1968 SCMR 417 (PLP)

JUGDMENT S. A. RAHMAN, J.-This petition for special leave to appeal, on behalf of the Province of West Pakistan and the Superintending Engineer, Mechanical Circle in Sind, Hyderabad, has arisen in the following circumstances The respondents Asghar ali Mohammad ali & Company had brought a suit against the petitioners which was decreed for recovery of Rs. 1,17,300, with costs, by the II Additional District Judge, Hyderabad, by order dated the 29th January 1964. The first appeal preferred against that order, on behalf of the peti tioners to the High Court of West Pakistan, was dismissed by a Divison Bench of that Court, with some modification. The relevant facts are that on the 5th of June 1957, a public auction was held by order of the Executive Engineer, Workshop Division, P. W. D., Jamshoro Hyderabad, of a stock of iron and steel scraps. The reserve price was Rs. 1,000 per ton. The respondents were the successful bidder at the auction and they were allowed to take delivery of the stock at Rs. 1,010 per ton. The whole stock weighed about 200 tons and the res pondents paid Rs. 2,02,000 for the goods and took delivery. The auction, it was later discovered, had been held in contraven tion of the Iron and Steel (Control of Production, Distribution and Imports) Order, 1948, as amended in 1953. Under this enactment, the Steel Controller, Government of Pakistan, had fixed the price of pig iron and steel scrap, including cast iron scrap, at Rs. 500 per ton. On learning of this fact, on the 21st of January 1959, the plaintiff-respondents addressed a letter to the Minister of Industries, Government of Pakistan, Karachi, informing him of the circumstances of the auction-sale and re questing that the Provincial Government should be asked to re fund the excess price to them or in the alternative, the petitioners may be permitted to sell it at a higher price than that fixed in the Control order, so as to cover their cost, plus 10 per cent. profit. Lastly, they offered to place the entire stock at the disposal of the Government for distribution by the Controller at suitable rates, to the dealers. Copies of this letter were sent, among others, to the Controller of Iron and Steel, the Director of Indus tries, West Pakistan, the Additional Chief Engineer, Hyderabad, the Executive Engineer, Workshop Division, Hyderabad and the Superintending Engineer, Mechanical Circle, Hyderabad. The Central Government, it appears, entered into correspon dence with the Provincial authorities and in particular, the Iron and Steel Controller, Mr. Habihur Rahman, sent a letter dated the 16th April 1960, to the Secretary, Irrigation and Works Department, Government of West Pakistan, in reply to the Chief Engineer, Irrigation, West Pakistan's letter dated the 10th February 1960, pointing out that even though the sale had been by open auction, it would constitute an offence under the Iron and Steel Order of 1948. The Secretary was then advised by the Controller to refund the difference in price to the plaintiff. How ever, neither the Provincial Government nor the Superintending Engineer were willing to make amends in this behalf or to take over the iron scrap from the plaintiff-respondents. The respon dents, therefore, served a notice on the Provincial Government under section 80 of the Code of Civil Procedure and brought a suit against the petitioners in which they succeeded in obtaining a decree, as mentioned above. In the decretal amount was includ ed the excess in the price charged, namely, Rs. 1,02,000, and Rs. 15,300 by way of interest. It was argued in the High Court, on behalf of the peti tioners, that the case was not covered, by section 65 of the Con tract Act that the respondents were not a Registered Firm at the time when suit was brought and the suit was, therefore, in competent and that the suit was barred by limitation. On all these points the decision went against the petitioners. It is obvious that the contract was vitiated in this case by a mutual mistake as to whether the sale of scraps was under Con trol or not. There was evidence led on behalf of the respondents to show that the auctioning authorities had made a specific representation that scrap material was outside the Control Order. This was accepted, apparently, by the respondents who paid more than trouble the controlled price for the scraps. It is clear that the petitioners were committing an offence by this sale and the, sale was in contravention of the relevant law. In addition both the parties apparently, suffered under a mistake of fact. On both grounds the contract became illegal. Initially it was, however, presumed to be legal and was discovered later to be void. Section 65 of the Contract Act was, therefore, clearly attracted to the case. The High Court took the view that although at the time of the suit the respondent-firm was not Registered they were Regis tered during the pendency of the suit and the technical defect, if any, was therefore, cured. They also held that the suit was within time, after elaborately discussing the relevant provision of the Limitation Act. It seems to us that this is not a fit case for grant of special leave to appeal. The Provincial Government apparently, seek to enrich itself as a result of its own illegal act at the expense of the respondents who were persuaded to make an illegal bargain, by an incorrect representation on behalf of the auctioning authorities. The High Court has not allowed interest to the respondent and has even cut down the principal amount decreed because the respondents had, in the meantime, utilized 50 tons of the material. The respondents were, therefore, allowed the excess price only in respect of 150 tons of scrap iron. This was eminently a just order and even if there be some technical defence open to the petitioners, we are firmly of the opinion that the petitioners were highly ill advised in resisting the suit of the respondents on very ques tionable grounds. We therefore, decline to grant special leave appeal and dismiss the petition. Petition dismissed.