P L D 1960 (W (PLP)

The plaintiffs are private limited Company doing business of imports and exports and it had placed an order for the import of 2157 cases of matches with a Russian firm, the letter of credit for which had been opened by the defendant bank on 17th April 1951, through the Chartered Bank as the defendants themselves were not authorised dealers in foreign exchange. The consign ment of the aforesaid cases of matches arrived at Chittagong to which place they were destined on 30th April 1951 and were pledged with the defendants. The plaintiff's go on to allege that the defendants did not supply them with the details of accounts and after long correspondence informed them by their letter dated 14th May 1953 (Exh. 5) that they had decided to sell the matches and agreed to pay the excess money amounting to Rs. 58,000 as soon as the accounts were adjusted. The plaintiffs claim that in spite of repeated demands the defendants have failed to pay and hence this suit for the recovery of Rs. 58,000 plus interest at 6%. The cause of action is stated to have arisen at Karachi on 14th May 1953, when the bank is said to have sent the acknowledgment of the amount of Rs. 58,000 vide their letter dated 14th May 1953.

2. The defendants in their written statement admitted the importing of the goods by the plaintiffs for East Pakistan and the opening of letter of credit through the Chartered Bank. They further state that the plaintiffs had deposited with the defendants only 30% of the amount of letter of credit as margin. With regard to the pledging of the goods it is stated that the plaintiffs failed to retire the documents or to clear the goods from the customs and to pay duty and sales‑tax thereon ; that the consign ment remained uncleared for sometime involving the occurring of demurrage and deterioration ; that it was in these circumstances that the plaintiffs requested the defendants to retire the documents, clear the goods, pay off all the charges and store them with Messrs Thomas Cook & Sons at Chittagong. They denied the allegation that the plaintiffs had not been supplied the accounts or that they had agreed to pay Rs. 58,000 to the plaintiffs. With regard to the letter of the, 14th May 1953, it was explained that the plaintiffs had failed to take delivery of the goods or make payment to the defendants, and as there was no market available in East Pakistan the goods were brought to Karachi and the letter dated 14th May 1953, was written in the expectation that this would be the difference after adjusting the dues of the defendants against the sale‑proceed of the goods; that when the goods arrived in Karachi the sale thereof resulted in a deficit between the amount due from the plaintiffs and the total sale- proceeds and that this deficit amounted to Rs. 91,161‑4‑6 and that therefore there was no question of making any payment to the plaintiffs ; it was denied that the letter dated 14th May 1953, constituted a binding agreement between the parties and it was asserted that the said letter was written on the assumption and in consideration of the expectation that the sale‑proceeds of the goods would be in excess of the money due from the plaintiffs.

3. Considering that the plaintiffs had based their claims entirely on the letter dated 14th May 1953, there was only one material issue framed and this was as follows "(1) What is the effect of the letter dated 14‑5‑1953 written by the defendants to the plaintiffs and whether it confers any title to the plaintiffs to the extent of Rs. 58,000 ? Later on when, the case had come up for trial the defendants 'sought an amendment of the plaint (sic) alleging that they had in fact paid Rs. 34,514 to the plaintiffs and that they were in any case entitled to adjust this amount towards the claim in suit. This was an alternative plea and the amendment having been allowed the following additional issues were framed "(1‑A) Did the defendants pay to the plaintiffs the sum of Rs. 34,514 towards payment of the amount of Rs. 58,000 ? (I‑B) Are the defendants not entitled to adjust this amount towards the claim in suit?" The other formal issues are 2, 3, and 4 "

2. To what relief, if any, the plaintiffs are entitled ? (3) Whether the plaintiffs are entitled to the decree claimed ? If not whether the defendants are entitled to special costs ?

4. Relief. Before I proceed to deal with issue No. 1, it is necessary to state certain facts which are not disputed. Though originally a letter of credit had been opened by a deposit of 30% margin in respect of the aforesaid goods when they actually arrived or were about to arrive the plaintiffs who were not able to clear the con signment themselves requested the defendants to do so at their own costs so that the entire charges including the customs duty, sales‑tax etc. were either paid by the defendants or by the Chartered Bank who debited the defendants to that extent. The goods were stored with Thomas Cook & Sons at the express request of the plaintiffs as would appear from their letter Exh.

12. Then what happened is stated in the evidence of the plaintiff's manager Mr. Cunningham. This is what he says "We tried to sell the goods at Chittagong but we did not find good price for them there. We then requested the bank to have the goods shipped to Karachi. This was done. The bank then disposed of the goods at Karachi to a party of their choice. This sale was not in violation of any direction by us, and even if there was any protest we had later on agreed to it." It is necessary to mention here that as the plaintiffs were not able to pay for and clear the goods themselves they entered into an agreement with the defendants described as the agreement for cash credit. This is Exh.

31. The limit of advances under this agreement was Rs, 5,00,000 and interest was agreed to be paid at 6%. The goods were pledged with the defendants under this agreement and by clause 8 the plaintiffs agreed to pay to the bank ‑the balance outstanding on this account inclusive of interest and under clause 9 the bank was authorised in default of such payment by the plaintiffs to sell or otherwise dispose of the pledged goods either by public auction or private contract without any notice to the plaintiffs and reimburse themselves from the proceeds and the deficit, if any, was to be made good by the plaintiffs under clause

11. It is the case of the defendants that after applying the proceeds of the sale of these goods towards the dues of the defendants there was a huge deficit still outstanding against the plaintiffs.

5. I shall now proceed to deal with issue No.

1. It would be useful to reproduce here the document Exh. 5, upon which the plaintiffs have almost entirely based their case "The Managing Director, Pakistan Development Corporation, Karachi. Dear Sir, With reference to the contract entered into between the Bank and Messrs Haji Sattar Ali Muhammad & Co., for the release of matches of Russian origin it is agreed that all the excess money received as sale‑proceeds which comes to about Rs. 58,000 shall be paid to you as soon as the accounts are adjusted. Yours faithfully, (Sd.) Manager." I asked Mr. Raza Hussain, the learned counsel for the plaintiffs, as to how he would describe this document but he was not quite clear about it himself. In the plaint (paragraph 9) it is described, as an acknowledgment. Mr. Raza Hussain stated that it is either an acknowledgment or an agreement to pay Rs. 58,

000. But an acknowledgment cannot stand in the air. There has to be an existing liability on which it has to rest and if that liability itself is in dispute it is that which has to be determined, may be with the aid of the acknowledgment as an admission. And if it is to be treated as an agreement to pay Rs. 58,000 it must be shown to be for consideration before it becomes enforceable. An agree ment without consideration is void unless it comes under any of the exceptions set out in sub‑clauses (1) to (3) of section 25 of the Contract Act. The question is as to what is the consideration for this promise contained in Exh.

5. None has been alleged and the document itself recites that it is the excess money which has to be paid to the plaintiffs. This excess, obviously, is the difference between the sale‑proceeds of the goods and the dues of the defendants in respect of this transaction. If therefore it is found that there was no excess in fact the promise in the document becomes illusory and ineffective. Under the contract Exh. 31, there was already a liability on the part of the defendants to pay any excess after the adjustment of all their dues just as there was already a liability on the part of the plaintiffs to make good any deficit which might occur in consequence of the sale‑proceeds of the goods being found to be insufficient to meet the defendants' dues. This being the relationship between the parties on the basis of a subsisting contract, there was no consideration for a fresh agreement between the parties with regard to the adjustment of the sale‑proceeds. Supposing after the full adjustment of the defendants' claim from the sale‑proceeds of the goods the balance actually turned out to be very much more than Rs. 58,000 could the defendants say that they were only bound to pay Rs. 58,000 and no more ? The answer must obviously be in the negative, because there would be no consideration for such an agreement if it was found to militate against the interest of the plaintiffs which was to be governed by the terms of the contract Exh.

31. If, therefore, the defendants could not take advantage of this so- called agreement if there had been a surplus, it is obvious that the plaintiffs cannot make a claim on the basis of Exh. 5 if in fact there is a deficit. The learned counsel for the plaintiffs was not able to assert, and rightly so, that this case came within any of the exceptions contained in sub‑clauses (1) to (3) of section 25. 1, therefore, find that the document, Exh. 5, does not amount to a binding agreement for want of consideration. I would go further and say that even if a consideration had been shown in the document itself or had been otherwise alleged, neither of which is the case here, the defendants would still have been entitled to show, if they could that in fact there was no consideration.

6. It appears to me that this document, Exh. 5, could at best be only an admission. But admissions according to section 31, Evidence Act, are not conclusive proof of the matters admitted. It is always open to a person who has made an admission to show that he had done so under some mistake misapprehension or miscalculation. An admission unless coupled with other fact which might constitute an estoppel, cannot form the foundation of a right. Estoppel has neither been set up nor does it arise in the circumstances of this case. An admission simpliciter is merely a piece of evidence and can certainly be controverted and demolished. The burden of doing so is upon the person who repudiates it. But its value must be judged having regard to all other factors in the case. The real question therefore in this case is as to whether there was any surplus from the sale‑proceeds of the matches which was payable to the plaintiffs under the contract between the parties. The plaintiffs did not make the slightest effort in this direction. They were content to base their case on Exh. 5 and made no appreciable attempt to challenge the mass of evidence mostly documentary produced by the defendants to show that in fact there was a deficit and not a surplus. I shall now proceed to examine this aspect of the case.

7. Out of 65000 gross of the matches ordered, only 64710 had been actually shipped. These arrived in Chittagong on or about the 30th April 1951 and were stored in the godown of Messrs Thomas Cook & Sons by the defendants at the instance of the plaintiffs. They lay there until March 1953 and no customer for it had been found. According to Mr. Akhtar Ali Khan, the Managing Director of the plaintiff Company, who was examined on commission in the Central Jail, the rate of these matches in September 1952, at Dacca was not more than Rs. 7‑8‑0 per gross though he says that in November the rates had started rising and went up to Rs. 9 per gross. But this statement does not seem to be correct in view of the clear admission of the plaintiffs' manager that they had not been able to sell the goods at Chittagong and had them brought over to Karachi where they were actually sold at Rs. 8‑8‑0 per gross vide Exhs. 215 and

216. According to the evidence of D. W. 1 Mr. Khalid, who was the Manager of the Liaqat Market Branch of the defendant bank at the relevant time the amount payable by the plaintiffs to the Bank in respect of this transaction amounted to Rs. 5,49,135‑4‑

0. This is supported by Exh. 244, which is the certified extract of the books of the Chartered Bank and also by the certified extract of the books of the defendants bank. Most of the entries in these extracts are further supported by vouchers which have all been produced by the defendants and were admitted by the plaintiffs. The correctness of the above figures was not seriously challenged by the plaintiffs company. This was the accounting position in May 1953, when Exh. 5 was executed by the defen dants' manager.

8. White the goods were still at Dacca and were about to be shipped to Karachi the defendants had entered into two contracts, Exhs. 202 and 204, agreeing to sell the matches to two parties namely, Messrs Abdul Sattar Haji Issa and Messrs Haji Sattar Ali Muhammad & Co., both of Karachi at the rate of Rs. 8‑8‑0 per gross ex‑seller's godown at Karachi. Mr. Akhtar Ali Khan, the Managing Director of the plaintiffs, served notices upon these two parties threatening to take action against them both civil and criminal if they purchased these goods from the defendants. According to him this price was low and that the goods could be sold at Rs. 9 per gross. In consequence of these notices these contracts were cancelled and the deposit money paid by these two purchasers were refunded to them. Thereafter, according to the evidence of D. W. 1 the defendants' manager, the managing director of the plaintiffs approached him and assured him that he will be able to get customers at Rs. 9 per gross. The explanation of Mr. Khalid, who has signed this Exh. 5, is that he wrote the letter Exh. 5 on the assurance of Mr. Akhtar Ali Khan as stated above and handed over that letter to him then and there as demanded by the letter ; the expected excess of Rs. 58.000 was worked out on the basis of the expected sale proceeds at Rs. 9 of the entire consignment a refund of Rs. 33,236 from Messrs Thomas Cook and another Rs. 40,000 from the Chartered Bank where this sum had been deposited in connection with this transaction. On this basis the excess of sale‑proceeds over the expenses etc. amounted to Rs. 66,000 and keeping another sum of Rs. 8,000 for further sundry expenses he promised to pay Rs. 58,000 to the plaintiffs on the basis of the expected profits. Whether this explanation is true or not the fact remains that the position of the accounts indisputably shows that after the sale of the matches there was in fact a deficit and not a surplus. Out of the cases received from East Pakistan 2167 cases and 16 trunks full of loose and broken packages were found to be unsaleable. This is understandable considering that these goods had been lying in Dacca for more than two years and in fact Exh. 47, which is a letter written by Mr. Akhtar Ali Khan on 25th September 1952, speaks of the goods being kept in a damp godown. The respon sibility for this could not be that of the defendants because the goods had been stored with Thomas Cook & Sons at the instance of the plaintiffs themselves. Messrs Ahmad Umar & Co. Ltd., who do the clearing and forwarding business had handled the clearing of these matches which came from Chittagong to Karachi. One of their directors Mr. Shirazi, who has given evidence as D W. 3, has stated that these damaged cases and the quantity in the 16 trunks were unsaleable and were destroyed. He has also proved that his company received in all Rs. 46,232‑2‑13 on account of freight, clearance, insurance, lighterage, cartage, godown and port trust charges. These charges were agreed to be paid by the plaintiffs when it was proposed to ship the goods from Chittagong to Karachi, but they did not pay it, so that it was the defendants who had to meet these charges. Such goods as were saleable were ultimately sold to the same two parties mentioned above whose contracts had been cancelled. The fresh contracts with these two parties was again at the rate of Rs. 8‑8‑0 per gross and was signed on 24‑6‑

53. It is important to note these two contracts, Exhs. 215 and 216, are also signed by Mr. Akhtar Ali Khan on behalf of the plaintiffs and the inference is inescapable that he had agreed to the sale of these goods at that rate.

9. The plaintiffs had before 15‑5‑53 drawn Rs 7,000 in this cash credit account and after 15‑5‑53 they further drew another Rs. 34,

514. Then out of Rs. 33,236 which had been expected to be refunded by Thomas Cook & Sons all that was actually refunded was Rs. 7,667‑5‑

6. This refund was expected because this sum, according to the defendants and also according to Messrs Thomas Cook & Sons, had been paid as duty in excess of the due amount. An appeal to the Central Board of Revenue had been preferred but all that the defendants were able to get back was Rs. 7,667‑5‑

6. It would thus appear that this item and the item of expenditure of the transport of the goods from Chitta gong to Karachi taken together constitute a very large amount and would wipe out any surplus from the sale‑proceeds which might have been expected in May 1953. The final position of the accounts which emerges from the statement and the evidence on record even upon the basis that the entire goods had been sold out and none had been rejected as damaged (though the damage has in fact been proved) is as follows :‑, Rs. a. p "Total Debits raised by Chartered Bank (excluding debit of Rs. 40,000) 4,97,881 4 0 Add debit of Rs.40,000 by the Chartered Bank 40,000 0 0 5,37,881 4 0 Add Interest on the Bill charged by the Bank of Bahawalpur Ltd . 2,954 6 0 Add Interest charged on the Cash Credit Account from 1st September 1951 to April 1953 49,154 1 0 5,89,989 11 0 Charges incurred on bringing the goods from Chittagong 46,232 13 13 0 6,36,222 8 0 Payment made to the plaintiffs before15‑5‑1953 7,000 0 0 Payment made to the plaintiffs after15‑5‑1953 34,514 4 0 6,77,736 12 0 Expected sale proceeds @ Rs. 8‑8‑0 of 64710 gross 5,50,035 0 0 Add Refund from Chartered Bank 40,000 0 0 Refund from Thomas Cook 7,667 5 6 5,97,702 0 0 Total payments 6,77,736 12 0 Total Receipts 5,97,702 5 6 Short fall 80,034 6 6 There was thus actually a large amount of short fall and therefore the plaintiffs cannot claim to be paid the sum mentioned in Exhibit 5 or any other sum. Actually the plaintiffs might well have been found liable to the defendants but as it has been explained by the manager of the defendants the bank was not able to take action against the plaintiffs in respect of this amount because there were internal disputes in the bank, in consequence of which the records had been seized by the C. I. D. and by the time the records came back this claim had become time barred.

10. My finding on issue No. 1 therefore is that the letter dated 14‑5‑53 cannot in the circumstances be made a basis for the claim of the plaintiffs and that they are not entitled to recover anything from the defendants.

11. In view of my finding on issue No. I no finding is necessary either on issue No. 1‑A or issue No. 1‑B which were on the basis of an alternative case pleaded by the defendants.

12. As a result of the above findings I hold that the plaintiffs are not entitled to any relief and I accordingly dismiss the suit with costs. I do not grant special costs to the defendants which had been claimed by them. Suit dismissed.