' ANWAR ZAHEER JAMALI, C.J.---Messrs Lakson Tobacco Company Limited have preferred this constitutional petition with the following prayers:-- "It is, therefore, prayed that this Honourable Court be pleased to set aside the imposition of penalty of Rs,4,865,009.00 and direct the respondent No,2 to refund the said amount of penalty to the petitioner recovered/levied by respondents Nos.4, 5 and 6 and paid to the State Bank of Pakistan (respondent No,2.)."
' Any other relief this Honourable Court may deem fit to grant in the circumstances of the case.
2. Briefly stated, the relevant facts divulged from the case record are that the petitioner, a public limited company, is carrying on the business of tobacco and tobacco related products in several forms, including cigarettes, and also undertaking its export. They obtained finance facilities from respondents Nos.4 to 6 under the State Bank of Pakistan Export Finance Scheme for the purpose of their export business. The State Bank of Pakistan, respondent No,2, imposed fine upon the petitioner company under para. 2(3) of Banking Central Department Circular No,9 dated 12-2-1985, as they failed to achieve the required export target of cigarettes during the year, 1988-1989. Accordingly, recovery of such fine, total amounting to Rs,48,65,009, was enforced by the respondents Nos.4 to 6 against the petitioner as detailed in para 1(a)(b) and (c) to the petition. The decision of respondent No,2 was initially challenged by the petitioner before the relevant quarters, but without success, and thereafter before the Federal Ombudsman with the request for waiver of fine imposed by respondent No,2. Such representation of the petitioner was disposed of by the Federal Ombudsman with the observations, which read as under:-- "From the above, it would be observed that the Bank is not guilty of mal-administration. They have acted as per rules on the issue. However, it is felt that the complainants were not given any lead time to reschedule their business, and reduce their inventories keeping in view the fiscal policy. As stated by them they have invested huge amounts in finished goods inventory, stocks of raw and packaging materials and tobacco before levy in the excise duty and sales tax. It is admitted that to keep the business running they had to borrow after 26 June, 1988. This office, therefore, cannot make any recommendation to waive the penalty/mark-up due to Force Majeure caused by abrupt fiscal measures. However, the scheme does provide for waiver of additional interest where the failure is due to reasons beyond the control of the borrower. This can be done by the State Bank only. It is entirely up to the Bank to reconsider the issue in the light of facts mentioned above."
3. The decision of the Federal Ombudsman referred above did not find favour of respondent No,2, therefore, the petitioner filed Constitutional Petition No,D-323 of 1992, thereby challenging the fine imposed by respondent No,2. This petition was heard and allowed by a Division Bench of this Court with the following observations:- "When the petitioner filed a representation to S.B.P to consider the Special Circumstances and grant relief, the latter rejected the request. It is apparent from S.B.P. Letter dated 8-8-1991 that it did not apply its mind and give reasons for not acceding to the request of the petitioner and rejecting their plea of failure to ship the goods for reasons beyond their control. It is an established principle of law that all administrative and quasi judicial officers must pass speaking orders i,e, the order must state the reason for the conclusion reached. S.B.P. Letter simply states. It is advised that under the provisions of the Export Finance Scheme, your request for refund of fine cannot be acceded to.
The said letter is patently contrary to the established principle of justice as it does not give any reason for rejection of the petitioner's request. It is also contrary to the provisions of the newly inserted section 24-A in General Clauses Act, 1987, which requires that all orders passed by all public functionaries who pass any order or issue any direction under the powers conferred by or under any enactment must state the reasons therefor. In our considered opinion, S.B.P. Order dated 8-8-1991 is unlawful, without jurisdiction and of no legal effect. The petition is allowed with costs and S.B.P. Order dated 8-8-1991 is hereby set aside and S.B.P. Is directed to consider the representation made by the petitioner an opportunity of placing all documents and information in support of their representation and giving them a personal hearing in the matter decide the issue by passing a speaking order."
4. After passing of above order when the matter again came up before the respondent No,2, the Joint Director, Banking Policy Department, State Bank of Pakistan, on re-hearing of the case, passed the impugned order, whereby 'once again he declined any relief to the petitioner for the following reasons:-- "It is quite clear that the criteria for the provision of export finance facility are different for both the parties. The two parties must not be intermingled and kept apart for better perception of the overall purpose of the scheme. As for force majeure, it is provided under the part-I of the said Scheme, however there is no such concept in the Part-II of the said Scheme that has its own features and stipulations. The features/principles of the Part-I cannot readily be applied to the cases falling under Part-II of the Scheme and there is no force majeure clause in the Part-II."
6(sic). Now, we turn to the facts of the case in hand, the Government withdrew the exemption of excise duty and sales tax on the export of cigarettes on 26-6-1988 whereas the company availed the Export Finance Facility through different Banks during the period from 1-7-1988 to 30-6-1989.
The company's stand is that after the withdrawal of exemption the export of cigarettes became a non-viable business but on the other hand it kept on availing the concessionary finance. Having fully known the fact that the export would not be made, being non-viable the Company utilized the public funds at a considerably low mark-up rate on similar finance from Banks for one full year flouting the very purpose for which the funds under EFS were provided by the State Bank.
7. The company failed to achieve the target of performance i,e, realization of export proceeds equivalent to 2.4 times for the monitoring year, 1988-1989 i,e, from 1-7-1988 to 30-6-1989 whereas concessions on Central Excise Duty, Sales Tax and Export Rebate were withdrawn by the C.B.R. With effect from 26-6-1988. It is observed that the fiscal incentives were withdrawn by C.B.R. Six days prior to the commencement of new monitoring year under EFS. However the exporter kept on borrowing under EFS, a concessionary scheme, knowingly that withdrawal of the incentives would make it difficult for them to export their product. Thus these concessionary funds were drawn by the company, when it was all along in their knowledge that they would not be able to export due to the withdrawal of the incentives by C.B.R. And achieve the required performance level. This act of the company is tantamount to abuse of the facility.
8. It is clarified that the refinance facility was not renewed for the year, 1988-1989 as a roll over facility, as contended the company, rather refinance loans were availed afresh during 1988-1989, the next monitoring year.
9. Under the circumstances when the Export Finance Facility was availed by the company it was in their knowledge that they would not export due to a non-viable transaction. Thus their plea that non-performance was a force majeure, even if it would have been envisaged under the Part-II of the Scheme, is not tenable.
5. (sic) Precisely, for seeking waive of fine, the whole case of the petitioner is that though they have availed finance facilities in terms of relevant State Bank's Circular (BCD Circular No,29 dated 11-10- 1977) and obtained such finances for export purposes from respondents Nos.4 to 6 and they could not meet the export target in terms of the said Export Finance Scheme, but non-achieving of export target was only due to the C.B.R. Notification S.R.O. 515(1)/88 dated 26-6-1988, through which the Government has suddenly withdrawn exemption of Excise Duty and Sales Tax etc. On the export of cigarettes w,e,f, 26-6-1988. The petitioner has termed such development as forced majeure and on that basis challenged the imposition of fine.
6. (sic) Mr. Naimur Rehman, learned counsel for petitioner, in his arguments mainly urged that the petitioner could not meet the export target of cigarettes due to the withdrawal of concessions like exemption of Excise Duty and Sales Tax on the export of cigarettes by the respondent No,1. He contended that the export of cigarettes became commercially non-viable business due to the withdrawal of such concessions, which forced the petitioner to stop export of cigarettes, thus, for non-meeting of required target under the Export Finance Scheme, the petitioner cannot be blamed or subjected to imposition of penalty by respondent No,2. In support of his arguments, he relied upon the cases reported as Chairman Regional Transport Authority Rawalpindi v. Pakistan Mutual Insurance Company Ltd. PLD 1997 SC 14; Faquir Muhammad and others v. Mst. Muhammad Bibi and others PLD 1991 SC 590; government of Balochistan & others v. Azizullah Memon and others PLD 1993 SC 31 and Government of Sindh and others v. Abdul Jabbar and others 2004 PLC SC 99.
7(sic). In reply to the above submissions, Mr. Sajjad All Shah, learned D.A.-G has argued that this petition is liable to be dismissed on the sole ground that neither the order dated 16-4-2003 nor the withdrawal of concessions, i,e, exemption of Excise Duty and Sales Tax vide S.R.O. No,515(I)/88 dated 26-6-1988 have been challenged by the petitioner. He further argued that respondents Nos.4 to 6 are fully justified in charging such penalty sums from the petitioner as per directives of the respondent No,2, who had full authority to impose such fines in case of default in achieving the export target as envisaged in the Export Finance Scheme, availed by the petitioner.
8(sic). Learned counsel for respondent No,2 in his arguments contended that there was no privity of contract between respondent No,2 and the petitioner, therefore, the petitioner cannot agitate any grievance against them. In this regard, learned counsel has relied upon the case of Dr. Syed Tariq Sohail v. Defence Housing Authority 2001 YLR 1193.
9(sic). 'Other counsel Mr. M.A. Khan, representing respondent No,5 has also adopted the arguments of Mr. Sajjad Ali Shah and supported the speaking order dated 16-4-2003 passed by the officer of respondent No,2.
10 (sic). We have carefully considered the arguments advanced by the learned counsel and perused the material placed on record, which goes to show that finance facilities availed by the petitioner from respondents Nos.4 to 6 were under specific scheme promulgated by respondent No,2 for providing Export Finance Facilities to the Export Oriented companies so that necessary foreign exchange may be earned for the benefit of the country. The petitioner has not disputed the position that under Part-II of the Export Finance Scheme 1973 the Government has given specific incentive to the exporters on the basis of their previous year' export performance and these loans were sanctioned to the concerned parties on furnishing of guarantees to the State Bank of Pakistan in the required form, which stipulated that in case of default the party would be liable to pay fine. It seems that the recovery of impugned fine by respondents Nos.4 to 6 from the petitioner, as detailed in paras 1(a)(b) and (c) of the petition, is in line with such guarantees and directives of respondent No,2. It has 'also not been disputed by the petitioner that during the relevant year; they could not achieve their export target in accordance with required Export Re-Finance Scheme Part-II of the State Bank of Pakistan and thus, they became liable to pay the requisite fine as undertaken by them in their guarantee documents. They only ground urged by the petitioner to wriggle out from the payment of such fine, is the Notification S.R.O. 515(1)/88 dated 26 June, 1988, whereby the earlier concessions in respect of sales tax and 'excise duty etc. Extended on export of cigarettes etc. Were withdrawn by the Government. It will be seen that this notification was issued only six days before the commencement of new monitoring year under Export Finance Scheme, but the petitioner continued borrowing under such Export Finance Scheme knowing well that the withdrawal of incentives would make it difficult for them to export their product and achieve the required target. In such circumstances, the powers exercised by respondent No,2, for imposition of penalty in the terms as agreed between the parties, cannot be termed as arbitrary exercise of jurisdiction nor the issuance of S.R.O. 515(1)/88 dated 26 June, 1988, could be considered as force majeure as alleged by the petitioner to evade fine. The cases cited by Mr. Naim-ur-Rehman will also not improve the case of the petitioner, being based on different premises.
11(sic). In its detailed order passed by Federal Ombudsman (some relevant observations reproduced above) it has been aptly observed that respondents Nos.4 to 6 were not guilty of maladministration and even on withdrawal of exemption of excise duty and sales tax the petitioner continued borrowing after 26-6-1988, therefore, their case was not fit for recommendation to waive penalty/mark-up due to force majeure caused by abrupt fiscal measures.
12(sic). The submission of Mr. Sajjad Ali, Shah as to the maintainability of this petition without challenging either the order dated 16-4-2003 passed by the Joint Director, Banking Policy Department, State Bank of Pakistan, Karachi, or without challenging the vires of S. R. O. No,515(I) /88 dated 26-6-1988, has also force.
13(sic). The result of the above discussion is that the order dated 16th April 2003, passed by the Joint Director, Banking Policy Department, State Bank of Pakistan, Karachi, which is a well discussed and well-reasoned order, requires no interference from this Court in exercise of its jurisdiction under Article 199 of the Constitution.
14(sic). Foregoing are the reasons for the short order dated 10-5-2005 passed by us.