P L D 1967 Karachi 714 (PLP)

(14) Whether the contract was kept alive by mutual consent? If so, whether the contract became void by reason of fixation of price at Rs. 12 per maund? (15) Whether the plaintiff contested to or acquiesced in keeping the contract alive and extending the time for its performance beyond 31st October 1958? (16) Whether the contract continued to subsist even after 31st October 1958, by reason of waiver? (17) Whether the contract was illegal and unenforceable as alleged in para. 15 of the written statement? (18) Relief." "Suit No. 244 of 1965 . (1) Whether the contract dated lath July 1958, became frustrated in view of Martial Law Regulation 42? (2) Whether the plaintiff became entitled to the refund of the sum of Rs. 10,000 paid by them to the defendants? (3) Whether the plaintiff committed breach of the contract, if so, what is the effect? (4) Whether the contract was entered into subject to market usages mentioned in para. 2 (A, B, C). (5) Relief." My findings and reasons are as follows.‑‑‑

5. Issue No. 1 (Suit No. 169 of 1961).‑This issue was not pressed and hence it does not arise.

6. Issue No. 2 (Suit No. 169 of 1961).‑The defence plea is that the suit is incompetent as the plaintiff's firm is not registered. This position is not correct Exh. 8/ 5 is the certificate of registration and it is dated 1‑9‑1958. Three persons namely, Hafiz Abdul Aziz, (2) Abdul Karim and (3) Pv1uhammdd Yousuf are shown as its partners. Muhammad Yousuf is the partner who had signed the contract Exh. 8/1 on behalf of the plaintiff's firm' on 18‑7‑1958. Present suit was filed on 23‑10‑

61. Clause (2) of section 69 of Partnership Act provides that "no suit shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm." It is evident from the dates mentioned above that the plaintiffs were a registered firm when the present suit was filed and therefore the bar does not exist now. It was urged on behalf of the buyers that the plaintiffs' firm is described in Exh. 8/5 as Messrs Hafiz Abdul Aziz & Co. but in the plaint they are described as Messrs Hafiz Abdul Aziz Yousufani & Co. In order to explain this discrepancy Hafiz Abdul Aziz Exh. 11 had stated before me on oath that Yousufani is their sur name and the three partners, mentioned above, constitute this partnership firm. It is not the case of the buyers that they had no contract with this plaintiffs' firm. Both the parties have dealt with each other as firms. Even the contract Exh. 8/1, describes the sellers/plaintiffs as Messrs Hafiz Abdul Aziz Yousufani, Karachi. Similarly the `Yousufani' appears in the correspondence which ensued between the parties. Paragraph 2 of the plaint refers to the contract entered into between the parties i.e., the plaintiff's and defendant. This fact is not disputed by the defence in their written statement. For all these reasons I find very little force in this defence plea and accordingly decide the issue to favour of the plaintiff.

7. Issues Nos. 3, 4‑ and 5 (Suit No. 169 of 1961). Issue No. 4 (Suit No. 244 of 1965). Case of the plaintiff/sellers is that parties had entered into a contract on 18‑7‑1958 for sale and purchase of 20,000 mds. of NTR cotton seeds "subject to the terms and conditions shown in the contract herewith attached and in accordance with market usage prevalent in the trade of Cotton Seeds at Tando Allahyar." I have already referred to the defence plea raised by the buyers that this contract was not subject to the trade usage alleged in the plaint. In view of this position the evidence adduced by the plaintiffs on this point was admitted subject to this objection. It was urged on behalf of the defendant that oral evidence is not admissible in evidence to prove this trade or market usage in evidence the provisions of sections 91 and 92 of the Evidence Act. The relevant portion in section 91 reads as follows: "When the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained." Section 92 excludes the evidence of oral agreement and the relevant passage in it is reproduced below: "When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or substracting from, its terms." Plaintiffs have relied upon proviso (5) of this section and it reads as follows:‑ "Any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description, may be proved. Provided that the annexing of such incident would not be repugnant to, or inconsistent with, the express terms of the contract." Plaintiffs have adduced oral evidence to prove the usage in connection with cotton seeds trade prevalent at Tando Allahyar according to which the buyers had to send bardana a few days before the date of delivery (2) send his man or agent to be present for inspection of goods, weighment and taking delivery of the contracted goods. Mumtaz Ahmed Khan Exh. 6, Moosa broker Exh. 7, Haji Muhammad Rahim Exh. 9, Hafiz Abdul Aziz Exh. 11 have been examined to prove this trade usage and they have supported the plaintiffs on this point. Mr. H. B. Tayabji the learned counsel for the defendant had argued before the that the delivery claustin Exh. 8/1 was very vague as (1) the place of delivery was not known (2) even the date of delivery was not definite, (3) that no final date had been fixed to complete the delivery (4) that bardana was to be sent by the buyers at the option of the sellers (5) that no specific date was fixed for delivery of the bardana, and lastly, that the delivery was to be made after the buyer had applied for it. It is apparent from this argument that delivery clause in Exh. 8/1 is vague. Plaintiffs' case is also the same. When ambiguous terms or phrases are found in mercantile contract evidence of usage is admissible to explain the meaning of the expressions in the particular trade or locality; and where a contract is silent in respect of some incidental terms or condition which according to the course of business established in a particular trade, it is e customary to find included in such a contract, evidence of the usage is admissible to prove that such terms or condition formed part of the contract; unless the incorporation of the terms o conditions will have the effect of introducing something repugnant to or inconsistent with the tendor of the written agreement. Oral evidence is admissible to explain or supply terms in commercial transactions on the presumption that the parties did not intend to put into writing the whole agreement, but tacitiy agreed that their. contract was to be interpreted or regulated by established usages and customs, provided they are not inconsistent with tae terms of the contract. Evidence of usage has been admitted as to contracts relating to transactions of commerce and trade, farming or other business for the purpose of defining what would otherwise be indefinite, or to interpret a peculiar term or to explain what was obscure, to ascertain what was equivocal or to annex particular incidents, which although not mentioned in the contracts, were connected with them. The plaintiffs have adduced evidence to prove the trade usage in respect of two clauses in respect of delivery and bardana in Exh. 8/1 and these are produced below: "Delivery: Weighment to be made in any of the factory Godowns or Compound at first November 1958 continue delivery as soon as possible after Buyer's application for it. If complete delivery is not taken before the final date, the balance of Buyer's goods will be weighed and appropriated by the sellers, when it shall be optional for the sellers to keep the goods in their godown and/or compound at Buyer's risk and expense (recovering from buyers godown rents at the reason able rate) or to take any other steps they may consider advisable for the protection of their interests, holding the Buyers responsible for all losses resulting therefrom. The acceptance at any time by the Buyers of the tender by the sellers of a quantity less than that contracted for shall not under any circumstances be taken to cancel the contracted as to the balance to be delivered. Bardana: Buyers to supply and despatch on his account empty bardanas and twine before such call to do so to seller's Factory." It is evident that both these clauses are vague in respect of the terms on which evidence has been adduced by the plaintiff sellers. Bardana clause does not mention when it was to be supplied by the buyers. It merely recites that it was to be supplied "before the sellers called to do so." Evidence has been adduced to show that bardana was to be supplied by the buyer 3‑4 days before the date of delivery viz., 1‑11‑1958. Similarly in respect of delivery clause evidence has been adduced to show that buyers had to send their agent, after the bardana was delivered, to be present for inspection of goods, weighment and taking delivery of the contracted goods and Railway Receipts. All this evidence appears to be very necessary because the two clauses in Exh. 8/1 are silent on this point. Sellers had also relied upon the provisions of section 62 of the Sales of Goods Act. It dells with exclusion of implied terms and conditions in the contract. Under this section in commercial transaction extrinsic evidence or custom and usage is admissible to annex incidents to written contracts in matters with respect to which they are silent. Plaintiffs have also relied upon decisions reported in Volkart Bros. v. Vettivelu Nadau (11 Mad. 459) and (1917) 2 K B 141 and

348. Madras case deals with trade usage and its proof. The two English decisions also deal with the evidence of usage. For the reasons stated above the defence objection to the admissibility of evidence adduced by the plaintiffs is rejected. Case of the plaintiffs is that delivery; was to start from 1st November 1958 and further that bardana was to be supplied by the buyers 2‑4 days earlier and secondly that buyers had to send their agent to be present for inspection of goods, weighment and taking delivery of contracted goods as well as railway receipts. Evidence has been adduced by the plaintiffs which fully supports the plaintiffs' case. No contrary evidence has been adduced by the defendants. I was also referred to decisions, made in Suit No. 134/61 and No. 183/61 (of this Court) which fully support the case of the plaintiffs. For all these reasons I decide all these issues in favour of the plaintiffs/sellers.

8. Issue No. 6 (Suit No. 169/61).‑This issue was pressed half‑heartedly on behalf of the defendant. Their learned counsel (Mr. H. B. Tayabji) had urged before me that it was immaterial if the sum of Rs. 10,000 paid by his clients was earnest money or paid in advance. I fully agree with Mr. Tayabji on this point. This amount is always paid by a buyer as a security for due performance of the contract. It was held in a case reported in Chiranjit Singh v. Har Swarup (A I R 1926 P C 1) that earnest money is part of the purchase price: "It is forfeited when the transaction falls through, by reason of the fault or failure of the vendee." Same view is expressed in another case reported in Trustees of the Port of Karachi v. Ghulam Ali Habib Rajwee (P L D 1961 Kar. 623), where it was held that: "There is no charm in the expression `earnest money', and whether the amount is described as a deposit. The true import of both of them is that it is a part of the purchase price and is at the same time intended to be a guarantee for the performance by the purchaser and liable to forfeiture in case of breach by him." The burden was upon the defendant to prove that it was not earnest money but this sum of Rs. 10,000 was paid by way of advance. As it has failed to prove it, for the reasons stated above, I decide this issue against the defendant.

9. Issues Nos. 7 to 17 (Suit No. 169 of 1961). Issues Nos. 1 to 3 (Suit No. 244 of 1965).‑It is not the case of the defendant/buyers that they had made a demand for the delivery of the contracted goods from the plaintiffs/sellers or to have sent the bardana to them. Reference to these pleas in their statements has already been made at great length. Their case is that the contract in suit was frustrated and became impossible of performance consequent to the imposition of Martial Law on 7th October 1958 and further that this contract became void by reason of the fixation of the price at Rs. 12 per maund on 10th November 1958, till which date this contract was kept alive by mutual consent of the parties. In the cross‑examination of the witnesses examined by the plaintiffs they have tried to show that (1) this contract was kept alive till 30th November 1958, (2) that they were ready and willing to accept the contracted goods on the control price fixed by the Martial Law authorities, (3) no stocks of cotton seeds were available with the plaintiffs (4) that they had no capacity to prepare the cotton seeds on the material date. They have also denied the receipt of the letters addressed by the plaintiffs to them as well as telephonic conversations. Their witness Kassim Exh. 12 appears to be a false witness. He had deposed before me on oath that he had contacted the plaintiffs on phone on 23rd or 24th October and Yousuf (partner of the plaintiffs) had informed him that the contract was of November delivery and hence the delivery would be made in that month and further that no goods were available with them at present. He had further deposed before me that plaintiffs had never asked them in writing for bardana in the two months of September and October. His evidence is also to the effect that he had a talk with the plaintiff over telephone "for delivery in the first week of November. Mr. Yousuf informed me that they would make delivery in the month of November." His evidence further recites that: "Plaintiff would have required at least 20 days to make complete delivery of the contracted goods. A purchaser has first to inspect the contracted goods in connection with quality and sends barddna. Delivery is complete after weighment is made and the bags are brought to the railway platform . . . . . We had maintained in our reply that we were still ready and willing to take delivery on the basis of control rates . . . . . Nor any delivery order was sent by the plaintiffs to us . . . . . As the plaintiffs had failed to deliver the contracted goods we had purchased the same in market at Karachi . . . . . As no delivery order was sent by the plaintiffs none from us had gone there in this connection. Bardanas were not purchased by us for this contract but empty bags were lying at our mill. We had maintained no stock register to show the bags available with us. We had to send bardana to the plaintiff at Tando Allahyar after we had received delivery order from them. Delivery order means the intimation from the plaintiffs that they were in a position to deliver the contracted goods." All these facts were not pleaded in their written statement. Nor Yousuf and other witnesses were cross‑examined on these points. This witness has set up a new case which is inconsistent with the pleadings raised in the written statement by the defendants. Apparently plaintiffs had no reason not to make delivery of the contracted goods. In their letter Exh. 8/2 dated 28‑10‑58 they had asked the defendant "to despatch empty gunny bags to us and your representative at our factory at Tando Allahyar to take delivery of the said contract and oblige." This letter was delivered personally by their peon Haji Muhammad Rahim. He is no longer in service of the plaintiff's. His evidence shows that he had approached the defendant's office on 28th, again on 29th but this letter was not accepted as Habib was not available. He ultimately contacted him on 30th October and Habib accepted this letter and signed the office copy i.e., Exh. 8/2 in token of acknowledging its receipt. It is strange that Habib has not been examined by the defendant to rebut all this evidence. Kassim has again tried to save defendants on this point also. I may, at this stage, add that Habib is the person who had signed the contract Exh. 8/1 on behalf of the defendant. On this point the evidence of Kassim Exh. 12 reads as follows:‑ "Habib had signed the contract Exh. 8/1 on our behalf. He was our cashier in those days. He is no longer in service with us. He left us on 3‑9‑1959. We had terminated his services due to several defalcations . . . . . I see letter Exh. 8/2 and say that it was not delivered to us. Exh. 8/2 does not bear his (Habib's) signature." He has assigned no reason for not examining Habib. If his services have been terminated attempt should have been made to serve Habib through Court. I, therefore agree with the plaintiffs that the evidence adduced by them in this respect has been rebutted by the defendant. Next letter addressed by the plaintiffs in this respect is Exh. 8/6 dated 3‑11‑

58. It is a representation made to the Martial Law Administrator at Hyderabad by the plaintiffs complaining against the defendant for not taking delivery of the contracted goods. If the contracted goods were not available with the plaintiffs it is impossible to believe that they would have made such a representation to the Martial Law Authorities giving out false or untrue facts. Another letter addressed by the plaintiff to the defendant is Exh. 8/3 dated 30‑11‑58 addressed through their counsel (late Mr. Moolraj of Hyderabad). It refers to two other letters of 15‑9‑58 and 20‑10‑58 addressed by them to the defendant in connection with this contract. Receipt of these three letters has been denied by the defendant. Evidence of Hafiz Abdul Aziz Exh.11 shows that they had written several letters to the defendant in connection with this contract. According to him the first letter was addressed after their factory had started working on 22‑9‑

58. Two more letters were addressed by the plaintiffs from Tando Allahyar to the defendant at Karachi. His evidence further shows that in their letter written in October 1958 they had asked the defendant to send the bardana and their agent to be present at the weighment. When nothing was done reminder was issued and it is Exh. 8/2 dated 28‑10‑

58. Its delivery to the defendant has been proved by Muhammad Rahim. Exh. 8/8 is the first letter written by the defendant to the plaintiffs on 5‑12‑1958. They have denied the receipt of two letters dated 15‑9‑58 and 20‑10‑

58. This letter is in reply to Exh. 8/3 dated 30‑11‑

58. This was followed by a legal notice Exh. 8/7 dated 24‑3‑59 and the reply from the defendant to it is Exh. 8/10 dated 6‑4‑

59. It is evident from all these facts that sellers had taken all necessary steps to make the delivery of the contracted goods from 1‑11‑

58. Their factory had started working on 22‑9‑58 and the evidence led by the plaintiffs shows 'that they could deliver the contracted goods within one week as not more than 3000 mds. of cotton seeds could be weighed every day. It is further apparent that the buyers had no intention to take the delivery of the contracted goods. They bad sent no bardana to the sellers. None of the letters addressed by the sellers was replied by them. Reference has already been made in detail to their conduct viz., contradictory pleas raised in the written statement and the evidence adduced by them. Their case is that the contract had been frustrated and bad become void and impossible to perform for the reasons mentioned in their written statement. Price had fallen down after the rates were fixed by the Martial Law Authorities. Chapter IV of the Sale of Goods Act deals with performance of the contract. Section 31 describes the duties of the seller and buyers. Under section 32 payment and delivery are concurrent conditions. Section 33 deals in detail with delivery of contracted goods while section 34 provides the affect of part delivery. I was referred to section 35 which lays down that the buyer bad to apply for delivery. It provides that "apart from any express contract the seller of the goods is not bound to deliver them until the buyer applies for delivery." Next relevant section in this connection is section 36 which provides rules regarding delivery. In this particular case, as already pointed out, it is not the case of the defendant that they had applied for delivery. In brief, stand taken by them is, that the contract had become frustrated and void and impossible to perform for reasons already referred to. Evidence adduced by the plaintiffs in respect of their case has not been rebutted. Kassim alone has been examined by the defendant and for the reasons stated above he appears to be a false witness. Ginning factory had started on 22‑9‑58 and apparently the plaintiffs were in a position to make delivery of the contracted goods. All this discussion shows that burden was upon the defendant to prove that they made the demand fort the delivery of the contracted goods. No evidence has been adduced by them in support of it. The fact that no bardana was sent by the defendant to the plaintiffs admits no dispute. Plaintiff has succeeded in proving that they had issued letter Exh. 8/2 and further that it was received by Habib on behalf of the defendant. Muhammad Rahim is no longer with the plaintiff. His story appears to be natural and therefore true. As prices were falling plaintiff must be very anxious to make delivery of the contracted goods and they bad even complained to the Martial Law Authorities in their letter Exh. 8/6 on 3‑11‑58.

10. Another plea raised by the defence is that time was not essence of the contract. This position is not correct. The contract in suit is mercantile transaction. There is no place, however, in mercantile contracts for the presumption that time is not of the essence of the contract. In this respect plaintiffs had relied upon the provisions of section 11 of the Sale of Goods Act which deals with stipulations as to time and cases reported in 18 Mad. 63, 1940 Oudh 443, A I R 1954 Orissa 254, Mohanlal and another v. Gyaniram Agarwal (A I R 1935 Nag. 111) and Baij Nath Prasad v. Johar Chand Mangi Lal (A I R 1933 All. 404). All these decisions support the stand taken by the plaintiffs that time is the essence of the contract in mercantile transactions.

11. Another plea taken by the defendant is that the contract was kept alive till 30th November 1958 when it was wrongfully terminated. This position does not appear to be correct. The date of the breach would be the date on which the contract had to be performed. In this particular case delivery was to start from 1st November 1958 and as such the breach was committed on that date. There is nothing on record to suggest that this contract was kept alive with the mutual consent of the parties till 30th November 1958. Plaintiffs in support of this case had relied upon cases reported in Balagamwalla Cotton Ginners and Pressing Factory v. Akbar Oil Mills (P L D 1965 Kar. 460), Errol Mackony v. Maharaja Dhiraj Kameshwar Singh (A I R 1932 P C 196), Mohanlal and another v. Gyaniram Agarwal, 37 Mad. 412, Paper Sales Ltd. v. Chakbani Bros. (A I R 1946 Bom. 429) and 48 I A 175.

12. Similarly I find very little force in the defence plea that contract had become frustrated consequent to Martial Law Regulation No.

42. I have already held that the breach in contract was made on 1st November 1958 while the prices were fixed long after this date. I, therefore, hold that the contract had not become frustrated or void or impossible to perform as alleged by the defendant.

13. As regards the rates evidence has been adduced by the plaintiffs. Case of the plaintiff, as disclosed in their plaint, is that the market rate prevailing from 31st October to 3rd November 1958 was Rs. 11‑12‑0 per maund and therefore they have claimed Rs. 4‑8‑0 as the difference in rates. On this basis they have claimed Rs. 90,000 as damages and after deducting the sum of Rs. 10,000, already paid, present suit has been filed for the recovery of Rs. 80,

000. Moosa Exh. 7 in his evidence has mentioned the rates prevailing from 26th October to 30th October and it shows that the rate on 30th October was Rs. 12 per maund. According to him "the difference in rates of cotton seeds between Karachi and Hyderabad would be at least Re. 1 per maund. This is due to freight and other incidental charges." Dad Muhammad Exh. 10 was also examined by the plaintiffs to prove the rates prevalent in market from 28th October 1958 to 10th November 1958. His evidence shows that the rate on 30th October was Rs. 12‑11‑0 to Rs. 13‑11‑0 and on 31st It was same, while the rate on 1‑11‑1958 was Rs. 12‑8‑0 to Rs. 13‑14‑0 per maund. It was therefore urged before me that the average rate at Karachi on 1‑11‑1958 would be Rs. 12 per maund and Re. 1 per maund is to be deducted in respect of freight charges and thus rate at Tando Allahyar, according to the plaintiffs, would be Rs. 11 per maund. However, the plaintiff has claimed the difference at Rs. 4‑8‑0 per maund and not at Rs. 5‑8‑

0. Findings accordingly.

14. Issue No. 18 (Suit No. 169 of 1961). Issue No. 5 (Suit No. 244 of 1965)‑For the reasons stated above, I dismiss Suit No. 214 of 1965 with costs. Suit No. 169 of 1961 is decreed for Rs. 80,060 and costs with running interest at 6 % per annum from the date of the suit till realisation. K. B. A. Suit decreed.