TMI Blog1957 (4) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... he agreement between the parties was that the said Manager would also supply, on payment of price, wire coils in connection with the supply of bhoosa presumably for the purpose of tying the bundles of fodder, and on the supply being made and on return of the wire coils, the military department would give credit for the price of the coils already paid by the respondent. In November, 1945, the respondent supplied fodder and returned 152 bundles of wire coils. The Manager, Military Farms, Lahore, informed the respondent, however, that out of 152 bundles of wire coils, said to have been sent, 24 bundles had not been received, though no note of such non-delivery was made at the time the consignment was received. The respondent had also deposited ₹ 11,026 by way of security with the military department in connection with the contract. The agreement contained an arbitration clause to the effect that if a dispute arose between the parties, it should be decided by the arbitrator named therein, viz., the District Commander concerned. The respondent said that he had a claim against the appellant for ₹ 720, the price of 24 bundles of wire coils at ₹ 30 per bundle, and for ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Dominion of Pakistan on account of the territorial situation of Lahore. But in the present case, the fodder was to be supplied to a Military Farm and the fodder, therefore, constituted Military stores. Military Stores were kept joint and under the exclusive control of the Joint Defence Council who had the power of allocating these stores among the two Dominions and for transferring them from one place to another. Therefore, fodder lying in the Military Farm, Lahore, was not, on 15th August 1947, the exclusive property of the Dominion of Pakistan but was under the exclusive control of the Joint Defence Council. This fodder could be transferred to a farm in India and thus could become the property of the Dominion of India. In the circumstances, it cannot be said that the contract for supply of fodder to the Military Farm, Lahore, was a contract exclusively for the purposes of the Dominion of Pakistan if the contract were viewed on the 15th of August 1947, and, that being so, it must be held that the contract was not a contract exclusively for the purposes of the Dominion of Pakistan. The decision of the learned trial Judge on this point must, therefore, be set aside. The pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case with reference to the provisions of the Independence Order, 1947, and the Defence Order, 1947. It is convenient at this stage to set out the relevant provisions of the two Orders. The Defence Order, 1947, was made in exercise of the powers conferred by.. sub-s. (1) of s. 9 and in pursuance of sub-s. (1) of s. II of the Indian Independence Act, 1947, and was published on August 11, 1947. The Independence Order, 1947, was made in exercise of the powers conferred by s. 9 of the Indian Independence Act, 1947, and was published on August 14, 1947. Both came into force at once. Article 3 of the Defence Order, 1947, states: (1) As from the 15th day of August, 1947, there shall be set up a Council to be known as the Joint Defence Council for India and Pakistan. (2)The said Council, hereinafter referred to as the Joint Defence Council, shall consist of- (i)the Governor-General of India, (ii) the Defence Minister of India, (iii) the Defence Minister of Pakistan, and (iv) the Supreme Commander of His Majesty's forces in India and Pakistan (hereinafter referred to as the Supreme Commander). Article 8, so far as it is relevant, is in these terms: The J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgument, learned counsel for the respondent contended that Art. 8(1) did not apply to what is sometimes described as executed contracts; this point was also urged before Kapur J. of the Punjab High Court (as he then was) and one of the reasons given by him for a reference of the case to a larger bench was the difficulty he felt if the contract in question which has been performed and executed long before August 15, 1947, so far as the respondent was concerned, attracted the operation of cl. (a) of Art. 8(1). It is necessary to appreciate clearly the distinction between the two classes of contracts where the consideration is either executed or executory. An executed consideration consists of an act for a promise. It is the act which forms the consideration......... No contract is formed unless and until the act is performed, e.g., the payment for a railway ticket, but the act stipulated for exhausts the consideration, so that any subsequent promise, without further consideration, is merely a nudum pactum In an executed consideration the liability is outstanding on one side only; it is a present as opposed to a future consideration. In an executory consideration the liability is ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India. What is the proper meaning of the expression a contract for the exclusive purposes of the Dominion of Pakistan ? We assent to the view expressed by Chagla C.J. in Union of India v. Chinu Bhai Jeshingbhai (I.L.R. 1953 Bom. 117, 130.). Said the learned Chief Justice- It is clear from the language used in art. 8 that the test to be applied with regard to this contract is not whether the contract was for the purposes of the Dominion of Pakistan at the date when it was made. Ex hypothesi that test is clearly inapplicable. All contracts contemplated by art. 8 must be contracts which when made were made by undivided India by the Governor-General in Council. The test that must be applied is an artificial test and the test may be either if the contract had been entered into on August 15, 1947, whether it would have been a contract for the purposes of the Dominion of Pakistan, or if the Dominion of Pakistan had been in existence when the contract was entered into, whether it would have been a contract for the purposes of Pakistan. This, we think, is the correct test to apply for determining the true scope and effect of Art. 8(1) of the Independence Order, 1947, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrol over it and could send it wherever they wanted it to be sent; therefore, they said that the purpose of the contract was not a purpose exclusively for the Dominion of Pakistan. We say this with great respect, but this line of reasoning appears to us to be due to a lack of proper appreciation of the distinction between the purpose of the contract and the ultimate disposal of the goods supplied under the contract. The purpose of the contract is not determined nor modified by the ultimate disposal of the goods supplied under the contract, nor even by the powers of control exercised over the goods after the contract had been performed by the respondent. Wherever the goods might be ultimately sent, the purpose of the contract remained what it was, that is, to supply fodder to the Manager, Military Farms, Lahore, which, on the test laid down by us, was clearly a purpose exclusively for the Dominion of Pakistan. The Independence Order, 1947, determines the respective rights and liabilities under contracts. If, under the Defence Order, 1947, some goods the liability for the price of which under the Independence Order, 1947, falls on, say, India, are allotted to Pakistan, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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