P L D 1964 (W (PLP)

(4) Did a fresh agreement take place between the parties for the supply of the same goods and on the same terms ? (5) Did the defendant write on 13‑6‑1955 and send reminders on 1‑7‑55 to the plaintiff calling upon them to take delivery of ready goods ? (6) Was the defendant bound to provide a bond room ? (7) Was the inspection of the goods delayed ? If so, to what effect ? (8) (i) Was the initial packing of the goods by the defendant in accordance with the appropriate contractual stipulation ? (ii) Was the objection of the plaintiffs unjustifiable ? (iii) Was further delay caused on account of the plaintiffs ? Or (iv) Whether any specification was given to the plaintiff by the defendant at the time of entering into the contract ? (9) Who was guilty of default and to what extent ? (10) Were the goods delivered within reasonable time in the circumstances of the case ? (11) Did the plaintiff's waive their claim ? (12) Are the plaintiffs estopped from maintaining their claim ? (12) (a) Did the defendants deliver the goods within the time stipulated in the contract ? (b) If not, are the plaintiffs entitled to damages for the delay in delivery of goods ? (13) Has any cause of action accrued in the plaintiffs' favour ? (14) Is the suit competent ? (15) To what decree, if any, is the plaintiff entitled ?

6. All the issues except issues 16 and 17 in Suit No. 100 of 1959 were either dropped or were not pressed. Similarly all the issues except issues Nos. 12 (a) and 12 (b) in Suit No. 221 of 1962 were either dropped or not pressed. The disposal of these two suits will, therefore, depend upon only the decision on issues 16 and 17 in Suit No. 100 of 1959 and issues 12 (a) and 12 (b) in Suit No. 221 of 1962. All these four issues in these two suits deal with the question of the breach of the contract. They on the admissions of the Advocates for the parties, require me to decide only about the party liable for the breach of the contract. According to both the learned counsel, the party which is res ponsible for the breach of the contract will be liable in these two suits.

7. In order to deal with this aspect of the case and dispose of the question of the breach committed by one party or the other it will be necessary to note that the facts on which these suits are founded are almost admitted. The contract between the parties is admitted under which the original date for delivery was fixed as the 15th of February 1953. It is also admitted that this date of delivery was extended by the defendant in Suit No. 100 of 1959 up to the 15th of April 1953. It is also admitted that further extensions were thereafter granted by the Department from time to time and the last extension granted by them was up to the 24th of May 1956. It is also admitted by the Advocates for the parties that the delivery of the goods was made by the contrac tors on the last extended date of 24th May 1956. It is further admitted by the parties that the value of the goods delivered by the contractors to the Department was Rs. 39,

690. It is also admitted by them that if the contractors are entitled to interest on this amount the interest worked up to the 7th of June 1956 will be Rs. 6,899‑7‑

0. The learned counsel for the Department, however, contends that although the Department had extended the period for delivery from time to time and fixed the last date fur delivery as the 24th of May 1956, the contractors would still be liable for the liquidated damages to the Department under the terms of the contract. He has further submitted that the terms of the contract are to be controlled by the conditions of contract governing tile Department of Supply and Development as set out in Form No. P. S.

35. Clause 11 of this Form reads as under :‑ "

11. Delivery. (i) Time for and date of delivery the essence of the Contract.‑ The time for and the date of delivery of the stores stipulated in the Acceptance of Tender shall be deemed to be the essence of the contract and delivery must be completed not later than the dates specified therein. The time given for delivery or dispatch dates from receipt by the Contractor of the Acceptance of Tender or Supply Order together with all necessary infor mation and drawings to enable the work to put in hand. The contractor shall allow all reasonable facilities to the Officer appointed by the Purchaser in this behalf including free and full access to his work and all records having a bearing on the progress of the deliveries against the contract. (ii) Notification by Contractor.‑Notice in writing shall be sent by the Contractor to the Inspector when the stores to be supplied are ready for submission for inspection and test. The Secretary, Ministry of Industries (and not the Inspector) is responsible for immediately notifying the Contractor if sub mission is to be retarded. (iii) Failure and Termination.‑Should the Contractor fail to deliver the stores or any consignment thereof within the period prescribed for such delivery, the Secretary, Ministry of Industries shall be entitled at his option either :‑ (a) to recover from the Contractor as agreed liquidated damages and not by way of penalty, a sum of 2 per cent. of the price of any stores which the Contractor has failed to deliver as aforesaid, for each month or part of a month during which the delivery of such stores may be in arrears, or (b) to purchase elsewhere, without notice to the Contractor on the account and at the risk of the Contractor, the stores not delivered or others of a similar description (where others, exactly, complying with the particulars are not, in the opinion of the Secretary Ministry of Industries which shall be final, readily procurable) without cancelling the contract in respect of consignments not yet due for delivery, or (c) to cancel the contract. In the event of action being taken under (b) or (c) above the Contractor shall be liable for any loss which the purchaser may sustain on that account but the Contractor shall not be entitled to any gain on repurchases made against default. In the event of the termination/cancellation of the contract for any reason whatsoever or on complete performance thereof the purchaser may, at his option (without prejudice to any rights which may be available to the purchaser under the existing Laws and Rules framed there under by notice in writing to the Contractor) requires the Contractor to deliver and the Contractor shall thereupon immediately deliver to the purchaser all or any part of the materials so required (fabricated or otherwise) in his possession or control, got or ordered by him whether in the normal course of business or under special terms arranged through the intervention of the purchaser or on his behalf for the performance of the said contract or any part thereof and thereupon the following provisions shall have effect :‑ (a) The Contractor shall, subject to any recoveries that the purchaser may be entitled to, be paid the cost price of the materials so delivered and not rejected as hereinafter provided plus a reasonable charge for handling. (b) In case at any time after the issue of said notice, the purchaser shall be of opinion that the materials are damaged or unsuitable for the purchaser's requirements, the purchaser may reject and return such materials. (c) In respect of materials supplied through the intervention of the purchaser or on his behalf and not taken over by the purchaser, at the request of the Contractor or with his consent, the Contractor shall settle all claims of the supplier including any claims to any extra charge (If the original stipulated terms bad been concessional) and keep the purchaser indemnified against the same. (d) In respect of finished articles rejected as not being up to specification or the standard of the accepted or sealed sample, the purchaser shall have the first option to take over the articles on payment, to the Contractor, of the cost of raw materials actually expended in the production thereof together with reasonable fabrication charges and the purchaser's decision on both shall be final and binding on the parties. (iv) Extension of time.‑(a) As soon as it is apparent that contract dates cannot be adhered to, an application shall be sent to the office issuing the Acceptance of Tender and a copy endorsed to the Inspector specified in the Schedule. Should, however, deliveries be made after the expiry of the contract delivery period without prior concurrence of the purchaser and be accepted by the Inspector/Consignee, such deliveries will not deprive the purchaser of his right to recover liquidated damages under clause 11 (iii) (a) above. (b) Without prejudice to the foregoing rights, if such failure to deliver in proper time as aforesaid shall have arisen from any cause which the Secretary, Ministry of Industries, may admit as a reasonable ground for an extension of the time (and his decision shall be final), he may allow such additional time as he considers to be justified by the circumstances of the case (c) Provided always that any failure or delay on the part of Sub‑Contractors though their employment may have been sanctioned, shall not be admitted as a reasonable ground for any extension of time or for exempting the Contractor from liability for any such loss or damage as aforesaid and provided further that no extension shall be allowed unless application for it shall, in the opinion of the Secretary, Ministry of Industries (which shall be final) have been made and in his opinion is justified. (v) (a) Place of delivery.‑The Contactor shall, as may be required by the Secretary, Ministry of Industries, deliver the stores either free at, or F. O. R,/F. O. B./F. A. S./C.

1. F. and C. & F., the place or places detailed in the Schedule hereto, and not later than on the dates specified in the Acceptance of Tender. (b) Notification of Despatch.‑Notification of delivery or despatch in regard to each and every consignment shall be made to the authorities named fn the form prescribed for the purpose, copies of which will be furnished free of charge by the office issuing the Acceptance of Tender. The Contractor shall further supply to the consignee a Packing Account quoting the Acceptance of Tender and/or Supply or Repeat Order No. and date of all stores despatched. All packages, containers, bundles and loose materials forming part of each and every consignment shall be described fully in the packing account and full details of contents of packages and quantity of materials are to be given to enable the Consignee to check the stores on arrival at destination. The railway receipt shall be forwarded to the Consignee immediately after despatch of stores otherwise the demurrage charges (if any) paid by the Consignee will be recoverable from the Contractor."

8. It is true that under this clause it is expressly stated that if the delivery is not made within the time specified In the contract when the Department would have three options left to it, namely, (1) to recover from the ‑Contractor as liquidated damages at the rate of 2 per cent. of the price of the goods for delay for each month or part of a month, (2) to charge the Contractor the difference in prices if the Department purchases the goods from somewhere else at the risk of the Contractor (3) to cancel the contract. In all these cases two clauses governing the situation are clauses (iv) and (iv) (b). Clause (iv) deals with the extension of time. This clause is in the nature of a saving clause and saves the Contractor from all the three contingencies visualized above in case the extension of time is granted to him with the concurrence of the Department. Clause (iv) (b) deals also with the extension of time and leaves it optional for the Department to grant extension or not. This clause also mentions that in case of grant by the Department of extension in time the other terms of the contract will be saved. These two clauses, in my opinion, are a complete answer to the case set up by the learned counsel for the defendant in Suit No. 100 of 1959 and the plaintiff in Suit No. 221 of 1962. As has already been said that admittedly the extension of time for delivery was granted to the Contractors and the delivery having been made by them within the stipulated period and accepted by the Department the question for liquidated damages by the Department cannot conceivably be set up. It is nobody's case that the extension of time to the Contractor was granted on condition that the Contractor for non‑performance of the contract within the first stipulated period in the contract would remain liable for liquidated damages. Sections 55 and 63 of the Contract Act are also in consonance with these rules on which reliance has been placed by the learned counsel for the Depart ment. Under these two sections of the Contract Act if and when extension of time for delivery is mutually agreed upon then the original time fixed in the contract for delivery is deemed to be substituted by the extended period. It is inconceivable to think that the rules framed by the Government will be is violation of these sections of the Contract Act. The case of Muhammad Habibullah v. Bird & Co. (A I R 1922 PC 178) also supports me on the view I have taken in this case that the Department will not be entitled to any liquidated damages if it has agreed to the extension of time for delivery of the goods and has accepted B the goods without any flaw or drawback in them. The case cited above sets out the principle as under :‑ The effect of section 55 of the Act is, where the party having the option elects not to avoid, to put the agreement after the original date on the same footing as an agreement just before the original date. Where a specific time is stated, then that substituted date must hold. If there 9s a simple waiver of the right to extension of the original time, then a reasonable time will be the proper time for delivery. Section 55, para. 3 means that the promisee cannot claim damages for non‑performance at the original agreed time, not that he cannot claim damages for non‑performance at the extended time. In an action for non‑delivery or non‑acceptance of goods under a contract of sale the law does not take into account in estimating the damages anything that is accidental as between the plaintiff and the defendant, as for instance an intermediate contract entered into with a third party for the purchase or sale of goods.

9. Mr. A. A. Zari, the learned counsel for the Department, teas conceded all this position but has founded his case upon Exh. 6/E dated the 4th February 1935 Exh. 6/K‑1 dated 20th August 1953 and Exh. 6/K‑? dated 24th September 1953. In all these letters while extension of time is granted it is stated that tire extension is granted without prejudice to the rights of the parties under other terms of the contract. These letters, in my opinion, are calculated to convey to the Contractors that the terms and conditions set out in the original contract would remain unaffected by the grant of extension by the Department to them. These letters, however, make an exception with regard to the time being the essence of the contract as originally set out in the agreement. The extended period in these letters will be deemed to have been mentioned in the original agreement. The learned counsel for the Department has also placed reliance upon Exh. 18 dated the 14th of September 1956 which purports to call for the explanation of the Contractors for the delay caused by them in making the delivery. The Contractors, under these letters have also been called upon to show cause why liquidated damages should not be recovered from them. What is significant to note in this letter is that it inter alia mentions that the Contractors should submit their explanation before the question of extension of time is considered. The question of granting further extension to the Contractors does not arise on the 14th of September 1956 when the extension had already been granted and the goods had been delivered to the Department. The letter was written on the 14th of September 1956 although the extended period had already expired on the 24th of May 1956.

10. Apart from this, the words written in the letters mentioned above "that the extension of time granted to the Con tractors is without prejudice to other rights of the parties under the contract" are without significance. The letter, Exh. 31/B‑1 written by the Department on the 19th of January 1953 also makes mention of these words although it was written to the Contractors on a query made by the consignee (C. O. D. Drigh Road) in their letter dated 4th December 1952. This letter was written in reply to the letter of the consignee dated 4th December 1962 which was written even before the tender of the Contractors was accepted. At any rate, this letter was written before the date for delivery fixed in the contract had expired and the date for delivery in the contract as originally stipulated was 15th February 1953. The words "without prejudice to other terms of the contract" have been introduced in every letter as a matter of routine and no significance. These words at any rate will not override the provisions contained in the rules and the Contract Act.

11. In view of what I have stated above, I am clearly of the opinion that the Department by extending the time for the delivery to be made by the Contractors and by accepting the C delivery had thereby given up their case for liquidated damages. I am also of the opinion that the Department had at no point of time claimed liquidated damages from the Contractors. The fact that Suit No. 221 of 1963 was filed on the 7th of November 1962 whereas delivery was accepted by the Department on the 24th of May 1956 by itself indicates that the Department had no idea of claiming liquidated damages at all. The belated Suit No. 221 of 1962 was in fact filed as a counterblast to Suit No. 100 of 1959 filed by the Contractors probably with a view to save interest for which they would be liable for non‑payment to the Contractors for the price of the goods. Under these circumstances, I have no option but to decree the suit for the amount claimed by the plaintiffs in Suit No. 100 of 1959 with costs. I have also no option but to dismiss the suit with costs filed by the plaintiff in Suit No. 221 of 1962. S. Q. Suit decreed.