P L D 2017 Balochistan 11
Before Naeem Akhtar Afghan, J
LAFARGE PAKISTAN CEMENT LTD. through Attorney ---Petitioner
Versus
Messrs DECENT COAL COMPANY through Managing Director ---Respondent
Civil Revision No.133 of 2015, decided on 31st May, 2016.
(a) Civil Procedure Code (V of 1908) ---
----O. VII, Rr. 2 & 10 & Ss.19 & 20(c) ---Contract Act (IX of 1872), S.4 ---Money suit ---Contract
for sale and purchase through letter ---Plaint rejection of ---Scope ---Agreement for sale and
purchase was entered at place "A" thr ough letter between the parties whereas suit for recovery of
amount was filed at place "B" ---Contention of defendant -corporation was that Court at place "A"
had jurisdiction to try the present suit ---Defendant -corporation filed an application for return of
plaint which was dismissed ---Validity ---Parties had entered into a contract for sale and purchase
through correspondence via e -mail and fax ---Offer of defendant -corporation was e -mailed to
plaintiff at place "B" from place "A" ---Said offer was accepted by the plaintiff from place "B"
and conveyed to the defendant -corporation at place "A" via e -mail---Purchase order was faxed
by the defendant - corporation from place "A" to plaintiff at place "B" ---When proposal and
acceptance were made by letters then the c ontract was made at the time when and the place
where from the letter of acceptance was posted/mailed ---Acceptance of offer by the offering
party and intimation with regard to such acceptance would result in contract ---Contract would be
completed when offe r of one party was accepted by the other party ---Contract by correspondence
would be completed where the acceptance had taken place ---Place of delivery of acceptance
would be irrelevant and same did not provide any cause of action ---Suit could not be filed at the
place where letter of acceptance was delivered as delivery of letter of acceptance was not a part
of cause of action ---Plaintiff in case of breach of contract had option to file suit at the place
where it was made ---Present suit had rightly been fi led at place "B" in view of accrual of cause
of action at the said place ---Civil Court at place "B" had jurisdiction to proceed with the suit filed
by the plaintiff ---No illegality had been committed by the Trial Court while rejecting the
application for r eturn of plaint ---Revision was dismissed in circumstances.
Rahmania Trading Co. v. Eagle Star Insurance Co. Ltd. PLD 1960 SC 202 and
Registered Firm Sheikhan Industries v. West Pakistan Industrial Development Corporation PLD
1976 Quetta 94 distinguished.
Abdur Rahim Baig v. Abdul Haq PLD 1994 Kar. 388; American Pipe Co. v. State of U.P.
AIR 1983 Cal. 186; Messrs Progressive Construction Ltd. v. Bharat Hydro Power Corporation
Ltd. AIR 1996 Delhi 92; Businet Internatinal (Pvt.) Ltd. v. Aramex International (Pvt.) Ltd. 2001
CLC 104 and Baroda Oil Cakes Traders v. Parshottam AIR 1954 Bom. 491 rel.
(b) Contract Act (IX of 1872) --
----S. 4---Communication when complete ---Communication of a proposal would be complete
when it came to the knowledge of the person to whom it was made ---Communication of
acceptance would be complete as against the proposer, when it was put in a course of
transmission to him, so as to be out of power of acceptor.
Taimoor Aslam for Petitioner.
Syed Ayaz Zahoor and Arthur Victor for R espondent.
Date of hearing: 11th April, 2016.
JUDGMENT
NAEEM AKHTAR AFGHAN, J. --- This judgment disposes of Civil Revision
No.133/2015, filed by the petitioner (defendant) against the order dated 22nd April 2015
(hereinafter "the impugned order") passed by the learned Senior Civil Judge -III Quetta
(hereinafter "the trial Court"), whereby the application filed by the petitioner under Order VII,
Rule 10, C.P.C. read with sections 20, 151 C.P.C. and all enabling provisions of C.P.C. for return
of the plaint to the respondent (plaintiff) for presentation before the proper forum, has been
dismissed.
2. Facts of the case are that the respondent filed suit for recovery of outstanding amount of
Rs.52,00,000/ - (Rupees Fifty Two Lakhs) and losses of Rupees Ten Milli on (total 15.2 million)
against the petitioner before the Court of learned Senior Civil Judge -III, Quetta.
3. According to contents of the plaint, on the basis of agreement dated 04.03.2014 arrived at
between the parties it was agreed that the respondent w ill supply 2500 tons of coal to the
petitioner specification and nature whereof was to be determined on the basis of 500 tons
average basis; that Rs.11800/ - per ton was agreed to be paid by the petitioner to the respondent
within two weeks of receipt of th e coal; that the agreement was duly signed by the parties with
certain conditions of dispatch etc; that approximately 2200 tons coal was provided by the
respondent to the petitioner; that remaining 300 tons of coal is available with the respondent and
is ready to be dispatched on receiving the total amount; that so far the petitioner has paid sum of
Rs.2,26,000,00/ - to the respondent while sum of Rs.52,00,000/ - has been withheld by the
petitioner without any lawful justification causing heavy losses to the respondent as the
respondent had already contracted several mines owners and has paid them the advance amount
for supply of coal, which has been forfeited by them; that due to ill conduct of the petitioner,
apart from Rs.52,00,000/ -, the respondent has als o suffered loss of Rupees Ten Million
approximately. The following prayer was made in the suit:
"a) Directing the defendants to make payment of amount of plaintiff Rs.52,00,000/ -
(Rupees fifty two lacs) and loss amount ten (10) million Rupees total 15.2 mi llion Rupees
in lump sum.
b) Any other relief which may deem fit and proper in the circumstances of the case may
also be awarded."
3. After receiving notice, instead of filing written statement, the petitioner filed an
application under Order VII, Rule 10, C.P.C. read with sections 20 and 151, C.P.C. with all
enabling provisions of C.P.C. for return of the plaint to the respondent for presenting the same
before the proper forum.
It has been contended in the application by the petitioner that the petitioner corporation is
based in Islamabad and has its head office at 18 -B, Kaghan Road, F -8 Markaz, Islamabad
wherefrom the petitioner runs its operations; that the respondent has wrongly instituted the suit
before learned Senior Civil Judge -III, Quetta as the pe titioner does not carry on any business in
Quetta nor has any sub/branch office at Quetta; that if any wrong has allegedly been done to the
respondent, the same has been done (without conceding) at Islamabad and not at Quetta; that all
the correspondence i ncluding the legal notice was sent to the head office of the petitioner at
Islamabad by the respondent; that the relief has been claimed from the petitioner during business
at Islamabad; that address in the plaint for service upon the petitioner has also b een given of
Islamabad; that according to second explanation to section 20, C.P.C., the Court at Islamabad has
the jurisdiction for trial; that the material fact for determining territorial jurisdiction of the trial
Court is the place of carrying on the bu siness of the petitioner.
4. The said application was contested by the respondent by filing reply. It was contended by
the respondent that application has been filed with mala fide and ulterior motive to linger on the
matter; that cause of action has accru ed to the respondent against the petitioner at Quetta,
therefore, the Court of Senior Civil Judge -III, Quetta has the jurisdiction for trial; that the
controversy between the parties relates to question of fact which requires evidence; that though
the peti tioner carries on his business at Islamabad, but he contacted the respondent at Quetta and
executed the agreement dated 04.03.2014 in pursuance whereof the respondent supplied 2200
tons of coal to the petitioner at Islamabad from Quetta as per specified te rms; that the petitioner
has paid Rs.2,26,000,00/ - to the respondent at Quetta vide payment advices, therefore, the Court
of civil jurisdiction at Quetta is competent to try the suit.
5. After hearing arguments of learned counsel for the parties the trial Court has dismissed
the application vide impugned order, against which the instant petition has been filed by the
petitioner.
6. Learned counsel for the petitioner stated that the petitioner has its head office at
Islamabad and has no branch or sub office at Quetta; that no cause of action has accrued to the
respondent at Quetta against the petitioner; that the payment for dispatched coal was made by the
petitioner to the respondent from Islamabad and in such circumstances the suit should have been
filed by the respondent at Islamabad. While relying upon section 20, C.P.C., learned counsel for
the petitioner stated that the plaint should be returned to the respondent for presenting the same
before the Court of competent jurisdiction at Islamabad. Learned cou nsel has relied upon the
case of Rahmania Trading Co. v. Eagle Star Insurance Co., Ltd., PLD 1960 SC 202 and the case
of REGISTERED FIRM SHEIKHAN INDUSTRIES v. WEST PAKISTAN INDUSTRIAL
DEVELOPMENT CORPORATION PLD 1976 Quetta 94.
7. Learned counsel for the respondent while relying upon sections 19 and 20(c) C.P.C. and
on the basis of accrual of cause of action to the respondent at Quetta stated that the trial Court
has rightly dismissed the application filed by the petitioner as the Court of civil jurisdicti on at
Quetta was competent to proceed with the trial. Learned counsel has relied upon the case of
Abdur Rahim Baig v. Abdul Haq PLD 1994 Karachi 388.
8. Heard the learned counsel and perused the available record. Perusal of the impugned
order passed by the trial Court reveals that after reproducing the contents of the plaint, the
contents of the application under Order VII, Rule 10, C.P.C., the reply thereof and sections 18
and 19, C.P.C., the trial Court has dismissed the application in the following words :
"Furthermore, the following Illustrations would more help the Court to reach at just
decision regarding the instant application filed by the applicant/ defendant as well as to
negate the claim of applicant/defendant regarding return of plaint, which is e ssential to be
mentioned as below:
"(a) A residing in [Karachi], beats B in [Quetta], B may sue A either in [Quetta] or in
[Karachi]."
8. So, application under Order VII, Rule 10, C.P.C. for return of the plaint to the plaintiff
for presentation the same before the proper/appropriate .forum, is hereby dismissed, as such, this
Court has got jurisdiction to entertain upon the instant matter filed by the plaintiff against the
defendant for recovery certain amounts which could only be ascertain by adducing evi dence
from either side. Application disposed of accordingly."
9. The documents annexed with the petition reveal of an e -mail dated 4th March 2014 of the
petitioner from Islamabad to the respondent at Quetta on 16:00 hours with subject "Viable coal
offer" w hich reads as follows:
"Dear Kashif
As discussed please find attached the terms and conditions for the supply of local coal for
your review and comments if any, once we agreed I will send you the formal Terms and
conditions for signing. " (underlining is mine.)
From the above it reveals that the parties had entered into a contract for sale and purchase
of coal through correspondence via e -mail and fax. The offer of the petitioner to purchase 2500
tons of coal @ Rs.11800/ - per ton was e -mailed to the respo ndent at Quetta by the petitioner
from Islamabad. The annexed documents further reveal that the offer of the petitioner from
Islamabad was accepted by the respondent at Quetta and the said acceptance was conveyed by
the respondent from Quetta to the petiti oner at Islamabad via e -mail of the same date i.e. 4th
March 2014 at 5:58 p.m.
The annexed documents also reveal of Purchase Order (PO) dated 12th March 2014 of
2500 tons of coal which was faxed by the petitioner from Islamabad to the respondent at Quetta .
The same was also annexed with general instructions.
Copy of the bank statement annexed with the petition reveals that the agreed price of the
coal, dispatched by the respondent from Quetta to the factory of the petitioner at Kalar Kahar,
was used to be deposited by the petitioner in UBL account of the respondent at Hali Road Quetta
online from Islamabad.
10. Since there was a contract (by correspondence) between the parties for sale/purchase of
coal therefore, section 4 of the Contract Act, 1872 being r elevant in the instant case is
reproduced herein below:
"4. Communication when complete. --The communication of a proposal is complete
when it comes to the knowledge of the person to whom it is made.
The communication of an acceptance is complete, as agains t the proposer, when it is put
in a course of transmission to him, so as to be out of the power of the acceptor;
As against the acceptor, when it comes to the knowledge of the proposer.
The communication of revocation is complete,
as against the person who makes it, when it is put into a course of transmission to the
person to whom it is made, so as to be out of the power of the person who makes it;
as against the person to whom it is made, when it comes to his knowledge.
With regard to accrual of caus e of action to the respondent for filing suit for recovery of
outstanding amount of Rs.52,00,000/ - lakhs, section 20, C.P.C. being relevant is reproduced
herein below:
"20. Other suits to be instituted where defendants reside or cause of action arises. ---
Subject to the limitations aforesaid, every suit shall be instituted in a Court within the
local limits of whose jurisdiction --
(a) the defendant, or each of the defendants where there are more than one, at the time of
the commencement of the suit, actually and voluntarily resides, or carries on business, or
personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the
commencement of the suit, actually and voluntarily resides; or carries on business, or
personall y works for gain, provided that in such case either the leave of the Court is
given, or the defendants who do not reside, or carry on business, or personally work for
gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
Explanation I ---Where a person has a permanent dwelling at one place and also a
temporary residence at another place, he shall be deemed to reside at both places in
respect of any cause of action arising at the place where he has such tem porary residence.
Explanation II. ----A corporation shall be deemed to carry on business at its sole or
principal office in [Pakistan] or, in respect of any cause of action arising at any place
where it has also a subordinate office, at such place."
11. According to section 4 of the Contract Act, 1872 communication of a proposal is
complete when it comes to the knowledge of the person to whom it is made. Similarly, the
communication of an acceptance is complete, as against the proposer, when it is put in a c ourse
of transmission to him, so as to be out of power of the acceptor. Where the proposal and
acceptance are made by letters (e -mails in the instant case) the contract is made at the time when
and the place where from the letter (e -mail in the instant cas e) of acceptance is posted/mailed.
Acceptance of the offer by the offeree and intimation in respect of such acceptance to the offerer
results in contract. A contract is made when the offer of one party is accepted by the other party.
In the case of a cont ract by correspondence (as in the instant case), the contract is made
not where acceptance is received but where the acceptance takes place. Hence the place of
delivery of acceptance (Islamabad in the instant case) is irrelevant and it does not provide any
cause of action. Thus in a suit based on a contract, the cause of action would consist of making
the contract. Suit by reference to section 20(c), C.P.C. cannot be filed at the place where the
letter of acceptance was delivered (i.e. Islamabad in the inst ant case) for delivery of letter of
acceptance is not a part of the cause of action. An action, therefore, for breach of contract at the
plaintiffs option can be brought at the place where the contract was made. Reference in this
regard is made to the case of American Pipe Co. v. State of U.P., AIR 1983 CALCUTTA 186,
wherein it has been held as follows:
"In the instant case contract was by correspondence through post. Contract, in our
opinion, takes place where the acceptance takes place. In the instant cas e the acceptance
was posted at U.P. Thus, the contract was formed in U.P.
............. In the case of a breach of contract offer is no part of the cause of action. Receipt
of acceptance in Calcutta within the jurisdiction, in our opinion, does not form pa rt of the
cause of action because according to the agreed mode of communication the contract was
to be formed through post. An acceptance in the instant case was admittedly posted in
U.P. The acceptance took place in the instant case as soon as it was post ed at U P.
Receipt of the same by the appellant in Calcutta within the jurisdiction does not form any
part of the cause of action. For the reasons stated hereinbefore, we are of the opinion that
no part of cause of action arose within jurisdiction and this Court has no jurisdiction to
entertain and/or try this suit."
Reference in this regard is also placed on the case of M/s. Progressive Construction Ltd.
v. Bharat Hydro Power Corpn. Ltd., AIR 1996 DELHI 92 wherein it has been held as follows:
"19. It is t hus clear that in view of section 4 of the Contract Act when offerer and offeree
are not at one place and are exchanging the offer and acceptance through post then the
contract would be deemed to have been entered into at the place where the offer was
received and the acceptance was posted. The place of delivery of acceptance is irrelevant
and does not provide any cause of action. Merely by placing reliance on the delivery of
letter of acceptance of offer, suit by reference to section 20(c), C.P.C. cannot b e filed at
the place where the letter of acceptance was delivered for delivery of the letter on
acceptance is not a part of the cause of action.
20. ....................................
21. From the abovesaid principles of law, applied to the case at hand , it is clear that the
contract was complete when the letter of acceptance of tender was posted in Calcutta.
The contract was entered into at Calcutta. The delivery of letter of acceptance at Delhi is
wholly inconsequential. It does not provide accrual of cause of action or part thereof in
Delhi."
Similarly in the case of Businet International (Pvt.) Ltd. v. Aramex International (Pvt.)
Ltd., 2001 CLC 104 Karachi it was held as follows:
"I have heard learned counsel. In my view the scope of section 20 is ve ry wide as it not
only provides that the suit should be filed in the jurisdiction of the Court where the
defendant actually resides, carries on business or voluntarily works for gain (which
aspect of section 20 has only been addressed in the cases cited at the Bar) but subsection
(c) also allows the plaintiff to file a suit where the cause of action accrues. Although it
may be correct that the defendant Company never carried on any business in Pakistan
within the meaning of Explanation II to section 20, it has to be considered whether in
term of subsection (c) to section 20 of the C.P.C. any cause of action accrued to the
plaintiff in Karachi. In this regard it would be seen that the term 'cause of action' has not
been defined in the Code, however, it has be en held in a number of cases decided by the
Superior Courts that it consists of every fact if traversed it should be necessary for the
plaintiff to prove in order to support his right to judgment and if not proved gives the
defendant a right to judgment. I n this regard the defendant's witness has stated in his
deposition that the agreement between the parties Exh.4/2 which formed the basis of their
business dealings was prepared by him at Dubai and then sent to the plaintiff Company at
Karachi who after sig ning it had sent it back to Dubai whereafter he had affixed his
signature to the same.
In this connection it would be seen that the essentials of a binding and valid contract are
an offer, its acceptance and consideration. It is not disputed by the defenda nt that there
was a concluded contract between the parties viz Exh.4/2. Consequently in my opinion
the dispatch of Exh.4/2 from Dubai would amount to an offer and its return by the
plaintiff after execution thereof to the defendant at Dubai and affixation of its signature
thereafter would be an acceptance by the defendant of such offer. In these circumstances
I am quite clear in my mind that the contract between the parties was made at Karachi as
it was accepted in this City by the plaintiff and accordingly this Court would have
jurisdiction to entertain the suit as the cause of action for filing the same also accrued at
Karachi to the plaintiff. In this regard reference can be made to I.T.O. Mardan v.
Sanaullah Khan PLD 1976 SC 790 and Lahore Development Au thority v. Sanbean
Corporation PLD 1984 Lah. 430."
In another case of BARODA OIL CAKES TRADERS v. PARSHOTTAM, AIR 1954
Bombay 491 it was held as follows:
"The plaintiff sent a telegram from Baroda offering to purchase 200 tons of ground -nut
cakes from the defendant who were resident of Kanpur. The defendants conveyed their
acceptance to the plaintiff by telegram dispatched from Kanpur and the said acceptance
reached the plaintiff at Baroda in due course. The delivery of the goods was to be given
to the pla intiff at Khanna railway station and the plaintiff had to pay the money at Kanpur
to the Guru Nanak Oil Mills, from whom the defendant -firm had purchased the goods for
the plaintiff, or to the agent of the said mills at Kanpur. The defendants failed to giv e
delivery of the goods. The plaintiff brought a suit in the Baroda Court against the
defendants claiming damages for breach of contract. The principal defence to the suit was
that the Baroda Court had no jurisdiction to try the suit as the contract was ma de at
Kanpur, as its performance was to be at Kanpur and as the payment was also to be made
at Kanpur and as the breach of the contract, if any, had also occurred at Kanpur.
Held that no part of the cause of action arose in Baroda though the plaintiff had sent his
offer from Baroda by telegram and though he received the acceptance from the
defendants by telegram at Baroda. In the eyes of law the offer was made at Kanpur and
the acceptance was likewise made at Kanpur, with the result that the whole of the
contract was made at Kanpur. Consequently, the Baroda Court had no jurisdiction to
entertain the suit."
12. With regard to accrual of cause of action to the respondent for filing suit claiming
damages, section 19, C.P.C. being relevant is reproduced herein b elow:
"19. Suits for compensation for wrongs to person or movables. ---Where a suit is for
compensation for wrong done to the person or to movable property, if the wrong was
done within the local limits of the jurisdiction of one Court and the defendant res ides, or
carries on business, or personally works for gain, within the local limits of the jurisdiction
of another Court, the suit may be instituted at the option of the plaintiff in either of the
said Courts."
In the instant case it reveals that the pric e of the coal supplied by the respondent to lie
petitioner was used to be deposited by the petitioner in UBL Account of the respondent at Hali
Road Quetta online from Islamabad and when the disputed amount was not paid/deposited online
in the Quetta accoun t of the respondent, the suit was filed for recovery of the said amount as well
as damages. In view of the cause of action accrued to the respondent for claiming damages, the
suit has rightly been instituted by the respondent at Quetta in terms of section 19, C.P.C.
Reference in this regard is made to the case of "Abdul Rahim Baig" relied upon by learned
counsel for the respondent wherein it has been held as follows:
"Taking up the element of cause of action in terms of section 19, C.P.C. as already seen,
such too arose elsewhere and beyond the limits of the civil district of Karachi. In these
circumstances, the suit was wrongly instituted here."
13. For the above reasons it is concluded that in view of Section 4 the Contract Act 1872 read
with Sections 19 a nd 20(c) C.P.C. and in view of accrual of cause of action to the respondent at
Quetta, the civil Court at Quetta has the jurisdiction to proceed with the suit filed by the
respondent; that while rejecting the application of the petitioner under Order VII, Rule 10, C.P.C.
for return of the plaint to the respondent, the trial Court has not committed any illegality or
irregularity warranting interference by this Court in its revisional jurisdiction.
The cases of "Rahmania Trading Company" and "REGISTERED FIRM SHEIKHAN
INDUSTRIES" relied upon by learned counsel for the petitioner being distinguishable are not
attracted in the facts and circumstances of the instant case.
For the above reasons the petition is dismissed with no order as to cost. The earlier
interim order dated 28th May, 2015 passed by this Court whereby the proceedings pending
before the trial Court were suspended, stands recalled. The trial Court is directed to further
proceed with the suit in accordance with law.
SL/37/Bal. Revision dismissed.This judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
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