The defendants Mitchell's Fruit Farms Limited, through their Managing-- Director contracted to supply the plaintiff Sadruddin, various kinds of fresh fruits from their orchards at Renala Khurd in the Province of Punjab. The quantities, rates and other terms of contract were reduced into writing in an agreement dated 3U-1-1973, duly executed by the plaintiff and the Managing-- Director of the defendants. The supplies were to be despatched from Renala Khurd to Karachi by trucks and the payment was to be made at the Company's Karachi Office at the time of delivery. It was agreed that the 60 % of the contracted quantity will be supplied and despatched to Karachi before the end of February 1973 and the balance by the end of March 1973.
2. It is the case of the plaintiff that in all six truck loads of fruits were supplied by the defendants out of which one contained damaged fruits. Thereafter tire defendants without notice failed to make any further supplies in terms of the contract in spite of repeated demands made in that behalf. It was further alleged by the plaintiff that on the expected supplies of fruits under the contract he in .Turn entered into an agreement dated 15-2-1973 with one Moloo son of Aloo at Karachi for the sale of 11,500 cases of fruits, each case weighing about 20 seers as per rates mentioned in the latter agreement. It was stipulated in the agreement between the plaintiff and his purchaser that in case of breach by him the plaintiff would pay damages at the rate of Rs. 5 per case. Accordingly, the plaintiff alleged that owing to the breach of contract on the part of the defendants in failing to supply fruits as promised by them under the terms of the contract, he in turn could not fulfil his contract to supply the fruits to Moloo, thereby making himself liable in damages in the sum of Rs.
57,500. Upon these allegations the plaintiff claims Rs.69,570 as loss of profit, Rs.940 as damages for supply of damaged fruits and for refund of 25,000 earlier paid by him by way of deposit with the defendants at the time of the contract. Thus the total claim of the plaintiff is for a sum of Rs. 1,53,010.
The defendants have denied the claim of the plaintiff. They, however, admit the contract for the supply of fruits by them and receipt of the amount of Rs. 25,000 by way of deposit. In their defence the defendants pleaded that after the execution of the contract on 30-1-1973 the plaintiff deputed his representative to go and remain at Renala Khurd with, authority to take decision in any manner arising out of the contract and also to supervise the despatch of fruits. It was alleged that after the dispatch of some quantity of goods, for reasons best known to him, the plaintiff demanded a change in the packing from the one agreed to which was acceded to by the defendants, but subsequently he wanted .a rebate in the price which was not agreed to by the defendants. They further averred that on 16-2-1973 the schedule of supplies was amended at the request and in consultation with the representatives of the plaintiff. Despite this the plaintiff subsequently withdrew from his commitment embodied in the amended schedule and committed breach of contract.
4. On the pleadings of the parties, following issues were framed by the Court :-
(1) Whether the contract dated 30-1-1973 was amended, and if so to what effect ?
(2) Whether the defendant committed breach of contract? If so when, and what is the effect?
(3) Whether the contract was rescinded by the plaintiff, if so, its effect?
(4) Is the defendant entitled to forfeit Its. 25,000 the amount deposit of the plaintiff?
(5) Whether the plaintiff is entitled to refund of deposit of Rs. 25,000?
(6) Whether the plaintiff is entitled to any damages? If so, then in what amount?
(7) What should the decree be?
Both parties have produced evidence in support of their respective pleas. On the plaintiff's side the plaintiff himself and Muhammad Kanji were examined as witnesses. They have produced a number of documents. On the side of the defendants only one witness, namely, Mr. Akhtar Aleem Ansari, the Secretary of the defendants' Company was examined who produced only three documents. It will be convenient to consider Issues Nos. 1 and 3 together.
Issues Nos. 1 and 3
5. Now there is no controversy between the parties that the contract in suit was entered into by them. The contract has been produced on record which is Exh. 5/2. It is also not denied by the defendants that under the terms of the contract they received the payment of Rs. 25,000 which is evidenced by the counter-foil of the bank draft (Exh. 5/3).
The receipt for the amount has also been placed on record (Exh. 5/4). In the contract the schedule of quantities as agreed between the parties is mentioned in the following terms SCHEDULE Fruits Quantity F. O. R. Karachi _Rs.
Lemons1,300 to 1,600 Mds.28per Md.
Grapefruits800 to 1,20016 Sangtras1,000 to 1,200 ---20 Kinnows500 to 80022 Blood Red Maltas1,500 to 2,000 ---22 Defendants' witness Mr. Akhtar Aleem in his evidence stated that the plaintiff had approached the defendants for reduction in price. He further stated that between 1st February to 1st March, 1973 two representatives of the plaintiff had come to Renala Khurd at the defendants' Farms in order to supervise the despatch of the fruits under the agreement. The name of one was Farzand Ali. The witness produced a writing purporting to be amendment of the original terms of contract in regard to the schedule of quantities (Exh. 7/2) in which the revised schedule was in the following terms .- REVISED SCHEDULE Fruits Quantity Lemons75 Mds. 30 seers Grapefruits800 to 1.000 Mds.
Sangtras1,000 to 1,200 --- Kinnows132 Mds. 16 seers Blood Red Maltas105 --- 25 the witness stated that this document has been .Signed by Mr. Mohsin, Managing-Director of the defendants and Farzand Ali, the representative of the plaintiff. However, the perusal of the document shows that there is a separate place intended for the signature of the plaintiff Sadruddin and the purported signature of Farzand Ali appears as the signature, of the attesting witness.
Therefore, the document is not signed by the plaintiff. It was admitted by the witness that Farzand Ali had not signed this document in his presence. The witness explained that the original of this writing with two spare copies was sent to the defendants' Karachi Office for obtaining the signature of the plaintiff. He then stated that the supplies of fruits were sent in terms of the amended contract, the last despatch accepted by the plaintiff being in February, 1973. According to the witness after this two trucks of fruit were sent to the plaintiff but he refused to take delivery and, therefore, the fruit was sold by public auction in the Karachi Market. The witness further stated that upon breach of contract by the plaintiff the defendants had to export one consignment of 900 cases to Saudi Arabia. There is no other evidence in proof of the allegation that the contract was modified. The plaintiff in his evidence has denied this allegation that he had agreed to reduce the quantities of fruits as he could A not lift the quantities originally stipulated for. The onus was on the defendants to prove mudification of the original contract, but there is no evidence produced by them to establish the fact. It was also alleged that the plaintiff bad repudiated the contract and committed breach by refusing to accept deliveries. No reliable evidence has been produced in support o this contention. The evidence of Mr. Akhtar Aleem Ansari, the Secretary of the Company cannot be relied upon for this purpose as it is a bare oral word of witness who was not at Karachi at the time of alleged delivery. No evidence has been produced of the fruits having been disposed of at Karachi by auction as alleged, nor of the export of fruits to Saudi Arabia. No notice was served by the defendants on the plaintiff complaining of breach by non-acceptance of the delivery. Even in the written-statement it is not the case of the defendants that subsequent deliveries offered by the e defendants were refused by the plaintiff. My findings to both the issues are, therefore, in the negative.
Issues Nos. 2, 4,5and 6
6. These issues relate to the question whether the breach of contract was committed by the defendants and what consequences follow therefrom if so. I have already reached the conclusion as would appear from the discussion under the previous issues that the defendant have failed to establish that the plaintiff had repudiated the contract and committed breach by refusing to accept deliveries. The defendants have also failed to prove modification of the contract reducing the quantities. The assertion of the plaintiff in his deposition that after 24-2-1973 no supplies were made to him in spite of his request in that behalf has not been seriously disputed. In support of his case the plaintiff has produced telegrams Exhs. 5/13, 5/14, 5/15 and 5/16 which show that the plaintiff had called upon the defendants to fulfill their obligation to despatch the fruits. Plaintiff has also produced 3 certified copies of telegrams demanding despatch of fruits by the defendants in the month of March, 1973. Finally the plaintiff has produced legal notice dated 14-4-1973 served by him upon the defendants whereby he asserted that the defendants had committed breach of contract and claimed damages on that account. I reply the defendants, Inter alia, alleged that the plaintiff had refused to accept 3 trucks of fruits which were then disposed of in the market and also alleged cancellation of agreement on the part of the plaintiff. The onus of proof regarding the allegation that the plaintiff refused to accept deliveries was on the defendants. No suggestion was made in this regard to the plaintiff in cross-examination and no evidence was produced by the defendants to prove the allegation. The only witness examined on behalf of defendants Mr. Akhtar Ali, stated that when the plaintiff refused to accept further deliveries the defandants expoted one consignment of 900 cases to Saudi Arabia for Rs. 2,360. However, he has admitted in his cross- examination that as Company secretary he had no connection with the sales. He has also admitted that telegrams were received from the plaintiff for despatch of fruits and that no reply was sent to these telegrams. This witness has further admitted that the consignments which were refused by the plaintiff were sold at Karachi on 26-2-1973 and 14-3-1973. However, no documentary evidence was produced to prove the sale of the fruits at Karachi or the despatch of the two consignments although it was admitted by the witness of the defendants that such documentary evidence was available. It was also admitted by the witness that the defendants did no write any letter to the plaintiff complaining about the refusal to accept the goods. He has also admitted that he was not at Karachi and had no personal knowledge about the refusal of the plaintiff to accept the deliveries intention to enter into a forward contract with Moloo on the basis of the supplies to be made under the contract between the parties. In his evidence the plaintiff has admitted that he cannot say if the informed the defendants in any of the letters addressed to them about his contract with Moloo but stated that he had personally informed Mr. Mohsin, Managing Director of the defendants about it at Karachi. It is not known at what point of time the plaintiff had informed Mr. Mohsin but it could not have been before 15-2-73. Even so there is nothing in the evidence of the plaintiff that he apprised Mr. Mohsin of the special stipulation in the contract with Moloo providing for stipulated damages. On the other hand, the plaintiff admits in his deposition that he had returned the deposit amount received by him under the contract with Moloo and that Moloo did not file any legal proceeding against him. The plaintiff also does not claim to have paid any amount by way of damages to Moloo. The claim of the plaintiff in substance, so far as this head of damages is concerned, is a claim for being indemnified against loss sustained by him on account of his breach of contract with Moloo due to the special stipulation in the sub-contract. These are special circumstances arising after the contract in suit was entered into and cannot be deemed to be loss or damage caused to the plaintiff which naturally arose in the usual course of things from the breach of contract between the parties. The claim would have been justified if these circumstances had been within the contemplation of the parties at the time of the contract. But there is no such evidence that it was so. Mr. Kazi, however, strongly relied on the observations of Viscount Haldane in the House of Lord's case of In re : R. & H. Hall Ltd.( (1928) AWE R 763 ) which may be reproduced as under; "In these circumstances I am of the opinion that the measure of damages is clear. It is not merely the amount of damages, measured by loss in the market which arises in the usual course of business from the breach. It extends whenever special circumstances require this, to such possible damages as may reasonably be supposed to have been. In the contemplation of both parties at the time they made the contract, as the probable result of breach of it. This is in accordance with what is called the second branch of the rule in Hadley .v. Baxendale, a rule which is fully explained by Lord Esher, M. S., in Hammond & Co. v. Bussey. He points out that the principle is not to be confined to a sub-contract already actually made at the date of original contract, but applies also to the case of a sub-contract which will probably be made."
On the aforesaid observations Mr. Kazi strongly contended that the circumstance that the sub- contract in the present case had taken place after the original contract in suit was entirely immaterial. However, the observation was made in the context of the particular facts of the case under decision. In that case the contract contained express provision as to what should be done in various circumstances if the cargo should be re-sold one or more times before delivery. Therefore, it would appear that on the facts before their Lordships a re-sale of the special cargo was within the contemplation of the parties expressly at the time of the contract. Obviously therefore, the sub- contract entered into by one of the parties subsequent to the original contract was a circumstance clearly within the contemplation of the parties. The facts in the present case before me are entirely different.
As pointed out above there is no indication of the parties having within their contemplation the possibility of a sub-contract providing for stipulated damages. Commenting on this aspect Cheshire and Fifoot in their Law of Contract (9th Edn.) at p. 596 made the following remarks :- "Thus, to take one common example, a sub-contract loss is usually too remote, i.e. a buyer, who has agreed before delivery to re-sell the goods to a third person at a price higher than the contract price looses the profit that he would have made on the re-sale had delivery been made to him ; but nevertheless, the loss is too remote, since it is not the natural and normal result of a failure to deliver sold goods. In order to recover for this exceptional loss he must prove that at the time of the contract the seller knew of special circumstances that signalized the probable re-sale of the goods."
The conclusion, therefore, is that the subject loss arising out of the contract with Moloo cannot legitimately be claimed by the plaintiff, I, therefore, reject the claim for Rs. 57,500.
13. The remaining claim of the plaintiff relates to the compensation for non-delivery of the goods in breach of the contract between the parties. As already mentioned the plaintiff claims damages under this head on the basis of the rates stipulated in his contract with Moloo as loss of profits. It was contended on behalf of the defendants that the plaintiff has failed to produce evidence of the market price on the two relevant dates when the breach occurred. The plaintiff has produced in the evidence six Sale Notes of the fruits disposed of by him in the fruit market at Karachi which are in Gujrati bearing Exhs. 5/43 to 5/48. The English translation of these documents is on record as Exhs.
5/49/1 to 5/49/6. Apart from this evidence no attempt was made by the plaintiff to prove the market price of the goods at the relevant dates of the breach of contract. As regards Sale Notes it was contended by the learned counsel for the defendants that these documents do not bear the signatures of the person who prepared the same nor has any attempt been made to prove the handwriting of the writer of these documents and it is not even known who was the person who prepared these documents. It was further contended that the plaintiff could have called some witness from the commission agents who have issued these documents to prove the contents thereof. Besides the prices shown in these documents are in relation to cases of fruits and not in terms of weight in maunds and seers. It was, however, pointed out on behalf of the plaintiff that the admitted document issued by the defendants i.e. Invoice dated 3-2-73 (Exh. 5/6) itself shows that on an average each case contained about half a maund of the each category of fruits. Learned counsel for the plaintiff argued that the Sale Notes were not challenged by the defendants as no cross-examination was directed on this point and even the statement made by the plaintiff in his deposition that the price of fruits had rises in the market at Karachi has gone in unchallenged. It is not necessary that the Sale Notes by the commission agents should be signed. In my opinion, therefore, although this evidence does not relate specifically to the notes of breach, it furnishes some evidence and basis as to the market price by the various types of goods near about the relevant dates of breach. It is admitted by the plaintiff that upon the breach of contract the plaintiff purchased fruits from the market. However, no evidence has been produced as to the rates at which he purchased the fruits. The first question, however, is whether the plaintiff can be awarded damages on the basis of loss of profits as claimed.
14. Mr. Kazi referred to some decisions in support of his contention that damages can be awarded in a case like the present one on the basis of loss of profits or a basis other than the market price. In Colony Woollen Mills v. Ismail Abdul Sattar and Brothers (1971SCMR103) their Lordships considered the position in respect of a claim based on a forward contract entered into in respect of the goods by the aggrieved party. It was observed that where a particular criterion is available that should form the basis of the damage and not the market price. In A. & Co. v. Government of Pakistan (PLD1973SC311) it was found that the amount claimed represented the loss of profits which the appellants would have earned if the contract had not been cancelled. Their Lordships were of the view that the loss of profits claimed as damages was a direct and natural consequence of breach to which the appellants were entitled under section 73 of the Contract Act. In order to place the aggrieved party in the same situation as if the contract had been performed, the loss of profits was treated as a fair and reasonable basis for awarding damages. However, these cases are distinguishable on facts. In the first case the breach was committed in respect of a contract for the supply of blankets in accordance with the sample which formed the basis of the contract between the parties which necessarily implies that it was a contract for specific goods in respect of which the buyer had entered into a forward contract. Different considerations arise in cases involving sale of goods of particular make and ordinary goods that are available in the market. In the second case the goods contracted to be supplied had to be imported from foreign countries for which obviously there would be no available local market. The position in the present case is, however, different. Here it is admitted that the plaintiff went out in the local market to make purchases of the fruits after the defendants committed breach. The loss of profits in this case on the basis of the sub-contract was not, therefore, a direct and immediate result of the breach of contract in normal course of events, without the knowledge of the sub-contract by the defendants at the time of the contract. The principle which governs the question whether loss of profits can form the proper basis for awarding damages was explained by Devlin, J. In Chaq v. British .Traders Ltd. ((1954)1 All E R 779) at p. 791 in the following words :- "The first is that there is no evidence that what measure of damages was contemplated by the parties. It is true that the defendants knew that the plaintiffs were merchants and, therefore, had bought for re-sale, but every one who sells to a merchant knows that he has bought for re-sale, and it does not, as 'I understand it, make any difference to the ordinary measure of damages where there is a market. What is contemplated is that the merchant buys for re-sale, but, if the goods are not delivered to him, he will go out into the market and buy similar goods and honour his contract in that way. If the market has fallen he has not suffered any damage ; if the market has risen the measure of damages is the difference in the market price There are, of course, cases where that prima facie measure of damages is not applicable because something different is contemplated. If, for example, a man sells goods of special manufacture and it known that they are to be re-sold, it must also be known that they cannot be bought in the market, being specially manufactured by the sellers. Then the loss of profits becomes the appropriate measure of damages. Similarly, it may well be that in the case of string contracts, if the seller knows that the merchant is not buying merely for re-sale generally, but on a string contract where he will re-sell those specific goods and where he could only honour his contract by delivering those goods and no others, then the measure of loss of profits on re-sale is the right measure."
15. As already held by me, there is no evidence that the defendants had any knowledge that the plaintiff intended to re-sell the very goods contracted to be supplied by the defendants. As in the cited case it is also net clear whether the plaintiff did at all intend to re-sell those very goods to Moloo. The loss of profits would, therefore, not be a direct consequence of the breach by the defendants as these were special circumstances beyond the contemplation of the parties at the time of the contract. The plaintiff cannot, therefore, be awarded compensation on the basis of loss of profits as claimed by him.
16. The only basis on which the plaintiff can be awarded damages is the usual basis of the market price. As pointed out earlier the plaintiff has produced some evidence of the market price and has asserted that the market was rising. The evidence has not been rebutted by the defendants.
Having regard to the continuing rising trend of market, in my opinion on the rule of preponderance of evidence the plaintiff has established the market price on the evidence adduced. The Sale Notes pertained to sale of fruits on six occasions between 7-2-73 and 27-2-73. There appears to be some fluctuation in the price during this period in respect of certain items of fruits but by and large the trend is towards a rise in the prices by lapse of time. This evidence, in my opinion is a fair basis for determining the, market price for the two dates of breach, namely, the end of February, 1973 and March, 1973. I have analysed the prices in these documents and worked out the mean price as under :- Rs.
Lemons56 per maund.
Grapefruits30 Sangtras32 --- --- Kinnows32 --- --- Blood Red Maltas36 --- The prices in the agreement between the plaintiff and Moloo on which the plaintiff has founded his claim are as under :-- Rs.
Lemons44 per maund.
Grapefruits24 --- --- Sangtras32 --- Minnows34 --- Blood Red Maltas32 --- --- The measure of damages would, therefore, be the difference between the market rates as mentioned above and the contract rates but since the a plaintiff' himself has claimed for Lemons, Grapefruits and Blood Red Malta at a lower price, I have no option but to accept the price as claimed by the plaintiff himself. On this basis the difference of prices per maund on each items works out as follows Rs.
Lemons16 Grapefruits8 Sangtras12 Kinnows10 Blood Red Maltas10 The maximum stipulated quantities of each item and the quantities actually delivered in maunds are as follows :- Quantities Quantities Category agreed to beactually Balance supplied Lemons1,30075.201,224.20 Grapefruits800451.26348.14 Sangtras1,000202.19797.21 Kinnows500132.16367.24 Blood Red Maltas1,500105.251,349.15
17. Accordingly the measure of damages for each item works out as under Rs.
Lemons19,584 Grapefruits2,784 Sangtras9,564 Kinnows3,670 Blood Red Maltas13,940 Grand Total. 49,542
18. In view of what is stated above I have come to the conclusion that the plaintiff is entitled to damages I n the sum of Rs. 49,542.
19. In the result, I decree this suit for a total amount of Rs. 74,542 (Rupees seventy-four thousand five hundred forty-two only) with proportion--ate costs against the defendants.