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High Court Appeal No.14 of 1983, decided on 22nd April, 1987.

---S.34--Interest Act (XXXII of 1939), S.34--Sale of goods--Suit by seller for recovery of dues from buyer--Interest--No usage or custom, on basis of which interest on Bank guarantee could have been granted pointed out nor any notice in terms of S.34 of Interest Act, 1939 shown to have been served--Finding of the Trial Court that plaintiff was not entitled to interest, held, was in accordance with law.

Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation Ltd., Lahore P L D 1971 S C 550, Alpha Insurance Co. Ltd. v. Messrs Decorative Arts and 2 others 1984 C L C 87 and Arif Ali Shah and another v. The Province of West Pakistan 1969 SCMR 690 held not applicable.

---S.9--Sale of goods--Price--Claim for difference in foreign exchange rate--Number of documents on record indicating the rate at which the respondent company had purchased the foreign exchange for importing goods from abroad--Difference claimed for foreign exchange based on rates obtaining at relevant time and no evidence in rebuttal produced by appellant-Trial Court, held, was justified in decreeing the suit for the amount in dispute.

Abdul Majeed Khan for Appellants.

Syed Inayat Ali for Respondent.

Date of hearing: 22nd April, 1987.

---The above two High Court Appeals are directed against the same judgment and decree, dated 29-11-1982 passed by a learned single Judge of this Court in Suit No.86 of 1982. We, therefore, intend to dispose of both the appeals by this common judgment.

2. The brief facts leading to the filing of the above appeals are that the respondents in High Court Appeal No.8 of 1983 and the appellants in High Court Appeal No.14 of 1983, hereinafter referred to as the Government of Pakistan invited tender for the supply of 30,000 bales of jute bags. The appellants in High Court Appeal No.8 of 1983 and the respondent in High Court Appeal No.14 of 1983, hereinafter referred to as the Company submitted a tender on 10-12-1977 for 10,000 bales of jute bags. Since the above tender was not accepted a meeting between the representative of the Company and the Government of Pakistan was held on 17-12-1977 and 19-12-1977 in which the basis for the supply of the above 10,000 bales of jute bags was agreed to which was reproduced by the Company in its letter dated 22-12-1977 Ex.3/2 and confirmed by the Government of Pakistan in the telegram Ex.3/3, which was followed by execution of a formal agreement dated 10-12-1978 Ex.3/4. However, by Ex.3/5 which is a letter from Assistant Director of Supplies the quantity of the goods was reduced to 7,347 bales in place of 10,000 bales of jute bags and the period for delivery was substituted as upto 30-6-78 in place of 30-5-1978. It may be pertinent to reproduce the relevant clause relating to the price contained in the aforesaid Ex.3/2.

"Rs.1,100/- per 100 Bags F.O.R. Keamari, Karachi. The above prices are based on an exchange parity rate of Rs.18.20 for the Pound Sterling.

Any variation in the said parity rate shall be for Buyers A/C.

Prices payable by Buyers in respect of the goods shall vary accordingly as there is any variation in the parity rate of exchange in accordance with the example shown hereunder:

The Bank's Certificate in respect of the rate of exchange shall be conclusive and binding on Buyers and Sellers."

3. It seems that the Company supplied the contracted goods within the stipulated period. The company was paid 95% of the price of the goods supplied and was asked to furnish a bank guarantee for 5% for finalization of the bill, which the company did on 8-2-1979 by furnishing a bank guarantee for a sum of Rs.12,12,255 upto the period expiring on 31-3-1979 which period was extended from the time to time at the request of the Government of Pakistan and the last extension was upto 31-12-1982. The company 'submitted two M/s. United Bank Limited's certificates both, dated 29-7-79 Exs. 3/6 and 3/7 indicating the foreign exchange rate at which the foreign currency was booked for the import of the goods by it. These certificates were followed by a number of letters which are on record. Eventually the company filed aforesaid suit for the recovery of Rs.31,27,679.48 that is (i) Rs.18,77,788.64 being the difference in the foreign exchange rate (ii) Rs.7,59,501.14 being the amount of interest at the rate of 14% from 1-2-1979 to 20-2-1982 and (iii) Rs.4,90,289.70 being the interest at the rate of 14% on bank guarantee dated 7-2-1979 for Rs.12,12,255 for the period from 1-4-79 to 20-2-1982. Though the Government of Pakistan was served but it did not file any written statement and therefore it was debarred from filing written statement by an order dated 13-9-1982 passed by the Additional Registrar. After that one witness on behalf of the Company was examined and no body was examined on behalf of the Government of Pak. The learned Single Judge by his judgment /decree, dated 29-11-1982 decreed the suit for the aforesaid sum of Rs.18,77,788.64 with interest at the rate of 14 per annum from the date of filing of the suit till realization but dismissed the claim for the above two amounts of interest. The company being aggrieved by the rejection of their claim in respect of the interest filed High Court Appeal No.8 of 1983, whereas the Government of Pakistan filed High Court Appeal No.14 of 1983 against the grant of the decree for the aforesaid sum.

4. We have heard Mr. Abdul Majeed Khan for the company and Mr. Syed Inayat Ali for the Govt. of Pakistan. Mr. Abdul Majeed Khan has urged that since the company has served several notices for the payment of its dues, it was entitled to claim interest. In support of his above submission he has referred to the cases of:

(1) Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation Ltd. Lahore reported in P L D 1971 S C 550;

(2) Alpha Insurance Co. Ltd. v. Messrs Decorative Arts and 2 others, reported in 1984 C L C 87 and

(3) Arif Ali Shah and another v. The Province of West Pakistan, reported in 1969 S C M R 690.

In the first case the Hon'ble Supreme Court had held that on the basis of mercantile usage, a decree holder may claim interest at the rate of 6% under section 34, Cr.P. C. on the amount due, whereas in the latter two cases it was held by the Hon'ble Supreme Court and by a learned single Judge that under section 34 of the Interests Act a plaintiff is entitled to claim interest.

The above cases have no application as Mr. Abdul Majeed Khan has not been able to point out any usage or custom on the basis of which the above interest could have been granted to the company nor he was able to point out any notice in terms of section 34 of the Interests Act, 1939. Furthermore, no evidence was produced before the learned single Judge in respect of the aforesaid amount of Rs.4,90,289.70 being the alleged amount of interest on the bank guarantee. We are, therefore, of the view that the finding of the learned single Judge that company was not entitled to interest is in accordance with law.

5. As regards the appeal filed by the Government of Pakistan, it may be observed that Mr. Syed Inayat Ali learned counsel for the appellant has contended that the company failed to prove that it was entitled to the difference in the rate and therefore no decree could have been passed. The above contention is devoid of any force in view of a number of documents on record which indicate at what rate the company had purchased the foreign exchange for importing the goods from abroad. In this behalf reference may be made to aforesaid Exs. 3/6 and 3/7 and also to the correspondence Exs.3/8, 3/10, 3/11, 3/12, 3/13 and the evidence of P.W.1. The contract was concluded on 12-1-78. The difference claimed for the foreign exchange is based on the rates obtaining in the month of Dec. 1977 and January 1978. No evidence in rebuttal was produced by the Government of Pakistan and, therefore, the learned single Judge was justified in decreeing the suit for the aforesaid sum of Rs.18, 77, 788.64.

6. For the aforesaid reasons both the appeals are dismissed but there will be no order as to costs.

These are the reasons in pursuance of short order of even date.

S.Q./P 27/K

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