1. ' By this common judgment I intend to dispose of these first appeals as they involve the common points of law and fact and the appellants in all the three appeals are the Firms of Motor Body Builders while the respondents are the same.
2. ' Briefly the facts of the case are that the present appellants, who are in the business of manufacture and fabrication of Buses, Trucks etc. All entered into various agreements with the respondent No,1 whereby they had agreed to undertake the work of fabrication of Buses' chassis. In the first case, there were five such agreements. In the second case, there were six such agreements while in the third case, there were five such agreements. According to the appellants, who are plaintiffs in the lower Court, they had completed the work of fabrication; and that there are some amounts, details of which are given below, outstanding which pertains to the labour charges etc. Of the fabrication work. The case of the appellants further is that according to clause 16 of the Agreement executed between the present appellants and respondent No,1 sales tax on the fabrication material to he used was to he- maid by the respondent No,l. As per clause 16 of the Agreement, the respondent No,1 has undertaken that in case the sales tax would not be waived, the same will be paid by the respondent No,1 However, according to the appellants, the Respondent No,2 after issuance of notices to the respondent No,1 got the amount of sales tax withheld from the plaintiffs' payment. The appellants approached the respondent No,1 for re-imbursement of the said amount of sales tax as well as for payment of the outstanding amounts pertaining to the work done by the appellants. Since no such payment was made by the respondent No,1, the plaintiffs filed the three suits being Suits Nos,187 of 1979, 188 of 1979 and 208 of 1979 claiming the following amounts:\ {{TABLE}} Suit No, Amount of Amount of Total Amount outstanding Sales tax claimed 187/79 Rs,1,44,160 Rs,5,11,000 Rs,6,55,160 188/79 Rs,1,00,000 Rs,6,93,798 Rs,7,93,789 208/89 Nil Rs, 4,27,000 Rs,4,27,000 {{TABLE}} ' The respondents were served in the suit. The respondent No,1 filed a similar written statement in all the three suits wherein they admitted having executed such agreements with the plaintiffs and also admitted having got the work done from the present appellants. However, a plea was taken by the respondent No,1 that they had approached the Government of Sindh for waiver of sales tax; and that the matter is still pending with Government of Sindh and, therefore, the present suits were premature. The respondent No,1 also admitted the said Condition No,16 partaining to the sales tax as mentioned in the agreement. The trial Court settled six issues in each case which are identical.
3. The following are the issues settled in Suits Nos, 187 and 188 of 1979:--
(1) Whether the suit is maintainable in law?
(2) Whether this Hon'ble Court has jurisdiction in this matter?
(3) Whether the defendant No,1 is liable to pay sale tax amounting to Rs,5,11,000 in respect of the Body fabrication work on Bus Chassis, directly to the defendant No,2 or to the plaintiff for paying the same to defendant No,2?
(4) Whether the balance of the cost of material and labour charges amounting to Rs,1,44,160 for the work executed by the plaintiff is outstanding against the Defendant No,1 which the plaintiff is entitled to recover from the Defendant No,1?
(5) Whether in the circumstances of the case the Defendant No,2 is justified and entitled under law to recover sales tax from the plaintiff by adopting coercive measures?
(6) What should the decree be?
4. ' The only difference is that of amount of sales tax and work done regarding the amounts mentioned in Issues Nos,3 and 4 while in Suit No,208 of 1979 except for Issue No,4 same remaining issues were settled.
5. ' The present appellants examined one witness and produced on record the copies of the agreements entered into between the appellants and respondent No,1, copies of the letters and demand notice from respondent No,1 alongwith Challan. The respondent No,1 did not produce any evidence although several chances were given. The respondent No, 2 had not filed his written statement and suit was ordered to proceed ex parte against them and they did not appear in the suit throughout. The trial Court was pleased to pass a preliminary decree in the suit to the effect that amount of sales tax paid by the appellants be calculated and paid by respondent No,1 while the suit against the respondent No,2 was dismissed. Being aggrieved, the present appellants have preferred this appeal with the prayer that this preliminary decree should be converted into a final decree for the specific amount claimed in the suits.
6. ' I have heard the learned counsel for the parties and also perused the record of the lower Court. At the very outset Mr. Mazharuddin Siddiqui, the learned counsel for the appellants has pointed out that in the written statement, the respondent No,1 has not denied the outstanding amounts pertaining to the labour and material charges as claimed by the present appellants in the suit. He has further submitted that respondent No,1 has also admitted the contents of the said agreements, specifically clause 16, whereby the respondent No,1 had taken upon themselves to approach the Government to waive the sales tax and had further undertaken that in case the sales tax was not waived, the same would be borne by the respondent No,l. The said agreements have been produced in evidence by present appellants and no cross-examination has been made regarding the above two specific pleas taken by the appellants. It will be pertinent to reproduce the contents of clause 16 of the agreement, which reads as under: "16. The Corporation undertakes to procure exemption of sales tax for the fabrication of these Bus bodies from the Government of Pakistan. In case this is not possible, then the sales tax on these Bus bodies will be paid directly by the Corporation."
7. ' In view of these admissions by the respondent No,1 in their written statement, the appellants were not even required to prove these facts. However, the appellants' witness has very much substantiated the contents of the plaint and their claim. The appellants' counsel has also referred to the Certificates issued by the present respondent No,1 to the effect that there are outstanding amounts which are to be paid to the appellants pertaining to the work done by them. These Certificates are as under:-- {{TABLE}} SUIT NO, CERTIFICATE FOR CERTIFICATE SHOWING WORK DONE SALES TAX 186/79 Rs,1,44,160 Rs, 5,11,000 (Exh. 68/1-2-3-) (Exh. 72)
8. 188/79 Rs,1,00,000 Rs, 6,93,789 (Exh. 112/1-2) (Exh. 111)
9. 208/79 Rs,4,02,700 (Exh. 78) {{TABLE}} ' In view of the above evidence on record the counsel for the appellants stated that the specific amounts have been proved, rather admitted by respondent No,1 and, therefore, the trial Court should have passed a decree in suit specifying the amounts as prayed. The question of passing of preliminary decree does not arise as the suits are for recovery of specific amounts.
10. ' Mr. Talmiz Burney, the learned counsel for respondent No,1 has submitted that the very suits were not maintainable in view of the provisions of section 69 of the Partnership Act and section 34 of Sales Tax Act. He, however, could not repel the contentions of the learned counsel for the appellants on the factual aspect. The learned counsel for respondent No,1 has submitted that the appellants' firm not being a registered firm no such suit could be filed by them by virtue of provisions of section 69 of the Partnership Act. A plain reading of the agreements entered into by the parties would show that the respondent No, 1 had entered into agreements with the appellants; and that appellants are therein defined as sole proprietary firms and not partnership firms. Thus, the provisions of section 69 of the Partnership Act would not be attracted. As regards other grounds taken by the learned counsel for the respondent No,1 that the present suit is barred by virtue of section 34 of the Sales Tax Act and for the reasons that an appeal is provided under Sales Tax Act, there is no cavil about the said legal provisions. However, the question for consideration in the present case is not that any act of respondent No,2 is being questioned in the suit but it is the liability of respondent No,1 which is called in question. The appellants are not denying the fact that sales tax had to be paid on the material in fabrication and the chassis but all that they claim is that the same is to be paid by the respondent No,1 to respondent No,2 and is not the liability of present appellants in view of clause 16 of the Agreement. Mr. Talmiz Burney, Advocate has placed reliance on number of cases wherein the Hon'ble Supreme Court has held that in case of taxable goods the liability to pay sales tax is that of manufacturer or importer. This proposition is not disputed. But the question is whether the present respondent No,1 can take the plea that in view of this provisions of law, they can be absolved of their liability under clause 16 of above Agreement. This is a case of contractual liability and it was under these terms and conditions that the appellants undertook the work assigned to them and have completed the same. The respondent No,1 having received the benefit out of the same cannot now turn round and deny their liabilities under the said contract.
11. ' Mr. Mazharuddin Siddiqui, the learned counsel for the appellants has submitted that none of these pleas were taken by the respondent No,1 in their written statement. In the first instance, the learned counsel has submitted that no objection was taken by the respondent No,1 in his written statement with regard to non-joinder or misjoinder of parties. He has referred to Order 1, rule 13, C.P.C. Which provides that any such objection is to be taken at the earliest possible opportunity and in all cases where issues are settled, on or before such settlement; and that in case no such objection is taken, it shall be deemed to have been waived. He has placed reliance on a Division Bench case of the Dacca High Court Re: Jamiyat Ali v. MRs, Chamon Ara Begum and another (PLD 1968 Dacca 190) wherein their Lordships dealing with similar situation have held that objection with regard to defect of parties not taken at an earliest opportunity cannot be raised during trial or at appellate stage.
12. He has also referred to the case of Secretary-cum-Chief Engineer v. Ghulai Muhammad Khan (1986 CLC 2987) in support of his above contention. He has also relied on the case of Masood Jilani v.
13. Muhammad Ibrahim Miraj-ud-Din (PLD 1962 (WV) Lahore 281) wherein a Division Bench had held as under:-- "Section 23 of the Contract Act declares the consideration in each of the cases mentioned in it to be unlawful and enacts that every agreement of which the consideration in unlawful is void. It is quite clear from the wording of section 23 of Contract Act, that there is a presumption of legality about every consideration. The law presumes against illegality and the burden of establishing illegality is on the person who asserts it.
14. ' It would appear from the above authorities that it was for the defendant appellant to place relevant material on the record to show that the contract was illegal within the meaning of section 23 of the Contract Act and was, therefore, void. We have already stated that the written statement is silent on this point and that no issue was framed. No evidence was led to show that the contract was illegal and, therefore, void. The defendant cannot now be allowed to take up this point at this stage."
15. ' From the above discussion, it can safely be concluded that in the first instance, the present respondent No,1 had in his written statement admitted his liability, both with regard to the outstanding amount of work done by the appellants and also for the payment of sales tax which has been withheld from the payment of the appellants. In this view of the matter, I allow these appeals and the three suits filed by the present appellants are decreed as prayed with mark up at 14% per annum from the date of institution of suits till the date of payment. However, there will be no order as to costs.