' KHILJI ARIF HUSSAIN, J.---The plaintiff filed suit seeking decree against the defendants jointly and severally for the sum of Rs,18,580,004 with interest at the rate of 15% per annum with quarterly rests from the date of filing of the suit until payment and further a sum of Rs,14,653 per shift from the date of suit until the defendants give to the plaintiff a fully conforming/performing sizing machine as undertaken in the contract and until produce satisfaction certificate from the plaintiff in the said behalf.
' Brief facts for the purpose of deciding the listed suit are that the plaintiff was interested to purchase modern upto date sizing machine. Defendants Nos.1 and 2, well-known through their agent in Pakistan. Defendant No,3, responded with great interest to sell, install and deliver the sizing machine with erection, running and operation at Karachi. Defendant No,2 sent to Karachi their Sales Manager/Engineer to offer a sale with delivery after erection and full satisfaction the running machine at Karachi. The offer was represented as in respect of the most modern high production complete sizing machine in the most modern/latest overhead version (to conserve horizontal floor space) with 12 cylinders drying unit, special tension and other auto-controls and features, so as to size all yarns of counts from 7/S upto 90/S, and their doubles, viz. Coarse, medium, fine and superfine yarns, whether single or double, with 45% capacity (in three shifts of 8 hours each) enough to size all the plaintiffs requirement of sized yarns for production of their fabrics leaving a sizable surplus capacity of approximately 55% to take outside job sizing contracts viz. Taking in loaded warp beams for sizing from other factories/market which work is available in plenty locally.
In pursuance of the offer in order to guarantees/ undertakings/assurances of performance and as the performing machines supplied and delivered at Karachi, the plaintiff entered into a formal contract with defendants Nos.1 and 2 with their sole and exclusive agent in Pakistan. The machines were installed on 14-12-1989 and the plaintiff through telex No,121/1-2-1990 pointed out the result of work done by the. Representative of plaintiff and further pointed out defects while representative was on job to bring about the contract result. The machines, which defendants supplied, were not performing as per contractual stipulations and number of correspondence were exchanged between the parties in this regard. On failure of the defendants to rectify the defects or replace the machines the plaintiff served a legal notice dated 10-10-1990 with a copy to defendant No,3. The notice was replied by defendants Nos.1 and 2 on 1-11-1990 and they denied the various averments, claims and demands made by the plaintiff in their notice. The plaintiff claimed following amounts on account of the defective/substandard machines supplied by the defendants:-- Achievable Sized Production (96 Meters x 60 Minutes x 7 hours)Per Shift 40,320 Meters Less Actual sized production achieved12,326 = Loss of sized production achieved27,994 =
1. Extra Overhead and Fixed Charges due lower efficiency and production 27994 Meters x Re.0.2308.
Rs.6,461.00
2. Cost of excess 0.3% sizing material used due of only one sizing box 12,326 meters x Re.0.0198Rs.244.00
3. 2% excess defective cloth weaved due defective sizing 12,326 meters x Re.0.41Rs.5,045,00
4. Weaving Efficiency and production loss on 261 looms (compared to sizing on old sizing M/c) 1,331 meters x Re.0.78.Rs.1,039,00
5. Loss of profit on lower cloth productionRs.1,855,00 Per ShiftRs.14,653,00 Accordingly claim upto 31-5-1991 ' Defendants Nos.1 and 2 were ordered to proceed ex parte vide order dated 26-1-1992 and only defendant No,3 filed written statement, denied his liability as an agent/guarantor of defendants Nos.1 and 2.
' On the basis of the pleadings of the parties, following issues were framed:--
(1) Whether the transaction of sale of the sizing machine was entered into between the plaintiff and defendants Nos.1 and 2 through defendant No,3 as their sole agent in Pakistan. If so what is the effect?
(2) Whether defendant No,3 gave any unqualified and unambiguous assurance/undertaking to the plaintiff regarding the good quality, uniform output and capacity of the sizing machine as alleged in para.2.03 of the plaint?
(3) Whether defendants Nos.1 and 2 gave the alleged guarantee dated 28-9-1989 as alleged in para.2.06 of the plaint.
(4) Whether defendant No,3 gave any guarantee dated 18-10-1989 as alleged in para.2.07 of the plaint and whether the alleged letter dated 18-10-1989 constitutes a guarantee by defendant No,3?
(5) Whether the alleged guarantee dated 18-10-1989 is not valid being without consideration?
(6) Whether the sizing machine supplied by the defendants Nos.1 and 2 was defective, untested and experimental as alleged by the plaintiff?
(7) Whether the machine cost amounts to Rs,9,644,611.00 as alleged in para.4.08 of the plaint?
(8) Whether the plaintiff is entitled to any damage? If so, for what amount and against which of the defendants?
(9) What should the decree be?
' On behalf of the plaintiff. Managing Director of the plaintiff appeared in the witness box and produced contract between the parties as Exh.3 and letter dated 18-10-1989 as Exh5. Parties undertook admission and denial of documents and contract, correspondence exchanged between the parties were exhibited as Exh.1 to Exh.95. On behalf of defendant No,3, Managing Director of defendant No,3 was examined.
' Vide order dated 12-12-1991, the learned Official Assignee was appointed to inspect the machines in question and estimate total expenditure required for making the sizing 'machines functional. The plaintiff through letter dated 17-12-1991 informed the Official Assignee that estimated' total expenditure would be between Rs,2,00,000 to Rs,10,00.000 to make sizing machines functional.
' Heard Mr. S.I,H. Zaidi, learned counsel for the plaintiff, and Mr. Usman Sheikh, learned counsel for defendant No,3, and perused the record.
' My findings on the issues are as under:- Issue No,1: --- ' The plaintiffs witness in his evidence stated that on the basis of the quotation given by defendant No,2 received from defendant No,3 they started negotiations with defendant No,2 for purchasing of the machines in question. It was further stated that the negotiations with defendant No,2 were carried on through defendant No,3 and thereafter the deal was finalized for purchase of the said machines from defendant No,2 through defendant No,3 and on the basis of the preliminary contract L/C was established, an a final contract was executed between the plaintiff and defendant No,2. Even after the detect was detected the plaintiff made complaint about the defect to defendants Nos.1 and 2 and correspondence was exchanged between them. The plaintiffs witness in his cross-examination categorically stated that Exh.3 was directly executed between the plaintiff and defendant No,2 and further voluntarily stated that defendant No,3 was not present at the time of execution. The plaintiffs witness further stated that contract document was signed by the plaintiff and defendant No,2 only and nobody has signed the contract documents on behalf of defendant No,2 and there is no mention of defendant No,3 'in this document. It was further admitted by the plaintiffs witness that it is not a fact that defendant No,2 has not written any document to inform the plaintiff that defendant No,3 was authorized to enter into a contract. Even if it is accepted that the Agreement was executed by defendant No,3 on behalf of defendants Nos.1 and 2, then at best same was executed by defendant No,3 as an agent of disclosed principal of defendants Nos.1 and 2. For the foregoing reasons the issue is answered that the transaction of sale was entered into between defendant No,2 and not through defendant No,3.
Issues Nos.2, 3, 4 and 5 ' The contract executed by defendant No,2 provided warranty to the effect that seller guarantees that during the period of six months from the date of putting into operation the goods or a period of nine months from the date of delivery to the purchaser, whichever period shall expire the earlier, should the goods or any part of them, due to the seller's default, prove defective in workmanship or materials or not be substantially in accordance with the descriptive and technical specification of the contract. The seller upon receiving notice in, writing from the purchaser shall subject to his right of inspection at the seller's expense remedy the defect or should the seller so elect replace such parts free of cost to the purchaser and after prior mutual agreement the purchaser may repair or remedy any defects at the expense of seller. The agreement was entered into between the plaintiff and defendant No,2 on 3-3-1989. On 28-9-1989, defendant No,2 guaranteed as under:--
(a) The machine supplied will be of first class execution in all respects.
(b) The machine will be as the detailed specifications described in the above contract.
(c) Production, efficiency and speeds are as per above contract RWIJECN/ 316.
(d) In case of complaints regarding point (c) above, and any manufacturing defects which are seller's responsibility, then we will attend to these and remove all justified causes of complaint.
(c) The machine is designed to operate within contract parameters without any problems (given buyer provides correct services, chemicals and yarns to specification).
' On 18-10-1989, in reply to Telex No,4754 dated 17-10-1989 from the plaintiff defendant No,3 addressed as under:-- ' As desired by you we confirm guarantee sent by Messrs Platt Sizing on September 28 as follows:-- -
(a) The machine supplied will be of first class execution in all respects.
(b) The machine will be as the detailed specifications described in the above contract.
(c) Production, efficiency and speeds are as per above contract RWI/ECN/316.
(d) In case of complaints regarding point (c) above, and any manufacturing defects which are seller's responsibility, then we will attend to these and remove all justified causes of complaint.
(e) The machine is designed to operate within contract parameters without any problems (given buyer provides correct services, chemicals and yarns to specification).
' According to the plaintiff the letter dated 18-10-1989 (Exh.5) is a guarantee given by defendant No,3 that the machine supplied by the defendants will be in accordance with the specifications described in the contract. The machine in question landed by the end of November, 1989 and the plaintiff in his evidence stated that during installations of the said machine, there were many problems and the machine was not correctly set. Defendant No,2 then sent one Mr. Snowdon S. Erector to erect the machine in their factory and after erecting the machine in the factory he went away. The machine after erecting was not properly functioning, defendant No,2 sent their technician to commence the sizing machine and the technician came after three weeks, but the machine could not be commissioned after 1-1/2 months defendant No,2 sent another technician, who also failed to commence the machine. It was stated by the plaintiff in his evidence that sizing machine was functioning, but was not giving the product with guarantee specifications. The plaintiff pointed out the following two defects in the sizing machine in his examination-in-chief:-
(1) An even tension. There was no Sancronization between one section of the machinery with other section.
(2) Defect in P.I.V. It was not working as programme schedule given by the defendants Nos.1 and 2.
' Since defendants Nos.1 and 2 failed to rectify the defects in the machine, sent by them, correspondences were exchanged between the plaintiff and defendant No,2 and the plaintiff produced the same as Exh.6 to Exh.95. The plaintiffs witness in his evidence with regard to letters dated 28-9-1989 and 18-10-1989 stated that defendant No,2 vide his letter dated 28-9-1989 (Exh.4) gave assurance that there would be no manufacturing defect and similar assurance was given to us by defendant No,3 vide his letter dated 18-10-1989 (Exh.5). From the perusal of the letter (Exh.5) it appears that defendant No,3 has not given any assurance or guarantee to the plaintiff except, confirming the contents of the guarantee sent by defendant, No,2, the letter dated 18-10-1989 (Exh.5) cannot be termed in any manner as guarantee given by defendant No,3, holding himself personally liable for any defects in the machine in question. Issues Nos. 2 and 4 are answered in negative and Issues Nos.3 and 5 are answered in the affirmative.
Issue No,6:-- ' The plaintiff in his evidence specifically stated that the machine supplied by the defendants was not of required specifications and in this regard a number of correspondence was exchanged between the parties. The defendant's technician visited the plaintiff's factory and tried to rectify the defects, but apparently they failed to do so. The Official Assignee also inspected the machine in question and directed the plaintiff to incur a sum of upto Rs,10,00,000, however, there is nothing on record that how much amount has been incurred by the plaintiff for rectifying the defects in the machine and accordingly the Official Assignee submitted his Reference on 19-1-1997 that despite sanction of the amount claimed by the plaintiff for rectifying the defects the plaintiff failed to intimate further progress. Throughout the correspondence exchanged between the parties and any evidence in rebuttal by the defendants that the machine supplied by them was in accordance with the specifications, the issue is answered in affirmative.
Issues Nos.7 and 8:-- The plaintiff claimed huge amounts in the suit, but in his evidence stated that since the machine was not properly B working and due to non-working of the machine plaintiff has suffered loss of Rs,14,600 per shift. It is stated that the plaintiff runs its factory in three shifts per day and works 300 days in a year, but failed to produce any evidence in support of his alleged claim pertaining to the loss due to non-functioning of the machine properly. No witness was examined by the plaintiff that due to the nature of the defect the production was reduced to 20 to 30%, resulting that the plaintiff has suffered loss of Rs,14,600 per shift. The plaintiffs witness though stated that they maintain account of production and sale of their goods, but failed to produce the same to establish that due to defect in the machine there was loss of production and further admitted that the alleged losses have not been mentioned by them in their income tax returns. In the absence of the evidence that due to defect in the machine, the plaintiff has suffered loss and B damages, the amount as claimed by the plaintiff cannot be granted. However, since the machine was not in accordance with the agreed specifications and Official Assignee agreed with the claim of Rs,200,000 to Rs,10,00,000, being the amount to be incurred for making machine workable according to the specifications, the plaintiff is entitled for some amount of damages. In view of the breach committed by the defendants in delivering the machine in accordance with the specifications and keeping in view warranty of proper functioning of six months in the contract, a. Sum of Rs,500,000, being the reasonable amount, will be awarded to the plaintiff towards the damages.
Issue No,9:-- For the foregoing reasons plaintiffs suit is decreed in the sum of Rs,500,000 against defendants Nos.1 and 2 with costs, C however, dismissed against defendant No,3 with no order as to costs.