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First Appeal No. 109 of 1960, decided on 12th March 1963.

Amount "fixed, determined or established"‑Relevant Act not making provi sion for fixing, determining or establishing amount due‑Document showing amount being due by taking accounts, not a "certificate" envisaged by S. 149‑Amount not recoverable as land revenue-- Sind Foodgrains Nationalisation Board Act (XIX of 1951), S. 6.

There is a lacuna in the Sind Foodgrains Nationalisation Board Act, 1951, in that the Act does not provide for the "deter mination" of amount due as envisaged under section 149, Sind Land Revenue Code, 1879.

Inasmuch as the dues claimed by Government from the other party are not fixed, determined and established, they cannot be recovered as arrears of land revenue from such party.

Besides, the statement of account filed by Government was at most a statement of a claim made by Government upon the party. This claim having been denied and disputed by the party cannot amount to a certificate such as is envisaged by section 149 of the Sind Land Revenue Code, 1879 or section 46 (2) of the Income‑tax Act, 1922.

Abdul Latif v. The Government of West Pakistan P L D 1962 S C 384 ref.

[Judgment of Karachi Bench in Suit No. 169/1953 ref.]

Wharton's "Law Lexicon", Fourteenth Edition, at page 355.

Bond not specifying specific amount liable to be forfeited in an eventuality --Section 74, inapplicable.

Waheed Farooqui for A. A. G. for Appellants.

A. A. Fazeel and A. M. Khoja for Respondents.

Date of hearing : 28th February, 1963.

This is a Civil First Appeal from the judgment and decree of the learned District Judge, Dadu, (Mr. Azizullah M. Memon) decreeing the suit of the plaintiff/respondent No. 1 with the exception of the alternative relief sought in the plaint namely a claim for rendition of accounts.

2. The plaintiff/respondent No. 1 filed this suit in the District Court, Dadu, against the three appellants and the respondent No. 2. It was the case of the plaintiff that in or about October 1949, he was appointed as an agent by the then newly‑constituted Sind Foodgrains Nationalisation Board for the purchase of rice on behalf of the Government of Sind at Radhan in District Dadu for the year 1949‑50. An agreement in writing was executed between the two parties and on the plaintiff being appointed again as agent for the succeeding years of 1950‑51, 1951‑52 and 1952‑53 a separate agreement for each of these years was entered into between him and the Board. According to this agreement the plaintiff as agent was responsible for the purchase of rice in quantities as directed by and at the price fixed by the Board. The plaintiff appointed Shaikh Beg Muhammad defendant No. 4 as his attorney for the year 1949‑50 and this defendant No. 4 carried out all the duties imposed upon the plaintiff as a result of the aforesaid agreements and also maintained the accounts on behalf of the plaintiff. According to the plaintiff these accounts were settled with the Board at the end of each year. It was further alleged in the plaint that according to the terms of these agreements the sellers were liable to the Board for the quality, allowances and shortage and any other incidental charges falling due. The agent was not liable on these counts. It was also stated in the plaint that the Board used to supply Bardana to the plaintiff every year which he used to utilise in the purchase of rice on behalf of the Board. In July 1958 the plaintiff received a notice from the Deputy Director, Food, Hyderabad Region, calling upon him to pay the sum of Rs. 1,01,695‑7‑0 as per a statement of account duly enclosed adding that this amount would be recovered from him through the Deputy Commissioner, Dadu, as arrears of land revenue should be fail to pay the same. The plaintiff immediately replied to this notice repudiating the claim made on him and he addressed a letter to the Minister for Food and Agriculture, West Pakistan, Lahore, dated 23‑7‑1958 requesting him to call for the papers and settle the accounts personally and, in the mean while, to direct the Deputy Director, Food, Hyderabad Region, to refrain from taking any action against him. The plaintiff later addressed a notice under section 80, C. P. C. to the Secretary, Food and Agriculture, Government of West Pakistan, Lahore, denying that there were any dues owing by him to Government and intimating his intention of filing a suit after the expiry of two months in the District Court of Dadu for a declaration that there were no dues owing by him to Government and for a permanent injunction restraining the Government from demanding any such dues from him. Pursuant to this notice this suit was filed by the plaintiff and it was decreed in his favour as mentioned in para. 1 above.

3. The appellants‑defendants resisted this suit on the plea that the demand made by them in Exh. 27 was correct, that this sum was owing to them by the plaintiff as a result of the agree ments he had entered into with them to act as their agent for the purchase of rice at Radhan and that they were entitled to recover this sum of money from him as arrears of land revenue under the provisions of the Land Revenue Code. A separate written statement was filed by the respondent No. 2/defendant No. 4 in which while admitting that he acted as the attorney on behalf of the plaintiff for the purchase of rice he denied that he was entrusted with the maintaining of accounts. He also denied that the account of Bardana which was maintained by the plaintiff's staff showed the receipt of four wagons of Bardanas despatched by the Food Department. He further denied having ever received delivery of Bardana from the railway station. He, finally, states that he has no books of account and he has never kept any such books of account.

4. On these pleadings several issues were struck but the learned District Judge confined his attention only to three issues namely :‑

"(1) What were the terms of agreement between the plaintiff and the defendants Nos. 1 to 3, and who committed breach thereof and what is the effect

(2) Who will be responsible for the shortage and excess of the Bardana

5. Can the defendants Nos. 1 to 3 recover the amount from the plaintiff‑as alleged by them "

In deciding these three issues, the learned District Judge relied very largely upon a judgment of this High Court in Suit No. 169 of 1953, decided on 14‑10‑1959 by one of us. In that suit the facts of which were very similar to the facts of the present matter, the learned trial Judge framed only two issues as under:‑

"(1) Whether the defendant was entitled to determine the dues under the agreement, and

(2) if so, was the defendant entitled to recover them as arrears of land revenue."

Both these issues were decided against the Government and the suit was decreed as prayed and a declaration given to the effect that the Sind Nationalisation Board had no power or authority to adjudicate and decide their claim against the plaintiff or the liability of the plaintiffs under the agreement of agency. It was also declared that the action of the Sind Foodgrain Nationalisation Board in attempting to make the recovery of the sum of Rs. 1,597‑12‑5 or any other sum as being due to them under the provisions of section 6 of the Sind Foodgrains Nationalisation Board Act is illegal and invalid. The plaintiffs in that suit were also awarded their costs but their prayer for an injunction restraining the defendants from making any recovery from them for any amount as due under the aforesaid agreement of agency was disallowed and rejected. Following the decision of this High Court in this suit the learned District Judge, Dadu, decreed the suit of the plaintiffs‑respondent No. 1 as mentioned in para. 1 above. The present appeal has been filed by the Government of West Pakistan and the two co‑appellants against this judgment and decree.

5. Appearing on behalf of the appellants Mr. Waheed Farooqui advanced five main arguments as under

(i) that the learned District Judge was wrong in rejecting the oral evidence merely because it was oral ;

(ii) that the respondent No. 1 had not at any time, prior to the filing of this suit disputed or denied the amount claimed by Government from him;

(iii) that the judgment in Suit No. 169/1953 is distinguish able as in that case it was the due of the sellers of the rice that was being claimed by Government whereas in this case this is not so ;

(iv) that the amount mentioned in Exh. 27 is rightly due from the respondent No. 1 to Government and it is recoverable by the Collector under the provisions of the Land Revenue Code as arrears of land revenue ;

(v) that irrespective of the correctness of the claim of these appellants, the appellants can forfeit the bond Exh. 23 entered into with them by the plaintiff‑respondent No. 1 or could recover from him any claim arising under this bond.

6. We propose to deal with each of these arguments advanced by the learned Advocate appearing on behalf of the appellants.

7. With regard to his first contention we cannot agree that in this case the learned District Judge has discarded the oral evidence. On the contrary, it appears to us that as neither party to this suit produced any account books in the trial Court or any other documents or statement of account, the learned trial Judge was left only with the oral evidence as led before him for reaching a decision in this case. The plaintiff examined himself and Mr. Muhammad Hashim the then District Food Controller, Dadu. But from the side of the defendants only one witness Mr. Muhammad Saleh, Advocate, was examined whose evidence consists of only two lines which are really meaningless. The defendants have not only led no evidence in support of their case, but the statement of account Exh. 27 produced on their behalf is a bare statement of assets and liabilities with no vouchers or documents in support thereof. Thus, this statement of account being wholly deprived of any basis for its existence cannot be relied upon and, therefore, the learned District Judge, in the absence of written or documentary evidence in this case, was left only with the oral evidence for the purpose of reaching a conclusion in the matter. It is not, therefore, true to say, as argued by Mr. Waheed Farooqui, that the learned District judge has discarded and rejected the oral evidence merely because it was oral.

8. The second contention of Mr. Waheed Farooqui can shortly be disposed of by referring to the plaintiffs' letter to the Minister for Food, dated 23‑7‑1958 in reply to the notice served on him by the Deputy Director, Food, on 16‑7‑1958 demanding payment of Rs.1,01,695‑7‑0. A reference may also be made to the notice under section 80 addressed by the plaintiffs to the Secretary, Food and Agriculture, Government of West Pakistan, Lahore, dated 18‑11‑1958 and before the filing of this suit. It is plain from these two letters of the plaintiff‑respondent No. 1 that even before filing this suit he has denied and disputed the amount claimed by Government from him.

9. The third and fourth contentions may with advantage be dealt with together. We have closely examined the judgment in Suit No. 169 of 1953 and we find that the ratio decidendi of this judgment is that before any money can be recovered as arrears of land revenue, it is essential that the sum of money to be thus recovered should be determined and established. In fact, it has been stated in this judgment that a condition precedent to the application of section 6 of the Foodgrains Nationalisation Board Act, 1951 which deals with recovery of the dues of the Board from agents as arrears of land revenue is that there should be existing dues which are determined and established. Now, in the instant case, the dues of the Board to be recovered from the plaintiff--respondent No. 1 have not been fixed, determined or established. The statement of account Exh. 27 merely shows the assets and liabilities mentioning the figure of Rs. 1,01,695 7‑0 as being recoverable from the plaintiff Haji Abdul Majeed Jatoi ; but this amount is disputed and denied by the plaintiff so that, according to us, the total effect of Eah. 27 is that a claim of Rs. 1,01,695‑7‑0 is made upon the plaintiff which claim he disputes and denies. It is of importance to pause and reflect here for a moment upon the "lacuna" in the Foodgrains Nationalisation Board Act, 1951, which has been pointed o‑at and commented upon by one of us in the judgment in Suit No. 169 of 1953. This lacuna is the omission of any section in this Act providing for the determination of the due. Mr. Fazeel in his argument referred us on this point to section 149 of the Land Revenue Code and to section 46 (2) of the Income‑tax Act wherein provision is made for a prior deter mination of the precise amount due from the debtor and the issue of a certificate which shall be "conclusive evidence of the existence of the arrears of the amount of land revenue dues and of the person who is the defaulter". In the Foodgrains Nationali sation Board Act, 1951, there is no such parallel provision to section 149 of the Land Revenue Code or section 46 (2) of the Income‑tax Act and on account of this lacuna in the Foodgraing Act the dues of the Board from an agent cannot be recovered as arrears of land revenue unless these dues have been fixed, determined and established. On the principle, then, of the judgment of this High Court in Suit No. 169/1953 we must hold that inasmuch as the dues claimed by Government from the plaintiff in this case are not fixed, determined and established.1 they cannot be recovered as arrears of land revenue from him, Besides, in our opinion, the statement of account Exh. 27 is at most a statement of a claim made by Government upon the plaintiff. This claim having been denied and disputed by the plaintiff, Exh. 27 cannot, in our opinion, amount to a certificate such as is envisaged by section 149 of the Land Revenue Code o ' section 46 (2) of the Income‑tax Act.

10. But, Mr. Waheed Farooqui appearing on behalf of the appellants has contended that the judgment in Suit No. 169/1953 can be distinguished inasmuch as the facts of that case are not on all fours with the facts of this case. Mr. Farooqui argued that in Suit No. 169 of 1953 it was the dues of the sellers of the rice which were being claimed by Government whereas in this case this is not so. Mr. Fazeel replying to this argument invited our attention to item No. 9 of Exh. 27 which expressly refers to "Sellers' dues paid to him; not disbursed by him". This item would show that certain money due to the sellers of the rice and which had been paid to the plaintiff by Government for remission to them, had been misappropriated by the plaintiffs so that the sellers were still without their money as in Suit No. 169/1953. No doubt, this sum mentioned in item No. 9 of the statement of account is not a very big sum amounting to only Rs. 1,579‑3‑0 ; but, nevertheless, even though it be not an imposing sum, yet it serves to annihilate the distinction on facts that Mr. Farooqui sought to make between the facts of Suit No. 169/1953 and the facts of the present appeal.

11. There remains for consideration the last contention of the learned Advocate appearing on behalf of the appellants namely that on the strength of the bond Exh. 23 executed by the plaintiff‑respondent No. I with the Government, he continues to be liable to Government up to the sum of rupees one lakh should it be found that he has not well and faithfully discharged his duties according to the terms and conditions laid down in the agreements entered into between them. We have examined the terms of this bond and we find that the plaintiff respondent No. 1 has bound himself to "well and truly indemnify the Government against ail loss and damage which it might or may in any way suffer and pay the Government all sums due to it". It would follow then that before the plaintiff can be called upon to indemnify the Government, it must be shown that some loss or damage has accrued to Government from the agreements entered into by the plaintiff' with Government. On the facts of this case, no such loss or damage has been shown : nor have we been able to interpret Exh. 27 as a statement of loss or damage incurred by Government in this matter. When we pointed out this difficulty to Mr. Farooqui the learned Advocate appearing on behalf of the Government in this appeal, he replied that by reason of the provisions of section 74 of the Contract Act he is exempt from showing such loss or damage. We have duly examined the provisions of section 74 and we cannot bring ourselves to hold that the bond in this case Exh. 23 can be so interpreted as to fall within the provisions of this section. To begin with, no specific sum of money has been mentioned or named in this bond as the amount to be paid in case of a breach or to be forfeited by way of penalty. Mr. Farooqui invited our attention particularly to the exception appearing after section 74 saying that he relied upon this exception for supporting this final argument of his. But this exception also' refers to a bail‑bond, recognizance or other instrument of the same nature in each of which a specific sum is mentioned as the sum of money to be forfeited in a certain eventuality. Although this exception goes on to speak of a bond given under the order of the Central Government or any Provincial Government for the performance of any public duty or act, it clearly states that the person giving the bond shall be liable upon breach of a condition of the bond "to pay the whole sum mentioned therein". Now, we have already pointed out above that no specific sum of money is mentioned in this bond Exh. 23 and in view of this omission this bond Exh. 23 cannot be so interpreted as to fall within the provisions of section 74. We cannot, therefore, accept this final contention of the learned Advocate appearing on behalf of the appellants.

12. Mr. Fazeel the learned Advocate appearing on behalf of the respondent No. 1 who replying to this final contention of Mr. Farooqui reminded us that the important words used in this bond are "to pay to Government all sums due to it". Similarly in section 6 of the Foodgrains Nationalisation Board Act, 1951 the important words again are "the dues of the Board". Mr. Fazeel referred us to Wharton's Law Lexicon, Fourteenth Edition at page 355 where the word "due" is defined as "that which law or justice requires to be paid or done. Mr. Fazeel pointed out that an indispensable prerequisite of a due is that th.. sum of money must be fixed, determined and established. In this case no such fixed or determined sum has been mentioned and the statement of account Exh. 27 is at most a statement of claim denied and disputed by his clients. Mr. Fazeel further contended that even in accordance with the terms of this bond it is incumbent upon the Government to show that there has been a breach of some essential condition committed by the plaintiff respondent No. I, before any money can be recovered under the terms of this bond. In this particular case, no such breach has been specified or mentioned so as to attract the provisions of this bond or to make it enforceable. Finally, Mr. Fazeel referred us to a recent decision of the Supreme Court of Pakistan in the case of Abdul Latif v. The Government of West Pakistan (PLD 1962 SC 384). In this case a deficiency of Rs. 7,484‑3‑3 in the stamps of the treasury was found at the end of the appellant's term of contract as a treasury contractor and this sum was sought to be recovered from the appellant as arrears of land revenue. The High Court came to the conclusion that the petitioner was a defaulter and that the sum due from him could be recovered as arrears of land revenue. In appeal, however, it was pointed out by their Lordships of the Supreme Court of Pakistan that‑

"a right construction of the Act can only be attained if its whole scope and object, together with an analysis of its wording and the circumstances in which it is enacted are taken into consideration. From an examination of the Land Revenue Act, it is apparent that it provides first a procedure for determination of land revenue and then comes the machinery for realization of such revenue. It is, therefore, manifest that before the operation of the machinery section for realisation of the arrears, the authority concerned must decide whether there is an arrear due or not."

Applying these observations to the facts of the present case, Mr. Fazeel submitted that unless the amount of loss or damage caused by his client to Government had been precisely fixed or determined, proceedings under the Land Revenue Code against him would not lie.

13. We are in agreement with the submissions of Mr. Fazeel. We agree that before any recoveries under the bond Exh. 23 can be made by Government from his client, it is imperative that the loss or damage sustained by the Government should first be established. This not having been done, no reliance can now be placed by Government upon this bond nor may the terms of this bond be enforced against the plaintiff‑respondent No. 1.

14. In the result, therefore, this appeal must fail and it is hereby dismissed with costs.

A. H.

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