P L D 1958 (W (PLP)

This is a very detailed letter on behalf of Pir Mahfooz, G. V. Rattanchand & Co. to the Additional Director, Civil Supplies, Karachi protesting against the supply of potatoes to Sind by Baluchistan Government through any other agent except Pir Mahfooz, G. V. Rattanchand & Co. A perusal of this letter would show that it had been written on behalf of Pir Mahfooz G. V. Rattanchand & Co. Pir Mahfooz tried to explain this letter by stating that he had signed it as partner of Pir Mahfooz and not as a partner of "Pir Mahfooz, G. V. Rattanchand & Co." I do not accept this explanation. If Pir Mahfooz wanted to write only as a partner of Pir Mahfooz & Co: it was not necessary for him to, have written at the top of the letter as under :‑ "From Pir Mahfooz, G.. V. Rattanchand & Co, Khori Garden, Karachi." This explanation is a belated one. (3) Exh. 7/60 dated 19th November 1947. This is also a letter from Pir Mahfooz, G. V. Rattanchand & Co. to the ‑Additional Director Civil Supplies, Karachi. This letter was written by Pir Mahfooz as a partner of Pir Mahfooz G. V. Rattanchand & Co. Pir Mahfooz in this letter had given the account on behalf of the firm of the potatoes received from 12th July 1947 to 29th October 1947. A perusal of this letter would show that; this was written by Pir Mahfooz on behalf of the, partnership, firm. The concluding portion of this letter runs as under " So we have Rs. 13,616‑2‑0 as balance in the Equalisation Fund. We have still to lift about 13,000 maunds of potatoes from Baluchistan." It is clear from the above that Pir Mahfooz was acting as a partner of the firm and not in his individual capacity. From the correspondence addressed by G. V. Rattanchand and Pir Mahfooz to the Government it is clear that they on their part gave to understand to the plaintiff 'that they were acting as partners. In other words, one was acting as agent to the other in away that his acts would bind the other partner. The essence of partnership is that one partner acts as an agent for the other so as to bind him for his acts in relation to the business. It has not been urged in the present case that in relation to the acts in respect of which G. V. Rattanchand or Pir Mahfooz have written to the Government, they would not bind each other. "Partnership" within the meaning of section 41 of the Partnership Act is "the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all", considering the intention of) G. V. Ratanchand and Pir Mahfooz as expressed in their letters, addressed to the plaintiff, I have no, doubt that they purported' to act as partners. I would, for the reasons given above, hold that there was a firm of G. V. Rattanchand Pir Mahfooz. Issue No. 2.‑In view of .what I have held above and the correspondence that I have already mentioned above addressed by G. V. Rattanchand and Pir Mahfooz to the plaintiff, it is clear that they had agreed to lift potatoes from Baluchistan. So far as the question of payment is concerned, I would hold that there is no evidence before me ‑to hold that it was the defendants viz. G. V: Rattanchand Pir Mahfooz who had agreed to make payment as disclosed in paras 2 and 3 of the plaint. Mr. Sadiq, the learned advocate for the plaintiff, has not been able to cite a single letter on behalf of G. V. Rattan chand Pir Mahfooz to show that they had agreed in the name of the firm to make payment to the Baluchistan Government. On the other hand, letters Exh. 7/3 dated 4th July 1947 and Exh. 7/4 dated 19th June 1947 would show that the payment was to be made by Messrs. P. M. Mahfooz & Co. and G. V. Rattanchand as separate firms. By letter dated 4th July 1947 the Government appointed Pir Mahfooz and G. V. Rattan chand as agents in respect of lifting potatoes from Baluchistan. A copy of this letter was sent to them separately. Exh. 7/4 also makes it clear that there were to be two agents who were to make payment against Railway Receipt to Baluchistan Government. I would, for these reasons, hold that the defen dant firm did not agree as alleged in paras 2 and 3 of the plaint to make, payment but that the individual firms viz. G. V. Rattan chand and Pir Mahfooz had agreed to make payment to the Baluchistan Government. Issue No. 3.‑From the documents filed by the plaintiff it would appear that the Government of Sind had appointed Pir Mahfooz & Co. and G. V. Rattanchand in their individual capacity for lifting potatoes from Baluchistan. Pir Mahfooz applied to the Additional Director of Civil Supplies, Government of Sind, on 21st June 1947 (Exh. 7/2) in respect of lifting the entire quota of potatoes from Baluchistan. G. V. Rattanchand also applied on 16th June 1947 (Exh. 7) for lifting potatoes from Baluchistan. The Government, by their resolution dated 4th July 1947 (Exh. 7/3), appointed Messrs. P. M. Mahfooz & Co. and Messrs. G. V. Rattanchand as agents. They are both mentioned as "Messrs." which shows that they were appointed as agents separately. A copy of the resolution was also sent to them separately as would appear from the note in Exh. 7/3. It has not been alleged by the plaintiff that the Government of Sind did not appoint Pir Mahfooz & Company and G. V. Rattanchand as agents in their individual capacity. So far as the Sind Government was concerned, the term of appointment would appear to be that the payment will be made by the agents to the Baluchistan Government against the Railway Receipt. This is clear from Exh. 7/4 dated 19th June 1947. There is not only the evidence of Pir Mahfooz before this Court that there was an arrangement between Pir Mahfooz and G. V. Rattanchand that G. V. Rattanchand would lift the potatoes from Baluchistan, pay for the same and distribute it in Sind, but the conduct of the plaintiff also lends support to the state ment of Pir Mahfooz that the payment was to be made by G. V. Rattanchand alone and not by Pir Mahfooz. I will deal with this aspect of the question under issue No.

6. I would hold for the purposes of this issue that the term of appointment with the Government for lifting potatoes was that money will be paid against Railway Receipt to the Baluchistan Government. Issue No. 4.‑It is stated in para. 4 of the plaint that the Hindu agent in Baluchistan was the agent of the defendant firm. This fact is denied in para. 4 of the written statement. I am inclined to hold, in view of letter (Exh. 7/8) dated 14th July 1947 that the Hindu agent in Baluchistan was the agent in Baluchistan of the defendant firm. The relevant portion of this letter addressed on behalf of G. V. Rattanchand Pir Mahfooz is as under :‑ " The Baluchistan Syndicate even after the arrival of our representative has been sending potatoes into Sind through opera trade channels "; The reference to the representative in this letter on behalf of the firm clearly establishes the contention of the plaintiff as put forward in para. 4 of the plaint that the Hindu representa tive was the agent of the defendant firm. The decision of this issue in favour of the plaintiff has not any material effect upon the question whether the liability for payment is that of G. V. Rattanchand or that of the defendant firm. The question of payment would depend upon the agreement between the plaintiff and the defendant firm. The agreement, from the correspondence produced before me, between the plaintiff and the defendants, appears to be that though the defendants were to act in partnership yet the payment was to be made by G. V. Rattanchand alone. I would deal with this aspect of the question in more detail while dealing with the other issues. Issues Nos. S, 6, 7, 8 and 9.‑These issues are interlinked and can be conveniently taken up together. The learned advocates for the parties also took up these issues together. It would appear from the allegation made in the plaint that the arrange ment of payment against Railway Receipt to the Baluchistan Government continued till the middle of August 1947 and thereafter, owing to communal riots, the payment could not be made against deliveries at Quetta. It is stated in the plaint that on the request of the " defendants " the plaintiff arranged with the Baluchistan Government " that they should send con signments of potatoes freight paid to the plaintiff and that the defendant would remit the cost of potatoes and freight by demand draft to the Baluchistan Government ". The plaintiff agreed to this request of the defendants. The Railway Receipts used to be endorsed by the plaintiff to the defendants and the bills accompanying the Railway Receipts were delivered to the defend ants so that the defendants may send the money due on each Railway Receipt inclusive of freight to the Baluchistan Govern ment. The plaintiff, after August 1947, received 16961 maunds and 23 (sic) seers of potatoes, the value of which inclusive of freight payable to the Government of Baluchistan, came to Rs. 2,72,559‑7‑

0. The defendants paid by two cheques a sum of Rs. 1,20,000 only. So far as Pir Mahfooz is concerned, he contends that there was no such arrangement. If there was any arrangement between G. V. Rattanchand and the plaintiff for lifting potatoes and pay ment being made not against the Railway Receipt but later on, he is not aware of the same. Considering the documents that have been produced before me in Court, I am of the view that the arrangement for pay ment was made only with G. V. Rattanchand in his individual capacity and not on behalf of G. V. Rattanchand Pir Mahfooz. I would now consider the documents and the circumstances which have led me to this conclusion. As I have already stated above, on behalf of the plaintiff Mr. Mumtaz Ali Muhammad Kazi who is now Superintendent, Statistical Bureau of West Pakistan Government, has been examined in this Court. His statement makes it clear that the Sind Government used to endorse the Railway Receipts in favour of G. V. Ratanchand. It is noteworthy that the witness does not say that the Railway Receipts used to be endorsed in favour of the defendants G. V. Rattanchand Pir Mahfooz. The relevant portion of his statement reads as under " After the riots the Government of Baluchistan despatched potatoes to the Government of Sind with the Railway Receipts and not to the defendants or to their agents. These R. Rs. were endorsed by the Sind Government in favour of G. V. Rattanchand. Government had arranged with G. V. Rattarchand that G. V. Rattanchand would make payment against R. R. G. V. Rattanchand was given these R. Rs. contrary to the arrangement without payment because he requested that due to disturbed conditions he could not make any immediate payments. G. V. Rattanchand used to submit periodical statements about delivery of the potatoes that he used to take ". That the arrangement for payment of the price for lifting potatoes was between the Government of Sind and G. V. Rattanchand is also borne out by letter Ex. 7/44, dated 15th October 1947. This letter to my mind is very important. It is addressed to Messrs. G. V. Rattanchand alone. The relevant portion of the letter reads as under " The described accounts together with Railway Receipts received from the Director of Civil Supplies, Baluchistan are sent herewith. You are requested to arrange to send cheque in favour of the Director of Civil Supplies, Quetta for the total amount of Rs. 1,89,957‑12‑0 being the cost of potatoes including freight etc., imported by you from Baluchistan at an early date under advice to this Department ". To my mind this letter very strongly supports the contention of Pir Mahfooz that the arrangement in respect of payment was only with G. V. Rattanchand and not with him. The demand, as it would appear from the above letter, has been made only to Messrs. G. V. Rattanchand and not to Pir Mahfooz. This letter, in my opinion, amounts to a clear admission on behalf of the plaintiff so far as the question of payment is concerned. It would appear from para. 7 of the plaint that in all nine railway receipts have been sent to the plaintiff which were in due course endorsed to Messrs. G. V. Rattanchand. Out of these nine Railway Receipts seven are mentioned in Ex. 7/44 reproduced above. The last two Railway Receipts mentioned in para. 7 of the plaint were not mentioned in this letter as they related to November and this letter was written in October 1947. The total amount of the cost of potatoes supplied till October as given in para. 7‑of the plaint also comes to the same amount as given in the letter Ex. 7/44. The potatoes supplied after October 1947 comes to about Rs. 82,

601. It would appear, therefore, that so far as the bulk of the supply of potatoes is concerned, the plaintiff's own document shows that the payment in respect of the same was to be made by Messrs. G. V. Rattanchand alone and not by Pir Mahfooz. This is further supported by Exs. 7/42, dated 10th October 1947 and 7/55, dated 29th October 1947. These are two letters in respect of payment of Rs. 70,000 and Rs. 50,000 by two cheques by G. V. Rattanchand. Mr. Mumtaz Kazi also admitted, after seeing these two letters that the payments referred to in para. 10 of the plaint were made by G. V. Rattanchand. These documents and the statement of Mr. Mumtaz Kazi for the plaintiff very clearly establish that the plaintiff had made an arrangement with Messrs. G. V. Rattanchand alone for pay ment of the potatoes lifted after August 1947. I am also of the view that this arrangement must have been made at the instance of G. V. Rattanchand himself. I would accept the statement of Pir Mahfooz made in this Court in respect of these facts. The plaintiff has satisfactorily proved that the Baluchistan Government after August 1947 sent the same quantities of potatoes as is mentioned in para. 10 of the plaint. This would appear from Ex. 7/44 and the statement of Mr. Mumtaz Kazi. There is no evidence on behalf of Pir Mahfooz to discredit the statement‑ of Mr. Mumtaz Kazi that the Government of Baluchistan supplied during September and November 1947, 16961 maunds and 23 seers of potatoes. I may mention that there is no oral or documentary evidence on record on behalf of the plaintiff to establish that there was any arrangement between the plaintiff and G. V. Rattanchand Pir. Mahfooz for the payment of the price of potatoes supplied by the Baluchistan Government. As I have already pointed out upto October 1947 the plaintiff's attitude definitely was that the payment should be made by Messrs. G. V. Rattanchand. It seems that after G. V. Rattanchand migrated to India the Government of Sind thought it convenient on the basis of letters addressed by Pir Mahfooz and Rattanchand as partners to put up a claim against Pir Mahfooz as partner of G. V. Rattan chand. I will now take up the question whether Pir Mahfooz having been alleged to be a partner of G. V. Rattanchand can be held to be liable under the circumstances which I have mentioned above for the payment of the balance of money due from G. V. Rattanchand. Mr. Sadiq, the learned Advocate on behalf of the plaintiff, contended that in view of section 28 of the Partnership Act, 1932, Pir Mahfooz having represented himself to be a partner of G. V. Rattanchand is liable to make the payment. In my opinion this section will have no application to the circum stances of the present case. In order to apply the provisions of section 28 of the Partnership Act, it would be necessary for the plaintiff to prove that they had allowed credit to G. V. Rattanchand on the faith that Pir Mahfooz was a partner of G. V. Rattanchand. This is a question of fact. In the first place it has not been alleged in the plaint that the plaintiff had given credit to Mr. Rattanchand only because Pir Mahfooz represented himself to be a partner of G. V. Ratanchand. In the second place, as would appear from what I have discussed above, the plaintiff was dealing with Messrs G. V. Rattanchand in his individual capacity and that G. V. Rattanchand had also made payment as G. V, Rattanchand to the plaintiff. It was next contended by Mr. Sadiq, relying on section 18 of the Partnership Act, that a partner is the agent of the firm for the purpose of the business of the firm. It is true that a partner is the agent of the firm for the purposes of the business of the firm but the question is what was the business of the firm. In this case it is not the ordinary business of purchasing goods and selling it in the market, but the business related to taking of potatoes from the Government of Baluchistan on payment of price against the Railway Receipt. The definite understanding was that potatoes will be taken on payment of price against Railway Receipt. Moreover, unless it can be shown that Messrs G. V. Rattanchand entered into this arrangement with the Sind Government for taking potatoes on credit in the name of the firm, he cannot bind Pir Mahfooz. It was observed in Ram Chandra Sahu and another v. Kaseem Khan and another (28 C W N 824) by Mookerjee and Rankin, JJ. that " the ultimate use by a firm of money borrowed by a ‑partner individually on his own credit does not make the firm liable for the loan. The circumstance that the firm obtains the benefit of a transaction entered into by one .of its members, as pointed out by . . . . . may show that he entered into the contract as the agent of the firm. But the fact is no more than evidence that this was the case, and the question upon which the liability or non‑liability of the firm depends is, not whether the firm obtained the benefit of the contract, but did the firm by one of its partners or otherwise enter into the contract ". The circumstances of the present case clearly disclose that G. V. Rattanchand alone in order to finance the venture took credit from the Sind Government on his own behalf and not so as to bind the other partner Pir Mahfooz. There is nothing on the record to show that Pir Mahfooz ever paid any amount of money to Government or that Government made any demand whatsoever upto 1947. The period of contract in question was upto December 1947 only. It was only after Rattanchand had left for India that the Government thought it fit to foist the res ponsibility of payment on Pir Mahfooz also. Mr. Sadiq also relied on section 21 of the Partnership Act and contended that because of the communal riots an emer gency was created and what was done by G. V. Rattanchand in order to take credit from Government was done to protest the firm from loss and therefore Pir Mahfooz was also bound by the Act of G. V. Rattanchand. There is no force in this conten tion. 1n the first place, this was not the case of the plaintiff in his plaint. In the second place, the communal riots at Quetta gave rise to only this emergency that payment could not be made at Quetta but had to be made in Sind. The Baluchistan Government having agreed to send Railway Receipts to Sind trade it easy for G. V. Rattanchand to make the pay ment. It was difficult, no doubt, because of communal riots to make payments at Quetta. Moreover, because of the communal riots the Sind Government should not have given credit to G. V. Rattanchand and if the Government did so it must bear its consequences. Pir Mahfooz cannot be made to bear the consequences of the failure of the Sind Government to give delivery of Railway Receipts only against payment, as was originally arranged. Mr. Dingomal, the learned Advocate for Pir Mahfooz, relied on section 22 of the Partnership Act and contended that in order to bind his client the plaintiff must prove that‑the credit was taken by G. V. Rattanchand on behalf of the firm. As I have already mentioned above the plaintiff has failed to prove that G. V. Rattanchand had taken credit m the name of the firm. In fact, the plaintiff had given it to G. V. Rattancliand alone and not to Pir Mahfooz as is clearly borne out by letter Ex. 7/44. It appears to me that there was x partnership between the parties for the single venture viz., to get, potatoes from Baluchistan on payment and to distribute the same in Sind and that the payment was to be made by G. V. Rattanchand alone. Pir Mahfooz was to get some nominal profit as ire was not to invest any money. It would be reasonable to conclude from the statement of Mumtaz Kazi, the letter Ex. 7/44, and the payments made by. G. V. Rattanchand that the Government had given credit to G. V. Rattanchand alone and that he alone was liable to make the payment and not Pir Mahfooz. Under these circumstances it is too late,in the day to foist the refponsi bility on Pir Mahfooz. I would, for the reasons given above, hold that G. V. Rattanchand alone is responsible for the payment of the amount due to the Government and not Pir Mahfooz. Issue No. 10.‑The Government has claimed a sum of Rs. 13,000 on account of equalisation fund maintained " for adjustment of the price of potatoes ". Exh. 7/7, dated I 1 th July 1947 makes it clear as to what is Equalization Fund. The Government had added two rupees to the price of potatoes at which they were to be sold in Sind. In the words of this notification (Ex. 7/7) : " The excess of Rs. 2 per maund will have to be credited to the Equalization Fund. The amount so collected in the Equalisation Fund will be utilized to subsidize sales of potatoes after September 1947, when the retail price of Baluchistan potatoes will have to be decreased to conform to prices of potatoes imported from Punjab and N.‑W. F. P ". The contention of Mr. Dingomal in respect of the Equalisation Fund was that as the necessity to subsidize sales of potatoes after September 1947 did not arise, the plaintiff is not entitled to any decree for the said amount. Para. 17 of the written statement in respect of this Fund runs as under : " The statements in para. 11 are denied. It is denied that the plaintiffs are .entitled to receive the amount on account of equalisation fund or to appropriate the same. Liability for the same is denied ". So far as the question of Equalization Fund is concerned, Ex. 7/60, dated 19th November 1947 is very important. This is an account of the Equalisation Fund. The concluding portion reads as under : " So we have Rs. 13,626‑2‑0 as balance in the Equaliza tion Fund . . . We want to utilize the Equalization Fund and we suggest that as per your Letter No. M‑138/47, dated 11th July 1947, henceforth no amount should be charged for the Equalization Fund ". It is clear from the above that the equalization fund amount as claimed by the plaintiff is admitted by Pir Mahfooz. He, in fact, has admitted some thing more than is now claimed by the Government. He has failed to establish that he was entitled to utilise the same as mentioned in his letter Ex. 7/60. He has not stated anything before this Court as to how he was entitled to utilize the equalization fund or whether he in fact did utilise it. Under the circumstances Pir Mahfooz having admitted the equalization fund, he is liable to pay the same. The suit is decreed for Rs, 13,000 claimed by the plaintiff as equalization fund and the balance of the claim is dismissed. The parties to receive and bear costs in proportion to their success and failure. A. H. Order accordingly.