1. 'KHILJI ARIF HUSSAIN, J.- Plaintiff filed suit for declaration, permanent injunction and compensation, etc. Seeking following reliefs:--
(1) To declare that the Licence(s) as, stated in the plaint for establishing, maintaining and operating of a Paging System/Service within Pakistan that has been issued, as a result of the Joint application, in the Joint names of the plaintiff and defendant No,1.
(2) To declare any purported licence(s) issued to or in the name of defendant No,1 as null and void or alternatively, the licence(s) issued in the name of defendant No,1 be declared to be for and on behalf of the plaintiff and defendant No,1 jointly.
(3) To direct the defendants to refrain from giving effect whatsoever to any purported licence issued to the defendant No,1 and further not to act upon or in pursuance of such licence in any manner whatsoever.
(4) To declare that the plaintiff and defendant No,1 have the right to jointly establish, maintain and operate a Paging System/Service Card Operated Pay Phone system, store and forward fax services, data communications, GSM cellular and Information System Development within Pakistan and direct the defendant NO.1 not to establish, maintain and operate the aforesaid telecommunications project in Pakistan to the exclusion of the plaintiff.
(5) To direct the defendant No,1 to use the Licence(s) jointly with the plaintiff and if the Honourable Court comes to the conclusion that the Agreement cannot be specifically enforced by any reason, the plaintiff as an alternative prayer claim compensation for a sum of Rs,300 million which include expenses incurred, damage to reputation, loss of goodwill, loss of contacts etc. However, the plaintiff reserves the right to file further and better particulars and add to this amount.
(6) Cost of the suit.
2. Since the learned Advocate for the plaintiff except relief pertaining to claim of compensation does not press the remaining reliefs asked for, about declaration that the licence as stated in the plaint has been issued as a result of Joint Venture of plaintiff and defendant No,1 and declaration that the licence issued in the name of defendant No,1 is null and void etc. Only facts which are relevant for the purpose of deciding the relief pertaining to the claim of compensation summarise as under:-- ' The plaintiff is a private limited company incorporated in Pakistan and defendant No,1 is a private limited company established under the law of Singapore. In response to an advertisement given by defendant No,2 inviting application from private sectors for the purpose of establishing, maintaining and operating a Paging System/Service for general public use in Pakistan, the plaintiff and defendant No,1 entered into an agreement of Memorandum of Understanding in July, 1992. In pursuance of the agreement plaintiff submitted an application before the defendant No,2 on behalf of defendant No,1 and itself. For a Nationwide Radio Paging Service in Pakistan. Plaintiff also held various meetings and discussed the matter with various officials in this regard. The plaintiff's representatives on various occasions travelled to Islamabad and incurred expenses. Defendant No, 1 authorised Chairman of the plaintiff to locate suitable sites in Pakistan for location of Card- telephone and accordingly plaintiff carried out detailed survey for suitable places. And incurred substantial expenditure in this regard. It was alleged by the plaintiff that plaintiff and defendant No,1 agreed that the premises of the plaintiff on. University Road, Gulshan-e-Iqbal would be the headquarters of all the telecommunication projects to be undertaken by the plaintiff and defendant No,4. The plaintiff accordingly commenced renovation to the said premises in accordance with the guidelines laid-down by the defendant No,
1. The plaintiff also forwarded a Tenancy Agreement vide its letter dated January, 1993 in respect of the premises of the plaintiff comprising of basement, ground floor plus other floors which were designated as headquarters for the telecommunication of the Joint Ventures between the plaintiff and defendant No,
1. In terms of the Memorandum of Understanding plaintiff arranged preparation of Memorandum of Articles of Association for the proposed Joint Venture Company through a local lawyer. On November 28, 1993, defendant No,2 issued Paging Licence in lieu of the licence issued to the defendant No,1 in favour of the plaintiff. On 23-3-1994 defendant No,1 informed the plaintiff that the plaintiff has obtained its own separate Paging Licence, it would be best for defendant No,1 and the plaintiff to act separately in respect of each licence. The refusal of defendant No,1 to work with plaintiff, plaintiff alleged that it was in flagrant disregard of the agreement between the parties and the Joint Venture. Plaintiff filed suit for specific performance of the agreement seeking declaration that the Licence has been issued as a result of joint application etc. And damages.
3. ' The defendant No,1 filed written statement denied various allegations made by the plaintiff. The defendant also specifically denied that there was any agreement between the parties that the premises of the plaintiff would be the headquarters of all telecommunication projects to be undertaken by the defendant and the plaintiff, which project in any case, were never acted upon.
4. The defendant further denied that the plaintiff commenced or effected any renovation on the said premises for the purpose of the alleged telecommunication projects or plaintiff is entitled for any damages. On the basis of the pleadings between the parties following issues were framed:--
(1) Whether the suit is not maintainable?
(2) Is there any valid signed, subsisting and enforceable agreement in respect of any Memorandum of Understanding, if so, to what effect?
(3) Whether the application dated July 15, 1992 in response to the Public Advertisement was made jointly by the plaintiff and the defendant No,1? If so, to what effect?
(4) Whether the plaintiff has any cause of action against he defendant, considering that the plaintiff at its own request was granted by the government a separate Paging Licence dated 28-11- 1993 in its own name? If so, to what effect?
(5) Whether there was any concluded agreement between the plaintiff and the defendant No,1 that plaintiff's premises at University Road, Gulshan-e-Iqbal would be used as office accommodation for the JV Company which was to have been set up by the parties? If so, to what effect?
(6) Whether for reasons of facts and law as stated in the pleading of the parties the plaintiff is entitled to any reliefs and to what effect?
(7) What should the decree be?
5. ' On behalf of the plaintiff one Zohaib Hasan filed Affidavit-in-Evidence and produced various documents/ correspondences exchanged between the parties as Exhs.5/l to 5/112. On behalf of the defendant one Lim Wee Seng filed his Affidavit-in-Evidence along with documents/correspondences exchanged between the parties as Exh.9 to Exh.41.
6. ' Heard Mr. Naveedul Haq, learned counsel for the plaintiff, Mr. Sajid Zahid, learned counsel for the defendant, and perused the record.
7. ' Mr. Naveedul Haq, learned counsel for the plaintiff, concedes that since application granting restraining order to refrain the defendant No,1 from entering into any transaction in relation to the telecommunication was dismissed vide order dated 30-3-1994 the relief so far as Issues Nos.1 to 5 rendered infructuous, and he pressed only relief in respect of damages and compensation:-- ' "In view of above, the only issue, now required to be answered is: ' Whether for reasons of facts and law as stated in the pleadings of the parties the plaintiff is entitled to any relief/s and to what effect?"
8. ' The plaintiff in his memo. Of plaint stated that after entering into Memorandum of Understanding
(MOU) with the defendant No,1, he arranged various meetings of defendant No,1 with government officials. In the affidavit-inevidence he gave details about the execution of the Memorandum of Understanding and various steps taken by him in terms of MOU. Plaintiff also produced various correspondences exchanged between the parties in this regard. However, since Issues Nos.l to 5 have 'not been pressed by the. Learned Advocate for the plaintiff, I would like to discuss evidence only in support of the plaintiff's claim pertaining to damages. The plaintiff in his affidavit-in- evidence gave details of his claim pertaining to damages which reads as under:-- ' "That the plaintiff is entitled to permanent injunction restraining defendant No,1 from using the licence(s) to the exclusion of the plaintiff. In addition the plaintiff is also entitled to seek specific performance of the agreement and an affirmative order directing defendant No,1 to engage in the business of telecommunication with the plaintiff as partners and further in case; the defendant No,1 fails to engage in such business jointly with the plaintiff then the plaintiff is also entitled to compensation from defendant No,1 for expenses incurred, damage to reputation, loss of goodwill, loss of potential profits, loss of contacts as follows:--
(i) Loss of rentals of US$ 3,805,299 B&H House for ten years
(ii) Loss of profits for Pak fifteen years Rs.439,185,000
(iii) Expenses incurred Pak by the plaintiff Rs. 10,000,000
(iv) Loss of Goodwill Pak and contacts Rs.10,000,000 The right of the plaintiff to claim damages depends upon the facts whether there was any concluded contract between C the parties for breach whereof plaintiff can claim damages.
9. ' From the Memo. Of Understanding Exh.5/6 and Exh.5/9 it appears that parties by this Memo. Of Understanding agreed to set-up of a company in Pakistan with nominal paid-up capital acceptable to both parties. Clause 1.2 of he Memo. Of Understanding specifically provided that subject to the agreement (underline is mine) by defendant No,1 and Hassan Group of Companies
(HGC) to use the name of the company in submitting any application for a licence to operate and implement introduced under clause 2. In terms of clause 1.3 it was agreed between the parties that neither defendant No,1, HGC nor company shall participate in any project introduced to or procured by HGC for the 'company, unless all the requirements specified in clause 2 of the Memo. Of Understanding has been satisfied. Clause 1.7 gives first right of refusal to defendant to decide whether it between them. Clauses 10 and 11 read as under:-
(10) "Good Faith ' This Memorandum has been signed by the parties in goods faith and in contemplation of a joint venture between. Each party must be just and faithful in its dealings with the other party and must use its best endeavours to promote the objects of this Memorandum and the joint venture."
(11) "Binding Nature ' This Memorandum and its terms are subject to the object of this arrangement of being fulfilled and the joint venture agreement or other documentation being agreed by both parties. The signing of this agreement by the parties constitute a firm and binding commitment on the part of each of the party to pursue and further the objects of this arrangement."
10. ' From the various clauses of the Memorandum of Understanding between the parties one can see that the validity of Understanding was for a fixed period of one year with a right that either party cab terminate the Memorandum by giving six months notice in- writing further immediately upon breach by any party of the Memorandum.
11. ' From the record it appears that on 15-7-1992 an application was made to Joint Secretary Ministry of Communication Government of Pakistan for issuance of nationwide radio paging licence in Pakistan jointly by the plaintiff and the defendant. It also appears that numerous correspondences for the purpose of securing licence were exchanged between the parties and plaintiff played an active role for the grant of radio paging licence which was granted to the defendant by the Government of Pakistan. The question which required consideration is whether the Memorandum executed between the parties was concluding contract between them or was subject to further agreement between the parties.
12. ' Clause 1.2 of Memorandum provided subject to agreement by the defendant No,l and Hassan Group of Companies (H & C) licence was to be obtained by the joint venture company to implement project under clause 2. In terms of clause 1.3(a) neither SIT (defendant No,l), H&C nor the company shall participate in any project introduced, to or procured by H&C for the joint venture company, unless all the requirements specified in clause 2 are satisfied.
13. ' The question whether agreement Memorandum of Understanding constitute a binding contract between the parties can be addressed in some appropriate cases as plaintiff has not pressed his relief for., enforcement of right under the Memorandum of Understanding, however, I would like to observe that in all cases one cannot say that Memorandum of Understanding between the parties cannot be enforced as same dependent not only on the terms of the MOU concluding but also on the way in which parties after executing the said Memorandum acted upon it.
14. ' The parties may agree to execute formal documents incorporating terms on which they have previously agreed. Such a provision in the Memorandum does not deprive the agreement of contractual force. In the case of Morton v. Morton, (1942)1 All ER 273, it was held that an agreement "to enter into a separation deed containing the following clauses" (of which a summary was then given) was held to be a binding contract. Likewise, in the case of Messiniaki Bergen (1983) 1 Lloyd's Rep. 424, it was held that "the grant of an option to purchase can similarly be described as a contract by which one party binds, himself to enter into a further contract if the other so elects; and neither of the contracts is void for uncertainty. However, there can be an exception like when parties have simply agreed to negotiate, such an agreement is not a contract". In the case of Chilling Worth v. Esche [(1924) 1 Ch.97], it was held that a mere agreement to negotiate is not a contract.
15. In order to constitute valid binding contract between the parties one of the essential conditions is that conscious ad idem must exist between the parties. With regard to the terms of the contract in case of ambiguity same can adversely reflect about the existence of contract.
16. ' In the case of Messrs Vinder Textile Mills Ltd. v. Industrial Development Bank of Pakistan, 1999 YLR
(Kar) 1188, learned Single Judge of this Court held:- ' "The plaintiff in order to establish breach of the alleged contract or understanding was required to clearly establish the terms between the parties. On the available material, I am unable to find the terms of agreement settled between the two parties and it is not possible to record finding about any breach having been committed."
17. ' Mr. Naveedul Haq, learned Advocate for the plaintiff, in support of his contention that the valid binding contract relied upon the case of Sandoz Limited and another v. Federation of Pakistan and others, 1995 SCMR 1431. In the said judgment the Honourable Supreme Court held that:- ' " It is well settled proposition of law that in case of any ambiguity Court in order to resolve it and to ascertain real intention of the parties, can have the resort to correspondence preceding and or subsequent to the execution of the contract document, conduct of the parties and the attending circumstances."
18. ' There is no cavil to the principle laid down by the Honourable Supreme Court in the case of Sandoz Limited and another (supra).
19. ' However, principle laid down in the case of Sandoz is of no help to the plaintiff for simple reason that the Memorandum of Understanding clearly stipulated that same is "subject to the contract" between the parties and further that after securing the licence the parties has to establish joint venture company which company admittedly not established so far. It is further established from the correspondence exchanged between the parties that till expiry of the agreement, the parties were under correspondence about to execute joint venture agreement established joint venture company.
20. ' A negotiation or offer with qualification subject to contract once introduced could cease to apply to the negotiations if the parties expressly or by necessary implication agreed that it should be expunged.
21. ' In the case of Cohen v. Nessdale Ltd. (1982) All ER 97, the Honourable Cumming-Bmce LJ reproduced a quotation from the judgment and I reproduced the same:- ' "....When parties started their negotiations under the umbrella of the "subject to contract" formula or some similar expression of intention, it was really hopeless for one side or the other to say that a contract came into existence because the parties became of one mind notwithstanding that no formal ~ contracts had been exchanged. Where formal contracts were exchanged, it was true that the parties were inevitably of one mind at the moment before the exchange was made. But they were ' only of one mind on the footing that all the terms and conditions of the sale and purchase had been settled between them, and even then the original intention still remained intact that there should be no formal contract in existence until the written contracts had been exchanged."
22. ' Coming to the issue whether plaintiff is entitled for any damage claimed in the suit. In my view in assessing damages the fundamental basis is compensation for pecuniary loss naturally flowing from the breach but this is qualified by the plaintiff duty to mitigate loss, consequent on the breach and he cannot claim any part of damages which is due to his neglect to take steps such as not selling the goods within reasonable time from the date Of breach till the price has fallen as in the instant case not letting out the property immediately upon breach of the agreement (if any).
23. Although the plaintiff claimed a sum of rupees three million as damages but failed to give any detail/break-up amount in the memo, of plaint nor he produced any documentary evidence in support of it. In para-114 of affidavit I n evidence plaintiff for the first time give break-up of his claim pertaining to damages and stated that:- ' "in case defendant No,l fails to negotiate in such business jointly with the plaintiff then plaintiff is also entitled to compensation from defendant No,l for expenses incurred, damages to the reputation, and loss of goodwill, loss of potential profit, loss of contract and claimed following mesne profit under different heads :- Loss of rental of B&H US$ 3,805,299 International (Pvt.) Limited for 10 years Loss of profits for 15 Pak Years Rs.439,185,000 Expenses incurred by Pak the plaintiff Rs.10,000,000 Loss of Goodwill and Pak contacts Rs.10.000,000 ' Plaintiff alleged that licence was granted for a period of 15 years, and accordingly plaintiff is entitled for the amount claimed.
24. ' So far as plaintiff's claim about the loss of rental amounting to US$ 3,805,299. Admittedly, no Tenancy Agreement was executed between the plaintiff and defendant No,l or between the plaintiff and joint venture company to be constituted except that draft of tenancy agreement was forwarded to defendant No,l by the plaintiff. From perusal of draft agreement of tenancy it appears that no covered area was disclosed nor quantum of rent was mentioned in it. The plaintiff for the first time in para-61 of the affidavit in evidence E alleged that the parties had agreed that the office accommodation would be of plaintiff's premises situated on University Road and the plaintiff incurred substantial expenses for undertaking massive renovation including electric works and air- conditioning to comply with the requirements of defendant No,l. The plaintiff failed to place on record any documentary evidence in support of his statement that the plaintiff has incurred any expense or undertaken renovation work as desired by defendant No,l to use the premises for joint venture company to be constituted. The plaintiff forwarded tenancy agreement to the defendant vide his letter dated January, 1993 and till the dat I of expiry of the Memorandum of Understanding, admittedly, no tenancy agreement was executed by the parties. Memorandum was effective for a period of 12 months only commencing from July, 1992 and accordingly if at all plaintiff is entitled to claim rental same cannot be granted for a period of more than six months i.e, from January, 1993 to June, 1993. In the absence of any agreed rate of rent and further evidence about the prevailing rent of the premises in the locality of similar to the premises of the plaintiff, relief pertaining to loss of rental cannot be granted. After expiry of the Memorandum of Understanding the plaintiff could let out the premises to anyone and nowhere in his evidence, it was alleged by plaintiff that the property remained lying vacant for an indefinite period of time due to alleged breach of the defendant.
25. ' As regards loss of profit of 15 years amounting to Rs,439,185,000 the plaintiff has not placed on record any evidence that what was expected profit which can be earned by the proposed joint venture company. It is not disputed by the plaintiff that licence was issued in his name on 28-11- 1993 and further till such date defendant has not commenced, his business. The plaintiff has not, alleged that after obtaining the licence he has not started his own business and or deprived from doing business which he agreed to undertake under the joint venture company with defendant No,l. The plaintiff is not entitled for any relief under this head.
26. ' Likewise, no documentary evidence has been placed on record, in respect of the expenses incurred by the plaintiff on loss of goodwill, (AIR 2000 SC 2003). From perusal of Exh.P.5/69 it appears that the plaintiff forwarded cost of breakdown of the trip in Pakistan on 6-1-1993 to 17-1- 1993 and apparently out of 8282.90 Singapore $ he had received 2630 Singapore $ and it is not the case of the plaintiff that remaining amount in this regard has not received by him. From the documents it appears that both the parties borne their respective expenses for tlie purpose of securing licence and eventually to form joint venture agreement.
27. Indeed, for claiming damages, onus to prove loss lies upon the plaintiff who cannot succeed without producing evidence in positive terms. In this respect, reliance can be placed on the case of Syed Ahmed Saeed Kirmani v. Muslim Commercial Bank Limited (1993 SCMR 441) wherein Saleem Akhtar, J., (as he then was), speaking for the Court, has held as follows:- ' "A party claiming damages suffered due to breach of contract must establish the contract, the breach thereof and the extent of damages. , The onus is on the plaintiff and without discharging it he cannot succeed, section 73 of the Contract Act prescribes the rule of assessing the damages suffered due to breach of contract. Only such damages can be recovered which naturally arise in the usual course of things from such breach of the parties at the time of making the contract knew that loss or damage is likely to result from the breach. Another principle which is to be kept in mind while assessing the damages is that whether, the plaintiff was in a position to mitigate the damages and has neglected to avail of it. As discussed above the appellant has failed to prove the agreement with the Egyptian Embassy, the rate of rent and the date of occupation. The appellant as stated by him is a man of status and resources but he has not proved what steps he had taken to mitigate the damages. It was contended and. Held by the learned trial Court that as the bank failed to pay the entire loan, the appellant could not be compelled to prepay the loan received by him. In the facts of the case such an observation cannot be justified by any principle of law. A party can be relieved of his obligation under a contract where there are covenants which are conditional and the performance of one is dependent on the performance of the other. There is no such conditional or reciprocal promise between the appellant and the respondent."
28. ' The law stated in the said judgment" is very clear and no cavil can be had thereto. The plaintiff in the present case, has failed to discharge its burden of establishing or bringing on record the terms settled between the parties and, therefore, finding about breach thereof cannot be recorded. "
29. ' In the case of Chief Officer, District Council, Sheikhupura and 2-others v. Haji Sultan Safdar and 2 others, 1999 YLR 1963, it was held:- ' "Likewise, there was nothing in his statement to show that in what manner, he had improved the Ghazi -Minara Cattle Market and how much amount was spent on such improvements and under what heads. Hence, without the details of such expenditures, it cannot be said that he had actually spent anything on the improvement of the cattle market aforesaid and in what way. The mere mentioning that he had made the improvements or that he had suffered the loss or that he was deprived of the profits, without supplying their details, it will remain a mere assertion ' without having any tangible value for the determination Of the losses suffered by him. "
30. ' In the case of Islamic, Republic of Pakistan v. Sheikh Nawab Din and Sons, PLJ 2002 Lahore 1998 (DB), Lahore High Court held that:- ' "If no valid contract was entered into between the parties the question of breach of contract or the entitlement of damages simply does not arise."
31. ' It was further held that:- ' "A party alleged breach of contract and one claim damages/ compensation then established law is that such party has to prove existence of concluded contract, breach of contract, and such breach of contract entitling the concerned party to damages and then quantum of damages."
32. ' In the case of Messrs Sagaria Brothers v. Messrs Azam Markaz and 2 others, PLD 1994 Kar. 149, wherein claim of damages was denied on the ground that party claiming compensation must establish specifically any loss suffered by it, and a mere general assertion cannot be made basis for awarding compensation. In the said case plaintiff claimed a sum of Rs,3,000,000 on the balance of work of six storeys calculating approximately cost of Rs,3,00,000 profit at the rate of 10% amounting to Rs,3,00,000 and the learned Single Judge refused to grant claim holding that neither explanation nor details of the loss nor the same has been substantiated by document or other evidence.
33. From the facts stated hereinabove it appears that not only plaintiff failed to establish that , there was an concluding contract between the parties so as to entitle him for damages in case of breach of such contract and even if there was any concluding contract failed to prove losses/damages suffered by him in consequence of breach.
34. ' For the foregoing reasons suit is dismissed with no order as to costs.