1. The plaintiff has filed this suit under section 73 of the Contract Act for compensation and damages for Rs-18,00,900.
2. The facts according to the plaint are that the plaintiff is a Limited Company carrying on business, inter alia, of imports, exports and agents at Karachi. The defendants are a limited Company incorporated in Japan having their Head Office at Tokyo and Branch Office at Karachi. The defendants are carrying on business as indentors and are also agents of Messrs Toho Kogyo Co.
3. Ltd. Osaka, Japan. The plaintiffs and the defendants executed three contracts at Karachi for the supply of G.P. Sheets cuttings bright soft temper 2 x 4 and larger (Max. 8 X 4') mainly 61 and larger thickness 24-31guage. The shipment in regard to the goods under the abovementioned contracts were to be effected in February/July, 1973 and L.C. Was to be opened by cable in the contracted currency and its photo copy was to be furnished to the defendants by 17th February, 24th February and 28th February, 1973 respectively for the three contracts. The contracts provided that in case the above dates are not adhered to, the defendants will have the right to cancel the contract or change the shipment and price. In view of above contracts, the plaintiff applied for Import Licence dated 9-2-1973 obtaining the Licence No.378497 through Habib Bank Ltd., Karachi and opened L.C.
4. In the name of the principals of the defendants M/s. Toho Kogyo Co. Ld. The L.C. Numbers and the amounts are stated to be as under;---
(a) L.C. No.83282 dated 19-2-1973 for US $ 29,020.43 in respect of goods under Contract No.K- 293/1973 dated 2-2-1973;
(b) L.C. No.83283 dated 20-2-1973 for US $ 26,269.75 in respect of goods under Contract No.K- 223/1973 dated 9-2-1973; and (c)L.C. No.83565 dated 22-2-1973 for US $ 58,410.74 in respect of goods under Contract No. A-348 of 1973 dated 19-2-1973."
5. As per terms the cable advice was also given to the negotiating bank regarding opening of the L.Cs. The plaintiffs were surprised when they saw a notice dated 24-2-1973 in two local dailies English and Gujrati to the effect that Mr. Muhammad Naseem Siddiqui, who was officer of the defendants and had signed the contracts mentioned earlier was declared to be not an authorised person to sign any contract/document/business neither in past nor in future. The defendants on query wrote a letter dated 2-3-1973 to the plaintiffs referring the L.Cs. Stating that no indents had been issued by them and that the said L.Cs. Have not been received by their Head Office.
6. The plaintiffs confirmed from the Habib Bank Limited that the defendants had received L.C. Amount through First National City Bank, Osaka, Japan, but have returned the same. They wrote another letter dated 10-3-1973 drawing the defendants' attention in regard to their responsibility for fuliflment of the contracts, which was denied by them. The plaintiffs felt that the defendants were trying to back out from their contracted liability on account of shortage of goods and fluctuation in the prices in the market and wrote -two letters inquiring as to the lowest prices and C.P. Cost in regard to the same goods. The plaintiffs called upon the defendants that since they have failed to supply the agreed quantities of goods under the contract they were liable to pay the difference between the prevalent price in the local market at the relevant time and the price which was quoted by them subsequently plus expenses incurred and that if the defendants failed to do so they will have no alternative but to take recourse to law at their costs.
7. According to the plaintiffs, the defendants in order to wriggle out of the contracts issued notice in the two daily newspapers in regard to the authority of their officer Muhammad Naseem Siddiqui. As according to the plaintiffs, Muhammad Naseem Siddiqui had in the past signed such contracts, which were honoured by the defendants. Finally, the plaintiffs gave a notice dated 13-7-1974 to the defendant which was replied by them vide their letter dated 19-7-1974. The plaintiffs have, therefore, filed the suit for recovery of damages to the tune of Rs.18,00,900 and have prayed for a decree in the same amount and the cost and any other relief under the circumstances of the case.
8. On the basis of the pleadings, the following consent issues were framed:-- "(1) Whether the suit is bad for non-joinder of necessary party?
(2) Whether the alleged three Letters Nos.K-293/1973 dated 2nd February, 1973, No.K-223 of 1973, dated 9th February, 1973 and No.K-348 of 1973, dated 19th February, 1973, constituted valid contracts between the plaintiff and the defendants for supply of goods mentioned therein?
(3) Whether the plaintiffs are entitled to damages, if any?
(4) What should the decree be?" .
9. Both the parties have produced one witness each.
10. I have examined the record and the proceedings and have perused the written arguments filed on behalf of the parties avid my findings on the issues are as follows:--- Issue No. l Muhammad Kassam Manager of the plaintiff has deposed that the defendants are agents/indentors for Toho Kogyo Co. Ltd., Osaka Japan and negotiate and enter into contract on their behalf with the parties in Pakistan. They entered into three contracts dated 2-2-1973, 9-2-1973 and 19-2-1973 and in consequence thereof the plaintiff opened LC No.83282, 83283 and 83465 through Habib Bank Ltd. And transmitted the amounts through First National City Bank, Osaka Japan. The contracts were signed by Muhammad Naseem Siddiqui on behalf of the defendants.
11. According to him, Muhammad Naseem Siddiqui had signed previous contracts also. This fact was denied by the witness produced on behalf of the defendants. He also denied that they have power to execute contracts on behalf of the other companies for whom they act as liaison and only negotiate on their behalf. But this fact bas been belied by its own evidence wherein he deposed that "in the year 1973 the Assistant General Manager of defendants Karachi Branch namely Mr. Nikiyama was authorised to enter into the contracts on behalf of the defendant". It is further pertinent to point out that Exh.19/11 produced by the plaintiffs, is an authority letter stating therein that they (defendants) are fully responsible for M/s. Toho Kogyo & Co. Ltd., Osaka Japan. This letter which is signed by Mr. Nikiyama, Assistant General Manager Karachi Branch has not been denied by the defendants and as such establishes, beyond doubt that the defendants were acting as agents/indentors for the Toho Kogyo, Osaka Japan. The contracts under dispute were signed by their employee Muhammad Naseem Siddiqui. There is no evidence on record to show that he was an authorised person to enter into contract on behalf of the defendants. The plaintiff was fully aware of this disputed fact and although they have deposed that the said Muhammad Naseem Siddiqui had signed earlier contacts, but none was produced in evidence. He cannot be regarded as the agent working for the principal in absence of any such authority. Section 238 of the Contract Act is clear in this regard. Since there was a question of contractual liability Muhammad Naseem Siddiqui was a necessary party under Order 1, Rule 6, C.P.C. But as provided under Order 1, Rule 9, C.P.C. Suit shall not be defeated because of his not having been joined as a party. Anyhow, it will be the plaintiff itself who will be prejudiced by this omission. Issue No. l is decided accordingly.
12. Issues Nos.2 and 3-- These are material issues and connected as such will be dealt together. Muhammad Kassam, Manager of the plaintiffs' Company reiterated the contents of the plaint and produced the original contracts signed by Muhammad Naseem Siddiqui for the defendants. He also produced photo copy of L.C. Nos.83282, 83283 and 83465 opened by the plaintiff in favour of Toho Kogyo Company Ltd., Osaka Japan, the notices published in the daily newspapers Dawn arid Millat Gujrati dated 24- 2-1973 and the certificate from Habib Bank Ltd., that L.Cs were opened and money remitted to Toho Kogyo, Osaka Japan. He also stated that Muhammad Naseem Siddiqui had earlier signed contracts on behalf of the defendants which were honoured by them and that during the relevant period there was a shortage of supply of these goods and prices were increasing every day. He was signatory to the contracts on behalf of the plaintiffs and claimed damages of suit amount from the defendants. In cross-examination he, however, admitted that in 1973 Mr. Nikiyama was the Assistant General Manager of the defendants at Karachi but the said contracts were signed by Muhammad Naseem Siddiqui. He denied that Exhs. 6, 7 and 8 which are the contracts are forged, false and fabricated. He further stated that he was not aware if Muhammad Naseem Siddiqui was dismissed for misconduct or that he was not authorised to sign on behalf of the defendants or the reasons for which the notices were published in daily newspapers. He refuted the suggestion that the L.Cs. Were opened on their own. However, he admitted that in subsequent correspondence the defendants denied the execution of contracts or their ability under the said contracts. He also denied that the suit was falsely filed and the plaintiff had no cause of action against the defendants.
13. The defendants produced John David, Senior Executive working With the Company for about 23 years and deposed that the Toho Kogyo Company is different from the defendants' company. He admitted that the disputed contracts were written on the letter heads of the Company but said that Muhammad Naseem Siddiqui was never authorised by the company to execute and enter into contracts with the parties. According to him, Mr. Nikiyanta was authorised to enter into the contacts on behalf of the defendants. In his cross-examination he admitted that Muhammad Naseem Siddiqui was dismissed from service after the defendants came to know about the execution of subject contracts but was not known-how much time lapsed in-between or after how much time the notices were published in daily newspapers. He denied the suggestion that the notices were published in daily newspapers. He denied the suggestion that the notices were published just to get out of the liability of the subject contracts due to escalation of prices. He denied that the plaintiff has suffered any loss for which the defendants are liable to pay damages. The above deposition 'establishes clearly that the contracts were signed by Muhammad Naseem Siddiqui on behalf of the defendants. The question arises if the said Muhammad Naseem Siddiqui had the authority to execute such contracts. There is no evidence to prove his 'authority on the contrary the evidence produced confirms that Mr. Nikiyama., Assistant General Manager of the defendants at Karachi Branch was the authroised person to execute contracts on behalf of the defendants. Toho Kogyo Co. In whose favour the L.Cs. Were opened never accepted the remittance and immediately returned the same. The defendants from the beginning denied contracts and their liability. Section 2 of the contract Act defines Contract as "An agreement enforceable by law". The ingredients for formation of an agreement are proposal, acceptance and consideration. In the instant case the acceptance of the proposal was indicated or executed by an unauthorised person. I have already discussed the entire evidence showing lack of evidence in regard to the authority of Muhammad Naseem Siddiqui. In the absence of this authority the documents which are Exhs.9, 10 and 11 cannot be termed as "agreement enforceable by law"., All contracts which cease to be enforceable by law become void. Only void contracts can be made binding on the parties.
14. After careful consideration of the above evidence and the law applicable, i.e., section 2 and sections 235, 73 and 238 of the Contract Act, I hold that Naseem Siddiqui while executing Exhs.9, 10 and 11 was not acting as agent of the defendants as there was neither any written nor any implied authority from the defendants. In the absence of a valid contract the issues are decided in negative.