This suit is for recovery of the sum of Rs. 3,59,556 as damages against the Government of Pakistan for alleged breach of duty by the Chief Controller of Imports & Exports, Karachi in refusing to issue an uncondi--tional import licence to the plaintiff' for the import of sugar and, in the alternative for recovery of Rs. 2,04,150 as damages against the Trading Corporation of Pakistan for refusing to import sugar for the plaintiff against the licence endorsed in its favour.
2. The facts which are not disputed are that under the Import Policy for the shipping period July- December 1968, notified by the Government of Pakistan in the Gazette of Pakistan dated 17-7-1968, the import of sugar was freely permissible against bonus entitlement vouchers under the Export Bonus Scheme which had been introduced by the Government in the year 19.19. Sugar was listed under Serial Item No. 158 of the Schedule IV to the Export Bonus Scheme as in force on 17-7-1968.
Pursuant to the above Import Policy, the plaintiff, Messrs Riaz & Kandawalla Ltd., submitted an application through its bankers on 14-10-1968 alone with the bonus entitlement vouchers of the face value of Rs. 7,18,234 to the office of the Controller of Imports & Exports, Government of Pakistan, Karachi (here--inafter referred to as "the Licensing Authority") for. 4tn import licence for sugar against the bonus entitlement vouchers under the Export Bonus Scheme. Three days after the application was filed and before the import licence was issued to the plaintiff (which was ready for delivery in all respects), the serial item sugar No. 158 was amended on 17-10-1968 with immediate effect by a Public Notice published in the Gazette of Pakistan of the same date. It reads as follows;- -- "Ministry of Commerce Public Notice Islamabad, the 17th, October, 1968 Export Bonus Scheme No. 2(21)/68-EP-24.--The Central Government have decided to make, with immediate effect, the following further amendment in Schedule IV to the Export Bonus Scheme published in this Ministry's Public Notice No. 2(21)/68-EP-17, dated the 17th July, 1968, namely.- Against Serial No. 158 in the Remarks Column, the words; "To be imported by the Trading Corporation of Pakistan only", shall be inserted.
Rashid Ahmad, TQA, for Secretary."
3. The effect of this amendment was that on and after 17-10-1968, sugar could be imported from abroad only by the Trading Corporation of Pakistan (which will hereinafter be referred to as "T. C.
P."). As a result of the change in the import policy introduced by the said amendment, the Licensing Authority with held the issue of the import licence to the plaintiff and kept it in abeyance pending the receipt of further instructions from the Ministry as to what was to be done with similar applications for bonus licences for import of sugar which were received by the Licensing Authority before 17-10-1968, the date of the amendment. Instructions were ultimately received from the Ministry of Commerce directing the Licensing Authority to enquire from the parties whether they had firm contracts with their foreign suppliers for the import of sugar and, if the answers were in the affirmative, the licences may be issued in their favour endorsed for import through the T. C. P.
Accordingly, an enquiry was addressed to the plaintiff on 11-11-1968 to which the plaintiff replied that it had a firm contract but that due to the delay in the issue of the import licence and the opening of the Letter of Credit, the foreign supplier had cancelled the contract and was even demand--ing damages. In the circumstances, the plaintiff desired to import the sugar into East Pakistan and requested that the import licence may be issued for East Pakistan (where it believed that the T. C. P. Was not functioning) but that if this request was not granted, the plaintiff would be ready to import the sugar through the T. C. P. And claim its entitlement to 6 % profits on the landed cost under the terms of the pertinent Government announcement. In view .Of this reply, the licensing Authority endorsed the import licence "Valid for Import through T. C. P. Only" and the licence was issued to the plaintiff on 14-11-1968. The plaintiff then approached the T. C. P. To import the sugar on its behalf in view of the endorsement in its favour. But T. C. P. Declined to do so stating that the plaintiff did not hold a firm contract with its foreign supplier and advised the plaintiff to approach the Licensing Authority to get the licence in question converted to any other item, the import of which was permissible under the Export Bonus Scheme.
4. In view of the refusal by the T. C. P. To import sugar on its behalf, the plaintiff requested the Licensing Authority to delete the endorsement from the licence so as to enable it to import sugar into East Pakistan. The Licensing Authority declined to do so and, like the T. C. P., directed the plaintiff to have the licence converted for import of any other item permissible under the Export Bonus Scheme. In the result, the plaintiff sold the import licence to the T. C. P. On 30th January 1969 at an agreed price at the rate of Rs. 183.60 per bonus voucher of the face value of Rs. 100.
5. The case of the plaintiff against the Government of Pakistan, the defendant No. 1 as set out in the paragraph 13 of the plaint is that the plaintiff was entitled under the law and the Export Bonus Scheme and the Import Policy declared by the Government, to receive "an effective or efficient" licence for the import of sugar without any restrictive endorsement or condition and that by illegally and wrongfully refusing to issue such a licence, the Licensing Authority has deprived the plaintiff of profits amounting to Rs. 3,59,556, which the plaintiff would have earned by the import of sugar against the said bonus entitlement vouchers.
6. The case of the plaintiff against the T. C. P. In the alternative, is set out in paragraph 14 of the plaint. It is that the T. C. P. Was bound to comply with the instructions and policies of the Government and to import items under import licences issued to private parties bearing endorsements, such as the one issued to the plaintiff in this case. The T. C. P. Was also bound to pay to Holders of such endorsed licences a profit at 6% of the landed cost of the imported goods.
That however, with mala fides and ulterior motive inter alia, of circumventing and/or of coercing the plaintiff to sell the import licence to it, and in order to deprive the plaintiff of the profits which the T. C. P. Was required to pay against the said licence, the T. C. P. Unlawfully and wrongfully refused to import sugar for the plaintiff, as a result of which, the plaintiff was compelled to sell the import licence to the T. C. P. And that thereby the plaintiff was deprived of the sum of Rs. 2,04,150 which the plaint ff would have earned otherwise. The plaintiff addressed notices to the Defendants demanding payment of the damages and, as no reply was received from them, the plaintiff filed the present suit on 5-4-1969 for a decree against the Government of Pakistan for Rs. 3,59,556 and in the alternative for a decree against the T. C. P. For Rs. 2,04,150 with costs and interest.
7. The Government of Pakistan filed a written-statement denying the case of the plaintiff. While admitting that the plaintiff had applied for a licence on 14-10-1968 for import of sugar under the Export Bonus Scheme, it submitted that its issue to the plaintiff was prohibited after 17-10-1968 when the Export Bonus Scheme was validly amended restricting the import of sugar in Pakistan by the T. C. P. Only. As, however, the plaintiff's application was received before the amendment of the policy on 17-10-1968, and as the plaintiff itself had signified its readiness to import sugar through the T. C. P., the licence was properly issued to the plaintiff bearing the endorsement "valid for import through the T. C. P. Only". It further submitted that the plaintiff's request for deleting the said endorsement from the import licence could not be acceded to as it was against the new Import policy of the Government as contained in the amended Export Bonus Scheme. It further submitted that as the plaintiff itself had sold the licence to the T. C. P. Of its own free will at a mutually agreed price, the plaintiff's suit was misconceived. It denied that the Licensing Authority had acted illegally or wrongfully or that the plaintiff was entitled to any damages as alleged, which it stated were imaginary and speculative. It further denied that the plaintiff had any cause of action and prayed that the suit be dismissed with compensa--tory costs.
8. The T. C. P. Filed a written statement and while supporting the case of the Government of Pakistan, it submitted that the import licence issued to the plaintiff for import of sugar through the T. C P. Could not be utilized by the T. C. P. Because the plaintiff did not hold a firm contract with any foreign supplier for the import of sugar. Therefore, it denied that it had wrongfully or maliciously refused to import sugar for the plaintiff against the said import licence as alleged. It further denied that the plaintiff was coerced into selling the licence and submitted that the plaintiff sold it of its own free will. The plain--tiff's claim for alleged loss of profits was denied as imaginary and speculative and that the plaintiff had no cause of action. Accordingly it prayed that the suit be dismissed with costs.
9. On these pleadings the following consent issues were accepted by the Court:-
(1) Whether the Chief Controller of Imports & Exports without lawful authority or reason and unlawfully, illegally and wrongfully refused to issue licence to plaintiffs for import of sugar for which the plaintiffs were entitled to under the Law and Export Bonus Scheme and Import Policy declared by the Government thereby unlawfully and wrongfully deprived the plaintiffs of the profits amounting to Rs. 3,59,556?
(2) Whether the defendant No. 2 unlawfully, wrongfully and maliciously refused to import sugar for the plaintiffs against the Import Licence granted to plaintiffs and thereby compelled the plaintiffs to sell out the Import Licence to defendant No. 2 and thereby deprived the plaintiffs of the profits amounting to Rs. 2,04,1507?
(3) Whether any cause of action has accrued to the plaintiffs against any of the defendants.
(4) Whether the plaintiffs are entitled to claim from defendant No. 1 Rs. 3,59,556 or alternatively from the defendant No. 2 Rs. 2,04,150.
(5) To what relief, if any, the plaintiffs are entitled and against which defendants.
(6) Whether the plaintiffs are liable to pay special costs.
10. The plaintiff examined one witness, namely, its Manager, Mansoor Ali (P. W. 1) who produced the relevant Government notifications and the correspondence exchanged between the parties. Shabir Ahmed (D. W. 1), who was serving as an executive officer in the office of the Chief Controller of Imports and Exports, Karachi was examined on behalf of the Government of Pakistan, while the T. C.
P. Examined Muhammad Aslam Siddiqui (D. W. 2).
11. I have examined the evidence and have heard counsel for the parties. My findings on the issues are as follows:-
12. Issue No. 1.----The burden on this issue is on the plaintiff to show that on the facts and in circumstances of this case, the refusal by the Licensing Authority to issue a licence in favour of the plaintiff was illegal and wrongful. There is no challenge to the validity of the public Notice dated 17- 10-1968 amending the import policy imposing a total ban on the import of sugar under the Export Bonus Scheme by private parties except by the T. C. P. Indeed, the Government have ample powers under section 3 of the Imports and Exports (Control) Act, 1950 to prohibit, restrict or otherwise control the import of goods of any specified description. Therefore, it is clear that the plaintiff was not entitled to import sugar into Pakistan on and from 17-10-1968 under Export Bonus Scheme and a refusal to issue a licence to the plaintiff would have been fully justified. But the submission of Mr. Mohsin 'rayabally, learned counsel for the plaintiff is that by applying for a licence on 14-10-1968 after complying with all the conditions applicable to the grant of a licence against bonus entitlement vouchers under the Export Bonus Scheme before its amendment on 17-10-1968, the plaintiff had acquired a vested legal right to the grant of the licence applied for and that the refusal by the Licensing Authority to issue a licence to the plaintiff, which he was bound to do, was a breach of his statutory duty for which the plaintiff was entitled to be compensated in damages.
Further, that the amendment of the import policy dated 17-10-1968, three days after the plaintiff had submitted its application dated 14-10-1968 cannot have retrospective operation and divest the plaintiff of the said right. He referred to the photo copy of the import licence document Exh. 6/2 and demonstrated that the licence was complete in all respects, as it was not duly signed by the Licensing Authority on 15-10-1968, but it was also registered with the State Bank of Pakistan on 16- 10-1968, before the date of the amendment.
13. Mr. Sayeed A. Shaikh, learned counsel appearing on behalf of the Government of Pakistan, submitted that the question whether by merely applying for an import licence; an applicant acquires any vested legal right to its grant, has now been concluded by a recent judgment of our Supreme Court in Government of Pakistan v. Zamir Ahmed (PLD1975SC50). The facts of that case were similar. In that case, the respondent Zamir Ahmed, who was a registered commercial importer, applied for an import licence on 4-8-72 for certain cinematograph films borne on the free list under item No. 49 of the annexe to the relevant Import Policy Order, 1972 and bad deposited Rs.
1,400 for that purpose. Some six days later, on 10-8-1972, the Government amended the said item No. 49 of the import policy in material respects by a notification published in the Gazette, restricting the import of cinematograph films only through the agency to be specified by the Ministry of Information and Broadcasting. As a result of this amendment, the Licensing Authority refused to authenticate the licence in favour of the respondent. Therefore, the respondent filed a constitutional petition in the High Court of Lahore challenging the refusal as being without lawful authority. The petition was dismissed but was allowed on appeal by a Letters Patent Bench. On appeal by special leave by the Government to the Supreme Court, their Lordships of the Supreme Court upheld the legality of the refusal by the Licensing Authority to authenticate the licence in favour of the respondent. They considered the question (which has now been raised by Mr. Mohsin Tayabally in the instant case, whether the respondent Zamir Ahmed by applying on 4-8-1972 and satisfying all other conditions for the grant of the licence before the amendment of item No. 49, became vested with any legal right for a licence, of which he could not be divested by the subsequent amendment on 10-8-1972. They, held that a licence being merely a privilege until it is actually granted and accompanied by a grant, an applicant for a licence does not acquire any legal right to its grant as a matter of right by merely applying for it and complying with all the conditions prescribed for its grant. They further held that as the licence was withheld ab initio with the result that the respondent had acquired no vested legal right, there was no substance in the further argument of counsel on his behalf that the amendment of Item No. 49 in the policy order on 10-8-1972 could not impinge retrospectively upon the respondent's entitlement on the basis of his application submitted earlier, on 4-8-1972. Their Lordships were careful to observe that (to quote) "the Courts have always endeavoured to protect vested rights, by refusing to allow statutes to have retrospective operation, unless such a result becomes inevitable from the express language of the statute or its necessary intend--ment". The judgment of their Lordships is on all fours and applies directly to the instant case before me, which I am bound to follow.
14. Mr. Mohsin Tayabally tried to distinguish Zamir Ahmed's case by submitting that in that case the opening words of para. 14 of the Import Policy Order, 1972, viz. "unless otherwise specified" negatived the existence of an unqualified statutory right of an applicant to a licence. Whereas in the instant case, the rules and procedure of the Export Bonus Scheme published in the Gazette on 16-1-1959 showed that an applicant had a statutory right to a licence against surrender of bonus entitlement vouchers under the Export Bonus Scheme. In my opinion this submission is misconceived. It is true that under para. 7(a) of the said Scheme, it is stated that "Import Licences under the Scheme will be issued for the items shown in Schedule It append--ed". But under para. 10 thereof Government reserved the right to them--selves to make any change including deletion and modification in the Scheme. The proviso thereto relied on by Mr. Mohsin Tayabally that such change shall not affect any exchange entitlement already earned before the change, is irrelevant and quite another mater. Neither has the plaintiff "earned" any exchange entitlement by the export of the specified goods. Nor does the present dispute raise any question of exchange entitlement. As stated earlier, Government has plenary powers to prohibit the import of goods of any specified description under section 3 of the Imports and Exports (Control) Act, 1950. In principle, I do not see any difference in principle and none had now been shown to me, in the nature of lince to import items on a free list borne under an Import Policy Order as in Zamir Ahmed's case above discussed, and in a licence to import goods against A bonus entitlement vouchers under the Export Bonus Scheme. In both case the licence, until it is granted, is a privilege and no vested right to its grant is acquired by an applicant until the licence is authenticated in favour of the applicant, when it becomes a licence complied with a grant.
15. Accordingly, my finding on this issue is that the refusal by the Licensing Authority to issue the licence to the plaintiff in the circumstances of the case is not unlawful, illegal or wrongful.
16. Issue No. 2. The submission of Mr. Mohsin Tayabally is that the endorsement on the licence "Valid for import through T. C. P. Only" is in the nature of a direction or instruction of the Government issued to the T. C. P. To import sugar and to pay a profit of 6 % on the landed cost of the imported sugar and the refusal by the T. C. P. To comply with such direction was unlawful and wrongful for which the plaintiff is entitled to the aforesaid statutory profits of 6 %. The submission of Mr. A. I.
Chundrigar, learned counsel for the T. C. P. On the other hand is that under West Pakistan notification dated 21-10-1968 (Exh. 7/ 10) the only obligation on the T. C. P. Was to purchase the sugar from private importers which was to arrive after 17-10-1968, against payment of the cost price plus 6 % profit thereof. The Notification reads as follows :- "GOVERNMENT OF WEST PAKISTAN FOOD DEPARTMENT
ORDER the 21st October, 1968.
No. S. Q. E. (Sugar) 5(59)/67.--In exercise of the powers conferred by section 3 of the West Pakistan Foodstuffs (Control) Act, 1968 (West Pakistan Act XX of 1968), the Governor of West Pakistan is pleased to order that all stocks of sugar imported by private importers which have arrived at Karachi on 17th October, 1968, or which may arrive thereafter, shall be sold to the Trading Corporation of Pakistan, at the cost price plus 6 % profit thereon.
By order of the Governor of the West Pakistan S. M. A. Kazmi S. K., T. Q A., C. S. P., Secretary to Government of West Pakistan Food Department."
In this connection he referred to the evidence of Mohammad Aslam Siddique (D. W. 2) a Finance Executive in the employment of the T. C. P. Who stated as follows:-- "I am aware that in October, 1968 a notification was issued concerning to import of sugar. We purchased the sugar from private importers who had firm commitment and documents were transferred to the T. C. P. Against payment. In the case of sugar which has already arrived we took over the documents against payment of C. I. F. Value plus 6 per cent. As the plaintiff had no firm commitment with foreign suppliers they could not transfer the documents and the import licence to us. In November 1968 the plaintiff requested us to import sugar on their behalf on their licence.
The plaintiff was informed that it was not possible to do so as T. C. P. Did not import on behalf of other party but on its own account."
It is also admitted by Mansoor Ali (P. W. 1), the Manager of the plaintiff that; "I-produce a contract which the suppliers Exh. 7/4. We placed an Indent with Messrs Hinnah and subsequently the contract was concluded with the suppliers . . . . . . . . The suppliers cancelled our contract on account of delay in opening the L/C." This is further supported by the plaintiffs' letter dated 11-11-68 to the Licensing Authority (Exh. 8/1) in reply to the enquiry whether the plaintiff held any firm contract with foreign supplier for import of sugar. The reply reads :- "In this connection, we would like to inform you that Bonus Vouchers f or the preparation of import licence were submitted on Licensing Counter through our Bankers well before the announcement of the Government restricting the import of. Sugar by private enterprises. We had at the time, a firm commitment with a foreign supplier, but due to delay in opening Letter of Credit supplier cancelled the contract and contrary demanding claim for damages incurred in chartering the steamer . . . . . . ."
Therefore, in the absence of a: firm contract by the plaintiff with foreign supplier for the import of sugar, there was no question of the T. C. P. Importing the sugar on the plaintiff s behalf by obtaining transfer of the document of credit, if any was placed or even opening of Letter of Credit. Equally, there is no question of claiming against the T. C. P. The statutory profit of 6% on the landed cost of the imported sugar. On the point of the alleged compulsion on the plaintiff to sell the licence for the T. C. P:, there is no evidence of it at all. Even Mansoor Ali (P. W. 1) does not mention it. I would accept the evidence of Mohammad Aslam Siddiqui (D. W. 1) on behalf of the T. C. P. That the plaintiff sold the licence at a price mutually agreed at the rate of Rs. 183 per bonus voucher of the face value of Rs.
100. In my opinion, the plea of compulsion raised by the plaintiff is false. My finding on this issue is in the negative.
17. Issue No. 3.-In the aforementioned reasons, I hold that no cause of action has accrued to the plaintiff.
18. Issue No. 4.-No, for the reasons aforementioned Additionally with regard to the damages of Rs.
3,59,556 there is no evidence of the market price or the landed cost price of sugar in East Pakistan on the relevant date.
19. Issue No. S.-To none.