1. ' ARSHAD NOOR KHAN, J.---This appeal has been directed under section 3 of the Law Reforms Ordinance, 1972 filed by the appellant against the judgment whereby the Suit No,373 of 1972 National Bank of Pakistan v. Farrukh Corporation and another, has been decreed against respondent No,1 and dismissed against respondent No,2, vide judgment dated 3-7-1989 and decree dated 22-8-1989 passed by the learned Single Judge of this Court.
2. ' Facts leading rise to the present appeal, in brief, are that the appellant filed suit for recovery of Rs,1,56,250 against the respondents for payment jointly and severally, stating therein that the appellant is a banking company incorporated under the Companies Act, 1913, having its registered office at Baghdadul Jadid, a Central Office at PIDC House, Karachi and a branch relevant for the purposes of the suit, known as Exchange Branch, near Denso Hall, Bunder Road, Karachi. That one Muhammad Munir Shaikh son of Muhammad Latif, who subsequently expired, was a customer of the appellant, who reportedly expired in January 1970, was the recipient of financial accommodation referred to herein appeal. The respondent No,2 is a Clearing and Forwarding Agent and interalia, stored the goods (Pledged by the said deceased as security to repayment of the packing cash credit allowed to him) in their godowns certified the quantity, quality and value which formed the basis of advances allowed to the said deceased. The deceased had an account with the appellant at its Exchange Branch, Karachi under the name and style of his sole proprietary concern. Messrs Farrukh Corporation, which account continued in the same name even after the death of the deceased. That on or about 31-5-1967, the appellant at the request of the deceased granted him a Packing Cash Credit Limit of Rs,50,000. The said facility was utilized by the deceased to the extent of aforesaid limit from his account from time to time and deposited various amounts in the said account from time to time. The limit was operated in the following manner:--
(i) That the said limit was to be operated after the receipt of advice of a foreign Letter of Credit in favour of the said deceased for the supply of goods.
(ii) That upon receipt of such L/C advice and/or an L/C. The said deceased delivered to the defendant No,2 goods for the purposes of export against L/C or L/Cs;
(iii) That the defendant No,2 for sufficient consideration accepted the said goods by way of pledge and as security for financial accommodation granted by the plaintiff and verified the quantity, quality and value of such goods as declared on the pledge form and after such verification gave a certificate in regard to the quantity, quality and value of the goods as delivered to him;
(iv) That upon receipt of pledge letter duly certified by the defendant No,2, as aforesaid, the plaintiff allowed the defendant No,1 to overdraw to the extent of 60% of the said value certified by defendant No,2;
(v) That the defendant No,2 was del credere agent of the plaintiff and was responsible for any negligence or misdeclaration which might have mislead the plaintiff into giving more advances than required on basis of quantity, quality and value of the pledged goods.
3. ' On or about 26-9-1967, the aforesaid Packing Cash Credit Limited of Rs,50,000 was enhanced to Rs,75,000 at the request of the deceased, which was allowed and the deceased utilized the enhanced limit in the same manner as stated above and continued to be the godown-keeper and certifier of the quality, quantity and value of the pledged goods on the basis, the limit was to be utilized. As a security for repayment of the said cash credit and/or any balance which might at any time be found due to payable by the deceased to the appellant. The deceased also executed promissory note dated 26-9-1967 for Rs,75,000 payable on demand to the appellant or order with interest at 5% above Bank rate minimum 10% per annum with monthly rests. That as further security in regard to the enhanced limit, the said deceased executed an agreement of pledge of goods dated 26-9-1967. The deceased subsequently in addition to the aforesaid agreement also from time to time acknowledged his liability through his letters dated 28-8-1968, 19-9-1968 and 4-2- 1969. It is further stated in the plaint that on 30-6-1969 a sum of Rs,1,14,739.41 accumulated due and payable against the deceased, the deceased acknowledged the said liability vide confirmation letter dated 30-6-1969. It is further stated in the plaint that respondent No,2 certified the quality, quantity and value of the goods pledged by the said deceased as security for repayment of the aforesaid dues and all several and progressive dues. The respondent No,2 also confirmed and certificated Bone-meal 100 tons Rs,400 per ton amounting to Rs,40,000; Horns and Hoofs 100 tons Rs,400 per ton amounting to Rs,40,000 and Blood-meal 100 tons Rs,600 per ton amounting to Rs,60,000 total amount to Rs,1,40,000. Since the deceased failed to fulfil obligation on his part, as such, the appellant sold the pledged stock, the total quantities delivered by respondent No,2 to the purchasers and the value obtained was Bone-meal, horns and hoof, 135 tons at Rs,18,955.44 and Blood-meal 18 CWT at Rs,281.25 total amount of Rs,19,236.69, duly credited in the account of the deceased towards partial adjustment of his liability to the plaintiff. The aforesaid sale was made in consultation with the respondent No,2 and quantities were weighed and delivered by the respondent No,2. The respondent No,2 is liable for the difference in certified stock and the stock actually found and sold from his possession. The respondent No,2 vide his letters dated 3-7-1969 and 8-12-1970 sent evasive reply about the shortfall in quantity and Value, which is an acknowledgment of his liability within the meaning of section 19 of the Limitation Act. The appellant, therefore, filed the suit as stated above. The respondents were served with the notice. The respondent No,1 did not contest the suit in spite of service, however, respondent No,2 contested the suit by filing of written statement, inter alia, admitted therein, to be a Clearing and Forwarding Agent of the appellant and deposit of the pledged goods at his godown, but according to him a quality, quantity and value of the pledged goods were not certified by him. He further denied the assertion that there was any shortfall in the stock pledged by the respondent No,1 with the respondent No,2 and kept in his godown and has further stated that he had returned all the goods on the advice/order of the appellant and that there exists no privity of contract, as such he was not liable for any liability towards payment as claimed by the appellant. On pleadings of the parties, the following issues were framed:-
(1) Whether the defendant No,2 certified the quantity, quality and value of the goods stored with them by, the defendant No,1?
(2) Whether defendant No,2 is liable for difference in the value of the certified stock in its possession and the value on which this stock was sold, and were the stocks weighed in the presence of the defendant No,2?
(3) Whether all the goods had been delivered by the defendant No,2 to the plaintiff?
(4) Whether there is a private of contract between the defendant No,2 and the plaintiff?
(5) To what decree the plaintiff is entitled to, and against which defendant?
(6) Whether the suit is bad for misjoinder of the defendant No,2, if so, to what extent?
4. ' After framing the issues, the parties led their evidence in pro and contra to their respective claims and filed all the relevant documents in respect of their claims. The learned Single Judge after hearing of learned counsel for the parties, was pleased to dismiss the suit against respondent No,2 and decreed the suit against respondent No, 1.
5. ' The appellant being highly aggrieved and dissatisfied with the judgment and degree passed against respondent No,2 has preferred the present appeal, whereas the respondent No,1 has not challenged the judgment and decree, impugned herein, as such decree passed against them has attained finality.
6. ' We have heard Mr. Mansoor-ul-Arfin, Advocate for the appellant. The respondent inspite of service, chooses to remain absent.
7. ' Mr. Mansoor-ul-Arfin, Advocate for the appellant vehemently contended that the evidence available on record fully establish the claim of the appellant against the respondent No,2 also and respondent No,2 has not led the evidence of any independent witness to controvert the claim of the appellant as such the claim of the appellant against the respondent No,2 has also been established on the basis of evidence available on record and the learned Single Judge did not apprise the evidence available on record in its true perspective and misread the evidence while holding that there exits no privity of contract and the respondent No,2 was not liable for any losses allegedly caused to the appellant. He has further contended that section 176 of the Contract Act, in any way is not applicable to the circumstances of the present case, as section 176 of the Contract Act applies against the respondent No,1, who pledged the stock with the appellant and said stock was kept in the godown of the respondent No,2 after his certification as to the quantity, quality and value of the goods and the stock reports Exhs.5/4 and 5/5 are the conclusive proof of certification of quantity, and value of the goods which were subsequently found shortfall for which respondent No,2 could not be absolved from his responsibility for the losses caused to the appellant as such the evidence available on record has been misconstrued by the learned trial Court while dismissing the suit against respondent No,2 as such, the findings of the learned trial Court against the respondent No,2 may be reversed and the suit may also be decreed against respondent No,2.
8. ' We have considered the arguments advanced on behalf of the appellant and have gone through the entire evidence available on record.
9. ' For the purposes of determination of the present appeal, the point for consideration would be that whether there was shortfall in the stock pledged by the respondent No,1 with the appellant and kept in the godown of respondent No,2 in spite of the certification regarding quantity and value of the stock and the respondent No,2 is equally responsible for the losses caused by him to the appellant.
10. ' In support of their respective claims, both the parties have led their oral as well as documentary evidence. The appellants have examined their officer namely: Fareed. Qazi as P.W.1, who stated that the loan facility was allowed to the deceased, who pledged his stock with the appellant and the pledged stock was kept in the godown of the respondent No,2 being Clearing and Forwarding Agent of the appellant and the said stock was certified with regard to quantity and value of the same by the respondent No,2. The respondent No,2 in his written statement has admitted the fact that he was acting as Clearing and Forwarding Agent of the appellant and kept the stock pledged by respondent No,1 with the appellant, in his godown, but has denied that the said stock was weighed any quantity and was certified for value also. The said denial Of respondent No,2 about the certification regarding the quantity, quality and valuation of the stock vide stock reports Exhs.5/4 and 5/5, and has stated in his evidence that he had not confirmed the said stock but his employee Haroon had checked the stock. The evidence led by the respondent No,2 in this respect is very clear. In his evidence before the learned trial Court he stated that he was not present when the stocks were brought to his godown but his staff was present and that there was no reading the said stock when brought to their godown and one Anwar, Export Officer of the said Bank used to escort the said stock to the godown and said Anwar was arrested in a case of fraud but not related to this consignment. He further stated in his examination-in-chief that he prepared stock report of the goods at the time when the same was brought to their godown and then submitted to the bank. He confirmed in his examination-in-chief that stock reports Exhs.5/4 and 5/5, were prepared by his staff and has stated that the said stock report bears the signature of Haroon, one of the members of staff. He while replying the question of the Court stated that writing in the column "approximate value" circled in red mark as Exh.5/4-A is not in the handwriting of Haroon. In his cross-examination the respondent No,2 admitted that in fact the goods used to be pledged in the Bank before the same were brought to his godown. He further admitted to a suggestion in his cross-examination that they were taking the goods in their possession on behalf of the bank. He further ratified that stock report Exh.5/5 was prepared by his office and bears the signature of his representative Haroon and has further admitted at the bottom of Exh.5/5 his signature. He further stated in his cross-examination that Anwar, Officer of the bank also used to be present and his representative used to be there for opening the godown and storing the goods. He further admitted the suggestion in cross-examination that he had not informed the bank immediately after taking delivery of the goods and that they have not been weighed by us. He further admitted the suggestion in his cross-examination that the stock reports Exhs.5/4 and 5/5 are correct.
11. ' The evidence of respondent No,2 as discussed above, without any iota of doubt, shows that respondent No,2 had kept the stock at his godown but nowhere he stated that he ever reported to the bank about any shortfall of the stock. He has admitted that stock reports 5/4 and 5/5 have been prepared by his staff member namely Haroon and at the bottom of these reports his signatures are present. A perusal of the stock reports shows that the same were prepared by the respondent No,2 through his staff and in view of such admission of respondent No,2 the averment contained in such stock report, duly signed by him, remained undisputed. The said stock report, therefore, appears to be a certificate regarding quantity, quality and value of the stock kept by the appellant in the godown of respondent No,2 and respondent No,2 could not be absolved from his liability for return of the pledged goods in the manner and quantity in which it was kept in his godown. The shortfall of the stocks has been admitted by respondent No,2 which strengthen the claim of the appellant. In view of the stock reports Exhs.5/4 and 5/5 the respondent No,2 was duty bound to return the whole quantity of the stock kept in his godown which he miserably failed to do and the learned trial Court did not appraise the evidence in its true perspective.
12. ' The learned trial Court has observed that respondent No,2 could not make responsible for any loss caused to the appellant in absence of any notice under section 176 of the Contract Act. Section 176 of Contract Act, 1872, in our humble opinion, does not attract to the circumstances of the present case as the respondent No,2 neither pledged the goods nor was owner or pawnee and was simply an agent who kept the pledged stock at his godown, as such section 176 of the Contract Act is not attracted to the circumstances f the present case, therefore, finding of the learned trial Court on this view of the matter, is contrary to the evidence available on record.
13. ' Respondent No,2 has not controverted the evidence of P.W.1 Fareed Qazi regarding keeping of the stock in his godown, which is completely in consonance with the averment contained in the plaint but in his cross-examination the claim of the appellant regarding keeping of the stock in the godown of respondent No,2 and its shortfall has not been seriously disputed, denied or challenged but a new story has been introduced by respondent No,2 by suggesting to P.W.1 Fareed Qazi that the stock was initially kept in the godown at Landhi which was subsequently shifted to Seven Seas Godown West Wharf, Karachi but the said plea has not been, taken by him in his written statement nor he has stated about shifting of the stock from the godown at Landhi to Seven Seas Godown, West Wharf in his evidence before this Court, which shows that the respondent No,2 has taken divergent pleas with regard to shortfall of the stock kept in his godown. Learned trial Court accused the said Anwar to be responsible for the shortfall but fact remains that the burden to discharge the said point heavily lies on the respondent No,2 to show that the said Anwar was responsible in any manner in causing shortfall to the stock kept in the godown of the respondent No,2. Respondent No,2 in his evidence before the learned trial Court, has admitted that the case of fraud was not registered against the said anwar, and has also admitted that whenever the godown was being opened for delivery of stock, his employee and Anwar used to remain present and, in case, if his employee used to remain present, how the said Anwar could be responsible for removal of much more stock than the order issued by the appellant and, in case, if it was allegedly so, what was the responsibility of his employee in whose presence the said stock was allegedly removed, even the said Haroon who had prepared the said stock reports Exhs.5/4 and 5/5 and other documents have not been examined by the respondent No,2 in support of his claim and non-examination of the said Haroon is of much significance which adversely reflects on the defence taken by respondent No,2.
14. The learned trial Court did not appraise the evidence in its true perspective, as discussed above and wrongly held that there was no privity of contract in between the appellant and respondent No,2. In case, if there was no privity of contract in between the appellant and respondent No,2, the responsibility of respondent No,2 could not be absolved with regard to keeping of the particular quantity of the stock at his godown and its return in the manner in which it was kept in his godown, to the appellant or his nominee and, in case, if any shortfall accrues, he is responsible for the said shortfall and is liable to pay the loss and damages caused to the stock kept by him in his godown.
15. From this angle, also the responsibility of respondent A No,2, which has been admitted by him regarding keeping stock in his godown, he could not be let free, in case of any loss or shortfall of the said stock kept in his godown. He is, therefore, fully liable to pay the losses incurred because of his negligence to the stock kept by him at his godown. The point is, therefore, answered in affirmative.
16. ' The appraisal of whole evidence available on record, therefore, fully establishes that respondent No,2 is equally responsible for all the losses and damages caused by him to the stock kept in his godown by the appellant as such learned trial Court was not justified in absolving him from such responsibility.
17. ' The result of the aforesaid discussion is that the appeal is allowed, the judgment and decree passed by the learned trial A Court is modified and is decreed against the respondent No,2 also, as prayed, with costs.