' This is an application by the purchaser of rice pledged with the National Bank of Pakistan and stored in the Godowns known as Tobacco Godowns, Gulbai site, Karachi complaining that neither the quantity nor the quality of the rice was in accordance with the representation of the Chief Manager, National Bank of Pakistan and that the confirmation of the sale be not made till the differences in the prices of rice retrieved from the godowns and the price deposited by the petitioner in the official liquidators' account may be refunded to the petitioner and the balance disbursed in accordance with law and till the matter aforesaid is decided the amount deposited by the petitioners may not be disbursed to the National Bank of Pakistan or the Soneri Bank.
2. The aforesaid application has been filed in the background that compulsory winding up of the respondent-company, namely, Fatima Food Industries was sought t y the two creditors, namely, National Bank of Pakistan and Soneri Banl of Pakistan. The winding up petition was resisted by the respondent-company but was ultimately accepted by order, dated 20-11-1997. Consequent thereto, official liquidators were appointed, who having taken over the assets of the company proceeded with the liquidation thereof. After the preliminaries, the official liquidators were allowed to sell the pledged rice by negotiating the bargain with the parties. It was in the process thereof that the official liquidators issued a public notice inviting bids for the purchase of stock of rice (Basmati/Al-sara Brand) lying in the godowns on 'as is where is basis. In response to the above said advertisement, a representative of Messrs Consumer Power (Pvt.) Limited, 7-Shahra-e-Fatima Jinnah Road, Lahore approached the official liquidators and the Chief Manager of National Bank of Pakistan, Corporate Branch, Lahore with an offer to purchase the entire stock for Rs,4,00,25,000 i,e, Rs,25,000 over and above the Bank's reserved price. It is submitted by the said purchaser that this offer was made on the clear representation of the Chief Manager of the Bank that the stock offered for sale constituted approximately 6000 tons of Basmati rice/Al-sara Brand, which was at the relevant time got verified by the said Chief Manager from the Stock Register. It was then that the formal talks between the purchaser and the seller ensued, wherein, according to the purchaser, the quality and quantity of the rice was confirmed with the rider that since a large quantity of rice was lying in closely stacked bags and also heaps in the warehouses, therefore, it was not possible to verify the exact quantity of the rice at the site. Additionally, it was also represented that the petitioner would not be able to examine the stocks till such time that he deposited 2% of the bid amount. It is the case of the petitioner that after reassurance as to quantity and quality of the rice by the Chief Manager of National Bank of Pakistan, Corporate Branch, the petitioner agreed to raise the bid for rice under reference to Rs,4,05,00,000 by letters dated 13-5-1998 and 14-5-1998.
' Pursuant to the approval of the petitioners' bid, the representative of the petitioner visited the godowns at Karachi and the way the rice were dumped on the floor of the warehouses and the bags were stacked, it was but obvious that a bare visit to the godowns would not suffice to confirm the quantity of rice lying therein. As far the quality, it is, however, submitted that the representative of the petitioner examined some of the rice lying on the surface of the heap and was satisfied about the quality, where after the petitioner started to lift the rice lying in the smaller of the two warehouses when it transpired that the representation made by the Banks as regards quality and quantity of the rice was grossly incorrect and misleading. The officers provided by the Bank to have access to the godowns did not stay there to ensure that the quantity and quality of the rice at site was as per their . Stock register rather on the same day they hastened to return to Lahore. Left with no alternative, the petitioner lifted the stocks of rice because he had to supply the same to a foreign buyer and in the process he got them weighed at Government Certificated Professional Bulk Weighing Scale available near the warehouses at Karachi. It was done as an abundant caution because while lifting the rice it revealed that it was more of dust than rice. As .a result of the above said weighing, it transpired that 425 metric tons in 11500 bags of rice were available while the total bags supposed to be lying there should be 20000 containing 1000 metric tons of rice. The petitioner immediately lodged a complaint in writing with the official liquidators who allowed them that in order to take an action, the petitioner should deposit the balance amount of Rs,5.39 millions of its payable money. The said amount was deposited with the request that the petitioner should be delivered complete stocks as per the books of Banks i,e, approximately 6000 metric tons of rice packed in 99000 bags of 50 Kgs. Each and 12000 bags of 80 Kgs. Each. The official liquidators merely forwarded the copy of petitioners's letter to the Chief Manager of National Bank of Pakistan, Corporate Branch and informed the petitioner accordingly. It was thereafter that another spree started between the purchaser and the seller in that the loading of the rice was started under the joint signatures, which would then be certified by the official liquidators finally with the result that all shipments from the Bank warehouses were first weighed on the weigh bridge then taken into custody by the petitioner. It is maintained that as a result of the aforementioned exercise the total weight of the stock lifted from both the warehouses was found to be 2622.75 metric ton, whereas the representation made by the Banks people showed total stock at 5910 metric ton i,e, 99000 bags of 50 Kg. Equivalent to 4950 metric ton and 12000 bags of 80 Kg.
Equivalent to 960 metric ton, thus, the short fall in terms of quantity works out to be 3287 metric ton.
As far quality, it is submitted that only 113 bags of rice were found to be Basmati/Al-sara brand while the rest was not of the same quality. In the circumstances, the petitioner repeatedly approached the official liquidators, but no action was taken by them despite holding out promises in that regard. It was then that the petitioner approached this Court complaining that the rice were deficient in quality as also in quantity and that they have suffered enormously because of misrepresentation made by the Bank officials, who had themselves taken a stand that the respondent-company had used duplicate keys of the two godowns and substituted the fine quality of rice with inferior quality of rice, hence, the application with the prayer afore-noted.
3. The application was resisted by the Banks, who inter alia maintained that the same is not maintainable and that the petitioner is estopped by his conduct to file the present application. It was then submitted that the public notice issued by the joint official liquidators inviting bids for the stock of rice (Basmati/Al-sara Brand) clearly stated the mode of sale on "As is where is basis". In so far as the weight of stock is concerned, it was submitted that there can be no assurance about it and very rightly because it was inserted in the public notice itself that a large stock of rice is available for sale subject to following conditions:-- "Stocks of rice remained in the godowns for a long time due to default of the company and were there subject to normal decay, decomposition resulting in loss of weight and deterioration of quality and quantity."
' The visits and holding of meetings as alleged by the petitioner were not denied and it was stated that the amount of bid was increased after inspecting the stocks. The initial deposit of 2% was stated to be deposited by the auction purchaser of his own free-will and volition. It was time and again repeated that the representative of the auction purchaser was satisfied as to quality and quantity after inspection. The rest of the contents of paras. Of the application were replied by submitting that the sale was conducted on the basis 'as is where is'. As far weighing and the report of the shippers are concerned, the same were termed to be forged reports and the National Bank of Pakistan relied on the staff order dated 24-7-1998 to demonstrate that the applicant is definitely trying to wriggle out of his commitment and has gone to the extent of forging documents.
Reference was also made to memorandum of understanding, which was termed to be self- speaking. It was, however, denied that there was any representation either by the Bank or by the Joint Official Liquidators about the weight of the stocks.
4. Messrs Soneri Bank Limited also submitted reply to the said application on somewhat similar grounds. Needless to mention here that the said Bank also referred to the advertisement to state that the offer of sale was made on the basis of 'where it is as it is' and the petitioner having accepted the same is estopped by his conduct to file the present application.
5. The petitioner has also filed a rejoinder to the reply filed by the two Banks but mainly it is directed towards the reply filed by the National Bank of Pakistan. Along therewith he has placed on record certain documents issued by the shippers and the Spinzer Weighbridge Corporation thereby showing that every truck load of rice was weighed by an independent agency.
6. As regards objection to the quality of rice, it is the word of mouth of the petitioner against the word of mouth of National Bank of Pakistan. The rice itself being the best evidence has since left the warehouses of the Bank and has either been stacked at warehouses of the petitioner or exported.
The reliance on the pleadings of the National Bank of Pakistan that the superior quality of the rice has been substituted by inferior quality of rice by Fatima Food Industries cannot also be taken into consideration for the reason that Fatima Food Industries very vehemently denied the said assertion and maintained that the company had no access to the godowns and then it was not possible to substitute the superior quality of rice with the inferior quality of rice. Additionally the matter of sale of the pledged rice was being controlled and supervised by the official liquidators, who having seen the bulk of rice to be sold had inserted the clause that the sale shall be on the basis 'as is where is'. The aforesaid clause was the basis of the sale conducted in this case and has been admitted as such by the petitioner vide his letter dated 27-5-1998 (admitted at bar by the learned counsel for the petitioner) wherein it is stated in unequivocal terms as follows:--- "This letter does not bind you for any quantity commitment as we have bought it on as is basis and require this letter for our bank formalities only."
' It can be argued that this is a commitment in regard to quantity only but it can safely be held that though the commitment appears to be in relation to quantity only but deep down it applies to quality as well. The contract having passed the stage of offer, acceptance and consideration, it was the purchaser who objected to the same during the time that he was taking delivery of the pledged rice. It would be noted that the petitioner has not levelled any allegations against the official liquidators and rightly so because the official liquidators had absolved themselves by inserting the clause that the sale would be on the basis 'as is where is'. At the bar, it was pointedly asked from the petitioner as to whether he had to say anything against the official liquidators or has he made any allegations against them, the answer was 'no'. The case of the petitioner on the other hand is to the effect that he met the Manager, who represented that it is Al-sara/Basmati rice and that he believed such representation and acted in furtherance thereof in taking the delivery of the pledged rice. This aspect of the matter has been taken care of in sections 16 and 16-A of the Sale of Goods Act, 1930. Section 16 of the said Act reads as follows:--- "16. Implied conditions as to quality or fitness. Subject to the provisions of this Act and of any other law for the time being in force, there is no implied warrant or condition as to the quality of fitness for any particular purpose of goods supplied under a contract of sale, except as follows:---
(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose; ' Provided that, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose.
(2) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality; ' Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defect, which such examination ought to have revealed.
(3) An implied warrant or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
(4) An express warranty or condition does not negate a warranty or condition implied by this Act unless inconsistent therewith."
' A bare reading of the above said section would show that there is no implied warranty or condition as to the quality or fitness of any particular purpose of goods applied under a contract of sale. The rules as prevailed in the Englo-Sexan Law as adopted in our country was held to be repugnant to the Injunction of Islam in the case of Wafaqi-Pakistan v. Awamunnas 1988 SCMR 2041 with the direction that it should be provided in the Act that the seller is under an obligation to inform the buyer of the defects in the property sold at the time of the contract except where the defect is obviously known to the buyer. Resultantly, section 16-A was enacted and inserted in the Sales of Goods Act, thereby providing that seller is obliged to inform the buyer of any defect in the property being sold. In the instant case, the contract of sale was concluded on the basis "as is where is", therefore, the purchaser cannot be heard to say that the quality of rice was otherwise than what was presented at the time of sale. Again, as noted earlier, the rice itself being the evidence of its quality, it may not be possible to say anything about it because the same has been utilized by the petitioner and last but not the least the petitioner having obtained the total delivery of bulk of rice has ratified the sale and is, thus, estopped by his conduct to object thereto on the ground of quality.
7. As far quantity, the rule of estoppel would apply more rigorously than objection as to quality. As noted earlier, the petitioner vide his letter dated 27-5-1998 unequivocally stated that the statements solicited from the bank would not bind them for any quantity commitment as according to the petitioner they had bought the bulk of rice on 'as is' basis. It would be appropriate to reproduce the contents of the above said letter so as to understand the import of commitment made by the petitioner:-- "REF: CPL/1719-(1) May 27, 1998: Chief Manager, National Bank of Pakistan, Corporate Branch, Lahore.
Dear Sir: ' In continuation to the letter acceptance we signed today for purchase of rice. Kindly as discussed issue us a letter mentioning the quantity as 5000 tons, which is required to enable our bank to process a bank guarantee.
' The letter could simply mention that you have agreed to buy and Messrs Consumer Power (Pvt.)
Ltd. Has agreed to buy the stocks of 5000 tons of rice ex-Karachi warehouse. The amount payable by Messrs Consumer Power (Pvt.) Ltd. In this regard is Rs,40,500,000.
' Kindly issue this letter today only, enabling us to expedite purchase formalities.
' Thanking for your assistance. Sincerely, ' P.S. This letter does not bind you for any quantity commitment as we have bought it on as is basis and require this letter for our bank formalities only.
' Rafat H. Qadri."
' A plain reading of the above said letter would make it abundantly clear that the petitioner has clearly conveyed in writing to the Bank that even if the stocks of rice are found to be less than 5000 tons, it would not give rise to any action by the purchaser because, as already observed, he is buying it on 'as is basis'. The phrase 'as is basis' has a direct reference to the quantity of rice, therefore, the purchaser is estopped to raise any objections as to quantity of rice. The conduct of the representative of the petitioner may not also be lost sight of inasmuch as even according to despite the fact that he had come to know that quantity of rice as represented by the Bank was less, he continued to lift the same and not only that he retrieved it from the warehouse, but also they utilized the same, what more is required to say that the contract was ratified by the petitioners. A stipulation in a contract of sale with reference to goods which are the subject-matter thereof may be a condition or a warranty. This aspect has been provided and dealt with in section 12 of the Sale of Goods Act sub-clause (4) of section 12 of the said Act provides that whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract. The consequence i,e, breach of warranty has been dealt with in section. 59 of said Act, which provides as follows:--- "59. Remedy for breach of warranty.--- (1) Where there is a breach of warranty by the seller, or where the buyer elects or is compelled to treat any breach of a condition on the part of the seller as a breach cf warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he may
(a) set up against the seller the breach of warranty in diminution or extinction of the price; or
(b) sue the seller for damages for breach of warranty.
(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of the price does not prevent him from suing for the same breach of warranty if he has suffered further damages.
' In the instant case, the stipulation itself was as is where is basis obviously no condition or warranty was attached with the contract. It was offered on 'as is where is' basis and was accepted on 'as is where is' basis, not only by circumstances but by express conduct in writing which is contained in letter dated 27-5-1998. As far the argument that the rice retrieved from the warehouses was found less in weight as certificated by the Government Certificated Professional Bulk Weighing Scale is a complicated question of fact which cannot be determined without recording evidence which exercise cannot be undertaken in the present summary proceedings. The conduct on the part of the petitioner, which spreads over a considerable period on the other hand, manifestly shows that he had accepted the goods and had utilized the same. It is also provided in section 37 of the Sales of Goods Act. 1930 that where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered he shall pay for them at the contract rate. Obviously the goods were never rejected by the buyer.
Again section 42 of the said Act deals with the acceptance of goods whereby it is provided that the buyer is deemed to have accepted the goods when he intimates to the seller, that he has accepted them or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. It is obvious from the conduct of the petitioner that he utilized the goods after having retrieved the same from the warehouse and this act of the buyer was definitely inconsistent with the ownership of the seller but, in any case, the buyer has not rejected the goods. The only other eventuality i,e, recovery of damages had been provided in section 59 of the Sale of Goods Act, 1930. As far the plea that the rice was purchased in pursuance of his representation contained in the advertisement soliciting the bids that a large stock of rice is available but in a point of fact the said stock was found deficient in its weight, suffice it to say that the advertisement soliciting the bids is to be read as a whole to understand the total bargain and the different Clauses thereof cannot be read in isolation of each other. Needless to add that it was also provided in the same advertisement that the sale of rice shall be on the basis "as is where is".
8. In the circumstances, no case for interference is made out, therefore, this petition is dismissed.
Sale of the rice is hereby confirmed. There shall, C however, be no order as to costs.