2020 PLP 33 (YLRN)

MAHMOOD A. KHAN, J.

These two suits are for recovery of amounts between the same parties which were consolidated by this court, vide order dated 20.03.1997, as passed in Suit No. 760 of 1993 wherein the Suit No. 760 of 1993 was ordered to be treated as leading suit. The allegations made by the parties not different only for the claim/ amounts which are specified; however the version being the same is not repeated for the sake of brevity.

2. Brief facts of the plaints as averred are that the plaintiff is engaged in the business as exporters, importers, suppliers, order takers, indenters, negotiators and also as commission agents for cotton, machinery, equipment, vehicles, etc. That the defendant approached the plaintiff to explore a possibility of a deal between the Government of Sindh and the defendant for supply of drilling rigs, earth moving machinery and garbage collection trucks. Defendant by letter of 07.06.1988 supplied to the plaintiff presentation proposal along with equipment list. That the plaintiff promptly started working on the project while the Manager Environmental Project of the defendant vide his letter dated 28.07.1988 agreed to pay the plaintiff a commission at the rate of 5% of total FOB Japanese prices (excluding the spare parts) for award of contract for supply of garbage collection vehicles to the defendant by the KMC. That the plaintiff represented and acted on behalf of the defendant and followed up the matter at all levels. That the plaintiff through its efforts managed to arrange the tender specifications in accordance with and as advised by the plaintiff and due to the efforts of plaintiff, the defendant was awarded the contract KMC vide agreement signed and executed on 22.04.1992 in the sum of JY 243,713,400.00 for Phase-I. That after the tender in respect of Phase-I was awarded and agreement was signed, the defendant started making false attempts to escape out of the agreement with the plaintiff in respect of payment of 5% commission to the plaintiff. Regarding Phase-I, the plaintiff filed a suit bearing No. 777/1992 in this Court. That the plaintiff on signing the agreement between the defendant and KMC and opening of A/P by KMC requested the defendant to inform to the plaintiff shipment date of the contract dated 06.10.1992 with breakup of value of goods, freight and insurance or JY 473,968,000.00 for Phase-II to enable the plaintiff to calculate their commission and lodge a claim in respect thereto according to agreement dated 28.07.1988, confirmed by an agreement dated 01.09.1988. That having received no reply from the defendant, the plaintiff vide its telex dated 01.09.1993 claimed JY 22,513,480/- being 5% commission on total FOB value of the goods under the contract and requested them to remit the same to the plaintiff bankers. That the defendant did not reply to the claim of the plaintiff, they however vide their telex dated 19.10.1992 had offered 0.75% of FOB value contract for Phase-I and 0.25% for Phase-II contrary to the agreement. That when the plaintiff did not agree to accept the offer, the plaintiff further served the defendant with a legal notice calling upon them to pay JY 22,513,480/- being the 5% commission within a period of 5 days from the receipt of the said notice. That the defendant by its reply dated 14.09.1993 flatly refused to pay the plaintiff's commission in the sum of JY 22,513,480/-.

3. In the Suit No.760/1992 following prayers are made; (a) a decree for a sum of JY 22,513,480.50/- on account of commission at the rate of 5% on the FOB value of the contract for Phase-II, for JY 473,968,000/- payable in Pak. Rupees at the rate of exchange prevailing at the time of decree; (b) a decree for compensation/mark-up at the rate of 20% per annum from the date of the suit till the realization of the above amount; (c) costs of the suit; and (d) any other relief or reliefs which this Hon'ble Court may deem fit and proper in the circumstances of the case.

4. In Suit No. 777/1992 following prayers are made; (a) a decree for a sum of JY 11,576,386.50/- on account of commission at the rate of 5% on the FOB value of the contract for Phase-I, for JY 243,713,400.00/- payable in Pak Rupees at the rate of exchange prevailing at the time of decree; (b) a decree for compensation/mark-up at the rate of 20% per annum from the date of the suit till the realization of the above amount; (c) costs of the suit; and (d) any other relief or reliefs which this Hon'ble Court may deem fit and proper in the circumstances of the case.

5. The defendant filed its written statements, wherein it is stated that Mr. Ghulam Ali P. Allana, Managing Partner of plaintiff came to Manager Machinery and Project Development of the defendant and impressed that he has very intimate and close contacts in the Government of Sindh as well as KMC and wanted to find out grant-in-aid, assistance program of the Govt. of Japan to Govt. of Pakistan and desired if the defendant company is interested to supply any, machinery as such after collecting of the facts and figure, letter dated 7th May, 1988 was written to the Plaintiff. That the plaintiff has referred to one photocopy of letter dated 20.06.1988 alleged to have been written by the learned Mayor, Karachi to the Secretary to Govt. of Sindh, had this letter been drafted at the initiative of the plaintiff, there would been definitely some mention about the plaintiff or defendant company or copy of that at-least would have been endorsed to the defendant. That the defendant accepted to pay 5%, commission of total FOB Japanese prices excluding spare parts to the plaintiff vide defendant's letter No. MH-H571 dated July 1988 and No. MH-H584, dated September 1, 1988 only in case that the plaintiff could succeed to arrange tender specifications strictly in accordance with defendant's proposed specifications. If the defendants were awarded the contract however the plaintiff miserably failed to arrange tender specifications in accordance with the requirements of the defendants. That the plaintiff further impressed upon the defendant that if the defendant appoint plaintiff as their local agent for procurement of solid waste management project for KMC, he can secure the contract for the defendants, as such through the same letter dated September 1, 1988, he was appointed as local agent but he miserably failed in his commitment as well as the contract thereof was awarded to another party. That as a matter of fact and record PC-I dated 04.02.1992 and dated May 25, 1992 were not prepared by the plaintiff. That at no time KMC or provincial government have any idea written any letter to the defendant that the plaintiff was citing as defendant's agent before them, on the contrary virtually every information given by the plaintiff to the defendant was meaningless, useless, obtainable by anybody. That the plaintiff was repeatedly warned for the same, the contents of P.C-1 dated 25.01.1992,04.02.1992 and 25.05.1992 and defendant's telex to plaintiff dated 23.06.1992, 30.06.1992, 06.08.1992, 16.08.1992, 30.08.1992 and 01.10.1992 are quite clear on this point. That it is expressly understood that the plaintiff miserably failed to arrange the tender specifications as required by the defendant, further the plaintiff wrongly contacted with JICA Delegation when JICA Delegation visited KMC in March 1992 which seriously damaged the prestige and credibility of the defendant. That the Plaintiff willfully tried to harm the interests of the defendant by contacting JICA Delegation wrongly when JICA Delegation visited KMC in March 1992 which seriously damaged the prestige and credibility of the defendants. It is prayed that the suit may be dismissed with cost.

6. On 20.03.1997 following consolidated issues were framed by this court;

1. Whether the suit is bad for non-joinder of Karachi Municipal Corporation and Government of Sindh, if so its effect?

2. Whether the work on agreements dated 28th July, 1988 and Ist September, 1998 was to be completed on or before 30th June, 1988, if so what is its effect?

3. Whether the plaintiffs acted as per agreement mentioned in Issue No. 1 above?

4. Whether the plaintiff managed to arrange tender specification in accordance with the defendant's requirement from time to time or not?

5. Whether the plaintiff could finally managed to prepare the tender specifications as desired by the defendant?

6. Whether the plaintiffs are entitled to the commission at the rate of 5% of the F.O.B value of the contract?

7. What is the effect of letters dated 28th July, 1988 and Ist September, 1988?

8. What reliefs the plaintiffs are entitled to?

9. What should the decree be?

7. The plaintiff examined PW-1 Ghulam Ali P. Allana who filed his affidavit-in-evidence as ExH-P/4-1, letter of defendant dated 07.05.1998 as Exh-P/4-21, letter of defendant dated 07.06.1988 as Exh.P/4-3, presentation proposal as Exh-P/4-4, KMC letter dated 06.06.1988 as Exh-P/4-5, letter of defendant dated 28.07.1988 as Exh-p/4-6, letter of defendant dated 01.09.1988 as Exh-P/4-7, PC-1 of KMC as Exh-P/4-8, letter of defendant dated 14.09.1988 as Exh-P/4- 9, KMC letter dated 09.10.1988 as Exh-P/4-10, Office Memorandum dated 19.04.1989 of Ministry of Finance and Economic Affairs as Exh-P/4-11, summary of information dated 11.04.1991 of plaintiff as Exh.P/4-12, handwritten message No. MNC 12121 by the defendant as Exh-P/4-13, telex dated 11.01.1992 as Exh-P/4-14, handwritten working paper by the defendant as Exh-P/4-14, telex dated 20.01.1992 as Exh-P/4-15, inception report of Japanese-International Corporation Agency as Exh-P/4-16, letter dated 05.03.1991 as Exh.P/4-17, telex dated 07.04.1991 as Exh-P/4-18, letter dated 06.03.1991 as Exh-P/4-19, handwritten working paper of representative of defendant as Exh-P/4-20, telex dated 07.02.1992 as Exh-P/4-21, telex dated 02.03.1992 as Exh-P/4-22, PC-1 for procurement of refuse vans by KMC in Phase-I as Exh-P/4-23, agreement between KMC, Federation of Pakistan and the defendants as Exh-P/4-24, telex dated 07.02.1992 as Exh-P/4-25, telex dated 19.04.1992 as Exh.P/4-26, PC-1 for procurement of refuse vans by KMC in Phase-II as Exh-P/4-27, telex dated 22.06.1992 as Exh-P/4-28, telex dated 29.06.1992 as Exh-P/4-29, telex dated 30.06.1992 as Exh-P/4-30, telex dated 30.06.1992 as Exh-P/4-31, registered A.D. slip as Exh-P/4-32, telex dated 01.07.1992 as Exh-P/4-33, telex dated 22.07.1992 as Exh-P/4-34, letter dated 04.08.1992 as Exh-P/4-35, telex dated 05.08.1992 as Exh-P/4-36, letter dated 15.08.1992 as Exh-P/4-37, registered A.D. slip as Exh-P/4-38, telex dated 16.08.1992 as Exh-P/4-39, telex dated 29.08.1992 as Exh-P/4-40, telex dated 01.10.1992 as Exh-P/4-41, telex dated 02.02.1992 as Exh.P/4-42, telex dated 02.03.1992 as Exh-P/4-43, telex dated 22.07.1992 as Exh-P/4-43, telex dated 16.08.1992 as Exh-P/4-44, agreement between KMC, Islamic Republic of Pakistan and defendant as Exh-P/4-45, memo of Suit No. 777 of 1992 as Exh-P/4-46, agreement between KMC, Islamic Republic of Pakistan and defendant as Exh-P/4-46, letter of Habib Bank dated 11.02.1993 as Exh-P/4-47, letter of Habib Bank dated 20.07.1993 as Exh-P/4-48, telex dated 27.07.1993 as Exh-P/4-49, telex dated 19.10.1992 as Exh-P/4-52, letter of Navin Merchant Advocate dated 09.09.1993 as Exh-P/4-53, letter of Raees M. Mushtaq dated 14.09.1993 as Exh-P/4-54, letter of KMC dated 05.10.1991 as Exh-P/4-55, brochure of Yammar High Speed Rubber Crawler Carrier as Exh-P/4-56 and field survey report of KMC as Exh-P14-57. The plaintiff also got examined his three witnesses namely (1) Ghulam Shabbar son of Ghulam Shabbir, (2) Khalid Jawed son of Shamshad Hussain and (3) Dr. Farooq Sattar son of Abdul Sattar who produced photocopy of letter of KMC dated 10.04.1991 as Exh-P/24-24-A. All the witnesses were cross-examined by the learned counsel for the defendant.

8. Defendant examined his witness namely Hirotsuau Ishiyama at Exh-D-1. He produced his affidavit-in-evidence as Exh-D-2 and authorization dated 26.03.2003 as Exh-D-3. He was cross-examined by the learned counsel for the plaintiff.

9. Learned counsel for the plaintiff contends that Suit No.760/93 is in respect of Phase-II for the commission for providing machinery of garbage collection and transportation vehicle for Karachi Metropolitan Corporation imported from Japanese, through Japanese Grant in Aid Program and Suit No.777/93 is in respect of Phase I of the same. That a 5% commission was agreed by the defendants to be paid to the plaintiff in the F.O.B. value of the goods. That the defendants have admitted all the documents as brought forward by the plaintiff. He has referred to exhibits P/4-2, 3, 4 and 6 contending that the said 5% commission was agreed to between the parties; however the defendants despite being successful in supplying the machinery through the efforts of the plaintiff have refused the due commission of the plaintiff. That the evidence of the plaintiff in the matter was recorded repeatedly i.e. before and after consolidation of the two cases wherein the plaintiff has proved his case and is entitled to the commission as claimed.

10. Learned counsel for the defendants on the other hand has contended that the plaintiff was entitled to commission only if tender/s were forthcoming in accordance with the specifications. as desired by the defendant. The specifications awarded in the contract were different to the once provided. That the plaintiff approached the team of JIACA (Japan International Corporation Agency) and he was warned not to do so. He has referred to the cross-examination of the plaintiff in regard to the terms of the contract and further submitted that the offer of payment made to the plaintiff was to avoid litigation on part of the defendant being a multinational company to protect the reputation, which having not been accepted the same stood withdrawn.

11. In rebuttal learned counsel for the plaintiff reiterated the stand of the plaintiff and further submitted that the plaintiff has proved his case by producing Ex.P/4 along with the other annexure to the plaint produced as exhibits as to the quantum of the claim.

12. At the time of hearing of arguments, I had called upon the attention of the learned counsel to the element of public policy in the matter to which learned counsel for the plaintiff had contended that the commission in this case may be treated as finder's fee, as the plaintiff was instrumental in identifying the source of funds. Whereas learned counsel for the defendant contended that the plaintiff is not entitled to make any claim as his performance was not up to the required standard.

13. Having heard the learned counsel and gone through the record at this final state, it is preferred on account of requirement, relevancy and presentation that the issues be re-casted as under, to which the findings are given, thereafter the discussion fallows;

1. Whether the suit is bad for non-joinder? .Negative

2. Whether the agreement between the plaintiff and the defendant is opposed to public policy? ..Affirmative

3. Whether the appointment of the plaintiff as an agent of the defendants was subject to any requirement's and restraints? .Negative but as discussed.

4. Whether the plaintiff failed in the said requirements? Negative but as discussed.

5. Whether the plaintiff is entitled to any commission? If so to what quantum? . Negative as discussed.

5. What should the decree be? . Suit dismissed with costs against both the parties.

14. Issue No. 1: Whether the suit is bad for non-joinder? The onus of this issue is with the defendants who have taken the stand that the Karachi Municipal Corporation having not been joined as a party the suit is bad for non-joinder. To this aspect however no material has come up whereby it could be said that the KMC was a necessary party. It is also observed that no relief is claimed against KMC and the defendant has not preferred to require impleading of KMC as a party neither there is any alleged or otherwise contract of the plaintiff with the KMC. It is otherwise a settled law now that suit is not liable to be dismissed on account of non-joinder of parties. This issue is as such decided in negative.

15. Issue No.2: Whether the agreement between the plaintiff and the defendant is opposed to public policy? This issue was as above referred was taken up by this Court during the hearing and is based upon law, to which learned counsel were called upon to address the same. Learned counsel for the plaintiff contended that the same is not in opposition to public policy and can well be considered as "finder's fee" as the plaintiff was instrumental in locating the source of funds. Whereas learned counsel for the defendant has avoided the same by way of any clear response. From the record it is clear that the plaintiff on his part was admittedly working as an agent of the defendant whereas the defendant claims that although he was appointed as an agent his assignment was to acquire tender documents in accordance with the specifications as given and that he failed in this regard. From the evidence it is clear that the plaintiff was having a relationship with the defendant and that he identified the source of funds, however the matter does not end here. The plaintiff has himself stated in paragraph 4 of the plaint; "That the plaintiff promptly started working on the project and arranged preparation of working paper for procurement of vehicles for transportation of refuse by KMC through the Government of Sindh, planning and development department, under the Japanese Grant Aid Assistance and this with the efforts the Mayer of KMC issued letter to Secretary, Government of Sindh, Karachi". It is further stated in paragraph No.7 of the plaint; "That the plaintiff represented and acted on behalf of the defendant corporation and followed up the matter at all levels from preparation of PC-1 for the full contractual amount of Rs.153.70 million, its bifurcation into Phase-I and Phase-II, preparation of PC-1 for Phase-I for JY 502 million and PC-I for Phase-II for JY 499 million and supplied to the defendant material imported informations as desired by them from time to time till the conclusion of contract and opening of A/p in the sum of JY 243,723,400/- under Phase-I and finalization of the contract under Phase-II which is evident from the telexes / correspondence exchanged between the parties." And in paragraph 8 of the plaint it is stated; "That the plaintiff through its efforts managed to arrange the tender specifications in accordance with and as advised by the defendant corporation " The plaintiff in his evidence has also specifically stated that the specifications of the tender were in accordance to what was proposed by the defendants. Apart from the above the letter of the defendant addressed to plaintiff in the name of Blessed Enterprises (B.E.) dated 28th of July 1988 relied upon 1 by the plaintiff and also admitted on part of the defendant states; B.E. contract KMC and its Ministry concerned to obtain and provide us such information and data on the same project as may be useful for successful contract. B.E. support KMC to prepare PC-1 form and the other requesting documentation concerned basing on our information given to B.E. B.E. support KMC to prepare detailed technical specifications (i.e. tender document) under or advice, so that such technical specification will be same as our manufacturer's ones.

16. That above quoted and the irrespective to the element of proof as to tender having, been in-accordance with the specifications of the defendant which is discussed under the relevant issue and is not required for determination of this issue. It is very clear that the agreement between the plaintiff and the defendant was to acquire the tender to be made out in accordance with the specifications of the defendants, as such the said tender losing the element of transparent, fair play and equal competition. This is apart from the element of basic requirement for the tenders to be in accordance with the requirements of the user and not that of the supplier. The agreement between the parties as such and of such nature based upon such an object having the understanding to acquire gains out of an engineered (not engineering) tender suiting the particular manufacturer/ supplier and not in accordance with the actual requirement of the user, in my humble understanding comes well within the ambit of Sections 23 and 24 of the Contract Act, 1872, providing for such an agreement to be treated as void. For a ready reference the said provisions of contract are reproduced being; Section 23 What considerations and objects are lawful and what not. The consideration or object of an agreements lawful, unless

it is forbidden by law or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or The Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. Section 24 Agreement void, if considerations and object unlawful in part.- If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object is unlawful, the agreement is void. As a result of the above discussion, it is not found possible to accept the claim of the plaintiff befitting to the nomenclature of finder's fee, as in that case it would have been for the KMC to acknowledge the same being the ultimate beneficiary. It may also be observed there is nothing wrong for a prospective supplier/s of a tender to provide information/s and details of his goods or services as the case may be. However such an exercise has to be remained to this extent only and any involvement exceeding thereof as is found in the present case cannot be entertained. The subject agreement having the said purpose and object as coming out from the fore-given establishes the same to be immoral and against public policy in its object as such is void resultantly this issue being decided in positive. Before I part from this discussion I cannot help myself from pointing out to the sense of morality and professionalism as is found referred in the matter of the JICA (Japan International Corporation Agency) team reacted accordingly on being approached by the plaintiff to which the defendant felt threatened of losing the business, unfortunately no such response is found present on part of any concerned especially any of the official/s here. The said officials admitted the involvement of the plaintiff although they have naturally denied his claim of managing the affair to his desire. As per the record the tenders were eventually managed itself by the donor agency whereby the requirements also seems to have been looked into by them by their visits made, which may very well have been the real reason, the dispute arose between the parties as the expected margins may not be forthcoming and as such as the alleged commission was also offered to be reduced, which is found quite shame-full on part of those involved in the matter, having a failure of coming up to the trust required on their part.

17. Issue No. 3: Whether the appointment of the plaintiff as an agent of the defendant was subject to any requirement/s and restraints? Issue No.4: Whether the plaintiff failed in the said requirements? The findings of issue No.4 being dependent to the findings of issue No.3, both these issues are taken up together. The onus of both these issues is with the defendant having taken the same as the defense. The reference to a desired specifications if found in the correspondence and has also been taken up in the evidence, which was denied by the plaintiff, though asserted on part of the defendants however no such failure/s has been pointed out. Merely alleging the same does not serves the requirement. It is also observed that although much of the documentation has come on record the defendant side has not shown any distinction between what was specifically desired by the defendant and what was achieved, in order to acquire any support from the material as present to the claim of the alleged failure said to have been present on part of the plaintiff. As such this issue is decided in negative being not proved. As to the issue No.4 the same being dependent on the findings of issue No.3, the same also stands decided accordingly in negative being not proved. However as already discussed above the agreement being held to void no benefit in this regard can be given by a Court of law. The said issues as such are determined as negative but as discussed.

18. Issue No.5: Whether the plaintiff is entitled to any commission? If so to what quantum? The plaintiff has claimed 5% commission on the F.O.B value, whereas the defendant claims that the plaintiff has no entitlement in the matter. As to the their telex dated 19.10.1992 offering 0.75% of FOB value contract for Phase-I and 0.25% for Phase-II which is not denied and it contended that the same is not available now, the plaintiff considers the same as contrary to the agreement. As a result of discussion as made above especially under issues Nos.3 and 4 the plaintiff despite having proved his entitlement for 5% commission as claimed, the same cannot be granted to him as the agreement in the matter has been held to be void. This issue as such is determined accordingly in negative as discussed.

19. Issue No.6: What should the decree be? As a result of the issues determined above for the findings as to issue No.2 where by the agreement between the parties has been held to be void both the suits stand dismissed, with costs to be born by the parties. The office to prepare a decree accordingly. ZC/B-22/Sindh Suits dismissed.