P L D 1977 Karachi 822 (PLP)

2. At the relevant time, the plaintiff was a registered partnership firm comprising of two partners and carried on business in civil engineering and buildings construction work at Karachi. In response to tenders invited by the defendant No. 1, the Pakistan Insurance Corporation (hereinafter referred to as the Corporation), for construction of their executive suite and canteen, the plaintiff firm submitted a tender which was signed by Massy, the defendant No. 2 on behalf of the firm, although without indicating in what capacity he signed it for the firm. The tender was accepted by the Corporation by its letter dated 22‑5‑1965 addressed to the plaintiff ‑firm. The Corporation prepared a draft agreement which it sent to the plaintiff for execution but. despite reminder no formal agreement was signet by the plaintiff: Then plaintiff also did not send a copy of the partnership deed which was requested by the Corporation. The work was done under the supervision of the Corporation's architects Mr. Zaffar and Associates. It was duly completed and a clean certificate of completion and handing over of the works to the Corporation was signed on 18‑2‑1966 on behalf of the Corporation, the plaintiff and the architects. The plaintiff then sent its final bill for the balance amount of Rs. 30,694.30 including extras on 22‑4‑1967, which the architect recommended for payment. Payment however was not made and therefore the plaintiff served a legal notice on 13‑2‑1968 to which a reply was received from the Corporation in which they raised a plea that the work was not done according to specification and that Mr. Massy, a partner of firm had agreed to a deduction of the sum of Rs. 15,115.20 from the final bill on account of the alleged defective works and that the payment of the balance was subject to the production of a confirmation letter by the firm, which the firm had not produced. It is the plaintiff's case that Mr. Massy was at no time a partner of the firm and had no authority to agree to any deduction which was not authorised by the firm but that Mr. Massy was a Supervisor, whose services were terminated in 1966 as he was leaving for U. K. Therefore the plaintiff filed this suit on 31‑5‑1968.

3. In its written statement the Corporation took the same pleas,. pleading that the work was unsatisfactory arid that fir. Massy who it was alleged had entered into the contract, had agreed to deduction for unsatis factory work which he later confirmed in writing and that cheque for the balance amount of Rs. 15,166.93 was prepared but none turned up to collect it. It also denied privity of the contract with the plaintiff and pleaded that the contract was with Massy who had signed it.

4. On 20‑2‑1969 Massy applied under Order I, rule 10, C. P. C. to join claiming that he was a partner with the plaintiff. His case in the application was that he was approached by She plaintiff firm to secure the contract for the works from the Corporation on the oral understanding that 50 % of all receipts were to be shared between him and the plaintiff firm. Therefore, he claimed as co‑partner with the plaintiff to share half of the claim in suit. The application for joinder was opposed by the plaintiff but by order of the Court dated 2‑12‑1968 Massy was joined as defendant No.

2. In his written statement however he took a different stand. He pleaded that the work was with him and not with the plaintiff and it was he who did the work and that the plaintiff was entitled to nothing and he was entitled to the balance amount of Rs. 15,166.93 for which he prayed that the suit be decreed in his favour. On these pleadings 7 issues were framed, but at the hearing before me, counsel agreed, by consent that they dropped all issues except Issues Nos. 2, 4 and 6 ; (2) Whether after adjustment of the amount received by the plaintiff from the defendant on various dates a sum of Rs. 30,694.30 remained due and payable to them ? (4) Whether defendant No. 2 had any authority to reduce a sum of Rs. 15,115.50 from the final bill of the plaintiff ? If yes, its effect ? (6) With whom there was privity of contract in respect of the work in dispute and what is its effect ?

5. The plaintiff examined Muhammad Ali P. W.

1. He was appointed as an attorney by the plaintiff firm and dealt with the works in suit. The plaintiff firm also examined Ch. Ali Muhammad, cane of the partners of the firm. The Corporation examined two witnesses Mahmoodul Haq Hashmi, the Chief Manager and Abdul Rasheed, Assistant Manager of the Corporation respectively. The defendant No. 2 Massy gave no evidence as he was presumably out of the country but his attorney Sadiq Wahab was examined on his behalf.

6. Issue No. 6.‑I will deal with issue No. 6 first. This raises the question with whom was the privity of contract in respect of the works in dispute. It is the case of Massy in his written statement that the contract was awarded to him and not to the plaintiff firm and in this he is supported by the Corporation in its written statement. But the correspondence and the circumstances of the case, however, show otherwise. The tender for the works Exh. 8/3 was signed by Massy "for New Era Builders". The letter of the acceptance of the tender Exh. 6/12 was also issued in the name of the firm. Running payment cheques were made out in the name of the firm and not in the name of Massy who had no authority to sign Bank Account of the firm. The completion certificate Exh. 6/16 dated 14‑2‑1966 was signed by Muhammad Ali P. W. 1 on behalf of the firm. During the period in 1965 when the relationship of Massy with the plaintiff firm appeared to the cordial, Massy addressed several letters to the Corporation on the firm's letter head namely, Exhs. 11/3, 11/4 and 11!5 although he .appears to have signed them so "partner" of New Era Builders. Even the agreement Exh. 11/1 which was executed on 31‑5‑1967, after the works were .completed, was signed "for New Era Builders Massy Partner" again, the letter dated 20th December, 1967 Exh. 10/1 which Massy addressed to the Corporation agreeing to the deduction from the final bill, was also signed by him "for" New Era Builders. The plaintiffs had produced a certificate of registration of the firm of New Era Builders Exh. 8/2 which does not show the name of Massy as a partner. The Corporation has also treated and assumed that the contract was with the plaintiff firm and not with Massy personally because it called for a letter of confirmation from the firm before making payment of the balance. The defendant's witness Mehmoodul Haq Hashmi D. W. 1 also admitted in his cross‑examination that "the contract was awarded to the plaintiff firm . . . . It is in my knowledge that the plaintiff is a partnership firm". Massy has not given any evidence to support his plea that the contract was entered into with him personally. Therefore, despite the plea in paragraph No. 10 of the written statement of the Corporation, there is overwhelming evidence that the contract was awarded to the firm and not to Massy in his personal capacity. The conclusion therefore, in irresistible that the privity of contract was with the plaintiff and not with Massy. The issue accordingly is decided.

7. Issue No. 4.‑The burden of proof of this issue is on the Corpora tion, whether Massy the defendant No. 2, had any authority to agree to the deduction of Rs. 15,115.50 from the final bill of the plaintiff. Mr. Mahmoodul Hassan. learned counsel for the Corporation relied strongly .on Exh. 10/1 dated 28th December, 1967, by which Massy advised the Corporation that the firm New Era Builders, confirmed and accepted a deduction from the finwl bill in full and final settlement. The authority of Massy to agree to the said deduction was denied by the plaintiff. It is, however, not disputed that despite the Corporation asking for confirmation of the deduction by Massy from the final bill, the plaintiff did not confirm the same. It is also admitted by Abdul Rasheed D. W. 2 in cross‑examination that the Corporation received no letter from the plaintiff agreeing to the deduction. As rightly submitted by Mr. Mubaratt Hussain Siddiqui, learned counsel for the plaintiff, the fact that a confirmatory letter was asked from the plaintiff firm indicated that the Corporation assumed that Massy had no authority to commit the plaintiff firm. If Massy was not a partner of the plaintiff firm, he could clearly not commit the plaintiff firm to a deduction unless the plaintiff had elected to ratify his act under section 196 of the Contract Act, 1872, which they elected not to do. Mr. Mahmoodul Hassan for the Corporation submitted that Massy represented the firm and exchanged correspondence with the Corporation ire his capacity as partner of the plaintiff firm. But even assuming that Massy was partner, he had s no implied authority to agree to the deduction because the implied authority of a partner does not empower him to compromise or relinquish any claim or portion of the claim by the firm, ‑in view of section 19(2)(c) of the Partnership Act. 1932. He was therefore compelled to base his submission on section 237 of the Contract Act, 18'12 and submitted that the plaintiff was bound by the act of Massy as it held him out to be an agent acting within the scope of his authority. But it is quite clear that the Corporation did not rely on the ostensible authority of Massy because they in fact, asked for confirmation from the plaintiff to the deduction agreed to by him. An attempt however was made by the plaintiff to deny the authority o8 Massy to represent the firm but the letter to the Corporation Exh. 7/6 was allegedly received by the Corporation on 26‑2‑1968, although it was dated 22‑2‑1967 before the date on which Massy committed the firm to the deduction. However, this Is immaterial. The case of Corporation that the plaintiff had held out Massy as an authorised agent has also not been pleaded in the written statement, where the plea was that the contract was with Massy (and not with the plaintiff) and he had agreed to the deduction. I therefore see no force in the contention of Mr. Mahmoodul Hassan. My conclusion on this issue, therefore, is that the defendant No. 2 had no authority to agree to the deduction from the final bill.

8. Issue No. 2.‑In view of the findings on the previous issues it must follow that the sum of Rs. 30,694.30 claimed by the plaintiff remains due and payable to them. There is no contest as to the amount of the sum.

9. For the foregoing findings on the issues I would decree the plaintiff's suit as prayed with costs against the defendant No.

1. S. Q. Suit decreed.