' This is a suit for the recovery of Rs, 42.175/43. The facts leading to the filing of the above suit are that the defendant had an account in the name of the sole proprietor concern, namely. Famous Traders Corporation with the plaintiff's foreign exchange branch at Mere weather Tower, Karachi, since 1964. It has been averred that at the request and on the application of the defendant the plaintiff opened an irrevocable and without recourse Letter of Credit being L. C. No, FE/P/64, dated 15th June, 1964 in favour of Messrs Premier Tin Plate Corporation, 26, Broadway. New York for U. S. $ 10,500 (equivalent to Rs, 50,000.00) for import of G. I. P. Sheets M. S. Sheets and plates for shipment from USA to Karachi. It has been further averred that the said LC was advised to the beneficiary through National Bank of Pakistan LC. No, AID/OGL5/61/696, dated 15th June, 1964 and the import was to be made under import licence Book No, A-7484 No, 47082 dated 25th March, 1964 for US $ 10,500 (equivalent to Rs, 50,000) for the aforesaid import of the goods. It has also been averred that the aforesaid goods were exported from USA under the aforesaid Letter of Credit by the beneficiary above mentioned under invoice No, 341 dated 27th August, 1964 for US dollars 10,303, 33 and were shipped under the shipments which arrived at Karachi as per two vessels named in para. 4 of the plaint. It has also been averred that the shipping documents were retired by the plaintiff upon payment of the exporter's sight Draft No, 341/253 dated 21st August, 1964 for US $ 10,350 presented through the National Bank of Pakistan. It has been further averred that upon retirement of the said documents the plaintiff by its letter dated 16th September, 1964 advised and requested the defendant to retire the relevant shipping documents against payment,
2. It is also been averred that on or about 18th January, 1965 after each of the consignment had suffered considerable demurrage the defendant requested for the payment of the customs duty, sales-tax and clearance charges by the plaintiff and for the clearance of the said consignment from the Karachi Port Trust and to store the said goods in the plaintiff's own godown. It has been further averred that the plaintiff paid the customs duties, godown rent etc. And the aforesaid two consignments were cleared from the customs and stored in the plaintiff's godown under pledge. It ha. Been further averred that on or about 17th March, 1965 a sum of Rs, 87,176,22 was due and payable by the defendant to the plaintiff and that the defendant acknowledged his liability and promised to pay the plaintiff's dues and executed and delivered to the plaintiff a demand promissory note payable to the plaintiff on demand or order for Rs, 87176/22 with the interest thereon at 4% above the bank rate. It has been further averred that inspite of the repeated requests and demand made in this behalf by the plaintiff the defendant had failed and refused/ neglected to pay the plaintiff's dues and to lift the goods against payment. It has also been asserted that the plaintiff after notice disposed of the goods and realized a net amount of Rs, 57,300 which was duly credited to the defendant's account with the plaintiff and that after adjusting the sale proceeds a sum of Rs, 42,175.43 is now due and payable to plaintiff by the defendant. It has been asserted that since the defendant had failed and neglected to pay the above amount the plaintiffs have filed the present suit.
3. The defendant contested the above suit and has filed the written statement in which it has been denied that the defendant is the sole proprietor of Famous Traders Corn. It has been averred that in or about the middle of October 1964, the said firm Famous Traders Corporation was converted into a partnership consisting of the answering defendant and one Kifayatullah Butt, as its partner, whereby it was agreed amongst the partners to share all the past and future liabilities of Famous Traders Corporation. It has also been averred that the change in the structure of the firm was notified to the plaintiff by a letter dated 17th October, 1964 and that in response to the plaintiff's demand dated 21st, October, 1964 a copy of the partnership and account opening card with the signatures of the partners were delivered to the plaintiff. It has been averred that the plaintiff accepted the new relationship and novation of contract obligations. It has been averred that sometime thereafter in or about the middle of November, 1964 the partnership was dissolved and the said Kifayatullah took over the firm along with its entire liabilities incurred in its name. It has been further asserted that the plaintiff was duly informed of the new change and it accepted the same and Mr. Kifayatullah became the sole proprietor of the said firm and as such carried on its business and dealt with the plaintiff as the sole proprietor of the said firm.
4. It has been further averred that this defendant retired from the firm and never received any letter or notice from the plaintiff. The defendant has denied the correctness of the copies of the letters filed with the plaint and referred to in paras. 4 and 5 of the plaint. He has also denied that the defendant requested for the payment of custom duty, sales-tax, clearance charges by the plaintiff as alleged and for clearance of the alleged consignment and storing the same in the plaintiff's godown. It has also been denied that the plaintiff got cleared and stored the alleged goods as alleged. He has also denied that the alleged sum of Rs, 87,176/72 was due and payable on 17th March, 1965. It has further been denied that the defendant acknowledged his liability and promised its payment as alleged. The defendant has also denied the execution and delivery of the alleged pronote and its contents. It has been further averred that the defendant had already left the firm. It has also been denied that the defendant executed and delivered any alleged promissory note. The genuineness of the documents is also denied. It has also been averred that the defendant had not received any request and demand for the payment of the alleged dues. It has further been denied that the goods were disposed of after notice to the defendant or that they were sold at market price or by public auction. It has been alleged that the alleged sale is forged. On the basis of the above pleadings the following issues were framed : "(1) Whether the defendant is proprietor of "Famous Traders Corporation" ?
(2) Whether the Defendant has an account in the name of his sole proprietary concern, namely Famous Traders Corporation with the plaintiff Bank as alleged in para. 2 of the plaint ?
(3) Whether the plaintiff has an account, as sole proprietor of Famous Traders Corporation ?
(4) (a) Whether the firm Famous Traders changed into partnership concern as alleged in written statement.
(5) Whether the alleged change in proprietorship of the firm replaced the plaintiff's contractual relationship in respect of the goods in suit bringing into existence new relationship between the alleged partnership concern and the plaintiff. If so to what effect ?
(6) Whether Mr. Kafayatullah Butt became sole-proprietor of the firm Famous Traders as alleged in written statement and became solely liable for the obligations of the transaction in suit and others to the plaintiff ?
(7) Whether the defendant acknowledged his liability and gave promissory note as alleged in para. 8 of the plaint ?
(8) Whether any request and demand was made to the defendant for payment of any dues as alleged in para. 9 of the plaint ?
(9) Whether the goods in suit were disposed of after notice as alleged in the plaint to the defendant.
(10)Relief, if any the plaintiff is entitled to.
' Documents and Commission if any within 3 months." My findings on the above issues are as follows :
6. Issues Nos. 1 to 3.-There is no controversy that the defendant was the sole proprietor of the Famous Traders Corporation (hereinafter referred to as the firm). Exhs. 5 and 6 are the account opening forms and I. C. Opening agreement respectively, which show that the defendant was the sole proprietor of the firm. In addition to the above documents Exhs. 15/2, 15/3, and 15/6 are the cheques dated 11th June 1964, 15th June 1964 and 20th June 1964 signed by the defendant as the sole proprietor of the said firm. Reliance has also been placed on the promissory notes dated 17th March 1965, Exh. 13 which is also signed by the defendant, In view of the above documentary evidence, it can be concluded that the defendant was the proprietor of the firm and had an account with the plaintiff bank as the sole proprietor. However, the controversy is as to whether the aforesaid proprietary firm, ceased to be proprietary concern sometime in the middle of October, 1964 and again became proprietor concern sometime in the middle of November, 1964 according to the learned Counsel for the defendant the firm had ceased to be proprietary concern in the middle of October, 1964 and was converted into a partnership firm by taking Mr. Kifayatullah as the partner. It has also been urged that the above partnership firm was dissolved in the middle of November, 1964 and thereafter the said Kafayatullah had become the sole proprietor. Mr. A. Aziz the learned counsel for the defendant when asked to say as to whether the above dissolution was under a formal dissolution deed or oral, has candidly submitted that his impression is that it was oral. I will be dealing with the above controversy here in below under Issues Nos. 4 to 6, However, my findings on the above three issues subject to what is stated here in below under issues Nos. 6 to 8, are in the affirmative.
7. Issues Nos. 4 to 6.-(a) The learned counsel for the plaintiff has urged that the plaintiff bank has never recognized any partnership and in support of this .He has relied upon the promissory note Exh. 13 and also on Exhs. 17/2, 17/3, 17/4 and 17/5, which are the copies of the plaint and other pleadings of Suit No, 414/65 filed by the Famous Traders Corporation through its sole proprietor Kafayatullah Butt. On the other hand the learned Counsel for the defendant has relied upon Exh. D/1 which is a letter dated 21st October, 1965, signed by the plaintiff's manager, D/3 copy of the alleged joint letter dated 17th October, 1964 addressed to the plaintiff's manager signed by the defendant and Mr. Kifayatullah Butt, Exh. D/4 letter dated 2nd June, 1964 addressed to the plaintiff's manager D/4-A postal acknowledgment receipt in respect of the said letter and also Exh. D/8 copy of the bill of entry in respect of a consignment allegedly imported by Mr. Kifayatullah Butt as the sole proprietor of the firm, and Exh. D/9 a copy of the firm letter dated 28th December, 1964 addressed to the plaintiff bank inter alia stating that the other partner had retired from the firm and forwarding the custom copy of the import licence No, 437082.
(b) It may be observed that the plaintiff has denied Exh. D/1 i,e, the plaintiff's manager's letter dated 21st October, 1964, but a comparison of the signature on this letter with the signature contained in Exh. 10 which is a copy of the plaintiff's manager's letter dated 18th November, 1964, addressed to the firm, and has been filed by the plaintiff indicates that the two signatures are similar. P. W. 1 in his cross-examination has admitted that these two signatures appear to be similar. On the basis of the above Exh. D/4, I am inclined to hold that the plaintiff bank was informed by the defendant about the formation of the partnership. The question as to whether there was a genuine partnership or the question as to whether the plaintiff bank had accorded its recognition to the said partnership are entirely different questions, which I intend to deal hereinafter. It may be observed that the defendant has not produced any document to show that in fact the plaintiff bank accepted the above partnership. Reliance has been placed on Exh. 9/D which is a copy of the firm letter dated 28th December, 1964 forwarding the custom copy of the import licence in which inter alia it has been stated that the other partner had retired. It was also stated that the request of any other person for the delivery of the goods should not be entertained. The above letter has been signed as the sole proprietor but the name of the person who had signed it is not legible. The learned counsel for the defendant has also relied upon Exh. D/8 which is a copy of the bill of entry in respect of import of galvanized Spoke wire, D.W. 2 has deposed that after he became the sole proprietor of the firm he got an L. C. Opened for the import of the aforesaid goods as the sole proprietor of the firm.
(c) It may be observed that above Exh. Dj8 does not mention the name of Mr. Kifayatullah Butt as the sole proprietor of the firm; on the contrary on the top of the copy of the bill of entry the name of the firm is mentioned. The defendant has not produced any other document in support of his assertion that the plaintiff bank after accepting said Mr. Kifayatullah Butt as the sole proprietor of the firm opened the aforesaid L. C. For the import of the aforesaid galvanized spoke wire. It may be pertinent to mention that the learned counsel for the plaintiff has denied the genuineness of the aforesaid Exh. D/9. In order to prove the above exhibit the learned counsel for the defendant has confronted P. W. 1 in cross examination letter bearing No, FT/15/67 dated 17th October, 196$, The above witness has admitted that the rubber stamp on the copy of this exhibit is similar to the rubber stamp shown on the other admitted documents. Even if it is to be held that Exh. D/9 was delivered to the plaintiff, it does not advance the case of the defendant in as much as in this letter, it was not stated that Mr. Kifayatullah Butt had become the sole proprietor of the firm. It is an admitted position that the plaintiff was dealing with the firm in question as the sole proprietorship concern from the inception of the dealings i.e, from the time the account was opened.
(d) It may be observed that the alleged partnership remained operative for about one month only.
It is significant that the defendant had not produced the deed of alleged partnership or its copy.
Furthermore, the D. Ws. 1 and 2 have not even stated the date of the formation of the alleged partnership nor it has been given in the written statement. It is also significant to note that the defendant has also not given the date of the alleged dissolution of the partnership. It has been urged by Mr. Nizam Ahmad, the learned counsel for the plaintiff that the alleged partnership on the face of it, appears to be fake. In support of his above submission he has drawn my attention to para. 3 of the written-statement as well as to the testimony of D. W. 1, wherein the defendant has given the description of his alleged partner as "one Kifayatullah Butt". However, in the cross- examination D. W. 1 had to admit that said one Kifayatullah Butt is no other person than his own father. I am inclined to agree with the above contention of the learned Counsel for the plaintiff that the alleged partnership was not genuine inter alia for the following reasons :-
(i) The defendant has not produced the alleged partnership deed or its copy.
(ii) The defendant has not been able to give the exact date of the partnership or the date of the dissolution.
(iii) The alleged partnership as per P. W. 1 lasted for about a month.
(iv) The defendant has not produced any deed of the dissolution of the partnership.
(v) The defendant in the written statement as well as in his deposition attempted to conceal the identity of the alleged partner, who happened to be his father.
' It may be mentioned that the impression one gets from the above facts is that the defendant wanted to get away from his legal commitments to the plaintiff by entering into a fake partnership with his own father and thereafter retiring himself within about a month from the above partnership in favour of his father.
(e) It has also been urged by Mr. Nizam learned counsel for the plaintiff that said Mr. Kifayatullah Butt had filed the aforesaid suit, namely, Suit No, 414/65 in the District Court at Karachi, in which it was asserted that he was the sole proprietor of the firm. It was further urged that as the aforesaid suit was dismissed for non-prosecution, this issue stands concluded against said Kifayatullah Butt.
On the other hand Mr. A. Aziz, the learned counsel for the defendant has submitted that the effect of the dismissal of the above suit is that said Mr. Kifayatullah Butt is debarred from filing another suit on the same cause of action, but the above dismissal does not constitute adjudication on merit on the above issue. In my view the above controversy need not be gone further because it is not relevant, ' It may be observed that the burden of proof of the issues Nos. 4 to 6 was on the defendant which the defendant has failed to discharge. The only fact which the defendant has been able to establish is that an intimation was sent to the plaintiff bank that a partnership was formed, which intimation was confirmed by the plaintiff bank through its letter dated 21st October, 1964 Exh. D/1. In my view merely sending of an intimation without any further proof will not prove that in fact there was a genuine partnership. I have already held hereinabove that the above alleged partnership seems to be fake for the foregoing reasons referred to hereinabove in para. (7) (d) and (e).
' The defendant has not produced any document to substantiate his assertion that the plaintiff bank ever recognized said Mr. Kifayatullah Butt as the sole proprietor of the firm for the purpose of the liabilities incurred by him as the sole proprietor of the firm. On the other hand, Mr. Nizam Ahmad learned counsel for the plaintiff has invited my attention to clause 11 of the L. C. Exh. 6 which provided that the obligation was to remain enforced notwithstanding any change in the partnership. Mr. A. Aziz, learned counsel for the defendant has submitted that this clause has no application to the instant case in as much as the above L. C. Form was signed by the defendant as the sole proprietor whereas this clause refers to partnership firm. In my view the object of this clause seems to be that any change in the constitution of a firm was not to absolve the execution of the aforesaid document from his obligation under it. It is an admitted position that the defendant had signed L.C. (Exh. 6) in the name of the firm as its proprietor. Accordingly, my finding on the issues Nos. 4 to 6 are in the negative.
8. (a) Issue No, 7.-This issue has been hotly contested. According to the learned counsel for the plaintiff, the promissory note (Exh. 13) is an acknowledgement by the defendant of his liability to the extent of Rs, 87,176/22 as on 17th March.
1905. It has been farther urged by hint that by virtue of section 118 of the Negotiable Instruments Act, there is a presumption in favour of the correctness of contents of the promissory note and in the absence of any reliable evidence in rebuttal the contents thereof are to be accepted as correct. On the other hand the learned counsel for the defendant, Mr. A. Aziz has urged that this promissory note was given in blank form at the time of the opening of the L. C. And that it was subsequently filled in by the plaintiff bank. It was further urged that the date of the execution viz. 17th March, 1965 shown on the promissory note is not a correct date and that the date of the handing over of the promissory note by the defendant to the plaintiff should be taken as the date of execution of the above promissory note. In this regard it may be pertinent to refer to sections 20 and 118 (b) which read as follows :- "Section 20. Where one person signs and delivers to another paper stamped in accordance with the law relating to negotiable instruments then force in British India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp.
The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount Provided that no person delivering the instrument anything in excess of the amount intended by him to be paid thereunder."
118. Until the contrary is proved, the following presumptions shall be made '-
(a) .
(b) that every negotiable instrument bearing a date was made or drawn on such date :
(b) It may be noticed that section 20 quoted hereinabove provides that when a person signs and delivers to another a paper stamped in accordance with law relating to stamp duty chargeable on negotiable instruments either wholly blank or having written thereon an incomplete negotiable instrument in order, it may be made or completed into a negotiable instrument, he prima facie authorizes the recipient of such negotiable instrument to fill in the required particulars, and whereas clause (b) to section 118 provides that there would be presumption that a negotiable instrument bearing a date was made or drawn on such date. Mr. A. Aziz, learned counsel for the defendant has submitted that as the defendant had retired from the partnership in November, 1964 and as he had ceased to have any connection with the firm he could not have signed the promissory note on 17-3-1965. His further contention was that by virtue of the above section 20, the plaintiff-Bank was not competent to insert a date other than the date on which the above document was handed over by the defendant to the plaintiff. P. W, I has deposed that the pronote Exh. 13 was executed and delivered by the defendant in acknowledgment of his liability as on 17-3-
65. On the other hand D. W. 1 has deposed that he had not executed the above promissory note on the date mentioned thereon, but had handed over in blank form with his signature at the time of the opening of the L. C. The question which requires consideration is, as to whether the presumption which has been provided for under section 118 (b) of the Negotiable Instruments Act has been rebutted by the defendant. In order to rebut the above presumption the learned Counsel for the defendant has relied upon the deposition of D. W. 1 and Exhs. D/I, D/8, 9, 10, 11 and 12. As far as the testimony of D. W. I is concerned, it does not inspire any confidence. In his Examination-in-chief he has referred to Mr. Kifayatullah Butt as 'one Kifayatullah Butt' instead of stating that he was his father as pointed out hereinabove. D. W. 1 has also failed to give the name of his employer or the date of joining of the alleged service after alleged retirement from the partnership firm in November, 1964. In my view the above oral testimony has not dislodged the presumption provided for in section 118 (b) of the aforesaid Act.
(c) Reverting to the documentary evidence, it may be observed that the genuineness of Exh. D/3 has been disputed by the plaintiff which is the alleged joint letter signed by the defendant and said Mr. Kifayatullah Butt addressed to the manager of the plaintiff bank after entering into the alleged partnership The copy of the letter produced by the defendant contains a rubber stamp of the plaintiff-Bank as a token of the receipt of the letter. In the absence of any evidence that in fact this letter was received by the Plaintiff bank merely the fact that the rubber stamp is similar which is on admitted documents will not prove the delivery of the above letter. Furthermore, the portion of the above letter containing the year after the date is torn. It appears that somebody has written in hand 17-10-1964. It is also visible that the word 64 has been over-written on this exhibit. In view of the above discrepancies, the genuineness of this letter is m doubt. The other exhibits referred to hereinabove do not lend support to the defendant's assertion that be was not in Karachi on 13-3- 1965 1. e. The date, which Exh. 13 bears nor these documents prove the fact that plaintiff bank had recognised Mr. Kifayatullah Butt as the sole proprietor of the firm. All the above exhibits except Exh.
D/8 (which is bill of entry) are on the letter head of the firm and have been signed by someone as the sole proprietor, whose name is not legible: It is an admitted position that the plaintiff-Bank had opened account and the LC in the name of the said firm as the sole proprietorship concern, and, therefore, the fact that the plaintiff bank had received certain letters signed by someone as the sole proprietor would not prove the fact that the bank had recognised the alleged change in the constitution of the firm, particularly when the signatures are such which are not legible. My finding on this issue is in the affirmative.
9. Issue No, 8.-On this issue the learned counsel for the plaintiff has relied upon Exhs. 9 10, 11 and 12.
Exh. 9 contains the signature of the defendant as a token of acknowledgement of the receipt of the letter whereas Exhs. 10 to 12 do not contain any such signature. The defendant has denied the receipt of Exhs. 10 to 12. Exh. 9 proves that in fact demand was made for arranging to pay the bill. My finding on this issue is in the affirmative.
10. Issue No, 9.-In support of the above issue Mr. Nazim, learned counsel has relied upon Exhs. 9 to
12. On the other hand the learned counsel for the defendant points out that according to P. W. 1 the goods were sold in July, 1965 and whereas a notice as required under section 176 of the Contract Act was served through the plaintiff's letter dated 9-8-1965 Exh. D/2. It is true that there is no other proved document on record to prove that any notice before disposing of the pledged goods was served on the defendant. If Exh. D/2 is to be taken as the first notice, then it is to be concluded that the plaintiff had disposed of the goods without serving any notice as contemplated under section 176 of the Contract Act. In my view this will not affect the defendant's liability admitted and acknowledged through Exh.
13. The defendant has not filed any counter-claim for the damages for the illegal conversion of his goods. The plaintiff's suit is based on the assertion that after clearing the goods from the custom and after making payments towards the custom duty and other charges a sum of Rs, 87,176.22 was due and payable by the defendant and in acknowledgement of his liability he executed Exh.
13. The plaintiff has given the adjustment of Rs, 57,300 being the alleged sale proceeds of the pledged goods in order to reduce the above admitted amount. Mr. A. Aziz learned counsel for the defendant submits that this adjustment is wrong as the plaintiff had failed and neglected to serve a mandatory notice under section 176 of the Contract Act and on this view of the matter this Court should adjust the actual value of the goods and not the sale proceeds of the goods. It will suffice to observe that the defandant has not taken any such plea in the written statement. The defence pleaded by the defendant is a complete denial. If the defendant wanted to claim adjustment of a particular sum or desired to recover any damage, the defendant was obliged to raise such plea and to claim a set off or a counter claim. My finding on this issue is that the plaintiff has not proved that they had served a mandatory notice before disposing of the goods as was required under section 176, but this does not affect the defendant's liability for the foregoing reasons.
' Issue No, 10.-In view of the above discussion I decree the suit for a sum of Rs, 42,175.43 against the defendant with 9% interest from the date of the suit till payment and costs.