P L D 1965 (W (PLP)

SARDAR MUHAMMAD IQBAL, J.‑

The plaintiff respondent instituted a suit against the appellants for the recovery of Rs. 2,00,000 as damages. The learned Single Judge in Chambers decreed the suit for Rs. 40,00 . . . . . (torn) . . . . . only. The defendants have come up in Letters Patent Appeal.

2. The facts of the case are simple. The Pakistan Industrial Development Corporation (defendants‑appellants) were in charge of the control of Harnai Woollen Mills at Harnai and Bannu Woollen Mills at Bannu. They appointed Messrs Fashion Arcade Elphinstone Street, Karachi, the plaintiff, as a sole distributor of their products in the area of Karachi and Sind with effect from the 1st of May 1955 to the 31st of March 1956, vide letter of appointment dated the 5th of May 1955 (Exh. 6). Mr. Aziz Qureshi, plaintiff respondent is the sole proprietor of the concern. Under clause (1) of the agreement, the agency was to be renewed for another period of one year subject to certain conditions According to the appellants, the respondent had failed to fulfil the terms and conditions of his appointment as distributor. The appellants, by their letter dated the 2nd of December 1955, (Exh. 18), informed the respondent that he had committed default in respect of certain terms of the contract mentioned therein and asked him to show cause by the 7th of December 1955, why action should not be taken under clause (16) to cancel his agreement. The respondent gave a detailed reply by his letter dated the 7th of December 1955 (Exh. P. 19), repudiating the allegations made against him and asserted that there was no justification for giving him the aforesaid notice. It was, however stated by him that if the distributorship was renewed for the next year, he would purchase handloom tweed worth Rs. 1,00,000 by March/April and that he would lift all the handloom stock lying in their godown of the value of Rs. 25,

000. It was further stated that he would lift other ready stock worth Rs. 1,00,000 as from the 1st of that month. The respondent further assured the appellants to guarantee his offer by his bankers. This letter was followed by a meeting between the appellants' representative and the respondent on the same date. The appellants by their letter dated the 13th of December 1955 (Exh. 7), offered to appoint the respondent as their distributor for the next session. This letter is reproduced in extenso for convenience of reference: "We refer to your letter dated the 7th of December 1955, and the subsequent discussion which your Mr. Qureshi had with our Deputy General Manager (Sales) on 7th December 1955, in which he agreed that in case we appoint you as our distributor for woollen products for the next season, i.e., during 1956, for Karachi and the area formerly known as Sind Province, you will abide by the following conditions:‑ (1) You will buy from ready stocks handloom tweeds of Harnai Woollen Mills of the value of Rs. one lac by the 30th April 1956. (2) You will also buy from the other existing stocks lying at Harnai and Bannu Woollen Mills stocks of the value of one lac of rupees by the.30th April 1956. (3) For the stocks referred to at (2) above and lying at Harnai Woollen Mills you will pay 10 % more than the predevaluation rates fixed for these stocks. (4) You will pay Rs. 25,000 immediately towards payment of handloom tweeds of Harnai Woollen Mills lying with us in Karachi and will lift these stocks. (5) You will open an irrevocable letter of credit immediately for one lac of rupees in favour of Harnai Woollen Mills towards the cost of handloom tweed and other ready stocks lying at Harnai as mentioned in paras. 1 to 3 above. The letter of credit would be in our hand not later than the 15th instant and would be valid up to 30th April 1956. (6) You will visit Harnai and Bannu Woollen Mills immediately and select stocks of handloom tweeds and other material. Immediately after visiting the Mills you would open another irrevocable letter of credit in favour of the Mills concerned to cover the balance of the total amount payable by you under paras. I to 4 above valid up to 30th April 1956. This letter of credit would be arranged before the 15th January 1956. "We have pleasure to inform you that subject to your confirming these terms and conditions in writing and your fulfilling the conditions regarding payment of Rs. 25000 and opening of the letter of credit for Rs. one lac referred to in paras. 4 and 5 above we agree to appoint you as our distributor for the next season, i.e., 1956, for the area stated above. We wish to make it clear that our offer to appoint you as our distributor for the next season is dependent upon the fulfilment in particular of the condition in para. 2 above. We, therefore, request you to fulfil these conditions immediately. As soon as you have done so, we will send you the necessary letter of appointment." The respondent in reply wrote a letter to the appellants on the 21st of December 1955/3rd of January 1956. Since the case mainly depends on the interpretation of this letter and the aforesaid letter, this letter is also reproduced: "With reference to your letter No. MB(W) 8, dated the 13th December 1955, regarding our appointment as distributors for your woollen products for the next season, i.e., until 31st March 1957, we confirm as under:‑ (1) We shall buy from stocks with no manufacturing defect of handloom tweeds of Harnai Woollen Mills of the value of Rs. one lac by the 30th April 1956, at notified current prices. The said figure of Rs. one lac shall include all the purchases of handloom tweeds hitherto made by us after our previous offer dated 7th November 1955. (2) We shall also buy as from 1st December 1955, other existing marketable stocks of Harnai and Bannu Woollen Mills to total the value of Rs. one lac. (3) For the stocks referred to at (2) above and lying at Harnai Woollen Mills, we agree to pay 10 % more than the pre devaluation rates provided the stocks offered are in marketable condition and absolutely undefective. We shall have our option to pick and choose the existing stocks at both the Mills. (4) In view of our appointment as your distributors, we have already paid you ad hoc Rs. 25,000 (Twenty‑five thousands) towards the cost of stocks of handloom tweeds of Harnai Mills lying with you in Karachi. (5) As desired by you, we have also established an irrevocable letter of credit for Rs. one lac in favour of Harnai Woollen Mills towards the cost of handloom tweeds and other stocks lying at Harnai and Bannu as mentioned in paras. 1‑3 above. A copy of the letter of credit for Rs. one lac on Grindlays Bank is enclosed herewith. (6) We shall visit your Mills or arrange otherwise for the selection of handloom tweeds and other material, at our earliest convenience. Another letter of credit, if and when required shall be promptly established. (7) We wish to make it clear that we have agreed to buy your old stocks of handloom tweeds of the value of Rs. one lac and other stocks of Rs. one lac at the close of the winter season, specially when we are already burdened with your Mills late deliveries of the value of over Rs. 2,50,000 solely on the understanding that our distributership for the next season shall not unnecessarily be disturbed until the close of the next term." The appellants did not take any exception to any of the contents of this letter by any of their letters. In the meantime the respondent had paid the appellants Rs. 25,000 in terms of clause (4) of Exh.

7. He further opened an irrevocable letter of credit for Rs. 1,00,000 on the 17th/19th of December 1955, in terms of clause (5). He also on the 23rd of December 1955, placed an order for the supply of 5,000 yards of plain velour at the rate of Rs. 17 per yard and check velour, measuring 5,000 at Rs. 18‑8‑0 per yard. This order was confirmed by the appellants by their letter dated the 5th of January 1956. The respondent again placed a verbal order for the supply of 5,000 yards of tweed quality No. 6465 in five shades and 5,000 yards of check velour as per sample supplied by the appellants. This verbal order was acknowledged by the appellants in their letter dated the 30th of January 1956, (Exh. 25) and they asked the respondent to send a firm written order in that behalf. The respondent duly confirmed this by his letter dated the 11th of February 1956 (Exh. 27). The appellants thereafter wrote a letter to the respondent on the 9th of January 1956 (Exh. 8), telling him that he had not observed and fulfilled all the terms and conditions of the letter dated the 13th of December 1955, (Exh. 7) and the offer to appoint him as distributor was, therefore, withdrawn. The respondent hurried to acknowledge this letter on the 11th of February 1956. He denied the allegations made against him and further told the appellants to withdraw their letter, failing which he would resort to legal action. The appellants, by their letter dated the 16th of February 1956 (Exh. 30), informed the respondent that they had reconsidered the matter, but that no revision in their decision was possible. It may be noted that in none of these two letters they had referred to any particular or specific instance on which they based their notice complaining the breach of contract by the respondent.

3. Some events took place reference to which is necessary. The shop of the respondent was raided by the Special Police on the 24th of January 1956. The goods of the respondent, along with the books of account, were seized by the police. The sealing of the premises was not, in any way, relatable to the present transactions. As we have already mentioned, the respondent had opened a letter of credit in the amount of Rs. 1,00,000 in favour of the appellants. The Grindlays Bank Limited, the bankers of the respondent, were, therefore, under a legal obligation to pay this amount to the appellants. The Bank, however, by their letter dated the 1st of February 1956, (Exh. 12), wrote to the appellants as follows:‑

"We refer you to our above letter of credit which was established in your favour on 17‑12‑1955, at the request of Messrs Fashions Arcade. We have to advise that business premises of Messrs Fashions Arcade has been sealed by the Police authorities as it was alleged that they were dealing in smuggled goods. We, therefore, request you not to draw bills under this credit till such time as this matter is cleared for under the present circumstances we feel that they will not be in a position to pay their bills." 4.; The respondent instituted the suit against the appellants on the 23rd of October 1956, for payment of Rs. 2,00,000 as damages. Since the respondent had failed to specify the particulars of the damages, he was given an opportunity to file better particulars which he did on the 14th of December 1956, and claimed the damages as follows:‑ (i) Loss of profit on the minimum amount of goods under the agreement at rate of 15% ... Rs. 1,50,000 (ii) Consequential damages ... Rs. 50,000 Total Rs, 2,00,000

5. The defendants‑appellants in their written statement denied their liability and pleaded that the respondent had failed to accept their offer in terms of the letter dated the 13th of December 1955, to become their distributor and instead offered counter‑proposals by his letter dated the 21st of December 1955, which were not accepted by the appellants. The position they took up was that there was no completed contract between the parties and they were, therefore, justified in withdrawing their offer. They denied their liability to pay any damages.

6. The learned Judge in Chambers decreed the suit of the respondent for Rs. 40,000 only. Messrs Pakistan Industrial Development Corporation have come up in appeal. The learned Judge in Chambers, however, held that the letter Exh. 10 dated the 21st of December 1955, contained counter‑proposals and the respondent had, therefore, not confirmed the terms and conditions proposed by the appellants in their letter Exh.

7. Learned counsel for the respondent took exception to this finding before us under rule 22, Order XLI, Civil Procedure Code, and contended that the letter dated the 21st of December 1955, did not contain any counter‑proposal. The letter, according to him, was only one of confirmation of the letter of the appellants dated the 13th of December 1955 (Exh. 7), and if anything was stated therein, it was only by way of elucidation and did not have any element of counter‑proposals. The finding appears to have been based on the fact that the counsel appearing on behalf of the respondent took up this point in arguments but did not press it. The question whether the letter Exh. 10 contained any counter. proposal, in fact did not receive any treatment from the learned Judge in Chambers. It is, therefore, necessary to examine this point.

7. The questions which call for determination in this case are whether there was any completed contract between the parties whereby the appellants had agreed to appoint the respondent as their distributor of their products for the year commencing from the 1st of April 1956, and ending with the 31st of March 1957, and if so, did the appellants commit breach of this contract and were the appellants liable to pay any damages, and if so, how much.

8. We must state at the very outset that although it was clearly stated in the first letter of the appointment of the respondent as distributor dated the 5th of May 1955 (Exh. 6), that his appointment would be renewed for a further period of one year on certain conditions, the respondent did not base his case on this clause of tire letter and was relying only on letters dated the 13th of December 1955 (Exh. 7), and the 21st of December 1955 (Exh. 10) for the purposes of his case. There shall, therefore, be no reference made in this judgment to his right of seeking renewal of his appointment on the basis of the first letter of appointment referred to above.

9. The important question which calls for determination is whether there was a completed contract between the parties to bind the respondent as distributor for the year 1956‑

57. It is a simple and pure question of fact and mainly depends on the interpretation of the clauses contained in the letter of the appellants dated the 13th of December 1955 (Exh. 7) and in the letter of the respondent dated the 21st of September 1955 (Exh. 10). If the letter Exh. 10 contained any counter‑proposals, then no valid contract could come into being unless the counter proposals in turn had been accepted by the other party. It is well settled that an acceptance must be absolute and unconditional and must correspond to the terms of the offer without leaving any term open to further negotiations. If it contains a material variation of the terms of the offer, there is no consensus ad idem on agreement upon which a contract can be I founded. If it introduces terms not comprised in the offer, no contract is made and the original offer must be deemed to have been refused and a counter‑offer made. A qualified acceptance is equivalent to a new offer which may either be accepted or rejected. In Haji Muhammad v. Spinner ((1900) 24 Bom. 510), Jenkins, C. J., observed:‑-- "That is to say, until there is such an acceptance, the stage of negotiations has not passed and no legal obligation is imposed. Similarly, any departure from the terms of the offer or any qualification vitiates the acceptance it accompanied unless it is agreed to by the person from whom the offer comes. In other words, an "acceptance with a variation is no acceptance; it is simply a counter‑proposal which must be accepted by the original promisor before a contract is made." The same learned Judge in another case Dagdu v. Bhan a ((1904) 28 Bom. 420), held: "Speaking generally, it is of the essence of a contract that there should be (expressly or by implication) a proposal to which an unqualified assent has been given; without such assent there is no contract, the minds of the parties are not at one." In Van Pragh v. Everidge ((1903) 1 Ch. 434), it was held, "Where the parties to an agreement are not ad idem THERE CANNOT be a binding contract". It will thus be clear that the acceptance must be unqualified with no counter‑proposals. It may, however, be noted that it depends on the facts and circumstances of each case whether a particular statement amounts to a counter‑proposal or not. To hold a particular Statement as a counter proposal it is the show that the same amounted to a substantial variation in the after made. If something is added by way of explanation or to elucidate a particular term or to make it express which otherwise is implied, it will not amount to a counter‑proposal. In the light of these accepted principles we may now examine the contentions raised by Mr. Nur‑ul‑Arifin, learned counsel for the appellants.

10. According to him the appellants offered the respondent to make him as a sole distributor for the areas of Karachi and Sind of their products on terms and conditions contained in letter (Exh. 7), dated the 13th of December 1955, but the respondent did not accept the offer, and instead gave counter proposals in the form of his letter, dated the 21st of December 1955, (Exh. 10). He therefore, argued that a completed contract of agency did not take place between the parties. He particularly made reference to clause (1) of both these letters which are reproduced for convenience of reference: "Exh. 7.‑You will buy from ready stocks handloom tweeds of Harnai Woollen Mills of the value of Rs. one lac by the 30‑4‑1956." "Exh. 10.‑We shall buy from stocks with no manufacturing defect of handloom tweeds of Harnai Woollen Mills of the value of Rs. one lac by the 30‑4‑56, at notified current prices. The said figure of Rs. one lac shall include all the purchases of handloom tweeds hitherto made by us after our previous offer dated 7‑11‑55." The precise contention raised by the learned counsel was that the words "with no manufacturing defect", "at notified current prices" and " Rs. one lac shall include all the purchases of handloom tweeds hitherto made by us after our previous offer dated 7‑11‑55" were counter‑proposal We have given our serious consideration to the matter and have come to the conclusion that there was no counter‑proposal whatsoever in this case. In having emphasised that there should be no manufacturing defect, the respondent in no way gave a counter‑proposal. It is not the case of the appellants that they were to supply any goods to the respondent with manufacturing defect. Mr. Aziz Qureshi respondent deposed that even under the first contract whenever he pointed out any defects in the cloth supplied to him, the appellants always made amends for the same. The appellants made no effort to rebut this evidence. In fact Mr. Muhammad Anwar, their General Manager stated that they gave rebate to the distributor for the defective material. It is at any rate always an implied condition a sale of goods that the purchaser has a right to expect a saleable article. Lord Ellenborough in Gardiner v. Gray ((1815) 4 Camp, 144) observed that c "the purchaser cannot be supposed to buy goods to lay them on dunghill." It was held in Malli & Co. v. V. A. A. R. Firm (A I R 1923 Mad. 252), that "When there is no express warranty in the sale of goods, there is an implied warranty of merchantability, that is to say, the good shall be immediately saleable under the description by which they are known in the market". This principle is accepted in section 16 of the Sale of Goods Act, 1930. It is clearly provided in clause (2) of section 16 that where the goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not there is an implied condition that the goods shall be of marketable quality. If the respondent has made a specific reference to it, D it can only be by way of abundant caution or to make a pointed reference to something which otherwise was implied. It is not a counter‑proposal at all. The plea of the appellants that the respondent by mentioning that he would purchase the goods "at notified current prices" made a counter‑proposal, is also without any basis. There is no price mentioned in the letter Exh.

7. Mr. Muhammad Anwar Khan, General Manager (D. W. 1), stated that the term "notified current prices" could not be acceptable to him. He, however, did not give any reason for the same. He also failed to point out if in any way it was different from the price which they intended to charge. In his cross‑examination to a specific question he replied that the respondent had to buy at prices fixed by the P. I. D. C., from time to time. The term "at notified current prices" could not have any other meaning. Mr. Aziz Qureshi respondent in explaining this term stated in his examination‑in- chief that it meant the prices as were published by the P. I. D. C. by means of circulars issued to the distributors at the time of the purchase of the goods by them. It was next contended by Mr. Nur‑ul‑Arifin that by clause (1) of Exh. 7, dated the 13th of December 1955, the respondent was required to buy in future the tweed of the value of rupees one lac by the 30th of April 1956, and the respondent in having stated in his letter dated the 3rd of January 1956, (Exh. 10) that the "figure of rupees one lac shall include all the purchases of handloom tweeds hitherto made by us after our previous offer dated the 7th of November 1955," made a counter‑proposal by including the earlier purchases as well. It is true that there is no reference in Exh. 7 to the purchases which the respondent might have made after the 7th of November 1955. It could, under certain circumstances, have amounted to a counter‑proposal if it was an alteration of any substance or significance. It is not the case of the appellants that the respondent had made any purchases in pursuance of his previous offer dated the 7th of November 1955. In that letter (Exh. 16) the respondent had offered to purchase by the end of December 1955, handloom tweed and other stock to the extent of Rs. 70,000 if his distributorship was renewed for the next year. The appellants did not say that this offer was accepted. The question of any supply in pursuance thereof did not arise. It was, for all intents and purposes a redundant addition.

11. We are thus clear in our mind that the letter Exh. 10 did not contain any counter‑proposal at all. We may refer to Moti Lal Mohan Lal v. Kishauri Lal (A I R 1930 Lah. 374). In this case on an order from a firm, following letter was sent:‑ "We have the pleasure to accept your under‑mentioned order subject to confirmation by mail. If you do not hear from us to the contrary within four weeks from today, the order should be considered as finally placed. Please note that if full particulars as to assortment, heading, stamping or ticketing, etc., are not given to us before 3rd September, we shall hold you responsible for all consequences." It was held that there was an absolute and unconditional acceptance. Again, in Sree Minakshi Mills Ltd. v. T. C. Anantarama Ayyar (A I R 1930 Mad. 654), the facts were that an engineer was offered a job on Rs. 300 by the company. The engineer demanded Rs.

400. The company wired "agree 400 without conveyance to act as engineer and manager. Please join duty immediately". The engineer accepted, wiring back "shall arrive Madura Friday, awaiting detailed letter". It was held that the last telegram was a complete acceptance. It is, therefore, with reference to the facts of each case that it can be decided whether or not certain facts constitute "counter‑proposal". In the present case the parties, in our opinion, had arrived at a firm contract of agency concluded by acceptance.

12. We are in no doubt that the appellants at the time they received the letter Exh. 10 did not consider this letter to have contained any counter‑proposals. If it had been so, the appellants would have immediately objected to it and pointed out to the respondent which, of course, they did not do. Mr. Muhammad Anwar Khan (D. W. 1) in his evidence stated that he had verbally informed Mr. Aziz Qureshi respondent about it and he had in turn agreed to withdraw this letter. This statement does not inspire confidence for more than one reason. Mr. Aziz Qureshi was not cross‑examined on this point and his attention was not drawn to any such conversation or the undertaking. Moreover, if the respondent had given such an undertaking and had failed to withdraw the letter, the appellants would in that case have reminded him of his verbal undertaking. The letter dated the 13th of December 1955 (Exh. 7) was withdrawn on the 9th of February 1956 (Exh. 8). The said letter is conspicuous by an absence of reference to the position taken up by the appellants now that the respondent had given counter‑proposals in the letter Exh. 10 or that the respondent had under‑taken to withdraw the counter‑proposals but had failed to do so.

13. There is yet another aspect of the case. Even if it had been held that Exh. 10 contained counter‑proposals, we would have felt no hesitation in holding that the same had been accepted by the P. I. D. C., by their implicit conduct. Mr. Muhammad Anwar Khan, Manager of the appellants, sent a copy of the letter Exh. 7 to Harnai immediately. If the proposals had not been accepted, there was no point in sending this letter there. The only purpose of sending this letter was to inform them that if any order for the supply of goods was placed by the respondent in pursuance of the terms of this letter, the same was to be complied with. The respondent had also placed an order by the letter dated the 31st of December 1955 which was acknowledged by the appellants on the 5th of January 1956 (Exh. 20), informing the respondent that the delivery date would be intimated to him, Similarly, the respondent placed a verbal order for another 10,000 yards which was acknowledged by the appellants by their letter dated the 30th of January 1956 (Exh. 25). The respondent was, however, directed to send a firm written order which the respondent did, though it was subsequent to the cancellation of the letter Exh. 7 on the 9th of February. The orders referred to in these letters pertained to the disputed period of 1956‑57, It was; however, contended that these orders did not relate to the next year, but were for the year 1955‑

56. Mr. Aziz Qureshi (P. W. 1) in his evidence stated that they were for the year 1956‑

57. He was not cross‑examined on this point. No attempt was made to discredit him as to this statement. In the letter Exh.20 of the 5th of January 1956, of the appellants a reference was made to the respondent's letter dated the 31st of December 1955, whereby the order was placed, The appellants, however, did not produce this letter of the respondent. If the said letter of the respondent had contained an order for goods for the period 1955‑56, they would have proved it by the production of this letter. Mr. Muhammad Anwar Khan (D. W. 1) did not repudiate the evidence of the respondent. These orders otherwise could not be in pursuance of the earlier contract Exh. 6 for the year 1955‑

56. Under the said contract the respondent was under an obligation to have placed the last order in October 1955. These orders, therefore, could not be referred to that period. They otherwise could not be executed till the 31st of March 1956. Mr. Fakhar Siddiqui (P. W. 2), who was the manager of the Harnai Woollen Mills at the relevant time, stated that it would have taken them four or five months to deliver the stocks mentioned in these letters. Mr. Siddiqui was not cross‑examined on this point. The orders were meant to be executed only in 1956‑

57. Mr. Siddiqui is undoubtedly the respondent's witness, but that does not mean that he should not be believed, more particularly when he was not cross‑examined on the point. Nor was any attempt made to show that he was, for any particular reason, trying to oblige the respondent. The said letters bear the particular numbers of despatch. If Mr. Siddiqui had not, in fact written these letters, the appellants could have belied him by the production of their despatch book. All these facts leave no room for doubt that the appellants accepted the orders referred to in the letters Exhs. 20 and 25 for the period 1956‑

57. The facts and circumstances of the case establish beyond any doubt that a completed contract had taken place between the parties.

14. It was next contended by Mr. Nur‑ul‑Arifin that the respondent was not to become the distributor for the period in dispute ipso facto by accepting the letter Exh. 7, but that he had also to comply with the terms thereof. He admitted that the respondent had paid Rs. 25,000 in December 1955, and also had opened a letter of credit for Rs. 1,00,000 on the 17th of December 1955, but contended that the respondent did not go to Harnai as required in clause (6) and also failed to open a letter of credit by or before the 1501 of January 1956, as required by clause (5) of Exh.

7. These facts are not denied by the respondent either, and on his behalf it was argued that he failed to do so not for any default or omission on his part but that the appellants had made it impossible for him to fulfil these conditions. Under clause (6) the respondent was to proceed to Harnai immediately. Mr. Aziz Qureshi respondent stated that he could not do so because he was informed by Mr. Muhammad Anwar Khan (D. W. 1) that the appellants were to divide the stocks of handloom tweeds into three lots for the different distributors or which fact all the distributors were to be duly informed and that they were to visit the Mills only after they were informed about it. Mr. Muhammad Anwar Khan admitted this fact and stated, "The handloom tweeds were to be divided into three lots before they were lifted. It was so divided and the plaintiff was informed about it. This information must have gone to him probably in December 1955". It would thus seem that the fact deposed to by Mr. Aziz Qureshi was substantially correct. In view of the fact that the stocks had to be separated, the respondent could not visit the Mills immediately. He, therefore, cannot be held liable for not having gone to the Mills for inspection unless these stocks were divided and he had been informed about it. Since it has not been proved on the record if any intimation had been given to the respondent, we have no material to hold that the respondent failed to observe this condition. As to the contention that the respondent failed to open the letter of credit for Rs. 1,00,000 before the 15th of January 1956, it is equally untenable for the reason that the respondent was to open it under clause (6) immediately after visiting the Mills, No doubt, it was stated that the letter of credit was to be arranged before the 15th of January 1956, but that was on the assumption that the respondent would be able to go to the Mills before that date. Since it did not become possible due to the conduct of the appellants themselves for the respondent to visit Harnai Mills before the 15th of January 1956, the latter obviously could not open the letter of credit before that date. The failure on the part of the respondent is for no fault of his but had been occasioned by all means due to the conduct of the appellants themselves. The respondent, in our opinion, not guilty of the breach of any of these conditions. It may further be noticed that the appellants in their letter dated the 9th of February 1956, (Exh. 8) whereby they withdrew the offer made by them in their letter dated the 13th of December 1955 (Exh. 7), it was not alleged that the respondent had committed breach of these terms. There was, doubtless, an allegation of breach in that letter, but as to what that breach was, had not been specified. It, therefore, cannot be said whether they were referring to the respondent's failure to comply with these terms or something else. The respondent had already performed his obligations under the contract to a considerable extent. He paid Rs. 25,000 to the appellants by cheque in December 1955. He had also opened a letter of credit in favour of the appellants. He, however, had not lifted any goods under the said letter of credit till the 9th of February 1956. If the respondent, in fact, was defaulter in the observance of any term or condition hi of the contract, the appellants could have drawn his attention to the same and thus afforded him an opportunity to remedy the failure or omission, if any. This was, however, not done. It is true that there is no principle of natural justice involved in cancelling the contracts for an alleged breach, but it is also a settled principle that where a particular breach in a contract can be remedied without any corresponding injury to any person, a reasonable notice should be given to remedy it. The appellants had themselves given a similar notice to the respondent on the 2nd of December 1955 (Exh. 18), drawing his attention to the breaches committed by him under the earlier appointment letter dated the 5th of May 1955, (Exh. 6) and calling upon him to show cause why action under clause (16) of the same letter should not be taken against him. If the appellants had, in fact, thought at the time they took the action on the 9th of February 1956, that the respondent had failed to comply with any term, they would have, in the usual course of things, given him a similar notice. The fact that such a notice was not given, shows that the action taken by the appellants was for causes other than the non performance of the terms of clauses (5) and (6) of the letter dated the 13th of December 1955, by the respondent. What seems to have happened is that the appellants took action against the respondent on the letter written by the Grindlays Bank Limited referred to above. The said letter had followed an event resulting in the sealing of the premises of the respondent and the publicity of this fact in the Dawn of the 26th of January 1956 (Exh. 11). The Bank in its letter had stated that the respondent would not be in a position to pay the bills. If the respondent was not able to pay the bills of the Grindlays Bank Limited, it should not have been any concern of the appellants. The appellants could, therefore, ignore this letter. An irrevocable letter of credit had been opened in their favour. The Bank was under a legal obligation to honour it. The appellants, instead of enforcing their claim against the Grindlays Bank, proceeded to take the impugned, action against the respondent. This seems to have been done in complete ignorance of their rights. The appellants, at any rate, should have informed the respondent of the letter received by them from the Grindlays Bank and asked him to explain his position. We have no doubt in our mind that the appellants did not take the action against the respondent on the ground that the latter had committed any breach. In fact, they were not conscious of any such breach, nor had the respondent committed one.

15. It was next contended on behalf of the appellants that in terms of the letter Exh. 7 dated the 13th of December 1955, the respondent could not be the distributor for the year 1956‑57, unless a letter of appointment had been issued in his favour. We are unable to agree with this contention. The letter of appointment in the circumstances of the case was only a formality and not a condition precedent to the appointment of the respondent as the distributor. In our opinion, a completed contract had taken place between .the parties, and the fact that the letter of appointment was not issued would not affect the relationship of the parties and the mutual rights and obligations arising therefrom. If this interpretation be placed on the letter, it will lead to far reaching consequences, inasmuch as the respondent might have complied with all the terms of the letter Exh. 7 and still the appellants could, by their unilateral conduct, refuse the letter of appointment and thereby render the respondent helpless. Such a situation is beyond the scope of this letter and otherwise is not consistent with the principles of justice and reason. The letter o appointment contemplated in the said letter in our opinion is not a condition of the terms of the bargain. It only indicates a desire of the appellants to complete a formality. Notwithstanding, this letter there was a binding contract between the parties. This question was considered in re: Hatzfeldt‑Wildenburg v. Alexander ((1912) 1 Ch. 284, 288); and Parker, J., observed as: "It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplated the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to f will in fact go through. In the former case, there is no enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored." The letter of appointment, therefore, was not necessary to bring about the desired relationship between the parties.

16. The contract, arrived at between the parties, was in the nature of a contract of agency. By virtue of section 205 of the Contract Act, it was to continue from the 1st of April 1956, to the 31st of March 1957. The appellants by their letter dated the 9th of February 1956 (Exh. 8), revoked the authority of the respondent. It is true that the respondent could not compel the appellants for the continuation of the relationship after the latte had revoked his authority. His remedy lay only in an action for damages for breach of the contract. A distinction must be kept in mind between the principal's power to revoke an agency and his right to revoke the same. Although he has the power to revoke the authority of an agent, he will not have the right to do so in a case in which he has agreed to appoint a particular person for a certain period. The authority of an agent, therefore, may f be withdrawn at any moment, but the contract of agency cannot be terminated in violation of its terms without making the principal liable for damages. A promise of indemnity is an implied term of such a contract of agency. The remedy of the respondent, therefore, for the improper revocation is under, section 205 of the Contract Act and the appellants are bound to make compensation to the respondent, and particularly for the reason that he had furnished valuable consideration by way of compliance with the terms contained in the letter Exh. 7 dated the 13th of December 1955, involving financial obligations.

17. We are now left with the question of damages. The learned counsel for the appellants contended that renewal of hi contract between the parties by itself did not warrant that the appellants were bound to supply any commodities to the respondent, and that since they in their discretion could refuse the supply of goods to the respondent, the latter had not suffered any loss by the revocation of the contract. In support of this contention reliance was placed on clause 12 of the first contract (Exh. 6), dated the 5th of May 1955, which reads as:‑‑ "This Corporation shall not be bound to execute any order placed by you but shall have absolute discretion regarding supplies for the period you are operating this distributorship. If, however, after accepting an order, the Mills are unable to arrange supplies, then the value of the order to the extent it is supplied will be deducted from the minimum specified limit. We are not liable to pay any penalty or damages for not executing any indent." On the basis of this clause it was argued that if the appellants could refuse to execute any order placed by the respondent, they could as well refuse to execute all orders placed by them. We have given our serious thought to this matter, and we are unable to accept the position taken up by the appellants. The said clause clearly implies that the appellants were to supply goods mentioned in the contract, but they reserved a right to themselves not to execute a particular indent. To refuse a particular order does not mean that they could refuse all orders. In the context of things, the refusal is to be an exception and not a rule. This clause, moreover, cannot be considered divorced of the other clauses of the contract. Under the contract the respondent was appointed as the sole distributor of the products of the appellants for the areas of Karachi and Sind. The respondent was under an obligation to place orders worth Rs. 10,00,000 with a break‑up mentioned in clause (4). There was corresponding implied obligation on the part of the appellants not to supply their goods for the specified area to any other person. It is, therefore, difficult to imagine that the appellants, under the ordinary circumstance, should have stopped all sale of their goods in Karachi and Sind area. The sale had to be made. This being the case, it is impossible to conceive that the appellants under clause (12) could during the year in dispute refuse to honour all the indents of the respondent. The intention of the parties is quite clear from the contract. The appellants had appointed the respondent as their agent describing him as their distributor for the sale of their goods. We are unable to visualize that the parties should have entered into such a contract without there being any intention on the part of the appellants to supply the goods to the respondent. The learned counsel for the appellants, however, relied on Official Assignee of Madras v. Frank Johnson Sons & Co. Ltd. (A I R 1931 Mad. 65). The facts of that case were essentially different, and it was with reference to the particular circumstances of that case that it was held that since the principal was not bound to supply goods to the agent, the latter could not claim damages. In that case the contract of agency was determinable by either party on notice and there was no express term obliging the principal to send any goods to the agent for sale in his area. In the present case the parties did not have that absolute right to determine the contract earlier than the stipulated time. The respondent, as already mentioned, was bound to place orders of the value of at least Rs. 10,00,000 on the appellants and on his failure to do so could be held liable. It was only in case of default on the part of the respondent to observe and fulfil the terms and conditions stipulated in the agreement that the contract could be cancelled. It was moreover, clearly provided in clause (16) that the cancellation was to be without prejudice to any obligation on the part of either party arising out of the agreement at the time of its cancellation. It will thus be clear that the facts and circumstances of both the cases were different and the decision in re: Official Assignee of Madras v. Frank Johnson Sons & Co. Limited can be of no assistance to the appellants in this case. Similarly, Rhodes v. Fowood ((1876) 1 A C 256), does not help the case of the appellants. It is true that in that case the contract was one of sole agency for a specified area and for a fixed period, but the distinguishing feature of this case from that one is that whereas in the present case the agency could not be terminated unless for a cause, in the case cited there was an express term providing for the termination of the agency by either party on notice. It was held by the House of Lords that under those circumstances no contract binding the principal to supply the agent with the goods could be discovered. The facts of the present case approximate those in Landu & Sons v. Ahmad Ayub (A I R 1922 Sind 25). In this case a written agreement was entered into between the parties whereby the respondent had agreed to purchase the "whole stock of old clothing lying in Karachi, the property of the appellants, at stated price and also agreed to purchase 500 bales at ruling price in London during the season ending with the 31st of January 1915. The agreement further provided that the respondent was to be agent of the appel lants for a period of one season certain with an option to continue for two seasons more". The appellants did not deliver 500 bales of secondhand clothing to the respondent, who, therefore, filed a suit for damages. The appellants pleaded that it was entirely left to their option whether to accept or reject any of the orders placed by the respondent with them and no claim for damages was entertainable. Relying on Turner v. Goldsmith ((1891) 1 Q B 544) the plea of the appellant was rejected and it was observed : "There was a clear contract between the parties that the respondent was to be employed as agent of the appellants for the sale of their secondhand clothing for one season certain as there was good consideration for this undertaking by the appellants, and if the latter were at liberty, during the period the contract was in force, to, or not to, supply goods to the respondent, the whole contract becomes meaningless, and it is futile to describe the respondent as the agent of the appellants" and they further observed, "To argue, therefore, that the principal I may at his choice send or not send goods for disposal by the agent, would be tantamount to completely ignoring foundation of contract between the parties." On these findings, the appellants were held liable to pay damages to the respondent for breach of the contract. Under the circumstances, the appellants cannot escape their liability to pay damages to the respondent.

18. The next question which arises is as to what the measure of damages should be in respect of the breach of contract committed by the appellants. The parties proceeded on the premises that the respondent was liable to place orders for a minimum sum of Rs. 10,00,

000. This was, in fact, the condition incorporated in clause (2) of the first contract dated the 5th of May 1955 (Exh. 6). By the appellant's letter dated the 13th of December 1955 (Exh. 7) and the confirmation of the respondent by his letter dated the 21st of December 1955/3rd of January 1956 (Exh. 10) what was actually done was only the renewal of the earlier contract. Since no new terms were settled, it would imply that the earlier terms remained operative. On that basis also, it is reasonable to infer that the respondent was to place the orders of the value of at least Rs. 10,00,

000. The respondent claimed a sum of Rs. 1,50,000 on account of the loss of profit at the rate of 15% and Rs. 50,000 as consequential damages. Under the contract Exh. 6 the respondent was allowed to fix the prices in accordance with clause (10) at 25 % about the F. O. R. prices of the Mills. It included the profits of the whole sale and retail dealers, which meant that the goods could not be sold in the market at a price higher than 25 % above the F. O. R. prices. The respondent had to pay sales tax which in the present case was 10% of the sale price. It meant that he could have gross profit of 15% out of which he had also to meet the incidental expenses in the form of transportation charges, maintenance of staff, etc., and he had also to give concession to the wholesale or retail dealers. It would thus be clear that the respondent was not justified in valuing his loss of profit at 15 % of the total supplies. He failed to furnish any authentic proof in support of his claim. He did not produce his books of account of the previous year to show as to how much profit he had earned earlier. On behalf of the appellants it was argued that since the respondent had failed to furnish evidence to show the details of his damages his suit merited dismissal or at the most he was entitled only to nominal damages. To repel this contention we can do no better than to refer to the decision of the Judicial Committee in A. V. Joseph v. R. Shew Bux (AIR 1918 P C 149), where it was held that if in a suit for damages the Court finds in favour of the plaintiff that there was a breach, then simply because the plaintiff had not given J sufficient evidence to show certain details of damages it is not, proper to grant only nominal damages. The facts of this case were that an action was brought for damages for not taking delivery of a quantity of sleepers. The defendant disputed the breach and also denied their liability to pay any damages. The Chief Court of Lower Burma found that there was a breach of the contract and having come to the conclusion that the plaintiff had not proved his damages sufficiently, awarded him nominal damages in the sum of Re. 1‑0‑

0. Their Lordships of the Judicial Committee observed that there was an element of uncertainty as to the precise quantity of damages and they, therefore, determined the damages themselves and decreed the suit of the plaintiff for Rs. 18,

500. The evidence as to the damages in the present case is not conclusive. The appellants also led no evidence to show the loss which the respondent might have suffered in this case. One way of doing this was that they could have with reference to their record shown that the supplies made by them for the period in dispute were of the value of less than Rs. 10,00,

000. The learned counsel for the respondent, in fact, argued on those lines, and we were prepared to give him an opportunity to substantiate it by additional evidence which he declined to avail himself of. In these circumstances, when we are clear that the respondent was entitled to something but the evidence on both sides is unsatisfactory as to what was the amount which the respondent had lost in consequence of the revocation of the contract, we are left with no choice but to ascertain in the best manner we can what the damages were. The same course was adopted in Sooriah Rao v. Raja Enoogunty Sooriah (2 M IA 72). It was a case of mesne profits. Neither party had produced anything like satisfactory evidence or what was the actual produce of the property in dispute. The suit of the plaintiff was dismissed. The Court of Appeal having agreed with the finding that the evidence was altogether unsatisfactory and not to be depended upon as to the actual produce, proceeded to determine the same itself. The Judicial Committee upheld the decision of the Court below. In the present case the learned Judge in Chambers assessed the damages at Rs. 40,

000. According to him, after making an allowance of 10 of the sales tax the respondent could make a gross profit of 15 %. He made an allowance of 2%. for salaries, transportation, godown and publicity charges. He observed that out of the total sales of Rs. 10,00,000 the respondent might have sold himself goods in retail worth one lac, and, therefore, determined his profits on this amount at 13%. valuing them at Rs. 13,

000. As to the balance, he gave a concession of 10 % profits to other wholesale and retail dealers, and calculated the profit of the appellant at 3 % and computed it at Rs. 27,

000. He thus determined the total amount of damages on account of loss suffered by the respondent at Rs. 40,

000. The learned Judge in Chambars has adopted a reasonable and proper method for determining the damages of the respondent, and we are in respectful agreement with him.

19. In the view of the matter we take, the appeal has no merit and is accordingly dismissed with costs. K. B. A. Appeal dismissed.