P L D '1969 Supreme Court 463 (PLP)

SAJJAD AHMAD, J.‑This is a defendants' appeal, by special leave, directed against money decree in the sum of Rs. 45,469‑4‑0 as price of goods supplied by the plaintiff: respondent. The decree was passed by the Additional Subordi nate Judge, Chittagong, and was ratified, on first appeal, by a Division Bench of the High Court of East Pakistan. The relevant facts are as follows. Defendant No. 1 which is appellant No. 1 before us, is a Swedish Shipping Company which owned and controlled a carrier vessel named "Alfhem". It carried on business in Chittagong through the agency of Messrs Bird & Co. (Pakistan) Ltd., which is appellant No. 2 before us and which, as a limited company, is doing business, inter alias, as shipping, agents at the Chittagong Port. The vessel "Alfhem" arrived at‑Chittagong early in March 1957. On the 13th of March 1937, the Master and Chief Officer of the vessel asked the respondent to supply some material needed for the upkeep of the ship as per list (Annexure `A' to the plaint) which was signed by the Chief Engineer of the ship and made over to the respondent. Before making the supply the respondent contacted appellant No. 2 being the agent of appellant No. 1, to ensure the payment of the price of the goods as ordered by the latter and was informed that it would pay the price if the Master of the Ship signed the bill in acknowledgment of the delivery of the goods. The supply was duly made. The respondent sent the bill, Exh. 3 (a, on the 14th of March of March 1957, in original and duplicate, which wore signed by the Master and the Chief Officer of the shop who also held out an assurance that appellant No. 2 would make the payment. When the bill was presented to appellant No 2, it first prevaricated and then declined to make the payment. The resulting suit brought by the respondent was contested by both the appellants, although, in actual fact, the real contestant was appellant No. 2 alone, which filed the written statements both for itself and for appellant No. 1 under the signature of its own Director. In the written statement filed on behalf of appellant No. 1, it was admitted that the plaintiff had supplied the material as sub‑contractors of the chandlers of the vessel, namely, Muhammad Hai, Ship‑Characters, but it was alleged that the bill for the goods did not correspond in number, description, quantity and value, with the actual goods delivered. In para 10 of the written statement, it was stated "That this defendant admits that goods of the approximate value, weight and nature set out in the said shipping bill were delivered to the said vessel and states that proper payment for such goods has been tendered to but rejected by the plaintiff". Appellant No. 2 in its written statement disowned its liability alleging ignorance about the transaction and absence of any privity thereto, stating further that its agency of appellant No. 1 was effected for the purpose of section 5 of the Sea Customs Act and was restricted in time to the duration of the vessel's halt at the port of Chittagong. Both the trial Judge and the High Court have found against the defendant‑appellants, holding that goods worth Rs. 45,469‑4‑0 were supplied by the plaintiff for which both the defendants were liable to pay. On the point of the liability of appellant No. 2, the trial Court came to the conclusion that not only had it recommended the order of appellant No. 1 as its agent for the supply of the goods by the respondent, but had also undertaken to pay the price thereof. Since defendant No. 1 which was evidently a foreign firm, had no other connection in Chittagong, the plaintiff company could not have had business dealings with it except through its agent, namely, appellant No.

2. Section 230 of the Contract Act was relied upon for fixing the liability of the appellant as the agent; of its foreign principal, namely, appellant No.

1. On appeal the High Court has affirmed this view, holding that the appellant No. 2 was liable under section 230 of the Act as agent of appellant No. 1 which was admittedly a foreign company not residing within the jurisdiction of the Pakistan Courts. The High Court has held further that defendant No. 2 had accepted the liability to pay the price of tie goods which were supplied to appellant No. 1 by the plaintiff respondent. Leave was granted by this Court on the 18th of June 1965, on a limited point raised on behalf of appellant No. 2 that since the contract was made directly between the principal (appellant' No. 1) and the respondent, the decree against appellant No. 2 as the agent was not valid in law. It was` further contended that' as the decree passed was not limited to the extent of the asset of the principal (appellant No. 1) in the hands of appellant No. 2 (the agent) the decree was illegal. We have been taken through the entire evidence adduced in the case and after hearing the learned counsel for the appellants we have no hesitation in affirming the view of the Courts below that the liability of appellant P. 2, joint and several, along lager with that of appellant No. 1, was clearly established for the payment of the money in suit to the respondent. According to the respondent's case as brought out in the evidence of Kurban Hussain, a partner of the plaintiff respondent's firm, one important ingredient of the agreement between the parties was that appellant No. 2, as ratified by himself, was to make the payment for the price of the goods for appellant No. 1 after the Master of the Ship had signed the bill in token of the delivery of the goods. Kurban Hussain stated as follows: "Before supplying the order I contacted and sought approval of Bird & Co. and the latter said that I should supply the goods and get the bills‑ signed by the ship officer whereupon defendant No. 2 would make payment." No evidence was produced from the side of the appellants to rebut this part of the plaintiff's case. On the contrary, the liability of defendant No. 2 is concluded by the statement made by D. W. 4 Mr. A. R. Adhami, who was the Accountant of Bird & Co. (appellant No. 2), at the relevant tune. He deposed as follows "I was Accountant in Bird & Co. in 1957. In that year, the ship Alfahem came to Chittagong, which belonged to defendant No.

1. It was to carry lice for which Bird & Co. was charterer's agent under: defendant No. 1 I came to learn that plaintiff Company supplied goods to the ship and submitted bill. Who actually supplied the goods I do not know. This shipping bill Exh: A was signed and approved by me. The value of good's to be supplied was Rs. 10,

000. I did not know of any supply of goods worth Rs. 45,000 . . . . In our capacity as agent of defendant No. 1 we paid the bill. I received the amount from defendant No.

1. If we had approved we would be liable. . . . . Cross‑examination :‑ I mean to say that the Bird & Co. is liable for only Rs. 10,

060. This I say on the basis of the shipping bill as that was the bill approved by us." The shipping bill referred to in the statement of Mr. A. R. Adhami which is Exh. A on record describes Bird & Co. (appellant No. 2) as the consignees of the materials supplied by the plaintiff to the vessel "s. s. Alfahem" and covered by this bill. This statement of Mr. A. R. Adhami lends full support to the respondent's case that appellant No. 2 had guaranteed the payment of the price of the goods supplied to appellant No. I by the respondent. This was, in fact, a part of the agreement itself. One can well understand that the plaintiff‑company would not have made a deal with a foreign concern whose vessel in Chittagong was in a temporary transit without being assured that the money to be spent in the deal was safe and obviously enough, it could have looked only to the agent of the foreign company, namely, appellant No. 2, to ensure this. The evidence reveals that it was a tripartite agreement between the three parties and appellant No. 2 was as much a privy to it as the 'other two. It undertook to make the payment for the goods supplied to appellant No. 1 and thus assumed the position of a guarantor for the contract Section 126 of the Contract Act defines a contract of guarantee as follows :‑ "1.26. A 'contract of guarantee' is a contract to perform the promise or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the `surety'; the person in respect of whose default the guarantee is given is called the 'principal debtor', and the person to whom the guarantee is given it called the 'creditor'. A guarantee may be either oral or written." Under section 127 of the Act anything done or any promise made, for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee. Under section 18, the liability of the surety is co‑extensive with that of the principal debtor, unless it is otherwise provided by the contract. On this view of the matter, we consider that the liability of appellant No. 2 is co‑extensive with that of appellant No. 1 in respect of the amount in suit. ‑ Section 230 of the Contract Act which has been invoked by the Courts below in fixing the liability of appellant No. 2 as agent of appellant No. 1, is as follows: "230. 1n the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal. nor is he personally bound by them. Such a contract shall be presumed to exist in the following cases‑‑ (1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad ; (2) where the agent does not disclose the name of his principal ; (3) where the principal, though disclosed, cannot be sued." The test question for applying the principle of this section to a given transaction is as to whom the credit was given by the other party, that is to say, to the principal or to the agent, or if that cannot he proved as a fact, to whom it may reasonably be presumed to have been given. The trial Court in applying this section has observed as follows :‑ "Defendant No. 1 is evidently a foreign firm having no other concern except through the agent, namely, defendant 2 According to the provision of section 230 of the Contract Act, in such circumstances the defendant 2 should be liable for the claim of the plaintiff against foreign principal. The High Court has‑held that since defendant No. 1 is a foreigner and is not within the jurisdiction of the Pakistan Courts, appellant No. 2 which was admittedly the agent of appellant No. 1, was liable contract. Therefore, the question of determining the personal liability of an agent arises only if there is no contract by an agent for a personal liability. 'The contract either exists in which, case it has to be proved or it does not exist. In certain circum stances, as mentioned in section 230, its existence is presumed. The legal presumption thus raised has to be rebutted by the party contending against it. In the present case, as stated above, the agent had made himself personally liable as a guarantor and it was thus a case of personal liability by contract. The liability of appellant No. 2 being thus direct, both as a guarantor and as an agent, he cannot enjoy the negative protection afforded by section 230 of the Contract Act, nor is it necessary in this case to invoke the presumptive clause of section 230 in favour of that contract to hold the agent liable becau3e his principal (appellant No. 1) was a merchant residing abroad. The learned counsel for the appellants has argued that appellant No. 2 had merely acted as a link or intermediary between the respondent and. appellant No. I to make the payment for the goods on receiving the approval of‑ appellant. No.. 1 and the remittance of money from it. He has referred us to an extract from Exh. B(4) which is a letter from appellant,` No. 1 to appellant No. 2, to the following effect :‑ "As regards Messrs Central Hardware Stores claim we are at a loss to understand how they can claim you as agents. You cannot be responsible for payments for, the ships account as long as you have not guaranteed payment to the firm in case they delivered stores to the ship. Please refer them to a law suit against us in Sweden or refer them to the Swedish Ambassador at Karachi." Regardless of the evidentiary value of this letter, it is clear that even according to it, appellant No. 2 ca snot avoid its liability if it had guaranteed payment to the respondent for the `stores delivered by it to appellant No.

1. There is no doubt that it had furnished that guarantee. The result is that this appeal fails and is dismissed with costs. S. Q. Appeal dismissed.