A contract entered into by the Governor-General in Council before partition would be deemed to have been made on behalf of Pakistan if it was for the exclusive purposes of Pakistan, and the liability to discharge such a contract would devolve upon Pakistan under the Indian Independence (Rights, Property and Liabilities) Order, 1947.

CHAGLA, C.J. :- This appeal raises a very short question as to the liability of the Union of India to discharge a liability arising under a contract which was entered into prior to partition and in respect of goods which according to the Union of India belonged to Pakistan on the appointed day, viz. 15-8-1947. In March 1947 the Government of India had certain quantities of longcloth for sale as disposal of surplus stock, and these goods were lying at the Ordnance Parachute Factory in Lahore. These goods were purchased by the plaintiffs, who are residents of Baroda, by three sale notes executed on 10-3-1947. Under these sale notes the plaintiffs had to pay a sum of Rs.34,758-15-5. The contract contained in these sale notes provided that the goods sold had to be stamped for which certain charges had to be paid by the purchaser and that the stock had to be removed within 21 days of the stamping of these goods. The evidence shows, and the finding of the learned Judge is also to the same effect which has not been challenged by the Attorney General in this appeal, that through no fault of the plaintiffs the goods could not be stamped at Lahore because of the serious communal situation that prevailed in Lahore in the month of August 1947. The evidence also shows that a representative of the plaintiffs and of the Textile Commissioner in Bombay did see the goods in Lahore on 10-8-1947, but on that day nothing could be done and the goods could not be stamped partly because of the communal troubles and also because no labour was available due to the serious situation prevailing in Lahore. Thereafter came partition on 15-8-1947, and ultimately the goods were never stamped and never delivered to the plaintiffs. The plaintiffs paid the full price in respect of these goods including the stamping charges to the Government of India prior to 15-8-1947.

2. On 26-9-1947, the plaintiffs wrote to the Textile Commissioner, Bombay, drawing his attention to the abnormal situation prevailing in Lahore and asking him to bring the stock lying at Lahore to Bombay where delivery could be taken by them, or in the alternative to give them other materials in place of the materials purchased by them under the contract. Two reminders were sent by the plaintiffs to this letter and ultimately on 30-10-1947, the Textile Commissioner informed the plaintiffs that all outstanding actions on the contract for the sale of surplus would be performed by the Government of the Dominion in whose territory the stores were situated at the time of sale, viz. the Dominion of Pakistan. On 11-11-1947, the plaintiffs informed the Textile Commissioner that he should either make arrangements to bring the goods to Bombay or, if that was not possible, the contract might be treated as having terminated and the moneys paid by the plaintiffs should be returned to them. The Textile Commissioner replied to this letter on 28-11-1947, pointing out that the decision communicated by him on 30-10-1947, was arrived at a very high level by the parties constituting the then Government of India and it was not possible to do anything further in the matter. The plaintiffs thereupon approached the Government of Pakistan and on 5-11-1948, the Textile Commissioner for Pakistan informed the plaintiffs that the sale notes in question had been cancelled as the stores were not available. With regard to the refund of the money the plaintiffs were asked to refer to the Textile Commissioner, Government of India, Bombay. On 16-11-1948, the plaintiffs approached the Government of India pointing out that the refund of the moneys had long been delayed and asking them to expedite the matter. On 21-1-1949, the Deputy Assistant Director of the Government of India informed the plaintiffs that the question of the refund had been referred to the Ministry in New Delhi along with other similar cases, and unless and until a decision was arrived at by the Ministry no action could be taken. On 25-1-1949, the Deputy As