' MUHAMMAD HALEEM, J.-This letters patent appeal is against the judgment dated 15th August 1966 of a learned Single. Judge, by which the appellant's suit was dismissed with costs.
2. The appellant is a public Limited Company while the respondent is described as having been registered in Pakistan as a private Limited Company, but nonetheless a branch of Messrs Associated International Commercial Agencies, Establishment A. I. C. A. Galleria Passarella 2, Milano, Italy. The appellant sued the respondent for the recovery of Rs, 1,17,332.81 on account of damages for supplying the goods other than those contracted for pursuant to the agreement dated 1st October 1960. Under this agreement, the respondent had agreed to supply the goods of the following description at the rate of U. S. 1234 per long ton C. & F., Karachi :-{{TABLE}} Size Quantity.
54' x 24' 24-BG (0.63 mm) 21 L/Tons. x 18' - 24-BG (0.63 mm) 14 L/Tons.
72' x 36 - 18-BG (1.25 mm) 18 L/Tons.
48" x 24' - 18-BG (1.25 mm) 8' L/Tons.
' As agreed the appellant had opened an irrevocable letter of credit in favour of Messrs Silta Corso Mattooti for U. S. $14,049.12 C. & F. Karachi. Subsequently the size of the G. I. Sheets was altered at the instance of the appellant and there is no dispute about it. However, when the goods arrived by s. s. 'FLYING CLIPPER' in December 1960 and delivery taken, it was found upon survey that instead of G. I. Sheets the contracted goods comprised of M. S. Sheets. They were rejected as being that of wrong description and damages claimed, the details of which are pleaded in para. 11 of the plaint.
It is the case of the appellant that the respondent accepted the entire responsibility vide letter dated 20th February 1961 and agreed to compensate, but subsequently the respondent backed out of his commitment either to get M. S. Sheets galvanised locally or to pay damages.
3. In its written statement, the respondent denied being a branch of Messrs Associated International Commercial Agencies, Milano, Italy and averred that it acted only as an indentor in order to place the appellant's order through Messrs Associated International Commercial Agencies, Milano, Italy with the suppliers, namely Messrs Silta Corso Mattooti. As for supplying goods of wrong description it took the stand that it was either the mistake of Messrs Silta Corso Mattooti or their manufacturers, namely Messrs Mauser of West Germany. Tile respondent disclaimed its liability on the ground that it had not contracted to supply the goods to the appellant and it were the suppliers or manufacturers who are responsible for supplying goods of wrong description. As for agreeing to compensate, the respondent pleaded that it had only agreed to take up the matter with the suppliers or manufacturers for the settlement of the dispute but was not itself liable to compensate. Lastly, it was averred that since it had acted merely as an agent for "non-principal" no claim can be made against it in connection with the supplying of goods of wrong description.
4. Upon the pleadings of the parties as many as 17 issues were settled by consent of the parties. As only issues 1 to 6 were decided by the learned Single Judge they are reproduced as under :- "(1) Are the majority of the shares in the defendants-Company owned by Messrs Associated International Commercial Agencies, Establishment A. I. C. A. Galleria Passarella 2, Milano, Italy and as such the defendants-Company is a branch of A. I. C. A., Milano, Italy, if so its effect ?
(2) Did the defendant agree to sell the goods to the plaintiff as alleged in para. 3 of the plaint ? If so, in what capacity ?
(3) Are the defendant indenting agents of the A. I. C. A., Italy ? If so, its effect ?
(4) And whether the defendant correctly indented the goods vide Indent No, ACCA/51/60 with the suppliers of the goods ?
(5) Did the plaintiff open letter of credit as alleged in para. 4 of the plaint under the instructions of the defendant? If so, its effect ?
(6) Was there any contract between the defendant and the plaintiff to supply galvanised iron sheets? If so, did the defendant supply M. S. Sheet as alleged in para. 7 of the plaint ? "
' There is no discussion issuewise but the findings highlighted in the judgment are that the respondent is not a branch of Messrs Associated International Commercial Agencies, Milano, that it had not signed the agreement as contracting party but was merely an indentor which had no liability to compensate as such, that the letter dated 20th February 1961, Exh. 22, cannot be construed as an agreement enforceable at law as it is without consideration.
5. In the first instance, it was argued by the learned counsel for the appellant that the contract, Exh.
14, should be construed as one between principal and principal; and if that is not accepted then the respondent should be held to be an agent acting for a foreign principal, in which case it would be liable in its personal capacity. The first submission rests on the stand taken by the appellant in para. 2 of the plaint, and that is that it is a branch of Messrs Associated International Commercial Agencies, Milano and in that capacity, as is pleaded in para. 3 of the plaint, it had executed an agreement dated 1st October 1960, by which is "sold and agreed to deliver" to the appellant 0. I.
Sheets of certain specifications. The respondent denied that it was a branch of Messrs A. I. C. A., Milano and took the plea that it merely acted as an indentor for a non-principal and was, therefore, not a contracting party. Upon the stand taken by the appellant an issue was settled as to whether the respondent is a branch of A. I. C. A. Milano and evidence was recorded. Ashfaq Husain, Assistant Registrar, Joint Stock Companies, was examined by the appellant. He candidly stated that the respondent was registered as a private limited company on 23rd March 1950, in which A. I. C. A., Milano had 689 shares and that it was registered not as a branch of foreign company but as a Pakistani Company. The respondent examined Ghulam Husain to deny its connection with A. I. C. A., Milano. He was cross-examined at length but no connection transpired from his evidence apart from the fact that "A. I. C. A. Schaan" held 70% of the shares. In this state of evidence, the learned counsel for the appellant did not assail the finding of the learned Single Judge that "the mere holding of shares by one concern will not make both these concerns as same concern" and conceded to this proposition before us. In this view of the matter, no further consideration is necessary and we uphold the finding of the learned Single Judge upon this question.
6. The alternate contention was not pleaded, but it has been urged before us. In this connection we would like to refer Exhs. 27/1, 16, 18 and 19, which are communications of the appellant. In Exh. 27/1, the respondent was called upon to send its indent and to give complete details and address of its principal in whose favour the L/C was to be opened. In Exh. 16 the respondent is treated as an indentor. In Exh. 18 again the same stand is taken and so also in Exh. 19, but in the notice dated 21st October 1961, Exh. 22, which was served on the respondent, a new stand was taken that he had contracted with the appellant as a branch of A. I. C. A., Milano and the earlier stand was given up. It was on the basis of that communication that the respondent was made liable. In the context of the stand of the respondent that it was not a contracting party but merely an indentor, an issue was struck and the finding of the learned Single Judge is in favour of the respondent. Nonetheless, the learned counsel for the appellant vehemently argued that as an agent the respondent had contracted for the sale of goods for a principal resident abroad, and, therefore, it was liable in terms of section 230 of the Contract Act which reads :- "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 shall 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 principal :
(3) Where the principal, though disclosed, cannot be sued."
' In support of his contention he relied on the case of Angbats Aktiebolaget Bohuslanska Kustan Sweden and another v. Central Hardware Stores, Chittagong in which section 230 of the Contract Act has been construed by their Lordships of the Supreme Court as under :- "Section 230 of the Contract Act protects the agent against personal liability unless he has personally bound himself by contract. Therefore, the question of determining the personal liability of an agent arises only if there is no contract by an agent for a personal liability. The contract either exists in which case it has to be proved or it does not exist. In certain circumstances, as mentioned in section 230, its existence is presumed. The legal presumption thus raised has to be rebutted by the party contending against it."
' We fail to see how this statement of law would help the appellant's case when the appellant failed to plead that the respondent was an agent of a foreign principal and that it had personally bound itself, in which case, the respondent could well have disputed that contention and rebutted the presumption. It is now too late in the day to take such stand and argue the case on that basis, for it is an accepted principle that if the alternate case is not pleaded, no reliance can be placed on it subsequently. The learned counsel relying on Haji Abdullah Khan and others v. Nisar Muhammad Khan and others urged that this question is one of law and could be raised for the first time in appeal even though it was not pleaded. We fail to see how such inference can be drawn from the observations of their Lordships which read :- "Points involving inquiry into the fact or as to which there could have been an answer on facts if they were raised in the trial Court cannot be in the absence of strong reasons justifying such a1 2 course be allowed to be raised for the first time in appeal and we will consider the points sought to be raised one by one to determine whether the High Court was justified in refusing to allow them to be raised."
' In the context of the above test, it was observed that only a pure question of law can be allowed to be raised, which depended on "admitted or proved facts", which is not the case here. As to what is such question of law it was defined to mean: "a question, which not only does not require any investigation into fact, but which could not have been met by a plea of fact if raised at the proper stage and ordinarily it will be a good argument as against a plea being a plea of law that it could have been met by an allegation of fact." The instant case is fully covered by this enunciation and we fail to see how the question is one of pure law when it could have been rebutted by a plea of fact. Consequently we were not prepared to consider it at this stage.
7. The next contention is that the letter dated 20th February 1961, Exh. 22, of the respondent independently establishes its liability to compensate. In regard to it, this is what is pleaded in para. 15 of the plaint "(15) That the defendant agreed to compensate the plaintiff in respect of all the damage claimed by the plaintiff from them and took entire responsibility upon itself but it backed out its commitments and failed to galvanise the M. S. Sheet and further failed to pay other damages. The contract was executed, signed by the defendant as branch office of Messrs Associated International Commercial Agencies, Establishment A. I. C. A. Galleria Passarella 2, Milano/Italy who are the majority shareholders in the defendants-Company and consequently the defendant is personally liable for the total claim in this suit."
' In rebuttal it was pleaded by the respondent that it acted merely as an indentor and that if it had accepted the responsibility to make good the loss, the same was without consideration and not enforceable at law. Before the learned Single Judge only the legal effect of the letter was considered and relying on Illustration (c) of section 127 of the Contract Act, he held that the promise was without consideration and, therefore, not enforceable at law. Before we advert to this question it is necessary to examine whether the contents of the letter point to the respondent having accepted the liability to compensate and in our view that is not so. In this connection, it will be of advantage to reproduce the relevant extracts of that letter :- "While we regret indeed very much for the happening we wish first of all to confirm you that we hold ourselves entirely responsible as the indenting house of this business and beg to inform you of having sent immediately on Friday evening a cable to Messrs Silta of Milano, the beneficiary of the L/C opened by your goodselves and the actual Italian supplier of these goods requesting them to contract immediately the German manufacturer and find out the position at that end and in any case to suggest immediately what they are prepared to do in order to settle this indeed unpleasant situation.
' From the contents of the above telegram you will note that Messrs Silta unrespectively of the result of their investigations from the forwarding and clearing agent in Genoa, which is under ways, have immediately filed their claims with the manufacturer and in any case they have accepted to settle this case to your satisfaction."
8. In the first extract responsibility has been accepted on the footing of an indenting house of this business without admitting in clear terms its liability to compensate and in the second, it is made clear that it is Messrs Silta who had accepted to settle the case to the satisfaction of the appellant.
We fail to see how a qualified acceptance of responsibility can be disjunctively considered when at the same time it was made clear that it was the supplier who had accepted to settle the case. The responsibility if at all is exended to the extent of an indentor, which could not otherwise be construed but as one of interceding in the dispute on behalf of the supplier. It cannot operate to hold the indentor personally liable. On this short ground we are unable to concede that the letter, Exh. 22, makes the respondent liable to compensate. However, it was argued that the acceptance of the responsibility was in the nature of guarantee within the meaning of section 12 of the Contract Act. It was only this letter which was relied for advancint this proposition and it would be pertinent to mention that such acceptance of responsibility was made at a time when the supplier had committed a breach and in the circumstances cannot be construed in the context of anything done or promise made for the benefit of the principal debtor qua the original contract, to attract the provisions of section 127 of the Contract Act. The learned counsel, however, relied on M. Ghulam Hussain Khan and another v. M. Faiyaz Ali Khan and another to urge that even a past benefit to the principal debtor can be good consideration for this acceptance of responsibility. The facts in that case are altogether different. Upon an auction of the lease to collect offerings at the Dargah for three years, the auction-purchaser executed an instalment bond to pay the amount in monthly instalments of Rs, 230 each. Subsequently the appellant in that case executed a surety bond in favour of the Dargah Committee binding himself to the extent of Rs, 2,762 if default was committed in the payment of instalments. It was contended in defence that the surety bond was without consideration and, therefore, unenforceable. While holding against the appellant the learned Judges relied on the word 'done' in section 127 of the Contract Act as one reflecting past benefit to the principal debtor which was a good consideration for a bound of guarantee. In the instant case, such acceptance of responsibility was made at a time when breach had already taken place and that too was limited to that of an indentor which cannot be construed as a past benefit to the principal debtor as it does not in any way reflect to bind the respondent for the due performance of the contract dated 1st October, 1960. Next, the learned counsel relied on Kali Charm' v. Abdul Rahman and others. In that case too, the sureties had bound themselves to pay a certain sum after the principal debtor had compromised a suit in case he committed default. It was, therefore, that their Lordships of the Privy Council held :- "There was ample consideration for the bond ; anything done or any promise made for the benefit of the principal, may be a sufficient consideration to a surety for giving a guarantee ; the liability of the sureties was for the performance by the defendant No, 1 of the conditions of the lease which were set out in the deed of agreement of the 14th January 1959 and the plaintiff was not bound on the failure of the defendant No, 1 to pay an instalment when it became due to insist on the payment by the defendant No, 1 of all the other instalments."
' Again from the above observations the respondent cannot be held liable as the responsibility was not for the performance of the agreement but was accepted after the breach and, therefore, if at all it can stand out to create liability it must amount to a contract. It was in this context that the learned Single Judge held relying an Illustration (c) of section 127 of the Contract Act that it was without consideration. Lastly, the learned counsel relied on Walter Smith and another v. Ahmed Abdeembhoy Peerbhoy, but in that case too their Lordships of the Privy Council while construing the evidence drew an inference from their dealings that "the parties agreed that the defendant was to be personally liable for losses on constituent consignments," which is not the case here. We are, therefore, of the view that the acceptance of responsibility does not amount to guarantee within the meanie of section 127 of the Contract Act.
9. Having excluded the applicability of section 127 of the Contract Act, the learned counsel for the appellant attempted to argue that Exh. 22 amounted to a contract, but we fail to see how it is so, for the respondent merely accepted the responsibility without Any consideration and the case is fully covered by Illustration (c) of section 127 of the Contract Act. The learned counsel urged that the commission of 2 per cent included in the price of G. I. Sheets afforded such consideration which is again misconceived as that cannot be construed as consideration in the context of section 2(d) of the Contract Act, if Exh. 22 is to be regarded as a separate contract. Here, the appellant has not at the desire of the respondent done anything or abstained from doing it so that such act or3 4 5 abstinence could well afford a consideration for the promise, namely the acceptance of responsibility. The commission, therefore, has no relevance, as it was in relation to the earlier contract dated 1st October, 1960. The learned counsel relied on Fatema Khatoon and another v. Nur Miah and others, but in that case there was forbearance on one side and acceptance of responsibility on the other which was held to be sufficient consideration to constitute a contract.
Here no forbearance is pleaded or apparent from the record on the part of the promise; that is the appellant, but merely an acceptance of responsibility by the promisor, that is the respondent. This case has, therefore, no application. He next relied on Firm Gopal Company Ltd. v. Firm Hazarilal Company. In the case under consideration while construing the definition of 'consideration' in section 2(d) of the Contract Act it was held that all that is necessary is that the desire of one party and the action of another must have a causal connection, i,e, the action of the promisee must have been induced by the desire of the promisor and it is the action of the promisee which is the essential element of the consideration. These observations go against the appellant's case, for there is no act or abstinence or promise so far as the appellant is concerned so as to constitute consideration. In conclusion we are inclined to hold that such acceptance of responsibility is hit by section 25 of the Contract Act, of which Illustration (c) of section 127 could well be regarded an appropriate instance.
10. Finally, the learned counsel for the appellant argued that the acceptance of responsibility is an admission in the nature of an acknowledgement but when we pointed out to him that it could only operate to extend time if the respondent was established to be an agent and there was an existing liability, he gave it up.
11. In the result, for the foregoing reasons we see no substance in this appeal which is dismissed with costs. PLD 1969 SC 463 PLD 1965 SC 690 188 I C 175 AIR 1918 P C 226 AIR 1935 1' C 154 PLD 1967 Dacca 152 AIR 1963 Madh. Pra. 37