1. ' By this order I propose to record my reasons for dismissal of the two applications on 20-3-1999.
2. The application placed at Serial No,1 is filed under Order XXXVIII, Rules 1, 2 and 5, C.P.C., for directing the defendants Nos.1 and 2 to furnish security for appearance and for any reasonable amount considered likely to be decreed. The application placed at Serial No,2 is filed under Order XXXIX, Rules 1 and 2, C.P.C., to restrain the defendant No,3 bank from transferring the amount of Letter of Credit No,8667 of 1998, dated 28-8-1998 for US $ 302,400 in favour of defendants Nos.1 and 2 . Or the negotiating bank.
3. ' The plaintiff's case as stated in the plaint, briefly stated, is that it had placed order for supply of 504 metric tons of Resin Semi Dull Polyester Chips (A-grade) hereinafter referred as the polyester chips, upon defendants Nos.1 and 2. The defendant No,1 is stated to be manufacturer of polyester chips in whose favour Letter of Credit, dated 28th August, 1998 was established for US $ 302,400 through the defendant No,3 Bank. The consignment of the polyester chips was shipped in September, 1998 and upon arrival at Karachi was placed at Customs Bonded Warehouse. The contract between the parties was for sale by prescription and condition No,14 of the Letter of Credit required the defendant No,1 to forward Chemical Analysis Report as per the specimen sheet issued by defendant No,1 along with the shipping documents. The above-referred condition No,14 reads as follows:--- "14. Semi Dull Polyester Chips Chemical Analysis Report as per specimen sheet issued by Manufacture (being couriered to you which forms an integral part of this credit) must accompany original documents."
4. ' According to the plaintiff, the polyester chips were cleared from the Bonded Warehouse in small lots. In November, 1998, 76 metric tons and 104 metric tons of the polyester chips were cleared whereas 104 metric tons of the goods were cleared in December, 1998. Upon utilization of 121 metric tons of polyester chips, the plaintiff realised that the same were of lower quality and not in accordance with the specifications. Such apprehension was confirmed by testing a sample and its report, dated 30th December, 1998 received from Synthetic Fiber Development and Application Centre, Government of Pakistan. The plaintiff, therefore, contacted the defendants Nos.1 and 2 complaining about the uneven size of the polyester chips. After repeated complaints, the defendant No,1, eventually, sent its representative on 18-12-1998 who took a sample of the polyester chips and the plaintiff was assured- of amicable settlement. The plaintiff, in the meantime, continued using the alleged sub-standard polyester chips which resulted in enormous loss to it.
5. The plaintiff claims to have been forced to shut down its plant for 23 days from 9th to 31st December, 1998 due to the defective polyester chips. The plaintiff has assessed its losses at Rs,8,550,043 and filed the suit for recovery besides seeking permanent injunction to restrain the defendant No,3 from transferring the amount of Letter of Credit.
6. ' The defendants Nos.1 and 2 have opposed both the applications and filed counter-affidavit too.
7. The case of defendants Nos.1 and 2 is that the polyester chips supplied by them are in conformity with the specifications agreed between the parties and the claim for damages was illusory and false. It is further the case of defendant No,1 that it was in the business in Pakistan for almost 18 years and had been maintaining a local office as well. The allegation about the said defendants removing their office or winding up business in Pakistan is denied in its entirety. The prayer for interim injunction is also opposed on the ground that the plaintiff, after having utilize the polyester chips, cannot deprive the plaintiff from its price. Mr. A.H. Mirza, appearing for defendant No,3-Bank, has taken the position that his client shall abide by order of the Court.
8. ' I have heard the learned counsel who have taken me through the pleadings and the affidavits Mr. Imran Ahmed has contended that the sale of the polyester chips was on the basis of prescription and the goods had to conform to the specifications contained in the Chemical Analysis Report.
9. According to the learned counsel, such position is manifest from the above quoted condition No,14 contained in the Letter of. Credit. The learned counsel, in reply to query, has taken specific position that the polyester chips deliver to the plaintiff did not conform to the Chemical Analysis Report, dated 4th September, 1998 in terms of Intrinsic Viscosity (also referred as I.V.). The Chemical Analysis Report referred by the plaintiff, received along with the shipping documents, describes Intrinsic Viscosity of the polyester chips to be 0.640 + 0.02. According to the learned counsel, the Intrinsic Viscosity of the polyester chips, sent to Synthetic Fiber Development and Application Centre, Government of Pakistan, was found 0.650 whereas the sample taken by the defendant No,1 was found to contain I.V., as 0.625. On the basis of above variation, it is contended that the polyester chips did not conform to the agreed specification. The above contention of the learned counsel is totally misplaced. As noted earlier, according to the Chemical Analysis Report, dated 4th September, 1998, the specified Intrinsic Viscosity of the polyester chips was 0.640 + 0.02. This means that the parties had visualized variation in Intrinsic Viscosity to range between 0.620 to 0.660. The two Reports referred by the learned counsel for plaintiff do not show that the Intrinsic Viscosity of the polyester chips was found beyond the expected variation. The learned counsel for the plaintiff then referred to a Mill Test Certificate, dated 30th May, 1998 (Annexure 'B' with the plaint) which permitted Intrinsic Viscosity to vary by 0.01, above or below 0.640. The learned counsel has omitted to notice that the last column in the Mill Test Certificate shows the specification in relation to I.V. As 0:640 + 0.02. The plaintiff has, thus, failed to show, at least prima facie, that the polyester chips supplied to it did not conform to specifications agreed between the parties,.
10. ' The learned counsel for the plaintiff has referred to section 43 of the Sales of Goods Act to contend that the plaintiff was not bound to return the rejected goods upon refusal to accept them. I am afraid, even this contention does not change the position of the case. While by virtue of section 15 of Sales of Goods Act, a contract for sale of goods by description implies a condition that the goods correspond to the specifications, a buyer is required to refuse acceptance in case the goods are found contrary to the agreed description. Upon refusal of acceptance, a buyer is not required to return the goods, indeed. It is sufficient for the buyer to intimate to the seller that he refuses to accept the goods. In the present case, however, the plaintiff has not only accepted delivery but has used almost the entire quantity of the polyester chips supplied by the defendant No, 1 . Such position has been accepted by the learned counsel for plaintiff at the bar. The learned counsel for the plaintiff, however, has attempted to justify the consumption of entire quantity of the polyester chips by pleading mitigation of losses. The provisions contained in section 43 of the Sales of Goods Act, on a plain reading, do not permit consumption of goods while pleading refusal to accept the delivery. The learned counsel for plaintiff has referred to order in Pan Ocean Enterprises (Pvt.) Ltd. v.
11. Thai Rayon Company Ltd. (PLD 1990 Kar. 395) and placed reliance on the following observation contained therein:-- "It is settled law that in cases of breach of contract the innocent party has a right to take such steps as would minimise the loss or damages. The plaintiff had a right to take delivery of the goods in spite of his protest not only for inspection, but even for minimising the loss."
12. ' The above case had its peculiar facts which included issuance of fraudulent and defective Bill of Lading. In the reported case, certain goods were claimed to have been shipped and payment was claimed there against. It was shown from the record that the subject goods had not been shipped as claimed in the Bill of Lading and trans-shipment was also undertaken contrary to specific terms of the contract. The grant of injunction against encashment of Letter of Credit, in the said case, was based upon manifest violation of the terms therein. In the present case, I have not found, ex facie, any contravention or breach on the part of defendant No,1 .
13. ' The plaintiffs own case is that the continued use of the polyester chips had added to the losses suffered by it. The plaintiff, therefore, cannot claim to have utilized the polyester chips or continued its use in order to minimise the loss or damages. The continued use of polyester chips negates the claim of the plaintiff that the goods were used in mitigation of the loss. The plaintiff in the event of polyester chips not conforming to their specifications, ought to have taken steps for restraining encashment of the Letter of Credit without utilizing the polyester chips. The Letter of Credit has still not been en cashed and the plaintiff to put it in simple words, wants to eat the cake and have it too. The plaintiff has failed to show any prima facie case for grant of injunction. In the cases of contracts with foreign parties, encashment of Letter of Credit cannot be restrained except for very strong reasons. The grant of injunction to restrain encashment of Letter of Credit may adversely effect the reputation of our business concerns who have to continue trading in the comity of nations.
14. As regards the application under Order XXXVIII, Rules 1 and 2, C.P.C., the learned counsel for defendants Nos.1 and 2 has rightly referred to the case of M/s. Balagam Wala Oil Mills v. M/s. Shakarchi Trading A.G. (1991 CLC 2071) wherein it was held that direction under Order XXXVIII, C.P.C., cannot be issued on the sole ground that the defendant was a foreign company and it had no assets in Pakistan. The plaintiff while dealing with defendant No,1 knew in advance that it was dealing with a foreign company which did not have any tangible assets in Pakistan. There are the reasons for the order passed by me on 26-3-1999.