' ABAID ULLAH KHAN, J.--The facts relevant for the purpose of disposal- of this appeal against the judgment and decree passed by the learned Civil Judge, Lahore, on the 18th December, 1978, decreeing the suit of respondents 1 and 2 for the recovery of Rs,2,67,000 to the extent of Rs,70,560 against the appellant may be shortly stated. Government Jallo Rosin and Turpentine Factory invited tenders for distillation of approximately 75,000 maunds of resin collected during the year 1966 by Abbotabad circle of the Forest Department. The relevant Conditions Nos.1, 4, 5 and 10' of the contract under which resin was to be distilled by the contractor are reproduced below, "(1) The successful distillation contractor will start distillation within ten days from the date of communication of acceptance of the tender and will distil the quantity of resin in question within 10 months from the date the distillation is resumed.
(2) The tenderer is required to quote the maximum quantity of good quality of rosin and turpentine which he would deliver in our factory at Jallo from 100 mounds of crude resin supplied to him for distillation. No distillation charges will be paid by us.
(4) The successful contractor will be required to deliver rosin Jallo daily.
(5) The successful contractor will be required to deposit the security of Rs,50,000 either in the form of Bank Deposit Receipt duly pledged in favour of the Chief Conservator of Forests, Lahore Region, Lahore or furnish bank guarantee from any scheduled bank.
(10) If the contractor does not deposit the security and sign the agreement within 6 days of the communication of sanction, his earnest money of Rs,5,000 will be forfeited to Government, the contract will be resold and loss sustained by Government on reselling the contract will be made good from the contractor as arrears of land revenue."
' Fazal Muhammad, respondent 1, tendered his rates fordistillation of resin and signed the form containing the terms and conditions some of which have been set out above. On the 10th January, 1968, vide letter Exh.P.7, the Manager of Government Jallo Rosin and Turpentine Factory informed respondent 1 that his tender dated the 4th December, 1967', had been accepted for distillation of resin at Jallo, tehsil and district Lahore, and asked him to deposit the requisite security and sign the agreement within six days as required by the terms and conditions already signed by him.
Respondent 1 acknowledged the receipt of this letter through his letter of the 12th January, 1968 (copy Exh.D.2). However, he sought permission to instal distillation plant at Shandara instead of at Jallo. Vide its letter of the 15th January, 1968, Exh.P.9, the Manager of the Government Jallo Rosin and Turpentine Factory expressed his inability to accede to respondent l's request to instal bhatties at Shandara because he had tendered to run bhatties at Jallo. He invited his attention to his earlier letter of the 10th January, 1968, and asked him to act accordingly (meaning thereby to deposit the security and sign the agreement) failing which he warned that the Government would proceed as provided in the terms and conditions of tender. The Manager, on the 23rd January, 1968, sent to respondent 1 the letter, Exh.P.10, telling him that he had neither deposited security nor signed the agreement within the stipulated period prescribed in clause 10 of the terms and conditions signed by him and informing him that action, including for feiture of earnest money of Rs,5,000.00 was being taken for his violation of the conditions of tender. In consequence of his approach to the Conservator of Forests for extension of time for furnishing security and signing the agreement, respondent 1 was allowed to deposit security and sign agreement by the 27th January, 1968.
Instead of furnishing proper bank guarantee on his own behalf, respondent 1 got the letter, Exh.P.12, addressed by the United Bank Limited, 55, Circular Road Branch, Lahore, to the Manager of Government Jallo Rosin and Turpentine Factory stating that the Bank undertook to issue bank guarantee for Rs,50,000 in favour of the Chief Conservator of Forests, Lahore Region, Lahore, on behalf of Messrs Fazal Muhammad (respondent 1) and Wali Muhammad (respondent 2) in due course of time on the terms and conditions mentioned in the agreement. The Bank asked the Manager to provide the form of agreement giving terms and conditions of the guarantee. The Manager felt disturbed by the fact that respondent 1 had, without any rhyme or reason, joined with himself respondent 2 for the purpose, of furnishing guarantee. The Manager pointed out to respondent 1 through the letter, Exh,P.13, that the bank guarantee was required from him and not from Messrs Fazal Muhammad and Wali Muhammad. Nevertheless, the guarantee that the Bank gave was on behalf of respondent 1 and 2 and not on behalf of respondent 1 alone who was the sole contractor. The Manager asked respondent 1 to produce partnership deed indicating his partnership business with respondent 2 to sort out the feasibility of accepting the bank guarantee on behalf of both of them. Respondent 1 failed to oblige the Manager in this behalf. In view of respondent failure who abide by the terms and conditions., touching furnishing of security and signing of agreement the Government ,was left with no option except to reinvite the tenders. As an act of grace it returned the earnest money of Rs,5,000 to respondent 1.
2. On the 16th of December, 1968, respondents 1 and 2 instituted suit against the appellants and the new contractor, the late Badar Din, whose successors respondent 3 to 17 are, for recovery of Rs,2,67,000 as damages on account of breach of contract which the appellants were said to have committed. They contended that immediately after acceptance of tender they had purchased four plants, transported them to Lahore, made advance payments for purchase of bricks, acquisition of labour and incurred expenses whose details they gave in para 9 of the plaint of their suit as follows,- iLoss on the cost of 4plants purchased for Rs.53,000Rs. 20,000.00 iiCost of their transportation. Rs. 1,000.00 iiiCost of burning wood and the advances forfeited.Rs. 7,000.00 ivCost of bricks and advances forfeited. Rs. 2, 560.00 vOther conveyance charges. Rs. 1,000.00 viAdvance to labour. Rs. 7,000.00 viiCost of bank guarantee. Rs. 1,500.00 viiiRegistration fee of the partnership agreement. Rs. 300.00 ixMiscellaneous charges. Rs. 1,640.00 Total Rs. 42,000.00 Loss of profit at the rate of Rs.3.00 per maund. Rs.2,25,000.00 Grand Total Rs.2,67,000.00
3. The appellants vehemently contested the suit and maintained that it was respondent 1 who had all along been guilty of breach of the basic terms and conditions of the contract and, therefore, was not at all entitled to claim any damages. They described respondent 2 to be a stranger and there being no privy of contract between him and the appellants he had no business and was not competent to bring the suit.
4. The learned trial Court blamed the Government for not fulfilling the contract and, therefore, awarded damages to the tune of Rs,70,560 against the appellants. It is surprising that though respondents 1 and 2 had claimed Rs,20,000 on account of loss on the cost of four plants, which they alleged they had purchased for Rs,53,000 the learned trial Court allowed them to reap the benefit of full cost of the plants amounting to Rs,53,000.
5. The crucial point which demands determination, and which has been argued before us, is as to who is responsible for the breach of contract. After going over the correspondence and events described above there can be no two opinions on the point, and the learned counsel for respondents 1 and 2 could not dispute it, that respondent 1 was the real contractor and that he did not furnish the requisite security nor did he sign the agreement within the stipulated period or extended time according to the terms and conditions of the tender which he had signed. Without complying with the basic and essential conditions of the tender he could not proceed to execute the contract and carry out of distillation of resin. The contract had first to be signed and then executed. It was for that reason that six days' time was fixed for furnishing the security of signing of the deed of agreement so that the contractor should thereafter proceed to act under the contract.
Respondent 1 clearly committed breach of contract leaving no obligation upon the appellants to allow him to proceed with the distillation of resin. If he had spent anything towards the execution of contract he is himself to bear the expenses, the appellants re not liable to compensate him in any manner. It is his good luck that he received back the earnest money which the appellants were within right to forfeit. The learned trial Court was clearly in error in blaming the appellants for the commission of breach of contract. Its finding cannot but be reversed.
6. In view of the above the appeal is accepted, the judgment and decree of the learned trial Court are set aside and the suit of respondents 1 and 2 is dismissed. The appellants will get costs of the suit as also of the appeal from respondents 1 and 2. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.