P L D 1967 Karachi 83 (PLP)

QADEERUDDIN AHMED, J.‑‑This is a Letters Patent Appeal against the judgment of our learned brother, Mr. Justice A. S. Faruqui, dated the 10th of November 1960, by which he decreed the suit of respondent No.1against the present appellants and dismissed it against respondent No. 2.

2. The facts which form the background of this appeal are that respondent No. 2, Sh. Mian Muhammad undertook to sell to respondent No. 1 Punjab Vegetable General Mills Company, 30 wagons of Star Brand vegetable ghee packed in tins of 35 lbs. each, at the rate of Rs. 43 per tin f. o. r. Karachi. The offer was confirmed by respondent No. 2, vide his letter, Exh. P‑22 dated the 5th of February, 1951. The following modification was made in the terms and conditions of the contract by another letter, Exh. P‑23, dated the 8th of February 1951, written by respondent No. 2: "The seller will try to effect deliveries in the following order in the months noted against each, and it will be entirely the option of the sellers to supply as much quantity in one month as feasible arid convenient to them. The buyers will have no right to object to the method of delivery, and will accept any arrangement made by the sellers in regard to quantity to be delivered in a particular month. February Deliveries 2 wagons March 6 wagons April 10 wagons May 12 wagons Copies of these letters were sent to the appellants who wrote to respondent No. 2, vide their letter Exh. P‑9 (its copy being Exh. P‑11) dated the 13th of February 1951, signifying their agreement to carry out the contract, as follows: "Your instructions have been noted and will be complied with as desired by you. The bargain has been registered against serial No. 186 dated 13‑2‑1951." On the 24th of February 1951, they supplied one wagon, vide their bill, Exh. P‑

12. The buyers, namely, Hussain Bros., respondent No. 1, found the packing to be unsatisfactory and appear to have lodged a complaint by a telegram. Thereafter, they made a complaint vide their letter Exh. P‑13, dated the 5th of March 1951. The appellants replied to the telegram, vide Exh. P‑24, dated the 6th of March 1951. They denied their liability for the leakage as follows: "We are not at all responsible for the leakage. It may kindly be noted. , . . . . We take all care at the time of loading. However, more care will be taken in future." The appellants, thereafter, appear to have stopped further supplies, with the result that M/s. Hussain Bros. respondents No. 1, complained against it, vide their letter, Exh. P‑14, dated the 3rd of April 1951, and pressed their point by writing the letters which are Exhs. P‑15, P‑26 and P‑16 dated the 16th, the 19th and the 24th of April 1951, respectively. The appellants' reply is Exh. P‑17, dated the 28th of April 1951, in which they took the stand that it was their option to supply the goods according to their convenience; therefore, respondent No. 1 had no right to feel aggrieved at the absence of supplies before the arrival of the last date. They took the grievance to be morally and legally objectionable as well as unbusinesslike. They expressed the fear that the price of the goods was not likely to be paid and cancelled the contract. The letter was received by respondent No. 1 on the 1st of May 1951. There was some more correspondence between the parties. Ultimately, respondent No. 1 sent, through their lawyers a legal notice to the appellants and respondent No. 2; it is Exh.. P‑20, dated the 2nd of May 1951; its copy is Exh. P‑

10. They claimed damages and refund of the amount which had been deposited with them, as follows:‑ "That our clients contracted to purchase the said products at the rate of Rs. 43 per tin of 35 lbs., and the market rate on 1‑5‑51, i.e. the day of the receipt of your last latter (cancelling the contract) dated 28‑4‑51, was Rs. 48 per tin of 35 tbs., and (therefore) you are liable to pay the difference at the rate of Rs. 5 per tin of 35 tbs., in respect of 29 wagons of the con tracted vegetable ghee besides the refund of Rs. 25,000 paid as deposit to you." No reply to that notice was received by them, with the result that the lawyers sent a telegram, Exh. P‑25, dated 14th of May 1951; as follows:‑‑ "Reference Contract D/231 (Stop). Our Notice Second Instant unreplied (Stop) Final Instructions to file suit for One Lac Four Thousand and Four Hundred if not paid within Seventy‑two Hours (Stop)." Thereafter, a suit was filed by M/s. Hussain Bros. respondent No. 1 against the present appellants and respondent No. 2 on the 7th of January 1952.

3. The amount claimed in the suit was Rs. 1,29,400.00 out of which Rs. 25,000.00 were claimed by way of refund and the balance of Rs, 1,04,400.00, by way of damages. The damages were calculated in the plaint, as follows:‑ "That at the time of the final breach of the contract (namely, the month of May 1931) a tin of vegetable ghee weighing 35 lbs, was selling in the market at Rs. 48 par tin. Accordingly, the plaintiff suffered a loss of Rs. 5 per tin and a total loss of 5 x 20,880=1,09,400 for non‑supply of 20,880 tins in 29 wagons, which defendant 1 had clearly undertaken to supply under the contract."

4. The suit was defended by respondent No. 2 only. Their reply to the above‑quoted allegations of the Plaintiff was as follows:‑‑ "The statement tirade in para. 7 is denied, it is not true that the prevailing rates at the time the contract was rescinded were Rs. 48 per tin of 35 lbs. The plaintiffs 'are not entitled to any damages." Additionally, respondents No. 2 denied in their written statement that they were at all liable under the contract. They stated, utter alia, in paragraph 1 of their written statement, as follows: ‑ "it is not true as stated in the plaint that a contract was entered into between the plaintiffs and defendant No. 1 respondents No:

2. The defendants No. 1 were at no time privy to the contract between the plaintiffs and defendant No. 2 as alleged. As a matter of fact, the Plaintiffs entered into an agreement for the supply of Star Brand vegetable ghee with defendant Nos. 2 and the letter (Exh. P‑9) dated 13th February 1951, front defendant No. 1 t8 defendant No. 2 cannot be construed as confirmation or acceptance of the contract between the plaintiffs and defendants No.

1. The defendants No. 1 agreed to carry out the constructions of defendant No. 2 as agents of a disclosed principal."

5. Eight issues were framed on the pleadings of the parties, and after they were tried, the suit was decreed against defendants No. 2 and dismissed against respondent No. 2 as mentioned above; on the 10th November 1960. Defendants No: 2 have come in letters Patent Appeal, and their counsel has confined his arguments to issues Nos. 2 and 7 only. They are as follows:‑ "

2. Was there a contract between the plaintiff and the defendant No. 1 for the sale by the said defendants to the plaintiffs of 30 wagons of Star 'Brand Vegetable Ghee? ".

7. To what damages, if any, are the plaintiffs entitled?

6. The above issues were discussed together by counsel for the appellants. His main point of attack was that, in terms of the clause which" is contained in Exh. P‑23, the sellers were entitled at their option to supply the 30 wagons in any one of the four months; they had supplied one wagon in February and could supply the balance of 29 wagons at any time upto and including the 31st of May 1951. The buyers, therefore, could not insist on receiving the goods before that date. In these circumstances, the breach of contract which is not disputed low, cannot be said to have taken place on any date earlier than that date. In, this view of the situation it wag the duty of respondent No. 1 as claimants to prove the market price which prevailed on that date, namely the 31st of relay 1951, because the measure of damages was the difference between the contract price and the market price which prevailed on the date of the breach of the contract. In support of this conten tion he relied on Michal Assely v. Abdul Sattar & Bros. (P L D 1960 Kar 346). The relevant part of that Judgment is as follows;‑‑ "The quantum of damages suffered by plaintiff No. 1 is to be determined by comparing the market prices of the goods prevailing on the date on which the goods had to be supplied with the contract prices and not the contract prices with those prevailing on the date of the renunciation of the contract. Counsel for the plaintiffs cited Re Jivanji ex parte David Sassor & Co. (1912) 6 S L R 187 and Foby Bros. v: James A. Mellwee and others (from British Columbia) A I R 1917 P C 255 in support of the proposition that the election to rescind a contract affects only the question of the breach of the contract, and not the measure of damages which must be assessed with reference to the date of delivery of the goods. There is no doubt that the proposition is correct both in principle and with reference to the language of section 73 of the Contract Act, that compensation which the seller is entitled to receive is for any loss or damage caused to him by the breach of the contract, and `which naturally arose in the usual course of things from such breach, or which the parties knew' to be likely to result."

7. Counsel for the appellants further contended that, is this case, the entire evidence which has a bearing on the relevant market price consists of the statements of Jan Muhammad P.W. 1 Manager of the plaintiffs‑respondents No. l; Abdul Ghafar; P. W. 2, broker of the transaction; Mahboob‑ur Rehm9 DJ W. 1, Manager at the relevant time of defendant No. 1 who are the appellants, and Nasir‑ul‑Hasan, D. W. 2, Manager at the relevant time of defendant No. 2 who is respondent No.

2. None of these witnesses has, according to counsel, made any specific statement or produced any document relating to the market price that prevailed on the 31st of May 1951. The learned Single Judge has not retied on the, evidence of, Mahboor‑ur‑Rehman and Nasir‑ul‑Hasan, but has purported to accept the evidence of the other two witnesses. He has observed as follows: 'I, therefore, accept the evidence of the broker (Abdul Ghaffar, P. W. 2) which supports the evidence of Jan Muhammad, P. W. 1, on which (evidence) I find that the rate of vegetable ghee of Star Brand between 28th April 1951, and 1st May 1951, was Rs. 48 per tin. In fact the evidence of the broker Abdul Ghaffar shows that the prices were going up because on 16‑5‑51 the ghee of this brand was sold at Rs. 51 per tin. I, therefore, find that the plaintiff is entitled to damages at Rs. 5 per tin, which is the difference between the contract rate and the market rate prevailing on the date of the breach, at this rate the plaintiff is entitled to the sum of Rs. 1,04,400 for the 28,880 tins which would have been contained in the remaining 29 wagons which were not supplied by defendant No. 1."

8. Counsel's criticism of the above finding was that Abdul Ghaffar has said nothing about the rates that prevailed between the 28th of April 1951 acid the 1st of May 1951, but has given the prices that prevailed on the 18th of April 1951, the 2nd of May 1951, and the 15th of May 1951 only. They were Rs. 48‑4, Rs. 47‑12 and Rs. 51 per tin respectively: Jan Muhammad has only made a generate statement that the rate was Rs. 48 per tin during the months of April and May 1951 at Karachi." He has explained the source of this information, as follows:‑ "I say that the rate at the relevant time was Rs. 48 per tin because A. K. Bros. had sold the goods at that rate to various parties and I sold in April 1951 to M/s. Ghulam Hussain Traders and Abdul Sattar & Co. at that rate. I maintain books of accounts. This would be mentioned in my books of accounts. I have not produced my books of accounts. My books were lost in transit to Chittagong where we have got a branch. We had also the bill books of the sale of these goods to the parties mentioned above. Those bill books were also lost in the same manner as the account books. Ghulam Hussain Bros. and Abdul Sattar & Co. maintain books of accounts." But counsel's main attack on the finding was that the relevant market price for determining the damages was of the 31st of May 1951 , only, about which the learned Single Judge has said nothing. It is obvious that if the appellants were entitled to urge that the 31st of May 1951, was the date of the breach of the contract, then the above criticism was adequate to satis factorily support the appeal; but the appellants are debarred from doing so because the parties had gone into trial on the assumption that the date of the breach of contract was the 1st‑of May 1951, when the letter of the appellants, Exh. P‑17, cancelling the contract was received by respondent No.

1. The respondents demanded damages, vide their notice Exh. P‑20 on the basis of the market rate prevailing on that date and the appellants themselves referred to tire date of the rescission of the contract in paragraph 7 of the written statement (reproduced above) without any objection. The parties apparently did Act suspect that their assumption was wrong because they claimed no issue with respect to the correct date of the breach of the contract. The consequence was that neither the parties nor the learned trial Judge were ever confronted with the question as to whether the 31st of May 1951, which is undoubtedly the last date on which the contract could be performed, was or was not to be treated as the date of the breach of the contract. Had the appellants pleaded or urged before the learned trial Judge that the 31st of May 1931, was the decisive date for determining the damages, the plaintiffs‑respondents could get an opportunity of producing evidence of the market price that prevailed on that date. In the absence of such an opportunity, owing to the positive, or, at least, a negative stand taken by the appellants, the latter are now debarred from raising a point of law which amounts to unwarrantedly damaging the cause of the plaintiffs respondents at the stage of appeal. The proposition, which counsel for the appellants has advanced, can in a sense be said to be one of law, but it involves a prejudice to the plaintiffs respondents inasmuch as they were not in a position owing to the stand taken by We appellants before the trial Judge, to produce evidence in terms of it. They have been negatively misled by virtue of the omission of the appellants to object to the contents of the legal notice, Exh. P‑20, in which it wall definitely stated that the claim for damages was founded on the difference between the contract price and the market price of the 1st of May 1951, and have been positively misled by the stand taken in paragraph 7 of the appellants' written statement the market price was not Rs. 48 per tin "at the time the contract was rescinded". In these circumstances, the appellants cannot be allowed to take advantage of proposition of law, in reality, amounts to taking advantage of the absence, of certain evidence which the plaintiffs respondents could not think of bringing on the record.

9. Counsel for respondents No. 1 has cited Arning & Co. Ltd. v. Haroon A. Soorty Bros. (P L D 1964 Kar. 133) in which it was held that the measure of damages was the difference between the con tract price and the market price prevailing on the date of the breach of the contract. With its help, he meant to support the view entertained by the parties at the time of the trial that the breach had taken place on the 1st of May 1951, when the notice from the appellants cancelling the contract was received by the plaintiffs‑respondents. But the Judgment does not help him because the proposition which has been advanced by counsel for the appellants is not inconsistent with that Judgment. On the contrary, the proposition advanced by counsel for the appellants represents a later stage of inquiry. It presumes that the measure of damages is the difference between the contract price and the market price prevailing on the date of the breach of the contract. But the next question is what is the date of the breach of the contract? It is not the date on which a contract is cancelled if the performance was to take place on a later date. The anticipatory communication of the intention not to perform the contract is a proof of the breach, but the measure of damages is the difference between the contract price and the market price prevailing on the date on which the contract was to be performed, because the breach actually takes place on that date even if th e intention to commit it had been communicated earlier.

10. However, as explained above, we do not allow the appellants to take advantage of the omission of the plaintiffs respondents to produce better evidence, and do not consider it proper to remand the case for trial on a new issue, which was not claimed at the titre of the trial and has not been raised even in the memorandum of this appeal, firstly, because the appellants are equally responsible the omission and, secondly, because we agree with the learned Singe Judge that the price of the goods was apparently rising, On the 15th of May 1951, it was Rs. 51 per tin, and there is no other reliable evidence to indicate that the prices went down after it, excepting for a letter, Exh. D‑37, which is dated the 2nd of June 1951 and according to which the market price on that date may be said tee be Rs. 39 per tin. But, this evidence has rightly not been believed by the Earned Single Judge on the grounds that "there is no indication as to when these supplies were to be made" and that the witness bad failed to produce the relevant books of account when called upon to do so. If we are right in thinking that the prices were rising, then the amount of damages that have been granted to the plaintiffs respondents is not open to objection despite the absence of evidence relating to the market price of the 31st of May 1951. We feel fortified in taking this view by the observations of the Privy Council made in Joseph, A. V. v. Shew Bux (49 I C 691). Their lordships have observed as follows:‑‑ "The evidence (of the plaintiff) was not of the very best, and every presumption should be made against him; if there is any range, the range should be taken against him; but the defen dant called no evidence on these points at all, and the Board is entirely without trace of any suggestion on the defendant's behalf that expenses would have wiped out the otherwise apparent great loss. Nevertheless, the Chief Court on appeal, after having decided in favour of the plaintiff to the effect that there was a breach and that he had taken the proper steps to have the breach measured, came to the conclusion that he had not given sufficient evidence to show the cost; that he had made one or two small mis‑statements as regards some of his expenses; and that, on the authority of a case (Clemens Horst Company v. Fiddell Brothers (1911) 1 K B 214 which their Lordships think the learned Judges somewhat misread, or, at any rate, misapplied, he could get nothing but nominal damages. Really that would be a very serious thing to hold. Without making the deductions for freight, loading, customs and insurance, if you simply take the gross cost, and deduct from it the sale price, here is a sum of Rs. 33,000 and to show that that is to be reduced to Re. 1, the Court would have to be satisfied that the freight and the other minor charges would come to an approximately equal figure." The above observations will indicate that in that case the plaintiff had failed to establish exact damages but had generally proved as to what they could he if no deductions were made: 'heir Lordships held that the defendant had some responsibility to prove the amount by which the total amount was to be reduced. As he had failed to do that, their Lordships based their calculations on the gross figure of Rs. 33,000 and proceeded, with every presumption against the plaintiff, to assess the amount which was to be deducted from it. They ultimately granted a decree for Rs. 18,

502. In the present case, no deductions are to be made from the amount, of the difference between the relevant prices; but while protecting the plaintiffs -respondents against the prejudicial contention of the appellants, we have to take into consideration the situation that the best evidence is not on the record. Reckoning this omission as a reason for making a presumption against the rise of prices and considering it along with the fact that the plaintiffs‑respondents have not in their plaint claimed a bigger amount. We leave the damages, as calculated by the learned Single Judge to be the difference between Rs. 43, which is the contract price, and Rs. 48 which according to Jan Muhammad, P. W. 1, was the prevailing price in the month of May 1951. As pointed out by the learned Single Judge: "No serious attempt was made on the side of defendants No. 1 (the present appellants' to contradict this statement or to prove the contrary."

11. The above discussion disposes of issue No.

7. No separate arguments were addressed to us on issue No.

2. We may however, mention that not only the appellants confirmed the contract, vide their letter, Exh. P‑9, but they had also supplied one wagon vide, Exh. P‑12 and had never objected to their liability, when disputes about leakage arose, on the ground that they were not the suppliers. Lastly, the appellants have cancelled the contract by their letter, Exh. P‑

17. For these reasons we agree with the learned single Judge that the appellants, and not respondent No. 2, are liable to pay the damages.

12. The appeal is accordingly dismissed with costs, This conclusion was announced by us, at the close of arguments of counsel for the parties, ors the 6th of November 1965. K. B. A. Appeal dismissed.