2002 PLP 607 (CLC)

As far as quantity of rice handed over to the defendant, I will consider admission on the part of defendant to be relevant which is 144,679.1501 Metric Tons and likewise as far as rendition of account is concerned, .I deem admission of the plaintiff's witness that total quantity accounted for is 142,417 Metric Tons is relevant, accordingly it is only 2262.1510 Metric Tons, unaccounted for which quantity in terms of percentage comes to 1.6% of the total quantity. Issues Nos.l and 2 are answered accordingly. Adverting to Issue No.3, while deciding Issues Nos. l and 2 it has come on record that only 2262.1510 Metric Tons was not accounted for as against 19,505.3665 Metric Tons as claimed in plaint. To determine losses, if any, suffered by the plaintiff. Evidence of the plaintiff's witness in relevant which is reproduced as under:‑‑ Question. Can you tell us what is the percentage of shortage occurred during handling? Answer. It depends upon the storage period and naturalizes and other circumstances like pesticide etc. Witness also admitted that the subject crop was handled by more (sic) one agent. To a question witness replied: It is possible that pilferage may take places in godowns. Rice Corporation Security Staff guards the gate of the godowns. During handling of grain, natural losses in the stock always occurs, which in normal course as per international practice ranges between 3 to 5 % , it may be on account of loss of water content, damages by infestation, pest, birds, rodents etc. Defendants' witness had produced finding of Wafaqi Mohtasib. Report of Committee constituted by the plaintiff's Corporation and so also by the Government of Pakistan, Ministry of Food, Agriculture and Cooperatives containing result of studies for natural losses and percentage of losses on account of handling of grain (Exhs. D/1 to D/3) showing that natural loss may range with minimum to 3 % . Such reports have not been disputed or contested by the learned counsel for the plaintiff it was only stated that same have not been ,approved by the authority. It was, therefore, contended that unless finding of reports are admitted by the Authorities no benefit can be extended to the defendant. When learned counsel for the plaintiff was confronted with the position that when by nature a handling contract of food grain is exposed to peril of natural losses at various stages of handling, whether the handling contractor under such circumstances can be called upon to account for and make good such natural and consequential losses which are inherent in the contract itself. Plaintiff's counsel contended, since in terms of contract the defendants are not only liable to account for but make good loss of each and every grain, therefore, natural losses are inconsequential as far as the liability of the defendants, under the subject contract is concerned. From the terms and conditions of the contract it can safely be concluded that the relationship between plaintiff and defendant is that of Bailor and Bailee as is‑ evident from clause 6(a) of the Contract which reads as follows:‑‑ "

6. Care of the stocks while in my/our custody (a) I/we shall exercise as much care in respect of the rice stock (including its byproducts/refractions and other Government store received, stored at Godowns/rice mills in my/or custody and also in transit in my/our custody under the agreement as is required of a bailee under section 151 of the Contract Act (IX of 1872)." The defendants were only required to extend handling service in respect of the left‑over quantity of the rice crop stored in the plaintiff's own godown and submit reconciliation report. It is pertinent to note that 3rd paragraph of section 1 of the Contract Act, gives overriding effect to the usage or custom of trade and any incident of any contract not inconsistent. with the provision of the Act. While interpreting terms of the contract Courts do not employ any consideration or term which are not expressly provided therein. It is only when any usage, custom of trade or incident of any contract comes one record or where both the parties either concede to existence of any such usage custom of trade or incident of any contract or otherwise same is established, then such incident, of contract, custom of trade or usage, as may be reasonable and necessary in order to effectively determine right and obligation of the contracting parties are read as term and condition of the contract. In the instant case learned counsel for the plaintiff had very fairly conceded that, in grain handling contract, like the one in hand,; incidence of losses in quantity, at various stages of storage, shifting, handling and transportation are but natural. Sanjiva Row in his well -written "Commentary of Contract Act and Law relating to Tenders etc.", 9th Edition at page 678 after reviewing large number of cases has given details of essential feature of mercantile usage to have binding effect and to be enforceable at law; such features may be summarized as follows:‑‑ (1) Must be universal. (2) Precise and certain, uniform in application in particular trade and business must be fair. (3) Reasonable, and equitable. (4) It is so universally practised that everybody in the particular trade knows it or might know if he took pains to acquire. (5) It must be continuous in that it should have existed without' interruption as controlling the subject‑matter affected. (6) it must not be illegal or immoral or opposed to public policy of the State. Even proviso 5 to Article 103 of the Qanun‑e‑Shahadat Order, 1984 provides exception to the general rule which runs as follows:‑‑ "

103. Exclusion of evidence of oral agreement.‑‑‑ When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last Article no evidence of. any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to or substracting from, its terms: Proviso

5. Any usage of custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description, may be proved:" In order to constitute effective bailment contract, it is obligatory on the part of the bailer to put the bailee in. possession of the goods. There must be actual tender and delivery of the goods and acceptance thereof by him. In the instant case, as already observed above, nothing has been brought on record by the plaintiff which 'shows as to what quantity has been actually handed over to, the defendant. Under the circumstances, it is only admission on the part of the defendant that can be considered relevant for the purposes of fixing any liability as to the quantity handed over to him. Another important aspect in such contract is that the bailor is also obliged to disclose to the bailee of the faults in the ,goods bailed or, circumstances that may expose the bailee to extraordinary risk. If bailer does not make such disclosure, it is the bailor and not the bailee who has to suffer as provided for under section 150 of the Contract Act. Admitted result of all the studies with reference to natural losses in grain handling contract that have come on record, shows that longer the storage period greater the chance for loss. The length of storage period increases the possibility of loss. Minimum loss that has been shown through various studies as reflected in the report on determination of "Transit Handling and Process Losses in Rice" carried out by the High‑powered Committee constituted by the plaintiffs as per Exh.D/2 is as follows:‑‑ "To sum up this committee is of the view that: (1) It is an established fact that the weight loss occurs in rice consignments in transit from the procurement centres to Karachi Godowns and this loss can be to the extent of 0.5 % on an average. (2) Storage and handling losses due to various factors ranges in the world from 6 % to 7 % loss in weight can be higher if the storage period prolongs. In our storage conditions the loss may be around 2 %. (3) Reprocessing/re‑cleaning loss may be considered at 0.5%, of the stocks which are mill processed. (4) Total losses on account of all the abovementioned factor can be placed at 3 % at maximum. Final Report Volume 1 (Exh.D/l) a study carried out under the auspecies of Government of Pakistan, Ministry of Food, Agriculture and Cooperative summed up as follows:‑ Rice handling and Storage.‑‑‑ RECP activities in rice are focusing on export. These include handling processing and storage in overlapping activities. The paddy is usually procured by commission agents, rice mills and PASSCO and mostly stored at rice mills. Chaudhry (64) reported 0.35% loss at farm level, 1.79% at commission agent, 0.29% at wholesale, 2.29% at processing and 3.3% at retail level." In view of the above, I am satisfied that in grain handling contract there is inherent risk of diminishing quantity and quality of the foodgrains and the ration of losses is inversely proportionate to the tenure of storage, which may vary from case to case basis. Longer the duration, greater the quantum of losses. In this case, shortfall that has come on record is to the extent of 1.6%. According to the defendant, it is merely fraction loss even less than acknowledged by research studies. In my humble opinion the defendant cannot be called upon to submit the account for the shortfall which is not only on account of inherent risk but a natural incident and consequence of grain handling contract, moreso, when the witnesses of "the plaintiff has not ruled out to quote. It is possible that pilferage may take place in godowns". The defendants as bailee could be held liable for the losses if accrued for want of contractor/bailee's due care and negligence in terms of clause (h) of the contract. Plaintiffs have failed to show that the defendants were negligent or careless in handling such contract or that the alleged shortfall is in excess of the normal and incidental losses and/or is not the result of natural losses inherent in the food grain handling contract. Food grain on the own showing of the plaintiff was for the crops of 1973‑

74. Earlier the contract was awarded to Messrs V.N. Lakhani, on 27‑11‑1973 and on their failure to fully perform, for the left‑over stock, contract was awarded to the plaintiffs on 27‑2‑1976 and a period of more than over two years lapsed before the contract was awarded to the plaintiff, the loss of merely 1.6% of total quantity is natural incident of contract, therefore, in my humble opinion, plaintiff cannot be said to have suffered any loss. In view of the foregoing discussion, plaintiff having failed to establish and prove any actual loss, the suit, therefore, fails. Suit is dismissed with no orders as to costs. Q.M.H./M.A.K./R‑57/K Suit dismissed.