Khan IFTIKHAR HUSSAIN KHAN OF MAMDOT (REPRESENTED BY 6 HEIRS) vs

1. WAHEEDUDDIN AHMAD, J.--This certificated appeal is directed against the judgment of the High Court of West Pakistan, Lahore, in Regular First Appeal No, 141 of 1955, decided on the 5th January 1962. By this judgment, the appeal was accepted and the respondent-company was granted a decree for Rs, 82,235-2-0 with costs throughout.

2. The respondent-company filed Civil Suit No, 31/88 of 1952-54 against late Khan Iftikhar Hussain Khan of Mamdot, the appellant. The respondent alleged that the appellant purchased cold storage plant of the value of Rs, 77,882-5-0 and after deducting a sum of Rs, 7,360 which was lying in deposit with the respondent-company, a sum of Rs, 70,522-5-0 was due against him which the appellant failed to pay in spite of repeated requests. A sum of Rs, 11,712-13-0 was also claimed as interest at the rate of 6% per annum according to the commercial usage, prevailing in the markets of Lahore. In this way, the above-mentioned suit was filed against the appellant for the recovery of Rs, 82,235-2-0.

3. The appellant resisted the suit. He admitted that he had taken delivery of certain machinery from the respondent-company but denied his liability to pay any amount on account of its price. He pleaded that a sum of Rs, 1,00,000 was due to him from the respondent-company and it was agreed between the parties on the 6th February 1949, that the shares of the value of Rs, 50,000 belonging to the respondent-company would be transferred to him in lieu of this amount and for the balance a complete cold storage plant would be supplied to him. He further alleged that in pursuance of this agreement 500 shares of the value of Rs, 50,000 were transferred to him and on the 18th February 1949, some defective and incomplete machinery was supplied to him by the respondent-company but it could not be installed as it was defective. He denied his liability to pay interest and claimed special costs from the respondent-company.

4. In the written statement, he raised two preliminary objections. He raised objection that Mr. Khurshid Mahmood, who claimed to be the Director-in-charge of the respondent-company and who had signed the plaint was not competent to institute the suit and it was obligatory on the respondent- company to specifically allege in the plaint that Mr. Khurshid Mahmood was competent to institute the suit on its behalf.

5. On the pleadings of the parties, two preliminary issues were framed which are as under:--

(1) Was it necessary for the plaintiff to allege in the plaint that Mr. Khurshid Mahmood was competent to institute the suit on behalf of Ghulam Nabi Corporation and if so, what is the effect of the omission ?

(2) Was Mr. Khurshid Mahmood authorised by the Ghulam Nabi Corporation to institute the present suit on their behalf ?

6. Evidence was recorded on these issues but at the request of the parties no decision was given on them. After recording the statement of the parties the trial Court framed the following issues on merits:--

(3) Were the articles described in para. 3 of the plaint worth Rs, 77,882-5-0 and sold to the defendant on credit?

7. (3-A) What is the value of the goods?

8. (3-B) Did the defendant pay Rs, 1,00,000 to Mr. Rafi Butt, the Managing Director of the plaintiff- company, under an agreement for purchase of shares and machinery from the plaintiff-company

(4) If issue No, 2 is proved, is the company not liable?

(5) Was an agreement referred to in para. 3 of the written statement and the statement of the defendant before issues arrived at between the defendant and the company through its then Managing Director. If so, what is its effect?

(6) Was the machinery supplied defective, in what particulars and is the defendant entitled to any deductions? If so, what ?

(7) Are the plaintiffs entitled to any interest? If so, at what rate?

(8) Is the defendant entitled to any special costs under section 35-A of the Civil Procedure Code? If so, what?

(9) Relief.

9. All these issues were decided by the learned Civil Judge, First Class, Lahore, by judgment dated the 9th July 1955. On issue No, 1, he held that it was not necessary for the respondent-Company to allege in the plaint that Mr. Khurshid Mahmood was competent to institute the suit on its behalf. On issue No, 2, he held that Mr. Khushid Mahmood was not competent to institute the suit on behalf of the respondent-company. On other issues it was held that the machinery in dispute was supplied to the appellant in pursuance of agreement arrived at between the parties and that he had paid a sum of Rs, 1,00,000 to Mr. Rafi Butt. In view of these findings, issues Nos, 3 to 5 were decided in favour of the respondent-company. .On issue No, 6, it was decided that the machinery supplied by the respondent-company was defective. On issues No, 7, it was decided that the respondent-company was entitled to claim Interest at the rate of 6% per annum. On issue No, 8 it was held that the appellant was not entitled to any special costs. In view of these findings the suit was dismissed.

10. The respondent-company challenged the judgment of the First Class Civil Judge in Regular First Appeal No, 141 of 1955. The High Court of West Pakistan, Lahore, by its judgment dated the 5th January 1962, accepted the appeal and decreed the suit for Rs, 82,235-2-0 with costs throughout.

11. On issue No, 1, it held that it was not necessary to specify in the pleading that the person who had signed the plaint was authorised to institute the suit. On issue No, 2, the appellate Court recorded additional evidence and on consideration of that evidence came to the conclusion that Mr. Khurshid Mahmood was authorised to institute the suit on behalf of the respondent-company. On issues Nos, 3, 3-A, 3-B, 4 and 5, it was held that some money possibly, though not necessarily, a sum of Rs, 1,00,000 was paid by the appellant to Mr. Rafi Butt before his departure to America in the month of May/June 1948, that this payment was not received by him on behalf of the respondent- company and that he did not agree with the respondent-company that the shares of the value of Rs, 50,000 would be transferred to him or that he would supply a complete cold-storage plant for Rs, 50,000. It was held that out of the money received by Mr. Rafi Butt from the appellant in his individual capacity a sum of Rs, 57,360 was transferred to the respondent-company and the company was liable to account for this amount only without being under any obligation to transfer shares or to supply machinery to the appellant and, therefore, the appellant was liable to pay the price of the machinery supplied to him. It was further held that the ratification of the alleged agreement by Mr. Taqi Butt did not bind the respondent-company. It was also held that the machinery supplied by the respondent-company to the appellant was not defective. The finding on issue No, 7 relating to the interest was affirmed. The appellants have challenged these findings in this certificate appeal before us .After the filing of the appeal, the appellant died and his legal representatives were brought on the record.

12. In support of the appeal, Mr. Maqbool Ahmad, learned counsel for the appellant, has urged that the learned Judges of the High Court were not justified in filling up a lacuna in. the case of the respondent-company who had ample opportunity in the trial Court to produce all the evidence it wanted to produce. According to the learned counsel the provisions of Order XLI, rule 27 of the Code of Civil Procedure, had no application to the facts of the present case and, therefore, the order regarding production of additional evidence by the respondent-company was not justified.

13. He further contended that even on the additional evidence it cannot be said that the meeting of the 28th September 1951, was properly convened. There is no proof that the notice of this meeting was given to the appellant. He contended that Mr. Khurshid Mahmood was not properly authorised to institute the suit and he was not competent to do so. He further contended that even if it be held that Mr. Khurshid Mahmood was competent to institute the suit, there was abundant evidence on the record to show that the appellant owed nothing to the respondent company for the cold- storage plant supplied to him. According to him, in June 1948, the appellant gave a sum of Rs, 1,00,003 to Mr. Rafi Butt, the then Managing Director of the respondent-company on condition that he would transfer 500 shares of the respondent-company and for the balance of the amount would supply a complete cold-storage plant. I will deal with these points separately.

14. The first point for consideration in this appeal is whether Mr. Khurshid Mahmood was competent to institute the suit on behalf of the respondent-company. In the trial Court, on this point the respondent-company produced P. W. 1 Khurshid Mahmood and P. W, 2 Malik Fateh Muhammad Tawana, Managing Director of the respondent-company. Mr. Khurshid Mahmood stated that he was authorised by the Board of Directors of Messrs Ghulam Nabi Corporation by resolution dated the 28th September 1951, Exh. P. W. 1/1, to institute the suit against the defendant. He further stated that due notice of this meeting was given to the deceased Khan Iftikhar Hussain Khan of Mamdot, who was one of the Directors. In cross-examination, Malik Fateh Muhammad Khan Tawana stated that it was wrong that the defendant was not sent any notice of the meeting of the Board of Directors. He further stated that he did not know how the notice of the meeting held on the 28th September 1951, was sent to the defendants. If the notice was sent by peon then someone's signatures must be in the column of the Peon-book. On this evidence, the learned Civil Judge held that the resolution, Exh. P. W. 1/1, was not passed on the 28th September 1951. He further held that no notice was served on the appellant about the meeting alleged to have been held on the 28th September 1951. In this connection, the learned Civil Judge observed as under:-- "As regards the contention of the learned counsel for the plaintiff that the burden of proving that no valid notice was given to the defendant lay on the defendant and that he has failed to discharge that burden, I may state that the defendant has categorically denied that he had received any notice of the meeting of the Board of Directors that is alleged to have been held on the 28th September 1951, when the alleged resolution is said to have been passed, vide his statement at page 131 of the file. The defendant is the Governor of Sind. It is difficult for me to disbelieve his statement. In view of the categorical denial by the defendant of the receipt of this notice, the burden shifts to the plaintiffs to prove that any such notice was given and there is nothing on the record, beyond the statement of Mr. Khurshid Mahmood to show that due notice was given to the defendant of this meeting. The books of the company are with the plaintiffs. They could have easily produced evidence to prove that due notice of this meeting was given to the defendant, but they have not done so. They have not produced any Despatch Book or Peon-book or any record from their office to prove this fact. So I hold that the plaintiffs have failed to discharge the burden that has shifted to them."

15. So far as the passing of the resolution is concerned he observed as under :-- "The fact that no mention of the resolution was made in the plaint. The fact that this resolution was not relied upon and that it was not properly pasted in the Minutes Book lends strength to view that it was not passed at a proper meeting of the Board of Directors. These facts show that after the defendant had taken the objection that Mr. Khurshid Mahmood had not been properly authorised to institute the suit. This resclution was passed by the three Directors and was anti-dated.

16. Otherwise there was no reason why mention of this fact should not have been made in the plaint. It is stated by Mr. Khurshid Mahmood that he had shown this resolution to his counsel Mr. Yaqub Ali Khan (now Mr. Justice Yaqub Ali Khan) before instituting this suit. But it is clear that the power of attorney of Mr. Yaqub Ali Khan is not on the file although it is stated by the witness that he was the Senior Counsel in this case. He has also not been produced in the witness-box to prove that this resolution was really shown to him before the institution of the suit. So, it is difficult to believe this part of his statement. I, therefore, find that the plaintiffs have failed to prove that Mr. Khurshid Mahmood had been properly authorised to institute the suit on their behalf."

17. It will thus be noticed that the respondent-company has neither produced any Despatch-book nor any Peon-book to prove that a notice was served on the deceased appellant. They had also not produced Mr. Justice Yaqub All Khan in support of their contention that they had shown the resolution to him before the suit was instituted in the Court. In order to fill up this defect, the respondent-company moved an application in the High Court in Regular First Appeal No, 141 of 1955, under Order XLI, rule 27, C. P. C., and made the following two prayers:-- (1)That Mr. Justice Yaqub Ali Khan who, at one time, was counsel for the respcndent-company be examined on commission to depose to a certain fact.

18. (2)That the respondent-firm may be permitted to produce in evidence a Despatch-register and a peon-book containing entries in regard to the notice of the meeting alleged to have been held for the 28th September 1951.

19. The High Court passed the following order on the 28th September 1961, on that application.

20. 'Notice of this application was given to the opposite-party who has opposed it. After hearing the both parties, we have come to the conclusion that it is a fit case in which we should exercise our powers, as appellate Court, for production of additional evidence. We are not satisfied with the reasons given by the appellant for not producing this evidence earlier and feel that the appellant had ample opportunity, in the trial Court :o examine Mr. Justice Muhammad Yaqub Ali Khan and also to produce the two documents, but as it would not be possible for us to give a satisfactory judgment on one of the points involved, namely, whether a meeting of the Board of Directors was duly called and held on the 28th September 1951, and as a decision of that question would affect the determination of issue No, 2, in exercise of the powers conferred by clause (b) of Order XLI, rule 27(1), C. P. C., we permit the appellant to produce the further evidence asked for, con-ditional on payment of Rs, 300 as costs to the other party. The respondent will have a right to produce evidence in rebuttal."

21. In pursuance of this order, Mr. Justice Muhammad Yaqub All Khan was examined as a witness. He stated that he had no re-collection of having seen the minutes, Exh. LC/2, before. He further stated that he nevertheless remembered that before advising the plaintiff-company to institute the suit, he informed Malik Fateh Muhammad Khan, its Managing Director that it will be necessary to authorise Mr. Khurshid Mahmood by a special resolution to sign and verify the plaint to institute the suit. Malik Fateh Muhammad Khan Tawana was produced as a witness. He produced that Despatch register, Exh. AW. 1/1, and proved the entry bearing No, 6/1967, dated the 27th of September 1951, at page 218 of the Despatch-register and proved the handwriting of Sardar Khan, an employee of the respondent-company. He also produced peon-book, Exh. A.W. 1/3 and proved entry at serial No, 95, dated the 27th September 1951, marked as Exh. A.W. 1/4 and stated that it was in the handwriting of Sardar Khan. He further stated that there were someone's initials in the last column of this entry.

22. Mr. Maqbool Ahmad, learned counsel for the appellant, has contended that the learned Judges of the High Court had not properly exercised the discretion vested in them under Order XLI, rule 27, C.

23. P. C. According to, the learned counsel, the object of Order XLI, rule 27, C. P. C. is not to fill up the lacunas in a party's evidence and evidence in such cases is only to be allowed if the appellate Court requires any document to be proved or any witness to be examined to enable it to pronounce judgment or for any other substantial cause. The learned counsel contended that according to the learned Judges the respondent had ample opportunity to produce the evidence sought to be produced in the High Court and having not done so they were not entitled to invoke the jurisdiction of the High Court under Order XLI, rule 27, C. P. C. In support of the contention, the learned counsel has relied on the cases of Mohammad Ikhlas and others v. Mohammad Ismail and others , Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. and The Secretary to the Government of West Pakistan; Communication & Works Department and another v. Gulzar Muhammad . In the first mentioned case, it was held that under Order XLI, rule 27(1) of the Civil Procedure Code, the appellate Court when allowing additional evidence to be produced is bound to record reasons for such action and it is not sufficient merely to repeat the provisions of the Code in the order. Such reasons must be factual leading to an inference of necessity for proper determination. It was further found that the evidence led before the Courts below the High Court was amply sufficient to enable satisfactory definitive resolution of the issues involved. In view of this, the Supreme Court ignored the additional evidence which had been recorded in the High Court. In the case of Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd., it was held as under :- "The rules of procedure are not made 'for the purpose of hindering justice' and, as such, the Court should not give such a restricted interpretation to the provisions of rule 27 of Order XLI of the Code of Civil Procedure as would, in effect, amount to tying down the hands of the appellate Court and stand in the way of doing complete justice in a cause. The rule merely prescribes that the requirement must be a genuine one and that the need for the additional evidence must be felt by the Court itself after it has examined the evidence already on the record and come to the conclusion that there is apparent some inherent lacuna or defect which hinders the due administration of justice. If it comes to this conclusion, then it has the power to call for additional evidence subject to the condition that it must record its reasons for doing so, in order that a higher Court may be able to ascertain that the need was not merely imaginary but based upon factual grounds.

24. In this case the Court originally hearing the appeal had felt the necessity of such evidence and had1 2 3 even offered to give time to the parties to produce the same, but the parties had not themselves availed of this opportunity."

25. In the case of Secretary to the Government of West Pakistan Communication & Works Department and another v. Gulzar Muhammad, it was held that in an appeal it is now well settled that additional evidence should not be admitted in order merely to enable one of the parties to litigation to fill in gaps in the evidence. Mr. Maqbool Ahmad learned counsel for the appellant, referred us to the following observation of the learned Judges of the High Court to show that the evidence in question was produced to remove the defects in the respondent's evidence produced in the trial Court :- "In coming to the conclusion that Mr. Khurshid Mahmood had not been authorised by the appellant-company to institute this suit, the trial Court was, primarily, influenced by the fact that no satisfactory evidence was produced by the appellant-company to prove, firstly, that a notice of the meeting, which was alleged to have been held on the 28th September 1951, for authorising Mr. Khurshid Mahmood to institute the suit, was duly given to the respondent and other Directors, secondly, that the despatch-book and the peon-book of the appellant-company were not produced in the trial Court, and thirdly, that Mr. (now Mr. Justice) Yaqub Ali Khan, who was counsel for the appellant-company and to whom the resolution said to have been passed in the meeting held on the 28th September 1951, was shown, was not produced as a witness. All these defects have now been removed, because in pursuance of an order, dated the 28th September 1961, passed by us under Order XLI, rule 27 of the Code of Civil Procedure, the appellant-company has produced further evidence in this Court."

26. The grievance of the appellant cannot be said to be ill-founded. In my opinion, the learned Judges of the High Court should not have exercised their discretion under Order XLI, rule 27, C. P. C. in respect of the production of the despatch-register or the peon-book, because such documents can be fabricated and manufactured. They were, however, right in allowing the evidence of Mr. Justice Muhammad Yaqub Ali Khan to be produced as additional evidence in the case.

27. However, even if the additional evidence is taken into consideration it is not possible for me to agree with the learned Judges of the High Court that the notice of the meeting held on the 28th September 1951, was duly served on the deceased appellant. Mr Justice Muhammad Yaqub Ali Khan has not said that the resolution dated the 2th September 1951, was shown to him before the suit was instituted against the appellant. So his evidence does not advance the case of the respondent. The other additional evidence produced shows that a notice of the meeting was issued on the 27th September 1951 to the deceased appellant which was entered in the despatch- register and the peon-book and on this evidence, it has been presumed that the notice dated the 27th September 1951, was duly served on the deceased appellant. The reasoning of the High Court has received my anxious consideration. In my opinion, the genuineness of the despatch-register and the peon-book is doubtful. The existence of any such documents at the time when the suit was heard was not proved. In fact Malik Fateh Muhammad Tawana has deposed in his evidence that he was not aware of the manner in which the notice of the meeting of the 28th September 1951, was served on the deceased appellant. He did not even mention in the trial Court that it was issued on the 27th September 1951. In his evidence before the High Court he stated as under :-- "Entries in the despatch-register with regard to the issue of notices of the meeting were always made. Prior to the 28th September 1951, the meeting of the Board of Directors was held on the 6th April 1951, for which notices were sent on the 5th April 1951. Entries with regard to the notices of this meeting were made at page 115 of the despatch-register, Exh. A. W. 1/1. The entries in the despatch- register made on the 5th April 1951, referred to above have not been given any serial numbers in the despatch-register. In the relevant columns of this register, it is not shown whether the notices were sent by post or by hand. This was because the notices were communicated on the telephone.

28. A meeting of the board of directors was held on the 9th December 1950. Notices of this meeting were sent on the 1st December 1950. I do not find any entry in the despatch-register regarding notices sent to the Directors of the meeting held on the 9th December 1950. No entries regarding telephone massages are made in this despatch-register. I think, the notices of the meeting of the Directors held on the 9th December 1950, were conveyed on the telephone."

29. This evidence clearly shows that the despatch-register was not regularly kept in the ordinary course of business and in respect of some of the meetings no entries were made in it. In these circumstances, the High Court was not justified in placing reliance on the despatch-register and the peon-book.

30. Even if it be held that the despatch-register and the peon-book exist and notice was issued to the deceased appellant in respect of the meeting dated the 28th September 1951, it is quite clear that the notice given was very short and it is not proved that it was delivered to Khan Iftikhar Hussain Khan of Mamdot. The initial on the peon-book appears to be of somebody else and, therefore, his statement that he did not receive the notice of the meeting of the 28th September 1951, cannot be doubted.

31. The question, therefore, is whether in such circumstances can it be said that the meeting of the 28th September 1951, was properly held and any business done in that meeting was a valid one. In my opinion, the meeting held on the 28th September 1951, cannot be said to be a proper meeting.

32. In Halsbury's Laws of England, Third Edition, Volume 6, at page 315, the following statement of law is made :- "A meeting of directors is not duly convened unless due notice has been given to all the directors, and the business put through at a meeting not duly convened is invalid. Whether or not there was a regular board meeting is immaterial for purposes of binding the company if all the shareholders consent to what is done. It is not necessary to give notice of an adjourned meeting. If no fixed notice is required, the notice must be fair and reasonable."

33. In the case of H. M. Ebrahim Salt v. South India Industrials Ltd. it was held that in law a meeting of directors is not duly convened unless due notice has been given to all the directors. On the facts of the present case, I am satisfied that due notice of the meeting was not given to the deceased appellant and, therefore, the resolution passed in the meeting of B 28th September 1951, cannot be said to be a valid one. In my opinion, no valid authority was conferred on Mr. Khurshid Mahmood and, therefore, he was not competent to institute the suit. I would, therefore, hold that the learned trial Judge was perfectly justified in dismissing the suit on this ground.

34. Coming to the merits of the case, it will be observed that the case of the deceased appellant was that he advanced a sum of Rs, 1,00,C00 to Mr. Rafi Butt, in his capacity as Managing Director of the respondent-company in pursuance of an agreement that he would allot shares of the value of Rs, 50,000 to him and would supply a complete cold-storage plant for the remaining Rs, 50,000.

35. According to him, he gave a cross-cheque for Rs, 1,00,030 to Mr. Rafi Butt for this purpose. In support of his case, he has relied on his own statement and on the statement of Mr. Taqi Butt, D. W. 1, and on the statement of Bashir Ahmad Ansari D. W. 4, who at the relevant time was the General Manager of the respondent-company. In his statement, the deceased appellant had stated as under : - "Mr. Rafi Butt was the Managing Director of the said Company. He approached me for associating me as a shareholder in the plaintiff-company. I wanted to purchase a complete cold-storage plant. The plaintiff-company was the importer of such machinery. With the said Rafi Butt as Managing Director of the plaintiff-company I placed an order for the supply to me of a complete cold-storage, the price of which Mr. Rafi Butt agreed to charge Rs, 50,030. I further agreed with him to purchase shares worth Rs, 50,000 in the plaintiff-company.

36. In pursuance of this agreement, I paid to him in his capacity as Managing Director of the plaintiff- company a cheque worth rupees one lac which included the price of a complete cold-storage4 plant and shares worth Rs, 50,000 in the plaintiff-company.

37. After his death, his younger brother Mr. Taqi Butt became the Managing Director of the plaintiff- company. Mr. Taqi Butt as Managing Director of the plaintiff-company, affirmed the contract and said that the company had received the full consideration for the performance of the contract. In pursuance of the said contract, the company, through Mr. Taqi Butt, the Managing Director supplied to me the goods stated in para of the plaint."

38. This statement of the appellant is contradictory to the case set up by him in the written statement.

39. He alleged in the written statement that the respondent-company owed him a sum of Rs, 1,00,000 and for payment of that amount an agreement was entered into on the 6th February 1949, which was to the effect that shares of the value of Rs, 50,003 would be transferred to him and that for the balance of the amount a complete cold-storage plant would be supplied to him. He further alleged that in pursuance of this agreement, 500 shares were transferred to him by the respondent-company and on the 18th February 1949, some machinery, which was incomplete, was delivered to him for installing a cold-storage plant. To the same effect he alleged in his letter dated the 21st February 1949, Exh. LC/l, which is as under :-- "Dear Sir, On the 6th instant when my brother Muhammad Aslam Khan concluded negotiations with Mr. Taqi Butt, the Managing Director of your firm, regarding the settlement of the sum of rupees one lakh paid by me to his brother the late Mr. Rafi Butt by Cheque No, LA-510605, dated the 7th of June 1948, on the Habib Bank Ltd , Lahore, it was agreed that since Mr. Taqi Batt was not in a position to pay back the said sum, the firm Ghulam Nabi Corporation would sell me a complete cold-storage plant for rupees fifty thousands and for the balance I would be made a partner in the firm."

40. In the presence of these documents, the learned Judges of the High Court were fully justified in holding that there was no agreement between the deceased appellant and Mr. Rafi Butt about the supply of a cold-storage plant to him for Rs, 50,000. It appears that such an agreement was entered into between him and Mr. Taqi Butt, the then Managing Director of the respondent- company. This can be gathered from the following statement of Mr. Taqi Butt :-- "Nawab Iftikhar Hussain Mamdot, defendant in this case gave a cheque of Rs, 1,00,000 to Rafi Butt, my brother, who was the Managing Director of the company at that time. When I was the Managing Director of the company, we sold a cold-storage plant to the defendant. Before the sale of this cold-storage plant I had a talk with Mr. Muhammad Aslam, younger brother of the defendant. We agreed that out of the sum of Rs, 1,00,000, Rs, 50,000 should be considered the price of the cold-storage plant and Rs, 50,000 would be considered the value of the shares that were to be allotted to the defendant by the company. In fact this agreement had taken place between my brother Mr. Raft Butt and the defendant 1 only informed the defendant that he could enforcement contract, The defendant was accordingly allotted the shares of the face value of Rs 50,000. The chequa that was given by the defendant was encashed and deposited in the Personal Account of my brother Rafi Butt in the Grindlays Bank when he was going abroad. The books are in possession of the plaintiff, but I know that Rs, 58,000 were transferred by Mr. Rafi Butt, from his personal account to the account of the plaintiff-company, out of this Rs, 1,00,000. This Rs, 58,000 were shown as credit to the defendant. The remaining sum had also been transferred to the account of the plaintiff-company from his personal account."

41. In his cross-examination, he stated as under :- "Rs, 42,000 could not be transferred in the account of Khan Mamdot because Mr. Rafi Butt had meanwhile died and I could not transfer it without the sanction of the heirs of Mr. Rafi Butt to the books. So this sum of Rs, 42,000 remained standing in the name of Mr. Rafi Butt in the books of the account of the plaintiff-Corporation."

42. The real question, therefore, is whether Mr. Taqi Butt was competent to enter in such an agreement.

43. In my opinion, in the absence of any authority conferred on him by the respondent-company, he was not competent to enter into an agreement to sell the goods in dispute to the deceased appellant, at a price which was much less than the selling price of the goods in dispute. In these circumstances, the respondent-company was perfectly justified in claiming from the appellant the selling price of the cold-storage plant contained in Exits. P. 1 and P. 2, which are the invoices of the goods supplied to the deceased appellant. This agreement was also not accepted by the respondent-company as in their account books they had entered a different price from what was agreed upon between Mr. Taqi Butt and the deceased appellant. This is also borne out by the notices dated the 19th April 1951 and 13th June 1951, Exhs. P. 4 and P. 6, in which a demand was made for the payment of the price of the machinery. The receipt of notice, Exh. P. 6, dated the 13th June 1951, had not been denied by the deceased appellant. Under the circumstances, the deceased appellant is liable to pay Rs, 77,&82-5-0 including sales tax as the price of the goods.

44. This, however, does not resolve the dispute between the parties. The appellant's case is that he gave a sum of Rs, 1,00,000 to Mr. Rafi Butt as Managing Director of the respondent-company. This fact is supported by Mr. Taqi Butt in his evidence. The evidence produced by the respondent- company also shows that a sum of Rs, 57,000 was transferred to the respondent-company from the Karachi Office as having been paid by the deceased appellant. It appears to me that Mr. Rafi Butt"ken the amount of Rs, 1,00,000 from the deceased appellant respondent-company. The evidence of his amount was credited to the 'nu in the account books of the gained standing in the name ^count of the respondent-company. This statement of Mr. Taqi Butt is not rebutted by any evidence on the record produced by the respondent-company. It was incumbent on the respondent-company to produce the personal account of Mr. Rafi Butt to show that no such amount was standing in his name in the books of account of the respondent-company. I am, therefore, of the opinion that the amount of Rs, 42,000 is still standing in the name of Mr. Rafi Butt in the account books of the respondent-company. In these circumstances, the respondent-company is liable to account for the sum of Rs, 1,00,030. Rs, 50,000 was paid by the respondent-company towards the transfer of the shares of Malik Inayatullah to the deceased appellant. The respondent- company, therefore, is liable to give credit to the deceased appellant for the remaining sum of Rs, 50,000. After deducting the amount of Rs, 50,000, the respondent-company is entitled to Rs, 27,882-5-0 towards the price of the goods supplied to the deceased appellant.

45. Mr. Maqbool Ahmad, learned counsel for the appellant, contended that the respondent-company is not entitled to claim any interest from the appellant. This contention has no force. According to the Mercantile Usage of the Lahore Market, the respondent-company is entitled to claim 6% interest on the amount due to them.

46. It was also contended by Mr. Maqbool Ahmad that cold-storage plant supplied to the deceased appellant was incomplete and, therefore, the respondent-company is not entitled to claim any amount from the deceased appellant. The appellant has not produced any independent evidence to show that the cold-storage plant supplied to him was incomplete. This is only a bare allegation.

47. No Expert has been produced in support of this allegation. In these circumstances, the High Court was perfectly justified in holding that a complete plant was supplied to the deceased appellant.

48. In view, however, of the conclusion reached by me that Mr. Khurshid Mahmood was not competent to file the suit against the deceased appellant, the appeal is bound to succeed. I would, therefore, accept the appeal but since the appeal is allowed on a technical ground, the parties are directed to bear their own costs.

49. HAMOODUR RAHMAN, C. J.--I agree. SAJJAD AHMAD, J.--I agree that this appeal be accepted with no order as to costs, on the ground that the trial Judge was right in dismissing the respondent's suit, which was not competently instituted by Khurshid Mahmud, who lacked the proper authority to do so. As the suit merits dismissal on that score, I would refrain from expressing any opinion on the merits of the case. PLD 1963 SC 446 PLD 1966 SC 684 PLD 1969 SC 60 AIR 1938 Mad. 962