' MUHAMMAD NAWAZ ABBASI, J.--- By this common judgment we propose to dispose of Regular First Appeal No,61 of 1997 filed by AlFarooq Roller Flour Mills against the Federation of Pakistan and Regular First Appeal No,68 of 1997 filed by the Federation of Pakistan against Al-Farooq Roller Flour Mills as both arise from a common judgment and decree, dated 19-7-1997 passed by a Civil Judge 1st Class, Rawalpindi.
2. For the sake of convenience and to avoid any confusion, the appellants and respondents in these cross-appeals will be referred by their names as Al-Farooq Roller Flour Mills and Federation of Pakistan.
3. Al-Farooq Roller Flour Mills filed a suit for recovery of Rs,2,55,,72,262 against the Federation of Pakistan through Secretary, Defence and the Director-General (Procurement) Pakistan Army on 21- 1-1990. In the suit the amended plaint was filed on 19-4-1995 through the Managing Director of the Mills having its office at Khairpur Miras, Sindh.
4. The Federation of Pakistan required the services of Flour Mills for grinding wheat for Pakistan Army through the Director-General (Procurement), and thus, the Federation invited tender for grinding of wheat. The tender submitted by Al-Farooq Roller Flour Mills for grinding of 40 thousand tons of wheat within one year with effect from 1-1-1989 at the rate Of Rs,10.95 per 100 kilograms was accepted. The management of the AlFarooq Roller Flour Mills undertook the responsibility of construction of godown for the wheat and to make the Mills functional and in consequence thereof, the parties signed the agreement on 29-12-1988 according to which the total amount for grinding 40,000 tons of wheat to be paid to Mills was Rs,43,80,000. The charge of the Mills was taken over by the Major Shahid Nazir an agent of the Federation who allegedly instead of running the affairs of The deposit as security Rs. 60,000 The expenses incurred on renovating the MillsRs.80,000 The total compensation for grinding the wheat under the Agreement.Rs.43,80,000 Unpaid telephone bills Rs.1,32,262 Loss caused due to the abandonment of the MillsRs.2,00,000 Loss occasioned due to dissuading the prospective buyers from purchasing the Mills.Rs.50,00,000 The loss for reputation of Mills due to illegal termination of the agreement and black listing of the plaintiff.Rs.25,00,000 The damages due to mental anguish and torture.Rs.25,00,000the Mills smoothly adopted hostile attitude towards the management of the Mills and created such circumstances which did not allow the contract to be performed by the management of the Mills. It was pleaded that due to bad law and order situation in Khairpur region the management wanted to sell the Flour Mills but the said Major Shahid Nazir dissuaded the purchaser from entering into the bargain with the owners of the Mills. The hostility of said Major Shahid Nazir was brought to the notice of Ministry of Defence through the Director-General (Procurement) but nothing was done.
The correspondence made on behalf of the Mills with the Federation and the Director-General (Procurement) regarding the grievance of management and owners of the Mills against Major Shahid Nazir and the affairs in the Mills was made part of the record. It was complained that the telephones installed in the Mills were misused by the said Major Shahid Nazir and his colleagues and that the residential accommodation provided to Major Shahid Nazir by the management of the Mills in terms of the agreement was not occupied by him. It was added that the Flour Mills alongwith the staff was under the control of the Federation through Major Shahid Nazir who unnecessarily pointed out the defects in the machinery of the Mills. He neither associated any representatives of the Mills nor informed the management about the total quantity of wheat brought to the Mills and how much wheat was taken back ungrinded. It was pleaded that the complaints made by the said Major Shahid Nazir to the effect that wheat was not being grinded as per specification were tainted with ulterior motives as the same were made without getting the samples testified from the laboratory in the prescribed manner. The Federation and the Director- General (Procurement) on the basis of said reports made by Major Shahid Nazir terminated the contract on 20th May, 1989 and the said Major Shahid Nazir without associating the representatives of the Mills and settling the affairs relating to shifting of ungrinded wheat and handing over the Mills in a proper manner to the management, abandoned the same in August, 1989 with the result that spare parts and stores of the value of about two lacs were misappropriated in the intervening period. The termination of the contract and non-payment of the bills for the wheat grinded by the Mills by the Federation made the owners of the Mills defaulter in payment of loans obtained from the Banks for installation of Mills and as a result thereof the suits of the creditor Banks, namely, I.D.B.P. And Habib Bank Limited against the Mills for recovery of loans were decreed against the Mills which was sold through auction in execution of the decrees for a nominal price. In nutshell, Al- Farooq Roller Flour Mills sought decree for the recovery of the following loses due to the breach of the contract through the suit of damages against the Federation.
Loss due to non-payment of bills by the Federation and in consequence thereof the taking over of the Mills by the creditors of the plaintiff.
Total:Rs.1,00,00,000 Rs.2.55.72.262
5. The appeal filed by the plaintiff before the Secretary, Ministry of Defence under the agreement was pending undecided at the time of filing of the suit.
6. The Federation of Pakistan and the Director-General (Procurement) having denied the averments of the plaint in the written statement. Pleaded that inspection of Mills was carried out by the Board of Officers of the General Headquarters before execution of the agreement and although the Mills was not technically fit due to insufficient storage facilities yet being found suitable for grinding the wheat, the contract was signed. Since the Flour Mills was not in operation for the last two years before the execution of an agreement, therefore, the contract was entered into on the assurance given by the management of the Mills to make it in proper order but as per commitment neither the storage facility was provided within the stipulated time nor the Mills was fully made operational till the termination of the contract. It was pleaded in the written statement that the plaintiff having failed to fulfil the contractual obligations caused loss to the defendant on account of defective grinding of wheat and the expenses of Rs,5,980 which was incurred on transportation of 974-729 tons wheat from Khairpur to Multan for grinding the same on failure of the Al-Farooq Roller Flour Mills to do the needful as its obligations. Thus, the Federation has deducted the loss borne by it from the amount of security of Rs,60,000 of the Mills and the balance amount of Rs,31,000 was available for payment to Al-Farooq Roller Flour Mills.
7. The learned Civil Judge on the basis of pleadings of the parties framed the following issues:-
(1) Whether the plaintiff has no cause of action? OPD
(2) Whether the suit is not maintainable? OPD
(3) Whether the suit is false, frivolous and vexatious as such the defendants are entitled to special costs under section 35-A of C.P.C,?
(4) Whether the plaintiff suffered heavy losses due to the illegal termination of the agreement and non-payment of the amount validly, contractually, legally due to the plaintiff? OPD
(5) Whether tip plaintiff is entitled to a decree for recovery of Rs,2,55,72,262? OPP
(6) Whether the machinery of the Mills was defective and not in operation conditions at the time of its taking over by the defendants? OPD
(7) Whether the plaintiffs failed to provide to the Army Officers Incharge of the Mills facilities stipulated in the contract between the parties? OPD
(8) Whether the wheat grinded at the Mills produced below specification flour? OPD
(9) Relief.
8. Issues Nos.1, 2, 3 and 4 were decided against the Federation of Pakistan and in favour of Al- Farooq Roller Flour Mills whereas issue No,5 was partly decided against the Mills and partly against the Federation. Issues 6, 7 and 8 were decided against the Federation. Consequently, under issue No,9, a decree to the tune of Rs,1,75,50,000 w h interest at the rate of 14 per cent. Per annum from the date of institution of the suit till the actual payment was passed in favour of Al-Farooq Flour Mills and against the Federation through the judgment, dated 19-7-1997. The remaining claim of the Mills amounting to Rs,83,22,262 was rejected and the suit to that extent was dismissed. The trial Court, however, fixed a period of three months for the payment of the decretal amount failing which decree would be executed.
9. The Federation and the Director-General (Procurement) being aggrieved of the judgment and decree passed by the trial Court against them in the suit preferred Regular First Appeal No,68 of 1996 whereas Al-Farooq Roller Flour Mills being also not satisfied has filed Regular First Appeal No,61 of 1997 for the grant of the decree of the claim made in suit in toto.
10. Learned counsel representing the Al-Farooq Roller Flour Mills the appellant in R.F.A. No,61 of 1997 and respondent in R.F.A. No,68 of 1997 raised the following contentions:--
(a) The agreement between the parties was executed after the inspection of the Mills which was found in perfect working condition at the time of possession, ' therefore, there was no justification for the termination of the contract on the ground that the Mills was not in working order;
(b) the trouble was started on taking over the charge of Mills by Major Shahid Nazir an agent of the Federation and the Director-General (Procurement) who having close contact with the proprietor of Sultan Flour Mills, Multan was not happy with the contract of Federation with Al-Farooq Mills as earlier Sultan Flour Mills was sole contractor for grinding of wheat for Defence. He argued that due to the bifurcation of the quota of wheat of Sultan Flour Mills, the proprietor of said Mills was annoyed and consequently, he in connivance with Major Shahid Nazir, Officer Commanding created obstacles to the performance of contract by the Mills and made the situation adverse to the Mills with the result that the Federation and the Director-General (Procurement) on the basis of the material provided to them by Major Shahid Nazir terminated the contract. Learned counsel with reference to the letters written by the management of the Mills against Major Shahid Nazir to the Ministry of Defence and the Director-General (P) submitted that the management of Al-Farooq Roller Flour Mills was not at fault and that Major Shahid Nazir, an agent of the Federation was responsible for breach of contract;
(c) that the contract was terminated on 20-5-1989 whereas the Mills remained in the control of the Federation till 9-8-1998 when it was abandoned by Major Shahid Nazir with information to the management and thereby caused loss to the Flour Mills;
(d) that out of 40,000 tons of total wheat, only 974.726 tons wheat was lying ungrinded, which was later shifted to Sultan Flour Mills, Multan. The major quantity of the wheat having already grinded by the Al-Farooq Roller Flour Mills, the termination of contract was not legal and in consequence thereof, the Federation was responsible for the damages caused to the Mills.
' The learned counsel has cited Saeed Ahmad Karmani v. Messrs Muslim Commercial Bank, Islamabad 1993 SCM R 441, Deputy Collector of Central Land Customs, Peshawar and 2 others v.
Premier Tobacco Industries, Peshawar 1993 SCM R 447, Isiah High School, Chiniot, through Province of the Punjab v. Jawad Hussain 1996 SCM R 193, Sufi Muhammad Ishaq v. The Metropolitan Corporation, Lahore through Mayor PLD 1996 SC 737, Miss Waheed Shafi v. University of Engineering and Technology, Texila through Vice-Chancellor and 3 others PLD 1996 SC 747 in support of the contention that in case of breach of the contract of the nature between the parties, the losses other than the actual losses can also be claimed under section 73 of the Contract Act, 1872.
11. The learned counsel next contended that the Mills was under the debt as loans were obtained from Industrial Development Bank of Pakistan and Habib Bank Limited, which fact was brought to the notice of the Federation and the Director-General (P) with a request to make payment of bills but non-payment of the running bills resulted into default on the part of Al-Farooq Flour Mills in the payment of instalments of loan to the creditors and consequently, the Mills under the decrees was auctioned at a nominal price at the cost of heavy loss to the owners. Learned counsel in support of his arguments had placed reliance on certain documents and the statements of the witnesses appearing on behalf of Al-Farooq Roller Flour Mills. He argued that due to the fault of the Federation, the Mills of the value of Rs,2,25,00,000 was sold for a sum of Rs,70,10,000 after the termination of the contract. Learned counsel while developing his arguments contended that actual damages upon the breach of the contract can be claimed under section 73 of the Contract Act, whereas the damages of general nature are claimed under tort and in this way the decree in favour of the Al-Farooq Roller Flour Mills is a composite decree consisting upon the damages under section 73 of the Contract Act as well as under the tort which is based on the claim for loss caused to the Mills due to the conduct of Major Shahid Nazir, the agent of Federation. He argued that since the application under Order I, Rule 10, C.P.C. For impleading Major Shahid Nazir as party was opposed by the Federation taking responsibility as his principal, the damages under section 73 of the Contract Act as well as under the tort could be claimed together from the Federation, therefore, the decree passed does not suffer from any factual or legal defect.
12. Conversely, learned Standing Counsel contended that Al-Farooq Roller Flour Mills having failed to grind the wheat as per specification contained in the agreement, the contract was terminated to avoid any complications in the supply of grinded wheat to Pakistan Army in the filed at different places. He argued that the evidence adduced by the Mills as well as by the Federation in the suit strongly supported the action of termination of the contract. He added that the contract was for the grinding of wheat and not for the taking over the Mills on lease, therefore, the claim of damage on the ground that the Mills being in the control of the Federation ever after termination of the contract, the purchasers were dissuaded by Major Shahid Nazir is not founded under section 73 of the Contract Act, 1872. Learned Standing Counsel contended that the personal bad relations of Major Shahid Nazir with the management of AI-Farooq Flour Mills were neither part of the contract nor could be made a ground for claim of damages against the Federation under the contract. The Federation being principal of Major Shahid Nazir was only responsible for its acts in terms of the agreement with the Mills and not its private affairs in the individual capacity. He submitted that as per agreement, the Mills had to grind 40,000 tons of wheat for which compensation to the tune of Rs,43,80,000 was to be paid to the Mills by the Federation and not Major Shahid Nazir and the Director-General (Procurement) was responsible for the payment of bills for wheat grinded by the Mills and, thus, the contention of the learned counsel for the Mills that the running bills were not paid at the instance of Major Shahid Nazir is not borne out from the record. Learned Standing Counsel argued that the balance amount of Rs,31,038.86 of security lying with the Federation will be paid to Al-Farooq Roller Flour Mills if and when it is so desired. In nutshell, the case of the Federation as contended by the learned Standing Counsel is that the claim of the Mills beyond the contractual amount was imaginary, fanciful and artificial. The crux of the matter was that the parties could not plead and claim anything out of the contract and that the claim relating to damages and assets of sale of Mills for less price in auction in execution of the decrees of the Civil Courts, neither could be claimed nor decreed. It was claimed that the total wheat supplied for grinding was 7,950 tons, out of which 974.926 was lying at the spot ungrinded at the time of termination of contract, therefore, the claim of the Mills that total quantity of 40,000 tons wheat was grinded is factually incorrect. He, in support of his arguments, contended that admittedly there were no storage facilities, therefore, no question of storage of wheat arose and that the total quantity of 40,000 tons was required to be grinded within the period of one year and if the same had already been grinded at the time of termination of contract, the Mills should have filed a suit for recovery of compensation and not a suit for damages without any cause of action.
13. The salient features of the agreement, dated 29-12-1988, Exh.P.114 were that it had to commence from first January, 1989 and was to be ended on 31st December, 1989. The total quantity of the wheat to be grinded in the prescribed schedule during the period of one year was 40,000 tons. The establishment and the labour of the Mills under the supervision of management of Mills were responsible to run the Mills. Except deputing an agent to supervise and control the grinding of wheat, no person was to be appointed by the Director-General (P) to work in the Mills. The Director- General (P), however, reserved the right of termination of contract at any time under clause (37) of the agreement. In the event of any dispute, the aggrieved party had a right of appeal to the authority mentioned in clause (44) of the agreement i,e, Ministry of Defence and the decision was to be final
14. We have heard the learned counsel for the parties at length and gone through the record with their help. The primary question for determination would be that in what manner what breach was committed by the Federation and the Director-General (Procurement) and what loss was caused.
The contract between the parties was only for the grinding of 40,000 tons of wheat within a period of one year for the compensation of Rs,43,80,000 as grinding charges to be paid to the Mills by the Federation. As per evidence of Fazal Elahi, the Managing Director of Al-Farooq Roller Flour Mills, who appeared as a witness of the Mills, an amount of Rs,60,000 was deposited by the Mills as security and the staff of the Director-General (P) vacated the Mills without handing over the same to the management in proper manner. He stated that an appeal was filed before the Secretary, Defence on 17-10-1989, which remained pending undecided till filing of the suit. He further, stated that Major Shahid Nazir, who was deputed by the Director-General (P) in the Mills without having technical knowledge about the Flour Mills made complaints regarding defects in the Mills for ulterior motives.
The witness giving the details of the correspondence, which was made on behalf of the Mills to the Federation against Major Shahid Nazir, stated that he acted maliciously against the Mills. However, the witness has not stated anywhere in his examination-in-chief about the total quantity of the wheat brought to the Mills and that what was grinded and what was left ungrinded when the agreement was terminated. In cross-examination, he stated that an order for the supply of 37,000 tons of wheat was issued on 1-1-1989 and that as per schedule a specific quota was to be grinded in every month and the payment was to be made tfrough running bills but the Mills was not paid any bill for the wheat grinded till termination of contract. He stated that it is not in his knowledge that what quantity of wheat was grinded from 1-1-1989 to 20-5-1989 and denied that only 520.250 tons were grinded whereas the Mills was required to grind 7950 tons of wheat during this period. He admitted that no record pertaining to the account of the wheat was available but denied the suggestion that wheat was not grinded as per schedule and in consequence thereof, the contract was terminated. According to this witness, two telephones bearing numbers 3290 and 3291 were under the use of Major Shahid Nazir in the Mills and that an amount of Rs,1,32,262 in connection with telephone bills being payable by the Federation was not paid. He, however, admitted that this amount included the amount of the telephone bills prior to 1-1-1989. The witness further stated that the owners intended to sell the Mills due to bad law and order situation in Khairpur and admitted that three suits were filed by the Creditor Banks in Sindh High Court at Karachi against the Mills for the recovery of loans taken for installation of the Mills. The Industrial Development Bank of Pakistan filed the suit in the beginning of 1989 whereas the Habib Bank Limited filed the suit in the year 1988 and another suit was filed by the said bank in the beginning of year 1990 which were decreed and no appeal was filed against the decrees. He, however, has not given the date of auction of the Mills in consideration of the decrees in question, whether before or after termination of contract. He admitted that some amount of loan was returned and after making adjustment of the same, the suits were filed against the Mills by the creditors.
15. The star-witness of the Federation, namely, Major Shahid Nazir appeared as D.W.1. He stated that the outstanding bills of telephones installed in the Mills pertained to the period prior to 1-1-1989 and that total bill of Rs,36,726.45 of telephone No,3291 and Rs,75,321.45 of telephone No,3290 were unpaid. He stated that 180 tons wheat was required to be grinded daily under the agreement whereas the wheat was grinded within the range of maximum 85 and minimum 9 tons daily which was much below to the prescribed and that 974.729 kilograms ungrinded wheat was sent from the Mills to Multan after termination of the contract. He categorically stated that out of the total wheat brought to the Mills a quantity of 520.20 tons was grinded by the Mills from 1-1-1989 to 20-5-1989, and that it was not in his knowledge about the total quantity of wheat supplied to the Mills but 974.729 tons was lying ungrinded in the Mills when the agreement was terminated. He stated that except the ill-performance of the Mills in grinding the wheat and non-availability of godown for storage of wheat, there was no complaint against the Mills and that the Mills remained under the control of the Director-General (P) till August, 1989, wheres the agreement was terminated in May, 1989. During this period, no representative of the owners of the Mills approached the Federation or the Director-General (P) for taking over the Mills, however, a representative of the Mills gave a certificate, which is Exh.D.1. He denied any loss to the Mills owners because of termination of the contract as well as late delivery of the possession. Similarly, he denied any loss to the Mills-owners for want of private sale of the Mills as the interested purchasers could not inspect the Mills during the period the Mills remained under the control of Federation.
16. The Managing Director of Al-Farooq Roller Flour Mills has made a general statement regarding the damages caused to the Mills whereas Major Shahid Nazir D.W.1 has placed factual position with reference to the record. The Mills claimed damages on different account. The major claim of the Mills is that loss was caused due to the reason that despite availability of willing purchasers, the bargain for sale of Mills could not struck with them as Major Shahid Nazir did not allow the purchasers to enter into the premises of the Mills and subsequently, the Mills was auctioned in satisfaction of the decrees at a very low price. Matte-ul-Haq Khalid P.W.6, Mian Muhammad Luqman P.W.8, Muhammad Amin P.W.9, Dr. Muhammad Abbas Bokhari P.W.10 and Sardar Arif Rashid P.W.11 were produced by the Mills to establish the fact that they were interested in the purchase of the Mills but Security Staff did not allow them to enter into the premises of the Mills.
Matte-ul-Haq stated that he has contacted Fazal Elahi on telephone who told him that the Mills was on contract with Pakistan Army and Rs,50,00,000 was the yearly income. The price of the Mills was disclosed as Rs,1,60,00,000. Muhammad Luqman P.W.8 stated that he alongwith Matteul-Haq P.W.6 went to the Mills but could not go inside the Mills as the Security Staff of Pakistan Army was on the Gate of the Mills. Sardar Arif Rashid P.W.11 stated that he had gone to inspect the Mills but could not do so because of the security. None of these witnesses stated about the proper negotiation for sale and purchase of the Mills and the offer and acceptance of price. Their evidence is only to the effect that they with a view to purchase the Mills had visited the same. According to these witnesses, they visited the Mills during April, 1989, when the agreement was still operative which was terminated in May, 1989. Thus, the Security Staff would not allow a stranger to enter into the Mills and it would not be a ground that the Mills during the existence of the agreement to contend that the buyers were not allowed to visit the Mills and consequently, the bargain could not be struck. This is noticeable that the Mills was under debt and the creditors much before the agreement of the Mills with the Federation filed the suits for recovery of loans as stated by the Managing Director of the Mills. The Mills undoubtedly being mortgaged with the creditor could not be sold as free of encumbrance and without the intervention of creditors for want of availability of deed of title with the owners. The evidence does not show that the Mills at any stage had moved the concerned Court or the creditors for the sale of the Mills for clearance of their dues and, thus, sale of the Mills through auction in execution to the decree could not be pleaded below the market value. The Mills being mortgage and under litigation only could fetch the maximum price through the public auction. The agreement was signed on 1-1-1989 when the Mills was already defaulter in repayment of loan and a suit for recovery of loan was filed against the Mills by the Habib Bank before the agreement in question. Consequently, the evidence produced by the Mills in support of its claim on this account is of no relevance and help and the same having no nexus with the agreement directly or indirectly was not recoverable in consequence to the alleged breach of the agreement.
17. The contract between the parties was for grinding the wheat at a specified rate. The plaintiff sought composite relief for damages for breach of the contract and also for tort. The alleged breach of the contract, subject-matter of the suit and appeal was to be judged in the light of section 73 of the Contract Act, 1872, which reads as under:-- "Section 73.-- When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
' Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
When art obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract."
18. The compensation in this section can be claimed only for breach of contract when damage is caused directly by the breach. The statutory recognition to the rule for the recovery of damages for the breach of contract is different to that of general rule for damages and the damages not arising in the usual course of things from the breach cannot be claimed in consequence to the breach of contract. A contracting party for his own default cannot be allowed either to defeat the contract or claim better position without fulfilling his obligation. The breach of contract by a party is specifically to be proved and unless it is done, it is not possible on the basis of general allegation to ascertain that who committed the breach. The plaintiff in such a suit cannot claim any sum as damages, which due to his own negligence happened. It is the duty of the plaintiff to take all reasonable steps to mitigate the loss and if some damages were caused to him for his own failure of performing his part of the contract, the damages for the breach of the contract either under section 73 of the Contract Act, or under the tort cannot be granted. The agreement in the present case between the parties provided the right of getting the wheat to be grinded by the Federation from some other Flour Mills in case of failure of performance of contract by Al-Farooq Mills. The plaintiff alleged the breach of the contract due to Major Shahid Nazir an agent of the defendants whereas according to the defendants, the plaintiff failed to grind the wheat as per schedule with the result that the requirements of Armed Forces was not being fulfilled properly and further he failed to provide the facility of godown as well as residence for the agent of the defendants in addition to the technical defects in the Mills. However, none of the parties except making general allegation and counter- allegation against each other has brought any cogent evidence in support of their respective contentions regarding the proper functioning of the Mills or its technical defects. The plaintiff having failed to provide the facility of the godown and the residential accommodation to the staff of the defendants under the agreement failed to give effect to the contract in letter and spirit, and thus, even if the Mills was functioning properly, it could not serve the purpose of defendants for want of godown facility and the accommodation for the win residence of the staff of the defendants. The plaintiff being negligent in performance of his obligation could not plead breach of contract by the Federation. Major, Shahid Nazir being responsible for the affairs of Federation in the Mills was under duty to look after the interest of the Federation to the best of his ability and was under an obligation to bring to the notice of his principal as well as to the plaintiff, the problems being faced by him. The plaintiff Mills instead of taking remedial steps for removal of such problems tried to convince the Federation through written complaint that Major Shahid Nazir was hostile to the Mills and subsequently, pleaded that the said Major Shahid Nazir was responsible for breach of contract. The default of Mills being apparent, it was inequitable to allow the plaintiff to get the benefit of his own wrong by enforcing it as breach of contract against the defendants.
There is no cavil to the proposition that the damages either for breach of the contract or for tort are to be calculated in terms of actual loss and following the principle of restituti integram, the endeavour is to be made to place the injured person in the same situation as if the contract had been performed. The plaintiff in the present case was himself being guilty of breach of contract, as he did not fulfil the condition of providing the godown and accommodation to the staff of the Federation could not claim equity. Generally in case of breach of contract, the party who suffer loss by the said breach is entitled to recover the compensation from other party for the actual loss caused to such party but in such case, the party complaining breach must prove that he was always ready and willing to perform his part of the contract and committed no fault. The general principle under section 73 of the Contract Act is that only special damages arising in consequence to the breach of contract are allowed and the general damages usually concerning with non- pecuniary losses such as loss of reputation cannot be estimated as special loss which is confined to the injury caused to an individual party as a result of breach. In the present case the special loss is confined to the extent of actual compensation for grinding the wheat in the Mills in case of any breach, if was committed by the defendants. In case of damages due to breach of contract, the matter would be governed by section 73 of the Contract Act, 1972, and the plaintiff could get compensation for actual loss but in any case the general losses are not permitted for such breach of contract. The compensation for wheat, which was, left ungrinded or the wheat which was yet to be supplied for grinding can be calculated as special loss caused to the plaintiff or it may be called the pecuniary loss subject to proof of the breach of contract but the other losses allegedly caused in respect of sale of the Mills having no nexus with the contract and alleged breach could not be made part of the claim. The bargain of the sale and purchase of Mills being personal affairs of the Mills was not related to the contract and, therefore, the plaintiff could not be allowed to take advantage of the omission of the defendants to produce evidence in addition to Major Shahid Nazir that no such customer visited the Mills or that no such sale was under proposal. Had the plaintiff at the trial pleaded that on the date of termination of the contract, the Mills was free from all encumbrances and had an offer for purchase for a certain price, the defendants could get the opportunity to rebut the same through evidence but the Mills being mortgaged with the Banks at the relevant time could not probably be sold without the intervention of creditors and if the same would have done, it could create legal complications, therefore, the plaintiff in the circumstances could not be allowed to take advantage of his plea of sale of Mills for want of evidence of the defendants in rebuttal on record. Thus, the plaintiff was not entitled to the compensation either in the nature of restitution or as penalty for the alleged loss suffered by the plaintiff. The term "compensation" is no doubt used for damages and is often measured with the rule of damages in terms of money and is paid as compensation for loss and injury sustained in consequence to the breach of contract. In the present case, no loss or injury was caused to the plaintiff as a result of termination of contract for grinding of wheat as it was not a contract of sale of. Mills, which in case of breach would cause loss to the plaintiff. It being simply a contract of hiring the Mills for the grinding of the wheat for a fix period of one year, the maximum damages in case of any breach would be to the extent of actual compensation for the quantity of wheat, which was grinded. The loss claimed by the plaintiff under different heads cannot be said to be naturally arisen out of the contract in case of breach in the normal course, therefore, no damage can be assessed for any such speculated gain or loss. Consequently, the damages claimed under issues Nos.4 and 5 having no nexus with the contract, the same could not be claimed for the allegedly breach of the contract. The plaintiff was not debarred from negotiating the sale of Mills on seeking the permission in proper manner from the concerned authorities to get the Mills inspected by the interested parties but the same having not done, the speculated gain and loss without drawing a fine between the night and day would be based on mere wishful thinking. We may observe that no compensation can be given for any remote or indirect loss or damages sustained for breach of the contract by reason of one's own fault. Admittedly, there was no proposal of sale between the owner of the Mills and a third party and mere desire of purchase by a person as shown in the evidence without an offer and acceptance of price would not acquire the status of contract of sale to be made a source for claim of damages for loss on sale. It was incumbent upon the plaintiff to prove that the Mills despite being mortgaged with creditors could not be sold and the creditors had no objection for the sale of the Mills but the same having not proved on record, the presumption would be that no customer could intend to purchase such a property for any higher price to that of the price received through Court auction and, thus, the Mills in private sale would not fetch a better price as having declared defaulter by the creditors, they have filed suit against the plaintiff before the execution of the agreement by him with the Federation. The plaintiff, therefore, under the circumstances, could not sell the property without the permission of the Court concerned and discharging the liabilities of the creditors and consequently, no such loss due to the alleged breach of the contract either could be claimed or granted to the plaintiff. In nutshell, except the amount of security and the actual compensation for grinding the wheat due under the agreement, no loss on account of purchase of Mills by perspective buyer and loss due to non-payment of bills or late handing over the premises to the owners of the Mills could be granted. The trial Court was misguided in awarding the losses to the plaintiff to the tune of Rs,50,00,000 an amount of sale of the Mills, Rs,10,00,000 due to non-payment of bills and loss of Rs,21,90,000 for ungrinded wheat and, therefore, the findings on issues Nos.4, 5 and 7 are reversed. There being no direct evidence of grinding of wheat below the specification, the defendants have not discharged the burden thereof, therefore, the findings on issue No,8 are upheld.
19. Notwithstanding the fact that the Mills was handed over to the Federation after its inspection which was operational. The plaintiff having failed to provide the essential facility of godown for storage of wheat as well as the accommodation for the staff of the defendants in terms of the agreement in addition to the failure of meeting the target of grinding the wheat as per schedule on a contractual obligation was himself defaulter and consequently, the termination being the natural result, the Federation was within its right to avoid the contract through termination. The termination of contract in the present case had the effect of unmaking the same but the plaintiff without adopting the factual position on record filed the suit as a writ in water. The evidence shows that only a small quantity of wheat was grinded by the Mills and major bulk of wheat was yet to be grinded and the Flour Mills having not grinded the wheat as per schedule for regular supply to the Army Units in Pakistan to cater their need forced the Federation to make alternate arrangement.
Therefore, the Mills having failed to discharge its obligation was not entitled either to the special or general damages and could claim only the amount of compensation for the grinding of the actual quantity of wheat. The payment of the telephone bills relating to the period prior to the agreement was not the liability of the defendants. The commencement date of the contract was First of January, 1989, which remained enforced only for a period of about four and a half months and possession of the Mills remained with the Federation till August, 1990, therefore, payment of the telephone bills only from the date of taking over the possession of Mills till its delivery back to the Mills owner was the responsibility of the Federation.
20. The result of the foregoing discussion is that R.F.A. No,68 of 1997 succeeds. The judgment and decree, dated 19-7-1997 are set aside and the case is remitted to the learned Civil Judge for determination of the actual compensation payable to the plaintiff for the total quantity of wheat grinded by the Mills alongwith the liability of payment of telephone bills for the actual use. The amount of Rs,60,000 deposited by the plaintiff as security shall be returnable to him alongwith the compensation referred to above, if any, to be paid to the plaintiff. The learned lower Court will make effort to dispose of the matter within two months. In the light of foregoing discussion, R.F.A. No,61 of 1997 is dismissed.