1. SAEEDUZZAMAN SIDDIQUI, J.-This appeal under clause 10 of the Letters Patent is directed against judgment and decree of a learned Single Judge of the erstwhile High Court of Sind & Baluchistan, Karachi, whereby he dismissed the suit instituted by the appellant against respondents Nos. 1 and 2 with no order as to costs and granted a decree to the appellant against one Yar Mohammed Shah, who was defendant No. 2 in the suit, as prayed. The appellant had challenged the dismissal of the suit by the learned Single Judge against respondents Nos. 1 and 2. However, at the hearing of this appeal Mr.Hassan A. Shaikh, learned counsel for the appellant, stated before us that he does not press his appeal against respondent No. 2 and that his submissions in the appeal will be confined with respect to the dismissal of the suit against the respondent No. 1 alone. We would accordingly confine ourconsideration of this appeal with respect to the dismissal of the suit of appellant against respondent No. 1.
2. The facts relevant to this appeal may be stated as follows :-.
1. The appellant, who was carrying on busing: 3 under the name and style of Messrs Pakistan Agricultural and Industrial Corporation and Messrs Sind Industrial Supply Corporation, instituted a suit for recovery of Rs. 96,829 against respondents Nos. 1 and 2 and one Yar Mohammed Shah: The basis of claim in the suit was That in May/June 1963, respondent No. 1 through respondent No. 2 placed orders on the appellant's aforesaid firm for the supply of plant protection equipment and other materials aggregating Rs. 3,84,283. The appellant before 30-6-1963 had made supplies of the contracted goods to the extent of Rs. 1,59,558. However, as the total grant in the sum of Rs. 3,84,283 was likely to lapse on the closing of the financial year by 30-t;-1963, the respondent No. 2 and said Yar Mohammad suggested to the appellant to submit bills for the total amount of Rs. 3,84,283 and also sign receipts in token of having received the aforesaid amount of Rs.3,84,283 so that the said respondent No. 2 and Yar Mohammed Shah may withdraw the said sum of Rs. 3,84,283 from the Government Treasury before 30-6-1963 and save it from being lapsed. According to the plaintiff (the appellant herein), this suggestion was accepted by him and he submitted bills before 30-6- 1963 for the total contracted amount of Rs. 3,84,283 and also passed receipt duly acknowledging the receipt of the above amount from the respondents. It is an admitted position that on the basis of the bills and the receipts submitted by the appellant the sum of the Rs.
3. 3,84,283 was withdrawn from the Government Treasury. The case of the appellant is that after 30- 6-1963 and before 31-12-1963 he completed the supply of the remaining items but out of the sum of Rs. 2,24,275, which was withdrawn by respondent No. 2 and said Yar Mohammed Shah from the Government Treasury on the strength of the bills and receipts submitted by the appellant, he was paid only a sum of Rs. 1,27,446 by the respondent No. 2 and Yar Muhammad Shah, thus leaving a balance of Rs. 96,829, which is still due and payable by respondent No. 1 against the supplies of material made by the appellant. The case of the appellant further is that Yar Muhammad Shah in order to satisfy the appellant with regard to the payment of the total sum of Rs. 3,84,283 gave a writing on 29-6-1963 admitting that a sum of Rs. 96,829 is due and payable to the appellant. A further writing was also given by the said Yar Muhammad Shah on 3-12-1963 in which it was admitted that a sum of Rs. 96,829 is due and payable to the appellant in respect of the supplies made by him to the Plant Protection Department and that Yar Muhammad Shah was personally liable to pay this amount to the appellant. These two writings have been produced in the suit as Exhs. 6 and 7. office. It was denied that a sum of Rs. 96,829 was withheld as a security deposit. Yar Muhammad Shah in his written state--ment filed in the suit, took the plea that he was petty clerk in the office of Director of Agriculture, Hyderabad Region and it was just beyond his power and capacity to give any undertaking or understanding of the kind as is alleged by the appellant. The liability for payment of Rs. 96,828 was denied.
2. In the above background of the pleadings of the parties, the learned Single Judge framed as many as 15 issues in the suit. Issues Nos. (i), (ii), (iii), (v) and (vii), which related to the liability of the respondents Nos. 1 and 2 for payment of sum of Rs. 96,829 were decided by the learned Single Judge against the appellant. On issue No. (iv) the learned Single Judge held that the amount was withdrawn from the Government Treasury by Yar Muhammad Shah on his own responsibility.
4. Issues Nos. (vi) and (viii) were decided by the learned Single Judge on the basis of an admission made by the learned counsel appearing on behalf of respondent No. 1 and it was held that the supplies for the total. Contracted amount of Rs. 384,283 were made by the appellant. On issue No.
(ix) the respondent No.' 1 was held not entitled to special costs. Issues Nos. (x) and (xi) were answered in favour of the appellant. On Issue (xii) the learned Single Judge came to the conclusion that the sum of Rs. 96,829 was withheld by Yar Muhammad Shah without authority or con--sent of respondent No. 1. - On Issue No. (xiii), the learned Single Judge found that the sum of Rs. 2,87,458 received by the appellant included the amount of Rs. 60,000. On issue No. (xiv) the learned Single Judge held that the suit was maintainable. However, it was found on the same issue that the appellant had no cause of action against respondent No. 2 personally. On Issue No. (xv), which was a general issue in the suit, the learned Single Judge awarded a decree in the sum of Rs. 96,829 with costs and interest as .Prayed against Yar Muhammad Shah and dismissed the suit of the appellant against respondents Nos. 1 and 2 with no order as to costs.
5. Mr. Hassan A. Shaikh, learned counsel for the appellant, mainly contended before us that the respondent No. 1 was liable to pay the sum of Rs. 96,829 to the appellant as Yar Mohammad Shah was acting in the course of his employment with respondent No. I and shall be deemed to have an implied authority as an agent to bind the respondent No. I in the course of his conduct as such agent. To elaborate the contention, the learned counsel stated that the appellant had all along dealt with Yar Mohammad Shah in respect of the contract of supply of plant protection equipments and even if there was no express authority on behalf of respon--dent No. 1 authorising the said Yar Mohammad Shah to act on behalf of respondent No. 1, there will be deemed to be an implied authority in favour of Yar Mohammad Shah in the circumstances which is sufficient to bind respondent No. 1 as a principal of Yar Muhammad Shah. To support his contention the learned counsel placed reliance on sections 227 and 238 of the Contract Act. The two Exbs. Namely Exhs.
6. Nos. 6 and 7 were relied upon by the learned counsel as an admission .Of liability for a payment of the sum of Rs. 98,829 to the appellant on behalf of respondent No. 1. The contention of the learned counsel for the appellant that Yar Muhammad Shah acted as an agent of respondent No. 1 or that admissions of liability to pay the sum of Rs. 96,829, made by Yar Muhammad Shah in Exhs. Nos. 6 &.
7. 7 could bind respondent No. I as a principal, has not at all impressed us. The two Exhs. Mentioned above relied upon by the learned counsel, in our opinion, were executed by Yar Muhammad Shah in his personal capacity and bad no relation to his duties as an employee of the respondent No. 1.
8. We will reproduce hereinbelow two Exhs. Heavily relied upon by the appellant to create the liability for the payment of sum of Rs. 96,829 against respondent No. I :-------- "To, The Pakistan Agriculture, Exh. 6 Industrial Corporation, Karachi.
9. This is to confirm that I have to pay you a balance amount of Rs. 96,829 for which you have already issued receipts, when and as material is received.
10. (Sd.) Yar Muhammad Shah 29-6-1973 AccountantA-4 D. A. Hyd. Region."
11. "Shaikh Abdul Rahim Suleman,Exh. 7 Karachi, I, the undersigned Mr. Yar Muhammad Shah confirm as under :-- (a)a Messrs Pakistan Agricultural and Industrial Corporation, Karachi
(b) Messrs Sind Industrial Supply Corporation, Karachi for the supply of plant protection equipment valued at an aggregate of over Rs. 4 lacs.
12. Part supply was made against cash payment while part supply was to be made in due course and a further sum of Rs. 1,93,658 was to be given to you by the department in advance as the relevant grant was likely to lapse.
13. As my personal risk was involved in this latter (advance) payment I withheld 50 % thereof viz. a sum of Rs. 96,829 as security deposit for the due performance of the whole contract, for which you have already issued receipt. I am satisfied that the entire supply has now been made as per specifications and you are therefore entitled to immediate refund and payment thereof but due to circumstances beyond my control I am unable to do so, immediately.
14. I, therefore, hereby undertake to arrange payment to you personally of the. Sum of Rs. 96,829 (Rupees ninety-six thousand eight hundred and twenty-nine only) in full within a month of execution hereof. fit.
15. (Sd.) Yar Muhammad Shah, Signed before meAssistant (Sd.) IllegibleDirector of Agriculture.
16. 4-12-1963Hyderabad Region It is an admitted position on record that as on 30-6-1963 when the total cum of Rs. 3,84,283 wag withdrawn from the Government Treasury, the appellant had made supplies of the goods worth Rs.
17. 1,59,558 only. It is also an admitted position that in spite of this fact that the supplies to the extent of Rs. 2,24,275 were yet to be made by the appellant in respect of the contract, he submitted bills for the total sum of Rs. 3,84,283 and also executed receipts in token of having received the above amount. It is not denied that without submission of those bills and receipts by the appellant, it would not have been possible for respondent No. 2 and the said Yar Muhammad Shah to withdraw the sum of Rs. 3,84,283 from the Government Treasury. It is not denied that the entries in the Government record show that the sum of Rs. 3,84,283 so withdrawn by respondent No. 2 was paid to the appellant. In this state of affairs we are unable to see as to how the claim of Rs. 96,829 could be sustained against respondent .No. 1. Turning to the two Exhs. Nos. 6 and 7 and the contention of the learned counsel that Yar Muhammad Shah should be held to have acted as an agent of respondent No. 1 with authority and as such . a decree in the sum of Rs. 96,829 should be awarded against respondent No. 1 on the basis on the undertaking given by Yar Muhammad Shah to the appellant; our reading of the two Exhs. Mentioned .Above is that the two documents had no relation whatsoever with the official duties and acts of Yar Muhammad Shah. Yar Muhammad Shah in the written statement filed in the suit in para. 4, had clearly stated that he had no such authority to act on behalf of respondent No. 1. He repeated this stand in the evidence (Exh. 13), which was recorded in the suit. According to the evidence of Yar Muhammad Shah the Officers of the Department used to note and the final orders used to be signed by the Director Agriculture. The duties of Yar Muhammad Shah, according to his own statement, were confined only to make payments to the contractors. This statement of Yar Muhammad Shah was not at all challenged in the cross-examination by the appellant: On the contrary, in an answer to a question by the counsel for the appellant, Yar Muhammad Shah stated that after payment was made, the relevant entry was made in the cash book. He further went on to say in his cross-examination that the Director was drawing and disbursing officer and that entries in the cash book were made when the payment were made. The suggestion of the appellant's counsel that the sum of Rs. 96,829 was withheld by the Department, was denied by Yar Muhammad Shah. The appellant in his own evidence in examination-in-chief, stated that respondent No. 1 placed order with his firms for the supply of the item and that he made supplies under the instructions of respondent No. 2. It was no where stated in the examination-in-chief by the appellant that Yar Muhammad Shah had the authority to enter into any agreement with the appellant on behalf of respondent No. 1. All that was said in the evidence was that after the amount of Rs. 3,84,283 was withdrawn from the Government of Treasury a sum of Rs. 2.87,458 was paid to the appellant in cash by the said Yar Muhammad Shah and that for appellant's own safeguard, he asked Yar Muhammad Shah to give something in writing for the balance amount, which was given by Yar Muhammad Shah in the shape of Exh.
6. It was further stated that Yar Muhammad Shah had told the appellant at that time that he was keeping this sum of Rs. 96,829 as a security for the goods which were to be supplied by the appellant and that after the supply was made the appellant asked Yar Muhammad Shah to pay the balance amount which was lying in deposit with him. Iqbal Wajih, who was examined as witness No. 2 for the appellant, stated in his examination-in-chief in answer to a question by the Court that both Yat Muhammad Shah and appellant had come to his office at Hyderabad and told him that there was a dispute about some payment due from Yar Muhammad Shah to the appellant, which the witness understood as, concerning some supplies made by the appellant to the Agriculture Department for which he was to receive some payment which had been undertaken by Yar Muhammad Shah but the same had not been paid to the appellant. It was further stated by this witness in cross-examination that it was his firm impression that Exh. 7 was executed with the consent of appellant and Yar Muhammad.
4. After careful consideration of the above evidence and the two Exhs. Mentioned above, we have reached the conclusion that Yar Muhammad Shah, while executing Exhs. 6 and 7 was not acting as an agent of respondent No. 1 and that in any case there was neither an express nor an implied authority by respondent No. 1 under which Yar Muhammad Shah could act so as to bind respondent No. 1 for payment of Rs. 96,829. According to section 182 of the Contract Act, an agent is a person employed to do any act for another or to represent another in dealing with the third person. The person for whom such act is done or who is so represented is called the principal. On the state of evidence before us in this case we have no hesitation in holding that Yar Muhammad Shah never acted as agent of respondent No. 1 nor respondent No. 1 could legitimately be described as a principal of Yar Muhammad Shah. The argument of the learned counsel for the appellant that by virtue of section 237 read with section 238 of the Contract Act there shall be deemed to be an implied authority on the part of Yar Muhammad Shah to act as agent of respondent No. 1 has no merit and evidence in the case does not support the contention of the appellant. The learned counsel failed to point out any material on record) which could support the inference that Yar Muhammad Shah while executing Exhs. 6 and 7 was acting on behalf of respondent No. 1 or that he possessed', the authority to act as such on behalf of respondent No. 1 expressed ors implied. In our conclusion Yar Muhammad Shah while dealing with the appellant acted purely in his personal capacity and even if Yar Muhammad Shah would have styled himself as noting on behalf of respondent No. 1, we would not have accepted this argument for the simple reason that there was an inherent lack of authority on the part of Yar Muhammad Shah who was admittedly an accountant in the department of Agriculture and his duties as such accountant did not include to deal with third party on behalf oft respondent No. 1 in such manner. The learned Assistant Advocate-General) appearing for respondent No. 1 in this case referred us to the Manual of Delegation of Powers Rules, 1958-63, and contended that according to rule 3 of Powers under the Financial Rules and Power of Re-appropriation Rules, 1962, the power in respect of all expenditure debitable to contingencies was exercisable by an Officer in Category 1, which in the present case was the Director of Agriculture. We have looked into the above rules and noticed that in the First Schedule to the said rules in Part I in the list of the Officers specified in category I, the name of Director of Agriculture appears under the heading "Head of Regional Office". We have further found that in the Second Schedule to the said Rules .At Serial No. 3 in Column 3, the Officer, who is empowered to exercise the powers in full, is officer in Category I. We have accordingly reached the conclusion that the power in respect of the contract entered into between the respondent No. 1 and the appellant was exercisable only by respondent No. 2. In', our view if Yar Muhammad Shah gave any such indication to the appellant while dealing with him that he was acting on behalf of respondent No. 1, such representation will squarely fall within the scope of section 235 of Contract Act as respondent No. 1 had never ratified the acts of Ya Muhammad Shah and as such the liability, if any, was that of Ya Muhammad Shah personally.
18. The learned counsel for the appellant referred us to the case of Sarshar A.I v. Roberts Cotton Association Limited and another PLD1963SC244 . Tile facts of that case, in our opinion, are of no assistance to the appellant. In the above Supreme Court case it was an admitted position that defendant No. 2 in the suit was the agent of defendant No. 1 and was selling goods on his behalf.
19. The liability was sought to be avoided in that case by defendant No. 1 by placing reliance on one of the terms of the agreement between defendants Nos. 1 and 2 according to which the defendant No. 2 was not entitled to enter into any contract on behalf of defendant No. 1 except with the written consent of defendant No. 1. This stipulation in the agreement between defendants Nos. 1 and 2, in that case was held to be not in the knowledge of the appellant, who as a 3rd party dealt with defendant No. 2 as an agent of defendant No. 1. It was in this context, at page 250 of the report the learned Judges of the Supreme Court observed as under :-- "Any term in a contract of agency which places restrictions on the authority of an agent is unavailing against parties who are not aware of such term if the circumstances are such as to confer an apparent authority on the agent to act on behalf of the principal,"
20. We failed to see how on the evidence in this case it can be held that Yar Muhammad Shah acted as an agent of respondent No. 1 and that the circum--stances were such as to confer an apparent authority on him to act on behalf of respondent No. 1. The learned counsel next referred to the case of Raja Sir Bissessardas v. Kabul Chand (1). The facts of that case equally have no application to the fact of the present case, and cannot advance the case of the appellant any further. We may here appropriately refer the case of Messrs S. Eshaq & Co. v. Dawood Cotton Mills Limited (2), which in our opinion, is a complete answer to the contention of the learned counsel for the appellant. In this case a purchase clerk of Dawood Cotton Mills Limited placed some orders on Messrs S. Eshaq & Co. For the supply of certain goods for which Eshaq & Co. Was not paid for and a suit for recovery of Rs. 18,975,7.3 was brought against Dawood Cotton Mills Limited by Messrs S. Eshaq & Co. For recovery of the said account. Messrs Dawood Cotton Mills Limited resisted the claim of Messrs S. Eshaq & Co. On the ground that the purchase clerk who had allegedly placed the orders on Messrs S. Eshaq & Co. Had no authority to act on behalf of Messrs Dawood Cotton Mills Limited. The High Court in appeal accepted this contention raised on behalf of Dawood Cotton Mills Limited and dismissed the suit of Messrs S. Eshaq & Co. In further appeal before the Supreme Court, it was contended on behalf of Messrs S. Eshaq & Co. That the clerk had an implied authority to act on behalf of the Mill as he was a purchase clerk and use to take delivery of the goods on behalf of the Mill and therefore any fraud committed in the course of his employment and within the scope of authority would fall under section 238 of the Contract Act. The Honourable Supreme Court, while repelling this contention of the appellant in that case, observed at pages 542 of the report as follows :-- "In any event, in the absence of clear evidence a clerk whose duty does not include purchase of goods, cannot be regarded as having authority to do so. This proposition is plainly based on sound and reasonable grounds. It is needless to say that it will place business of any kind in great jeopardy from actions of unscrupulous clerk if goods purchased by him in the name of the Mills he serves were to become liability of the Mills on that ground alone."
(1) AIR 1945 Nag. 121(2) 1968 SCMR 539 Considering the fact of present case in the light of the above observations of the Hon'ble Supreme Court, we are of the view that before respondent No. 1 could be held liable under sections 237 and 238 of the Contract Act for the acts of Yar Muhammad Shah, it should have been positively' established on record that either Yar Muhammad Shah had express or implied authority on behalf of respondent No. 1 to so act and/or after Yar Muhammad Shah had so acted the respondent No. 1 ratified the acts of Yar Muhammad Shah. In our conclusion both these ingredients are completely missing and as such we hold that the respondent No. 1 was not liable for payment of sum of Rs.
21. 96,829 to the appellant. We accordingly dismiss this appeal with costs. However, the costs will be payable only to respondent No. 1, who contested this appeal. There will be no costs in favour of the respondent No. 2.