating to the past contract. Security Deposit, and Retention Money of Rs,1,21,65,050/- pertaining to the previous
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contracts of 1983-84, 1986-87, and 1987-88 was not adjusted though the Plaintiff was entitled to do the same as per Clause 15 (iv) of the Contract, yet retained because of lien thereon and due to its claim in the present suit which is more than double of the said amount. The said amount is lying in separate bank account of the Plaintiff in compliance of the order passed in the case. It is also argued that the defendant is not legally entitled for refund of the said amount (Rs,1,21,65,050/-) as the same is admittedly not the subject matter of the present suit and defendant did not file any counter claim and or set off claim in respect of the said amount in the present suit. Further urged that the Plaintiff through evidence has proved its claim in the case, hence, the Plaintiff is entitled to the decree as prayed. In support of the stance in the case, the learned counsel also relied upon following case law: ' 2008 MLD 755 (Trading Corporation of Pakistan v. Messrs AlNoor (Pvt.) Ltd.) ' In this case this court in a contract of similar nature on the basis of admission of the defendant in respect of shortage of rice claimed by plaintiff and further the quantity of short bags and value thereof mentioned in plaint and affidavit-in-evidence of plaintiff not challenged during his cross- examination by defendant, decreed the suit in favour of the plaintiff. ' PLD 2004 Karachi 281 (Trading Corporation of Pakistan Shahrah-e-Faisal Karachi v. Messrs Continental Cargo Services, Shahrah-e-Liaquat Karachi) ' In this case the suit filed by plaintiff was dismissed where after defendant filed application to the effect that since suit filed by plaintiff had been dismissed, Certificates deposited by it as security, be ordered to be returned to it along with the profit earned thereon. It was held that dismissal of suit would not automatically make defendant entitled for recovery of said amount in absence of any counter claim or set off on the part of defendant and any such decision in respect thereof in the suit. Application filed by defendant, having no force was dismissed. 14. In rebuttal, the learned Advocate for the Defendant besides reiterating contents of the written statement and affidavit-in-evidence filed on behalf of the Defendant has argued that the plaintiff has failed to prove its case in the evidence. Further urged that the plea taken by the learned counsel for plaintiff regarding filing of written statement by unauthorized person is alien to the pleadings of the Plaintiff as this plea is raised by the counsel of the plaintiff first time that too at the stage of final arguments, hence, not sustainable in law. Furthermore, the written statement was signed by a duly authorized person and authority letter whereof was also filed with the written statement which is available in the court's file. Further urged that the Plaintiff has filed the present suit with mala fide intentions to avoid payments (refund of security deposit and retention money) in respect of previous contracts of the defendants on the basis of an afterthought enquiry wherein neither the defendant participated nor any intimation notice was issued to the defendant. Moreso, said enquiry was conducted after more than four (4) years of expiry of the contract and handing over the godown by the defendant. It is also urged that the case of the Plaintiff has been completely shattered in the evidence, hence in the circumstances; the suit is liable to be dismissed with compensatory cost. The learned counsel in support of his arguments also relied upon the following case law. ' 2002 CLC 607 (Messrs Rice Export Corporation v. Messrs A.H. Corporation and 3 others) ' In this case this court while dismissing the suit of the plaintiff for damages has held that in grain handling contract there was inherent risk of diminishing quantity and quality of the food grain. Defendant could not be called upon to submit account for the shortfall which was not only on account of inherent risk but a natural incident and consequences of grain handling contract. The defendant as bailee could be held liable for the losses if accrued for want of contractor/bailee's due care and negligence. ' In this case this court dismissed the suit of the plaintiff filed against the defendant for accounts and recovery of amount in respect of shortfall of stock of rice and gunny bags entrusted to the
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defendant under the contract of handling rice crop, on the ground that the plaintiff failed to justify its claim in the evidence. ' Judgment dated 4.6.1999 passed by this Court in Suit No,752/1986 (Rice Export Corporation of Pakistan v. Star Trading Company). ' In this case also the suit of the plaintiff filed against the defendant for accounts and recovery of amount in respect of shortfall of stock of rice and gunny bags entrusted to the defendant under the contract of handling rice crop, was dismissed on the ground that the plaintiff failed to justify its claim in the evidence. 15.I have given due consideration to the arguments advanced by the learned counsel for the parities, minutely perused the material/evidence available on record, the applicable laws and the case law on the subject. My findings on the issues are as under: 16.Issue No,5: I propose to decide this issue first as the same relates to the maintainability of the suit. It is now well settled that the point of maintainability of the proceedings is to be decided in the first instance. Though the question of maintainability of the suit was not raised by the Defendant either in its written statement or in the affidavitin-evidence filed in the case but this issue was framed. Furthermore, the learned counsel for the parties also not addressed this issue in their oral arguments; however, the Plaintiff and the Defendant in their submissions in writing addressed this issue. It is submitted by the Defendant that from the perusal of the evidence it has been cleared that the Plaintiff has failed to establish its case with regard to any violation of the terms and condition of the contract committed by the defendant. It is next submitted that the Plaintiff has also failed to establish any claim against the Defendant except mere words that the amount is payable by the defendant for violation of the contract, which was left by outgoing contractor M/s. Behri Enterprises, awarded subsequently to the defendant on the 'Book Balance' basis, hence any shortage in the stocks entrusted to it, is the sole responsibility and concern in between Plaintiff and outgoing contractor. It is also submitted that the documents filed by the defendant, showing the request of the defendant for its due payments, have not been disputed by the Plaintiffs, hence, the present suit for contract in question is not maintainable against the defendant. Whereas the Plaintiff in its submissions in writing has stated that since there is nothing on record on the side of the defendant to substantiate that the suit is not maintainable, hence, in absence thereof this Issue to be answered in affirmative. 17.The question of 'Maintainability of lis' and 'Entitlement to relief' are two distinct things. 'Maintainability of is a legal question, inter alia, related to a legal character of the person under the provisions of Section 42 of Specific Relief Act, which requires any person entitled to any legal character or to any right as to any property, may institute suit against any person denying or interested to deny, his title to such character or right and the Court may in its discretion make therein a declaration that he is so entitled. It would thus be safely stated…
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