P L D 1965 Supreme Court 489 (PLP)

CORNELIUS, C. J.‑This certificated appeal against a judgment of a Division Bench, of the High Court of West Pakistan, Peshawar, raises a question concerning a contract for sale of standing timber in a Government forest, as to the application of the remedies of the law consequent upon termination of the said contract by the Government, by reason of non‑payment of the first instalment of the purchase money. The contract, was executed on the 22nd March 1952, and provided for payment of a first instalment of Rs. 90,904‑14‑3, being one‑fourth of the purchase price, "on or before commencement of work, but not later than 31st March 1952". As a point of interest, clause 13 of the contract provided for termination of the agreement, if the purchasers did not commence "their work in an earnest and thorough manner by the 1st March 1952," that is 22 days before the contract was itself signed, but as this clause provided also for the same consequences to follow from failure of the contractors to prosecute their work in an earnest and thorough manner after the 1st March 1952, it cannot be thought to be entirely without effect. More detailed reference to this clause will be necessary in the course of this judgment. The principal clause requiring interpretation and application in this case is clause 11, with which clause 12 should be read to gain full appreciation of the remedies at the disposal of the Provincial Government in case of failure of performance of all or any of the relevant promises by the contractors. These clauses read as follows:‑ "

11. That if the purchasers fail to pay any installment of the purchase money or any part thereof on the due date, they shall be liable, after the lapse of ten days grace, to pay interest at the rate of 10 per cent. per annum on the sum due in addition to any penalty provided in this agreement. If such failure extends beyond 30 days, the purchasers shall be liable to the stoppage of all export of their timber and to the confiscation of their produce and of the security deposits hereinafter mentioned as well as of all other monies paid by them or on their behalf under this agreement, and to the cancellation of this agreement, at the discretion of the officer for the time‑being in charge of the North‑West Frontier Province Circle of Conservancy (herein after called the Conservator), as he may direct. Should the agreement be Cancelled the purchasers shall have no further claim to any trees, timber, fuel‑wood and charcoal remaining in the forest whether paid for or not or to a refund of any money which may have been paid by them for such trees, timber, fuel‑wood and, charcoal.

12. That the purchasers shall not remove beyond the limit of the forest any part of the timber obtained from the trees sold under this agreement before they have paid the first installment provided for in clause 10 of this agreement, nor during such time as‑any installment payable by them may be in arrears or any fine or liability incurred by them under this agreement may be unpaid or unsatisfied. If at any time the Forest Officer considers that the value of any timber exported by the purchasers exceeds the amount of purchase money paid by them up to that time he may stop further export until the purchasers have paid such further sum as in the opinion of the Forest Officer may be sufficient to cover the excess value of the timber exported or about to be exported. The decision of the Conservator as to whether the payment has been made in full shall be final in the matter." Before the contract was executed, the contractors had paid Rs. 10,000 by way of security to the Government. They made a further payment of Rs. 39,000 towards the first instalment in the month of March 1952 and thereafter sought for further time to pay the balance which was granted from time to time, and finally by a letter of the 21st June 1952, up to the 15th July 1952, but it was clearly stated that this was the "last and final" extension and no further extension would be granted "on any ground whatsoever", and further, the letter being from the Divisional Forest Officer, that if the balance were not paid up within the extended period, this officer had been authorised by the Conservator of Forests, N.‑W. F. P., to take. immediate action under clause 11 of the agreement without "referring back the case to him". By an endorsement to this letter the local Range Officer was directed to "see that no timber is removed from the road‑side depot by the purchasers under any circumstances whatsoever", and further to stop the work of the contractors in the forest and stocking of trees whether standing or felled, of timber, fire‑wood, etc. By this time, however, the contractors had already removed from the forest about 7,000 cubic feet of sawn timber and 5,000 maunds of fire‑wood. This was contrary to the mandatory provision in clause 12 of the contract which has been reproduced above, but the Divisional Forest Officer giving evidence said that the "defendants were permitted to remove the aforesaid timber and fire‑wood in order to enable them to pay the balance." At the time when the contractors' work in the forest was stopped, there was left behind by them in the forest, sawn timber measuring 21,683 cubic feet and fire‑wood weighing 4,070 maunds. They had contracted to cut and remove 2,219 green trees and 24 dry trees, and of these the number standing at the time when the work was stopped was 1,447 green trees and 22 dry trees. No further payment having been made by the contractors, the Divisional Forest Officer took action to terminate the contract and reported it to the Conservator of Forest by his letter dated the 29th July 1952. His action was approved by the Conservator of Forests by letter dated the 12th August 1952. Thereafter action was taken by the Forest Department to resell the standing timber and also the cut trees. The total recovery was Rs. 2,29,078‑0‑

9. The Divisional Forest Officer gave evidence that he called for tenders in respect of the re‑sale, in the regular way. The record shows that only two quotations were received for the standing timber. .This contrasts with eight tenders that had been‑ received when the forest was sold for the first time. The Contractors, one of whom Mr. M. K. Musafir gave evidence as his own witness, do not appear to have challenged the fairness of the re‑sale of the standing trees or of‑ the fire‑wood; but Mr. M. K. Musafir complained that the sawn timber had been sold at less than Rs. 3 per cubic foot while the market rate was Rs. 5 per cubic foot. Another witness for the defendants, Zoaq Akhtar, a forest contractor said that the carriage expenses per cubic foot to the market at Havelian was Re. 0‑3‑

6. Since the quantity of sawn timber sold after the confiscation was 21,683 cubic feet a considerable difference might have been made in the price received, had not the sale been an upset sale, as was also the sale of standing trees. On a rough calculation it would seem that the contractors benefited from the contract to the extent of Rs. 35,000 against which their cash loss was Rs. 49,000 to which should be added labour costs on sawing, etc., of the sawn timber and fire wood, they left in the forest. There can be no question but that under clause 11 of the contract, the Government were within their rights in confiscating the produce, the security deposit and the money paid by the contractors, viz., Rs. 39.,000, as well as in their action in cancelling the contract. That however was not sufficient to cover the loss on the re‑sale, and it was for this that the Government on the 23rd April 1953, sued the contractors. A deficit of Rs. 85,535‑13‑6 was ascertained, giving credit for (i.e., not confiscating) the produce they left behind as well as the two payments of Rs. 10,000 and Rs. 39,000, but the Government sued only for Rs. 84,476‑3‑4, allowing the balance as a concession. Before the trial Court, the question now in issue was raised, namely, the right of the Government to sue for damages having regard to the terms of the contract. Reliance was placed by the Government on clause 13 which reads as follows:‑ "That, if the purchasers have not commenced their work in an earnest and thorough manner by the 1st March 1952, or having commenced, their work do not prosecute it in earnest and thorough manner thereafter, the Forest Officer may warn the purchasers in writing and shall give them a term of not less than fifteen days from the date of such warning within which to render their work thorough, and if after expiry of this term the aforesaid officer is still of opinion that the purchasers are not working in an earnest and thorough. manner the Conservator may terminate this agreement and may resell the trees and timber and confiscate the security money hereinafter mentioned and all other monies paid by or on behalf of the purchasers under the terms of this agreement and the purchasers shall have no claim to such trees or timber or monies or to compensation for damage on account of such action. The Conservator shall have the additional right of bringing a civil suit for damages to recoup loss, if any, caused by the default." The trial Judge, however, held that this clause was inapplicable, since the Government had made no complaint against the contractors, as respected the commencement or execution of the work under the contract. But the Government had also relied on clause 27, reading as follows:‑ "That in the event of any' breach of the terms of conditions of this agreement by the purchasers ‑ or by their agents or servants the purchasers in all cases for which a special penalty has not been provided shall be liable to pay a fine which may extend to Rs. 100 for each such breach at the discretion of the Conservator and such fine shall not absolve them from liability for damages." The trial Judge relied on clause 11, particufairly the following words, viz.: ‑ "in addition to any penalty provided in this agreement," and referring further to clause 27, he came to the conclusion , that this clause "safeguards the plaintiff's additional remedy to . bring a civil suit against the defendants for damages in case the plaintiffs suffer any loss as a result of the cancellation of the agreement." On this view, he held that the suit for damages was competent and on a calculation, that a sum of Rs. 89,476‑3‑4 could be claimed on that account, and he decreed the suit with costs. The contractors appealed to the High Court where the learned Judges on examination of the contract, in particular clauses 11, 13 and 27 came to the conclusion that the Government could not claim damages under any one of these clauses: Reliance was placed on behalf of the Government upon section 73 of the Contract Act, which provides that a party in breach of a contract is liable to pay compensation for any loss or damage caused to the other party thereby, but as to this, the learned Judges thought that a restriction was applied by the provisions of section 74 of the Contract Act which expressly confine the obligations upon a party in breach of a contract to "reasonable compensation not exceeding the amount so named (i.e., as liquidated damages in case of breach) or, as the case may be, the penalty stipulated therefore (i.e., in the contract)." Accordingly, the learned Judges held that the Government was only entitled in case of breach of the conditions‑ under clause. 11 to the penalties stipulated in that clause and nothing more. The Government also sought to rely upon section 54 of the Sale of Goods Act, 1930, which gives the right to an unpaid seller, who has exercised his right of lien on the goods, to resell the said goods after notice to the buyer of such intention, and if upon the resale there be a loss, to recover damages to the extent of the loss from the buyer. This section expressly provides that if no notice be given, the unpaid seller should not have the right to recover such damages. It was contended before the High Court that although no notice of intention to resell was given to the contractors in this case, such notice should be deemed to have been given because the sale was on the basis of tenders received after notice of sale was published, and had been sent to all registered contractors. The argument was rejected by the High Court, on the sufficient ground that such a public notice was not to be regarded as being in compliance with the particular notice require4 under section 54 of the Sale of Goods Act. Concluding "that no legal right vested in the Government to file a suit for damages to recoup the, loss", the learned Judges allowed the appeal and dismissed the Government suit with costs throughout. Mr. Muhammad Bashir, Assistant Advocate‑General appearing for the appellant, namely, the Provincial Government, attempted to place the case on a new footing, viz., that the contract should be deemed not to have been rescinded by the Government. It is, clear that this would involve a total alteration of the case as it was brought to Court and would be in contradiction of the express action taken by the Government through the Conservator of Forests to terminate the contract. Throughout, the only complaint against the contractors was that they had failed to pay the first instalment of the purchase money. It cannot be said by any means that they had failed to commence or prosecute the work with sufficient diligence. In fact, by the time that their work was stopped; they had cut down and processed some 36 per cent, of the timber they had bought, which indicates good progress. Therefore, the case clearly falls within clause 11 and not within clause 13 of the contract. No assistance in support of the case put forward by the Government is derivable from clause 27, which provides for a fine extending to Rs. 100 for each breach of any term or condition of the agreement by the purchasers "for which a special penalty has not been provided" and further that "such fine shall not absolve them from liability for damages". This clause is clearly not applicable, where a special penalty has in fact been provided, and that is clearly the case in clause

11. By that clause, on failure of payment of any part of any instalment on the due date, interest at 10% was to accrue on the sum due, and if there was further delay, then when the delay extended beyond 30 days, the following penalties could be imposed by the Government, namely, (i) stoppage of all export of timber, (ii) confiscation of all produce, (iii), confiscation of the security deposit, and (iv) confiscation of all other monies, as well as cancellation of the agreement. A specific condition was included, at the conclusion of clause 11 to follow in case of such cancellation, namely, that the purchasers would have no further claim to any of their produce lying in the forest, whether paid for or not, or to refund of any money which may have been paid by them in respect of such produce. It is here that there might have been added, if such was the intention, provision for re‑sale of the standing timber or the produce left behind in the forest, at the risk of the contractors. No such provision appears and a reason for the omission may be found in the terms of clause 12 which provided that no timber or produce should be removed from the forest before the first instalment should have been paid in full, nor during any period in which any in3talment payable should be left in arrears, or any fine or other liability should remain unpaid. Further,‑ whenever, the value of timber exported from the forest was in excess of the money paid by the purchasers, the Forest Officer was empowered to stop further export until the deficit had been made good. This, clearly was a provision to safeguard the interest of the Government against loss through the contractors removing from the forest more produce than they had paid for at any given time during the period of the contract, and again, to allow no removal of produce until the Government securely hold a sum of over one lakh of rupees from the contractors in their possession. These safeguards could well be regarded as adequate. With this provision may be read the condition expressly contained in clause 13, namely, that if the contractors did not commence the work in time or did not prosecute it efficiently, and further did not comply with a warning given to them in this respect, the Conservator was at liberty to terminate the contract, and in addition, would have the right to "resell the trees and timber and confiscate the security money‑and all other monies", and in such a case not only would the purchasers have no claim in respect of such confiscated goods or money, but the Conservator would also have "the additional right of bringing civil suit for damages to recoup loss. if any caused by the defaults". There is here clear and direct expression, in this clause alone, of a condition for resale at the risk of the purchasers. The expression unius rule is applicable to the interpretation of such deeds provided the Court is satisfied that the omission has not occurred through mere accident. As was said in the case of Colouohoun v. Brooks ((1887) 19 Q B D 400 at p.406) an exclusion of this kind is‑-- "often the result of inadvertence or accident and, the maxim ought not to be applied where its application, having regard to the subject‑matter to which it is to be applied, leads to inconsistency or injustice." In the present case, the possibility of inadvertent omission of a condition for re‑sale at the risk of the purchasers in clause 11 is, in our opinion, excluded, by the fact that clause 11 itself contains a provision to be applied in consequence of termination of the agreement under that clause, and moreover, the immediately following clause, viz., clause 12 provides sufficient concrete safeguards to protect the interest of the Government against loss through default by the contractors in performance of the stipulations under clause

11. The mandatory provision in clause 12 that no produce was to be removed before the first instalment was paid, was allowed to be departed from by the Government and it seems clear that the loss imposed upon the Government in this case is to be traced to this variation from a 'stipulation in the contract, which was made at its own risk by the Government. However, that may be, it is in our opinion sufficiently clear reading the relevant clauses of the contract together, that the omission of a stipulation for re‑sale at the risk of the purchasers, upon breach of the conditions specified in clause 11, was by no means inadvertent, and consequently the rule of expressio unius may be applied with confidence to the determination of the remedies available to the Government in the present case. We agree with the learned Judges in the High Court in holding that in the circumstances established, the Government was confined in respect of remedies to those expressly mentioned in clause 11 and that the suit for damages was rightly dismissed. We accordingly dismiss this appeal with costs. A. H. Appeal dismissed.