DAWOOD CORPORATION Ltd. Versus Mst. JASIAN JASIMINA

MAMOON KAZI, J.‑‑ This High Court appeal, is directed against the judgment and decree passed by the learned Single Judge of this Court on the original side, dated 27‑5‑1984, decreeing the suit filed by the deceased predecessor of the respondents (hereinafter referred to for the sake of convenience as "the respondent") for h 53, 992‑4‑6 or in the alternative for Rs.15,64,360.41 with costs.

2. That facts of the case as set up in the plaint are that the respondent (now being represented by his legal representatives) was an importer‑exporter and a commission agent, doing business in Indonesia. The appellants on 7‑9‑1984 rough the agency of the respondent and in pursuance of the Export Credit Guarantee Scheme, entered into a contract with Messrs P.N.Budi Bhakti of Djakarta, for a sale to them of 6,131 bales of cotton yarn and 240,400 yards of white cambric cloth and agreed to pay to the respondent 5‑1/2 per cent commission in pounds sterling on the sale after the sale proceeds of the goods were realised by the appellant in Pakistan subject to the usual approval of the State Bank of Pakistan.

3. Again on 1‑11‑1984, through the agency of the respondent, the appellant entered into another contract on similar terms with Messrs P.T. ABD Rachman Aslam & Co. of Djakarta for sale to them of 50,00,000 yards white cambric cloth and agreed to pay to the respondent 3‑1/2 per cent commission payable in pounds sterling.

4. On 15‑4‑1965 the appellants again appointed the respondent their sole commission agent in Indonesia for selling their cotton yarn and cotton piece goods and agreed to pay one per cent. commission on FOB value on all the transactions finalised and booked by the appellants through the respondent for Indonesia. This agreement was amended subsequently by a letter, dated 1‑4‑1965, which entitled the respondent to the aforesaid commission, payable in pounds sterling, on all the orders booked by the appellants whether directly or through the respondent for export of cotton yarn cotton piece goods in Indonesia.

5. According to the respondent's case the appellants sold and exported through his agency cotton yarn and cotton piece goods of FOB value of L 22,73,030‑7‑7 and thus became liable to the respondent for payment of a sum of L 53,992‑4‑6 to him on account of the commission. The particulars of all the sale transactions referred to above are contained in a "Schedule", duly authenticated by the concerned authorities of Indonesia and the Embassy of Pakistan at Djakarta (Ex.8/1).

6. The respondent thereafter sent several letters to the appellants, asking them to pay the commission but the appellants replied by their letter, Ex.P/5, dated 30‑8‑1968, that the matter was still pending with the State Bank of Pakistan for clearance. However, in spite of several letters and reminders notices sent by the respondent to the appellants, the latter did not pay the commission as per agreement referred to above and consequently, the respondent filed Suit No.218/71 in this Court against the appellants.

7. It may be pointed out that originally the plaintiff had claimed Rs.6,51,511 which were then equivalent to h 53,992‑4‑6, but after devaluation of the Pakistan currency the plaint was amended by the respondent on 13‑2‑1974 and the amount claimed in Pakistan currency was raised to Rs.15,64,350,1.

8. The case of the appellants in their written statement was that, although, apparently, according to the aforesaid agreements, the entire amount agreed to be paid as commission was to be received by the respondent, but in reality, the amount of the commission was to be shared by the Indonesian officials for using their respective positions and influence to produce the contracts in respect of the appellants' goods. Thus, according to the appellants, the respondent was entitled only to 1/2 per cent of the commission agreed and the rest of it was payable to the Indonesian officials. The appellants also raised several legal issues to which we propose to refer hereinafter.

9. On the pleadings of the parties the learned Single Judge raised as many as fifteen issues. However, the issues relevant for the purpose of this appeal ale as follows:‑

(2) Whether the suit is time‑barred by the provisions of section 69 of the Partnership Act and/or provisions of section 23 of the Contract Act?

(4) Whether the suit is barred by limitation.

(11) To what amount by way of commission and at what rate is the plaintiff entitled?

(14) Whether the plaintiff is not entitled to increase the amount of the claim due to devaluation of Pakistan rupee during the pendency of the suit?

(15) To what relief, if any, is the plaintiff entitled?

The learned Single Judge also framed three additional issues which are as under:‑

"(1) Is the suit properly valued, if not to what effect?

(2) Is the figure in sub‑clause (iv) validly substituted?

(3) Whether the plaintiff is not entitled to increase the amount of the claim in view of the devaluation of the Pakistan rupee during the pendency of the suit?

9‑A. All the above issues were decided by the learned Single Judge in favour of the respondent and consequently, the suit decreed in his favour, as pointed out above.

10. We have heard Mr.NA.Farooqui, learned counsel for the appellants and MrA.I.Chundrigar, learned counsel for the respondents.

11. Mr.NA. Farooqui has firstly contended that the suit is barred under section 69 of the Partnership Act and section 23 of the Contract Act, as according to him, since there was in reality an agreement between the respondent and the Indonesian officials to share the commission. His argument firstly is that, the partnership between the respondent and the Indonesian officials was not registered as required by the provisions of the Partnership Act, 1932. The counsel has argued that according to subsection (2) of section 69, no suit to enforce a right arising from a contract can be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of the Firm as partners in the firm. The next contention of Mr.Farooqui, which relates to section 23 of the Contract Act, is that, according to the section, every agreement, the object or the consideration of which, is unlawful is void. Therefore, according to the counsel, since the agreements entered into by the appellants and the respondent were meant to procure business for the appellants against payment of illegal gratification to the Indonesian officials, the same was void and no claim could be based on such agreements. The counsel has further contended that the claim of the respondent had also become time‑barred as the commission on the‑ aforesaid contracts claimed by him had admittedly become due in 1965, but the suit for its recovery was filed on 26‑8‑1971.

No doubt according to the counsel, the respondent had relied upon a letter, dated 30‑8‑1968, admittedly written by the appellants' representative to the respondent's Company, which according to the respondent constituted acknowledgment in terms of section 19 of the Limitation Act, but according to Tvlf4arooqui, the respondent could not derive any advantage therefrom as the requirements of Order VII, Rule 6 of the Code of Civil Procedure had not been met with by the respondent as such acknowledgment of liability was not specifically pleaded in the plaint. In any case, the argument of the counsel, in the alternative, was even if the letter, dated 30‑8‑1968, is construed as an acknowledgment in terms of section 19 of the Limitation Act, only a negligible part of the respondent's claim would be within time as the rest of it had already become time‑barred before the appellants had acknowledged their debt. The learned counsel has also questioned the legality of such acknowledgment on the basis of the letter, dated .30=8‑1968, as according to him, even if there was an acknowledgment made in the letter, the same was a conditional acknowledgment and consequently, outside the purview of section 19 of the Limitation Act. Lastly, according to Mr.Farooqui, the original claim in the plaint could not be enhanced by the respondent during the pendency of the. suit on account of devaluation of the Pakistan rupee. MrA.I.Chundrigar, on the other hand, has fully .,supported the impugned judgment. According to him, the suit was not barred by any law as contended by Mr.Farooqui. As regards the enhancement of the claim made by ;.4 respondent, the argument of MrA.I.Chundigar is that since the commission was payable in pounds sterling and the actual figure in that respect has a'.3o been mentioned in the plaint, the learned Single Judge was fully justified in decreeing the suit on the bass of the enhanced claim.

12. So far as the first contention of Mr.Farooqui is concerned, the learned counsel has relied upon the evidence of the appellants' witnesses D."AJ.1 Abdt. Pahem Soria and D.W.2 Abdul Razzak. According to these witnesses, the respondent was entitled only to 1/2 per cent of the commission agreed to be paid to him and the balance after deduction of the respondent's share was to be paid to the Indonesian officials. Reliance has also been placed on some letter., admittedly written by the respondent to the appellants, the English translations of which are Exhs. D/8,‑D/9, D/10 and D/11. According to Exh.D/9 which is letter, dated 22‑10‑1984, written by the respondent to the appellants, the forma had demanded a commission of 1/2 per cent from the appellants. Exh.D/10 another letter written by the respondent to the appellants wherein the former had requested to increase his commission from 1/2 per cent to 1 per cent. Again ill Ex.D/11, which was a letter written on 16‑6‑1965 by the respondent to the appellants, there is a reference to one Mr.Subhan to whom commission was to be paid on shipment of the goods and it has been further stated in Ex.D/11 that there were some others also who had their interest in the commission. Besides this evidence, Mr.Farooqui has sought further support from the evidence of the respondent himself as according to the learned counsel, the former had made certain admissions therein, which according to the counsel, cannot be ignored. First of all, the respondent had stated that there used to be state control on the import of goods in Indonesia and the Government there used to issue import licences to Indonesian nationals and the respondent used to buy import licences from them. Besides that, in reply to another question, the respondent had admitted that he had initially been offered 1/2 per cent. commission by the appellants and he had made it clear to them that he. was in a position to act as their agent on 1/2 per cent. commission and had demanded 6 1/2 per cent in respect of the two contracts first referred to in the plaint. In this respect it is pertinent to point out that the respondent in his cross‑examination has clarified the position that although the appellants had offered him 1/2 per cent. commission initially, but the respondent got the price of the goods under one 6't the contracts improved and he demanded 6 1/2 per cent. commission from the appellants. The respondent has also stated that one per cent. commission was payable to P.N. Budi Bakhti and 3 per cent. to P.TAbdul Rahman Aslam and the balance of 5 1/2 and 3 1/2 per cent. respectively was payable to the respondent on such contracts. It is also pertinent to point out that in his evidence the respondent has denied that out of the agreed commission only 1/2 per cent. of the same was payable to the Indonesian officials.

13. Turning ;o the contention of Mr.Farooqui Once again, the examination of the above evidence nowhere reveals that there was any agreement between the respondent and the Indonesian officials to share the commission received from the appellants. A partnership envisages an agreement between the partners to share the profits of a business carried on by the partners or any of them acting for all. We find that there is no evidence whatsoever to suggest that there was any agreement between the respondent and the Indonesian officials to share the commission which was to be received by the respondent from the appellants. Even if it is accepted that the respondent had to share a part of his commission with the Indonesian officials in order to get favours from them, there is nothing before us to establish that there was an agreement between the respondent and the Indonesian officials to share the aforesaid commission. In the absence of such evidence, the argument of Mr. Farooqui cannot be accepted. The appellants, consequently, leave failed to establish that there was a partnership agreement as pointed out above: Consequently, the appellants cannot plead the bar of section 69 of the Partnership Act in this case and the first argument of Mr. Farooqui, therefore, fails.

14. The next argument of Mr.Farooqui is that, the agreement between the appellants and the respondent is hit by the provisions of section 23 of the Contract Act. This contention also needs examination of the same evidence to which we have referred above, although from a different angle. However, before the same is done, reference may first be made to certain precedents on which Mr.Farooqui has relied. The first case relied upon by Mr.Farooqui is reported as Muhammad Shaft and others v. Allah Dad Khan P L D 1986 S C 519. In this case although it was held that oral evidence as to the intention of the provisions contained in section 92 of the Evidence Act (which was then applicable) when the validity of a document is being questioned, but proviso (1) to section 92 of the Evidence Act does open the door for the Court to enquire into the real nature of the transaction between the parties and the rule of evidence does not fetter the powers of the Court to unveil the real transaction when validity of the document itself is being challenged and the Court can always ascertain the real nature of the transaction. In support of his contention that the agreement between the appellants and the respondent is against public policy and hit by the provisions of section 23 of the Contract Act, Mr.Farooqui has relied upon the following cases. In Atlas Industry and Trading Corporation Karachi v. Dr Jalil Asghar P L D 1970 Kar. 241, the Court after going behind the transaction ultimately concluded that the contract in question, produced through official patronage, was void being opposed to public policy and therefore, unenforceable through a Court of law. This case went before the Supreme Court and the judgment of the Supreme Court is reported in 1984 S C M R 1. In this case the judgment of the High Court was set aside by the Supreme Court and it was observed that although the public policy requires that Court should not ignore an illegality brought to its attention refuse to allow a party to enforce an agreement or a contract ex facie illegal, however, the question of illegality depends upon the surrounding circumstances which must be pleaded by the party. Reference m this case was made to Chitty on Contracts (22nd edition) and the observations made therein as follows:

"Where a contract is ex facie illegal, the Court will not enforce it, whether the illegality is pleaded or not; secondly, where the contract is not ex facie illegal, evidence of external circumstances tending to show that it has an illegal object, should not be admitted unless the circumstances relied on are pleaded; thirdly .where unpleaded facts, which, taken by themselves, show an illegal object, have been put in evidence (because, perhaps, no objection was raised be‑Ouse they were adduced for some other purpose). The Court should not act on them unless it is satisfied that the whole of the relevant circumstances are before it; fourthly, where the Court is satisfied that all the relevant facts are before it and it can clearly see from them that the contract had an illegal object, it may not enforce the contract, whether the facts were pleaded or not."

Reference was also made in this .case to 'Law of Contract' by Cheshire ,and Fifoot, tenth edition, wherein the following rules of evidence have been laid down to govern the proof of illegality, whether the contract is illegal by statute or at common law:

"Firstly, where the contract is ex facie illegal, the Court takes judicial notice of the fact and refuses to enforce the contract, even though its illegality has not been pleaded by the defendant.

Secondly,. where the contract is ex facie lawful evidence of external circumstances showing that it is in fact illegal will not be admitted, unless these circumstances have been pleaded.

Thirdly, when the contract is ex facie lawful but facts come to light in the course of the trial tending to show that it has an illegal purpose, the Court takes judicial notice of the illegality notwithstanding that these facts have not been pleaded. But it must be clear that ail the relevant circumstances are before the Court."

In Muhammad Obaid v. Muhammad Rafi Qureshi P L D 1962 (W.P.) Kar. 409, the Court although agreed with the above principle but rejected the defendant's plea on the basis of the facts pleaded therein. In Lai Mia v. Abdul Ghani P L D 1953 Dacca 149 while expressing similar views in respect of the contracts hit by section 23 of the Contract Act, the Court further observed that to decide the question, the Court should not confine itself purely to the terms of the agreement, but will endeavour to draw its conclusions from the evidence, both oral and circumstantial. Another case reported as Gulab Chand v. Kudilal A I R 1966 S C 1734 has been cited from the Indian jurisdiction wherein a suit to enforce an agreement to sell 2‑1/2 annas share in t managing agency by way of a bribe offered to the plaintiff, a member of committee appointed to report on a management of a company by the defendant, was held to be not enforceable.

15. So far as the principle enunciated in the above cases is concerned, there can hardly be any cavil with the same, but whether on the basis of evidence brought by the parties on the record of the case, the aforesaid contracts between the appellants and the respondent are void on account of their being opposed to the public policy, is another matter. In this connection, a reference to the agreements Ex.P/1, Ex.P/2 and Ex.P/3 shows that the same are not ex facie B illegal as they do not contain any stipulation in regard to the payment of any share from the commission to the Indonesian officials. Mr.Farooqui has vehemently argued that these agreements should be considered in the light of the other circumstances brought out on record, a reference to which has already been made above. Moreover, according to him, the very fact that the rate of commission payable to the respondent on different transactions varied, lends further support to argument that a part of the commission was meant for the Indonesian officials. It may be pointed out that according to the agreement Ex.P/1, the rate of commission payable is 5‑1/2 per cent. while according to the agreements Ex.P/2 and P/3 the rate of commission payable is only 3‑1/2 per cent. and one per cent. Respectively. We, however, rind no force in the learned counsel's contentions. As we have already pointed out, the agreements apparently appear to be simple agreements providing for payment of commission on the completion of each transaction of the goods after realisation of their sale proceeds in Pakistan subject to usual approval of the State Bank of Pakistan. No doubt, from the evidence referred to above, some indication can be found that some payment was also to be made to the Indonesian officials by the respondent for procuring favours from them, but it has not been established that there was any stipulation made between the appellants and the respondent in this respect. It hardly needs to be emphasized that in view of the agreements, Ex.P/1 to Ex.P/3, being silent in this respect the onus completely was on the appellants to establish an illegal deal between them and the respondent as now pleaded by them. In Sultan Textile Mills (Karachi) Ltd. v. Muhammad Yousuf Shamsi P L D 1972 Kar. 226, it was held that the question, whether a contract or its performance was against policy, is a mixed question of law and fact and the Courts may deduce from the plea, but they cannot make deductions which may be mere surmises. In Manzoor Hussain Wali Muhammad P L D 1965 S C 524 the question before the Supreme Court was whether an arbitration clause in a contract was enforceable at law. In this case there was nothing in the partnership contract itself; which related to export import business, to show that the contract had of necessity to be performed in an illegal manner or in a manner which offended the provisions of the Exchange Regulation Act, 1947. It was held by the Supreme Court that the mere fact that the partnership in performance of the contract adopted a method which was not in accordance with the provisions of the Foreign Exchange Regulations Act would not determine the validity or invalidity of the contract itself. In the instant case not only that there is no evidence to conclusively establish that there was an agreement between the appellants and the respondent to pay illegal gratifications to the Indonesian officials for procurement of orders in respect of the appellants' goods, but there is a categorical assertion in the evidence of the respondent that Mr.Siddiq Dawood, the Managing Director of the appellants had himself visited Indonesia and settled the terms and conditions with the officials there and whatever amount was paid to the officials, it was paid by the directions of Mr.Siddiq Dawood. It has also come in evidence that such payments were not made out of the commission which was payable to the respondent from the appellants. Reference in this respect may again be made to the evidence of D.W. Abdul Razzak, the Chief Accountant of the appellants at the relevant time. According to this witness, numerous Indonesian officials were involved in the transaction in question, including Mr.Adam Malik the then Minister of Commerce in the Government of Indonesia and Mr.Siddiq Dawood, the Managing Director of the appellants had settled the terms with the Indonesian Government officials himself. This further militates against the counsel's contention that there was an illegal agreement between the parties. We also cannot take any notice of the different rates of the commission which were payable on different agreements as pointed out by Mr.Farooqi, because we find that no explanation in this respect was obtained from the respondent during his ‑cross‑examination. In absence of the same, the argument of Mr.Farooqi cannot be considered. Consequently, the second argument of the counsel also fails.

16. The next argument of Mr.Farooqi is that the claim of the respondent was not maintainable as the same had become time‑barred. In this respect the learned counsel has made the following contentions. Firstly, that the cause of action accrued to the deceased respondent either in 19155 or in 1966 when the aforesaid contracts were performed, but the plaint was presented by him in the Court on 26‑3‑1971 and the period of limitation admittedly being three years, the suit was time‑barred. In this respect it may be pointed out that, although, cording to the respondent, the appellants had acknowledged their liability on 30‑&1968 through their letter of the same date, Ex.P/5, and consequently the same had extended the period of limitation by a further period of three years from the aforesaid date, but the argument of Mr. Farooqi in this respect is that, Ex.P/5 in the first instance, does not constitute acknowledgement as contemplated by section 19 of the Limitation Act because if at all any acknowledgment of liability was made by the appellants in this letter, the same was not an unconditional acknowledgment to pay the amount in question. Secondly, even if Ex.P/5 is regarded as acknowledgment, still most of the transactions had become time‑barred as the so‑called acknowledgment having been made in respect of them in August, 1968, was after the expiry of the period of the limitation prescribed under the law, consequently, the same could not extend the limitation period as contemplated by section 19 of the Limitation Act. Besides that, the next objection of Mr. Farooqi was that, according to Order VIII, Rule 6, C.P.C., "Where the suit is instituted after the expiration of the period prescribed by the law of limitation, the plaint shall show the ground upon which exemption from such law is claimed." The plaint according to the learned counsel is also wanting in this respect. Reliance in this respect has been placed on Kalyan Mal v. Ahmed Uddin Khan A I R 1934 P.C. 298, wherein it was held that a plaintiff claiming exemption from any rule of limitation on the ground of fraud, must allege it in the plaint, stating when such fraud known to him and must prove his allegation. As to the argument that the letter dated 30‑8‑1968 (Exh.P/5) does not constitute acknowledgment as contemplated by section 19 of the Limitation Act, the counsel has sought support from the following precedents. In Patuakhali Bank Ltd. v. Muhammad Emdad Ali P L D 1964 Dacca 36 when a statement of account sent by the Bank informing the customer about the state of his account within the bank was confirmed by the former, it was held that stick confirmation could neither constitute acknowledgment of debt nor part payment of principal or interest so as to give fresh start to limitation. In Ittappan Kuthiravattat Nayer Avergal v. Nanu Sastri 26 Mad. 34, ii was held that though under section 19 of the Limitation Act, the exact nature of the right or liability need not be disclosed by the acknowledgment and its exact nature may be established by evidence, yet the acknowledgment in itself should import that the person making it is under an existing liability at the time. Such liability cannot be read into it by proof allunde or by an admission subsequently made by a party to a suit in which 'the acknowledgment is relied upon as saving the bar of limitation.

17. The above arguments have been vehemently opposed by Mr. Chundrigar, as according to him, it was not the letter dated 30‑8‑1963 (Exh.P.5) alone, on the basis of which the issue of limitation turned in favour of the respondent, but the letter dated 14‑5‑1969 written on behalf of the appellants to the Controller, Exchange Control Department, State Bank of Pakistan, Exh.P.4 must also be taken into consideration and when both the letters are read together, the same clearly establish an acknowledgment of liability by the appellants within the 4neaning of section 19 of the Limitation Act. So far as the argument that the plaint fails to meet the requirements of Order VII, Rule 6, C.P.C. is concerned, the learned counsel has referred to paras No.10 and 16 of the second amended plaint, a reference wherein has clearly been made to the aforesaid acknowledgments allegedly made by the appellants. Mr. Chundrigar has also placed reliance on the following cases. In Government of West Pakistan v. Syed Zainul Ebad Rizvi PLD 1977 Kar. 279 it was held that the acknowledgment under section 19 of the Limitation Act need not be addressed to the person whose right is being acknowledged. In Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff A I R 1962 Cal. 115 it was held that in order to fall within the purview of section 19 of the Limitation Act, an acknowledgment of a debt need not be made to the creditor nor need it amount to a promise to pay the debt. An admission of indebtedness in a balance‑sheet was, therefore, regarded as sufficient acknowledgment under the section.

18. It needs to be mentioned here, that we have not had the advantage of any findings given on the point by the learned Single Judge as the impugned judgment shows that the learned counsel for the defendants/appellants had failed to press the issue of limitation before him. This has however, been controverted by Mr. Farooqi, according to whom, the observations in this respect appear in the judgment of the learned Single Judge owing to some misunderstanding, as the counsel for the appellant had at no stage of the suit given up the ground of limitation.

19. Be that as it may, but even otherwise we are not impressed by any of the contentions raised by Mr. Farooqi in this respect. Explanation (1) to section 19 il provides that:

"For the purpose of this section an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or it appears that the time for payment, delivery, performance or enjoyment has not yet come, or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or coupled with a claim to set off, or is address e d to a person other than the person entitled to the property or right ."

A plain reading of the words underlined by us above in the explanation clearly indicates that an acknowledgment of debt can be addressed to a person other than the creditor himself and consequently, the argument of Mr.Chundrigar that the letter addressed by the appellants to the Controller, Exchange Control Department, State Bank of Pakistan dated 14‑5‑1969, Exh.P.4, should be regarded as acknowledgment does not appear to be without force. In this letter which was written by A.Sattar Muhammad it has been stated as follows:‑

"With reference to above, we beg to inform you that State Bank of Pakistan vide sanction No.Exp‑CL‑1879 to 1881, dated 16‑5‑1966 allowed us to remit S 55,239‑9‑5d for making payment of commission on account of our exports of Textiles to Indonesia. Although this amount is payable yet the payment has not been made owing to the dispute as regards the payment of further commission on additional exports. This sum of $.55,239‑9‑5 with accrued interest presently amounting to Swiss p Franc 6.61,656,42 is lying in Bank in Zurich."

This letter when read in the light of the above explanation, in our view, clearly constitutes acknowledgment as contemplated by section 19 of the Limitation Ad as in this letter the appellants have in clear and unambiguous terms acknowledged their liability to the respondent in respect of S 55,239‑9‑5. Although m our view the letter, dated 30‑8‑1968 Exh.P.5 also constitutes acknowledgment because in that the appellants have clearly acknowledged their liability by informing the respondent that as soon as sanction from the Ministry of Finance was received by them the question relating to the payment of commission in respect of the shipments made by the appellants would be settled, but in our view the importance of the letter, EXh.9/4 in any case cannot be ignored, as it has clearly been shown therein that the sanction for repatriation of the amount of the commission claimed by the respondent had been received by the appellants from the State Bank of Pakistan through their letter dated 16‑5‑1966, which fact the appellants appear to have concealed from the respondent. In our view the letter Exh.9/4 is a very important document so far as the question of limitation in the present case is concerned, because looking at the agreements in question Exhs.P/1, P/2 and P/3, the commission was payable to the respondent from the appellants after the approval of the State Bank of Pakistan. This clearly established that the right to claim commission from the appellants was to mature only after a permission to repatriate the amount of commission in terms of the foreign exchange had been received by the appellants from the State Bank of Pakistan, irrespective of the fact that the transactions had been completed earlier. Such permission, according to their own admission made through the letter, Exh.9/4, had been received by the appellants on 16‑5‑1966. Consequently, in our opinion the cause of action to the respondent to claim commission from the appellants, in fact, accrued after 16‑5‑1966. If this date is regarded as the starting point for running of the period of limitation against the respondent, then the acknowledgment of debt which was made by the appellants on 14‑5‑1969 was within the period of three years from the accrual of the cause of action and consequently, the suit having been filed within three years from 14‑5‑1969, was within time. We, therefore, are unable to accept Mr. Farooqi's contention on the) question of limitation.

20. Turning to the last argument of Mr. Farooqi, the argument is that the respondent was not entitled to enhance the valuation of the suit on account of the devaluation of the Pakistan rupee during the pendency of the suit. In this respect, as we have already pointed out above, the suit was originally filed for recovery of Rs.6,15,511.37 which were at the time of the filing of the suit equivalent to $ 53,992‑4‑6 and an additional sum of Rs.87,014.76 which had been claimed as interest at ‑10 per cent from 30‑3‑1970 to 28‑8‑1971. However, during the pendency of the suit the Pakistan rupee was further devalued and the claim was enhanced by the respondent to Rs.15,64,360.41. The claim for interest had however, remained, the same. It is pertinent to point out in this respect that although according to the agreements in question, the commission was payable to the respondent ire poun1L; standing but when the suit was filed, the clam was preferred in Pakistan rupees only. No doubt in the title of the plaint, the equivalent amount in pounds sterling was also shown by the respondent, but as pointed out above, the claim was preferred only in Pakistan currency and not in pounds sterling. A question consequently, arises, whether the amount originally claimed by the respondent could be enhanced on account of the devaluation of the Pakistan rupee.

21. This question, when raised before the learned Single Judge, has been discussed by him as issue No.14 in his judgment. His conclusions on the point are as follows:‑

"According to the agreement, the plaintiff was entitled to recover commission in pounds sterlings. As the commission has been withheld unreasonably by the defendants, hence they are liable to pay the same at the exchange value of Pounds Sterlings in Pakistan currency prevailing at the time of filing the claim. If the value of Pakistan currency has gone down, the plaintiff shall not suffer on that account, payment and are, therefore, liable to pay the commission at the exchange rate in Pakistan currency which was prevailing at the time, the plaint was amended. The issue is decided in the negative.

22. A somewhat similar question had also come up for determination before one of us. namely, Ajmal Mian, J. in Industrial Development Bank of Pakistan v. Messrs. William Sons & Co. Ltd. and 2 others P L D 1980 Kar. 576 and after quoting extensively from a number of judgments of the Courts both in Pakistan and outside it was held by him as follows:‑

"10.(a) From the above‑quoted and discussed Indian and Pakistan cases referred to hereinabove in paras. 6 and 7 the following principles are deducible:

(i) In an execution application for the recovery of costs awarded by the Privy Council in sterling during the pre‑partition days, the Indian Courts on the basis of the provisions of the C.P.C. permitted conversion of sterling into Indian rupee on the basis of the rate of exchange prevalent on the date of the order and not at the rate obtaining on the date of filing of the execution application or the date of payment.

(ii) In a case for enforcing a foreign judgment in foreign currency, the rate of exchange would be the rate prevalent on the date when the foreign judgment is sued in Pakistan and not the rate prevalent on the date of the foreign judgment.

(iii) In a case of winding up of a company, the rate of exchange for converting foreign currency into local currency or vice versa would be the rate of exchange prevalent on the date of order of the winding up.

(iv) In a case of a breach of a contract, the material rate of exchange for the purpose of converting foreign currency into Pakistani rupee or vice versa, would be the rate of prevalent on the date of the breach of the contract and not at the rate of exchange obtaining on the date of the suit for the date of the decree.

(v) In a case for the recovery of an amount due under a contract, the material rate of exchange for converting foreign currency into Pakistani rupee, or a Pakistani rupee, into foreign currency, would be the rate of exchange prevalent on the due date and not the relate obtaining on the date of filing of the suit or the date of the decree as default in payment on the due date would constitute, breach of the contract.

(b) On the basis of the above principles, it can safely be concluded that in the instant cases the material rate of foreign exchange for the purpose of converting foreign currency into Pakistani rupees is the rate of exchange prevalent on the date of each instalment and not the rate obtaining on the date of the actual payment of each instalment."

Among the cases referred to in the aforesaid judgment, the following need to be particularly mentioned:‑

(1) Mst.Khursheed Jamal r. Muhammad Asghar Qureshi PLD 1956 Sind 47;

(2) Dr.Muhammad Rafiquddin and another v. Federation of Pakistan P L D 1960 Kar. 506;

(3) Henry Stanley Rernadan and two others v. S.M.Fazil & Co. P L 1? 1964 Kar. 290;

(4) The matter of the Income‑tax Assessment of the Khanewal Oil Mills Ltd., Khanewal P L D 1962 (W.P.) Lah. 821);

(5) Central Bank of India Ltd. v. Muhammad Aslam Khan PLLJ 1962 S C 251;

(6) S.M. Hanif v. Central Bank of India Ltd. P L D 1962 S C 376;

(7) Karachi Electric Corporation Ltd. v. Messrs American Export Isbranditser Lines Inc., Karachi P L D 1976 Kar. 23 and

(8) P.I.C.I.C v. Messrs Mahboob Industries Ltd. Suit No.312/1971.

23. In the first case reported in P L D 1956 Sind 47, the plaintiff therein brought a suit against the defendant for recovery of her dower amounting to Rs.10,000. The marriage had taken place in Saharanpur, a district in U.P., on 29 2‑1944 and the amount of dower then fixed was Rs.10,000 in Indian rupees. The suit was brought by the plaintiff on 22‑2‑1948 after she had been divorced by the h defendant in Pakistan. A question arose before the Court as to the amount claimed by the plaintiff on the basis of the rate of exchange of the Pakistan currency, and it was held that the rate of exchange applicable would be that prevailing on the date when the debt became due, that is to say, at the time of divorce and not at the rate prevailing on the date o: the judgment. In the next case reported in P L D 1960 Kar. 506, ‑the defendant in the case vas sued by the Government of Pakistan for breach of a bond executed by him before he was sent abroad for training. A similar question arose before a Division Bench of the erstwhile high Court of West Pakistan and the learned Judges of the Division Bench after reviewing the case‑law on the point held that since the cause of action had accrued to the plaintiff Government on commission of the breach of the bond committed by the defendant, therefore, the payment was to be made in the national currency calculated at the rate of exchange prevailing on the date when the breach had been committed. In the next case reported in P L D 1964 Karachi, the defendant was sued for breach of a contract. As one of the parties to the contract was carrying on business at Edenburg Scotland, the claim was made in Pounds Sterling. Once again, a similar question arose before the Division Bench of the same Court and it was held that the damages for the breach of contract were to be assessed on the basis of the difference between the sale price and the market price on the date of the breach and at the rate of exchange prevailing on such date and not at the rate of exchange prevailing on the date of the suit. In the ca reported in P L D 1962 Lahore 8?1, the appellant claimed loss incurred by it on account of a business transaction according to which an amount of Rs33,693.12 was recoverable by him against supply of goods to a firm in India. When the aforesaid amount had become recoverable the rate of exchange in Pakistan and India was the sane. However, later the Indian rupee was devalued. It was held by the High Court that the devaluation of the Indian rupee before the close of the year did not result in any trading loss to the assessee because the buyers were under a legal obligation to pay the full amount of the sale price to the assessee in the currency which was legal tender at the time when the payment became due. In the next case reported in P L D 1962 S C 251, certain bills of exchange, pa)‑able at sight, had been received by the appellant‑bank. A demand for payment was made by the respondents after the bills had matured for payment. The payment on the bills was deferred by the appellants on a request made by the respondent. The bills were in pounds sterling but the money was payable in Pakistan rupees. It was held that the rate of exchange applicable would be the rate prevailing on the date of maturity of the bills and not on the extended date of actual payment. In the next case reported in P L D 1962 S C 376 once again a similar question arose before the Supreme Court as the question once again related to the bills of exchange and it was held on the basis of section 63 of the Negotiable Instruments Act that the rate of exchange would be the date when the bills matured. In the case reported in P L D 1976 Karachi 23, which was a case brought by the plaintiffs against the defendants on account of a breach of contract committed by the latter, it was held that in foreign currency, which in the case was dollars, was convertible into Pakistan rupees on the basis of the rate prevailing at the time the cause of action arose for the loss actually incurred and not on the date of filing of the, suit. The last case referred to above is an unreported judgment delivered by Naimuddin, J. (as he then was), a learned Judge of this Court. The question before him was, whether the material rate of exchange for the conversion of D.M. into Pakistani currency would be the rate of exchange obtaining when each instalment, according to an agreement between the parties, fell due, or the rate prevailing on the actual date of payment. The Honourable Judge after reviewing the relevant case‑law concluded as follows:‑

"On the basis of the opinion expressed by the jurists and the case noticed hereinabove it seems clear that in an action m whatever form in Courts in this country for the recovery of a debt payable in foreign currency, the amount of judgment and order must be expressed in Pakistani rupees, and that unless the relative values of the respective currencies are fixed by statute or some authority binding on the Pakistani Courts or by the agreement of the litigants, then amount of the judgment or order of Court in this Court must be based on the quantity of Pakistani rupees which would have to pay here to obtain the market the amount of the debt payable in foreign currency delivered at the appointed place of payment, i.e. the amount payable according to the rate of exchange. It seems plain that this mode of computing the value of foreign currency in Pakistani rupees, and thus converting the one currency into the other is based upon damages for the breach of contract to deliver the commodity bargained for at the appointed time and place and if this is so it follows that the date as of which that value must be ascertained is the date of the breach, and not the date of the judgment."

Reference in the above cases was made to the following English cases:‑

(1) Cash v. Kennion (1805) 2 Ves 314.

(2) Celia v. Volturno (1921) 2 A C 544.

(3) Di Ferdinance v. Simo Sunts & Co. (1920) 3 KB 409.

(4) Reunited Railways of Nawaina and Regla Warehouse Ltd. (1961) A C 1007.

(5) In re: Russain Commercial and Industrial Bank (1955) A All. E R 75.

(6) Teh No (1970) Prob. 106.

(7) Societs Dec Notele Le Tonquet Place v. Cumming (1920) 1 K B 451.

24. The above cases make it abundantly manifest that in the case of a breach of a contract, if the claim of the plaintiff is to be determined in terms of foreign exchange, the rate for the purpose of conversion into the Pakistan currency would be the rate prevalent at the time of the breach, that is to say, when the cause of action accrued to the plaintiff and not when the suit is filed. If the plaintiff is permitted in such cases to bring his claim according to the rate of exchange prevalent at the time of the breach, that is to say, when the cause of action accrued to the plaintiff and not when the suit is filed. If the plaintiff is permitted in such cases to bring his claim according to the rate of exchange prevailing at the time of the institution of the claim, then the same would fluctuate accordingly. To meet such exigencies, the following principle has been enunciated in the Diecy's Conflict of Laws. Rule 160 at page 7I8 of tae 6th Edition states:

"160‑A debt expressed in the currency of any country involves an obligation to pay the nominal amount of the debt in whatever is legal tender at the time of payment according to the law of the country in the currency of which the doubt is expressed (Ixx monetae), irrespective of any fluctuations of the value of that currency in terms of sterling or any other currency of gold or of any commodities which may have occurred between the time when the debt was incurred and the time of payment (Principle of Nominalism).

If damages are to be assessed in terms of a given currency, any fluctuations in the value of that currency which may have accrued after the event giving rise to the claim for damages (breach of contract, tort) must be disregarded."

25. In the instant case as pointed out above,. no doubt the commission was payable to the respondent in the pounds sterling, but when the suit was filed by him, the claim was preferred in the Pakistan currency. Although the equivalent o the same as pointed out above, was shown in the title of the plaint, but the same fails to change the position materially as admittedly, no prayer was made in the plaint for payment of the claim in the pounds sterling. Under such circumstances, according to the view taken in the cases referred to by us above from which we have no reason to depart, the conversion of the currency would be permissible only at the rate of exchange prevailing at the time the breach was committed by the appellants. Consequently following the same principles as laid down in the above cases, in our opinion the respondent was not entitled to enhance his claim on the basis of the fluctuation in the rate of exchange. We are therefore, unable to agree with the view taken by the learned Single Judge that the respondent could enhance the claim owing to the devaluation of the Pakistan currency. Therefore, according to us the respondent was only entitled to the amount originally claimed by him, that is to say, Rs.615,511.37 together with interest at the rate of 10% per annum on Rs.6,15,511.37 from the date of filing of the suit till payment.

26. In the result, this appeal is partly allowed in the above terms. Subject to such modification the rest of the judgment shall remain intact. There will be no order as to costs.

AA./D‑26/K Appeal partly allowed.