KARACHI GAS CO.LTD Versus DAWOOD COTTON MILLS LTD

1. MUHAMMAD GUL, J ‑These three connected appeals by special leave are from the judgment of the late High Court of West Pakistan, Karachi Bench dated 10‑3‑ 1962, modifying the decree of a learned Single Judge of the same High Court in Civil Suit No. 125 of 1959.

2. The Dawood Cotton Mills Ltd. (hereinafter called the plaintiffs) filed a re-stitutionary suit for the recovery of Rs. 1,90,027 from Sui Gas Trans mission Company Ltd. (hereinafter called Sui Gas) and the Karachi Gas Company Ltd. (hereinafter called Karachi Gas) or any of them. This amount was alleged to have been over‑charged by the latter two, as price of natural gas supplied by them to the plaintiffs and on account of certain other related items.

3. On 19‑8‑1954, Sui Gas by their letter (Exh. D/7), offered to sell natural gas to the plaintiffs on the terms set out in the letter which, for the material purpose read:

4. "We write to confirm that for a period of four years with effect from the 1st August, 1955, or from such date as of which we may give you not less than three calendar months' notice, we shall sell, and you will buy, in each calendar month, a minimum quantity of 15.6 million cubic feet of natural gas from the Sui Gas Field at a price of Rs. 1‑14‑0 per thousand cubic feet.

5. We shall deliver gas to you at your works and we shall make proper arrangements for the metering of gas sold.

6. At the end of each month, we shall deliver to you an account showing the quantity of gas sold to you in the preceding month, together with the price payable therefore.

7. The delivered price of furnace oil to you at works at the date hereof is Rs. 84 per ton which is the equivalent of Rs. 2‑0‑5 per thousand cubic feet. Notwithstanding anything herein contained, if such price of oil should at any time during the continuance of this agreement exceed Rs. 99 per ton then we shall be at liberty to terminate our obligations hereunder by giving you not less than thirty days' notice of our intention so to do.

8. We shall be obliged if you will confirm your agreement as to the fore going by signing and returning to us the enclosed duplicate copy of this letter."

9. 'The plaintiffs signed the copy and returned it alongwith the letter dated 5th September, 1954 (Exh. D/8) subject however, to the following reservation:

10. Mr. Davis personally gave us to understand, however, that your Company would not bind us as to the minimum quantity purchaseable by us in a month and also told us not to interpret strictly paragraph 4 of the agreement empowering your company to discontinue supply in case of rise in price of furnace oil beyond Rs. 99 per ton.

11. We shall be glad to have your confirmation on the foregoing points, in anticipation of which we now return the agreement with our signature."

12. This letter was acknowledged by Sui Gas by their letter dated 11th September, 1954 (Exh. D/9) which read:

13. "I acknowledge with many thanks receipt of your letter dated the 8th instant together with agreement for supply of Sui Gas, duly signed as requested.

14. In regard to the point raised by you, I confirm that the Gas charged will only be that which is measured and recorded through the meter and that should the price of oil reach the figure quoted of Rs. 99 this would naturally be subject to negotiations."

15. It is common ground between the parties that the three letters set out above constituted the contract between them regarding the supply of natural gas by Sui Gas to the plaintiffs.

16. The supply of gas commenced on 28‑11‑1955 instead of the 1st October, 1955 as originally stipulated in the agreement. But in the meantime on 12th September, 1955 in terms of paragraph 4 of the letter dated 19‑8‑1954 (Exh. D/7), Sui Gas, by means of letter dated 12‑9‑1955 (Exh. D/22) notified to the plaintiffs:

17. "Since with effect from 1‑9‑55, the price of furnace oil delivered to you exceeds the hitherto delivered price by more than Rs. 15 per ton, and since due to devaluation our costs make such action necessary, we hereby give notice in terms of paragraph 4 of our contract dated 19th August, 1954, that gas prices are subject to upward revision. We shall advise you shortly what these will amount be but meantime can assure you that they will remain competitive."

18. This letter was followed by letter dated 1st October, 1955 (Exh. D/26) by Sui Gas intimating the plaintiffs that the price of gas will be Rs. 2‑8‑0 per 1000 c.f. It is important to point out that tree notice regarding the increase in the price of gas was given before the supply of gas had actually commenced.

19. In the meantime the Karachi Gas had been incorporated and the distribution of gas in Karachi city was entrusted to the new Company. Sui Gas by their letter dated 17th September, 1955 (Exh. 13/25) informed the plaintiffs about this change in the arrangement, but nevertheless assuring the latter that Karachi Gas would supply gas on the same terms as agreed to between the original parties to the contract.

20. The plaintiffs did not immediately protest against the increase in the price, although they raised certain other controversies regarding deposit of security, and payment of monthly rental for meter installed to measure the gas supplied. Not only that: supply having commenced on 28‑11‑1955, the plaintiff's continued paying bills for monthly consumption at the rate of Rs. 2‑8‑0 per 1000 c.f. until August, 1957 when, they raised, for the first time, the issue that the gas supplied was not being charged at the agreed rate and that the recoveries made in excess of the agreed rate were "illegal".

21. Later, another controversy arose between the parties. It appears that supply of gas was extended to the workers' canteen and officers' residences from 1‑1‑1957 for which the plaintiff's charged @ Rs. 4 and Rs. 6 per 1000 c.f. respectively, though according to the plaintiffs, gas supplied to the canteen and officers residence should have been charged @ Rs. 1‑14‑0 per 1000 c. f.

22. By a subsequent letter (Exh. D/170) dated 23‑8‑1957 by the plaintiffs, it was stated that all previous bills for the consumption of gas, had been paid under protest. A further protest was lodged by means of letter dated 2‑9‑1957 (Exh. D/172), to which Karachi Gas replied on 4‑9‑1957 expressing their inability to reduce the rates.

23. Ultimately, on 30‑5‑1959, the plaintiffs filed Suit No. 125 of 1959 in the late High Court of West Pakistan at Karachi for the restitution of Rs. 1,49,169‑2‑0 on account of excess amount charged as price of gas supplied for various purposes and Rs. 37,593‑5‑0 and Rs. 3,264‑9‑0 allegedly wrongly recovered as cost of pipeline laid in the Mills premises and meter rent respectively. The total amount thus claimed was Rs. 1,90,027. The plaintiffs also claimed interest at 6 per cent per annum.

24. Sui Gas and Karachi Gas repudiated the plaintiffs' claim and further alleged that the suit, in respect of amount realized more than three years next prior to date of suit, was barred by time.

25. A large number of issues were framed in the suit. However, as the controversy between the parties has now been narrowed down to the proper rate chargeable in respect of gas supplied for industrial purposes only, it is not necessary to refer to these issues in detail.

26. A learned Single Judge by his judgment dated 30‑11‑61 held that the plaintiffs were not entitled to get back from the appellants the sum of Rs. 37,593‑5‑0 on account of the cost of the pipeline for in his opinion, the correspondence between the parties showed un-mistakenably that the plaintiffs had agreed to pay for pipeline laid in the Mills premises. The learned Single Judge also held that the plaintiffs were not entitled to the refund of the rental for meter from Sui Gas or Karachi Gas as the contract between the parties was silent on the point and that in accordance with the "settled usage", meter rent was chargeable from the consumer.

27. The learned Single Judge also did not accept the plaintiffs' claim that gas supplied to them for various purposes in the mills should have been charged at the rate of Rs. 1‑14‑0 per 1000 c.f. and not at any higher rate in terms of paragraph 4 of letter (Exh. D/7).

28. The learned Single Judge however, accepted the plaintiffs' claim that Sui Gas or its assignee Karachi Gas, as the case may be, could charge for the gas supplied to the plaintiffs for various purposes of the Mills at the uniform rate, as the gas supplied to the officers' bungalows situate within the premises of the plaintiffs' Mills and the workers' canteen was equally covered by the terms of the contract between the parties The learned Single Judge conse quently allowed a uniform rate of Rs. 2‑8‑0 per 1000 c.f. of gas supplied to the plaintiffs' Mills, including the workers' canteen and officers' bungalows, and decreed the plaintiffs' claim to the extent of Rs. 4,303‑8‑0 with propor tionate costs.

29. The plaintiffs filed Letters Patent Appeal against the above judgment, which was allowed by the learned Judges of the Letters Patent Bench. The learned Judges held that the Sui Gas and Karachi Gas were not entitled to more than Rs. 1‑14‑0 per 1000 c.f. and therefore, decreed the plaintiffs' claim for the restitution of the amount overcharged, but only in respect of gas supplied for the period of three years next prior to date of suit. Suit in respect of alleged over‑payments made beyond three years was held to be barred by limitation and the plaintiffs' appeal to that extent was dismissed. The plaintiffs' appeal was also dismissed in respect of the claim for Rs. 37,593‑5‑0 on account of cost of pipeline and Rs. 3,264‑8‑0 on account of meter rent.

30. The three parties have come up in appeal. C. As. No&. 7 and 8 of 1969 are respectively by Karachi Gas and Sui Gas, against that part of the judgment of the Letters Patent Bench, which decreed restitution of the amount allegedly charged over and above the agreed rate of Rs. 1‑14.0 per 1000 c. f. C. A. No. 9 is by the plaintiffs against that part of the judgment of the Letters Patent Bench which disallowed restitution in respect of the alleged over‑payments made more than three years next prior to the institution of the suit.

31. Mian Mahmood Ali Kasuri, Advocate who appeared for the plaintiffs (the appellants in Appeal No. K‑9/1969), however, did not seriously press the plaintiffs' claim for the restitution of the alleged over‑payments made during the period beyond three years next prior to the institution of the suit. The plaintiffs had claimed restitution in respect of even that period on the plea that there was a "running account" between the parties and therefore, three years' limitation for the refund did not begin until the final settlement of accounts between the parties and signed in their behalf. The plea was obviously founded on Article 64 in the First Schedule to the Limitation Act, 1908 (Act IX of 1908) which provides for three years limitation from the date "when the accounts are stated in writing and signed by the defendant or his agent", in this case the plaintiffs herein. The plea however, is wholly, misconceived. In the third paragraph in the first letter dated 19‑8‑1954 by Sui Gas (Exh. D/7), it was clearly stated that the bills will be paid at the `9 end of each month. Even otherwise, the relationship between the parties was that of buyer and seller, the plaintiffs being buyers were the debtor. Thus, the plaintiffs were in debit throughout, and the accounts being one-sided there was no mutuality which is an essential element in current and open account. There is abundant evidence on record to show that the bills were sent by Karachi Gas to the plaintiffs at the end of each month, which were generally promptly paid by the latter before the expiry of the next month, and occasionally on a reminder by Karachi Gas. In this state of affairs, learned counsel for the plaintiffs, was entirely right not to press Appeal No. K‑9 of 1969 by the plaintiffs.

32. Consequently, the arguments addressed at the Bar were confined to Civil Appeals Nos. K‑7 and K‑8 filed by Karachi Gas and Sui Gas respectively. In both these appeals. the Judgment of the Letters Patent Bench in so far as it decreed the restitution of the amount charged in excess of Rs. 1‑14‑0 per 1000 c. f., was assailed by Mr. A. K. Brohi, learned counsel for Karachi Gas, but was supported by Mian Mahmood Ali Kasuri, learned counsel for the plaintiffs. The argument of Mr. A. K. Brohi was adopted by Mr. Fazl ‑ur‑Rehman, learned counsel for Sui Gas in C. A. No. K‑8 of 1969. For a proper appreciation of the arguments of learned counsel on both the sides, it is necessary to recapitulate certain broad facts bearing upon what remains the only point in controversy.

33. As pointed out earlier, three letters namely, Exhs. D/7, D/8 and D/9 are repository of contract between the parties. Under the letter mentioned first, Sui Gas inter alia reserved to themselves the right to terminate contract on not less than 30 days' prior notice, should the price of furnace oil at any time during the period of contract, exceed Rs. 99 per ton. The prevailing market price of furnace oil then was Rs. 84 per ton which thus allowed a margin of Rs. 15 before the critical point was reached. However, this, condition was ultimately modified in the last letter, so that the consequential action upon the price of furnace oil reaching Rs. 99 per ton was made "subject to negotiations".

34. The learned Judges of the Letters Patent Bench while accepting the plaintiffs' appeal, took the view that prior negotiations between the parties was an essential condition for any upward revision of the price of gas, even if critical point as postulated in paragraph 4 of the letter (Exh. D/7) was reached. Since there ere no prior negotiations between the parties, Karachi Gas or Sui Gas could not charge the plaintiffs for the supply of gas at a rate exceeding Rs. 1‑14‑0 per 1000 c. f. In that conclusion, the learned Judges were greatly influenced by the fact that Sui Gas having notified their intention vide letter dated 12‑9‑1955 (Exh. D/22), to increase the price of gas, they by their subsequent letter dated 17‑9‑1955 (Exh. D/25) asked the plaintiffs to deposit Rs. 29,250 as security. This figure was worked out on the basis of Rs. 1‑14‑0 per 1000 c. f. with a minimum consumption of 15.6 million c. f. per month. This evoked immediate protest from th‑3 plaintiffs in so far as the security was being required on the basis of the minimum consumption as aforesaid. This condition has already been waived in letter (Exh. D/8). To alley the plaintiffs' misgivings, Sui Gas wrote letter dated 1‑10‑1955 (Exh. D/27) stating inter alia that the plaintiffs shall be charged "for the quantity actually metered", but nevertheless requesting the plaintiffs to arrange for the security deposit as demanded, "which though calculated at the rate of Rs. 1‑14‑0 per 1000 c.f. is considerably less than the value of gas reserved for you (the plaintiffs) at today's prices". Simultaneously, by another letter of even date (Exh. D/26), Sui Gas also informed the plaintiffs that until further notice, Karachi Gas will supply gas at the rate of Rs. 2‑8‑0 per 1000 c. f.

35. This correspondence, in the opinion of the learned Judges of Letters Patent Bench was symptomatic of the "mental attitude" of Sui Gas and intimation vide their earlier letter of 1‑10‑1955 that the price of the gas supplied until further notice would be Rs. 2‑8‑0 per 1000 c. f. was "tentative and subject to negotiations". The fact that the plaintiffs were being asked to deposit security on the basis of Rs. 1‑14‑0 per 1000 c. f. was, in the opinion of the learned Judges, "a complete answer" to any claim for a price exceeding Rs. 1‑14‑0 per 1000 c. f. notwithstanding the letters Exh. D/26 intimating the increase in price, which the learned Judges treated as "tenta tive" and therefore, "negotiable".

36. Mr. A. K. Brohi, learned counsel for Sui Gas, was critical of the above conclusions of the learned Judges. He argued that the contract, concluded between the parties by means of three letters, Exhs. D/7, D/8 and D/9 clearly envisaged an upward revision of price of gas, should the price of furnace oil equal Rs. 99 per ton; and there was no dispute that on 1‑10‑1955 when Exh. D/26 was addressed to the plaintiffs, the ruling price of furnace oil was Rs. 105‑8‑0 per ton. Therefore, a right accrued to Karachi Gas to increase the price under the terms of the agreement between the parties. In exercise of that right, Karachi Gas increased the price from Rs. 1‑14‑0 to Rs. 2‑8‑0 per 1000 c.f. The revised price was not only accepted by the plaintiffs but continued to be paid without any demur for about two years. This accord ing to learned counsel made negotiations on the point wholly otiose.

37. Alternatively, it was submitted by Mr. Brohi, that letter (Exh. D/9) did not prescribe any particular mode of negotiations. According to him, letter dated 1‑10‑1955 (Exh. D/26) in substance, initiated negotiations and it then fell upon the plaintiffs to make counter proposal, if the proposal in Exh. D/26 was not acceptable to them. The fact that the plaintiffs continued paying the bills for the gas actually consumed by the plaintiffs' Mills at Rs. 2‑8‑0 per 1000 c.f. for almost two years without any demur or protest, was in sharp contrast with the controversy raised by the plaintiffs on certain other related points. This conduct, according to the learned counsel irresist ibly led to the conclusion that the plaintiffs had by their conduct, accepted the proposal for increase in price of gas. In support of this part of his argument, learned counsel cited Privy Counsel judgment in Hari Dass Ranchordass v. Marcantile Bank Ltd. (47 I A 17), Allahabad case, Goddarmal v. Tata Industrial Bank, Bombay (I L R 49 All. 649) and a recent judgment from Indian jurisdiction, Hulas Kunwar v. Allahabad Bank Ltd. (A I R 1958 Cal. 644). I will presently advert to these cases in some detail.

38. Mian Mahmood Ali Kasuri, learned counsel for the plaintiffs on the other hand referred to certain circumstances antecedent to the formation of contract as explanatory of the conduct of the parties herein. He submitted that Sui Gas was anxious to conclude contract for the sale of gas to the plaintiffs to help Sui Gas to procure loan from the World Bank. He also referred to the heavy expense incurred by the plaintiffs to fit their machinery for running on gas in place of oil. Therefore, according to learned counsel, plaintiffs would scarcely be expected to be a party to an one‑sided agreement giving Sui Gas the right to increase the price of gas, virtually unilaterally. These considera tions, in my opinion are hardly relevant to the matter in controversy which falls to be determined on a proper construction of contract by correspondence between the parties. It is important to bear in mind, that we are concerned with what is purely a commercial contract between persons experienced in business and therefore, it must be interpreted and given business efficacy. in that context, any hidden motivation, notwithstanding. Then it is wrong to suggest that the contract gave Sui Gas the right to increase price of gas uni laterally price of gas was co‑related with the price of furnace oil and was subject to upward revision only after the ruling price of oil, which then was Rs. 84 per ton, rose to Rs. 99 per ton or more. The critical point having reached, the question is whether that being so, Sui Gas increased the price of gas from 1‑14‑0 to 2‑8‑0 per 1000 c.f. in conformity with the terms of the agreement and whether the same was accepted by the plaintiffs, either expressly or by implication?

39. Learned counsel for the plaintiffs, next emphasized that among the reasons stated in letter dated 12‑9‑1955 (Exh. D/22) for the proposed increase in the price of gas, were that the price was being increased because of devaluation of Pakistani rupee and increase in the administrative expenses. Learned counsel argued that Sui Gas had increased the price of gas for reason extraneous to the contract and not for any increase in the price of furnace oil beyond the critical limit of Rs. 99 per ton. The argument proceeds on a ,superficial reading of the letter (Exh. D/22). The letter among other reasons said that the price of gas is being increased because of the increase in the price of crude oil by "more than Rs. 15 per ton." It is in the evidence of D. W. 2, Mr. Muhammad Muslim Saifee, that on the 12th September, 1955 when Exh. D/22 was addressed to the plaintiffs, the ruling price of oil had ‑risen to Rs. I 12‑8‑0 per ton which later in October, came down to Rs. 105‑8‑0 per ton. This evidence has gone unchallenged and the argument proceeds on mistaken premise. Devaluation might have also contributed to increase in the price.

40. Mr. Mahmood Ali Kasuri, learned counsel for the plaintiffs, also repeated ‑the argument, which had weighed with the Letters Patent Bench that the con tract between the parties as modified by letter Exh. D/9 postulated negotiations between the parties, which was a condition precedent for any increase in the agreed price. The argument even went further that the negotiations had to be confined to the revision of price only so that in the event of parties' failure to reach a consensus as to any increase in the price. Karachi Gas remained bound to supply gas for the remainder period at the agreed rate of Rs. 1‑8‑0 per 1000 c. f. without any right to terminate the contract as originally pro vided in the letter (Exh. D/7). It was also submitted that intimation about the increase in rates did not amount to an acceptance of modified proposal by ‑Karachi Gas to the increase in the price of gas. For this part of the argument plaintiffs' learned counsel also sought support from the case of Hulas Kunwar cited by learned counsel for Karachi Gas in support of the contrary proposi tion. Finally, it was submitted that the plaintiffs' protest by letter dated 23‑8‑1957 (Exh. D/170) was effective enough to cover all previous payments of bills by them.

41. On no discoverable principle, the legal fiction can be imported to give retrospective effect to the letter of protest (Exh D/170), which otherwise had become much too late and therefore, devoid of any efficacy. The plaintiffs having accepted and paid the monthly bills at the revised rates for almost two years, without any demur, had by their conduct accepted these rates thereby dispensing with the requirement of negotiations. Indeed, this unequi vocal conduct brought into existence a situation, which would at once attract the application of section 63 of the Contract Act, 1872, which reads

42. "Every promisee may dispense with or remit, wholly or in part, the per formance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit."

43. The section envisages inter alia dispensation or remission by a promise of the performance of the promise made to him, either wholly or in part. Therefore, it is competent to both the parties to an executory contract ---the instant case is of such contract by mutual agreement without any satisfaction to discharge or dispense with any of the obligations of that contract. This section applies to cases where the old contract subsists and IC there is a voluntary remission of some promise in it. In my opinion, the instant case falls within the purview of the section, the plaintiffs having dispensed with the requirement of negotiations, by their unequivocal conduct extending to almost two years, pointed to their acceptance of the increased rates.

44. The Privy Council decision in Hari Dass Ranchordass noticed above is a strong case in support of the implied agreement by the conduct of the promisee. In that case, the question was whether the Bank was entitled to compound interest with monthly rests, though the written contract between the parties provided only for yearly interest on the daily balance in respect of the over‑draft. The Bank relied on the pass‑book of the customer which showed that at the end of every month, the interest was added to the amount then due and-‑ "the resultant balance which included the interest was carried forward to the debit of the customer as balance due on the 1st of the following month."

45. The customer did not raise any objection to this principle of charging interest. On the basis of these facts, the Privy Council following the principle laid down in (1813) 3 Camp 487 observed at p. 23 as follows:‑

46. " . the fact that the defendant had not objected to a change of compound interest in accounts which for several years, he had annually received from the plaintiff bank offered sufficient evidence of a promise by him to pay interest in that manner."

47. In Gaddarmal v. Tata Industrial Bank Ltd. provision was made for varia tion of rate of interest by agreement between the parties. The bank intimated its intention to raise the interest from 8 percent to Rs. 10 per cent. from a specified date to which the customer plaintiff in that case made no reply although after the receipt of notice, he secured a fresh loan from the bank. The question that arose for consideration of the Court was whether in the circumstances of the case, there was an implied agreement on the part of the plaintiff to pay interest at the higher rate. Though the Division Bench observ ed in that case, that mere intimation by the bank of its intention of charging higher rates of interest was not sufficient by itself to render the customer liable to pay interest at the higher rate, nevertheless, the learned Judges held that since the customer had taken further advances from the bank even after the receipt of the notice, there was an implied agreement to pay interest at the higher rate. Ashworth, J., who delivered the judgment of the Court said:

48. "If it had not been for this acceptance of a further loan I should have held that there was no acceptance by the plaintiff of the higher rates of interest. Even if the Bank had intimated in the said letters that in the event of their not hearing from the plaintiff they would presume accept ance by the plaintiff of the higher rates of interest, this would not have justified the Bank in claiming that their offer had been accepted in the manner prescribed .."

49. The facts in the case of Hulas Kunwar on which learned counsel on both the sides relied to support their respective propositions were these. In a suit for redemption of shares pledged by the plaintiff on a proper accounting of ail the bills and transactions between the plaintiff and the defendant bank, the allegations of the plaintiff were that the bank had wrongfully charged interest @ 3 percent. while it should have had charged at the reduced rate of Rs. 3 per cent. Evidence was led to show that the defendant bank had intimated by a cyclostyled copy of a circular issued to all customers of the bank including the plaintiff in that case, which read as follows:‑

50. "The bank has decided to conform to the minimum interest rates stipulat ed by Calcutta Exchange Banks. You are by this letter informed that interest on your over‑draft account secured by shares will be increased as from date to percent over the bank rate minimum 3 percent."

51. The defence to the suit was that though a copy of this notice was sent to the plaintiff in the ordinary course, there was no express acceptance of its terms by the plaintiff. It was however observed that the communication to the plain tiff intimating him the bank's decision to raise the rate of interest was is the nature of an implied proposal that if the plaintiff wanted to keep his over‑draft account alive with the bank or desired to take further advances from the bank, it could be done only on the terms contained in the notice. Evidence was also led to show that the plaintiff had, after the cyclostyled notice to him taken a further advance and he also kept alive the over‑draft for more than three years. On these facts, it was held that the plaintiff had notice of the fact that the bank had raised the rate of interest and hence, there was an implied promise on his part to pay higher rate of interest. In reaching that conclusion, the two cases noticed above were followed.

52. Mr. Mahmood Ali however, relied on the headnote (a) in the report of tke judgment in the above case which stated, that the cyclostyled note by the bank was in the nature of a mere proposal to raise the rate of interest, which for its conversion into contract, required consent of the customer. But as pointed out above, the Court, on the facts of the case, which, in essential respect are analogous to this case, had no hesitation to come to the conclusion, that the customer's failure to object to the increase in the rate of interest, coupled with his acceptance of further loan, after the cyclostyled circular, imported acceptance of the new proposal by him.

53. In a publication in two volumes, called "Formation of Contracts" (1968 Edn.), which is a comprehensive comparative study in the relevant branch of law followed in various Common Law and certain continental countries, by Schelsinger the learned author at page 138 in Chapter B‑5 of Volume I, under the title "Acceptance by Silence" observes

54. "Because of a change of circumstance or of alleged difficulties of performance, one party may offer modification of the contract. In such a case silence, normally does not amount to acceptance. A different rule may prevail when a clause in the original contract expressly provides for further adjustment in the light of changing economic condition. If one party makes an offer of modification which is consistent with the standard set in that clause (assuming that the clause is not invalid) silence of the other party may, possibly be regarded as an acceptance, where in the absence of such a clause a reasonable offer to adjust the terms of the contract (especially a contract involving successive perform ance over a long period of time) to rapidly changing economic condi tions is deemed accepted by silence is a more difficult question."

55. Its Volume 11 of the same publication, the learned author at p. 1095 under the heading "Proposal to modify a contract" goes on to observe:‑

56. "If there is an existing contract not providing for changes, silence in response to a subsequent proposal, without more, deals the contract as before without modification.

57. If an existing contract provides for future adjustment silence upon the receipt of notice of making the adjustment may constitute consent, especially if the parties continue performance. ."

58. In the instant case as pointed out in the beginning, the contract between the patties expressly provided for upward revision of price of gas, if price of counsel, the price,

59. Sui Gas to terminate the contract even if the negotiations proved my humble view, is as unreal as it is fallacious and must therefore, be rejected, It is unthinkable, that Sui Gas who had the monopoly for gas would agree to such modification; it cannot be spelt out of the correspondence or the ambient circumstances.

60. These circumstances when viewed in the context of the express provision in the contract for upward provision of rates in the relevant circumstances, in my opinion lead to the reasonable conclusion, that the plaintiffs had by their conduct accepted the increased rates which were notified and brought in force, before the supply of gas actually commenced. Having done so, the plaintiffs cannot now be permitted to retract from that position. On that view, the plaintiffs' suit was rightly decided by the learned Single Judge in the High Court.

61. For the foregoing reasons, I would accept C. As. Nos. K‑7 and K‑8 of 1969, set aside the judgment of the learned Judges of the Letters Patent Bench and restore that of the learned Single Judge. However, in view of the convict of judgments in the High Court, I would leave the parties to bear their own costs in these two appeals.

62. C. A. No. K‑9 of 1969 by the plaintiffs is however, dismissed with costs.

63. MUHAMMAD YAQOOB ALI, J.‑‑ These are three connected Civil Appeals brought by special leave from the judgment and decree passed by a Division Bench of the erstwhile High Court of West Pakistan, Karachi Seat, on 10th March 1966.

64. Civil Appeal No. K‑7 of 1969 is by Karachi Gas Company Limited and Civil Appeal No. K‑8 is by Sui Gas Transmission Company Limited. Dawood Cotton Mills Limited is the sole respondent in both the appeals. Civil Appeal No. K‑9 is by Dawood Cotton Mills Limited in which both Sui Gas Transmission Company Limited and Karachi Gas Company Limited are respondents.

65. The appeals have arisen out of Civil Suit No. 125 of 1959 filed by Dawood Cotton Mills Limited against Sui Gas Transmission Company Limited, defendant No. 1 and Karachi Gas Company Limited, defendant No. 2, for recovery of Rs. 1,90,027 on account of:-‑

(i) Excess amount charged by the defendant for supply of gas to the plaintiffs' works between 22‑11‑1955 and 13‑4‑1959.

66. Rs. 1,49,169-2‑0.

(ii) Refund of cost of pipelines and fittings.

67. Rs. 37,593‑5‑0

(iii) Refund of meter rent charged during the aforesaid period.

68. Rs. 3,264‑9‑0

69. The case for the plaintiffs was that under the contract concluded between the parties on 19th August 1954, defendant No. 2 had undertaken the obligation to supply, for a period of four years, natural gas to the works, canteen and residential bungalows within their mills at Rs. 1‑14‑0 per thousand cubic feet but had wrongfully billed them at Rs. 2‑8‑0 per thousand cubic feet for the gas supplied to the mills and at Rs. 6 per thousand cubic feet for the gas supplied to the canteen and residential bungalows. The other two items in the suit likewise proceeded on breach of the terms of contract by which defendant No. 2 had undertaken to supply gas at the works of the plaintiffs and to make proper arrangements for the metering of the gas sold.

70. Before commencement of the supply of gas on 26th November 1955, the defendant No. 1 floated the defendant No. 2 as a subsidiary and assigned to it all the rights and obligations under the contract with the plaintiffs dated 19th August 1954. Intimation of this assignment was given to the plaintiffs to writing by defendant No. 1 on 17th September 1955. The plaintiffs accordingly claimed refund of the excess amount from both or any one of the defendants.

71. The defendants denied the plaintiffs' claim in its entirety and pleaded that increase in the race of gas was made in accordance with the terms of the contract. In para. 2 of the written statements of defendants Nos, 1 and 2, it is said, "the price of the gas went up and came down from time to time in accordance with paragraph 4 of the agreement dated 19th August 1954.

72. On list March 1966, the learned Single Judge who tried the suit on the original side in the High Court framed the following issues with the consent of the parties counsel:

CONSENT ISSUES

(1) What part of the claim in suit is barred by limitation? .

(2) Whether the defendant No. 1 had given specific assurances to supply gas at much cheaper rate than fuel oil, if so, what is its effect?

(3) Whether the price of furnace oil went over Rs. 99 per ton before the supply of gas to the plaintiffs commenced and the contract as to price was terminated?

(4) Whether the plaintiffs paid the defendant's bill under protest without prejudice to their rights? If so, what is the effect?

(5) Whether the plaintiffs protested through the Karachi Gas and Electricity Consumer's Association and claimed any refund? If so, what is the effect?

(6) Whether the defendants had agreed to supply gas at Rs. 1.14‑0 for all purposes?

(7) Whether the defendants had agreed to provide the pipelines up to the point of consumption in the plaintiff Mills?

(8) Whether the plaintiffs are entitled to; the refund of Rs. 37,593‑5‑0 paid as cost of Pipelines etc?

(9) Whatever the charging of meter rental was in contravention of the Agreement?

(10) Whether the plaintiffs are entitled to the refund of Rs. 3,264‑8-0 paid as raster rental

(11) Whether the plaintiffs are entitled to claim back any part of the amounts paid against the bills of the defendants for the supply of gas?

(12) Whether a cause of action accrued to the plaintiffs on the date of receipt of each bill and finally on 25‑5‑1959?

(13) Whether defendant No. 2 is agent of the defendant No. 1 for distribution of gas?

(14) Whether the plaintiffs' claim is barred by the laches and conduct of the plaintiffs?

(15) Whether the plaintiffs are estopped from claiming back any monies paid for the supply of gas?

(16) To what relief, if any, the plaintiffs are entitled?

73. Documents and commission applications, if any, within two months.

74. (Sd.) (Sd.)

75. Advocate for plaintiffs Advocate for defendants.

76. Karachi.

77. Dated: 21st day of March 1960.

78. (Sd.)

79. A. S. Farooqi, Judge.

80. 21‑3‑1960

81. By consent issue No. 2 dropped and issue No. 8 amended.

82. (Sd.)

83. A. S. Farooqi, Judge,

84. 21‑11‑1961.

85. In affirmation and rebuttal of the issues, the parties relied mainly an documentary evidence. Only defendant No. 2 examined Iqbal Ahmad, D. W. 1, who produced the agreement dated 26th November 1955, by which defendant No. 1 had assigned its rights and obligations under the contract with the plaintiff to defendant No. 2 and Muhammad Muslim D. W. 2, who deposed to the variation in the price of furnace oil between, August 1954 and May 1958.

86. Consequent upon the findings recorded by the learned Single Judge on issues Nos. 2 and 3, to which I will. refer presently, he did not consider it necessary to answer issues Nos. 1 sand 12 to 15.

87. On issues Nos. 4 and 5, it was found that the plaintiffs had raised their protest for the first time on 23rd August 1957, but the protest was r‑: ineffective. The plea that the plaintiffs had protested through the Karachi Gas and Electricity Consumers' Association, was also rejected as it was not supported by any evidence.

88. On issue No. 6, Mr. Fazalur Rahman, appearing for defendant No. 2, conceded that if the contract of 19th August 1954, was not terminated as maintained by him, then his client had no justification for charging at different rates for supply of gas to the canteen and residential bungalows within the mill. As the learned Judge had under issues Nos. 2 and 3, found that the contract subsisted, issue No. 6 was found in favour of the plaintiffs and it was held that they were entitled to refund of Rs. 4,303‑8‑0 charged by defendant No. 1 in excess of the average rate of Rs. 2‑8‑0 per thousand cubic feet.

89. Issues kilos. 7, 8, 9 and 10 were answered against the plaintiffs on the finding that they had willingly paid Rs. 37,593‑5‑0 as cost of pipeline and fittings and Rs. 3,264‑9‑0 as meter rent. The claim for refund of these amounts was, therefore, held to be without any substance.

90. Under issue No. 11, the learned Judge held that the plaintiffs were entitled to the refund of Rs. 4,303‑8‑0 only on account of excess amount charged by defendant No. 2 for supply of gas to the canteen and residential bungalows within the mill area. The rest of the claim in the suit was rejected.

91. To appreciate the findings on issues Nos. 2 and 3, it is necessary to set out first the three letters which contain the terms of the contract of 19th August 1954. Reference may also be made briefly to the other correspondence which passed between the parties in relation to increase in the price of gas made unilaterally by the defendant.

92. "Exh. D/7

SUI GAS TRANSMISSION COMPANY LIMITED

93. Karachi, 19th August, 1954

94. Dawood Cotton Mills Ltd., Landhi Estate.

95. Gentlemen !

96. We write to confirm that for a period of four years with effect from the 1st August 1955, or from such date as of which we may give you not less than three calendar months' notice, we shall sell and you will buy, in each calendar month, a minimum quantity of 15.6 million cubic feet of natural gas from the Sui Gas Field at a price of Rs. 1‑14‑0 per thousand cubic feet.

97. We shall deliver gas to you at your works and we shall make proper arrangements for the metering of gas sold.

98. At the end of each month, we shall deliver to you an account showing the quantity of gas sold to you in the preceding month, together with the price payable therefore.

99. The delivered price of furnace oil to you at works at the date hereof is Rs. 84 per ton which is the equivalent of Rs. 2‑‑0‑5 per thousand cubic feet. Notwithstanding anything herein contained, if such price of oil should, at any time, during the continuance of this agreement exceed Rs. 99 per ton then we shall be at liberty to terminate our obligations hereunder by giving you not less than thirty days' notice of our intention so to do.

100. If through Act of God, floods, strikes, lock‑outs, riots, civil commotion or other circumstances beyond our control, we are unable to carry out our obligations under this contract, then to that extent we shall be excused from such performance,

101. We shall be obliged if you will confirm your agreement as to the foregoing by signing and returning to us the enclosed duplicate copy of this letter.

102. Yours faithfully,

103. SUI Gas Transmission Co. Ltd.

104. (Sd.)

105. Managing Director."

106. The plaintiffs did not sign the copy of the letter until Mr. Davis, s representative of defendant No. 1 gave them the understanding that defendant No. 1 will not bind them to the minimum quantity purchaseable in a month and that clause 4 of the agreement empowering defendant No. 1 to discontinue supply of gas in case of rise in the price of furnace oil will not be strictly interpreted. On this assurance, the plaintiffs sent signed copy of Exh. D/7 alongwith their letter Exh. D/8 dated 8th September 1954, reproduced below:‑

"DAWOOD COTTON MILLS LIMITED

107. Ref. 965/786/54. Karachi: 8th September 1954

108. M/s. Sui Gas Transmission Company Limited, Karachi.

109. Gentlemen!

110. Please find enclosed herewith a copy of agreement which your Mr. Davis left with us for our signature and which we understand is required by you for submission to the World Bank Authorities as evidence of business contracted.

111. Mr. Davis personally gave us to understand, however, that your Company would not bind us as to the minimum quantity purchaseable by us in a month and also told us not to interpret strictly paragraph 4 of the agreement empowering your company to discontinue supply in case of rise in price of furnace oil beyond Rs. 99 per ton.

112. We shall be glad to have your confirmation on the foregoing points, in anticipation of which we now return the agreement with our signature.

113. Awaiting to hear from you soon, we are.

114. Yours faithfully, for Dawood Cotton Mills Limited.

115. (Sd.)

116. Director."

117. In reply defendant No. 1 on 14th September 1954, gave the following assurance (Exh. D/9):‑‑‑

"SUI GAS TRANSMISSION COMPANY LIMITED

118. Reference: D/O 70/10/637 Karachi: 14‑9‑1954

119. M. H. Gani Esq.,

120. Director,

121. M/s. Dawood Cotton Mills Ltd.,

41. Saleh Mohammad Street,

122. Near Gordhandas Market,

123. Karachi.

124. Dear Sir,

125. I acknowledge with many thanks receipt of your letter dated the 8th instant together with agreement for supply of Sui Gas, duly signed as requested.

126. In regard to the point raised by you, I confirm that the gas charged will only be that which is measured and recorded through the meter and that should the price of oil reach the figure quoted of Rs. 99 this would naturally be subject to negotiations.

127. Yours faithfully,

128. Sui Gas Transmission Co. Ltd.

129. (Sd.)

130. Managing Director."

131. The clause 'this would naturally be subject to negotiations' when read alongwith paragraph 4 of Exh. D/7 and para. 2 of Exh. D/8, will yield to the interpretation, "In case the price of furnace oil exceeds the quoted figure of Rs. 99 per ton during the subsistence of the contract, the option reserved by defendant No. 1 to be at liberty to discontinue supply of gas to works of the plaintiffs, will not be exercised until negotiations are held between the parties".

132. Before supply of gas was commenced, defendant No. 1, on 12 th September 1955, sent letter (Exh. D/22 to the plaintiffs informing them that prices of gas were on upward revision. This was followed by another letter (Exh. D/26) dated 1st October 1955, that defendant No. 2 will supply gas to the plaintiffs at Rs. 2‑8‑0 per thousand cubic feet.

133. The plaintiffs first protested against the increase in price of gas on 23 rd August 1957, by letter (Exh. D/170). This was followed by another letter (Exh. D/172) dated 2nd September 1957.

134. On 4th September 1957, defendant No. 2 sent the following reply to the letter of protest dated 2nd September 1957:

"KARACHI GAS COMPANY LIMITED

135. GUD/DCM/L‑45/1. Karachi September 4, 1957.

136. Ahmed Dawood Esq., Chairman,

137. Dawood Cotton Mills Ltd.,

138. Insurance House No. 2,

139. 2nd Floor, Habib Square,

140. Bunder Road, Karachi‑2.

141. Dear Sir,

GAS SUPPLIED FOR CANTEENS

142. We thank you for your letter dated the 2nd September 1957, advising us that you have issued instructions for our outstanding bills to be paid.

143. We regret that you are making this payment under protest, but as we have already advised you, it is impossible to reduce our rates any further at this stage.

144. We assure you that our rates are being kept under constant review, as it is our policy to reduce them still further immediately circumstances permit us so to do.

145. Yours faithfully, for Karachi Gas Company Ltd.

146. (Sd)

147. Manager.

148. The tenor of this letter shows that defendant No. 2 did not consider itself bound by the price fixed in the contract of 19th August, 1954. On the contrary, the defendants assimilated to themselves the right to supply gas to the plaintiffs at such rates as they may fix in their discretion from time to time.

149. On 22nd May, 1959, the plaintiffs served on the defendants a notice through a lawyer claiming refund of the excess amounts charged by defendant No. 2 and as there was no response, they instituted the present suit on 30th May, 1959.

150. The learned Single Judge construed the material terms of the contract of 19th August 1954, in these terms:‑

151. "The contract, Exh. D/7 and the relevant portion of Exh. D/8 and Exh. D/9 have been reproduced in the earlier part of this judgment as also the notice dated 12th September 1955, Exh. D/22. Para. 2 of the contract had provided that if the price of furnace oil should, at any time during the continuance of the Agreement, exceed Rs. 99 per ton then the defendants would be at liberty to terminate their obligations to supply gas by giving the plaintiffs not less than 30 day's notice. But this term was amended at the request of the plaintiffs as contained in their letter dated 8th September 1954, Exh. D/8 and the defendant No. 1, by their letter of 14th September 1954, Exh. D/9 confirmed that should the price of oil reach the figure of Rs. 99 the rates would then be subject to negotiations. They also made a relaxation with regard to the minimum quantity of the gas consumed by the plaintiffs. Indeed, in their notice dated 12th September 1955, Exh. D/L2 though the defendant No. 1 mentioned para. 4 of the contract dated 19th August 1954, they did not say that they shall cease to supply the gas in view of the price of furnace oil having gone up by Rs. 15 per ton. What they said was that in view of this increase the gas price would be subject to upward revision and they would advise the plaintiffs shortly as to what this would be. The defendant No. 1 was thus giving effect to the amendment to which they had agreed by their letter Exh. D/9. 1, therefore, cannot accept the contention of Mr. Fazlur Rahman that the contract for the supply of gas on the part of the defendant No. 1 and later on the part of the defendant No. 2 had come to an end and that the defendants were not bound to supply and the plaintiffs were not bound to accept the supply for the contract period. The documents referred to above make it abundantly clear that only the rates had become subject to revision. The plaintiffs on their own part had accepted the position that if the price of furnace oil went up the rates of supply of gas by the defendants would be subject to revision. It was thus futile on their part to urge that they were only bound to pay at the rate of Rs. 1‑14‑0 per thousand cubic feet."

152. The counsel for the plaintiffs tried to invoke section 9 of the Sale of Goods Act, but the plea was repelled by the learned Single Judge with the observations:‑

153. "It was at the request of the plaintiffs themselves that an amendment was brought about and this was that upon the price of furnace oil going up beyond a certain point the price of gas would be subject to revision. Now Exh. D/9 says that this would be brought about by negotiations. There is no evidence that this negotiation had or had not taken place but the important fact indisputably stands out that when the defendant No. 1 informed the plaintiffs on 1st October, 1955, as per Exh. D/26 that the price of gas until further notice will be at Rs. 2‑8‑0 per thousand cubic feet, the plaintiffs, far from raising any protest, will ingly paid this amount and kept on doing so. It may be noted that the supply actually started on 26th November 1955 and if this price was not acceptable to the plaintiffs it was open to them to say so, in which case, in all probability, the defendants would have terminated the contract. I must, therefore, hold that the plaintiffs had accepted this price and any further revision that might take place from time to time. This being so, clause (2) of section 9 has no application as the revised price had been accepted by the plaintiffs and it can also be determined by the course of dealings."

154. Disregarding the protest made by the plaintiffs against increase in the price of gas made by the defendants during the subsistence of. the contract, the learned Judge remarked:‑

155. "The protest made by them on 23rd August, 1957, two years after the supplies had commenced and payments had been made without any demur can be of no avail to the plaintiffs. In fact, even after this date the plaintiffs kept on paying all the bills until the matter came to ahead in May, 1959. The protest had no meaning and in any case, it must be deemed to have been waived. My finding, therefore, is that the plaintiffs are not entitled to recover anything from the defendants either by way of excess payment or damages regarding payment by them in respect of supplies to the mills.

156. On these conclusions, the learned Single Judge answered issues Nos. 2 and. 3 in the following terms:‑

157. "In view of my conclusions, my finding on issue No. 2 is that the con tract was terminable by 30 days' notice on the price of furnace oil exceeding Rs. 99 per ton but parties had by the amendment of the contract agreed that the supplies will be continued at the revised prices.

158. My finding on the first part of issue No. 3 is in the affirmative. The rates have been proved by the defendants' witness No. 2 and they have not been consented. With regard to the second part of the issue, my finding is that the price of Rs. 1‑14‑0 per thousand cubic feet had been abandoned and the revised prices were payable by the plaintiffs."

159. The Letters Patent Bench took a contrary view of issues 2 and 3 and found that the plaintiffs had paid for the gas at rates higher than Rs. 1‑14‑0 per thousand cubic feet in the hope that defendants will enter into negotiations with them on the question of revision of prices as undertaken by defendant No. 1 in the letter Exh. D/9. The plea that the plaintiffs had consented to increase in the price of gas was ruled out on the basis of letter Exh. D/28 written on 13th October 1955, by defendant No. 1 to the plaintiffs to the effect:

160. "SUI GAS TRANSMISSION Co. LTD.

161. Karachi:

162. D/O 80/38/716. 13th October 1955.

163. Dawood Cotton Mills Ltd.,

164. 41, Saleh Mohammad Street,

165. Near Gordhandas Market,

166. Karachi.

167. Dear Sir.

SUPPLY OF GAS

168. We acknowledge with thanks your No. 965/794/55 of 1 st October.

169. While we agree that we shall charge you only for the quantity at standard pressure and temperature actually metered to you, at the same time arrangements have had to be made to secure the necessary reserves o1 gas for you from our suppliers, Messrs Pakistan Petroleum Ltd. Con sequently, we should be glad if, at your earliest convenience you could kindly arrange to let us have the deposit payment which at Rs. 1/14‑0 per 1000 cubic feet is considerably less than the value of the gas reserv ed for you at today's prices.

170. Yours faithfully, for and on behalf of Sui Gas

171. Transmission Co. Limited

172. (Sd.)

173. Managing Agents."

174. The learned Judges further observed that the plaintiffs had repeatedly protested against the increase in the prices of gas and finally given written notice to the defendants on 23rd August 1957 that payments of supply of gas were being made under protest. This protest, in their opinion, applied to the charge from the very beginning.

175. On these conclusions, the Letters Patent Bench held that the plaintiffs had been "illegally charged at the rate of Rs. 2‑8‑0 per thousand cubic feet. This will also apply to the gas supplied for canteen and bungalows as well as works of the plaintiffs uniformally." The appeal was, accordingly, allowed with costs for refund of the excess amount for the period of three years before the institution of the suit on 30th May 1959. The claim for the earlier period was held to be barred by time. The suit for recovery of Rs. 37,595‑5‑0 being the cost of pipelines charged by the defendants and Rs. 3,264‑9‑0 as rent of meter was dismissed as the appeal was not pressed by the learned counsel for the plaintiffs in relation to these claims.

176. Leave to appeal was granted on 28th March 1966, to consider the plea that the Letters Patent Bench had wrongly assumed that payments were altogether made under protest and that the protest sent on 23rd August 1957, was waived by payments made subsequently at increased rates.

177. In support of the appeal, Mr. A. K. Brohi, appearing for defendant No. 1, argued that: (i) the contract of 19th August 1954, for supply of gas to the plaintiffs for a period of 4 ‑ years stood terminated when the price of furnace oil went beyond Rs. 99 per ton; (ii) negotiations were held before increase in the price of gas was made; and (iii) the plaintiffs had consented to the increase in the price of gas.

178. Mr. Fazalur Rahman, learned counsel for defendant No. 2 relying on the findings of the learned Single Judge, contended that the contract of 19th August, 1954, was not terminated and that negotiations envisaged in letter (Exh. D/9) had reference only to fixation of fresh price of gas. From this, the learned counsel inferred that the contract, as a whole, subsisted though the term `fixing the price of gas at Rs. 1‑14‑0 per thousand cubic feet' terminat ed when the figure quoted of Rs. 99 per ton in paragraph 4 of Exh. D/7 was reached.

179. The arguments raised by Mr. Fazalur Rahman may be disposed of first. The obligation undertaken by defendant No. 1 in the contract of 19th August 1954, to supply gas to the plaintiffs at Rs. 1‑14‑0 per thousand cubic feet was a fundamental term of the contract. Without it the contract could not stand, as a whole. The plea is also contrary to the pleadings of the defendants. They did not aver in their written statements that a part of the contract relating to price of gas had terminated when the price of furnace oil exceeded Rs. 99 per ton. On the contrary, it was specifically mentioned in para. 6 of the written statements that the price of gas went up and came down in accordance with the provisions of para. 4 of the contract of 19th August 1954. The contention is also disproved by the evidence placed on the record by the defendants themselves as will be seen presently.

180. The contention raised by Mr. A. K. Brohi that the contract dated 19th August 1954, came to an end ipso facto when the price of furnace oil exceeded Rs. 99 per ton is not only contrary to para. 4 of the contract of 19th August 1954, but also against the evidence placed by the defendants themselves on the record.

181. Under paragraph 4, defendant No. 1 was at liberty to terminate its obligations under the contract but only by giving notice to the plaintiffs of not less than 30 days. No such notice was given. The so‑called notice (Exh. D/22) dated 12th September 1955, was in these terms

182. SUI GAS TRANSMISSION CO. LTD.

183. D/O 70/10/171. Karachi: 12th Sept. 1955.

184. Dawood Cotton Mills Ltd.,

185. Landhi Estate.

186. Dear Sirs,

187. Since with effect from 1‑9‑1955, the price of furnace oil delivered to you exceeds the hitherto delivered price by more than Rs. 15 per ton, and since due to devaluation, our costs make such action necessary, we hereby give notice in terms of paragraph 4 of our contract dated 19th August 1954, that gas prices are subject to upward revision. We shall advise you shortly what these will amount be but meantime can assure you that they will remain competitive.

188. Yours faithfully, for and on behalf of Sui Gas

189. Transmission Company Limited.

190. (Sd.)

191. Managing Agents."

192. It will be noted that the contract was not being terminated, on the contrary, an assurance is given that gas will be supplied to the plaintiffs at competitive price.

193. The rest of evidence, bearing on the point, is contained in the following letters:‑

194. "SUI GAS TRANSMISSION Co. LIMITED

195. D/O 70/10/293. Karachi: 17‑9‑1955,

196. Messrs Dawood Cotton Mills Ltd.,

197. Landhi Estate.

198. Gentlemen,

199. Supply of Sui Gas

200. We refer to our Agreement with you dated 19th August 1954, relating to the supply to you of natural gas.

(2) The functions of distribution and sale of gas to consumers are being taken over by the Karachi Gas Company Ltd., who will supply to you broadly on the same terms as those contained in our above mentioned Agreement.

(3) We have pleasure in informing you that the Karachi Gas Company will very shortly be in a position to supply gas to you, and we should be glad to know when you will be in a position to commence purchasing in quantities up to those set out in our Agreement with you.

(4) We have separately addressed you in our D/O 70/10/171 of 12th September 1955, on the matter of change in gas prices and will let you have further advice very shortly. You have agreed to purchase a minimum quantity of 15.6 million cu. ft. which at the existing price of Rs. 1‑14‑0 per thousand cu. ft. amounts to Rs. 29,250 per month, and meantime we should be obliged if you would forward your cheque for this sum in favour of the Karachi Gas Co. Ltd. to the address given at the head of this letter. Your cheque will be held as a security deposit by the Karachi Gas Co.

201. Yours faithfully, for Sui Gas Transmission Co. Ltd.

202. (Sd.)

203. Managing Agents."

204. In para. 4, there is reference to letter of 12th September 1955, which has been reproduced above. When both these letters are read together, they leave no doubt in one's mind that notwithstanding the so‑called notice, the parties treated the contract as subsisting. The clause which at the existing rate of Rs. 1‑14‑0 per thousand cubic feet' refers to the rate fixed in, the contract of 19th August 1954. It is noteworthy that subsequent to 12th September 1955, when, the so‑called notice under paragraph 4 Of the F contract had been given, defendant No. 1 asked the plaintiffs to deposit Rs. 29,250 as security deposit under the contract of 19th August 1954. It. was, therefore, incorrect to say that when the price of furnace oil exceeded` Rs. 99 per ton, the contract dated 19th August 1954, came to an end or was put to an end by defendant No. 1.

205. The next letter in the series is Exh. D/26, reproduced below, written by defendant No. 1 to the plaintiffs on 1st October 1955 ‑

206. "Sui Gas TRANSMISSION Co. LIMITED

207. D/O 70/10/525. Karachi: 1st October 1955.

208. Messrs Dawood Cotton Mills Ltd.,

209. 41, Saleh Muhammad Street,

210. Karachi.

211. Dear Sirs,

212. Further to our D/O 70/10/171 of 12th September, we have to advise that the price of gas delivered to you by the Karachi Gas Co. Ltd., will, until further notice, be Rs. 2‑8‑0 per 1000 cubic ft.

213. This increase in price caused by increases in service charges on the I. B. R. D. loan and increases in operating costs as a result of devaluation is registered. We assure you, however, that prices will remain under constant review and such reductions as are possible and consistent with sound economics may be expected from time to time in the future.

214. Yours faithfully, for and on behalf of Sui Gas.

215. Transmission Company Ltd.

216. (Sd.)

217. Managing Agents."

218. Though increase in the price of gas was conveyed by this letter, it did not suggest that defendant No. 1 had terminated the contract dated 19th August 1954, and a fresh offer was made to the plaintiffs to buy gas at the increased rates.

219. This is further borne out by the letter Exh. D/27, written by the plaintiffs to defendant No. 1 on 1st October 1955, and the reply sent by the latter:‑

220. Exh. D/27.

"DAWOOD COTTON MILLS LIMITED

221. Karachi.

222. Ref. 965/794/55. 1st October 1955.

223. M/s. Sui Gas Transmission Co. Ltd.,

224. McLeod Road, Karachi.

225. Dear Sirs,

226. Sub: Supply of Sui Gas

227. We have for acknowledgment your letter No. D/O/70/10/293 dated 17th September 1955.

228. As pointed out by us previously vide our letter of 8th September 1954, your Mr. Davis had personally given us to understand that we would not be bound as to the minimum quantity purchaseable in a month as specified in the agreement. On your side you had also confirmed by your letter No. D/O 70/037 dated 14‑9‑54, that we shall only be charged for the quantity measured and recorded through the meter, and as such there was to be no binding.

229. We cannot say exactly when we should be able to purchase the minimum stated quantity, but certainly we cannot do this at the start. Accordingly, we cannot be expected to deposit an amount of Rs. 29,250 straightaway but we would nevertheless be prepared to forward to you our cheque for any nominal sure that you may care to name as security deposit.

230. Yours faithfully, for Dawood Cotton Mills Ltd

231. (Sd.)"

AND

232. Exh. D/28

233. "SUI GAS TRANSMISSION Co. LTD.

234. D/080/38/716. Karachi: 13th October 1955

235. Dawood Cotton Mills Ltd.,

236. 41, Saleh Muhammad Street,

237. Karachi.

238. Dear Sirs,

239. Supply of Gas

240. We acknowledge with thanks your No. 965/794 /55 of 1st October.

(2) While we agree that we shall charge you only for the quantity at standard pressure and temperature actually metered to you, at the same time arrangements have had to be made to secure the necessary reserves of gas for you from our suppliers, Messrs Pakistan Petroleum Ltd. Consequently, we should be glad if, at your earliest convenience you could kindly arrange to let us have the deposit payment which at Rs. 1‑14‑0 per 1000 cubic ft. is considerably less than the value of the gas reserved for you at today's prices .

241. Yours faithfully, for and on behalf of Sui Gas

242. Transmission Co. Ltd.

243. (Sd.)

244. Managing Agents."

245. The above resume of the correspondence which passed between the parties up to 26th November 1955, when supply of gas was commenced, negatives the first contention raised by Mr. A. K. Brohi that the contract of 19th August 1954, had ipso facto come to an end when the price of furnace oil exceeded the figure quoted of Rs. 99 per ton in para. 4 of Exh. D/7.

246. The next contention raised by the learned counsel that negotiations were held between the parties before increase in the price of gas was made on 1st October 1955, is equally untenable. He relied, for this purpose, on the letters Exh. D/21 and D/26 reproduced above and payments made by the plaintiffs without protest up to 23rd August 1957. `Negotiation' is defined in oxford English Dictionary as: "A business transaction. Trading traffic.) a course of treaty with another (or others) to bring about some result, esp. in affairs of state; The action or business of negotiating with others; the action of getting over or round some obstacle by skilful manoeuvring.", Similarly, in Wharton's Law Lexicon, it is defined as : "Treaty of business, whether public or private." It is hard to conceive that unilateral decision by one party to the contract to increase the price of goods beyond the contractual rate and submission to it by the other, can be styled as a 'treaty of business'. Such payments can be made under duress or coercion or under protest. It was, idle, therefore, to contend that negotiations were in fact, held before increase in the price of gas was made by defendant No The learned Judges in the High Court have also overruled the plea that any negotiations were held between the parties before the increase in the price of gas was notified by defendant No. 1.

247. The last contention raised by Mr. A. K. Brohi was that change in the price of gas was made with the consent of the plaintiffs. It was not the defendants' case that the plaintiffs had given an express or written consent to the increase. But it was said that consent was given by conduct inasmuch as the plaintiffs had received supply of gas after increase in the price was notified on 1st October 1955, and paid for it in excess of the rate fixed in the contract. Reliance was placed on Hari Dass Ranchordass v. Mercantile Bank Ltd. (47 I A 17), Goddarmal v. Tata Industrial Bank, Bombay (I L R 49 All. 674) and Hulas Kunwar v. Allahabad Bank Limited (A I R 1958 Cal. 644).

248. In Hari Dass Ranchordass, the appellants had entered into a written contract with the respondent‑Bank whereby they were to be allowed to overdraw their current account, it being provided that interest should be charged at a certain rate per annum, and should be calculated on the daily balance due on the overdraft. The course of business adopted by the bank was that at the end of each month interest was added to the balance then due, and the total carried to the debit of the account, the effect being that compound interest with monthly rests was charged. 'The appellants knew how the interest was being computed and charged, but raised no objection it was held that the appellants had impliedly agreed to pay compound interest with monthly rests. It is to be noticed that in the contract under which loans were taken by the appellants, there was no term that interest will be charged annually or will not be compounded with monthly rests. The contract was silent on this point. If, therefore, the appellants obtained loans knowing the practice that interest was being compounded by the respondent‑Bank monthly, the agreement to pay compound interest with monthly rests was clearly implied.

249. In the case of Goddar Mal, it was held that the mere sending of a notice by a bank to one of its customers that the interest charged on overdrafts against security held by the bank had been raised is not of itself sufficient to render customer liable to pay the enhanced rate. But where, after receiving notice that the rate of interest has been raised, the customer borrow, more money from the bank, the bank is justified in charging him interest at, the enhanced rate. Similarly, in Hulas Kunwar, a notice communicating to the customer was given that the bank has decided to raise the rate of interest from a certain date. In the opinion of the learned Judges "it contained an implied proposal to the effect that if the constituent wanted to keep alive his overdraft account with the Bank or desired to take further advances from the Bank it could be done only on the terms contained in the notice. In other words, this implied proposal invited from him in the words of section 8 a 'reciprocal promise' to pay interest at the higher rate and as a consideration for that reciprocal promise the Bank offered to desist from making a demand for the immediate payment of the amount advanced and also to make further advances."

250. In the last two cases, the customers had enjoyed the facility of obtaining loans on lower rates of interest but there was no subsisting contract between the parties under which the banks were obliged to advance them loans at the same rates. On these facts, the learned Judges were right in concluding that the plaintiffs had given their consent to increase in the rate of interest when they applied for further loans from the banks.

251. In the present case, however, the position is materially different. Defendant No. 1 was, under the contract of 19th August 1954, bound to supply ca s to the plaintiffs for a period of 4 years at Rs. 1‑14‑0 per thousand cubic feet. So long as the contract was not put to an end, under' paragraph 4, neither defendant could unilaterally increase the price which was one of the fundamental terms of the contract.

252. In reply, the plaintiffs relied on the letter Exh. D 28 by defendant No. 1 dated 13th October 1955, to the plaintiffs in which the rate of gas was mentioned at Rs. 1‑14‑0 per thousand cubic feet. It did, give an impression that the rate of Rs. 2‑8‑0 notified in the earlier letter (Exh. D/26) was countermanded but this was not a firm ground on which the plaintiffs could rely. In the hills submitted by defendant No. 1, thereafter, the rate mentioned was Rs. 2‑8‑0 per thousand cubic feet. There is, however, another aspect of the cafe which supports the plaintiffs' claim in the suit.

253. It was open to the plaintiffs to terminate the contract and refuse t receive supply of gas when increase in the price of gas was notified to them on 1st October 1955, but such a course, was hazardous for their business operations. They had, on the inducement of defendant No. 1, changed the equipment of their works from oil heating of the boilers to gas firing. If supply of gas was not commenced or terminated, it would have resulted in the closure of their mills resulting in substantial losses before they could re‑equip the boilers with oil heating. In this context the observation made by the learned Single Judge may be recalled, "if the plaintiffs had not paid forth gas at the increased price of Rs. 2‑8‑0 per thousand cubic feet, defendant No. 1 would have exercised the option reserved by it to discontinue the supply of gas to the works of the plaintiffs." It was, in these circumstances, that the plaintiffs found themselves compelled to submit to the unauthorized increase in the price of gas. But did they thereby, in law, lose the right to claim refund of the excess amounts. In my opinion, section 72 of the Contract Act, became applicable and the plaintiffs were entitled under it to claim refund of the amounts paid by them in excess of the contractual price of Rs. 1‑14‑0.

254. Section 72 of the Contract Act, is In these terms:‑

255. "72. A person to whom money has been paid or anything delivered by mistake or under coercion, must repay or return it.

256. The word 'coercion' in section 72 is used in its general sense and not in the, section 15 of the Contract Act. At one time the view that sense given in prevailed in India was that the word `coercion in this connection meant the same thing as coercion defined in section 15 but the Judicial Committee in Kanhaya Lal v. National Bank (40 I A 56) removed this erroneous view. Their Lordships observed:

257. "A person making a payment to rid himself of unlawful interference with his property, can recover back the money. Formerly the view that prevailed in India was that the word `coercion' in section 72 meant the same thing as defined in section 15. That view is wrong."

258. The nearest case in point is Kaka Ram Tej Bhan Sakari v. Khatar Electrical Engineering & General Supply Co. Ltd., Dera Ismail Khan (A I R 1939 Pesh. 8). A consumer of electricity paid minimum charge provided in the Rules of the Company in the belief that necessary legal preliminaries had been gone through before the law was framed. In fact, the requisite permission of the Provincial Government had not been obtained and the Rule was ultra vires. The learned Judicial Commissioner held that "the payment was made by the consumer under a mistake of fact and was covered by section 72. Besides this, if the payment is made under protest after being warned that supply would be disconnected if payment is not made, this is sufficient to constitute coercion in the general sense of the word and consumer would be entitled to refund under section 72".

259. The application of section 72 of the Contract Act also came under consi deration of this Court in E. A. Evans v. Muhammad Ashraf (P L D 1964 S C 536). A tenant of evacuee house transferred to a claimant agreed to pay at double the rate subject to landlord allowing him to remain in occupation after expiry of statutory period of 3 years. The landlord served notice of ejectment without waiting for statutory period to expire. In an action for ejectment on ground of default in payment of rent, the tenant claimed that as he was not liable to pay rent at double the rate, and if the excess amount of rent paid for 15 months was adjusted, there was no default. He also filed a suit for refund of the excess amount paid to the landlord. Dealing with this aspect of the case, my learned brother Hamoodur Rahman, J. as he then was, observed:‑

260. "The respondent in his evidence clearly admitted that when the appellant agreed to pay rent at Rs. 110 per mensem he also said that he should not be evicted even after the expiry of the period of statutory protection which was then three years. The respondent does not say as to whether he agreed to this condition, but the fact that for a period of 15 months thereafter he accepted rent at Rs. 110 per month would show that if not by express words then by his tacit conduct he accepted the condition of the appellant as well. If he did not do so, then of course there was no consideration at all for the payment of the enhanced rent. On the other hand, if he tacitly did accede to this request, then by giving notice before the expiry of the period of statutory protection of three years, he withdrew the consideration and the same became wholly non‑existent: In such circumstances section 72 of the Contract Act would apply and the other contracting party would be absolved from performing his part of the contract, and if he had done anything or paid anything in pursuance of that contract then he would be entitled to ask for restitution and reversion to the position quo ante. The respondent cannot be allowed to claim inconsistent rights in the manner in which he is doing in the present case. If he accepts the higher rent and treats the tenant as not a statutory tenant but a contractual one, then he must abide by his contract. He cannot unilaterally resile back to the position under section 30 and treat the tenant as a person who has been deprived of the protection thereunder and thus become liable to eviction. The Additional District Judge seems to have taken the view that the appel lant unilaterally resiled flow his contract but he has failed to notice that if he could not do so, the landlord also could not unilaterally repudiate his part of the contract.

261. The stand taken by the appellant in his answer to the notice to quit, appears, therefore, to us to be correct. If the landlord repudiated the contract and elected to treat the tenant as a statutory tenant under section 30, then the tenant could not be treated as a defaulter save in accordance with the provisions of the said section. His liability under the said section was only to pay rent at the rate of the last Municipal Assessment. But since he had paid for 15 months at double the rate, he was legitimately entitled either to a refund of the excess amount paid or an adjustment thereof against further rents before he could be treated as a defaulter. We are, therefore, unable to agree with the Courts below that the appellant was either a defaulter or that he had lost the protection given to him by section 30 of the Act."

262. The circumstances in which the plaintiffs made payments of excess amount in the present case are not exactly similar, but it can be fairly concluded that up to 23rd August, 1957, excess payments were made under coercion within the scope of section 72 and that thereafter payments at increased rates were made under protest.

263. This brings us to the last contention which was raised by Mr. Fazal-ur-Rahman at the leave stage that the Letters Patent Bench had misconstrued the evidence in brushing aside the finding by the learned Single Judge that notice dated 23rd August, 1957 was waived by the plaintiffs. The observation on which the learned counsel relies has been reproduced earlier. It is just a stray sentence in the judgment and means that the plaintiffs had waived the notice by receiving supply of gas and making payments in excess of the contractual rate of Rs. 1‑14‑0. Our attention was also drawn in this connection to the remarks by the learned Judge that though the plaintiffs had taken objection to the charge made at Rs. 6 for the supply of gas to the canteen and residential bungalows, they did not object to the charge of Rs. 2‑8‑0 for gas supplied to the works. The first letter relied upon by the defendants is Exh. D‑27 dated Ist October 1955.

264. Exh. D‑27

"DAWOOD COTTON MILLS LIMITED

265. Karachi: 1st October, 1955,

266. Ref. No. 965/794; 55

267. Messrs Sui Gas Transmission Co. Ltd.,

268. McLeod Road,

269. Karachi.

270. Dear Sirs,

271. Sub: Supply of Sui Gas

272. We have for acknowledgment your letter No. D/O 10/10/293 dated 17th September, 1955.

273. As pointed out by us previously vide our letter of 8th September, 1954, your Mr. Davis had personally given us to understand that we would not be bound as to the minimum quantity purchaseable in a month as specified in the Agreement. On your side you had also confirmed by your letter No. D/O 70/037 doted 14‑9‑1954 that we shall only be charged for that quantity measured and recorded through the meter, and as such there was to be no binding.

274. We cannot say exactly when we should be able to purchase the mini mum stated quantity, but certainly we cannot do this at the start. Accordingly; we cannot be expected to deposit an amount of Rs. 29,250 straightaway but we would nevertheless be prepared to forward to you our cheque for any nominal sum that you may care to name as security deposit.

275. Yours faithfully. for Dawood Cotton Mills Ltd.

276. (Sd.)"

277. Earlier defendant No. 1 had on 17th September, 1955, asked the plaintiff to send them a cheque for Rs. 29,250 as security deposit calculated at Rs. 1‑14‑0 per thousand cubic feet for the minimum quantity of gas which the plaintiffs were to pay for each month. As the condition to purchase the minimum quantity of gas had been subsequently given up by defendant No. 1, the plaintiffs, in the letter (Exh. D/27), pointed out that they were not liable to deposit the amount of Rs. 29,250. It is to be noticed that the letter (Exh. D/26), by which defendant No. 1 had conveyed to the plaintiffs the increase in the price of gas from Rs. 1‑14‑0 to Rs. 2‑8‑0 per thousand cubic feet was also written on the same date. The plaintiffs did not, therefore, know about the increase in the price when they wrote the letter (Exh. D/27), expressing their inability to deposit R s. 29,250 as security. There was no occasion, therefore, to protest against the increase in the price of gas in the letter (Exh. D/27).

278. The same consideration applies to the letters written by the plaintiffs to defendant No. 1 thereafter objecting to the charge of Rs. 6 per thousand cubic feet for supply of gas to the canteen and residential bungalows in the Mills. In the contract, there was no provision for supply of gas to the residential bungalows and the canteen. No rate was fixed at which the gas was to be supplied to places other than the works of the plaintiffs. The objection raised in the letters to the charge for supply of gas to the canteen and residential bungalows at the rate of Rs. 6 thus stood on different footing. The plaintiffs claimed in these letters that the charge should be uniform. It would have been inapt if a second dispute was raised simultaneously in these letters that the rate of gas supplied to the works should also be reduced.

279. The observation that the plaintiffs had waived the notice is also against facts and law. 'Payment made under protest' is a well-known technical tern in commercial transactions. It means the maker of the payment does no admit his liability and will claim refund. If, what the learned counsel says, is correct, then `payment made under protest' will mean payment simpliciter without safeguarding the legal rights of the person making such payments. Such an interpretation is contrary to well established commercial practice. Once the letter of protest was sent the payments made thereafter did not preclude the plaintiffs from claiming refund, if in law, they were entitled to it.

280. On a closer examination of the case, the conclusions I have reached are s (i) the contract of 19th August, 1954, under which defendant No. 1 had bound itself to supply gas to the plaintiffs for a period of four years did not terminate when the price of furnace oil exceeded Rs. 99 per ton. In order to do so, it was necessary for the defendants to serve a notice on the plaintiffs of the intention to terminate the contract but no such notice was given; (ii) No negotiations were held between the parties before increase in the price of gas was unilaterally made by defendant No. 1. Their letter (Exh. D/174) mentioned in the beginning showed that defendant No. 2 considered itself compe tent to lay down rates in its own discretion without being bound by the rates fixed in the contract of 19th August, 1954; (iii) the plaintiffs did not, by conduct, give consent to the increase in the price of gas. The payments mad by them both before the letter of protest was sent and thereafter were under 'coercion' within the purview of section 72 of the Contract Act; and (iv) the notice given by the plaintiffs on 23rd August, 1957, was not waived by payments made subsequent to this date at higher rates.

281. On the above findings, I will dismiss all the appeals and restore the judgment and decree passed in the suit by the Letters Patent Bench of the High Court. The parties are left to bear their own costs throughout.

282. ANWARUL HAQ, J.‑ --I have had‑ the benefit of perusing the judgments proposed to be delivered, in this case by my learned brothers Muhammad Yaqoob Ali, J. and Muhammad Gul, J. In view of the difference of opinion between their Lordships as to the fate of these appeals, it is necessary that I briefly state my own views in the matter.

283. As the facts are stated in considerable detail in both these judgments it is not necessary for me to repeat them here.

284. Both my learned brothers are agreed on the point that the contract between the patties to the present dispute is to be spelt out of three letters exchanged between them, namely, Exh. D. 7 dated the 19th of August 1954, Exh. D. 8 dated the 8th of September 1954 and Exh. D. 9 dated the 14th of September 1954. They also agree that the original stipulation, as contained: in the defendants' letter, Exh. D. 7, to the effect that "notwithstanding) anything herein contained, if such price of oil should, at any time, during the continuance of this agreement exceed Rs. 99 per ton, then we shall be at liberty to terminate our obligations hereunder by giving you not less than thirty days' notice of our intention so to do, stood modified, by the defendants' letter Exh. D. 9, which stated that "I confirm that the gas charged will only be that which is measured and recorded through the mete and that should the price of oil reach the figure quoted of Rs. 99, this would naturally be subject to negotiations".

285. It is common 'ground that no negotiations as such were held between the parties, before the defendants notified, by means of their letter Exh. D. 26 dated the 24th of October 1955 that the revised price of gas would be Rs. 2‑8‑0 per one thousand cubic feet as against the original agreed rate of Rs. 1‑14‑0 owing to the rise in the price of furnace oil beyond Rs. 99 per ton. Some other factors were also mentioned, but it is not necessary to go into them. It may be stated here that the price of natural gas supplied by the defendants to the plaintiffs was sought to be related to the price per ton of furnace oil which was being used as a fuel by the plaintiffs at the time the negotiations started between the parties. From the three letters forming the contract between the parties, it is clear that they contemplated an increase in the price of gas in the event of an increase in the price per ton of furnace oil, although the increase was to be subject t negotiations between the parties.

286. It is of some significance to note that the contract as originally offered in Exh. D. 7 and accepted by Exh. D. 8 was modified by Exh. D. 9 and even the price was raised by Exh. D. 26, before the supply of actually commenced on the 26th of November 1955. The bills war subsequently sent by the defendants and paid by the plaintiffs at the revised rate of Rs. 2‑8‑0 per one thousand cubic feet, for about two years, when, the plaintiffs protested by their letter dated the 23rd of August 1957 against the increase in the price of gas, and the levying of certain other items of expenditure on the laying of pipelines and meter rent etc. O failing to reach mutual agreement, the plaintiffs filed the present suit on the 30th of May 1959.

287. My learned brother Muhammad Yaqoob Ali, J., has, after reviewing the correspondence exchanged between the parties and considering the arguments addressed at the Bar, come to the conclusion that no negotiations were held between the parties, before the defendants unilaterally increased the price of gas, that the plaintiffs did not by conduct give consent to this increase in the price, and that payments, made by them before the letter of protest was sent on 23‑8‑57, were made under coercion within the purview of section 72 of the Contract Act, for the reason that the defendants had the monopoly of the supply of gas and the plaintiffs could not, without incurring undue expenditure and loss of business, revert to the use of furnace oil. My learned brother Muhammad Gul, J., on the other hand. has taken the view that the plaintiffs had by their conduct accepted the increased rates which were notified and brought in force before the supply of gas actually commenced. He has observed that the plaintiffs could not now be permitted to retreat from that position.

288. After giving my anxious consideration to the matter, I find myself in agreement with the view taken by Muhammad Gul, J. It will be seen that in the original proposal made by the Sui Gas Company there was a stipulation that the supply of gas could be terminated, on giving one month's notice, should the price of furnace oil exceed Rs. 99 per ton. This condition was, however, later modified by the defendants' letter Exh. D. 9, written on the 14th of September 1954, with the result that the termination of supply was not envisaged, but an increase in the price of gas was to be negotiated if the price of furnace oil reached the critical point mentioned earlier. It is thus clear that in any event the parties did envisage an increase in the price of gas, should the price of furnace oil exceed Rs. 99 per ton. That this price level of furnace oil was reached even before the supply of gag commenced to the plaintiffs, is not disputed:

289. The intimation sent by the defendants, by means of Exh. D. 26 dated the 24th of October 1955, has to be viewed in this background, namely, that the contract between the parties did envisage an increase, although by mutual negotiations. No special mode of negotiations was prescribed in Exh. D.

9. On receiving intimation of increase in the price of gas, even before this supply had commenced, the plaintiffs kept silent for almost two years, during which period they received and paid bills at the revised price. In these circumstances the doctrine of "acceptance by silence" referred to by Muhammad Gul, J. would certainly appear to be applicable. The contract between the parties undoubtedly provided for future adjustment of price, a notice to this effect was served in time by the defendants, bat the plaintiffs continued to accept the supply of gas and to pay bills at the enhanced price for a period of two years. In these circumstances, I would hold that they accepted the increased price by their silence and continued performance of the contract.

290. It is true that the defendants had the monopoly of supply of gas, and it would not have been possible for the plaintiffs to revert to furnace oil without incurring substantial expenditure and loss of business, but such an eventuality could also have arisen in the event of failure of negotiations envisaged in Exh. D.

9. The doctrine of coercion embodied in section 72 of the Contract Act, does not appear to me to be available to the plaintiffs P in this case for the reason that they were fully aware of the respective circumstances of the parties, when they entered into negotiations for the conversion of their furnaces from oil to natural gas. It was well‑known, right from the start, that the Sui Gas Company had the monopoly in the field. In the circumstances of the parties, I would, therefore, be reluctant to invoke the doctrine of coercion.

291. As a result, agreeing with Muhammad Gul, J., I would accept Civil Appeals Nos. K‑7 and K‑8 of 1969, set aside the judgment of the learned Judges of the Letters Patent Bench, and restore that of the learned Single Judge. I would leave the parties to bear their own costs in both these appeals.

292. Civil Appeal No. K‑9 of 1969 by the plaintiffs, is, however, dismissed with costs as it was not pressed by the learned counsel.

ORDER OF THE COURT

293. In accordance with the opinion of the majority, Civil Appeals Nos. K‑7, and K‑8 of 1969 are accepted and the judgment of the Letters Patent Bench is set aside, restoring that of the learned Single Judge in the High Court, leaving the parties to bear their own costs. Civil Appeal No. K‑9 of 1969 is dismissed with costs.

294. S. A. H. Orders accordingly.