On 31-8-1986 the plaintiffs, Pakistan Engineering Consultants filed the Suit against Pakistan International Airlines Corporation and Bank of Credit and Commerce International which was merged into Habib Credit and Exchange Bank Limited that was again merged in to Bank Alfalah Limited, claiming the following reliefs: "(a) A perpetual injunction to issue to the defendants restraining them from encashing the Bank Guarantee and Performance Bond Annexures B14, B15 and the defendants be restrained from making any payments under the cited annexures.
(b) The Defendant No. 1, be restrained from completing the works in accordance with the plaintiffs designs which is in their custody pending payment of the plaintiffs dues.
(c) Money decree be awarded against the Defendant No. 1, on account of the plaintiff's clues including outstanding/ compensation/damages in the sum of Rs. 9,749,775.
(d)Interest on amount "C" 15% p.a. from the date of suit until realization.
(e)Cost of the suit and any other relief deemed fit and proper be also granted.
2. The case of the plaintiffs is that the plaintiffs upon the Defendant No. l's invitation dated 3-8-1983 submitted a proposal for extension and modernization of their flight kitchen at Karachi Airport. The proposal inter alia included architectural design, drawings, procurement of a requisite equipment, consultancy and supervision of the work by a building contractor. The Defendant No. 1 accepted the proposal vide their letter of intent dated 27-10-1983. The envisaged mobilization advance representing 10% of Contract Price upon plaintiff's submission of the relatable guarantee on 17-11- 1983 was released to them on 31-12-1983. The contemplated period for completion of the work was two years. The value of the work was estimated at Rs. 43.9 million and the plaintiffs were to get 3% consulting charges for the services rendered thereto. The plaintiffs submitted to the Defendant No. 1 the requisite Mobilization Advance, Bank Guarantee and Performance Bond for corresponding value, commenced the work after effecting mobilization submission of relative drawings and appointing the approved building contractor. It is alleged in the plaint that the relative drawings although timely submitted by the plaintiffs were belatedly approved by the Defendant No. 1 whose considerable delay affected their services drawings. Although the work was in full swing its progress was retarded owing to the Defendant No. l's acts of omission and commission. The Defendant No. 1 in the matter of payment of the plaintiffs dues under the contract adopted a dilatory stand which adversely affected the progress of the work. In the meantime the then Managing Director died on 28-11- 1985. A formal supplemented deed dated 30-11-1985 envisaging the appointment of the present Managing Partner was executed by the partners of the firm. The Defendant No. 1 accepted the alteration in the firm and continued dealing with them. However, during its final phase of completion and with a view to eliminate the plaintiffs from the scene, the Defendant No. 1 with mala fide intention embarked on a preconceived design at the managerial level to exclude the plaintiffs and get the finishing done by the building contractor with whom during the execution of work requisite liaison had developed by the concerned managerial staff.
The plaintiffs formal written request for extension of time submitted on 1-1-1986 though ostensibly granted was in writing being withheld. The plaintiffs however, in good faith, continued with work on the Defendant No. l's representation in the arising context.
3. It is alleged that the Defendant No. 1 addressed a notice dated 13-8-1986 contending primarily on account of the death of the previous managing partner that the subject contract had come to an end. The plaintiffs received a further letter dated 19-8-1986 to the effect that in connection with the completion of the contract the plaintiffs were required to prepare the requisite documentation in furtherance of the contract. On account of Defendant No. l's illegal action including breach of contract the plaintiffs are entitled to recover their dues, interests and damages. The Defendant No. 1, with a view to justify their delay in making payment, have set up baseless and vague charges regarding the plaintiffs purported default which is denied. The Defendant No. 1 with a view to further aggravate the situation are making steps for encashment of Bank Guarantee and Performance Bonds. The Defendant No. 1 notwithstanding their breach are threatening to continue with the works without the plaintiffs although they are fully utilizing the plaintiffs design thereof, hence the plaintiffs filed this suit.
4. Only Defendant No. 1 Pakistan 'International Airlines Corporation contested the suit. The Defendant No. 1 admitted the letter of intent dated 27-10-1983 and agreement dated 16-4-1984 with the plaintiffs a partnership firm but took the plea that the plaintiffs breached the terms of contract as they did not complete the work within the stipulated time mentioned in the agreement. The Defendant No. 1 however, took further plea that Kafiluddin Ahmed Managing Partner of the firm died on 28-111985, therefore, the agreement had come to an end and the Defendant No. 1 was no longer bound and liable under the said agreement. The Defendant No. 1 also took the plea that because of the delay in completion of the contract, the Defendant No. 1 has suffered serious financial losses and counter-claimed damages in the amount of Pak Rs. 28,277, 574 and US $ 218486 alongwith interest of 15% per annum. The Defendant No. 1 also alleged that the suit was not maintainable.
5. Out of the pleadings of the parties the following issues were framed.
ISSUES
(1) Whether the suit is or is not maintainable?
(2) Whether the plaintiff is entitled to the injunctions prayed for in the Suit?
(3) Whether the plaintiff is entitled to any money decree as prayed for?
(4) Did the plaintiff commit any breach of the contract dated 27th October, 1983, and if so, to what effect?
(5) Is the Defendant No. 1 entitled to the counter-claim?
(6) Has the plaintiff got any cause of action?
(7) To what relief the Defendant So. 1 is entitled?
6. In support of the case the plaintiffs examined Hyderuddin Ahmed one of the partners of the plaintiffs' firm who produced series of documents from Exhs. P/I to P/109 containing deed of partnership, agreement executed between the parties, correspondence exchanged between them on various subjects concerning the contract and other documents. The Defendant No. 1 examined Fareed Ahmed Mughal Manager Projects. He also produced various documents containing general conditions of the contract, correspondence exchanged between the parties, letter of termination of contract, partnership deed of plaintiff's firm, etc.
7. I have heard the parties' Advocates, perused the evidence and documents available on the record. My findings on the above issues are as under for the following reasons: FINDINGS Issue No. 1The suit is maintainable.
Issue No. 2In affirmative.
Issue No. 3In affirmative (as under).
Issue No. 4In negative.
Issue No. 5In negative.
Issue No. 6In affirmative.
Issue No. 7The suit of the plaintiff is decreed as under.
REASONS
8. ISSUE NO. 1.--The burden of proof lies upon the Defendant No. 1 to prove the issue. Learned Advocate for the Defendant No. 1 has argued that the suit is hit by Section 34 of Arbitration Act as there was an arbitration clause in the agreement and that the suit is not maintainable under Section 42 of Partnership Act as the firm was dissolved on the death of Kafiluddin Managing partner of the firm.
9. Conversely learned Advocate for the plaintiffs has stated that Section 34 of Arbitration Act is not applicable: that the suit is not hit by Section 42 of Partnership Act as the parties intended to continue the contract on the old terms and conditions.
10. A perusal of Section 34 of Arbitration Act reveals that it is applicable in a case when a suit is filed without referring the matter to arbitrator as per agreement. Under this provision the Court has power to simply stay the proceedings of the suit and refer the matter to the arbitrator. In the present case no such application was filed by the Defendant No. 1' before filing written statement, which is requirement of the law. It appears that the Defendant No. 1 did not invoke the said arbitration clause of the agreement but allowed the suit to continue before this Court. Under Section 34 of Arbitration Act the suit cannot be dismissed. Confronted with the above position, the learned Advocate for the Defendant No. 1 has agreed that suit is not hit by Section 34 of Arbitration Act.
11.As regards the second submission, it is an admitted position that Kafiluddin Ahmed Managing Partner of the plaintiffs' firm died on 28-11-1985. Thereafter the terms of the contract were being implemented. /The Defendant No. 1 allowed the firm to continue its obligation under the terms of agreement even just after the death of Kafiluddin and after the firm was reconstituted by the remaining partners of the firm. As such, the conduct of the parties shows that they allowed the contract to continue the business of the firm after the death of one of partners. A similar question arose in, a case of Tarachand Ghanshamdas v. Pakistan PLD 1957 Kar. 557. In that case during subsistence of agreement one of the partners died. The Division Bench of this Court examined the question but there was difference of opinion between the members of the Bench. One of the members of the Bench Muhammad Bakhsh, J. took the view that there was no dissolution because a contract to continue the firm after the death of a partner could be inferred from the conduct of the parties whereas another member of the Bench Munshi, J. took the view that the Writ Petition was not maintainable inasmuch as the alleged agent could' not represent a dissolved firm. As there was conflict of opinion between the Judges, therefore, the matter was referred to Constantine, J. under the Letters Patent. The learned Constantine, J. agreed with the view taken by learned Muhammad Bakhsh, J. by holding that implied contract excluding dissolution by death of a partner may be inferred from the circumstances of the case. The rule laid down in the above authority is fully applicable to the facts and circumstances of this case. It is pertinent to point out that the original partners of firm were father, son and daughters. A similar question was examined by the Privy Council in the case of Deviji Goa v. Tricumji Jiwandas AIR 1945 PC 71 it was observed as under: "Their lordships are also of opinion that having regard to the nature of the partnership which went on as a living concern continuously since the time it was started, that separation or death of some members of the firm, others-their sons or grandsons-taking their place, cannot amount to dissolution, as Goa Petha presumably agreed to treat as partners the remaining members of the firm or such members as were added to it from time to time.
12. In the present case also the original partners of the firm were father, son and daughters. After the death of father, the son and daughters took over the control of the firm. They further reconstituted the firm with the remaining partners and then such intimation was conveyed to the Defendant No. 1 who accepted the said reconstitution of the partnership and allowed the firm to continue the contract not only after reconstitution but after the death of one of the partners. The partners also allowed the firm to continue the contract.
13.In view of above circumstances the suit of the plaintiffs is not hit by Section 42 of Partnership Act.
14.ISSUE NO. 4.--The burden of proof, to prove the issue lies upon the Defendant No. 1. The learned Advocate for the Defendant No. 1 has stated that the plaintiffs have committed the breach of contract when they failed to fulfil the contract within 2 years of its execution. In order to substantiate his arguments, he has stated that the plaintiffs delayed in carrying out the work by taking irrelevant matters in their letters with regard to mobilization of advance, approval of layout plans; installment of equipment etc. Conversely, the learned Advocate for the plaintiffs has stated that contract was not completed because of delaying tactics adopted by the Defendant No. 1. He referred to various documents by showing that delay had occurred in advancing the mobilization advance which was to be given after 15 days of furnishing bank guarantee; that the Defendant No. 1 delayed in approving of kitchen layout drawing, providing import licence, releasing foreign exchange, installation of equipment imported directly by the Defendant No. 1, insistence of Defendant No. 1 on single manufactures specified by them for certain items, withholding payments for work done and equipment delivered.
15. Defendant No. 1 examined Farid Ahmed Mughal Manager Project whereas the plaintiffs examined one of partners Haderuddin Ahmed who produced various letters and documents in support of the case.
16.I have examined the evidence and the documents produced by the parties in support of their respective claims and find that before the actual agreement there as a letter of intent dated 27-10- 1983 between the parties containing the same terms and conditions which are mentioned in the agreement of contract dated 16-4-1984. Thereafter there were general terms of contract which have been produced by the parties. The Defendant No. 1 has produced these documents as Exhs.D- 1/1 to D-I/3. According to the terms and conditions of the contract mobilization advance was to be provided by the Defendant No. 1 within 15 days after furnishing insurance guarantee. According to general terms of conditions the drawings were to be approved by the Defendant No. 1 within 15 days of their submission. In this case from the very start delay has occurred in advancing mobilization advance. No date was fixed for furnishing insurance guarantee but the plaintiffs submitted bank guarantee on 17-11-1983 but the mobilization advance was given after. 45 days.
Thereafter the Defendant No. 1 wanted to change the alignment of boundary wall and approval was given on 10-1-1984. Drawings were submitted to the. Defendant No. 1 for approval but the approval was given after delay of 150 days. There was delay in providing import licence and releasing foreign exchange. There was delay in providing equipment imported directly by the Defendant No. 1. There was delay in withholding payments of running bills. When confronted, the learned Advocate for the defendant firstly stated that the drawings were not required to be approved by the Defendant No. 1, as per clause (b) of the letter of intent, dated 27-10-1983, which was the initial contract between the parties till drawing up a formal agreement. But when he was confronted with the general conditions of the contract appearing at page 5 of the said conditions and mentioned in para. 12, then he frankly conceded that the plaintiffs were required to furnish two sets of complete final details of working drawings which were to be approved by the Defendant No. 1 within 15 days. He frankly conceded that the said approvals were not provided within the required period. He also admitted that the mobilization advance was not furnished within 15 days of furnishing bank guarantee but he took the plea that under the agreement the plaintiffs were required to provide insurance guarantee and not bank guarantee. On querier he frankly conceded that the Defendant No. 1 never objected to furnishing bank guarantee instead of insurance guarantee by the plaintiffs. Thus delay in executing of the work starts from the very beginning.
Learned Advocate for the Defendant No. 1 could not point out anything from the evidence which can suggest that the plaintiffs were responsible for violating the terms of agreement and the delay can be attributed to the plaintiffs but on the contrary various letters produced by the plaintiffs clearly indicate that the delay was caused on the part of the Defendant No. 1 on various aspects of the contract. As such, the plaintiffs cannot be held responsible for breach of the contract but on the contrary it was the Defendant No. 1 who was the cause for such delay. The Defendant No. 1 has failed to prove this issue, therefore, the same is replied in negative.
ISSUE NOS. 2 AND 3. As both the issues are connected with each other therefore they are discussed together. The burden of proof lies upon the plaintiffs to prove these issues. The plaintiffs in para.7(a) of the plaint has claimed the following amount:-- S. No. Description Date. AmountMark-up @ 15% p.a. till date of filing suit.Total
1. Local Currency 26.1.1986605,900 52,041 657,941 Reimbursement of Import Licence fees, Letters of Credit and Insurance charges
2. 15th Running Bill 20.2.19861,481,365108,972 1,590,337
3. Consultancy Fees (1.5%)20.3.1986658,50042,487 700,987
4. 16th Running Bill (Total 1,990,258). 13.5.1986508,89321,332 530,225
5. Generator 11.6.19862,000,00060,000 2,060,000
6. Balance Consultancy Fees (1.5%)Not Yet billed658,500--- 658,500
7. Reimbursement of InsuranceNot yet billed40,392 --- 40,392
8. Foreign Exchange 19.3.19861,786,278115,986 1,902,264 Third shipment of equipment (30.12.1985)($137,406 @ Rs. 13)
9. Balance of second shipment of equiment (31.10.1985)12.12.1985402,38446,785 509,129
10. Office running expenses since January 1986 @ Rs. 75,000 p.m.--- --- --- 600,000
11. Installation of equipment imported by PIAC--- --- --- 500,000 Grand Total: Rs.9,749,775 17.With regard to the expenses at Serial No. 1, the plaintiff has relied upon Exhs.65, 75 and 84. A perusal of these exhibits reveal that they are the letters sent by the plaintiffs to the Defendant No. 1.
The plaintiffs have claimed reimbursement of Import Licence Fees, Letters of Credits and Insurance charges. From this it appears that the plaintiffs had paid these amounts to the concerned departments but no proof whatsoever in the shape of payment vouchers or through any mode has been produced to show that the amount of Rs. 605,900 was paid by the plaintiffs towards the charges. Merely on the letters and without proof of payments, the amounts cannot be claimed by the plaintiffs.
18.As regards the payment of 15th and 16th running bills, the defendants' witness in the cross- examination has admitted the 15th and 16th running bills owed by the defendants to the plaintiff for the work done after the death of Kafiluddin Ahmed had not been paid, as such, the plaintiffs are entitled to-recover the amount mentioned at Serial Nos. 2.
19.The plaintiffs have also claimed consultancy fees. Under clause 4 of the Contract of agreement Exh.P-1/3, the consultancy fees are to be paid to the plaintiffs at 3% of the cost of the project. The defendant's witness in the cross-examination has also admitted that the consultancy fee at 3% of the project costs at Rs. 43.9 million is to be paid to the plaintiffs. Therefore, the consultancy fees at Serial Nos. 3 arid 6 are required to be paid to the plaintiff.
20.As regards the claim of purchase of generator, the defendant's witness in the cross- examination has admitted that the plaintiffs had supplied the generator of value of Rs. 20,00,000 to the defendants on 11-61986 and such invoice of payment was submitted to the defendants on 11- 61986 vide Exh.
102. Thus the amount claimed at Serial No. 5 is required to be paid to the plaintiff.
As regards the claims at Serial Nos. 8 and 9, the plaintiffs have produced the invoices which were attached to Exhs.97 and 82, as such, they are entitled to recover the amount mentioned at Serial Nos. 8 and 9. As regards the claim at Serial Nos. 7, 10 and 11, no proof has been filed to prove the payments, as such, the plaintiffs are not entitled to claim such amounts.
21. In view of above discussion, the plaintiff are entitled to claim total amount of Rs. 75,55,920. As the defendants have failed to prove that the breach of contract had occurred due to plaintiff's action, therefore, the plaintiffs are entitled to the injunctions as prayed in the. suit. The issues are replied in affirmative.
22.ISSUE NO. 5. The burden lies upon the Defendant No. 1 to prove the issue. Learned Advocate for the Defendant No. 1 has stated that the Defendant No. 1 has counter-claimed as per statement prepared by Hyder Bhimji and Co. which has been produced in evidence. At the time of production of this document an objection was raised. Learned Commissioner did not allow the document to come on the record on the ground that this document was not mentioned in the plaint, therefore, without leave of the Court the document cannot be accepted. This document is not prepared by the Defendant No. 1 but it was prepared by Hyder Bhimji and Co. Chartered Accountants, This document merely bears the stair of the said Chartered Accountant but it was not signed by any of their officer. A covering letter has been produced which is purported to be signed by one Hyder Ali: It was addressed to general Manager Works Pakistan International" Airlines Corporation. A production of document and proof of documents are two different subjects. A document can be produced in evidence which is always subject to proof as required under Article 78 of Qanun-e- Shahadat Order. The said Section reads as under: "Proof signature and handwriting of person alleged to have signed or written document produced.- -If a document is alleged to be signed or to have been written wholly or in part by any person, the signature or the handwriting of so much of the documents as is alleged to be in that person's handwriting must be proved to be in his handwriting."
23.In the present case neither the person who had signed the documents has been examined nor it has been proved through any other evidence to suggest that the document was issued by the person mentioned in the document. The Hon'ble Supreme Court of Pakistan has examined this question in the case of Muhammad Yousuf v. S. M. Ayub PLD 1973 SC 160 at page 191 it has observed as under: "I am of the view that even if such documents are brought on record and exhibited without objection, they remain on the record as "exhibits" and faithful copies of the contents of the . original but they cannot be treated as evidence of the original having been signed and written by the persons who purport to have written or signed them, unless the writing or the signature of that person is proved in terms of the mandatory provisions of Section 67 of the Evidence Act. If instead of the copy Exh.PE., the original Form "E" which formed the primary evidence, had been exhibited on the record without proving as to who was its author can it be argued that by merely exhibiting it, the document should be taken for granted as bearing the signature of the appellant without proof that in fact it was written and signed by him. The onus obviously lay on the respondent to prove this fact and his failure to prove it did not cast any responsibility on the appellant to negatively disprove it."
24. This document which has been formerly Exhibited as D/6 has not been proved in accordance with law, therefore, it cannot be relied upon. The learned Advocate for the Defendant No. 1 has frankly conceded that documents Exh.D/6 is the only document which can support the counter- claim of the Defendant No. 1. As the said document has neither been produced in evidence in accordance with law nor proved as required by law, therefore, the same cannot be relied upon.
Thus the Defendant No. 1 has failed to prove this issue.
25.ISSUE NO. 6. In view of my findings on the above issues, the plaintiffs have cause of action, as such, the issue is replied in the affirmative.
26.ISSUE NO. 7. In view of my findings on the above issues, the suit of the plaintiffs is decreed against the Defendant No. 1 for an amount of Rs. 75,55,920 with 15% mark-up from the date of suit till realization of amount. The suit in respect of injunction is also decreed as prayed with costs.