1980 PLP 1228 (CLC)

In addition to what we have stated in our. letter of 30th July 1978 we may briefly comment on the points mentioned by William & 'Glyn's Bank London, as under : The amount of outstanding cannot be ascertained from the papers available with us. However, even William & Glyn's Bantc admit that the vessel is subject to mortgagees and there are outstandings. In the light of this, it is abundantly clear that L/c conditions have not been complied with and the requirements of the vessel being 'free of all debts mortgages etc. has not been fulfilled and if any Bill of sale has been substituted, the same is fraudulent. The requirement of legal Bill of the Sale and Guarantee from Williams & Glyn's Bank are not alternative requirements both of these documents are amongst the other documents, mandatorily required by the credit. There was no question of delay in beaching the vessel as in the absence of Legal Bill of Sale and the documents mentioned in para 6 of our letter of 30th July 1978, no permission for beaching could be obtained. For reasons mentioned in our letter of 30th July 1978 any alleged new Bill of Sale is false and fraudulent. Contents of para. 4 are wholly false and even from the certificate issued by Hegge & Co. (Pakistan) Limited, the vessel did not have her own power. Yours faithfully, For Al Farooq Shipping Limited (Sd.) Director Copy to The Manager, United Bank Limited, Cloth Market Branch, Karachi, M/s. Hegge & Co. (Pakistan) Limited. State Life Building No. 1-A. 1.

1. Chundrigar Road, Karachi." it may be noticed that through the above letter, the plaintiffs had divested themselves of the constructive delivery of the vessel. (d) It has been urged by Mr. Khalid Ishaque, learned counsel for the plaintiffs that the above two letters were addressed by the plaintiffs to their banker and that they would not undo what had already been done i.e, the handing over of the constructive delivery of the vessel to the plaintiffs and the passing of the property in the vessel to them. Whereas Salim Akhtar in support of his contention that the plaintiff's having elected to claim damages cannot claim specific performance of the agreement referred to the case of Anwer Ali Khan v. Abdul Sattar Abubakar (P L D 1968 Kar. 154) wherein it has been held that when the purchaser by his letter addressed to the seller claimed damages in respect of the sale agreement relating to immovable property and asked for the refund of earnest money, the specific performance could not be granted. On the other hand Mr. Khalid Ishaque has referred to the case of Dennant v. Skinner and another ((1948) 2 All E L R 29) wherein the plaintiff had knocked down a van to the highest bidder and inquired his name, who in reply stated his name was King and that he was the son of the proprietor of Kings Moiors of Oxford, a well-known and reputable firm. The plaintiff knocked down 5 more vehicle, to King including a standard motor car, the purchase price was paid by a cheque on the representation of King and by showing of the counter foils of the cheques that he was paying large amounts to the well-known auctioneers through cheques. Thereupon, the plaintiff accepted the cheque and obtained the signature of King on a printed form which stated "I hereby certify that my cheque number will be met on presentation at my bank. Furthermore, I agree that the ownership of the vehicles will not pass on to me until such time as the proceeds of my cheques have been credited to South London Motor Auction account at Lloyds Batik." On obtaining the above form the plaintiff delivered the cars taking who sold the standard car to a third party and who in turn sold the same to the defendant. Subsequently, the cheque given by King was dishonoured acid it was discovered that King had no connection with Kings Motors of Oxford. The plaintiff brought a suit for the recovery of possession. 1It was held by Rallett, J. of the King's Division Bench that there was no mistake as to the identity of the contracting parties at the time when the contract of the sale was made which was at the fall - of the plaintiff's hammer, and that the plaintiff's assent to the sale and to the passing of the property to King was not vitiated. In my view the facts of the above case are distinguishable from the instant case, inas much as there is no mistake of the identity of the parties involved in the present case. (e) In may be pertinent to mention that sections 18 to 25 of the Sale of Goods Act deal with the passing of property from a vendor to a purchaser, Section 19 provides that in a contract for the sale of specific or ascertained goods the property in them is transferred to buyer at such time as the parties to the contract intend to be transferred, and that for the purpose of ascertaining the intention of the parties regard shall by had to the terms of the contract, the conduct of the parties and the circumstances of the case and that unless a different intention appears, the rules contained in sections 20 to 24 are rules for ascertaining the intention of the parties. Whereas section 20 of the above act lays down that when there is an unconditional contract for the sale of specific goods in a deliverable state, the property passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of goods, or both, is postponed. Furthermore, section 21 of the aforesaid Act provides that where there is a contract for the sale of goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof. It may be noticed that in order to attract to the aforesaid section 20 of the Sale of Goods Act there are three preconditions, namely :- (a) that there should be an unconditional contract. (b) that the subject matter of the contract should by specific goods. (c) that the goods should be in deliverable state. I have referred to the various relevant clauses of the instant agree ment in para 2 hereinabove, which indicate that prima facie the contract was not an unconditional contract, but there were certain obligations which were to be performed by the parties to the contract. Furthermore. if the allegations of the plaintiffs were correct that the vessel was not on its own power and that it was Junk and wreck in breach of the terms of the agreement in that event the vessel could not have been in deliverable state, and therefore, prima facie the property in the vessel could not have passed to the plaintiff till the time the vessel was put into a deliverable state as per section 21 of the Sale of the Goods Act and a notice thereof was given to the plaintiffs by the defendant No. 1 From the above sections of the Sale of Goods Act referred to hereinabove, it is also evident that the passing of property in the goods and the delivery of the same are two different things. It is not necessary that the property would pass on to the purchaser upon delivery of the goods and similarly the property in the goods may pass on to the purchaser without the delivery of the goods, if the conditions contained in section 20 of the Sale of the Goods Act are present. Prima facie. it appear that the plaintiffs elected to claim damages from the defendant No. I and were not interested in the performance of the agreement on the ground of the alleged breach on the part of the defendant No.

1. I asked Mr. Khalid Ishaque to point out any document indicating, that after August September, 1978 the plaintiffs were ready and willing to perform their obligations and that in fact they had called upon the defendant No. 1 to complete the sale transaction. There is no document, on the record to indicate that in fact the plaintiffs had been requesting, the defendant No. 1 to complete the sale transaction. It is an admitted .position that the L/C in favour of the defendant No. 1 had. expired on 30th July, 1975 and that the plaintiff did not get it renewed till today. 1t may be noticed that under the aforesaid amended clause (2) of the agreement referred to hereinabove, the price of the vessel was to be deposited with M/s. William Glyn's Bank Ltd. London, on the fulfilment of certain conditions contain ed therein and was to be kept with them till the beaching on the vessel at Gadani. But in the instant case the plaintiffs instructed M/s. United Bank Ltd. not to honour-L/C for the reasons mentioned by them 'in their aforesaid letters dated 30th July, 1978 and 3rd August, 1.978. Further more, the plaintiffs in their aforesaid letter dated 30th July, 1978 even calculated an approximate amount of damages which they' were allegedly entitled to recover from the defendant No. 1, namely, Rs. 8,50,000 on the ground of the breach of the contract. The plaintiffs' aforesaid letter dated 3rd August, 1978 indicates that they had divested themselves of the constructive possession. It may again be observed that a copy of the letter was endorsed to the defendant No. I's agents, namely; the defendant No. 2 and, therefore, it cannot be urged that the aforesaid letter was intended by the plaintiffs for their banker, (g) Furthermore, from the plaintiffs.' telex dated 3rd September, 1978 (Annexure R/16 to the plaintiffs' rejoinder), it is clear that the plaintiffs wanted to renegotiate the price of the vessel in question and instructed their Karachi Office to revoke the L/C. It is also evident from the above telex that the plaintiffs were negotiating to purchase two vessels named therein at a price lower than the contract, price of the vessel in question, i. e. the contract price of 'the instant vessel was US' $ 78.40 per ton and whereas the quoted price of 'the two vessels named therein was US $ 74/75 per ton. In this regard a reference may, also be made to defendant No. I's agent's (in England) telex dated 23rd November, 1978 addressed to the plaintiff's agent (R 16.1 to the plaintiffs' rejoinder) which reads as follows :- "23673 Erum PK 8813567L 11ros G Most Urgent No. 494 dated 23rd November, 1978 For Al Farooq Att : Mr. Rauf. m.v. ILION We have recvd Fllwg Tlx from Sellers Reps which we Quote in Full Ilion--With reference to sale of this vessel to your Principals to whom the vssl was delivered we are Instructed by Sellers to Enquire

1. Do buyers intend to accept Delivery and re-establish the letter -of Credit as called for ?

2. If not will buyer pse state their position so that sellers may take whatever action they feel proper We await your Prompt Reply" Unquote. Pse telex your reply Immediately. Regards Lizrose Ltd. 23673 Erum PK 8813567 Lizros `G" From the above-quoted telex it is clear that the defendant No. 1 wanted to know as to whether the plaintiffs were interested in completing the sale transaction. It was urged by Mr. Khalid Ishaque that the above telex supports his contention that in fact the delivery of the vessel was taken over by the plaintiffs. It is true that the constructive delivery was given to the plaintiffs but the plaintiffs themselves gave up the same. In the above telex the plaintiffs were asked to state as to whether they were willing to accept the delivery of the vessel or not. It may further be noticed that the plaintiffs have not produced any reply to the above telex nor any document to indicate that after the receipt of the above telex they had shown their readiness and willingness to perform the contract. It may be pertinent to mention that it is an admitted position that the plaintiffs did not post their two chowkidars for which the permission was granted by the defendant No. 2 nor put any staff on the vessel after the alleged taking over of the constructive delivery. The constructive delivery of the vessel was given on the paper which the plaintiffs voluntarily disowned. It may also be pertinent to observe that it is not a case in which the price was to be paid in Pakistani currency, but it was to be paid in foreign currency through a L/C and in fact if the plaintiffs were ready and willing to perform their obligation under the contract and wanted specific performance of it, the least which they could be expected of was to keep the L/C valid till the time of the filing of the suit. The plaintiffs have not only done this, but they have not even called upon the defendant No. 1 to complete the sale transaction, during the period commencing from September, 1978 till June, 1979 i. e. till the time of the filing of the suit. In this regard Mr. Salim Akhtar has referred to .the case of K. S. Sundramayyar v. K. lagadeesan and another (A I R 1965 Mad. 85) wherein a Division Bench of the Madras High Court held that the plaintiff in a suit for specific performance is to show that he always considered contract as still subsisting and had to prove his continuous readiness and. willingness from the date of the contract to the time of the filing of the suit, and that where a purchaser to a contract of sale made a claim for damages on the basis of the alleged breach, it would amount to having elected on his part to treat the contract as at an end. It may be mentioned that the above case related to the sale of an immovable property, but in my view, the principles of law propounded in the above case can be pressed into service in a case for specific perfor mance of a sale agreement relating to goods as well. (h) Referring to Mr. Salim Akhtar's contention that the contract relating to the sale of goods cannot be specifically performed, it may be observed, that by virtue of section 12 (c) of the Specific Relief Act a contract is specifical enforceable if the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief. Furthermore, the Explanation to the above section provides that unless otherwise proved, the Court shall presume that the breach of a contract of transfer immovable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer movable property can be thus relieved. Whereas section 21 (a s provides that a contract cannot be specifically enforced for the non-perfor mance of which compensation in money is an adequate relief. In the instant case it cannot be urged that the plaintiffs cannot be compensated in terms of money. The plaintiffs entered into the agreement in question for the purchase of the vessel for scrapping it. The plaintiffs have neither pleaded nor pointed out any peculiarity or uniqueness in the vessel. C Section 58 of the Sale of Goods Act which empowers a Court to grant specific performance of a contract relating to sale of goods expressly also provides that the above section is subject to the provisions of Chapter II of the Specific Relief Act. The learned counsel for the defendant No. 1 in support of his above contention has referred to the case of Muhammad Azam and Muhammad Fazil Co. v. A- N. Industries, Karachi (P L D 1977 Kar. 21), wherein the facts were that the subject-matter of the sale was a vessel. After the dispute having arisen between the parties, they approached the Court under Arbitration Act i.e., one party for the filing of the arbitration agreement and the other party for declaring the agreement as null and void and not binding. In the above case an application for injunction for restraining the seller from removing the vessel and from scrapping or removing any article from it was also filed. While rejecting the above application by my learned brother Zaffar Hussain Mirza, .1. observed as follows :- "Additionally section 58 of the Sale of Goods Act which provides for specific performance of a contract to deliver specific or ascertained goods, in its opening clause makes the power of the. Court to grant such relief subject to the provisions of Chapter 11 of the Specific Relief Act which contains section 21 referred above. 1 am, therefore, clearly of the opinion that if a suit had been brought by the buyers upon the same cause of action in a Court of Law, it would not have been permissible in law to order specific performance of the contract in question. Confronted with this position, learned counsel for the buyers contended that under section 41 read with the 11 Schedule to the Arbitration Act, the Court has nonetheless, the power to grant the relief sought in order to preserve the goods which are the subject matter of the reference. The perusal of the I1nd Schedule, shows that while dealing with the powers of the Court separately it provides in clause (1) for preservation, interim custody or sale of any goods which are the subject matter of the reference and in clause (4) with tike power to -rant interim injunction or the appointment of the receiver. The applications made for the interim relief have been expressly made for an injunction to restrain specific acts by the defendants. I do not think therefore, that the present is a case falling within the purview of clause (1) of the find Schedule. The case of the; buyers is not that the goods are subject to decay or deterioration so as to require preservation. In any event. as stated earlier, I have taken the view that the present contract not capable of specific performance. Therefore, no useful purpose will be served by keeping the defendants from demolition of the ship or disposal of the materials obtained therefrom." (i) The above ruling supports Mr. Salim's contention that specific performance of an agreement relating to a vessel cannot be granted. However, Mr Khalid Ishaque learned counsel for the plaintiffs had drawn my attention to section 12 (d) of the Specific Relief Act, which provides that a contract can be specifically enforced whet! it is probable that pecuniary compensation cannot be got for non-performance of the act agreed to be done. It was urged by Mr. Khalid Ishaque that as the defendant No. 1 has no assets in Pakistan, it will not be possible for the plaintiffs to get the compensation in money, It is a debatable point as to whether a party who had Prima facie elected to claim damages instead of claiming specific performance upon the alleged breach on the part of the other party before invoking the jurisdiction of this Court can press into service this provision. It was urged by Mr. Salim Akhtar that it is not the case of the plaintiffs that the defendant No. 1 do not have assets even in the country where they ordinarily carry on their business and, therefore, the above provision cannot be pressed into service. Be that as it may, the defendant No. l has offered to give a bank guarantee for a sum of Rs. 8,50,000 being the amount mentioned by the plaintiffs in their aforesaid letter dated 30th July, 1978. ( to the plaintiffs' rejoinder) as the amount of damages which they were allegedly entitled to recover from the defendant No.

1. It may be observed that the above amount was mentioned by the plaintiffs prior to the filing of the suit, whereas in the present suit the plaintiffs have claimed a sum of Rs. 32,10,

000. The above figure comprises of Rs. 30 lacs being the alleged difference of the contract price and the market price and whereas Rs. 2,10,W0 being the alleged expenses incurred by the plaintiffs. No particulars have been furnished as to the date on the basis of which the alleged market price has been taken nor any explanation for claiming the above amount instead of Rs. 8,50,000 has been set out in the plaint. On the other hand, the agreement of sale entered into between the defendants Nos. 5 and 4 shows than the defendant No. 5 has agreed to sell the very vessel to the defendant No. 4 for a sum of Rs. 35,1720 US $ (Annexure A to the defendant No. 4's counter affidavit), the difference between the plaintiffs contract and the defendant No. 4's contract comes to US $ 4,4333 which is equivalent approximately to Rs. 4,50,

000. In my view for the time being the plaintiffs' interest will be sufficiently safeguarded if the defendant No. 1 will be directed to furnish a bank guarantee for Rs. 8,50.000, without prejudice to the right of the plaintiffs to press for the suit amount at the trial of this suit. (j) It may be observed that the plaintiff have also filed a statement dated 14th January 1980 to the effect that they are ready and willing to take the vessel 'as it is' on the price at which the ship being offered by the defendant No. S to the defendant No . 4 witl1out claiming arty damages, bat as the defendants are not agreeable to the above offer, I cannot impose a new contract upon an unwilling party. (k) It was urged by Mr. Abbas Ali, the learned counsel for the defendant No. 4 that the defendant No. 4 has entered into a sale agreement with defendant No. 5 in good faith without any knowledge and, therefore. The defendant No. 4 is protected under section` 30 and 54 of the Sale of goods Act. On the other hand Mr. Khalid Ishaque has urged that the agreements entered into between the defendants Nos. I and 5 and in turn between the defendants Nos. 4 and 5 are not genuine but the same .ire fake. Be that as it may, in my view it is not necessary to go into the Rah question as I am not inclined to confirm the injunction. I, therefore, order that the ad interim injunction shall stand vacated upon furnishing bank guarantee of Rs. 8,50,000 by the defendant No. 1 to the satisfaction of the Nazir of this Court or upon the expiry of 15 days' time from today whichever is later in time. I have granted 15 days' time in order to enable the plaintiffs to file a petition for leave in case they are aggrieved by this order. With the above observation the application stands disposed of with no order as to costs. The office is directed to fix the above suit for regular hearing within is months after completing the preliminaries. Order accordingly.