ABAID ULLAH KHAN, J.--The facts of the respondents' suits giving rise to the present appeal (R.FA.
No. 31 of 1986) and the other two appals (R.F. As. Nos. 32 and 33 of 1986) are almost identical and the points requiring determination therein are the same. Therefore, it is expedient to dispose of the three appeals together by this judgment. Muhammad Afzal, respondent in the instant appeal, and Muhammad Arif, respondent in R.FA. No. 32 bf 1986, were the highest bidders at the auction of scrap steel shaving, turning and boring held by the Pakistan Railways at their general stores, Moghalpura, Lahore, on the 25th March, 1980, in respect of lots No. 1-SSY-8 and 2-SSY-8 respectively, each lot weighing about 400 tons. Muhammad Afzal purchased the lot for Rs.12,40,000 and Muhammad Arif for Rs. 12,00,000. They deposited 25 per cent of the amount of the bid with the Railways Department that very day. Tie remaining amount of the price was, according to the terms of the auction, payable within a free period of two months and failure to pay the same could entail cancellation of the sale in their favour and forfeiture of the 25 per cent of the amount of price already paid by them, It was only after the full amount of price had been paid that the respondents could take away the scrap purchased by them.
2. Muhammad Anees, respondent in R.F.A. No. 33 of 1986, participated in the auction of lot No. 11-SS- Y-8 of scrap steel shaving, turning and boring weighing about 499 tons held on the Ist April, 1980, and he gave the highest bid of Rs. 11,22,000. He paid Rs. 2,81,000. Being 25 per cent of the price that day. The remaining 75 per cent of the price, like the first two auctions referred to above, was payable within a free person of two months and any default in such payment could result in cancellation of sale and confiscation of Rs. 2,81,000. Paid by him by the Railways Department.
3. It so happened that due to import policy of the Government of Pakistan there was slump in iron and steel market and as such the respondents in the three appeals as well as four other persons, who had purchased different lots of scrap steel shaving, turning and boring, could not deposit the balance of 75 per cent amount of the price and were not able to lift the material purchased by them. Consequently the sales in favour of the respondents and other purchasers were cancelled and the amount of 25yper cent of the price in each case was forfeited.
4. The respondents and other purchasers represented to the Chief Controller of Stores, Pakistan Railways, defendant 2- appellant 2, for reinstatement of the sales and for allowing them to pay the balance of price in six instalments. For this purpose the respondents alleged that they had an interview with appellant 2 in March, 1981 and that appellant 2 had agreed in principle to reinstate the auction sales and had told the respondents that they would be intimated about reinstatement of sales either by the railway administration or through the auctioneer at their postal addresses.
According to the respondents appellant 2 had told them that some departmental formalities had to be gone through and, therefore, they should wart for the letter of reinstatement and thereafter the balance amount would be paid within the prescribed period and the material would be lifted.
The respondents averred that though they had been visiting the appellants' administration, making inquiries from and submitting applications to them for the purpose of eliciting information regarding reinstatement of sales, they had not been intimated that the sales had been reinstated.
According to the respondents it was in September, 1983, when they had gone to participate in another auction held at the railways stores, Moghalpura, Lahore, that they had come to know from three other purchasers who had also asked for reinstatement of sales, that the auction sales of their lots had been reinstated, that they had been served with letters of reinstatement, !Fiat they had deposited the balance amount of 75 per cent of the sale price and lifted the material of their lots. The respondents said that they had been astonished to learn about the reinstatement of sales, that they had gone to and seriously protested with the railway administration as to why they had not been informed of the reinstatement of sales and that they had been told that the District Controller of Stores, Headquarters, Lahore, Sheikh Hameed-ud-Din, was to write letters of reinstatement to them but he had intentionally withheld the file of the respondents and had never sent any intimation to them about the reinstatement of sales whereas the other purchasers had been duly issued intimation letters regarding reinstatement of sales. The respondents averred that Sheikh Hameed---ud-Din had kept the file in his personal custody and had not released it to the office for sending intimation to them. They made mention of the fact, which is borne out by the evidence on the record, that an inquiry was held against Sheikh Hameed-ud-Din for this lapse.
They learnt that the material of their lots had been sold away by the Railways Department to Messrs Orient Technical Works, Lahore. They blamed the District Controller of Stores, Headquarters, for acting mala fide in not informing them of the reinstatement of sales and disposing of the material. They asserted that the sales in their favour after reinstatement had not been cancelled by any competent authority before the District Controller of Stores sold away the stores of the lots to Messrs Orient Technical Works, Lahore.
5. Thereafter the respondents, through letters dared the 23 November, 1983 (Exh. P2 on the tiles of the suits), addressed the appellant 2 asked for the refund of the earnest money paid by them alongwith 12 per cent interest thereon from March, 1981, the date of reinstatement of sales, till November, 1983. Appellant 2's reply is contained in his letter dated the 12th January, 1984, Exh P 5; it informs the respondents that the request for refund of earnest money cannot be considered. The respondents again approached appellant 2 through notice dated the 29th January, 1984, copy Exh P 6, for the refund on earnest money plus 12 per cent interest thereon. This was followed by another letter dated the 25th March 1984, copy Exh P 8, requesting for the refund of the earnest money and interest. Appellant 2's reply dated the 19th May, 184, Exh P 13, was that the request for refund ofrd earnest money could not be acceded to. On the 14th June, 1984, the respondents preferred appeal, copy Exh P 14, to the General Manager, Pakistan Railways, against the refusal, of appellant 2 to refund the earnest money. However, the appeal was rejected and the respondents were so informed through letter dated the 5th November, 1984 Exh P 23. On the 24th November, 1984, the respondents served legal notice, copy Exh P 24, upon appellant 2 asking for refund of earnest money and payment of interest at the bank rate of 15 per cent from March, 1981, within 15 days.
Having not received a favourable response from the appellants, each of the respondent instituted a suit for recovering the amount of earnest money paid by him and interest thereon at the rate of 14 per cent from March, 1981, till the date of realisation of the decretal amount. The respondent in this appeal filed suit on the 2nd January, 1985, and the respondents in other appeals brought suits on the 10th March, 1985.
6. The respondents blamed the appellants for not having informed them of the reinstatement of auction sales so as to enable them to pay the amount due and lift the stocks. The respondents maintained that it was the appellants' responsibility to give notice of reinstatement of sales to them. They stated that whenever they went to inquire about the reinstatement of sales they were told that the moment the reinstatement was ordered they would be intimated. They particularly criticised the conduct of Sheikh Hameed-ud-Din, District Controller of Stores, who, instead of performing his duty of sending intimation of reinstatement of sales to them secretively kept the file with himself and did not send it to the officer for taking action of informing the respondents. They said that they were not at all at fault because being unaware of the reinstatement of sales they could not pay the balance of purchase money and lift the stocks. They claimed that in law and equity they were entitled to refund of the earnest money deposited by them and also were entitled to get interest as their money had been unnecessarily blocked by the appellants.
7-A. The appellants stated that the sales had been reinstated in March, 1981, and the respondents were to deposit the balance of 75 per cent of the price in two instalments. They averred that since the previous letters containing notices Nos. 189-S/2/23/80 (Budget), sent on the 2nd September, 1980 to the respondent in the present appeal and on the 24th November, 1980, to the respondent in appeal No. 32 of 1986, had been received back unserved with the report that the addresses were incomplete, these respondents were not sent any intimation through post regarding reinstatement of sales. Though the appellants did not say that notice No. 189-S/2/23/80 (Budget), dated the 2nd September, 1980, sent to respondent in appeal No. 33 of 1986, had been received back unserved even he was not given any intimation of reinstatement of sale through post by the appellants. As a matter of fact the pleadings of the appellants disclose that the appellants expected the respondents themselves to come to the office and get information of reinstatement of sales. They threw the blame upon the respondents for not collecting information in this behalf.
7. The appellants stated that they had sold the scrap material, which had been purchased at auction sales by the respondents, to Messrs Orient Technical Works, Lahore on the 10th March, 1983, at the rate of Rs. 1583.05, 1585 and 1578 per metric ton in case of the lots of the respondents of R.F.As Nos. 31,32 and 33 of 1986, respectively.
8. The learned Civil Judge held the trial of the suits on the following issues:--
(1) Whether the plaintiff is entitled to the recovery of suit amount as prayed for from the defendants?
(2) Relief.
9. The learned Civil Judge formed the view that it was due to the fault of the appellants' officials, especially of Sheikh Hameed-ud-Din, District Controller of Stores, Headquarters, whose responsibility it was for sending intimation to the respondents regarding reistatement of auction sales, that the respondents received no such intimation and that they had been, without their fault, deprived of the opportunity of paying 75 per cent of the balance price in instalments and lifting the stocks. Apart from the evidence produced by the respondents the learned Judge banked heavily upon the appellants' own evidence especially the statement of their employee, Rao Iftikhar Ahmad DW 1, in formulating his conclusion. Rao Iftikhar Ahmad, DW 1, admitted that the respondents had not been issued any notice that their sales had been reinstated. He added that even the auctioneer had not been given intimation of reinstatement of sales. He confirmed that sales after reinstatement had not been cancelled. He bore out that the file relating to sales, after reinstatement, remained in the custody of Sheikh Hameed-ud-Din, District Controller of Stores, and that subsequently on the respondents' complaint an inquiry had been conducted and that payment of arrears of dues to Sheikh Hameed-ud-Din had been withheld.
10. When the file of the sales was kept by Sheikh Hameed-ud-Din with himself and it had not gone to the office for issuance of intimation of reinstatement of sales to the respondents and when factually no intimation was received by the respondents nor could they gather such information from the office because the file was stuck up with Sheikh Hameed-ud-Din the respondents could not possibly become aware of the reinstatement of sales and take steps for payment of the balance of price of the purchased goods. The appellants sold away the stocks to Messrs Orient Technical Works without any notice to or knowledge on the part of the respondents. The entire fault lay with the appellants for withholding information of reinstatement of sales from the respondents.
Even after reinstatement of sales, the appellants, by their conduct, made it impossible for the respondents to perform the contract. In such a state of affairs the respondents were not to be blamed for failing to act and perform their part of, the contract. With the reinstatement of sales the forfeiture of earnest money was set at nought and money in law belonging to the respondents was to be taken to be lying with the appellants. Since failure in the completion of contract occurred due to the fault of the appellants the respondents are entitled to get back the refund of their earnest money.
11. The learned counsel for the appellants made grievance of the fact that the learned Civil Judge had directed payment of interest without conscious application of his mind to this problem. He also complained of the high rate of interest awarded by the learned Civil Judge. The learned counsel contended that the learned Judge had not given any reasons for payment of interest at such an exorbitant rate. The learned counsel for the respondents drew our attention to the provisions of section 34 of the Code of Civil Procedure and section 61 of the Sale of Goods Act, 1930 (III of 1930), empowering the Court to award interest at such rate as it thinks fit. The learned counsel for the respondents invited reference to the saving schemes being administered by the Central Directorate of National Savings of appellant showing that interest at the rate of more than 14 per cent per annum was being given in the cases of Khas Deposit Account, Defence Savings Certificates, National Deposit Certificates and Mahana Aamdani Account. He submitted that if the respondents had invested money in any of these accounts they would have got return at a rate higher than 14 per cent. The arguments of the learned counsel for the respondents is not without force. The respondents' amount of earnest money remained blocked since the day of its deposit with the appellants who were making use of it as was borne out by Rao Iftikhar Ahmad, DW 1. The appellants are found to be responsible for failure of the contract. The respondents, as pointed out by their learned counsel, could have earned extra amount by investing earnest money in any of the above referred two schemes of the National Savings or somewhere else. In the circumstances the learned trial Court's order directing payment of interest at the rate of 14 per cent does not appear to be unjustifiable and needs no interference.
12. Two points raised by the learned counsel for the appellants regarding maintainability of the suits in the form they had been brought and of their being time-barred, which had not been urged before the learned trial Court, may now be dealt with. The contention of the learned counsel for the appellants that the respondents ought to have filed suits for specific performance of contract of sales or for recovery of damages was effectively met with by the learned counsel for the respondents. Referring to the explanation appended to section 12 of the Specific Relief Act, 1877 (I of 1877), which says that unless and until the contrary is proved the Court would presume that the breach of a contract to transfer movable property can be adequately relieved by compensation in money and to section 21 (a) of the Act which forbids specific enforcement of contracts for the non- performance of which compensation in money is an adequate relief, the learned counsel for the respondents insisted, and to our mind rightly so, that the contracts in hand for the purchase of steel scrap, which constituted movable property, could not be specifically enforced because for their non-performance compensation in money furnished an adequate relief. Such a suit if brought would have certainly failed.
13. As regards suits for recovery of damages the learned counsel for the respondents said that the respondents had not suffered any actual damage in consequence of breach of contracts on the part of the appellants and. Therefore, they could not successfully sue for realisation of damages.
This is a valid reason for not suing by the respondents for recovery of damages.
14. The learned counsel for the appellants contended that even though the bar of limitation had not been pleaded during the trial of the suits, this Court, in view of the provisions of section 3 of the Limitation Act, 1908 (IX of 1908), and of what has been laid down by the Supreme Court of Pakistan in Muhammad Boota versus Habib Ahmad (PLD 1983 S.C. 153), can on its own judge whether the suits had been brought out of time and if so can dismiss them. He wanted to terminus a quo for the purpose of limitation to run from the date of forfeiture of earnest money by the appellants which took place in September, 1980. However, he lost sight of the fact that with the reinstatement of the sales the forfeiture of earnest money vanished and ceased to be operative. As borne out by Rao Iftikhar Ahmad, DW 1, the reinstatement of sales was never cancelled. Therefore, the period of limitation cannot be made to run from the date of forfeiture of earnest money.
15. The learned counsel for the respondents tried to make the period of limitation run from the appellants' first refusal to refund earnest money which was visible from the letter, Exh P 5 bearing the date of 12th January, 1984, and in the alternative from the late of sale of the scrap material by the appellants to Messrs Orient Technical Works, the 10th March, 1983. In either case, he contended, the suits having been brought within three years of the aforementioned dates, whether Article 97 or Article 120 of the first Schedule of the Limitation Act prescribing periods of limitation of three and six years, respectively, was applicable, were within time.
16. Proper Article to regulate the period of limitation for filing suit claiming refund of earnest money is 97. The consideration in the instant case failed when the appellants disposed of the scrap material to Messrs Orient Technical Works on the 10th March, 1983, because thereafter any effort by the respondents to get the material from the appellants would not have borne any fruit. The suits were instituted within three years of the failure of consideration and as such could not be said to he time-barred.
17. In view of what has been said above the appeals file and are dismissed with costs.
H.B.T./1-149/L