P L D 1967 Karachi 388 (PLP)

10. In support of their case the defendants examined Muhammad Siddique D. 2 who is a Director of the defendants Company. He admitted in his examination‑in‑chief that the delivery in dispute was contemplated to start from 15th October 1958. He also admitted that they had to supply the bardana before the delivery date. He stated that the bardana was supplied to the plaintiffs on 5th October 1958. On 6th October 1958, it was forwarded under Exh. D.

1. He stated that on 21st November 1958, they offered the plaintiffs to accept by Exh. D. 3 to take the delivery of the goods at the rates fixed by the Martial Law Authorities. He alleged that the plaintiffs kept the contract alive till this letter was written, as at no time before that the contract was closed by them. He alleged that on 18th November 1958, the plaintiffs were willing to give delivery of the goods in dispute at the rate fixed by the Martial Law Authorities. He admitted that on 5th October 1958, the market rate was fluctuating between Rs. 17‑4‑0 and Rs. 17‑8‑0, but alleged that there was no market available till the rate was fixed by the Civil Supplies Department. He admitted that on 20th October 1958, some rates were fixed by the Civil Supplies Department at Re. 13 per maund, but the plaintiffs were not prepared to give delivery even at this rate. He admitted that no letter was sent to the plaintiffs calling upon them to give delivery at this rate. He admitted in cross‑examination that the defendants had not replied to the letter dated the 20th October 1958, but give the reason that this was because they had received oral message from the plaintiffs that the matter will be settled after the Civil Supplies Department had fixed the rate. He admitted in cross -examination that before 18th November 19j8, they did not send any person to take delivery on behalf of the defendants from the plaintiffs. We asserted that no market was available on 30th October 1958, and alleged that there was no market available after 15th October or 16th October 1958, in spite of the fact that the Civil Supplies Department had fixed the rates. D. W. 2, Abdullah was an Assistant Secretary at the material time of the Mill Owners Association. He stated that in October 1958, the Director of Civil Supplies has fixed rate for cottonseed. He stated that on 14th November 1958, the rates for cottonseed were fixed under a Gazette Notification of the said date. He further stated that meetings were going on between the Mill Owners Association and the Director of Civil Supplies about the fixation of rates, and during this period the market had come to a standstill. He admitted in cross‑examination that he had no personal knowledge about the fact that the market had come to a standstill before the rate was fixed by the Director of Civil Supplies. This is all the evidence produced by the parties.

11. Now I will proceed to consider the issues framed in the above‑mentioned two cases. Learned counsel for the parties have not pressed Issues Nos. 1 to

5. They were very right in taking up this attitude because it is proved on the record that the plaintiffs' firm was registered with the Registrar of Firms, Karachi on 3rd October 1959. Besides, there is nothing to show as to why the two suits are not maintainable in law. Learned counsel for the defendants have not been able to satisfy me that the plaints are not sufficiently stamped or the suits are bad for misjoinder of parties or for multifariousness. It is also not shown that the two suits are barred by limitation. I would, therefore, decide Issues Nos. 1 to 5 against the defendants in both the suits.

12. In the present cases, the most important questions for consideration are those which are covered by Issue: Nos, 6 and 9, namely :‑ "

6. What are the terms of the contract in suit?

9. On whose part was the breach of the contract in suit ?" The decision of these issues depends on the two contracts entered into by the parties in the above‑mentioned suits. In Suit No. 134 of 1961 the contract is Exh. P. 1 and in Suit No. 143 of 1961 it is Exhibited as P.

2. The important terms of these contracts are in respect of price, delivery and the bardana. In both the gases the contract was entered on 1st October 1958, and the price was fixed at Rs. 16‑12‑0 per maund of 40 seers N. T. F. O. R. Tando Allahyar in the first case and N. T. F. O. R. Jhudo in the second case. In both the cases bardana and twine were to be supplied by the buyers before the delivery at seller's call to seller's factory. The clause about delivery in both the cases is as under : "Delivery.‑Weighment to be made in any of the Factory Godowns or Compound at and delivery to be given at any tithe at Seller's option between of 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 goofs 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 the Buyers Godown‑Rents at the reasonable rate) or to take any other steps they may consider advisable 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 contract as to the balance to be delivered." The only difference in the two contracts about the delivery is that in the first case weighment was to start from 1st November 1958, and in the second case it 'was to start from 15th October 1958. In view of the terms of the contract it is proved beyond doubt that in the two contracts the goods in question, namely, 10,000 maunds each of new crop N. T. rollers sawgin cottonseed and new crop N. T. roller cottonseed respectively was agreed upon between the parties to be supplied at Rs. 16‑12‑

0. Under both the contracts the defendants had paid Rs. 5,000 each in advance. Under the contract in Suit No. 134 of 1961 the bardana was to be supplied before 1st November 1958, and the delivery was to start from 1st November 1958. It was open to the defendant to demand the delivery earlier also under the terms of the contract. In Suit No. 143 of 1961 the bardana was to be supplied before 15th October 1958, and the delivery was to start from 15th October 1958, or even earlier than that if demanded by the buyer.

13. It is in evidence that in Suit No. 134 of 1961 the defen dant did not supply any bardana before the 1st November 1958. On 20th October 1958, the plaintiffs by Exh. P. 2 called upon the defendant to supply the bardana immediately but no reply was given to this letter. It is further in evidence that the defendant did not send any representative to take delivery of the goods on 1st November 1958, or within a seasonable time thereafter. It is, therefore, quite clear that in Suit No. 134 of 1961 the defen dants committed the breach on 1st November 1958. It was urged by Mr. Zari that because the plaintiffs claimed by letter Exh. P. 3 dated the 18th November 1958, the amount of damages on the basis of the difference in the contract rate and the one fixed under Martial Law Regulation No. 42 it was quite clear that they had kept the contract alive till the above‑men tioned date. In my view the submission of learned counsel has no force whatsoever. It only shows that the plaintiffs were waiting for the fixation of rats under the Martial Law Regulation in order to claim damages on that basis. It does not in the least show that they had kept the contract alive till 18th November 1958. There is no reliable documentary evidence to show that the plaintiffs between 1st November 1958, and 18th November 1958, called upon the defendants to fulfil the terms of the contract, or kept it alive for performance by the defendants P. W. 1 Abdul Jalil, Exh. P. 1 stated in unambiguous terms that it is incorrect that the contract for the first time was cancelled on 18th November 19.58. He stated that the contract had automatically ended on 1st November 1958. I see no reason to des-believe his statement on this point. Mr. Zari referred me to the statement of D. W. 1 Muhammad Siddique, Exh. D. 3, that the defendants offered bandana to the plaintiffs before 1st November 1958, but it was represented to them that on account of the promulgation of Martial Law Regulation negotiations were going on between the Mill Owners Association and Civil Supplies Department and they were asked to wait till a final decision is taken about it. The learned counsel in addition to the fact that damages were claimed by letter dated the 18th November 1958, relied on this circumstance for supporting the defendant's case that the contract was kept alive till after 1st November 1958. In my opinion, no reliance can be placed on such bare statement, unless it is corroborated by any reliable piece of evidence. Such evidence is lacking. In these circumstances, I would hold that in Suit No. 134 of 1961 the defendant committed the breach on 1st November 1958.

14. Coming to the second case, as already stated, the term of the Exh. P. 2, shows that in Suit No. 143 of 1961 bardana was to be supplied before 15th October 1958, and the delivery was to commence from 15th October 1958. The plaintiffs alleged that no bardana had been supplied by the defendant, but P. W. Abdul Jalil, Exh. P. 1, admitted in his evidence that on 6th October 1958, the defendants had sent the information of dispatching the bandana by letter Exh. D.

1. He admitted that they had supplied 10,000 gunny bags, the market rate of which is Re. 1 per bag. It cannot, therefore, be said that the defendant committed any breach in the supply of the bardana in terms of the contract. The only question in this case is whether the defendants committed the alleged breach in taking the delivery of the goods from 13th October 1958. In this connection P. W. Abdul Jalil stated that the defendant did not send any representative to take delivery of the goods on 15th October 1958, or within a reasonable time thereafter. The witness relied on a letter Exh. P. 4 dated the 20th October 1958, by which the plaintiffs demanded from the defendants to send their representative to take delivery, but they failed to reply this letter. Nor did they send any of their repre sentative to take delivery. In defence the defendant's witness D. W. 1 Muhammad Siddique Exh. D. 2, stated that the contract was kept alive up to 21st November 1958, as the defendants had expressed their desire to take delivery by Exh. D. 3, on that date. The further reason given by the witness for keeping the contract alive is that the plaintiffs at no time informed the defendants that they had closed the contract. The witness however admitted to a question put by Court that on or about 20th October 1958, some rates were fixed by the Civil Supplies Department at Rs. 13 per maund and they called upon the plaintiffs to give delivery at this sate, but stated that it was only an oral request. He admitted that no letter was sent to the plaintiffs about it. On the evidence led, therefore, in this case I am satisfied that the defendants committed breach on 20th October 1958, or soon thereafter as they failed to take delivery of the goods within a reasonable time after the letter Exh. P. 4 dated the 20th October 1958, was sent to them. The plea of the defendant that the contract was kept alive up to 18th November 1958, in view of the letter Exh. P. 3, on which date the plaintiffs claimed damages on the basis of the rate fixed by the Martial Law Authorities, cannot be accepted as good defence. This letter only shows that the plaintiffs were waiting for the fixation of rate in order to claim damages; other wise the breach had already occurred and the contract had come to an end.

15. My findings on these issues are that the terms of the contract in the first case was that the goods were to be delivered from Ist November 1958, and in the second case from 15th October 1958. The breach was committed in the first case on 1st November 1958, and in the second case on 20th October 1958.

16. This brings me to the two other important issues covered by Issues Nos. 7 and

8. Under these issues the question for consideration is whether the fixation of rates under Martial Law Regulation No. 42 in any way affected the contracts or whether the contracts in suits were frustrated as alleged by the defendants. In order to appreciate this argument it may be stated that Martial Law was promulgated in Pakistan on 7th October 1958. Thereafter certain Martial Law Regulation were promul gated. The relevant Regulation applicable in the present case is Martial Law Regulation No. 42 by which the rates of the goods were fixed on 11th November 1958, at Rs. 12 per maund. This question has been considered by this Court in a number of cases. The leading case on this subject was decided by Faruqui, J. In the case of Bengal Oil Mills Ltd. v. Dada Sons (P L D 1964 Kar. 18), In this connection His Lordship observed as under :‑ "The next question is as to the date on which the price fixed by the Central Government of cottonseed became effective. Mr. Jan Muhammad Dawood contended that under the original Martial Law Regulation 42 it was expressly provided by para. 11 that the prices determined under the said Regulation were to come into force from 17th November 1958, and, therefore, the price: fixed by the order dated 10‑11‑58 did not become effective before the 17th of November. This argument loses sight of para. 10 of the reconstituted Martial Law and it is expressly stated in para. 1 that if any Martial Law Regulation is repugnant to the provisions of this Regulation (reconstituted Regulation), it shall have no effect to the extent of that repugnancy. When this was pointed out to the learned counsel he took up the position that in any case the control price did not become effective before the Gazette Notification dated 14th November 1958. I do not agree. The Government made an order on the 10th of November and issued a Press note which was published in the newspaper on 11th November 1958. In my opinion, therefore, the issuance of the Press note and the publication thereof in the newspaper amounted to a notification within the meaning of para. 10 of the reconstituted Regulation and became effective as from the 11th November 1958. This interpretation is also in consonance with the notification dated 7th October 1958, issued by the Chief Martial Law Administration for para. 2 of which laid down that Martial Law Regulations and orders will be published in such a manner as is con veniently possible. My finding, therefore, on the first issues is that the price of cottonseed was validly fixed and became effective from 11th November 1958. " I am in respectful agreement with these observations. In my opinion the prices fixed by the Central Government in respect of the cottonseed, which are also the goods in dispute in these cases; became effective under Martial Law Regulation No. 42 from 11th November 1958. In view of this the contention of Mr. Zari that the fixation of rates under Martial Law Regulation had frustrated the contract or had affected the terms of the contract entered into between the parties has not impressed me. It is quite true that in the above‑mentioned suits the parties entered into the contract on the expectation of the market being normal at the time of the delivery of the goods, and if Martial Law Regulation No. 42 and the prices fixed for cottonseed under it had in any way affected the contract price, it would have been fatal to the case of the plaintiff. But since the breach in both the cases took place much earlier than the price fixed under Martial Law Regulation No. 42, it is not possible for me to hold , that they have in any way affected the contract rates or frustrated the contract. It is in evidence that the business was going on in the market before the fixation of the rates. The market had its own rates, though it had considerably fallen down. But this could not absolve the defendants from performing their part of the con tract. These cases, therefore, are not one of those in which it can be held that the contract was frustrated under section 56 of the Contract Act or for unforeseen circumstances.

17. Mr. Zari's contention that the contracts were kept alive in both the cases till 18th November 1958, the date on which the plaintiffs claimed damages from the defendants has already been discussed earlier. In my view these letters did not in any way keep the contracts alive till this date. Ordinarily, in a contract for sale of goods the time is the essence of the contract and the date of the breach of the contract is the date when the contract ought to have been fulfilled and not the date of the refusal of liability or repudiation of the contract. This question was considered by the Judicial Committee to the case of Errol Mackay v. Maharaja Dhiraj Kameshwar Singh and another (AIR 1932 P C 196). In that case the claim was on a contract dated the 9th November 1919, for the sale of 200 maunds of new crop Java indigo seed at Rs. 22 per maund excluding bags F. O. R. Purnea, delivery to be made in April 1920. The respondents failed to make any deliveries either by the end of April 1920, or at all. The question before their Lordships was "what are the damages", that is, at what rate are they to be estimated and on what basis. The appellant in that case wrote on 3rd May 1910, to the respondents for delivery and again on 10th May 1920. The respondents repudiated the contract by letter dated the 1st June and 11th June 1920, and further reiterated it by letter dated 1st July 1920. The Subordinate Judge at Purnea considered that the contract was finally repudiated on 1st June 1920, and accordingly treating that as the date of breach assessed the damages on the basis of the market price then ruling. On appeal the High Court held that the date of breach was 30tb April 1920, by which date the contract accord ing to its terms, ought to have been completed by full delivery. Their Lordships approved this view on the. following obser vation :‑‑ "Their Lordships are of opinion that this was the correct date of breach : there is no evidence that the contract time was varied or extended : all that happened was that the appellant wrote pressing for delivery after that date, but the respondent never acknowledged any obligation to deliver or did anything but repudiate the contract. Their Lordships accordingly pronounce against the appellant's claim that the proper date was either 1st July 1920, or 11th June 1920, or 1st June 1920. On the basis of the date of 30th April 1920, it is now necessary to consider how the damages are to be estimated." In the light of the above observations I am of the view that the mere fact that the plaintiffs claimed damages on 18th November 1958, at the rate fixed by the Martial Law Authorities is not such a circumstance that it had the effect of extending the time of the performance of the contract or such a step by which they can be said to have kept the contract alive till that date. In the absence of any evidence that the time was varied or extended, the date of the breach should be that by which time the contract ought to have been completed by full delivery. The defendants have led no evidence to show that the full delivery could not be effected immediately or would have taken a long time. This is not even their plea. I am, therefore, of the view that 'in the first case the breach was committed on, 1st November 1958; and in the second case the breach was committed on 20th October 1958.

18. I will now proceed to consider another aspect of the question of the frustration of the contract. In Messrs Balagamwalla Cotton‑Ginners and Pressing factory v. Messrs Akber Oil Mills (P L D 1905 Kar. 460) Qadeeruddin, J considered a similar argument which is advanced in these two cases. In that case the appellant counsel contended that the performance of the contract had been frustrated from 11th November 1958, on which date the price fixed by the Martial Law Authorities was notified to the public. This plea was rejected because the performance of the contract had to commence on 1st November 1958, and the fixation of price did not have any effect on the performance of the contract between 1st and 10th November 1958: In this connection His Lordship observed "As the breach of the contract had taken place during the period in which there was no frustration, there was subsisting contract on the 11th of November 1958, when frustration took place. In this respect counsel has relied on the judgment given in the case of Kumaraswami v. Karupuswami. A Division Bench of the High Court of Madras has observed in it as follows :‑ "When a contract has been broken it is dead, and there is nothing which could thereafter be kept alive." Mr. Mansoorul Arfin appearing on behalf of respondents has not disputed that breach, if any, had taken place before the frustration. but has contended that frustration took place on the 10th of November 1958, and not on the 11th of November 1958. This appeal would have required lengthier arguments if a judgment by A. S. Faruqui. J., on the effect of the fixation of prices by the Martial Law Authorities on those contracts is which higher prices bad been agreed upon, was not available. His Lordship's judgment was given in the case of Bengal Oil Mills v. Dada Sons Ltd. (2) He has held in it that the price fixed by the Martial Law Authorities' did frustrate those contracts in. which the prices agreed upon were higher than the price fixed under Martial Law Regulation No. 40, and that the price so fixed was effective from the 11th of November 1958. I respectfully agree that that is the correct date on which frustration should be taken to have occurred because the public came to know of the ruling price on that date. The difference however, between counsel for the parties with regard to the date of frustration is not substantial in this appeal. The important aspect of the discussion is that frustration did take place and that the breach, if any, had taken place before it." In the present case also the breach took place much earlier than fixation of rates of the goods in dispute by Martial Law Authorities. I would therefore hold that the Martial Law Regulation No. 42 had not frustrated the two contracts between the parties and the defendants cannot avoid their responsibility under them on this ground.

19. This brings me to the last issue namely, "To what damages, if any are the plaintiffs entitled to?"' In the first cane in support of their claim the plaintiffs have relied on the market rate on 1st November 1958. In this connection they have proved Exh. P. 5, the issue of Dawn dated this let November 1958. In it is stated that the market rate of the goods in dispute on 1‑11‑58 was between Rs. 12‑11‑0 to Rs. 13‑12‑

0. These rates have not been denied by the defendants. Their only plea is that there was no ready market. In rebuttal they have not led any evidence to prove the market rate of the goods in dispute on the above‑mentioned date. In this circumstance the evidence of the plaintiffs on this point will have to be accepted as good. In law the defendant is entitled to claim the best rate available on the date of breach. Since the highest was Rs. 13‑12‑0, I would hold that the plaintiffs are entitled in Suit No. 134 of 1961 to claim damages on the. difference between Rs. 16‑12‑0, the contract rate and Rs. 13‑12‑0, the market rate. The difference is of Rs.3 per maund. On this basis the plaintiffs are entitled to claim damages on the quantity of the goods to be supplied to the defendants. Admittedly 10,000 maunds were involved in view of this the plaintiffs are entitled to claim Rs. 30,000 as damages. After deducting the amount of Rs. 5,000 paid to them in advance, the plaintiffs are entitled to claim Rs.25,000 as damages. In Suit No. 134 of 1961. I would, therefore, grant them a decree of Rs. 25,000.

20. In Suit No. 143 of 1961 1 have given the finding that the date of the breach is 20th October 1958. In this case too in support of their claim the plaintiffs have proved Exhs. Y. 6, P. 7 and P. 8, the issue of daily Dawn dated the 18th and 25th October 1958, and 1st November 1958. According to Exh. P. 6 the market rate of the goods on 18th October 1958, was between Rs. 12‑12‑0‑ to Rs.

14. Exh. P. 7 shows that on 25th October 1958, the market rate of the goods in question was between Rs. 13 to Rs. 14‑4‑0 and according to Exh. P. 8 the market rate on 1st November 1958, was between Rs. 12‑11‑0 and Rs. 13‑12‑

0. Further it is admitted by the defendants in their cross‑examination that the Civil Supplies Department had fixed the rates of the goods in dispute on 20th October 1958, at Rs. 13 per maund. The defendants have not led any evidence to prove the market rate on or about 20th October 1958. In my opinion, therefore, Rs. 13 per maund was the market rate of the goods in dispute on 20th October 1958, the date of breach in the second suit. On this basis the difference between the contract rate, that is, Rs. 16‑12‑0 and the market rate Rs. 13 comes to Rs. 3‑12‑0 per maund. The plaintiffs are entitled to claim damages on the difference of Rs. 3‑12‑0 in respect of 1,000 maunds of goods in dispute. On this basis the plaintiffs are entitled to claim Rs. 37,500 as damages. Out of this the defendants are entitled to the credit of Rs. 5,000 paid by them in advance to the plaintiffs. They are further entitled to get the credit of Rs. 10,000 the value of the bardana supplied to the plaintiffs at the rate of Re. 1 for 1,000 gunny bags. This comes to Rs. 10,

000. In this way the defendants are entitled to get credit of Rs. 15,000 out of the claim of damages. Accordingly the plaintiffs are entitled to claim Rs. 22,500 as damages from the defendants. I would, therefore, in the second suit grant them a decree in the sum of Rs. 22,500.

21. In the light of the above discussion my finding on the issues in the two Suits are as under :‑ Issues Nos. 1 to 5.‑Against the defendants. Issue No. 6.‑As discussed above. Issue No. 7.‑In the negative. Issue No. 8.‑In the negative. Issue No. 9.‑Defendant committed the breach. Issue No. 10.‑As discussed below.

22. In the result, I would grant the plaintiffs a decree in Suit No. 134 of 1961 for a sum of Rs. 25,000 and in Suit No. 143 of 1961 for a sum of Rs. 22,500 with proportionate costs. The plaintiffs will also be entitled to claim interest at 6 per cent. per annum from the date of the decree till the decretal amounts are recovered. K. B. A. Suit decreed.