1. ' This suit has been filed by the plaintiffs for the recovery of Rs, 2,45,250 by way of damages with interest @ 9% per annum from the date of the suit till final payment and the cost of the suit.
2. Briefly the plaintiffs' case is that on 25-6-1973 the defendants had agreed to purchase from the plaintiffs 2,200 bags (3,850 maunds) of 'rape-seed oil-cake' at Rs,50 per maund ex-plaintiffs' go down for delivery in the months of August/September, 1973 at the option of the plaintiffs (sellers). It is also claimed that in second similar agreement on 28-6-1973 the defendants agreed to purchase further 2,000 bags (3,500 maunds) of rape-seed oil-cake at Rs, 59 per maund ex-plaintiff's go down on the same terms and conditions. The delivery in both the cases was to be effected during the months of August/September, 1973 at the option of the plaintiffs. It is also alleged that in both the cases the plaintiffs exercised their option by their letter dated 7th September, 1973 and called upon the Defendants to take delivery of the goods covered by the two contracts and even thereafter a number of repeated demands were made by the plaintiffs, but the defendants deliberately delayed the matter and in the mean while the market price of the goods had considerably gone down. The plaintiffs have further claimed that the defendants failed to perform their part of contract in both the cases and therefore, the plaintiffs suffered the loss as shown in paragraph 5 of the plaint amounting to Rs,2,45,250 for which, after giving legal notice, the plaintiffs filed the present suit.
3. The defendants have filed their written-statement wherein they have not denied the fact of having entered into the two agreements as stated in the plaint, but it is contended by the defendants that in the first contract the agreement was for 3,000 bags (5,250 maunds) of 'rape- seed oil-cake' at Rs,50 per maund, out of which the defendants had lifted 800 bags of 'rape-seed oil-cake' in the last week of August, 1973 and had also supplied empty bardana for further delivery, but in the meanwhile a Central Ordinance was promulgated being Ordinance No,XIX of 1973 and under a Notification No, F-24 (1) 73 published on the 2nd September, 1973 all the Vegetable Industries were nationalized and that in pursuance of this Notification the possession of Bengal Oil Mills Ltd. Including Mill premises, machinery plants, etc. Were taken over by the Board of Management (Sindh) under order of the Deputy Commissioner, Karachi bearing No, JB/AIC/8036- A-73, dated 2nd September, 1973. It is further the case of the defendants that on taking over of the Mills by the Board of Management, the Government appointed Directors and since then the total control of the business came under their authority which was run according to their own policy and the old management had no powers, right to act, or interfere in any manner with the business of M/s. Bengal Oil Mills Ltd. And even their bank accounts were frozen. From this it is contended by the defendants that it became impossible for them to perform the old contract and thus the contract in suit frustrated and the defendants cannot be held liable for the same.
4. Following issues were framed:- "(1) What were the terms and conditions of the contract dated 25th June, 1973?
(2) Whether in view of the facts mentioned in para 3 of the written statement the contracts became frustrated?
(3) Whether since the management and control of the business was with the Government, the defendants were absolved from their liability to perform the contract?
(4) Whether the plaintiffs are entitled to the alleged damages or any other damages?
(5) What should the decree be?"
2. 4-A. The plaintiffs examined only one witness namely, Abdul Rehman and then both the Advocates for the parties made a joint statement on 20th August, 1989 to the effect that they do not want to lead any further evidence, but requested that the documents placed on record by the parties be exhibited as evidence in the suit. Such request was allowed and the matter was put off for arguments.
5. I have heard the learned counsel for the parties. Their submissions and my-findings on the issues are as under:- ' ISSUE No,1: ' This issue has not been pressed by the learned counsel for the parties as, according to them, the terms and conditions as stated in the plaint stand admitted.
3. ' ISSUES Nos.2 AND 3: ' These are connected issues and are the material issues in the suit.
4. ' Mr. Abdul Rauf, learned counsel for the plaintiffs, has submitted that according to the terms and conditions of the contract, the option was with the plaintiffs and that they exercised their option for delivery of goods vide letter dated 7th September, 1973, but the defendants did not lift the goods resulting in the loss sustained by the defendants, as according to the learned counsel, the price of the 'rape-seed oil-cake' had drastically fallen by the end of the month of September, 1973. In support of his submission he has referred to the evidence of P.W. 1 Abdul Rehman, who has stated in his examination-in-chief that the price of the 'rape-seed oil-cake' on 26-6-1973 was Rs,50.50 per maund, whereas the same on 29-6-1973 was Rs,60.00 per maund, hut on 29-9-1973 the same was between Rs,22 to Rs,24 per maund and on 3-10-1973 the rate was between Rs,20 and Rs,21 per maund. This witness is a publisher of market bulletin and he has given the above figures by referring to the said bulletin. However, it may be observed that the said bulletin has not been produced in evidence.
5. ' From the above, the learned counsel for the plaintiffs has submitted that the difference between the rates as agreed in the two contracts i.e, Rs,50 and Rs,59 per maund and the rate as given on 29th September, 1973 or on 3rd October, 1973 as per the above bulletin would be the quantum for determination of the loss sustained by the plaintiffs on account of non-performance of the contracts by the defendants. The learned counsel has further referred to the provisions of Ordinance, XIX of 1973. He has placed reliance on Sections 20 and 23 of the said Ordinance which read as under:-- "S.
20. Power to revoke contract. etc,--If any contract or agreement entered into, or any obligation undertaken by any previous management of a managed establishment is declared by the Federal Government, after such inquiry as it may deem fit and giving an opportunity to the person or persons with whom such contract or agreement was entered into or to whom such obligation was undertaken to show cause why such declaration shall not be made, to be against the interests of the establishment, such contract, agreement or obligation shall stand revoked and the establishment shall not be liable for any loss or damage suffered by the previous management by reasons of such revocation: ' Provided that this section shall not be construed as preventing any party to a contract, agreement or obligation so revoked from initiating action in a Court of law against the previous management.
21. .........
22. .........
6. S.23. General effect of vesting of establishment.--(1) Where the management of a managed establishment has been transferred to a corporation under section 13, all contracts, agreements and other instruments of whatever nature subsisting or having effect immediately before the date of transfer, to which such establishment was a party or which were in favour of such establishment shall, subject to the provisions of section 20, be of as full force and effect against or in favour of the corporation and may be enforced or acted upon as fully and effectively, as if, instead of the establishment, the corporation had been a party thereto or as if they had been entered into or issued in favour of the corporation.
(2) If, on the date of transfer of the management of a managed establishment to a corporation, any suit, appeal or other legal proceeding of whatever nature is pending by or against such establishment, it shall not abate, be discontinued or be in any way prejudicially affected by reason of such transfer or anything done under this Ordinance, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the corporation."
7. ' The learned counsel for the plaintiffs has submitted that the above provisions show that the new management had the power to rescind or revoke the contract and that the proviso to section 20 of the Ordinance provides that in case of such contract, it will be open for the parties to seek remedy in a Court of law against the old management and therefore, this suit has been filed. He has further submitted that Mills of the defendants was taken over under the abovesaid Ordinance, but was subsequently released by the Government on 31-12-1973. He has also submitted that even after the release of the Mills the defendants failed to lift the goods in contract and therefore, they are liable for the payment of damages pertaining to the loss suffered by the plaintiffs. According to the learned counsel for the plaintiffs, the provisions of section 73 of the Contract Act are applicable to the present case. He has placed reliance on the case of A & B Oil Industries Ltd. Karachi v.
8. Government of Pakistan and 3 others (PLD 1975 Kar. 439) wherein a Division Bench of this Court has held that "the cases already pending at the time of transfer of establishment under the provisions of Hydrogenated Vegetable Oil Industry (Control and Development) Ordinance, 1973 will not be barred from being dismissed for want of prosecution under Section 23 (2)". He has also placed reliance on the case of Fazal Vegetable Ghee Mills v. Mulazim Hussain 1976 PLC 274, wherein it was held by the Presiding ' Officer of Punjab Labour Court that operation of Labour Laws is not excluded by the above-said Act of 1973.
9. ' Mr. Suleman Qassim, learned counsel for the defendants repelling the aforesaid contention of the plaintiffs' Advocate, has submitted that the time for delivery of goods in the contract in suit was specified to be the months of August and September, 1973 and that the plaintiffs had supplied 800 bags of the goods involved in the last week of August, 1973 which were duly lifted by the defendants and the same have since been paid for. It is also submitted by the learned counsel that the defendants have supplied 1,000 Bardanas to the plaintiffs for futher supply of the goods, but the plaintiffs admittedly'exercised their option for delivery on 7-9-1973, before which date i,e, by Notification on 2-9-1973 the defendants Mills was taken over by the Government under Ordinance, XIX of 1973 and therefore, the present defendants were not in a position, rather prevented under the operation of law from performing their part of the contract and therefore, they cannot be held liable for the same. The learned counsel has further subinitted that the period of two contracts expired on 30-9-1973 when the Mills was under the control of the new management and that the old management was restored with the possession of the Mills on 31-12-1973, the date on which no contract existed between the parties. He has emphasised that the two contracts have, therefore, become frustrated by operation of law and the defendants are not liable for the same. He has further pointed out to the correspondence which has been brought oh record and exhibited. He has referred to the letter dated 26-2-1974 written by the defendants' Advocate in reply to the letter dated 15-2-1974 wherein he has referred to the letter of the Advocate of the Board of Management and has also shown the willingness of defendants to pay for the goods already lifted by them worth Rs,43,840 which payment has already been made and the empty hardanas supplied by the defendants to the plaintiffs has since been returned. He has further referred to the letter dated 4-3- 1973 (Ex. 16). This letter has been written by the Board of Directors to Mr. Jan Muhammad Dawood, Advocate for the Plaintiffs which reads as under:- "Dear Sir, ' Reference your letter dated 26th February 1974, we enclose herewith a copy of the deed of release signed between Board of Management (Sindh) and Messrs Bengal Oil Mills ' Limited on 31st December, 1973. Kindly acknowledge receipt.
10. ' Yours faithfully, ' Sd/ for CHAIRMAN."
11. ' From this the learned counsel has submitted that the copy of the deed of release was sent to the plaintiffs by the Board of Management, but the same has not been produced by them in evidence.
12. Obvious inference from this suppression of evidence is that, if they had produced the same, it would have gone against them. The learned counsel has then referred to anothe letter dated 8-4- 1974 written by Mr. Jan Muhammad Dawood, Advocate for the plaintiffs to Dr. Aziz N. Kurtha, the Advocate for Board of Management (Ex. 23) wherein the leaned counsel for the plaintiffs himself has written as under:-- "2. As regards paras 2 and 3 of your letter, your clients have sought to justify their non-liability in the matter on the ground of the Deed of Release and also on the further ground that the contracts in question took place on 25th and 28th June, 1973 before the Government took over the industry. In this connection we have to draw your client's attention to the fact that the contracts were in the nature of agreements to sell and delivery of the contract goods was to be taken in August/September, 1973 at the option of the seller i,e, our clients. It is the delivery period which was relevant in so far as the performance of the contracts was concerned and since your clients had taken over the industry at the material time when our clients exercised their option for the performance of the contracts, your clients cannot escape their liability arising out of the breach of the contract on their part on the second ground urged in your letter under reference."
13. ' The learned counsel has further submitted that these documents show that the plaintiffs had themselves been putting the burden on the Board of Management for the loss suffered by them and it is only when they had failed in getting any thing from the Board of Management that they have filed the present suit against the defendants. He has further submitted that the present case will be governed by the provisions of first part of section 56 of the Contract Act. Section 56 reads as under:-- "56Agreement to do impossible act.An agreement to do an act impossible in itself is void.
14. Contract to do act afterwards becoming impossible or unlawful : A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
15. Compensation for loss through non-performance of act known to be impossible or unlawful : ' Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-perfomance of the promise."
16. ' The learned counsel for the defendants has placed reliance on the cas of M/s. Dada Ltd. v. M/s. Abdul Sattar & Co. (1984 SCMR 77), wherein their Lordships have held as under:- "The contention has no force. Firstly, because the letters in question were written by the buyers after the contracts stood already frustrated a day earlier on 25-2-1965 upon the imposition of the ban by the. District Magistrate on the said date. The letters of the appellants/buyers dated 26-2-1965 at best were in the nature of fresh proposals as the mode of delivery was sought to be changed contrary to the stipulation contained in the two contracts. Further, the stipulation in the contracts with regard to delivery was that the sellers had to present R/Rs at Karachi to the buyers and payment of 90% of the price was to be made against the R/Rs, Thus, undoubtedly the intention of the parties was that the mode of performance contemplated by them was that the sellers themselves had to despatch the goods by rail to Karachi from any railway station on the Mirpur Line and present relative R/Rs to the buyers at Karachi before 28-2-1965. No exception, in the circumstances, can be taken to the finding of the learned Bench of the High Court that the alternate mode of delivery of the goods ex-stock with other merchants. In Karachi, could not have been in the contemplation of the parties or intended by them as a natural or reasonable mode of delivery of the goods."
17. ' He has also placed reliance on the case of Province of West Pakistan v. Pir Muhammad and 2 others (1980 CLC 525) wherein a Division Bench of this Court has held that the "doctrine of frustration would apply where the contract had become impossible of performance due to perishing of goods". He has also relied on the case of M/s. Mansukhdas Bodaram v. Hussain Brothers Ltd. (P L 1) 1980 SC 122) wherein the Hon'ble Supreme Court has held as under:-- "12. Proceeding to examine the present case in the light of the above legal position relevant in cases of this type, we have no hesitation in holding that under Martial Law Regulation 42 of 1958 the words 'foodgrains' were used in a wider sense and in the context of the special purpose for which that law was made they would cover, in view of the peculair situation prevalent in the country at that time as explained in Civil Appeals Nos.K-23 and K-24/69, the 'rape-seeds' as well. The result of our this finding is that with the promulgation of the relevant notification the contracts in hand which were alive on 28-5-1959 got frustrated and became unlawful and impossible to be performed and as such the plaintiffs could not claim any damages for their alleged nonperformance due to the reason aforesaid.
18. ' In the face of this state of the legal position on the subject, and the factual circumstances above mentioned, the act of the purchasers to purchase and lift the goods at contract rates, would have been in Violation of Martial Law Regulation 42 and therefore, if they refused to undertake that realistic risk of being prosecuted they cannot he said to be guilty of a deliberate breach of a contract. It is to be remembered that doctrine of frustration is not really an exception to the rule that a man must pay damages if he breaks the contract for there can be no default in not doing that which the law prohibits. It may be stated frustration of a contract is a developing concept like negligence: its categories are never closed but are as wide as the categories of human conduct. Its effect is immediate and automatic. It guillotines the contact without the action of either party."
19. ' In support of his above contention, he has also placed reliance on the case of Yousuf v.
20. Hashimbhoy & Co. And others PLD 1966 (W.P.) Kar. 456 and the case of Bengal Oil Mills Ltd. v. Dada Sons PLD 1964 (W.P.) Kar.
21. 18.
22. ' I have given anxious consideration to the submissions of the learned counsel for the parties. The two cases cited by the learned counsel for the plaintiffs are on different footing than the present case. In the first case of A & B Oil Industries Ltd. Karachi v. Government of Pakistan and 3 others PLD 1975 Kar. 439 the point under consideration was as to whether pending proceedings could be dismissed for want of prosecution. While in the other case of Fazal Vegetable Ghee Mills v. Mulazim Hussain (1976 P.L.C. 274), the point under consideration was the applicability of labour laws. In the present case it is an admitted position that the period for delivery of the 'rape-seed oil-cake' under the two contracts was to end by 30th September, 1973 and also that the defendants `Mills was taken over by the Government on 2nd September, 1973, whereas the Plaintiffs' own case as stated in paragraph 3 of the plaint is that they exercised their option of delivery vide their letter dated 7th September, 1973.
23. ' From the above it may be observed that on this date (7-9-1973) the Mills was no more under the possession and control of the answering defendants and they could not be said to be able to perform their part of contract. The Mills was released on 31-12-1973. In these circumstances I am not inclined to hold the defendants liable. From the above discussion I have arrived at the conclusion that the contracts had become frustrated as far as the present defendants are concerned and that the management and control of the business was with the Government at the relevant time and therefore, the answering defendants were absolved from their liability to perform the contract.
24. ' These issues are answered in favour of the defendants. ISSUE No,4: ' On this issue the plaintiffs have placed reliance on the evidence of their witness Abdul Rchman, who has stated that the rate of the 'rape-seed oil-cake' in the month of June., 1973 was Rs,50.50 and Rs,60.00 per maund, whereas on 29-9-1973 the rate fell down to R.,.22.00 and Rs,24.00 per maund and on 3-10-1973 the rate was Rs,20.00 and Rs,21.00 per maund and therefore, the plaintiffs are entitled to the damages as claimed by them on the basis of diflerence of rates. The learned counsel for the plaintiffs though submitted that subsequently the plaintiffs sold away the said goods to some third party, but no evidence on the record has been brought as to at what rate the same were sold away. He has submitted that proving of this fact of actual loss suffered by the plaintiffs is not necessary, but it is the date on which the breach is committed that is to be taken into consideration for computing the actual loss. In order to support his contention he has placed reliance on the case of Aijaz Ahmad v. M/s. Amin Fabrics Ltd. PLD 1983 Kar.
25. 63.
26. In my view the facts of this case are different from the present case as the principle laid down in the cited case was based on the fact that the parties at the time of making contract had known the quantum of loss or damages which was likely to result from breach of the contract and therefore, it was held that in order to compute the loss or damages the relevant date will be the date of breach. In the present case the defendants were prevented from performing their part of contract on account of unforeseen act. The defendants could not have anticipated the promulgation of Ordinance, XIX of 1973 at the time of entering into the contract with the plaintiffs.
27. ' The learned counsel for the defendants has further submitted that the burden was heavily cast on the plaintiffs to have proved the loss and damages suffered by them and the best evidence that could have been brought on record was that the plaintiffs should have examined their own representative, but they have deliberately kept him hack. Not only this, but the learned counsel has submitted that the plaintiffs have also not produced the terms and conditions on which the Mills was released by the Board of Management specially when the said Release Deed was supplied to them as per letter (Ex. 16) which is referred to above. From this the learned counsel has submitted that by keeping back or suppressing the above evidence, the inference will be drawn against the Plaintiffs. He has placed reliance on the case of Government of N.-W.F.P. And three others v.
28. Bahadur Khan (1985 CLC 1457) wherein a Division Bench of Peshawar High Court has held as under:- "5. As the contract had been broken by the Political Agent in a wrong manner, the respondent- plaintiff was entitled to claim damages under section 73 of the Contract Act, provided any loss or damage was caused to him by such breach. The fundamental question in this respect is the pecuniary loss naturally flowing from this breach. A cause of action for breach of contract would arise as and when the plaintiff had actually suffered damage. The amount of damages recoverable, as a general rule, is governed by the extent of the actual damage sustained in consequence of the breach of the contract. In case of admission of proof of such damage, the amount must be established with reasonable certainty and the damages must he appreciable, capable of being stated and of being established and in a suit for the recovery of damages for breach of the contract it is for the plaintiff to establish the extent of his suffering. The onus is on the plaintiff to produce best evidence to prove damages otherwise every presumption would he made against him."
29. ' He has also placed reliance on the case of M/s. Mohammad Amin Mohammad Bashir Ltd. v. M/s. Mohammad Amin Bros. Ltd. (PLD 1969 Kar. 233).
30. ' The learned counsel has also submitted that the last date for delivery was 30-9-1973, but there was no evidence of the prevailing rates on this date. He has also submitted that the evidence of P.W. Abdul Rehman admittedly is based on hearsay, but he has not disclosed as to from whom he has learnt about these rates and he has not shown as to what was the evidentiary value of such bulletin published by a private person having no such authority from any agency. It is also submitted by the learned counsel that the said witness Abdul Rehman has not given as to what was the exact rate prevailing on the relevant date.
31. In these circumstances I am of the view that the plaintiffs have failed to prove the kjuantum of damages. I am also of the view that since the Issues No,2 I ( and 3 have been decided against the plaintiffs, they are not entitled to any chhmages from the defendants.
32. ISSUE No,5.
33. ' In view of my findings above, the suit is dismissed with costs.