P L D 1966 (W (PLP)

Issue No. 1‑Not pressed. Plaintiffs' firm is a registered firm under the Partnership Act? (2) (a) Defendant No. 1 agreed to sell and deliver the copper wire to the plaintiffs on the terms and conditions established by the defendant No. 1. (b) No. (3) (a) No. (b) Yes. (4) Yes. (5) It is agreed that this issue is not relevant for the determi nation of the issues between the parties. (6) Plaintiff is not entitled to any damages or interest. (7) This issue is not pressed, and is decided in favour of the plaintiffs. (8) This issue is not pressed. (9) Yes. There was a concluded contract between the plaintiffs and defendant No. 1. (10) Plaintiffs committed breach of the contract. Collusion has not been proved. (11) Plaintiffs were responsible for the breach of the contract. (12) Plaintiffs are not entitled to any relief against any of the defendants. (13) Suit dismissed with costs.

7. Issues 2, 4, 6, 9, 10 and 11.‑The manner in which the contract was effected between the plaintiffs and defendant No. 1 is adduced to by Mirza Ismail Beg, Exh. 8, the Manager of the plaintiffs' firm then at Karachi. He has stated that he knew defendant No. 2 as a Government Auctioneer, that on 24‑4‑60 defendant No. 2 informed them that consignment of copper wire had been received weighing 36,OOOlbs. and consequently the following day, accompanied by defendant No. 2, he met the Assistant Engineer in charge of the Central Telephone Store, and and with the permission of the Controller, obtained on the tele phone, was shown the copper wire lying at the back of the building. He approved of the quality of the goods, and desired to speak to the Controller, but as the Controller was busy, Ismail Beg was informed through the Assistant Engineer, Nawab Mirza that he could talk to him. This witness insisted on seeking the Controller, who ultimately met him. Ismail Beg then informed the Controller of his approval of the goods and offered Rs. 56,500 which offer was accepted and on further inquiry over the telephone, the Con troller informed him that payment should be made to defendant No. 2, the auctioneer, according to the usual practice. The witness was also informed to make the offer in writing, in consequence of which he wrote Exh. 8/1 dated 26‑4‑60, and also issued two cheques in the name of defendant No. 2 being Exhs. 7/1 and 7/2. Rs. 100 was paid in cash on the same day. On 28‑4‑

60. Exh. 8/1 was returned to this witness by defendant No. 2 as the Controller desired that the freight charges etc. incurred by the Government should be also paid by the plaintiffs, and that be should write a fresh letter accepting these terms. Accordingly a letter dated 29‑4‑60 was written by this witness which is Exh. 8/2. On 11‑5‑60 Rs. 2,364 was paid and the witness states that during this period he visited the office of the Controller several times. In spite of receipt Exh. 6/13 dated 12‑5‑60, issued by defendant No. 2, this witness was informed that he could not get delivery of the goods until the amount paid through defendant No. 2 had been deposited with defendant No. 1, defendant No. 2 was then taken to the Controller and admitted having received the amounts for the plain tiffs, admitting further that he had deposited a portion of it and promised to pay the balance shortly. Thereafter there was an exchange of letters, wires and telegrams between the parties and as defendant No. 2 avoided producing receipts of the amounts, and defendant No. 2 stating that he had deposited in the name of defendant No. 1, final delivery was withheld. Due to this, he had suffered loss as he had entered into a forward sale transaction with another party. Ismail Beg has further stated that they had no intimation that the licence in favour of defendant No. 2 as the Official Auctioneer of defendant No. 1 had been cancelled, but he learnt about it after the deed had been finalised having been pub lished in a newspaper.

8. In cross‑examination, to defendant No. 2, Ismail Beg admitted that the goods were not purchased through auction and that the transaction was finalised by personal negotiation carried on between this witness and the Controller, and that defendant No. 2 merely introduced this witness to the Controller. In cross- examination to the learned counsel to defendant No. 2, he stated that he did not know the Controller before this transaction and met him for the first time on the 5th of May 1960, and he did not finally deposit the amount demanded of him with either of the two officials of the Telegraph Stores Department.

9. On the other hand, there is the evidence of Mr. Muhammad Nawaz, the Controller of the Telegraph Stores, at the time of these transactions, who has stated that the offer of the plaintiffs was finally accepted on the 11th of May, and he was directed to pay the amounts either to the Accounts Officer or to the Controller. This was done by Exh. 6/14 dated 11‑5‑60, a copy of which was sent to defendant No.

2. Another telegram was sent on 16th May, being Exh. 6/9, and lastly on the 19th of May being Exh. 6/10 and finally the contract was cancelled. It is the consis tent case on behalf of defendant No. 1 that although the contract for the purchase of the copper wire was agreed to between them and the plaintiffs, the total amount the plaintiffs had agreed to pay, which included the freight and transport charges from Dacca to Karachi, was not deposited by the plaintiffs with the two officers of the defendant department. Muhammad Nawaz on behalf of these defendants has denied that defendant No. 1 had agreed to the plaintiffs depositing the full amount with defendant No. 2 and that delivery was to be given if this was done. He has further stated that it was in March 1960 that the defendant No. 2's licence as the auctioneer for the defendant had been suspended for non‑payment of Government dues, and that defend ant No. 2 did act as an unofficial agent in the transaction in suit, that defendant 2 was not authorised to accept any moneys on behalf of the defendant, and that a report had been made against him which he was under investigation before the Special Police. Mr. Muhammad Nawaz has categorically denied that he acquiesced or gave permission to the plaintiffs to deposit the amount with defendant No. 2.

10. It is admitted by defendant No. 2 that he received two cheques dated the 26th and 28th April, Exhs. 7/1 and 7/2, for two amounts each for Rs. 14,000 and Rs. 42,400 from the plaintiffs in consequence of which he issued Exh 6/17 dated 26‑4‑60 addressed to the Controller of Telegraph Stores, to deliver to the plaintiffs the contracted goods. In his evidence this defendant has stated that the amounts of the two cheques and that of Rs. 2,364 were deposited by him in his account in the Central Bank and that he paid witness Muhammad Nawaz Rs.30,500 by cheque and Rs. 8,000 in cash according to usual practice by which Muhammad Nawaz sent the cheques and the amounts to the Accounts Officer. He states that the goods were sold by private negotiations and that he merely introduced the plaintiffs to the Controller and the tran saction was finalised between them, and that he accepted the cheques from the plaintiff under the orders of the Controller. It may be stated at the very outset that there is no evidence whatso ever to establish that defendant No. 2 has made any payments to Muhammad Nawaz. It is established and indeed admitted that the officials of the P. and T. Department had agreed to sell and 's deliver the copper wire to the plaintiffs but the condition was that the entire amount should be paid by the plaintiffs and deposited with the Accounts Officer of the Stores Department. The plaintiffs' case that they deposited the amounts with defendant No. 2 is a neither established nor justified. Muhammad Nawaz had denied that he had agreed to this method of payment and the contention of the plaintiffs is that they acted in the bona fide belief that defendant No. 2 was the agent of defendant No. 1 and acted accord ingly. It is also urged that the conduct of defendant No. 1 was such as led them to believe that defendant No. 2 was an agent of defendant No.

1. The oral evidence examined refutes the claim of the plaintiffs, and it has been rightly urged by the learned counsel for defendant No. 1 that if the plaintiffs' case is as set out, through his witness Ismail Beg with regard to the payment of the amount and the acquiescence of the officials of defendant No. I as to the manner of payment, and if the amounts by the two cheques dated 26th and 28th April had indeed been paid towards the contract why did the plaintiffs in their letter dated 26th April 1960, Exh. 8/IA make no reference to these payments at all? Nor indeed did they do so is their letter dated 29‑4‑60, Exh. 8/2. It is also important to bear in mind that in these letters, plaintiffs make no reference whatsoever to the alleged permission accorded to the plaintiffs by defendant No. 1 to pay the amounts to defend ant No.

2. In Exh. 6/7 dated 19‑5‑60, the Controller of Telegraph Stores informed the plaintiffs that their offer contained in their letter dated 29‑4‑60 was accepted, and on 11‑5‑60 that they should comply with the terms and conditions set out in this letter, and that "if you have paid Ks. 56,500 to the Auctioneer Agha Syed Asghar Hussain on 26‑4‑60, that is even before the submission of your offer dated 29‑4‑60 to us, we accept no responsibility for the payment of the said amount as the same was done without our knowledge and permission." As a special case, however, the offer was kept open for 14 days to enable the plaintiffs to deposit the amount with the Accounts Officer. In the correspondence with defendant No. 1, plaintiffs have made no mention of the con versation with the Controller. It is the consistent case of defendant No. 1 and defendant No. 2 that the transaction was the result of a private sale wherein defendant No. 2 was an introducer of the plaintiffs to the Controller, and that defendant No. 2 was not an auctioneer at the time, nor were the contracted goods purchased through an auction. Therefore, even although defendant No. 1 agreed to sell the copper wire to the plaintiffs, and payments as admitted by defendant No. 2 were made to him by the plaintiffs, these payments were against the conditions of the contract and without the permission of defendant No. 1, and defendant No. 1 was justified in refusing delivery of the disputed goods to the plaintiffs, and the plaintiffs were responsible for the beach of the contract. The plaintiffs cannot rely on section 230 of the Contract Act, which reads as follows:‑ "(230) In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Such a contract should be presumed to exist in the following cases:‑ (1) Where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad; (2) Where the agent does not disclose the name of his princi pal; and (3) Where the principal, though disclosed, cannot be sued."

11. In Nicholas Schinas v. Namazie and another (A I R 1952 Cal. 859), in which the plaintiff, a sailor had sued the defendants, the agent and the Shipping Co. for his salary as an official of the ship belonging to Nemazie its owner, and in which both the agent and principal had been sued at the time, Mukherji, J. observed thus:‑ "In my judgment the suit against the defendant 2, Lionel Edwards Ltd. must fail on preliminary grounds. On a contract both principal and agent cannot be used in the same suit. Section 230, Contract Act, provides that the agent is not person ally bound by the contract except in the three cases specified there. The present suit does not come within any one of these three exceptions. Secondly, the plaint, even after the amend ment, does not plead and disclose any cause of action against the defendant 2."

12. Mr. Munawar Abbas, after defendant No. 2 has relied on Messrs The Bombay Company Ltd. v. Haji Adam Haji Peer Muhammad Issak (P L D 1959 Kar. 411), and the observations of Constantine, J. based on the question whether there was any contract imposing personal liability on the agent. It was observed thus:‑-- "In the first place, it is to be remarked that the Legislature has recognised that a presumption does not arise from certain circumstances; the fact that section 230 directs the Court in three cases to draw a rebuttable presumption of an implied con tract does not displace the ordinary rule that a Court may in appropriate cases hold that a term of a contract is implied. That a contract of personal liability may be implied is in accordance with the principle which Pollock and Mulla, 8th Ed., p. 697 state underlies the section. `The test question in cases within the principle of this section is always to whom credit was given by the other party, or, if that cannot be proved as a fact, to whom it may reasonably be presumed to have been given.' The learned authors state lower down: Whether an agent, apart from the cases, specially mentioned, is to be taken to have contracted personally, or merely on behalf of the principal, depends on what appears to have been the intention of the parties, to be deduced from the nature and term of the particular contract and the surrounding circumstances."

13. For the foregoing reasons, there is no claim sustainable against defendant No. 1 and I have already discussed earlier the position of defendant No. 2, holding that he also cannot beheld liable, and it is established that he was not acting in this transac tion as an agent of defendant No.

1. The relief claimed by the plaintiff against defendant No. 2 also cannot be allowed. On a plain reading of the plaint, it is clear that the claim is based against defendant 2 in his capacity as the agent of defendant No. 1, and on the basis of Messrs The Bombay Co. Ltd. v. Haji Adam Haji Peer Muhammad Issak, and the test within the principle of section 230, Contract Act, to whom credit was given by the other party, it has been established that the negotiations were directly between the plaintiff and the Controller of Stores of defendant No.

1. Under Order VI, rule 7 C. P. C., the plaintiff cannot now be allowed to change over and allege that defendant No. 2, on his own admission, is liable for the amount deposited with him by the plaintiff, and admitted to have been received by this defendant. Necholas Schinas v. Nemazie and another referred to the proposi tion whereby both principal and agent cannot be sued at the same time. Issue No. 12.‑For the above reasons, the plaintiff is not entitled to any relief from either of the defendants, in consequence of which his suit is dismissed with costs. K.B.A. Suit dismissed.