1. ' ZIA PERWAZ, J.---Petitioner claims to have purchased Special US $ Bearer Bonds (hereinafter referred to as the said bonds) for face value of US $ 5.322 Million for a period of three years out of his frozen foreign currency account. The terms and conditions for investment in said bonds are laid down in the Special US $ Bearer Bonds Rules, 1998 (hereinafter referred to as the SUSDB Rules 1998) as amended vide Notification dated 11-8-2001 whereby two sub-rules Nos.(2) and (3) added in existing Rule 10 which reads as follows:- "(2) In case bonds of three years maturity are redeemed in Pak Rupees, holders will get Pak Rupees in lieu of face value of bond in inter-bank Dollar to Rupee Redemption Bonus of 5% of the total rupee value of the Bond.
(3) Face value of bonds of three years maturity may be reinvested for a further period of three years starting from the date of redemption at a profit of six months 'LIBOR' on the day preceding the date of payment plus two per cent."
2. ' On maturity of bonds petitioner reinvested the amount in Special US $ Bearer Bonds for a further period of three years commencing from Nov-Dec.
3. 2001. It was during this period that vide notification dated 22-3-2002 the SUSDB Rules 1998 were further amended as Sub-Rule (2) of Rule 10 was omitted. The State Bank of Pakistan vide EDMD Circular No,9 dated 15-6-2002 made clarification as to payment of redemption bonus at the rate of 5% if the bonds were redeemed in Pak Rupees. Said Circular is reproduced as under:- "Amendment in Special US Dollar Bonds Rules 1998 ' Please refer to EDMD Circular No,3 dated 22nd March, 2002 on the captioned subject whereby, Rupee Redemption Bonus of 5% on maturity of three years Special US Dollar Bonds for encashment in Pak Rupees was withdrawn.
4. ' In this regard, for facilitating the general public, the following clarifications are being made, in consultation with the Finance Ministry:--
(1) SUSDBs (3 years maturity) that matured during the period from 1 1 the August, 2001 to 22nd March, 2002, and redeemed in Pak Rupees, are entitled to Rupee Redemption Bonus of 5% irrespective of the date on which they are presented for encashment.
(2) SUSDBs (3 years maturity) sold during the period from 11th August, 2001 to 22nd March, 2002 would be entitled to Rupee Redemption bonus of 5% on maturity. This would mean that the holders of SUSDB's of three years maturity sold during the period from 11th August, 2001 to 22nd March, 2002, and redeemed in Pak Rupees on maturity, would be entitled for Rupee Redemption Bonus .Of 5% on maturity i,e, during the period 11th August, 2004 to 22nd March, 2005 (only if redemption is made in Pak rupees on maturity).
5. Yours faithfully (Muhammad Shakir)
6. Director"
7. ' The petitioner sought clarification as to his entitlement of 5% bonus and received following reply which is as follows:-- "EDMD/558/3(166)/03 12th March, 200.1 ' Dr. Mirza Ikhtiar Baig, Chairman, ' Baig Group of Industries, F-255, Street No,5, ' Textile Avenue, S.I.T.E., Karachi-75700 ' Dear Sir, EDMD Circular No,9 dated 15th June, 2002 ' Please refer to your, letter dated 11th March 103 on the captioned subject.
8. ' It is advised that reinvested bonds do not fall into the classification of bonds sold during the period 11th August, 2001 to 22nd March, 2002, which only include bonds sold against fresh dollars, frozen FAC 's and FCBC's/DBCs and hence the reinvested bonds do not qualify for Rupee Redemption Bonus of on establishment in Pak Rupees on maturity. Yours faithfully, Sd/- (Anser Sultan)
9. Assistant Director"
10. ' On subsequent representation, State Bank of Pakistan vide their letter dated 22-4-2003 informed the petitioner that the matter has been referred to Finance Division for clarification and finally vide State Bank of Pakistan Letter No,EMP 1519 dated 12-7-2003 the petitioner was denied 5% redemption bonus on encashment of the said bonds in Pak Rupees as follows:-- "EDMD/1599/3(166)/03 12th July, 2003 ' Dr. Mirza Khtiar Baig, Chairman, ' Baig Group of Industries, F-255, Street No,5, ' Textile Avenue, S.I.T.E., Karachi- 75700.
11. ' Dear Sir, Redemption Bonus of 5% on maturity of Special US Dollar Bonds.
12. ' Please refer to your Letter No,Fd-47 dated 18th March, 2003 on the captioned subject.
13. ' In this regard it is advised that the provision under which the rupee redemption bonus of 5% is available clearly states that Special US Dollar Bonds of 3 years maturity sold during the period from 11th August, 2001 to 22nd March, 2002 would be entitled to rupee redemption bonus Of 5% if encashed in Pak Rupee on maturity. The Special US Dollar Bonds held by you were sold in November-December 1998 and renewed in November-December, 2001 at LIBOR +2% and enjoy Tax exemptions.
14. ' In view of this Finance Division has expressed the opinion that your bonds do not qualify for rupee redemption bonus of 5% as these bonds were not sold in November, -December, 2001 but simply renewed. Yours faithfully, Sd/- (Anser Sultan)
15. Assistant Director"
16. ' Being aggrieved with the above decision, petitioner seeks a declaration that the said bonds qualify for Rupee Redemption Bonus of 5% on maturity, if redeemed in Pak Rupees.
17. ' Comments and counter-affidavit have also been filed on behalf of respondents Nos.1, 2 and 3 respectively. They have opposed the claim of the petitioner.
18. ' Learned counsel appearing for the parties have advanced detailed arguments and requested that the matter be finally decided at the present stage, hence we propose to finally decide the matter.
19. ' Mr. Nafees Ahmed Siddiqui, learned counsel for the petitioner, has contended that the petitioner was allowed a bonus on the said bonds at 5% by the Government of Pakistan against encashment of. The same in Pak Rupee at maturity of the said bonds in November/December, 2001. The conditions on reinvestment remained the same. The amount was not converted to Pak Rupee but continued to remain invested in US Dollars. The rate of interest is also payable at the rate of 2% above London Inter-Bank Offer Rate (LIBOR) prevailing on the day prior to the date of encashment.
20. The LIBOR is only available against the dollars and not for Pak Rupee which further goes to show that the investment was not in Pak Rupee. On the dates of reinvestment the incentive of 5% on encashment of bonds in Pak Rupees was available. Having reinvested the amount under a bona fide belief that the petitioner would be entitled to 5% bonus as respondent cannot now deny the amount promised to them for investment against the said bonds. The respondents cannot reprobate, as there is a promissory estoppel against the respondents from refusal to make payment of 5% bonus. In support of his contentions learned counsel has placed reliance on the cases of Tradex (Pvt.) Limited v. Governor, State Bank of Pakistan 2003 CLD 756 Lahore; Messrs Dadabhoy Cement Industries Limited v. Messrs National Development Finance Corporation 2002 CLC 166; Habib-ur-Rehman alias Rehman alias Raja Bottal v. The State 1992 SCM R .1625 and Messrs United Kashmir Flour Mills (Pvt.) Ltd. Company v. Government of Azad Jammu and Kashmir 2003 YLR 2835.
21. ' Mr. Aziz A. Khan, learned counsel appearing for respondent No,3, has vehemently opposed the petition. He has referred to the counter-affidavit and comments filed by the respondent No,3 denying the liability for payment on redemption bonus of 5% on encashment of said bonds on maturity, by operation of law. It is contended by the learned counsel that the petitioner has exercised the option of reinvestment in term of Rule 10(3) of SUSDB Rules. 1998, therefore, the claim was liable to be dismissed. It is further contended that the reinvestment was subject to special incentive in shape of payment at the rate of 2% above LIBOR rate in addition to the fact that the amount of interest was free from income-tax. Reference is also made to the reply to the legal notice dated 18-9-2003 reflecting the above position.
22. ' To appreciate the contentions of Mr. Nafees Ahmed Siddiqui, we propose to examine the situation under which the Dollar Bonds were issued, the change brought about by the Foreign Exchange.
23. (Temporary Restrictions) Act, 1998 and the effect of subsequent notifications dated 11-8-2001 followed by notification 22-3-2002.
24. ' The Government of Pakistan in Protection of Economic Reforms Act, 1992 allowed foreign investment in Pakistan subject to conditions. After promulgation of the aforesaid Act, instruments in the shape of certificates, bonds etc. In foreign currency were issued by various Banks and DFIs. The petitioner had made investments in US Dollars Bonds which are governed by specific rules and the interest on encashment were to be paid in US Dollars. Thereafter due to the economic exigencies at that time certain immediate measures were adopted by the Government of Pakistan, which, amongst others, included a temporary prohibition on' encashment of . The special U.S. Dollars Bonds. Shortly thereafter the encashment in US Dollars was restored. However, as the foreign exchange crunch was not over by that point of time, a special incentive was offered on encashment of the said bonds in Pak rupees.
25. After perusal of the record we are of the view that on expiry of the term of three years, the petitioner had following options:--
(i) Either to en cash the bonds in Pakistani rupee or
(ii) To obtain the amount in Dollars.
26. ' Incentives were offered to the holders of the bonds in both cases. In case of encashment in Pak rupees on additional bonus of 5% was offered while in case of exercise of the second option the incentives in the shape of non-levy of income tax on the interest and the terms as specified in the notification were offered.
27. ' In the instant case the amount was neither obtained in Pak Rupee nor in dollars but and it was reinvested. Admittedly the period of maturity of the said bonds was not varied, the question can, therefore, be settled if it is ascertained as to whether on the date of maturity, after the expiry of the initial period of three years, reinvestment was made in Pak Rupee or dollars as this is the basic condition for determination of the entitlement to the 5% bonus. There is sufficient material on record to show that the denominations of the bonds is in US Dollars. The interest payable is based on LIBOR (plus the percentage fixed on the basis of the duration of investment depends upon the number of years). The LIBOR, which stands for the London Inter Bank Offer Rate, obviously applies to US Dollars and pot to Pak Rupee. At the time of maturity, the bonds were encashable either in US Dollars or Pak Rupee at the sole discretion of the petitioner.
28. ' This view finds further support from the word 're-invest' used in the said Notification. The dictionary meaning of reinvest according to the different dictionaries is as under:-- Chambers 20th Century Dictionary: ' Reinvest re-in-vest, v.t. To clothe again: to encov to invest again.- n. Reinvestment. [Pfx. Re-.] The New Shorter Oxford English Dictionary: ' Reinvest/rinn'vest/v. E17. [f. RE + Invest.] 1 v.t. A Invest or cover again with or as with a garment. E17. B Re-endow with a possession, power, etc. M17 2 v.t. Replace, re-establish. Foll. By in. EI7. 3 v.t. An 1 Invest (money) again. MI9.
29. Oxford English Dictionary (1982): Reimiestment. (further examples)
30. ' 1857 MILL Pol. Econ. (ed. 4) I. I. Iv. 70 All property. Is a part of capital, so soon as it: is set apart for fro luctive of reinvestment. 1931 Economist 3 Jan. 25/2 A fair amount of reinvestment business following the heavy dividend disbursements of this week sufficed. . To give prices a firm tendency. 1980 W.
31. ASH Incorporated vi. 61 Various proposals for the re-investment of the profits.
32. ' This obviously leads to a conclusion that the contract was concluded in respect of the term of the special US Bonds and the reinvestment is not a continuity but a separate transaction followed under subsequent Notification when the amount was reinvested in Dollars under a fresh set of conditions laid down in Special US Dollar Bonds Rules, 1998 which does not provide for payment of any bonus on encashment of the bonds in Pak Rupees. Under the circumstances, as the reinvestment is neither a continuation nor the same transaction but a separate contract, we are of the humble opinion that the reinvestment amounts to encashment of the bonds on maturity in Dollars and it is followed by a fresh contract for reinvestment in US Dollars under the conditions set forth for such reinvestments attracting conditions different from those offered to the purchasers of Special US $ Bonds sold at that time as discussed below.
33. ' The petitioner as well as other investors who had made investment during November-December, 2001 are entitled to LIBOR plus 2% and enjoy tax exemption. In pursuance of the Notification dated 11-8-2001 already reproduced above. Incentive was provided on the reinvestment made by the petitioner in the shape of higher rate of profit as compared to the prevailing rate of profit on sale of special US Dollars Bonds at that time as specifically mentioned by the respondents in paragraph 12 of their parawise comments. The petitioner having availed the benefits by exercise of one option is therefore, precluded from again claiming benefits offered to those investors who purchased US Dollar Bonds during the aforesaid period but were paid a lower interest rate with the incentive of 5% bonus in case of encashment of the bonds in Pak Rupee. This goes to show that the two classes of investments have been dealt with differently. They have been allowed incentives attracting to each of the categories i,e, by way of higher rate of profit in case of reinvestment while the purchasers of fresh Special US Dollars Bonds during the same period were offered lower rate of profit with an incentive of 5% bonus in case of encashment in Pak Rupee.
34. ' The case-laws cited by learned counsel for the petitioner are therefore, distinguishable from the present case. However, learned counsel for the petitioner has given much emphasis on the case of Tradex (Pvt.) Limited (supra) being the case pertains to same subject-matter. Albeit, the controversy in that case was that State Bank of Pakistan had withdrawn 5% bonus upon encashment in Pak Rupees in respect of bonds matured after 22-3-2002 thus depriving the petitioner of 5% bonus, whose bonds were to mature on 26-3-2002. Such act was declared discriminatory and the petition was allowed. The case did not relate to reinvestment after maturity.
35. In the instant case the petitioner is claiming 5% bonus on reinvestment which is an entirely different issue. The Principle laid down in the case of I.A. Sherwani and others v. Government of Pakistan 1991 SCM R 1041 that in case similar terms are applied to all the people viz. Holder of the bonds, who reinvested the amount in US Dollars the action taken is not discriminatory, are attracted to the present case as all cases of reinvestment after maturity of the bonds after expiry of the period of three years are being treated in like manner without any discrimination.
36. In view of the above discussion, we are of the view that as the petitioner chose the second incentive at maturity on completion of the period by a free exercise of his choice, no ground for setting aside the impugned action due to discrimination nor any case of promissory estoppel is made out in the present petition. The petition is devoid of any merit and is accordingly dismissed.