' MUSHTAK ALI KAZI, J.-This Letters Patent Appeal arises from the judgment of the learned Single Judge of this Court dated 16-5-1968 whereby the suit of the plaintiff/respondent was decreed against the defendant/appellant, K. P. T. For payment of Rs, 1,24,448.14 and costs and interest.
2. The facts in brief are that the defendant/respondent, namely, Trustees of the Port of Karachi accepted a tender of M/s. Seigfried Beacon (Pakistan) Limited for converting iron scrap material lying at K. P. T stores, Keamari and West Wharf, into mild steel bars at their re-rolling mills and supplying the same to the K. P. T. At the rate of Rs, 140 per ton. An agreement was executed and signed by the parties whereby it was agreed by M/s. Seigfried Beason (Pakistan) Limited through their Director S. M. Hussain to supply 1450 tons of M. S. Bars of specified diameter and to accept the M.S. Scrap material from the K. P. T. In instalments of 50 tons each. This stock of the scrap material was not to exceed 100 tons at any time unless the M. S. Bars against that material were supplied, and allowance of 20% was allowed as wastage. The total supplies were to be made within a period of six months from the date of the first delivery of the scrap. The contractor had to furnish Rs, 30,000 bank guarantee for due performance of the contract and Rs, 50,000 bank guarantee covering the two instalments, that is, 100 tons of M. S. Scrap at the rate of Rs, 500 per ton. All these terms and conditions were agreed to and accepted by the plaintiff/ respondent. The plaintiff 1 respondent could not complete the supply during the contracted period of six months and the delivery time was accordingly extended by the appellant, that is, the K. P. T. As requested by the plaintiff/respondent. The plaintiff/respondent on their part extended the bank guarantee to cover the extended period beyond 18-12-1961, the date by which the contract had originally to be completed. However, even by 4th July, 1962 after the extension of about 6 months had expired the contractor was able to deliver only 220 tons of finished material. They were accordingly asked to expedite the supply of the bars when further scrap material would be delivered to them but even until 31st July, 1962 no further supplies of the finished bars were received beyond 220 tons. The balance of 1230 tons still remained to be delivered. The contractor M/s. Seigfried, Beacon (Pakistan)
Limited were accordingly informed that no more work could be entrusted to them. It also came to the notice of the appellant that the respondent had obtained this contract under an assumed name and he was not director of any limited company known as M/s. Seigfried Beacon (Pakistan)
Limited. An enquiry w is made from the respondent but no reply was received. Information was also received by the appellant that the contractor was in fact getting more scrap in collusion with the staff of K.P.T. And showing less weight by removing the scrap and then getting the remaining scrap weighed at the Meezan Corporation. A report was accordingly lodged with the police and the matter was investigated by the C.I.A. They did not, however, get sufficient evidence to send up the respondent. The respondent had been charging excise duty without getting the certificate of payment from the excise department and the Port Trust accordingly declined to cash their two last bills for Rs, 17,815.72 and Rs, 1,632.42. The K. P. T. Asked the contractor to return the remaining scrap of about 46 tons but also could not be done by the respondents. In fact it had been noticed that the respondent/contrator was disposing of the scrap in the market and was then buying the finished material for supplying the same to the K.P.T. For all these reasons the K. P. T. Did not entrust any more work to the contractor and the contract came to an end.
3. The plaintiff/respondent accordingly brought a suit for specific performance and in the alternative for compensation and damages for defamation, etc. He claimed the re-rolling charges in respect of the balance quantity of the bars, after deducting the cost of re-rolling at Rs, 25,000. He also claimed the amount of the bank guarantee which was cashed by the K. P. T., namely, Rs, 80,000 in addition to the two unpaid bills of Rs, 19,448.14. The plaintiff accordingly claimed the total sum of Rs, 1,24,448.14.
4. The defendant/appellant in their written statement contended that the plaintiff had entered into an agreement by representing that this agreement was on behalf of a limited company known as M/s. Seigfried Beacon (Pakistan) Limited. That in fact no such company had ever been incorporated as a private or public limited company and he was thus making use of this assumed name fraudulently. The K.P.T. Also contended that under the terms of the contract 1,450 tons of M.S. Bars had to be supplied within six months. That even after the time had been extended the plaintiff was able to supply 220 tons of the bars after getting delivery of 320 tons of scrap material. That even after allowing wastage of 20% the plaintiff had still to supply finished product of the balance scrap material of 45 tons, which he failed to do. That the report was lodged after the information had been confirmed that lesser weight had been mentioned in the books than the actual weight of the material. That the security amount was cashed because the contractor failed to deliver the entire finished product for the scrap taken under the contract.
5. The learned Single Judge found that although M/s. Seigfried Beacon (Pakistan) Limited was never incorporated and the plaintiff had used this name knowingly, he would be liable for prosecution for using the word limited against the proprietorship concerned and no such action had been taken by the K.P.T. The learned Single Judge also found that time was not the essence of the contract as there was provision for liquidated damages at the rate of Rs,50-per day for the period the performance was delayed. He accordingly came to the conclusion that the breach was on the part of the K.P.T. The suit was, therefore, decreed for Rs, 1,24,448 against the defendant/appellant with costs and running interest at 6% per annum from the date of the suit until realization.
6. It has been argued on behalf of the appellant by Mr. Abbas Ahmad that the plaintiff had obtained this contract by using the assumed name of a limited company and this was evident from the tender, the agreement and the letter-heads used in the correspondence. It was an admitted fact that no such company had been incorporated in Pakistan and the plaintiff had ever made an application for incorporation of the so-called limited company, long after the contract had been cancelled. That the K.P.T. Were all the time under the impression that they were dealing with the limited company for getting the job done at the re-rolling mills of the company. That the contract was, therefore, vitiated by fraud and since such contract became voidable it could be cancelled by the K. P. T.
7. That learned Advocate has also pointed out that under the contract the plaintiff had to supply 1,450 tons of M. S. Bars within a period of 6 months. Even upto July, 1962, 12 months after the scrap had been first supplied the plaintiff had, been able to supply only 220 tons. That at this rate he would have taken at least 5 years more to supply the balance. That even if time had not been the essence of the contract it was presumed in a contract of this nature that the bars would he supplied within a reasonable time. The learned counsel has referred to the correspondence exchanged between the parties. Under letter dated August 2, 1961 the contractor gave the excuse for delayed supplies as collapse of the KESC power station on account of bad weather and breakdown. Under letter dated December 12, 1961 the contractor requested the K.P.T. For extension of time by six months more because of rains and electric supply breakdown etc., and they furnished renewed bank guarantee. Under letter dated July 3, 1962 the plaintiff/contractor asked for further concessions. They were informed by letter, dated 4th July. 1962 that although the time had expired by 18th December, 1961 the same had been extended but there were no deliveries beyond 220 tons. They were accordingly called upon to supply the bars immediately for which they had withheld the scrap material and ultimately by 31st July, 1962 after waiting for about a month they informed the contractor that since no supplies had been received no more work could be entrusted to him as he had not fulfilled his obligations under the contract.
8. We have carefully considered the evidence and the correspondence. All these allegations regarding the use of assumed name, the selling of the scrap and getting the finished bars from the other re-rolling Mills and supplying them to the K.P.T. Are more or less admitted. This had very naturally raised apprehensions against the bona fides of the contracting company which in fact never existed. The plaintiff respondent had been asked to expedite the supplies but the supplies were slow and even the finished products for the scrap material actually taken could not be delivered in time. In a contract of this nature time is presumed to be essence of the contract. But even if it is not so it is to be expected that such a contract would be completed within reasonable time. Even by notice time could be made the essence of the contract. But looking to the delay in the delivery of the finished products found that the obligations under the contract could not be fulfilled by the plaintiff 1 Contractor.
' Under these circumstances it was open to the defendant/appellant to avoid the contract regarding the balance of the job work and to realise the value of the balance scrap by encashing the bank guarantee. It could not, therefore, be said that the breach was on the part of the K.P.T. For which they could be awarded damages. The contractor could, therefore, at the most cl aim the charges for the work done upto the time of cancellation of the contract and he was bound to account for the scrap material for which the finished products had not been supplied. The position would, therefore, remain as under : -- {{TABLE}} Encashing of bank guarantee Rs, 80,000.00 Balance amount for 2 bills Rs, 19,448.14 Total Rs, 99,448.14 {{TABLE}} ' From this may be deducted the price of the scrap lying with the contractor at Rs, 500 per ton Rs, 22,735.49. The amount of Rs, 46,481 lying with the K.P.T. On behalf of the contractor was attached on account of some decree executable against the contractor. Therefore a net amount of Rs, 30,232.65 remains payable to the plaintiff 1 respondent by the defendant/appellant, K.P.T. With interest at 6% per annum from the date of the suit till payment together with proportionate costs of the suit. The decree is modified accordingly.