P L D 1964 (W (PLP)

(10‑A) What damages if any, is the plaintiff entitled to ? (11) Whether the contract become void ? (12) Whether the defendants are entitled to the refund of Its. 30,000 or any sum ? (13) Whether the contract became impossible of performance on account of the ban on the import of the contract dal by the Governments of Colombo, Madras, Bombay and other parts of India ? (14) Whether the plaintiff neglected to afford reasonable facilities to perform their part of the contract and as such the defendant is excused from performing the contract ? (15) Whether the defendant is excused from the performance of the contract on account of the sale of the contract dal by the plaintiff without notice to the defendant." Separate issues were also framed in Suit No. 1000/1951 but as the issues framed in Suit No. 679/1951 cover all the grounds, it is not necessary to reproduce them in this judgment. It may, however, be mentioned that at the trial on the original side before the learn ed Single Judge, the learned counsel for the parties did not press Issues Nos. 2, 3, 4, 7, 14 and 15 and they were dropped on the commencement of the arguments by them.

6. In support of their cases the parties adduced both oral and documentary evidence. Respondent Government examined P. W.

1. Dost Muhammad (Exh. 11) and P.W. 2, Jamal (Exh. 39). The first witness at the material time being a Senior Assistant in the Civil Supplies Department, deposed about the circumstances in which the contract was entered and the damages suffered by the respondent Government. The second witness, a partner of Parekh Flour & Rice Mills deposed that the market rate in January 1949, was Rs. 15 per bag. The appellants, examined D. W.

1. Dad Muhammad (Exh. No. 40), D. W. 2 Mohammed Yunus (Exh. 41) and D. W. 3 S. M. Ibrahim (Exh. 65) as witnesses to support their case. D. W.

1. Dad Mohammad a clerk of Karachi Grain & Seeds Merchants Association deposed about the market rates of Matar Dal in January. June and August, 1949. According to him the market rate on 17th January 1949, was Rs. 95 to Rs. 105 per 8 mds. On 28th June the rate was Rs. 50 to Rs.

85. On 29th August it was Rs. 80 to Rs.

85. The other two witnesses are the partners of the appellant's firm and deposed on material points in support of the appellants' case. Documentary evidence consists of the letters exchanged between the parties, the permits Issued by the Central Government for the export of the goods, the contracts entered into by the appellants with the foreign firms and the correspondence carried on in that connection.

7. After considering the evidence of the parties, the learned Single Judge on issue No. 1 held that the contracted goods belonged to the Government of Sind and in the light of the arrangement entered into by the Sind Government with the Sind Purchasing Board the objection that the Government could not sue the appellants on the contract was not maintainable. On issue No. 5, the finding of the learned Single Judge is that there it was no stipulation between the parties that the export permits will be issued simultaneously with the acceptance of the tender. It was further held that even if there was any such implied term it was later on modified and replaced by the term that export licences or permits will be obtained from the Central Government. On Issue No. 6, the finding is that time was of the essence of the contract. The period of performance of the contract was extended from time to time at the request of the appellants' firm. On Issues Nos. 9, 10 and 13, the finding of the learned Single Judge is that there was no condition attached to the contract in suit that export licence would be provided to the appellants' firm or that the goods were fit for human consumption. It was found that the appellants' firm committed the breach of the contract. On Issue No. 11, the finding is that the performance of the contract was not frustrated by any impossibility. On Issue No. 10‑A, which dealt with the question of damages, it was held that there was good excuse for the respondent Government not to sell the goods before 18th August 1949, it was, however, held that at a time when the prices were falling the delay to advertise the sale in September 1949, exposed the respondent Government to the charge of negligence. The resale of the goods was held to be bad to law both on the ground of delay and on the ground that the contract between the parties was of unascertained goods and to law the right of resale is not available in such cases to a seller. The rate at which the goods were sold to M/s. Dinar Mills was not accepted as proper criterion for assessing damages of breach of the contract committed by the appellant. On the evidence produced by the parties, the learned Single Judge's finding is that the market rate on the date of the breach of the contract namely in August 1949, of low quality dal was Rs. 25 per bag of 2 mds. On this basis the learned Single Judge found that the Sind Government has suffered a loss of Rs. 2,74,725 on 2,700 tons. It was further held that in view of the breach committed by the appellants they were not allowed to claim the refund of the security deposit. On these findings the learned Single Judge passed a decree for Rs. 2,44,725 in favour of the respondent Government with proportionate costs and interests at the rate of 6 per cent. per annum from the date of the Suit until payment. The claim of the refund of Rs. 30,000 was accordingly dismissed. The appellants have challenged these findings in these appeals.

8. Mr. Aijaz Ali, the learned counsel for the appellants has attacked the judgment under appeal on the following grounds (1) that the breach was committed by the respondents ; (2) that the contract in question became impossible for performance on account of the ban imposed by the Ceylon and Indian Governments on the export of "Mattar Dal", the subject‑matter of the suit ; (3) that the suit for damages based on resale, was not maintainable ; (4) that the damage has been wrongly assessed ; and (5) that the respondent Government having sold 700 tons to Saz & Co. out of the contracted goods has frustrated the performance of the contract. We will discuss these points separately.

9. We will first deal with the first two grounds namely that the respondent Government committed the breach of contract and the contract became impossible of performance in view of the ban imposed by the Ceylon & Indian Governments. In support of the first ground Mr. Aijaz Ali, the learned counsel for the appel lant, drew our attention to the terms of the contract, under which the Sind Government had undertaken to provide facilities to export the contracted goods outside Pakistan. The learned counsel con tended that the Government of Sind by issuing their own export permits not only acted illegally but also caused delay in the performance of the contract. This contention has some force. But fortunately or unfortunately in spite of this the appellants' firm kept the contract alive on future hopes. In December 1948, and even in January 1949, it was open to them to terminate the contract on these grounds. But they did not take advantage of it and chose the other course in keeping the contract alive. On the evidence led by the parties undoubtedly it was an implied term of the contract that Sind Government would provide valid export permits for the effective performance of the contract. Exh. 7, a letter of the Sind Government dated 24‑11‑1948, address ed to the Ministry of Food, Government of Pakistan calling upon them to issue necessary permits immediately for the export of the goods fully supports this view. The fact that the export permits were also issued in the name of the Sind Government further strengthens our view, But this finding has no material bearing on the appellants' case because D. W. 2 Muhammad Yunus admitted In his evidence that they continued to perform their part of the contract after coming to know on the 17th of November 1948, that permits issued by the Sind Government were invalid. They had accepted the modification that export permits be issued by the Central Government on 17th November 1948. In the face of this clear admission it is not possible to hold in this case that the respondent Government committed any breach of the contract in this respect. Moreover, there is ample evidence on the record that in spite of the fact that by December 1948, most of the foreign purchasers had cancelled their contracts in respect of the goods in dispute, the appellant‑firm vide letter Exhs. 20 and 21 sought from the Government of Sind to extend the period of the performance of the contract. It was for this reason that the Government of Sind vide Exh. 24, a letter dated 19th May 1949, allowed the appellants time to lift the goods in dispute within fifteen days of the receipt of this letter. On this clear evidence we are in full agreement with the finding of the learned Single Judge that the appellants' firm committed breach of the contract.

10. It was next urged by the appellants' counsel that one of the implied term of the contract was that the goods were suitable for human consumption. The learned counsel has referred us to the correspondence that passed between the appellants and some businessmen to India and Ceylon to show that both the Governments had imposed ban on the import of the contracted goods on the ground that it was not fit for human consumption. A reference was made to the statement of P. W. 3, Muhammad Ibrahim a partner of the appellants' firm, who stated that the Government Laboratory of Ceylon had declared the goods which the firm wanted to export to be poisonous stuff. He further stated that the ban imposed in India was also on the ground that the stuff that the firm desired to export was poisonous. But as observed by the learned Single Judge there is no material on the record to find out the actual reason for which the ban was imposed. Even otherwise the ban imposed by these Governments has no material, bearing on the decision of this case. The contract in question was not entered on the understanding that the goods in question would be allowed to be imported in these two countries. Under the contract the goods in dispute were meant for export in any country outside Pakistan. It seems to us that any ban imposed by the said two countries cannot have any material bearing on the validity of the contract entered into by the parties. At best the appellants can plead that it was an implied warranty of the con tract that the contracted goods were merchantable. We have examined the appellants' case from this angle. In our opinion, the two certificates produced by appellants on the record completely demolish the appellants' case in this respect. Exh. 36, a certificate issued by Mr. A. G. Bunn, Director of Civil Supplies (Sind) shows that goods in question meant for export outside Pakistan was a produce of Sind Province and was used as food in Pakistan. Another certificate obtained by the appellants, Exh. 18 of the Health Officer, Karachi dated 12th January 1949, also shows that the goods in dispute were found fit for human consumption. In these circumstances, the contention of the learned counsel in this behalf has no force and must be repelled.

11. This brings us to the next question namely whether in the circumstances of the present case the suit for damages based on resale of the goods was maintainable or not. Mr. Aijaz Ali, the learned counsel for the appellants contended that the respon dent Government had no right to the resale of the goods at the risk of the appellants' firm because the contract between the parties was in respect of unascertained goods. This contention prevailed with the learned Single Judge. Mr. Aijaz Ali further contended that since the respondent had brought the suit on the basis of the damages suffered by the re‑sale of the goods in dispute the suit was not maintainable. He referred us to the plaint in the suit in support of his contention that the claim for damages was not based on any other basis. The learned counsel placed reliance on two decisions of Lahore High Court reported in Sunder Singh Jit Singh v. Gulab Singh Kalyan Singh (A I R 1927 Lab. 268) and Dayal Singh Harnam Singh v. Beli Ram Nathu Ram (2). The first case is not of much help as the point under consideration was not discussed on merits. In the second case it was observed that it was settled law that the goods cannot be resold at the risk of the purchaser until the property in them was passed to him. It was, however, held in both the cases that the seller in such cases could sue on account of the breach of the contract and claim the difference between the contract price and the market price of the goods on the due date. Both the decisions are of no help to the appellants because in the first the claim of the seller was disallow ed on the ground that the market rate of Partalpur sugar was not available on the record. In the second case the High Court framed additional issue on the ground that plaintiff had claimed in the alternative any other equitable relief which they were, found to be entitled and remanded the case for finding out the market rate on the date of the breach. There are two other cases, which however, support the contention of the learned counsel. In M. S. Angulia 8c Co. v. E. D. Sasson & Co. (13 I C 705), the Calcutta High Court held as under :‑ as the sugar was In bulk and the vendors had not even appropriated the goods for the purposes of the agreement, it could not be said that there were goods to which the power of re‑sale applied so as to make the result of that re‑sale the measure of damages, and that the suit should fail. In Muhammadi Cotton Factory Ltd. v. Pakistan Industries Ltd. (P L D 1962 Kar. 243), a Division Bench of this Court held that where in a case for damages for breach of contract of sale, a party claims damages on the basis of a re‑sale of the goods and fails to prove it, it cannot in appeal set up an alternative claim for damages on the basis of a market price. It was further observed that to allow a party to do so would be tantamount to allowing its claim without offering the other party any chance to defend itself. We have considered both the cases and in our opinion these cases cannot be applied to the facts of the preset case. In the Calcutta case, there was no evidence about the market rate of the goods. In Karachi case also the damages on the basis of the market price was set up in appeal as an alternative claim which is not the position in this appeal. In another case a Division Bench of this Court in Letters Patent Appeal No. 3 of 1959, decided on 15th March 1962, had taken a contrary view on this point. It was held in that case that‑ "Where in a suit for damages for the breach of a contract for sale of goods the seller plaintiff claims as the measure of damages the difference between the price, which he realised on the re‑sale of goods and the contract price, the fact that the plaintiff has made a mistake in demanding damages on a wrong basis is not a reason for the Court to refuse to set right the mistake by directing the damages to be calculated in the proper way unless the plaint is amended. For even without an amendment the Court is entitled to award the proper measure of damages if there is sufficient evidence on record." In expressing this view the Division Bench considered the reason ing of the Bombay High Court in Narsinggirji Manufacturing Co. v. Bundansaheb Abdul (A I R 1924 Bom. 390) and of the Andhra Pradesh High Court in Majety Balakrishna Rao v. M/s. Mooka Devassy Cuseph & Sons (A I R 1959 Andh. Pro. 30). In both the cases the measure of damages was claimed on the basis of re‑sale of the goods. The Courts without amendment of the pleadings granted a decree to the plaintiff on the basis of the difference between the contracted price and the market price on the evidence available on the record. We would, therefore, prefer to follow the decision taken by the Division Bench in the above‑mentioned Letters Patent Appeal.

12. In our opinion, the learned Single Judge was justified in awarding damages to the respondent Government on the difference of the market price and the contracted price. No prejudice was caused to the appellants on this account. The parties have led evidence in the original suit on the question of market rate and the learned Single Judge awarded the damages on the basis of the evidence produced by the appellants' witnesses. We, therefore, find no force in this contention and hold that the suit was maintainable and the damages awarded to the respondent was on proper basis.

13. It was further contended on behalf of the appellants that the measure of damages awarded in this case were not based on proper appreciation of fact involved in the matter. According to the appellants' counsel the contract rate was agreed upon between the parties on the ground that the goods in question were to he exported outside Pakistan. It was for this reason that the appellants agreed to offer a higher rate than that one prevalent in the market to the respondent Government. The learned counsel contended that at the material time the market rate for similar goods for local consumption was Rs. 34 per bag. In this connec tion he referred us to the evidence of P. W. 1 Dost Muhammad, who admitted that there was a difference of about Rs. 10 in the market rate for local consumption and the goods meant for export at the time when the contract in question was entered into. In our opinion, the evidence of this witness is not consistent to the other reliable evidence produced on the record of the market rate at the time when the contract was entered into. This witness being a layman was not in a position to state proper market rate of similar goods used for local consumption. Appellant's witness D. W. 1 Dad Muhammad (Exh. 40) a clerk of the Karachi Grain and Seeds Merchants Association gave the rate of similar goods in January 1949, between Rs. 95 to Rs. 105 for a unit of 8 mds. On this basis the market rate of the goods for local consumption of a bag of 2 mds. would be between Rs. 30 to Rs. 33 per bag. This witness further stated that he was not aware that there was a difference in the rate of the Mutter Dal meant to be sold in the country and meant to be exported out of the country. It, therefore, cannot be said that there was much difference between the market rate of the goods meant for export and the goods meant for local consumption. The contention of the appellants that since the respondent Government sold 700 tons out of the goods stocked in the godown to Saz & Co. the terms of the contract was varied and the contract was frustrated is also without force. There is evidence on the record that there was about 4300 tons of Mutter Dal stocked in the godowns of the Government. Out of this 700 tons were dis posed of to Saz & Co. Thus the contention that the contract was in any way varied or frustrated is without foundation.

14. The evidence on the record shows that the breach of the contract was committed by the appellants in June 1949. The learned Single Judge has, however, held that the breach was committed in August 1949. Whatever view is taken the market rate of the goods both in June 1949 and August 1939 according to the statement of D. W. 1 Dad Muhammad was between Rs. 80 to Rs. 85 per bag of 2 mds. On this evidence the market rate of the goods in dispute of a bag of 2 mds. would be Rs. 25 per bag. 1n our opinion, therefore, the measure of damages was assessed on the basis of the proper market prices prevailing for low quality dal in June or August 1949. No exception can be taken to the finding of the learned Single Judge on this point.

15. It was lastly contended on behalf of the appellants that the learned Single Judge has calculated the damages on the basis that the appellants committed breach in respect of 2,700 tons. The learned counsel referred us to the evidence on the record, which establishes beyond doubt that the appellants had taken delivery of 551 tons of Mutter Dal out of the goods in question and exported it to India, Ceylon and Baherin. The contention of the learned counsel in this respect is fully supported by the evidence on the record. The damages, therefore, should have been awarded to the respondent on 2149 tons and not on 2700 tons. In view of this the decree of the learned Single Judge will have to be modified to the extent of Rs. 54,971 (fifty‑four thousand nine hundred and seventy‑one only) out of the damages awarded to the respondent Government.

16. The learned Single Judge has also awarded the respon dent Government interest at the rate of six per cent. per annum from the date of the suit until payment. In our opinion this is not a fit case in which interest should have been awarded. Under section 61 of the Sale of Goods Act unless there is a contract to the contrary a (sic) is not entitled to claim interest on the amount/ of damages. Even otherwise this is a most unfortunate case. The appellants could have terminated the contract in January 1949, on the delay in the issue, of the export permits by the Central Government. There is no doubt in our mind that the appellants are the victims of unfortunate circumstances and the respondent Government cannot be excused from the blame that it was also to a certain extent responsible for the loss caused to the appellants' firm. We would, therefore, set aside the decree of the learned Single Judge in this respect.

17. In the result the appeal is allowed to the extent of Rs. 54,971 (Rupees fifty‑four thousand nine hundred seventy‑one only). The decree of the learned Single Judge will stand modified to this extent. The respondent will be entitled only to propor tionate cost of the suit. In the circumstances of the present case, the parties will bear their own costs of this appeal. K. B. A. Appeal partly accepted.