P L D 1964 (W (PLP)

3,975 3,150 2651 19 11 141 4,797 3,240 1,557 1,310 16 9 142 3,500 1,566 1,934 1,620 4 10 Proceeds of resale of goods by Barton & Catlow Limited. Indent No. Contract Price: Proceeds of resale. Loss on resale. Amount due after proportionate appropriation vide para. 10 of the plaint. 136 4,053 2,074 1,979 1,753 7 5 152 3,658 1,920 1,738 1,541 0 6 153 2,660 1,270 1,390 1,231 3 9 154 2,850 1,699 1,151 1,017 8 4 13,221 6,963 6,258 5,543 0 0= Equivalent in Pakistani Currency : Rs. 74,035 3 0 The plaintiffs claimed these sums in these two suits upon the basis of resale of the appropriated goods in their exercise of the right as unpaid sellers. Later on, they amended the plaint on 7‑8‑62 by the following addition in para. 7 of the two plaints "In the alternative as a result of the cancellation of the contract by the defendants, the plaintiffs are entitled to recover the difference between the contracted price of the goods agreed to be sold and the price actually realised by them upon the sale of the goods in the global market, under section 56 of the Sale of Goods Act."

7. In the first plaint the claim in Pakistani rupee was made on the basis of the rate of exchange before its devaluation. Later on, the plaint was amended and the claim was made upon the basis of the rate of exchange after devaluation. At this rate in Suit No. 1142/55 the plaintiffs have claimed Rs. 99,292‑6‑2 as being the equivalent to 7,434 and in Suit No. 1192/55, Rs. 74,035‑3‑0 as being the equivalent to 5,543 sterling.

8. As in the plaint the pleas in the written statements of both the suits were also identical. It is not necessary to refer to the whole of the written statement because of the limited stand taken before me at the hearing on behalf of the defendants. In the material part the defendants have denied that it was only on 27th February 1952 that they had cancelled the orders. It was alleged that this was done by a letter written in June or July 1951. With regard to the resale it was averred that the plaintiffs never informed the defendants that they were going to sell the goods and they did not give any notice of resale. It is added that in any case they should have sold the goods at the time when the contract was cancelled or when it was to be performed. It was further stated that the plaintiffs did not make any attempt to get the best available prices in local and other markets including Pakistan, nor were the goods resold after due notice to the defendants. The liability, therefore, for the loss on resale was denied. It was added that if the plaintiffs suffered any loss, it was due to their own laches and negligence. With regard to para. 10 of the plaint it was admitted that certain negotiations were carried on between the parties and certain amount of the defendants lying with the plaintiffs were appro priated towards payment of the compensation which was already settled between them. It was asserted that the amount of com pensation had been agreed upon between the parties but this could not be fulfilled because of the insistence of the plaintiffs that the payment should be made to them in sterling.

9. A number of issues arising from the denials and aver ments in the written statements of the two suits had been framed. However, at the stage of the argument before me Mr. Jamil Alam, the learned counsel for the defendants, stated at the Bar that the only question, which he was going to press, was that the plaintiffs bad failed to prove damages as required by law. He also said that he denied that the goods had been sold by the plaintiffs and for the prices as alleged by them. In view of this statement only the following issues survived : ‑ (1) Did the plaintiffs resell the goods covered under the orders of the defendants, if so, for what sum? (2) Did the plaintiffs suffer any loss, if so, how much? (3) Are not the defendants liable to make good the loss suffered by the plaintiffs because of not having given any notice before selling the goods? (4) Are the plaintiffs entitled to damages under section 56 of the Sale of Goods Act as claimed in the alternative? (5) Are the plaintiffs entitled to the new rate of exchange on account of the devaluation of the Pakistan rupee? (6) To what reliefs, if any, are the plaintiffs entitled? These issues were agreed to be treated as common for both the suits. I shall now proceed to deal with these issues.

10. Issues Nos. 1 and 2.‑These two issues can be taken together. The question of the resale of these goods by the plaintiffs and the prices fetched at the resale is not of much significance in the suit because of the conclusion that I have reached that the plaintiffs are not entitled to claim damages upon the basis of the difference between the contract price and price of resale. However, I shall deal with this matter very briefly. Exhs. 16 and 43 are the two statements relating to the resale of the goods of the 8 contracts in suit. Exh. 16 is in respect of the resale of the goods of the contracts between Arning & Co. Ltd. and the defendant and Exh. 43 in respect of the contracts of Barton & Catlow Ltd. These statements were proved by Mr. Eric Nuttal, the Production Manager of both the companies who was examined on commission. Both these statements contain complete detail of sale of the goods of each of the eight contracts with invoices and other supporting documents. In addition the plaintiffs have examined on commission some of the buyers of these goods. These are P. W. 2 the Secretary to Mr. Maurice Shamsh, Manchester ; P. W. 3 Norman Martin Sacca of Dintex Fabrics, Manchester; P. W. 4 William Torkington of William Forgatty Ltd., Manchester; P. W. 5 Cecil Robert Stephenson for Cooper & Co. Manchester; P. W. 6 J. D. Doll, Manufacturers, Johannesburg, South Africa; P. W. 7 Kassamali Fazal of Faz d Dharamshi & Company Ltd., Mombasa; P. W. 8 Taherali Gulamabbas of M/s. Tayaballi Abdulhusein & Co. Ltd. Mombasa, P. W. 9 Issa Hirji of M/s. Issa Hirji, Mombasa; P. W. 10 Kanji Karsan of Messrs Kanji Karsan & Co. (Kenya) Ltd., Mombasa; and P. W. 11 Lalji Mangalji of M/s. Lalji Mangalji & Co. (Kenya) Ltd. Mombasa. These witnesses have given the quantities and the price for which they have bought the goods from the plaintiffs. Exhs. 16 and 43 contain the names of all the buyers at resale along with the relative invoice number. Upon all this evidence I hold that the resale of the goods of the eight contracts in question was made upon the prices stated in Exhs. 16 and

43. I accordingly find that on the resale the plaintiffs Messrs Arning & Company suffered a loss of 8,083 which, after adjustment of certain credits of the defendants in the books of the plaintiffs amounting to 1396, brought the figure to 7,434, the equivalent of which in Pakistani currency has been claimed in this suit. In the other suit of Barton & Catlow, the plaintiffs suffered a loss of 6,258 upon resale and after adjusting the sum of 715, which was standing to the credit of the defendants in the books of the plaintiffs, brought the figure down to 5,543, the equivalent of which in Pakistani currency has been claimed in the suit. I answer issues 1 and 2 accordingly.

11. Issues Nos. 3 and 4.‑These issues are connected and may be taken up together. The contention of Mr. Jamil Alam, the learned counsel for the defendants, was that in order to bind his client with the losses at resale, assuming that the plaintiffs had such a right, it was incumbent upon them to give notice of resale to the defendants, which they admittedly did not, and further that they should have resold the goods within a reasonable time which also they did not. It was, therefore, pointed out that the plaintiffs were not entitled to claim damages upon the basis of the difference between the contract prices and the prices fetched at the resale in view of the clear provisions of section 54 of the Sale of Goods Act. It was then urged that having regard to the provisions of section 73 of the Contract Act, which applies to cases when damages are claimed under section 56 of the Sale of Goods Act, the plaintiffs could only have been entitled to damages upon the basis of difference between the contract price and the market price prevailing on the date of breach, and in so far as the plaintiffs have made no attempt to prove the market price at the material time their claim for damages must fail in its entirety.

12. It may be noted that in the plaint the case set out in para. 7 was that "the plaintiffs in the exercise of their rights as unpaid sellers under the said four contracts, resold the goods which had been appropriated to the said four contracts at the best prices obtainable". This statement appears in para. 7 of both the plaints. It would, therefore; appear that the plaintiffs had clearly based their claim for damages upon their right of resale. The plaintiffs, however, amended the two plaints on 7‑8‑62 by adding art alternative claim for damages under section 56 of the Sale of Goods Act. However, they led no evidence thereafter on the question of market price on the date of breach. All their evidence had been concluded in the year 1960.

13. At the final bearing the position taken by Mr. Fazlur Rahman, the learned counsel for the plaintiffs, was that sub section (2) of section 54 of the Sale of Goods Act was not applicable to the present case. This subsection reads as under "54 (2).‑Where the goods are of a perishable nature, or where the unpaid seller who has exercised his right of lien or stoppage in transit gives notice to the buyer of his intention to resell, the unpaid seller may, if the buyer does not within a reasonable time pay or tender the price, resell the goods within a reasonable time and recover from the original buyer damages for any loss occasioned by his breach of contract, but the buyer shall not be entitled to any profit which may occur on the resale. If such notice is not given, the unpaid seller shall not be entitled to recover such damages and the buyer shall be entitled to the profit, if any, on the resale." The learned counsel admitted that no notice of resale was given by the plaintiffs to the defendants, but he urged that no notice was necessary because in the present case the property in the goods had not passed to the buyers inasmuch as these were C. I. F. contracts and the property in the goods would have passed only after the shipment of the goods by delivery of documents of title. For the same reason, it was urged that the question whether the plaintiffs resold the goods within a reason able time also did not arise. It may be noted that the resale in this case according to Exhs. 16 and 43 took place between August 1952 and June 1953. It was thus conceded that the plaintiffs were not entitled to damages within the meaning of section 54 (2) of the Sale of Goods Act. That is obviously so, because if the plaintiffs wore exercising their right of resale a unpaid sellers who had exercised their right of lien they would have to give notice of resale to the buyers and also have to effected the resale within a reasonable time. According to the plaintiffs the breach of contract in this case took place on or about the 27th of February 1952 and the resale having taken place between August 1952 and June 1953 could not be said by any stretch, to have been effected within a reasonable time.

14. We then come to the alternative claim under section 56 of the Sale of Goods Act. This section merely provides that where the buyer wrongfully neglects or refuses to accept and, pay for the goods the seller may sue him for damages for non‑acceptance, but the rule governing the question of measure o damages is contained in section 73 of the Contract Act, the material portion of which reads as follows :‑ "When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach." The rule is now well‑settled that where a seller of goods commits a breach, the buyer is entitled to damages upon the basis of the difference between the contract price and the market price of the goods in question on the date of breach. This is so because the buyer has to be put in the same position in which he would have been if the contract had been fulfilled and upon a breach by the seller he can go to the market and buy the goods on the prevailing market rate. This, of course, assumes that the G goods are such which are available, conversely when the buyer commits a breach and fails to accept and pay for the goods, the seller would be entitled to damages and based upon the difference of the contract price and the prevailing market price on the date of the breach, because he can take his goods to the market and sell it at the ruling price. This rule, however, may not be applicable if there is no market for the goods. As far back as 1915 the Judicial Committee of the Privy Council took this view in the case of A. K. A. S. Jamal v. Moolla Dawood (43 I A 6). It was held that under a contract for the sale of shares in a company the measure of damages upon a breach by the buyer is the difference between the contract price and the market price on the date of the breach, with an obligation on the part of the seller to mitigate the damages by getting the best price he can upon that date. Lord Wrenbury, who delivered the judgment of the Court in this case, observed :‑ "It is undoubted law that a plaintiff who sues for damages owes the duty of taking all reasonable steps to mitigate the loss consequent upon the breach and cannot claim as damages any sum which is due to his own neglect. But the loss to be ascertained is the loss at the date of the breach:" The underlined portion appeared in italics in the judgment of his Lordship. The same view was taken by their Lordships of the Privy Council in the case of Foley Brothers and others v. James A. Mcllwee and others (A I R 1917 PC255). Again the case of Erroll Machay v. Maharaja Dhiraj Kameshwar Singh (A I R 1932 P C 196), Lord Wright, who delivered the judgment of the Board, observed as follows :‑ "If there was an available market for the goods at the date of breach, the damages must be based on the difference between that market price and the contract price : a contract of resale becomes immaterial, because if there was a market, the law presumes that the buyer can minimize his damages by procur ing substituted goods in the market, so that he is thus in the same position, apart from the difference in price, as if the seller had not made default. Hence the difference of price, if the market price exceeds the contract price, is the sole damage in general recoverable." This was a case where the seller had committed the breach but the principle is equally applicable where the breach is by the buyer.

15. It was, therefore, contended by Mr. Jamil Alam, that inasmuch as the plaintiffs failed to prove the market price of the relevant time, their claim based, as it is, upon a right of resale, which right was not available to them, must fail. It was pointed out that it was not the plaintiffs' claim that there was no market for these goods at all and that there is sufficient evidence on record to show that the goods could be sold though the market was low.

16. Mr. Fazlur Rahman did not question the correctness of the interpretation of the rule as to the measure of damages as has been stated above, but he contended, firstly that the defendants had authorised the plaintiffs to sell the goods and had agreed to compensate them to the extent of the loss accruing upon such resale, and secondly, that there was evidence in the admitted correspondence, which establishes the market price of the goods at the material time and which price compares favourably with the price at which the goods were sold by his clients. For that reason it was pointed out that the plaintiffs' claim should succeed even upon the rule of market price on the date of breach. I shall now proceed to deal with these contentions. 17. 1 shall first deal with the contention of Mr. Fazlur Rehman that the defendants had authorised the plaintiffs to resell these goods and are upon that ground liable to pay damages as arose to the plaintiffs upon the resale as established in this case. There can be no doubt that the power to resell may either be statutory or it may be conferred on the sellers by the contract of sale. It has been seen that in the former case that power can g be exercised only if the property in the goods has passed to the buyers but in the latter case it can be exercised even if the property in the goods has not passed to the buyers. In the present case, no power of resale was conferred upon the sellers by the contracts.1 The question then to consider is whether this power was subse quently granted to the sellers. Mr. Fazlur Rehman referred me to several letters which passed between the parties in support of the contention that a power of resale was conferred upon the sellers. I may note that the correspondence establishes the fact that there was a great slump in the textile market at the material time. There are number of letters from the defendants themselves on this point and this fact was not disputed by Mr. Jamil Alam, the learned counsel for the defendants. Now, to revert to the correspondence relied upon by Mr. Fazlur Rehman, the first of these is the letter of 31st July 1951 from the defendants to Messrs Arning & Co. Ltd. It may be here stated that all the correspondence on the side of the plaintiffs was done by Messrs Arning & Co. Ltd. or by Mr. Nuttal who repre sented both the concerns. In this letter of 31st July 1951, Exh. 1 14, the defendants have written that the market here "has slumped still further with practically no buyers. Under the circumstances, we have decided to dispose of as much of our outstanding commitments as possible (including the above order) outside our market. We hope you will appreciate the position and help us by selling out such outstanding items as you possibly can to any of the other markets with which your firm has connections . In carrying out such sales, we are, of course, prepared to cover you with a reasonable percentage as your commission. Before we close, we would like to state that in the event of this arrange ment not being possible due to any reasons, we shall no doubt, on receipt of your advice, establish the necessary credits here and import such on our account." The plaintiffs replied by their letter dated 3‑8‑51, Exh 94 and the relevant portion of this letter may be quoted :‑ In replying to the problem you have posed to us, we intend to be quite frank. To begin with, despite the undoubted fact that the majority if not all of goods due for shipment to you this year are extremely well bought, and still much below the market replacement price today, we might in the attempt to carry out your request have recourse to force sales. It is no exaggeration to say that there is virtually a complete standstill in regard to the purchase of textiles. This state of affairs which is applicable to our awn domestic market, as well as world markets, seems to be waiting on an expected fall in the price of raw cotton, and other factors. Like you, we are of the opinion that the general prob lem is only a temporary one, but it cannot be foreseen at the present time just how long it will be before the matter adjusts itself and goods begin to flow freely again . We very much appreciate your assurance that you will in the event of our not being able to comply with your suggestion, establish credits and import the goods into Pakistan. Then the next two letters are from the plaintiffs both dated 27th August 1951, Exhs. 90 and

91. Exh. 90 is from Mr. Nuttal. In this he has said that from the letter of the defendants as well as from the other reports which had reached them, the dependence. market was in a shocking state. He went on to assure them that they will do all that they can to help them (defendant ~ either by resale or by delayed shipment. In Exh. 91 which a letter from Arning & Co. to the defendants, it has been stated that‑ " So far we have not been able to arouse any interest in goods despite the heavy sampling we have made. Our efforts are nevertheless continuing. We can only hope that they will produce some result before very long. The market continues here very dull." Then there is a letter from the defendants dated 20th September 1951, Exh. 117, in which they have confirmed their cable of 18th September whereby they have conveyed their disagreement, the plaintiffs' proposal for selling the goods of indent No, to at a certain price and telling them that the lowest price which the defendants could accept "under present condition is 20 pence per yard net ". The next letter is from the defendants dated "Ice October 1951, Exh. 89, in which they are promising to establish credit to cover pending orders during the first week of the next month. On 15‑1‑52 the plaintiffs have sent a cable, Exh pressing the defendants to establish credit and then come, 67, letter of 27th February 1952, Exh. 62, whereby all pending the orders with the two firms were cancelled and which letter has been pleaded by the plaintiffs in both plaints. The date of his letter, that is 27th February 1952, has been pleaded as the tats of cause of action as also the date of breach. This letter was in response to a cable of the plaintiffs which they had receive was that day. It would be useful to reproduce the whole of this letter :‑ " Further to our previous correspondence, we have today received a cable from you as follows :‑ CANNOT UNDERSTAND YOUR CONTINUED SILENCE STOP OUR POSITION NOW MOST EMBARASSING S41CE PLEASE REPLY FAVOURABLY AND FULLY INCLUDING BARTONS URGENT. In our previous letters, we have indicated the impossibility of importing the pending orders under present conditions.' you are no doubt, aware, we in Pakistan have been paying out tremendous losses during the last ten months. Up toying there has been no noticeable improvement even for a bore period ; in fact, conditions have become worst during the last few weeks. Our present condition is that practically our financial resources have been completely wiped out all our firm at present, as you can imagine, is in acute financial difficulties. Under these circumstances, we are not only unable to import our pending orders, but have also stopped our business activities altogether and will not be in a position to restart again unless we are able to make fresh financial arrangements. As we see no chances of this arrange bent materializing within the next few months, we have therefore decided that our pending orders with your two firms be cancelled. We very much regret we have ultimately to come to this decision. On our part. however, we are prepared to com pensate you to the best of our ability towards any loss that may occur in cancellation of these orders. In this connection, you may realize the amounts outstanding to our credit in lieu of our Return Commission with the two firms. In addition to this and if you so require, we shall be making arrangements for further remittances to be made to you by our Rangoon office on receipt of your advice. Thanking you. Yours faithfully, for Haroon A. Soorty Bros." It was common ground at the hearing that by this letter the orders which were the subject‑matter of the 8 contracts were cancelled by the defendants.

18. The contention of Mr. Fazlur Rehman was that this letter read in the light of the previous correspondence referred to above binds the defendants to pay the loss which might arise to the plaintiffs on the resale of the goods under all the contracts in question. It was pointed out that in the previous letters the defendants had themselves asked the plaintiffs to resell the goods and, therefore, when in this letter they have expressed their preparedness to compensate the plaintiffs, this must be treated as a part of the contract and the plaintiffs are entitled to the damages which they have claimed in this suit upon the basis of resale. The learned counsel relied upon a decision of the Lahore High Court in the case of Messrs Ralli Brothers Ltd. v. Firm Messrs Bhagwan Das Parmeshri (A I R 1945 Lah. 35). This was the only case which was cited by the learned counsel in support of his decision. In my opinion this contention cannot be sustained, There is no doubt that the defendants had in the previous letters asked the plaintiffs to try and resell the goods, but nowhere in those letters have the defendants given an unlimited power of resale to the plaintiffs. Those instructions were given while the contracts still subsisted and had not been cancelled and if any resale had been effected by the plaintiffs it would have been after notice to the defendants. Indeed, when upon one occasion the plaintiffs had found a buyer in respect of the goods of indent No. 137 they asked the permission of the defendants to sell it upon a certain price and the defendants declined to do so and informed the plaintiffs that they should not sell the goods at the price quoted by them. This becomes clear by the defendants letter, Exh. 117, dated 20th September 1951 which has already been referred to above. The plaintiffs accepted this instruction and did not sell the goods at the prices for which they had found a customer. Where is then the power of unlimited resale given to the plaintiffs 7 Coming to Exh. 62, that is the letter of 27th February 1952 which was relied upon by the learned counsel to contain a promise by the defendants to compensate the plaintiffs for the loss suffered on resale, it is plain to me that there is no such promise therein. Let me requote the relevant passage :‑ " We very much regret we have ultimately to come to this decision. On our part, however, we are prepared to compensate you to the best of our ability towards any loss that may occur in cancellation of these orders." Clearly the defendants are expressing regret for the situation that has arisen by their decision and all that they are promising is to compensate the plaintiffs to the best of their ability towards any loss that might occur by the cancellation of the orders. This does not confer a power of resale upon the defendants, nor does it contain a promise to bear all the losses of the resale which might at any time be made by the plaintiffs and without any reference to the defendants. As to how much they were able to pay " to the best of their ability ", there is sufficient material in the subsequent correspondence which has followed, in the course of which there has been a considerable amount of bargaining between the parties‑the plaintiffs asking for more and the defen dants saying that they were not in a position to pay anything more than a certain sum of money. Nowhere in the subsequent correspondence in which the bargaining has taken place there is any suggestion by the plaintiffs that they have construed the letter of 27th February as a promise by the defendants to pay all such losses as might occur upon the resale of goods by the plaintiffs. Reference may be made to Exhs. 83, 81, 75, 72 and 145.

19. The Lahore case relied upon by the learned counsel does not render him any assistance. 1n that case, there was a clause in the contract, the relevant portion of which reads as follows :‑ " The sellers are also authorised to resell the goods in whole or in part by public or private sale without any reference to the buyers and such resale or resales may be carried out by the sellers at such time or times after such failure as they shall in their uncontrolled discretion think desirable and the buyers agree and undertake to pay to the sellers any deficit arising from such resale or resales together with all expenses incurred in connection therewith, and the buyers shall not be entitled to raise any objection to the liability to repay the said deficit and expenses on the ground that the said resale or resales was or were carried out after an unreasonable lapse of time or on any other ground whatever." The sellers had exercised the right of resale under this clause upon the default of the buyers and the question that was urged before their Lordships was that this clause of the contract was unconscionable, illegal and against the public policy and should not be given effect to. The argument advanced was that this clause of the contract went contrary to the principles contained in section 73 of the Contract Act and the explanation attached to that section. This was repelled by the learned Judges who decided the case. It was held that such a clause though harsh was not unconscionable or illegal in mercantile contracts. The judgment in this case was written by Abdul Rashid, J., as he then was, and it is significant to note that his Lordship gave his finding in favour of the sellers entirely upon the basis of the clause referred to above which he himself described as a drastic one ; otherwise, he held that the repudiation of the contract having been finally made " the plaintiffs ought to have resold the goods within a fortnight or a month of the repudiation. My opinion, therefore, is that the goods were not resold within a reasonable period of the repudiation of the contract by the defendant." He then went on to examine the effect of the special clause attached to the contract and it was because of the vast powers given under it to the seller that he found in his favour. It may also be noted that the principles of the two judgments, one from the Bombay High Court A I R 1925 Bom. 28 and the other from the Lahore High Court A I R 1932 Lah. 169, which were cited before his Lordship by Mr. Barkat Ali, the learned counsel for the buyers, were accepted by his Lordship. In the Bombay case the clause was that the goods could be resold at any time and it was conceded by the counsel appearing in the case that " any time " in the contract meant " any reasonable time ". In the Lahore case it had been held that in the case of a statutory right of resale, so in the case of resale under a contract the seller must give notice to the buyers of his intention to do so and resell the goods after the lapse of a reasonable time. Abdul Rashid, J. while dealing with these two cases pointed out that in neither of them there was such a clause giving such wide power of resale to the seller as was contained in the contract with which he was dealing. It would, therefore, follow that if such a clause had not been there the finding of the learned Judge would have been against the sellers. This is plain from his various observa tions in the said judgment. For all these reasons I have no hesitation in repelling the first contention of the learned counsel for the plaintiffs. I shall now consider the second contention, namely that there is material on record from which the market price of the goods at or about the time of the breach can be determined and this compares favorably with the price at which the goods were sold by the plaintiffs.

20. The contention of Mr. Fazlur Rehman was that in the correspondence the plaintiffs have given the estimate of the loss which they were likely to suffer by the resale of the goods and as these were not repudiated by the defendants it was urged that these estimates should be held to represent a fair basis for deter mining the market price of the goods at the material time. The letters relied upon by the learned counsel are these : (I) Exh. 85 dated 5‑3‑

52. In this, the plaintiffs, with reference to the defen dants' letter dated 27th February 1952, after referring to several other matters, have stated " Without going into detail, you will understand that the orders total about 36,000 the enforced sale of which would probably result today in a loss of not less than 12,000 say 33.1/3%." (II) Exh. 161 dated 22nd April 1952. In this the plaintiffs have stated :‑ " Basing ourselves reasonably upon the theory of gradual sale by dint of effort and much salesmanship we find that our total losses would amount to not less titan 13,626." The defendants have at no time admitted the correctness of these figures. It is true, they have not specifically repudiated it and that is understandable because they were trying to negotiate a settlement. Reference may be made to the defendants' letter, Exh. 83, dated 5‑5‑52 ; Exh. 81, dated 5‑6‑52 and Exh. 145 dated 8‑7‑52, in which they have offered various sums of money by way of settlement. Indeed, the plaintiffs in their own letter dated 25‑7‑52, Exh. 75 have asked for remittance of 5,000 in instalments and this taken along with certain adjustments of the credits of the defendants lying with the plaintiffs would have made a figure of about 7,000 and they have emphasised that "the total compensation received from you shall not be less than 7,000."

21. I have tried very hard to find if it was possible to accept the contention of Mr. Fazlur Rehman that the estimated loss of 12,000 in Exh. 85 and 13,626 in Exh. 84 represented the difference between the contract price and the market price prevailing on or about the date of breach, and I must confess that I have not found it possible to do so. Such statements in corres pondence varying the figure from time to time and communicat ing for the purposes of determining the amount which was being F demanded by the sellers in compensation of their loss resulting from the refusal of the buyers to accept the goods, cannot, in my, opinion, form a sound basis for determining the market price.

22. The question which then arises is whether upon the material on record it is possible to award some damages to the plaintiffs upon a basis which was admitted by the defendants themselves and which must, in fairness, be taken to be the amount which, even in their own view, would have at least been the difference between the contract price and the market price. The defendants offered various sums of money at various times to the plaintiffs. In reply to the plaintiffs' letter of 22nd April 1952, Exh. 84, they said in their letter of 5th May 1952, Exh. 83, that as far as their Karachi office was concerned they were not in a position to make any contribution and for that reason had negotiated with their Ragoon office and as a result had offered Mr. Nuttal a sum of 2,500 to be paid by the end of June in addition to arranging a credit for the pending mulls indent. Mr. Soorty, the partner of the defendants, stated in his evidence that he had only agreed to pay a round figure of 5,000 to both the plaintiffs against cancellation of all the contracts and towards this sum of 5,000 was adjusted the amount of 2,500 which was lying to their credit with both the plaintiffs leaving the balance of 2,500 and that he was willing to pay this balance. He added that it was further agreed that the goods of indent No. 134 were to be imported and paid for. However, I think the correspondence on this point clinches the issue. Exh. 82 is a letter from Arning & Co. dated 19th May 1952 which is in reply to the defendants' letter of 5th May 1952, Exh. 83, which has just been referred to. In these the plaintiffs have said that they must insist on compensation over and above the amount of 2,376 which was lying to the credit of the defendants in No. 2 account and the amount of 2,500 promised to be remitted from Rangoon They have added that against an indebtedness of something around 14,000 they were not going to be satisfied with 4,876 only. To this the defendants have replied by their letter dated 5th June 1952, Exh.

81. They have stated that they have arranged with their Rangoon office to contribute and remit 2,500 by the end of June. They have then observed that this was not found satisfactory by the plaintiffs as appeared from their letter under reply. They have then gone on to add that they have agreed to contribute and remit a further amount of and up to 2,500 by the end of December. Thus, the defendants had themselves offered to pay 5,000 in addition to the adjust ment of the amount lying to their credit with the plaintiffs. Of course, they did not fulfil the promise and made no payment. Having taken everything into consideration I have come to the conclusion that the liability of the defendants for payment of 5,000 over and above the amount to their credit with the plaintiffs has been established by their own admission. While offering to pay 5,000 in addition to the adjustment of the credit pound there can be no doubt that the defendants must have taken the prevailing market price at the time of the breach. In reach ing this conclusion I have taken into consideration the admitted fact that the prices in Karachi bad suffered a big slump and the defendants have repeatedly admitted that by not fulfilling the contract they had confronted the defendants with loss. There is reference in the correspondence to the "ridiculously" low price in the Karachi market of goods similar to the goods of one of the contracts. The plaintiffs have proportionately in their plaint given to the defendants credit for the amounts lying with them. In addition to this End upon my finding recorded earlier I hold that they are at least liable to pay another 5,

000. I find accordingly.

23. On issue No. 5, which relates to the rate of exchange, it was conceded by Mr. Fazlur Rehman that the rate of exchange would be of the pre‑devaluation period, that is the rate pre vailing before September 1955. This is so, because the material rate of exchange is the rate prevailing on the date of breach. The breach in this case took place in February 1952. I answer the issue accordingly.

24. In view of my findings I hold that the plaintiffs in the two suits are entitled to a further sum of 5,

000. Considering that these two concerns are allied concerns I would split this amount into two halves granting 2,500 in each of these two suits. The equivalent of 2,500 in Pakistani rupee according to the rate of exchange before the devaluation of the Pakistani rupee amounts to Rs. 23,

126. There shall accordingly be a decree for Rs. 23,126 in each of the two suits with proportionate costs and interest at 6 per cent. from the date of suit until the date of the decree and further interest at the same rate until payment. The rest of the plaintiffs' claim is dismissed. K. B. A. Suit partly decreed.