1. ' KHILJI ARIF HUSSAIN, J.--- Brief facts to decide the appeal are that the appellant under an Agreement dated 24-10-1972 agreed to purchase vessel "S.S. Marbella" from respondent Nos.1 to 4.
2. Clause 16 of the Agreement relates to opening of irrevocable letter of credit. After exchange of various telex messages and correspondences appellant opened an irrevocable letter of credit. The "S.S. Marbella" vessel in question had come to Karachi Port in the end of December, 1972/beginning of January, 1973 with a cargo. The respondent refused to handover possession of the vessel to honour the contract, after discharge of the cargo, on the ground that the letter of credit had not been opened by the appellant in accordance with clause 16 of the agreement dated 24-10-1972.
3. ' The appellant filed suit for specific performance and injunction. The appellant alleged that appellant had performed their part of agreement and was ready and willing to perform of their obligation under the contract, extended time limit of letter of credit even after 31-3-1973 but the respondent has refused to carry out their part of agreement and are negotiating for the sale of the vessel to other party. The respondent filed written statement and resisted the suit.
4. ' During the pendency of the suit vessel was attached and vide order dated 16-104973, the vessel was sold in order to eliminate burden in the form of port and haulage charges etc. The parties to the suit were also allowed to give bid in respect of vessel order to sell by Nazir of Court. The bid of the appellant in a sum of Rs,65,05,299 was accepted. Out of sale proceeds a sum of Rs,30,27,394 was paid to respondent being price on which respondent agreed to sell the vessel to appellant and balance amount of Rs,34,77,899, was ordered to be invested by the Nazir in terms of order dated 16-10-1973. By order dated 10-4-1974 the appellant was allowed to withdraw the amount on furnishing a bank guarantee.
5. ' On the basis of the pleadings seven issues were framed including the issue, whether defendant/respondent committed breach of agreement dated 24-10-1972, if so, what amount of compensation if any?
6. ' After discussing evidence at length, the learned Judge came to the conclusion that from the evidence it is clearly established that the plaintiff/appellant were ready and willing to perform their part of contract but the respondent wrongly backed out from the contract and committed breach of agreement. The learned Judge held that relief of specific performance cannot be granted and awarded a sum of Rs,20,36,628 as damages and directed the appellant to deposit the excess amount of Rs,14,41,271 in Court with interest at 7-1/4 after adjustment of the cost. The appellant preferred appeal aggrieved by the order.
7. ' Heard Mr. Khalid Anwar, learned counsel for the appellant. None for the respondents.
8. ' Mr. Khalid Anwar, learned counsel for the appellant, taking us to various documents on record, argued that after holding that the respondents have committed breach of contract the learned single Judge ought to have granted decree for damages in respect of entire amount lying with the Nazir of this Court. In support of his contention, learned counsel relied upon the cases of Sm.
9. Shakuntla Devi and another v. Harish Chandra and another AIR 1952 Allahbad 620; Ganga Singh and others v. Santosh Kumar and others AIR 1963 Allahbad 201; Muhammad Sharif v. National Motors Ltd. 1989 CLC 916; Messrs Nigar Pictures, Karachi v. Messrs United Brothers, Lahore and 6 others PLD 1970 Karachi 770; Domb and another v. Isoz 1980 All ER 942.
10. ' Mr. Khalid Anwar, learned counsel for the appellant, vehemently argued that although the appellant has claimed amount lesser than their entitlement in the memo. Of plaint as well as in evidence the appellant is entitled for the amount lying in the Court being compensation under section 19 of the Specific Relief Act. Learned Advocate argued that the appellant had filed the suit for specific performance and when Court came to the conclusion that the respondents have committed breach of contract, the appellant/plaintiff has to be compensated under section 19 of the Specific Relief Act. In support of his contention learned Advocate relied upon AIR 1926 Bom. 189; Wroth and another v. Tyler 1973 (1) All E R 897; Malhotra v. Chaudhry 1979 (1) All ER 186.
11. ' We have taken into consideration arguments advanced by the learned counsel for the appellant, perused the record. From perusal of the record, it appears that the appellant agreed to purchase vessel "S. S. Marbella" in total sale consideration of US$ 3,05,500 equivalent to Pak. Rs,34,07,894 at the relevant time. The appellant also established letter of credit for the contracted amount. Vessel arrived at Karachi Port in the end of December, 1972/beginning of January, 1973 with a cargo but the respondent after discharge of the cargo refused to hand over possession of the vessel. The appellant in these circumstances filed suit for specific performance. The respondent resisted the suit filed by the appellant. The vessel was attached in pursuance of order dated 16-10-1973. To eliminate burden of demurrage etc. Vessel was ordered to be sold. The parties were given option to participate in the auction. The appellant purchased the vessel as parties were allowed to participate in the auction conducted by the Nazir of the Court at price of Rs,65,05,293. The appellant's case is that the appellant is entitled for the entire amount received after sale of vessel irrespective of damages asked by him in the memo. Of plaint or even in his evidence.
12. ' The appellant's witness in his examination-in-chief stated that they purchased the vessel in auction on higher price than the market price because this was their major transaction and appellant wanted to protect their reputation. It was further stated that the appellant attempted to purchase another vessel from market but no suitable vessel was available except small ships were available at US$86 to 88 per LD ton, and these vessels were not suitable for appellant's use as the scrap thereof cannot be utilized as raw material for re-rolling. The bigger vessel was available at US$92 per LF ton but same was not available for delivery immediately. Apart from this for the purpose of importing vessel for scrap the appellant has to obtain no objection from the Government of Pakistan, Director Port of Shipping and thereafter has to enter into contract with the seller of the vessel, established letter of credit and then wherever vessel arrived used its scrap for the purpose of their factory.
13. ' We have taken into consideration arguments advanced by the learned Advocate for the appellant and in order to appreciate contention of learned Advocate we would like to reproduce section 73 of the Contract Act, 1872 and section 19 of the Specific 'Relief Act, 1875.
14. "Section 73 of the Contract Act, 1872:-- Compensation for loss or damage caused by breach of contract.---When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result 'from the breach of it.
15. ' Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
16. Compensation for failure to discharge obligations resembling those created by contract.--When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract."
17. Explanation.--In estimating the loss or damages arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.
18. "Section 19 of Specific Relief Act, 1877:--- "19. Power to award compensation in certain cases.--Any person suing for the specific performance of a contract may also ask for compensation for its breach, either in addition to, or in substitution for, such performance.
19. ' If in any such suit the Court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant and that the plaintiff is entitled to compensation for that breach, it shall award him compensation accordingly.
20. If in any such suit the Court decides that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly.
21. ' Compensation awarded under this section may be assessed in such manner as the Court may direct".
22. ' Explanation.--The circumstances that the contract has become incapable of specific performance does not preclude the Court from exercising the jurisdiction conferred by this section.
23. (Emphasis is added).
24. 'Specific Relief Act was enacted after about five years of the Contract Act was enacted. It is one of the settled principles of law that Legislature is well aware of law in the field and while framing section 19 of the Specific Relief Act, section 73 of the Contract Act was before the Legislature.
25. 'Section 73 of the Contract Act, 1872 comprises of three paragraphs and one explanation whereas section 19 of the Specific Relief Act comprise of four paragraphs and one explanation.
26. ' First paragraph of section 73 of the Contract Act provides that the plaintiff already suffered loss or damages in consequence of breach of contract is entitled to receive compensation from the party who broke contract. The second paragraph of section 19 of the Specific Relief Act, worded to some extent similar to section 73 of the Contract Act, provided that Court has power to award compensation to the plaintiff for the breach of contract by the defendant where specific performance cannot be granted.
27. ' From comparing section 73 of the Contract Act and section 19 of the Specific Relief Act, it appears that under section 73 of the Contract Act party elected not to seek performance of the contract but to seek relief of damages, compensation or any loss or damages caused to him due to breach of contract by the other party which naturally arose in the usual course of things from such breach whereas under section 19 of the Specific Relief Act party elected for the enforcement of the contract between the parties and while asking for such relief either in addition to or in substitution for performance if relief of specific performance in equity cannot be granted can ask for compensation.
28. ' The Court while exercising power under section 19 of the Specific Relief Act can though come to the conclusion that the plaintiff is entitled for specific performance, instead of granting relief for specific performance can grant relief of compensation for the breach of contract or further while granting relief of specific performance, to meet the ends of justice, in addition to relief of specific performance can grant compensation also.
29. ' In the case of Floor a Sassy v. Hardship H. Mama AIR 1926 Born. 189, it was held:-- "In my opinion, therefore, in a suit for specific performance of a contract for sale of immovable property or in the alternative for damages, the measure of damages, if there is breach and specific performance is not decreed, is not necessarily the same as in a suit for damages for a breach of contract. In a suit for specific performance, if the plaintiff disregards the breach and asks the Court to compel the defendant to fulfil is contract, the Court may say it will not compel the defendant to convey, but will order him to restore any advantage he has secured under the contract and ,pay such damages as it may think fit. Assuming there was a contract in this case, it may be pointed out that if the defendant is able to sell her property at a higher price than the contract price, that would not be due to her breach of the contract with the plaintiff but would be due to the fact that plaintiff deliberately refrained from asking the Court to sell him the property at the price he agreed to pay for it."
30. ' In the case of Afroz Qureshi and another v. Muhammad Ikram Siddiqui 1995 CLC 735, it was held that "a party is entitled to get compensation for breach or damages as was caused to him by commission or breach and which naturally arose in usual course of thing for which parties knew when they contracted to be likely to result from such breach.
31. ' In the case of Wroth and another (supra), it was held:-- "On the wording of the section, the power to award damages to the party injured .... In substitution for such specific performance at least envisages that the damages awarded will in fact constitute true substitute for specific performance. Furthermore, the section is speaking of the time when the Court is making its decision to award damages in substitution for specific performance, so what it is at that moment that the damages must be a substitute. The fact that a different amount of damages would have been a substitute if the order had been made at the time of the breach must surely be irrelevant. In the case before me, I cannot see how 1,500 damages would constitute any true substitute for a decree of specific performance of the contract to convey land which at the time of the decree is worth 5,500 more than the contract price. A choice between inadequate and the equivalent seems to me to be, no real choice at all. It may seem strange that nearly 115 years should have elapsed before this aspect of Lord Cairns' Act should have emerged; but the economic conditions which reveal its significance have not been with us long."
32. ' The principle laid down in the above-referred matter was again came into consideration in the case Malhotra v. Chaudhry 1979 All ER 186.
33. ' Where it was held that damages awarded in substitution for an order for specific performance of contract of sale of real property were to be assessed by reference to the value of property from the date of judgment and not date of breach of contract.
34. 'In case of Sm. Shakuntla Devi and another v. Harish Chandra and another AIR 1952 Allahabad 602, it was held that where Court find that contract has been entered into and there has been breach of contract and that it is possible or desirable to order specific performance of that contract but is just and proper to award compensation, the Court can make an order allowing compensation to the aggrieved party even without a specific prayer in the plaint.
35. ' In the case of Messrs Nigar Pictures, Karachi v. Messrs United Brothers, Lahore and 6 others PLD 1970 Kar. 770, it was held that "section 19 of Specific Relief Act empowers the Court to grant remedy in lieu or in addition to decree for specific performance. "
36. ' In the case of Arya P'radishak Pratinidhi Sabha through Lala Hans Raj v. Chaudhri Ram Chand and others AIR 1924 Lahore 713, it was held that Court can grant damages in suit for specific performance even when plaint does not contain prayer for damages and even when specific performance is granted.
37. ' In the case of Muhammad Sharif v. National Motors Ltd. 1989 CLC 916, same principle reiterated that the Court has ample discretionary power to grant damages under section 19 of Specific Relief Act, provided that such relief plaintiff has abandoned or disentitled him from seeking relief of specific performance.
38. ' In the case of Ganga Singh and others v. Santosh Kumar and others AIR 1963 All. 201, due to abolition of Zamindri of Land Reforms Act relief of specific performance in respect of immovable property could not be granted and it was held that under section 19 of the Specific Relief Act Court when specific performance cannot be granted but there has been breach of contract, it shall award the plaintiff compensation to which plaintiff may be entitled.
39. ' In the case of Sm. Shakuntla Devi, Floor a Sassy and Wroth and others and Malhotra (supra), the Honourable Court held that when decree for specific performance is not granted as not desirable, compensation as substitution of specific performance can be granted.
40. ' While interpreting section 73 of the Contract Act along with section 19 of Specific Relief Act and section 58 of the Sale of Goods Act not only the intention of the Legislature is to be kept in mind that the Sale of Goods Act is later in time than Contract Act, 1872 and Specific Relief Act, 1877; but also that so far as issue in the matter is special law deal with the Law of Sale of Goods which previously was governed by Chapter VII of the Contract Act, prevail over the more general one.
41. 'Provisions in different Acts having bearing on the same subject may be read together in a complimentary manner so that they do not create contradictions while operating in the same field.
42. ' On reading section 19 along with sections 21 and 22 of Specific Relief Act, where Court. Came to the conclusion that plaintiff is entitled for specific performance, on the ground of unfair advantage over the defendant or hardship of the defendant which he did not foresee, Court can refuse to grant relief of specific .Performance and can award compensation for which plaintiff is entitled on the date of judgment. In the matter, where contract cannot be specifically enforced the plaintiff would be entitled for compensation, keeping in view the principle of awarding compensation under section 73 of the Contract Act.
43. ' On the basis of various case laws discussed hereinabove. We are of the view that compensation under section 19' of Specific Relief Act can be granted when (i) plaintiff has not abandoned his right of specific performance and (ii) Court comes to the conclusion that although plaintiff is entitled for relief of specific performance same not to be granted although contract has been broken by the defendant, due to hardship, equity etc. The compensation in such cases, if equity so required, irrespective of the date of breach can be based upon the value of the property or damages, loss etc. Caused to the plaintiff upto the date of judgment. However, in case when court comes to the conclusion that plaintiff is not entitled for specific performance then damage/ compensation can be determined under section 73 of the Contract Act for breach of the contract.
44. ' The respondent was well aware at the time when entered into agreement of sale of vessel that the appellant is engaged in business of re-rolling and will use the scrap in his factory and as such appellant is entitled for a reasonable compensation on this count.
45. ' Now we would like to discuss the question, whether the appellant was entitled for specific performance of the agreement in question or not?
46. 'The appellant agreed to purchase specified vessel "S.S. Marbella" by an agreement of sale. In terms of the agreement of sale vessel was to be delivered to appellant by the respondent sometime in the end of December, 1972 and in the beginning of January, 1973. The appellant established letter of credit in terms of the agreement of sale and also guarantees as required and the learned Judge rightly held that the appellant has not committed breach of the agreement and was always ready and willing to perform their part of obligation and it is the respondent who has committed breach of contract in failing to deliver physical possession of the specified vessel, but declined relief of specific performance as the appellant purchases vessel for demolition and then apparently to sell scrap to 3rd party while relying upon the cases of Muhammad Azam Muhammad Fazil & Co. v.
47. Messrs N.A. Industries Karachi and Alfarooq Shipping Co. Ltd. v. Messrs Vasa Shipping Co. Ltd. And 4 others 1980 CLC 1228.
48. ' From the evidence on record, it appears that appellant has not purchased the vessel for the purpose of selling the scrap to third party but to use the said scrap of the vessel in their factory. In examination-in-chief the appellant Managing partner categorically stated:--- "Besides we had to fulfil our commitments with other parties and if we had not purchased the ship our mills would have stopped functioning resulting in labour problem. We had also entered into a contract of ship breaking for this ship."
49. "The witness further stated in his statement that smaller ships were available in market and these ships were not suitable for their purposes as the sheets are thin which cannot be utilized as raw- material of re-rolling."
50. ' From the evidence of 'the appellant which has not been questioned in cross-examination, it appears that the appellant has not purchased vessel for the purpose of selling scrap in the open market but for the purpose of using in his re-rolling factory and if the delivery was not effected then same may result closer of the factory and other problems like labour problem, breach of contract etc. Admittedly, the appellant is engaged in the business of re-rolling and carrying on the business under the name and style of Dada Re-Rolling Mills. Principle laid down in the Alfarooq Shipping Co.
51. Ltd. (supra) as well as Muhammad Azam Muhammad Fazil & Co. (supra), are not attracted to the facts of the instant case as in both the above referred matters the parties purchased the ship for the purpose of demolition and selling scrap in market, whereas in the instant case the appellant has purchased specific ship not only for the purpose of demolition but for the purpose of using scrap in his re-rolling factory. The evidence of plaintiff/ appellant that the ships suitable for demolition were not available in the market for the sale or purchase of the ship in Pakistan and appellant's entire business was likely to be adversely affected in case delivery of the vessel was not made to it, was not taken into consideration by learned Judge.
52. ' For the foregoing reason, we are of the view that the appellants are entitled for specific performance of the contract in question particularly when learned Judge recorded the finding that the appellant has performed their part of obligation and respondent had committed breach of contract by failing to deliver the same though vessel arrived at Karachi for the purpose of delivery to the appellant, pursuant to agreement of sale between them and as we come to the conclusion that the appellant is entitled for specific performance of the agreement in question the impugned order is set aside and suit for specific performance is decreed resulting that the appellant is entitled for the amount lying in the Court.