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Suits No. 26 of 1957, decided on Ist October 1963.
‑No obligation can be implied in contract inconsistent with its expressed terms‑Contract Act (IX of 1872), S. 9.
Nooruddin N. Ramzan for Plaintiff Defendant.
Fazle Haq for Defendant‑Plaintiff.
Dates of hearing : 18th and 19th September 1963.
These are cross suits. The first suit was filed by Qasim Ali Rajab Ali (hereinafter referred to as "the Contractor") who had entered into a contract with the Karachi Municipal Corporation (hereinafter referred to as "KMC"), on the 22nd of August 1952, vide Exh. 7, to pluck the fruit of the trees which were in Sewage Farm No. 1 of K. M. C., for the period ending on the 31st of March 1955, in consideration of Rs. 91,100 ,payable in 6 instal ments as specified in Clause 19 of the conditions which were attached to the contract and are Exh. 8. The possession of the Farm was delivered to the contractor on the 25th of August 1952, by the letter of K. M. C., which is Exh. 10. The nature of the possession given to the contractor is explained by the words used in that letter that‑
"he may be allowed to take up the work in hand."
2. In order to explain the nature of the transaction it is necessary to refer to conditions Nos. 17, 18, 20 and 23 of Exh. 8. They explain that the management of the orchard and its control remained with K. M. C., without any liability for any damage or loss that might be caused to the contractor by the acts or omis sions of‑
"the employees of K. M. C. ; nor was the contractor entitled to claim any rebate for any loss or damage caused to the fruits by any act, human or divine."
In the event of the failure of the contractor to pay the instalments, K. M. C., had the option' to terminate the contract after giving a fortnight's notice and to prevent him from plucking the fruit, and to re‑auction them at his risk and cost, as well as to forfeit his cash security of Rs. 4,555.
3. There is no mention in Exh. 7 of the period of time during which the contractor could pluck the fruit of the orchard excepting for the insertion of the last date of the contract as the 31st of March 1955. A sub‑heading of the conditions, Exh. 8, however, needs an explanation. It is as follows
"Conditions of contract and tender form applicable to right to the fruit of all the trees in Sewage Farm No. 1 Garden for 1, 2 and 3 years from the date of acceptance."
The figures 1, 2 and 3 in the above writing referred to the three columns of the Schedule, Exh. 9, which was attached to the con ditions. The first column shows that the contractor could enter into a contract for plucking fruit up to the 31st of March 1953, on payment of Rs. 21,000. The second column shows that he could do so up to the 31st of March 1954, on payment of Rs. 55,000 and the third column shows that he could do so up to the 31st of March 1955, on payment of Rs. 91,100. In this case the con tractor had entered into the contract for plucking fruit up to the 31st of March 1955, on payment of Rs. 91,100. The figures and the word "years" which appear in the sub‑heading do not, there fore, mean that this contract was for full 3 years. It was intended to run up to the 31st of March 1955, from the date of the accept ance of the tender which, according to counsel for the contractor, was the 19th of August 1952, but as stated above the possession of the farm was given 5 days after it on the 25th of August 1952.
4. On the 7th of April 1954, the contractor wrote to K. M. C. vide Exh. 12 that the‑
"Contract which was to commence from 1‑4‑1952, in any ordinary course . . . . . the said contract was allowed to me as late as in September, 1952, i.e. 5 months later than the scheduled time and we had to sustain loss to that extent."
Secondly, owing to frequent changes of officers, the fruit trees in all the contracted plots were not adequately looked after, with the result that many fruit trees remained barren and produced no fruits. We have, therefore, suffered heavy losses on this account.
In order to enable us to make up the loss I request that the aforesaid contract be extended by at least one year more i.e., ending the 31st of March 1956, without any extra costs."
The request for extention of time by one year is to be noted. On the 8th of April 1954, he wrote another letter which is Exh. 13. It was more or less a reminder of the first letter. On the 3rd of May 1954, he again wrote, vide Exh. 14, with reference to the previous 2 letters for early orders. On the 10th of June 1954, K. M. C., replied vide Exh. 15, as follows
"It is regretted that your request to extend the term of contract up to 31st of March 1956, cannot be acceded to.
You had accepted the contract in the year 1952 without any objection."
5. On the 24th of June 1954, the contractor sent a notice Exh. 6 to K. M. C., stating in it that the contract was due to expire in September 1955 ; therefore the price should be reduced to Rs. 78,378‑4‑0. As Rs. 30,340 were demanded by K. M. C., n, as the balance of the originally fixed consideration he stated in the notice that he was prepared to pay it only if K. M. C., conceded that full 3 years were allowed to him to pluck the fruit. This acknowledgement of liability conveyed with a condition for honouring it is to be noted. He further mentioned that adequate quantity of water was not supplied to him with the result that‑
"many fruit trees have died out thereby causing a loss of Rs. 25,000."
The number of the trees which were allegedly withered away was not mentioned and nothing was demanded as damages. K. M. C., pointed out in reply, vide Exh. 6/1, that the contract was due to expire on the 31st of March 1953, and that there had been no default on its part. On the 27th of January 1955, the contractor filed Suit No. 65 of 1955, in the Chief Court of Sind for a declaration that the contract was to expire on the 25th of August 1955, and not on the 31st of March 1955 ; and for an injunction to restrain K. M. C., from preventing him to enjoy the benefits of the contract. He also prayed‑
"for such damages and losses . . . . . as may be deemed fit."
It is to be noted that the prayer for damages was meaningless and because no amount was named and no court‑fees was paid on the prayer. Moreover as his prayer for declaration and injunction amounted to specific performance he could not get it as well as damages for the breach of the contract.
6. He applied for interim injunction which was granted on the 28th of January 1955, K. M. C., submitted an application dated the 9th of August 1955, for modification of the injunction order on the allegation that the contractor had been removing "green grass and dried leave thus causing loss to it. The applica tion was granted on the 18th of August 1955, by a consent order. On the 25th of August 1955, which was the date on which, according to the contractor, the period of the contract expired, he stopped making use of the orchard. On the 21st of February 1956, K. M. C., filed its written statement in this Court after the creation of the High Court of West Pakistan. On the 15th of November 1956, the suit was transferred to the District Courts in view of an amendment in the law.
7. On the 17th of December, 1956, an application of the contractor for the amendment of the Plaint was accepted by the transferee Court. It was an important amendment because the prayers for declaration and injunction were given up and Rs.46,215/‑ were claimed as damages with costs and interest and court‑fees on the amount was also paid. The effect of the amendment is that after enjoying the benefits of the contract for as long a time as he thought was his due, he is now claiming damages for the alleged breaches of the contract This is an inconsistent and inequitable stand.
8. On the 23rd of February 1957, the suit was re‑transferred to this Court and numbered as 26 of 1957. K. M. C., submitted its amended written statement on the 21st of December 1962. On the 8th of May 1963, issues were submitted by counsel for the parties as follows
"(1) When did the period of contract expire On the 25th of August 1955, or the 31st of March 1955
(2) Whether the defendants were required to perform under the contract the duties as mentioned in para. 4 (a), (b) and (c) of the amended plaint
(3) Whether the defendants have failed to irrigate the area in question and also failed to supply sufficient water and remove the dry fallen leaves, and allowed the trees to go dry and committed thereby a breach of the terms and conditions of the contract
(4) Whether the defendants allowed the refugees to settle in and near the area under contract If so what is its effect
(5) To what relief is the plaintiff entitled "
The above issues fairly well reflect the pleadings of the parties excepting for the claim of the contractor for damages, because there is no specific issue as to what amount, if any, is recoverable as such.
9. In the meantime K. M. C., instituted in this Court Suit No. 115 of 1958, for the recovery of Rs. 50,585 after deducting the cash security of the contractor. It has claimed Rs. 30,24u as unpaid instalments, Rs. 10,800 as interest on that amount at the rate of 9 per cent. per annum and Rs. 14,000 as compensation for the loss sustained by it owing to allegedly wrongful removal by the contractor of "fruit and grass", under the cover of the interim injunction which was obtained by him. The following issues which reflect the pleadings of the parties were framed
"(1) Whether the suit is incompetent, not maintainable and time barred
(2) Whether the defendant has liable to pay to the plaintiff Rs. 30,340 or Rs. 25,785 credit given by the defendant to the plaintiff in Suit No. 65 of 1955
(3) Whether the plaintiffs are entitled to recover interest at 9 % as claimed in the suit
(4) Whether the defendant has wrongfully removed fruit and grass after the enquiry of the contract If so, whether the plaintiffs are entitled to recover from the defendant Rs. 14,000 or any other amount
(5) Whether there are admissions of the defendant in Suit No. 65 of 1955, which extend period of limitation
(6) To what reliefs are the parties entitled
(7) General."
10. The above‑mentioned two suits came up for hearing before me on the 18th of September 1963. After reading the plaints and the written statements I felt that they could be disposed of without unnecessarily recording the lengthy evidence which the parties intended to produce to prove damages. Those documents which were admitted by the parties were exhibited by consent and then I recorded the statements of counsel for parties. It became clear that the contractor had misconceived his claim for damages and counsel for the parties agreed that oral evidence was not necessary. A reference may be made to my questions and the answers of Mr. Nooruddin, learned counsel for the con tractor, to them which were as follows
"Q. How have you, calculated the loss of profit
A. The plaintiff had to spend Rs. 1,24,305 as stated above, therefore, should get interest at the rate of 12 per cent. per annum on that amount as profit
Q. How did you calculate your actual loss
A. It is the difference as stated above between the expenses
incurred and the sale proceeds of the fruit.
Q. Did the K. M. C. agree, or in any manner guarantee the plaintiff, that he will make profits at any rate of interest or will be able to recover by the sale of the fruit at least as much amount as he would spend
A. This was implied in the contract because the plaintiff was entitled under it to pluck the fruit for three years, and the plots were in the possession of the K. M. C. who were expected to do all those things which would interfere with his normal expectation of earnings in these circumstances.
Q. What was the plaintiff's normal expectation
A. The plaintiff expected to recover the expenses which he had to incur and to earn a profit at the rate of 12 per cent. per annum at least.
Q. What was the basis of this expectation of the plaintiff
A. The basis of the expectation was the commercial con sideration of investment and profit.
Q. Is it correct that, in view of your above statements, you expect the claim of the plaintiff to be decided on consideration of the accepted normal success of a commercial enterprise independently of any other con siderations
A. It is right : The plaintiff expects his claim to be decided in this suit on the consideration of ordinary success of a commercial enterprise
In view of the circumstances of this suit and the statements made by counsel I framed the following issue to be tried as a legal issue.
"Whether, in view of the circumstances of this suit and the above statements and explanation given by counsel for the plaintiff, the defendant K. M. C. is liable under law to pay any damages at all "
11. I also questioned Mr. Fazle Haq counsel for K. M. C. whose answers and my questions were as follows
"Q. On what basis you think that K. M. C. is entitled to claim interest at the rate of 9 per cent. per annum
A. In terms of clause 23 of the conditions attached to the contract, Exh. 8, and alternatively, as compensation for money wrongly detained.
Q. How have you calculated the amount of Rs. 14,000 claimed by you
A. This amount has been claimed in terms of Paragraph 8 of the plaint for wrongful loss of fruit and grass caused by the defendant, but my stand in this suit will be that K. M. C. is entitled to this amount because of the wrongful use and occupation of the Farm by Kassimally Rajah Alt after the expiry of contract, up to the 25th of August 1955.
Q. Are you claiming the amount of Rs. 14,000 by way of mesne profits or by way of actual or special damages or damages for wrongful use and occupation of the Farm
A. K. M. C., claims the amount by way of mesne profits or as damages for wrongful use and occupation of the Farm.
Q. Is there any reason for claiming interest at the rate of 9 per cent. per annum
A. No, no particular reason."
Mr. Nooruddin counsel for the contractor admitted that Rs. 30,340 are due by the contractor to K. M. C. He did not take the plea of limitation in respect of it obviously because of the acknowledgment of that amount in the notice of the contractor, Exh. 6, dated the 24th of June 1954. No objection was raised by him to the competency and maintainability of the suit. I, therefore, framed the following issues to be tried as legal issues only
"(1) Whether the K. M. C. is entitled to claim interest on the amount of Rs. 30,340 at any rate of interest
(2) Whether the K. M. C. Is entitled to claim Rs. 14,000 as mesne profits or as damages for wrongful use and occupation of the Farm "
12. I take up the issue which I have framed in Suit No. 26 of 1957. Mr. Nooruddin argued in support of the contractor that K. M. C. was aware that the Contractor had agreed to pay Rs. 91,100 for doing the business of selling the fruit of the orchard and that he had to invest money in addition to the contract price for earning profit. A businessman expects to make profit which should be equal to at least 12 per cent. interest on his outlay. In this case K. M. C. had the control and Manage ment of the orchard ; therefore it was implied in the contract that it would look after the orchard by supplying adequate water to it, keeping it clean and avoiding interference by outsiders so that the contractor might at least make the minimum profit.
K. M. C. has disowned the liability vide Conditions Nos. 17, 18 and 20 of Exh. 8 for any loss that might be incurred by the contractor in consequence of any act or omission of its staff and employees, but these provisions should not be so interpreted as to give freedom to it to neglect the orchard and thus to knowingly cause loss to the contractor. There is no proof of the quantity of the fruit which the orchard could yield if ordinary care and caution, which were expected of K. M. C. in looking after the orchard, had been bestowed by it ; therefore the contractor relies on the implied undertaking of K. M. C. that he would at least earn the minimum profit that can be expected of a commercial venture. The contractor did not treat the contract as rescinded in spite of the breaches of the contract committed by K. M. C. because there was a dispute as to the date of the expiry of the term of the contract, which was to be settled separately from his claim for damages. K. M. C. would have been liable to a higher amount as damages if the contractor had not used the orchard for the full terry of the contract and had treated the contract as rescinded from the time when it neglected to take proper care of the orchard as was pointed out by the Contractor vide his letters of April and May 1954, Exhs. 12, 13 and 14. The Con tractor, according to counsel, has mitigated the damages for the benefit of K. M. C. by working for the full term of the contract.
13. Mr. Fazle Haq replied by pointing out that there could be no implied obligation of K. M. C. Which was inconsistent with the expressed terms of the contract. Moreover, the liability of K. M. C. to look after the orchard could not be more than that of a man of ordinary prudence who was looking after his own property, This was the best guarantee for the contractor because he was aware that he had bought only the fruit which were growing on the trees of K. M. C. In the very nature of things K. M. C. was more interested in the well being and pros perity of the orchard than the contractor whose interest was limited to its yield for 2 or 3 years only. If K. M. C. neglected the orchard it was to suffer much more heavily by ruining the trees themselves than the contractor who cared for the fruit of a short period only. If, therefore, K. M. C. is held to have been under an implied obligation to look after the trees, the degree of care expected of K. M. C. could not be more than that which maybe bestowed by a bailee. If, for the sake of argument, K. M. C. has not bestowed enough care and has allowed its own trees to be dried up, then it has not failed in any obligation towards the contractor because no higher degree of care was expected of it.
14. 1 may add that the above argument of Mr. Fazle Haq could be defeated if the alleged negligence of K. M. C. was malicious but there is no allegation of malice ; therefore, there is no substance in the grievance of the contractor. In reality the contractor seems to have no grievance for otherwise he would have had rescinded the contract and claimed damages. His insistence on treating the contract as subsisting and enforceable and his actual enjoyment of the contract is inconsistent with his allegation of the breach of the contract.
15. I agree with Mr. Fazle Haq that no obligation can be implied in a contract inconsistently with its expressed terms Apparently the contractor did not mind the expressed terms because he was confident that K. M. C. could not allow the orchard to be damaged. His attempt from the beginning was to get the period of the contract extended. He asked for one year's extension in his letter Exh. 12. That request was not granted ; therefore, he filed a suit for declaration and injunction on the ground that he should at least get the use of the orchard for full 3 years. An interim injunction was granted to him with the result that he reaped the fruits of the contract for the entire alleged term of the contract. After that period was over he converted his suit from one for specific performance to the recovery of damages for breach of contract. The amendment perhaps was not looked with disfavour because the allegations of breaches of obligation had been made in the body of the plaint from the beginning. Nevertheless, there was a complete change of the case which was not brought about to serve the ends of justice or to determine the real disputes between the parties as they existed at the time of institution of suit but merely to make a new stand which was inconsistent with the original stank If the amendment had been disallowed and the contractor was compelled to bring a new suit after the first suit, which was virtually for specific performance was practically decreed, I have no doubt that the new suit could not win the favour of any Court of law. The situation is the same in the present circumstances because this suit for damages is a new one for all intents and purposes.
16. Even if breach of any obligation was conceded the contractor cannot claim to earn 12 per cent. interest on his outlay because the risk of loss is implied in a commercial venture. There is no basis for the contractor's stand that any profit whatsoever, was guaranteed to him. If his stand was conceded then he could claim damages to increase the profit up to 12 per cent. had he earned a lesser profit than that.
17. The suit of the contractor is, therefore, not only without foundation but it also savours of mala fides.
18. I now take up the two issues which I have framed in Suit No. 115 of 1958. Issue No. 1 must be decided in favour of K. M. C. because the principal amount is admitted and the claim for 9 per cent. interest on it should be considered as reason able in view of the claim of the contractor for 12 per cent. interest on his outlay. I, therefore, allow Rs. 10,800 as interest up to the date of the institution of the suit but allow 6 per cent. interest only on Rs. 30,340 from the date of the suit until its recovery.
19. The claim of K. M. C. for Rs. 14,000 which is the subject‑matter of the second issue is not sustainable because this amount has been claimed vide Paragraph 8 of the plaint as well as Annexure D' to it as damages for wrongful‑
"removal of fruit and grass from the sewage Farm."
In Paragraph 8 of the plaint the claim relates to the period‑
"after the expiry of his contract up to the 25th of August, 1955".
from the date of injunction. Mr. Fazle Haq conceded that he had no evidence to establish as to how much "fruit and grass" was removed by the contractor and what its market price was. Therefore he claims the amount now as mesne profits or as damages for wrongful use and occupation of the Farm from the 31st of March 1955 up to 25th of August 1955. His stand is open to serious objections. Firstly, it amounts to changing the basis of his claim for damages. Secondly, the removal of fruit and grass as alleged in para. 8 of the plaint refer to the period during which the order of injunction subsisted unmodified. That injunction was granted on the 28th of January 1955, and was modified according to the desire of K. M. C. on the 18th of August 1955. The claim should, therefore, relate to 5 months and 15 days but the contractor has used the orchard up to the 25th of August 1955, instead of the 31st of March 1955, i.e., for say 4 months and 25 days only beyond the term of the contract. Thus neither the period of time nor the dates coincide. Thirdly, K. M. C. applied for the modification of the injunction on the ground that the contractor was removing "green grass and dry leaves" and not because he was removing fruit. Fourthly a part of the claim is by every calculation barred by time. The issue is, therefore, decided against K. M. C.
20. The conclusion of all the foregoing is that Suit No. 26 of 1957, is dismissed with costs and Suit No. 115 of 1958 is decreed for Rs. 41,140 with interest at the rate of 6 per cent. per annum on Rs. 30,340 from the date of the suit until recovery with proportionate costs.
K. B. A. Suit dismissed.
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