1. ' SAEEDUZZAMAN SIDDIQUI, C..J---We propose to dispose of the above-noted two appeals by a common order as they arise from the judgment and decree in Suit No,218 of 1969. For the sake of convenience and in order to avoid any confusion we will refer the appellant in H.CA. No,36/75 and respondent in HCA No,37/75 by his name "Sheikh Muhammad Amin" and respondent in HCA No,36/75 and appellant in HCA No,37/75 as "PIDC".
2. On or about 2nd of May, 1967 Sheikh Muhammad Amin made an offer to PIDC to purchase 8,000 bags of sugar manufactured by Bannu Sugar Mills at the rate of Rs,64 per maund Ex-Mill. The entire contracted quantity of sugar was to be lifted by Sheikh Muhammad Amin during June, 1967. A sum of Rs,40,000 by way of earnest money was deposited by Sheikh Muhammad Amin with PIDC in connection with the above contract. It appears that the prices of the sugar went down immediately after the above contract and accordingly on 13-6-1967 Sheikh Muhammad Amin addressed a letter to the Deputy General Manager, Sugar, PIDC, Karachi, requesting that he may be allowed to lift the contracted quantity of sugar in two installments, namely, 4,000 bags in July and 4,000 bags in August, 1967. The above request made by Sheikh Muhammad Amin was accepted by PIDC on 17- 6-1967, when the Deputy General Manager Sugar, PIDC Karachi informed Sheikh Muhammad Amin that the entire contracted quantity of sugar is to be lifted by him during the month of July and August, 1967 and that no further extension of time would be granted in this date. Copies of the letter dated 17-6-1967 addressed by Deputy General Manager, Sugar, Karachi to Sheikh Muhammad Amin were endorsed to the Manager, Bannu. Sugar Mills and Resident Representative, PIDC Branch, Lahore. It is an admitted position that the contracted quantity of sugar was, however, not lifted by.
2. Sheikh Muhammad Amin and on 19-8-1967 he repudiated the contract on the ground that the sugar supplied by the Bannu Sugar Mills was of inferior quality. He accordingly demanded the refund of Rs,40,000 paid at the time of entering into the above contract. The claim of Sheikh Muhammad Amin was repudiated by the PIDC which demanded a sum of Rs,1,87,000 by way of damages on account of the difference in the rate of sugar on the date the contract was to be performed. As the damages demanded by PIDC were not paid by Shaikh Muhammad Amin, the former instituted Suit No,218 of 1969 on 15-6-1969 in this Court against the later for recovery of Rs,1,87,000 being the difference in the contract price and the market price prevailing on the date of breach. The suit was resisted by Sheikh Muhammad Amin and on the basis of pleadings of the parties following consent issues were framed:-
(1) Whether the defendants failed to lift the sugar even during the extended period of July and August, 1967, and repudiated the contract by his letter dated 19-8-1967?
(2) Whether the plaintiff had to sell the stipulated sugar at Rs,55/50 per mound sustaining a loss of Rs,1,87,000?
(3) Whether the plaintiff is entitled to recover Rs,1,87,000 from the defendant being the difference between the stipulated price and the market price?
(4) Whether the quality of sugar manufactured by Bannu Sugar Mills in 1967 was as contracted? If so, to what effect?
(5) Whether this Hon'ble Court has no territorial jurisdiction to try the suit?
(6) Whether the plaintiff forfeited the amount of earnest money. If so, were they entitled?
(7) Relief."
3. In support of the claim in suit on behalf of PIDC Siraj Ahmad Khan, Manager Sugar in PIDC, Karachi, Saeeduddin, Manager, PIDC, Lahore, Fazalur Rehman, General Manager, Bannu Sugar Mills and Anis Ahmed Khan, Accountant, Bannu Sugar Mills were examined. The defendant in support of his case examined Talib Hussain and Sheikh Muhammad Amin. The learned Judge in chamber after hearing the learned counsel for the parties and examining the evidence produced in the case, decreed the suit for Rs,88,000 and after allowing adjustment of the sum of Rs,40,000 paid by Sheikh Muhammad Amin to PIDC at the time of entering into the contract for purchase of 8,000 bags of sugar, determined the amount payable under the decree as Rs,48,000 with costs. Both Sheikh Muhammad Amin as well as PIDC have challenged the above decree passed by the learned Judge in chamber in the above appeals.
3. ' The contention of the learned counsel for Sheikh Muhammad Amin before us is that the learned Judge in chamber failed to appreciate that the quality of sugar which Sheikh Muhammad Amin had contracted to purchase from Bannu Sugar Mills was white sugar while the sugar which was supplied to them was of inferior quality and as such Sheikh Muhammad Amin was not bound to perform the contract and was entitled to reject the goods offered to them under the contract. It is also contended by the learned counsel for Sheikh Muhammad Amin that this Court has no territorial jurisdiction in the matter as the contract was concluded between Sheikh Muhammad Amin and PIDC at Lahore and as such the suit should have been filed at Lahore. The learned counsel for PIDC on the other hand while supporting the judgment and decree in the case contended that the learned Judge in chamber failed to take into account that the rate of sugar prevailing on the date of breach was only Rs,55 per maund as against the contract price of Rs,64 and as such the petitioner should have been allowed damages at the rate of difference between the contract price and the prevailing market rate on the date of breach. After hearing the learned counsel for the parties at lengh we are of the view that no interference is called for in the judgment and decree passed by the learned Judge in chamber.
4. ' I will first of all take up issue No,5 in the case which relates to the territorial jurisdiction of this Court.
5. It is contended by the learned counsel for Sheikh Muhammad Amin that this Court had no jurisdiction to entertain the suit as the contract was entered into between the parties at Lahore and, therefore the Court at Lahore had the jurisdiction to entertain this suit. The learned counsel for PIDC on the other hand contended that though the contract was entered into between the parties at Lahore but it was with the consent of the Head Office which was situated at Karachi and as such even in respect of the initial agreement between the parties the breach could be enforced at Karachi. It is further contended by the learned counsel for the PIDC that apart from it after the contract was entered into between the parties the time for performance in the agreement was changed at the request of Sheikh Muhammad Amin and such alteration in the contract had taken place at Karachi and as such the breach of the performance of the notated contract could be enforced at Karachi. Section 120 of the Code of Civil Procedure provides that the provisions contained in sections 16, 17 and 20 of the Code shall not apply to the High Court in exercise of its original civil jurisdiction. Section 16 of the Code of Civil Procedure relates to the recovery of immovable property, partition of immovable property, foreclosure, sale or redemption in the case of mortgage of or charge upon immovable, property determination of any right or interest in the immovable property, compensation for wrong to immovable property and for recovery of movable property actually under distrait of attachment. Section 17 deals with the situation where an immovable property in respect whereof a suit is to be filed to obtain relief for compensation of wrong to an immovable property and it provides that where the property is situated within local limits and jurisdiction of two Courts the suit could be filed in any one of such Courts. Section 20 provides that a suit is to be instituted where defendant or defendants reside or cause of action arises. Although the provisions of sections 16, 17 and 20 of the Code of Civil Procedure do not apply to the High Court in exercise of its original civil jurisdiction, the Court will have jurisdiction to entertain a suit if the cause of action has arisen within its local limits of the jurisdiction. No doubt the letter dated 3-5-1965 by which the offer of Sheikh Muhammad Amin was accepted was written by the West Pakistan Industrial Development Corporation, Lahore but it is quite clear from the endorsement on that letter that the acceptance of the offer of Sheikh Muhammad Amin was made with the consent of Deputy General Manager, Sugar, PIDC, Kutchery Road, Karachi, which was accorded to the contract on 24-5-1967. As the contract entered with the consent of PIDC, Karachi, the breach of the agreement, could be enforced at Karachi. Apart from it the original contract between the parties provided for delivery of the entire contracted quantity of 8,000 bags of sugar by June, 1967. It is an admitted position in the case that on 13th June, 1967 Sheikh Muhammad Amin applied to Deputy General Manager, Sugar, PIDC, Karachi requesting the latter to change the delivery date from June to July and August in instalments of 400 bags each in every month. The change in the delivery time was granted at Karachi and accordingly breach of the altered contract which provides for delivery of contracted goods in two instalments of 400 bags each in July and August respectively could be enforced at Karachi. We are, therefore, of the view that the suit filed by PIDC at Karachi was fully competent and this Court had the jurisdiction to entertain and decide the above suit. The learned Judge in chamber, therefore, rightly decided the issue No,5 in the negative.
6. ' Issues Nos.1 and 4 were taken up together by the learned Judge in chamber and were decided in the affirmative. The failure of Sheikh Muhammad Amin to take delivery of the contracted goods and repudiation of the contract is established by the letter dated 19-8-1967 (Exh 5/4). The contention of the learned counsel for Sheikh Muhammad Amin, however, is that the sugar supplied by Bannu Sugar Mills was of inferior quality and as such Sheikh Muhammad Amin was justified in law to reject the sugar offered to them and to repudiate the contract. The letter dated 3-5-1967 which formed the basis of the contract between the parties is as follows:- "We confirm having accepted your offer to purchase Bannu Sugar at Rs,64 per maund Ex-Mill, on 2nd May, 1967. As already advised over the telephone you may deposit earnest money at Rs,5 per bag for 8,000 bags to be delivered to you during June, 1967.
(2) You shall not sell this sugar within a radius of 150 miles of Bannu Sugar Mills, Naurange Serai (District Bannu) except with the prior permission of the Manager, Bannu Sugar Mills. You will also not sell it in the areas where our stockists are functioning.
(3) Please note that each delivery at the Mills will be made to you against each payment in athance.
(4) Please acknowledge receipt and confirm that you have since remitted telegraphically Rs,40,000 to the Manager, Bannu Sugar Mills.'
7. ' The evidence in the case shows that Bannu Sugar Mills was producing only one quality of sugar.
8. The contract dated 3-5-1967 clearly states that the offer for purchase made by Sheikh Muhammad Amin was in respect of Bannu Sugar. There is no description of the quality of sugar which Sheikh Muhammad Amin had contracted to purchase from PIDC. There is neither anything in cross- examination of the witnesses of PIDC nor in the evidence of Sheikh Muhammad Amin to show that the sugar supplied by Bannu Sugar Mills was not that which was normally and usually produced in Bannu Sugar Mills. Since there was no mention with regard to the quality of sugar in the original contract dated 3-5-1967 the burden of proving that Sheikh Muhammad Amin had entered into the contract for purchase of a particular type or quality of sugar was entirely on Sheikh Muhammad Amin which he failed to discharge. The evidence produced by the PIDC in the case clearly established that Bannu Sugar Mills was producing only one quality of sugar and that the same was supplied/offered to Sheikh Muhammad Amin. The learned Judge in chamber, therefore, rightly decided issues Nos.1 and 4 against Sheikh Muhammad Amin.
9. Issues Nos.2 and 3 were also dealt with together by the learned Judge in chamber as they were inter-connected. The repudiation of the contract by Sheikh Muhammad Amin is established by the letter dated 19-8-1967. As Sheikh Muhammad Amin failed to establish that the quality of sugar supplied or offered for supply to him by the Bannu Sugar Mills was inferior to that which he had contracted to buy, the repudiation of the contract by him was not justified. As the breach of the contract was committed by Sheikh Muhammad Amin he was liable to compensate PIDC for the losses suffered by them on account of such breach. The contract price is mentioned in the letter dated 3-5-1967 (Exh.5/1) as Rs,64 per maund Ex-Mill. The PIDC claimed that on the date of breach the prevailing market price of sugar was Rs,55 per maund. The PIDC accordingly claimed the damages on the basis of difference in the two prices. The last date for performance of the agreement was 31-8-1967 and as such the prevailing rate of sugar on 1-9-1967 would be relevant for the purposes of determining the damages suffered by PIDC. The documentary evidence in the case produced before the learned Judge in chamber show that on 1-9-1967, 3 bags of sugar were sold at Ex-Mill price to one Khan Habibullah Khan at the rate of Rs,60 per maund. No doubt PIDC claimed that it sold 8,000 bags to 3rd party between 17-10-1967 to 31-10-1967 at the rate of Rs,53 to Rs,53.57 per maund but the learned Judge in chamber rightly' came to the conclusion that the market rate of sugar, on the date of breach was Rs,60 per maund. It is well-settled law that a party complaining of breach and claiming damages on the basis of such breach must do every thing within its power to mitigate the damages. There is nothing in the evidence of PIDC to show that it made attempts to sell the stock of sugar but was unable to sell the same. There is documentary evidence on record which established the prevailing market rate of sugar on 1-9-1967 as Rs,60 per maund. The learned Judge in chamber, therefore, rightly allowed the damages at the rate of Rs,4 per maund in respect of the contracted quantity of sugar. Mr. Khalilur Rehman, the learned counsel for PIDC has, however, contended that as the sum of Rs,40,000 paid by Sheikh Muhammad Amin at the time of entering into the contract was an earnest money which was legally forfeited as held by the learned Judge in chamber the amount of damages should have been awarded over and above the amount of earnest money. We are unable to accept the contention of the learned counsel. We have already reproduced earlier the letter dated 3-5-1967 which formed the basis of the contract between the parties. No doubt the sum of Rs,40,000 paid by Sheikh Muhammad Amin at the rate of Rs,5 per bag to PIDC at the time of entering into the contract was described an earnest money but there is nothing in the letter dated 3-5-1967 or in the subsequent correspondence between the parties on the subject which could show that the amount of Rs,40,000 paid by Sheikh Muhammad Amin to PIDC could be forfeited in the event of breach of contract by Sheikh Muhammad Amin. In these circumstances, the amount of Rs,40,000 paid by Sheikh Muhammad Amin at the time of entering into the contract was rightly treated as an advance payment and adjusted out of the damages awarded by the learned Judge in chamber.
10. No case for interference is made out. Both the appeals filed are accordingly dismissed. We are, however, of the view that in so far the cost is concerned the PIDC will only be entitled to the proportionate costs in the suit. The costs of the appeal will be borne by the parties respectively.