P L D 1983 Karachi 609` (PLP)

By a short order, dated 23-6-1983 vessel m. v. `Fratzscos' was attached before judgment on condition that it shall be released on furnishing security in the sum of Rs. 7,09,

484. The ,Reasons are as follows : The plaintiff a Pakistani businessman entered into an agreement with the defendant No. 1, a Company carrying on business in West Germany to purchase m. v. `Fratzscos' for scrapping on terms and conditions mentioned in Memorandum of agreement, dated 12th April, 1983 executed at Karachi. This agreement was signed by the defendant No. 2 on behalf of defendant No. 1 as its agent. The agreement inter alia provides that vessel shall be delivered to the buyers till 30-5-1983. In case the delivery is not effected due to reasons beyond the control of the seller, the buyer will have a right to cancel the contract. It further provided that delivery was subject to safe arrival of the vessel and clean title by seller and if the above conditions were not fulfilled within the stipulated period, agreement was to be treated null and void and without any compensation to either side. The vessel was to be delivered at Karachi free of charge and cargo by 30th May, 1983. However, this date of delivery was extended at the request of the defendant to 7th June, 1983. In terms of contract, the plaintiff obtained import licence and spent Rs. 3,00,00 and also opened a letter of credit, for U S $ 384,769 for which the expenses and interest cost him Rs. 1,17,

500. The plaintiff has alleged that he had chosen to purchase this vessel in preference to other vessels as the delivery was to be effected on 30th May, 1983, and he wanted to purchase the vessel before the announcement of the budget. The plaintiff has stated that the defendant No. 1 through defendant No. 3 who at the relevant time was at Karachi, by letter, dated 6-6-1983 informed him that the defendant No. 1 were unable to give delivery even by 7th of June, 1983 and. asked the plaintiff to treat the transaction as cancelled. The plaintiff protested against the unilateral cancellation of the Contract, which the defendants justified. This was not accepted, by the plaintiff. The vessel had arrived on 15-5-1983 with the Cargo, but I. G. M. for discharging its cargo was filed in the first week of June, and after discharging a part of cargo, again stopped discharging the same, whereby the entire discharge could not be completed. According to the - plaintiff, the defendants conduct in failing to discharge the entire cargo after having commenced it was with rnala fide intention as the market of scrap vessels was rising, and, therefore, they were adopting these tactics to defeat the contract. The plaintiff, therefore, by his letter, dated 7-6-1983 while protesting against the cancellation claimed Rs. 7,09,824 as damages. This letter was replied by the defendant No. 3 on 2-6-1983 who relying on clause 4 of the agreement stated that the Contract shall be treated null and void and without compensation to either side. Finally the plaintiff by a telex which was subsequently incorporated in a letter, dated 13-6-1983 made a claim of Rs. 24,60.522 and immediately filed suit on 16-6-1983. The plaintiff has also filed an application under Order XXXVIII, rule 5, C. P. C. for attachment before judgment of the Vessel mainly on the ground that defendant No. 1 is a foreign Company having no assets in Pakistan except the vessel, and further that after cancellation of the contract, the defendants have approached brokers asking them to arrange ~he sale of the Vessel immediate at rebate of 5 % on the prevailing market rate asking for payment in West Germany. The plaintiff has pleaded that the defendants are trying to remove the vessel and or sell it with intention to delay and defeat the decree that may be passed against them. In support of this application, the plaintiff has filed his affidavit, and another affidavit of one A. Aziz, a broker dealing in scrap. He has stated that defendants have approached him for sale of the ship at 5 % less than the prevailing market rate. The defendants have filed counter-affidavit, in which it has been stated that the agreement includes an arbitration clause and a separate application has been filed for the stay of the action. It has. been revealed that the said vessel was purchased by the defendant No. 1 from Asfar Navigation Co., Cyprus, and in pursuance of the said agreement M. O. A. was signed with the plaintiff for delivery of the vessel on the basis of back to back contract. But as the plaintiff refused to accept delivery beyond 7th June, 1983 thereby resulting in the cancellation of the contract in pursuance of express terms. The defendants have denied that they have committed breach of agreement. It has been admitted that the defendant No. 1 is a Company carrying on business in Germany of which the defendant No. 2 is an agent. -On account of the plaintiffs refusal to accept delivery beyond 7-6-1983 in view of clause 4 of the agreement it became null and void. It has been pleaded that the delivery could not be effected within the stipulated time due to reasons beyond the control of the defendants. In these circumstances defendants are fully entitled to deal with the vessel in Pakistan as they deem fit in the ordinary course of their business of selling of vessel for scrap. It has been denied that they negotiated with Abdul Aziz broker for selling the vessel. The liability to pay damages has also been denied. The plaintiff's main contention is that in spite of the extension granted from 30th May to 7th June, 1983 the defendants failed to deliver the vessel and unilaterally cancelled the contract, which they were not entitled to do. To justify the cancellation, the defendants are relying on clause 4 of the agreement which is reproduced hereunder "The Vessel shall be delivered to the Buyers not later than 30th May, 1983. If delivery of the Vessel is delayed for reasons beyond Sellers control, so that she is not ready for transfer to the Buyers on or before 30th May, the Buyers have the right to cancel this contract provided written or telegraphic notice of such cancellation is given to Sellers by Buyers at or before 24 working hours after written of telegraphic notice is given by Sellers that the Vessel is not to be ready for delivery within 30th May, 1983. The delivery is further subject to safe arrival of the Vessel by the Sellers. The Contract shall be treated null and void and without any compensation to either side, if the above is not fulfilled in the stipulated time of delivery i. e. latest 30th May, 1983, or even before by mutual agreement. The defendant's contention is that the plaintiff was not prepared to accept the delivery, therefore in view of clause 4, the agreement had become null and void and, therefore, without any compensation to either side, it was rescinded. Mr. Abdul Sattar Memon, the learned counsel for the plaintiff has referred to clause 4 and contended that it is in 2 parts. The first part fixes the time for delivery upto 30th May, 1983 and in case it is delayed for reasons beyond defendant's control, and cannot be delivered before 30th May, then the plaintiff has the right to cancel this contract after serving notice. According to the learned counsel, the second part contemplates that the delivery will be affected on safe arrival of the vessel at Karachi and clean title to the vessel, by the Seller and if these conditions are not satisfied the contract shall be treated null and void and no party shall be entitled to any damage or compensation. On the other hand Mr. Sajid Zahid, the learned counsel for the defendants, has contended that if delivery is not affected by 30th May, 1983 due to reasons beyond the sellers control, the agreement shall be treated null and void, without any compensation. A bare reading of this clause prima facie shows that it contemplates two situations. The first is when the delivery cannot be affected upto 30th May, 1983 due to reasons beyond the control of the defendants, and in that case after serving proper notice, the plaintiff can cancel the contract. In this situation, the option to cancel the contract is with the plaintiff not the defendants. The next part provides that the delivery is further subject to safe arrival and clean title to the vessel. If these conditions are not fulfilled by 30th May, 1983 the contract shall be null and void without any compensation to either side. If both these clauses are treated as one, then these become ambiguous and contrary in terms. This being the prima facie impression the defendant's contention that as the contract has become null and void and no compensation is payable, the suit is not maintainable and no attachment can be granted, has no force. Now coming to the averments made in the application it is clear from the affidavits of the plaintiff and the broker that the defendants are trying to dispose of the vessel at a rate less than the market rate and that the defendant No. 1 being a foreigner has no property in Pakistan: Mr. Zahid has contended that the fact that the defendant No. 1 is a foreigner having no property in Pakistan is not sufficient for grant of attachment before judgment. The contention is correct. But in the present case, this is not] the only ground for seeking attachment before judgment. This ground is coupled with the fact that the plaintiff has made out a prima facie case for claiming damages and also that the defendants are trying to dispose of the vessel hurriedly at a price less than the market rate. From these facts it can be presumed that the defendants intention is to dispose of the vessel so that they may be able to save themselves from the plaintiff's claim. In these circumstances if the defendant is a foreigner and has no other property except the property in suit or one sought to be attached, the Court will consider it as an important factor for exercising its discretion unde Order XXXVIII, rule 5, C. P. C. All such factors taken together i established make out a clear case for attachment before judgment. The defendants in their affidavit have not denied that they are not selling the, vessel. It has been denied that they are selling it at a lower rate with intention to delay or defeat the decree. The defendants are admittedly selling the vessel. They have stated that it is in the normal course of their business, but have not produced on record an iota of evidence that they are engaged in the business of selling scrap vessels or that during the past how many vessels. they have sold. They have stated that they are selling it but did not disclose with whom they are negotiating to sell the vessel. It is correct that if a party sells or disposes of any of its propety in it normal course of business, then unless it is clearly established that the sale is with the intention to delay or defeat the decree, the Court will not make an order for attachment before judgment. But where the sale is admitted without establishing that it is in the normal course of business together with the facts that the defendants have no other property within the jurisdiction of this Court and sufficient evidence has been brought on record prima facie "establishing incriminating intention of the defendants, mere statement that it is being sold in the normal course of business will not be sufficient to save the property from attachment. Mr. Sajid Zahid has not taken up the position that the vessel does'not belong to the defendant No."

1. In fact he has stated that although reference has been made to an agreement through which the defendant No. 1 has purchased the vessel, it is not intended to contend that the vessel does not belong to defendant No.

1. He has, however, made a reference to the affidavit where it has been stated that the agreement with the plaintiff was a back to back agreement. It is pertinent to note that in the agreement with the plaintiff there is no reference to the agreement with Asfar or that it was a back to back agreement. In these circumstances defendants agreement with Asfar has no relevance. Mr. Zahid has pointed out that the plaintiff's claim for Rs. 24,60,522 is not bona fide. In fact by notice, dated 7-6-1983 the plaintiff had claimed Rs. 7,09,824 and thererafter on 12-6-1983 raised it to Rs. 24,60,

522. For purposes of this application no justification and legal ground seems to have been shown for the increase. In these circumstances for purpose of this application attachment can be -made for Rs. 7,09,

824. M. Y. H. Appeal accepted.