' This is a suit for recovery of Rs, 74,224/66. The facts leading to the filing of the above suit, as averred in the plaint, are that the new import policy of the year 1969 issued by the Chief Controller of Imports and Exports under circular dated 30th June, 1969 under P.L.O. No, 391- 140/660 and the letter of commitment issued by the O.S.D. Bearing No,1 I/14012 provided for the import of Cold-rolled steel sheets as an item on the free list. It has been averred that it was also provided under the said circular that 'the import of the items against a' free list would be permitted without covering of the import licence, but only against letter of credit. It has also been averred that the Chief Controller, Imports and Exports, Government of Pakistan, by a public notice bearing No, 77 (69) Import R, published in the Gazette of Pakistan dated 14th August, 1969 inter alia notified that the shipment of M.S. Sheets and M.S. Plates and tin sheets shall be made on Pakistan flag vessels and others commodities on U.S. Flag vessels. It has been further averred that the plaintiffs opened an irrevocable letter of credit with the United Bank McLeod Road Branch, Karachi bearing No, 2/45/145/5088 dated 25th August, 1969 in favour of Titan Industrial Corporation, New York for US 4 125545/45 being the value of the shipment of the cold rolled sheets. It has been averred that the aforesaid consignment was shipped on as Taxila belonging to the defendant No,
1. It has also been averred that at all material time, it was agreed between the parties that the freight would be paid in Pakistan currency at the port of destination. It has also been asserted that on or about December, 1969 the defendant No, 1 by a letter dated 13th December, 1969 informed the plaintiffs that the vessels Taxila was due to arrive at the port of Karachi on or about 25th December, 1969 and that plaintiffs were required to pay freight amounting to Rs, 1,36,309.34 before the delivery order could be issued in respect of the consignment of 283 skids of old-rolled steel sheets. It has also been averred that the defendant No, 1 further informed the plaintiffs that in case of shipment, on FOB basis the payment of the freight at the port of destination should be duly supported by permission from the State Bank of Pakistan (the defendant No, 3) on a regular P. Form with clear entitlement of 30% bonus vouchers to the defendant No,
1. The aforesaid vessel arrived on 5th January, 1970 and the defendant No, 1 in spite of the payment of the freight charges failed to issue a delivery order and demanded surrender of bonus voucher to the extent of 30% of the freight of the value of its. 40,891. It has further been averred that the plaintiffs protested against the above demand but as they were incurring demurrage, they applied to the defendant No, 3 for a P. Form after surrendering the bonus voucher equivalent to 30% of the freight. It has also been averred that the circulars providing surrender of 30% vouchers issued by the defendant No, 3 in the alleged exercise of power under Foreign Exchange Regulation Act, 1947 (hereinafter referred to as the Act) are illegible, unlawful and ultra vires to the Constitution and the Act and of no legal consequences.
It has further been averred that the plaintiffs had no knowledge/information about the aforesaid circulars inasmuch as they were not published. In the above suit the plaintiffs have claimed the above sum of Rs, 74,224.60 being the market value paid by them for the purchase of bonus vouchers of the face value of Rs, 40,893.
2. The defendant No, 1 has filed written statement in which preliminary objection including about the maintainability of suit and being time barred have been raised. It has been denied that at any time the plaintiffs and the defendant No, 1 agreed that the freight would be paid in Pakistani currency at the port destination except a remark in the bill of lading indicating "on board" "freight to pay". It has also been averred that the defendant No, I according to the legal requirement asked the plaintiff to obtain an unqualified P. Form from the State Bank of Pakistan on surrendering bonus vouchers to the extent of 30% of the actual freight prior to the issuing of the delivery order. It has also been denied that the plaintiffs were not liable to pay any additional thing more than the actual freight. It has been averred that the circulars issued by the State Bank of Pakistan are quite clear and specific and as such the defendant No, 1 was perfectly justified in demanding the surrender of the bonus voucher to the extent of 30% of the actual freight value of an unqualified P.
Form it has also been averred that an unqualified P. Form is issued by the State Bank on surrendering of bonus vouchers to the extent of 30% freight to the State Bank and that an unconditional P form issued by the State Bank entitles the carrier to collect from the consignee bonus voucher to the extent of 30%. It has been further averred that in the present case the Plaintiffs obtained unqualified P. Form from State Bank and, therefore, the answering defendant did not collect any bonus voucher from the plaintiffs. The defendant No, 1 has denied their liability to pay any amount.
13. The defendant No, 2 i.e, The Deputy Controller, Exchange Control Department, State Bank of Pakistan, Karachi, has also filed a written statement in which inter alia it has been averred that the suit is not competent against the said defendant as he is neither a necessary party nor proper party to the suit inasmuch as he was not the Deputy Controller at the material time.
4. The defendant No, 3 (i.e, State Bank of Pakistan) has also filed a separate written statement, in which inter alia several preliminary objections have been raised which include the maintainability of the suit, non-joinder of parties, estoppel, want of disclosure of cause of action against the said defendant and that the bonus vouchers were surrendered to the answering defendant for and on behalf of defendant No, 1 and/or for their benefit. 'On merits the obvious assertions contained in the plaint have been denied. It has been averred that the import is also governed by the Foreign Exchange Regulations Act, 1947 in addition to the other relevant Act. It has also been averred that the imports of the items in question were permitted to the extent of the entitlement subject to the provision of FE circular No, 149/168, the intention of which is that Foreign Exchange liability by way of insurance of bonus vouchers to Pakistan shipping companies on their freight collection on imports under US aid consignment not to be borne by the State Bank and it has got to be borne by the importer or the shipping companies. It has been averred that the plaintiffs never brought to the notice of the answering defendant that there was any agreement between the plaintiffs and the defendant No, I for the payment of freight in Pakistani currency. It has also been averred that the plaintiffs had applied for an unconditional P form, which could only be issued on surrender by the plaintiffs bonus vouchers for 30% of the amount of the freight. It has been denied that the plaintiffs were not aware of the various circulars. It has been averred that the circulars must or ought to have been brought to the notice of the plaintiffs by the defendant No, 1 and/or their bankers and/or by both of them and that the same must have been within their knowledge which were addressed to all the authorised dealers in Foreign Exchange airlines, shipping companies and travelling agencies and bankers. It has also been averred that the Foreign Exchange circular No, 149/68 was issued by the Defendant No, 3 under the provisions of section 25 of the Act, under the direction of the Central Government and SPA Circular No, 8 was issued in exercise of the power conferred under the provision of section 20 (3) of the Act. It has been denied that the impugned circulars are illegal or unlawful or ultra vires etc. It has further been averred that the plaintiffs should have questioned the demand of the defendant No, 1 before surrendering the bonus vouchers and that the plaintiff's claim if any lay against the defendant No, 1, as they have received from the defendant No, 3 the bonus vouchers. It has been denied that the plaintiffs are entitled to relief against the defendant No, 3.
5. On the basis of the above pleadings following consent issues were adopted :
(1) "Whether the suit, as framed, is barred by law, and not maintainable against the defendants ?
(2) Whether the suit is not maintainable in view of section 26 of the Foreign Exchange Regulation Act, 1947 ?
(3) Whether the suit is bad for non-joinder of necessary parties ?
(4) Whether the plaintiff, acting in pursuance of the import policy for the year 1969 issued by the Chief Controller, Imports and Exports, vide Circular No, SRO 152 (14)/69 dated 30th June, 1969 and Public Notice No, 73 (69)/Import-R, published in the Gazette of Pakistan dated 14th August, 1969, opened a Letter of Credit for import of M.S. Sheets. M.S. Billets and Tin Plates into Pakistan, which shipment was to be effected on Pakistan flagged vessel ?
(5) Whether defendant No, 1 contracted and agreed with the plaintiff to carry the said consignment to Karachi, the freight whereof was agreed to be' paid in Pakistan currency ?
(6) Whether the demand of defendant No, 1 for an unqualified P. Form with clear entitlement of 30% bonus vouchers to defendant No, 1, amounting to Rs, 40,893 in addition to the freight of Rs, 1,36,309.34 was valid, legal and maintainable ?
(7) Whether the impugned Circulars SPA Circular No, 8 and or SPA Circular No, 149 dated 26th November, 1968 issued by defendants No, 2 and 3 are illegal, unlawful, ultra vires and of no legal effect or consequences ?
(8) Whether the plaintiffs surrendered 30% bonus vouchers of the face value of Rs, 40.893 of the market value of Rs, 74,224.06 to defendant No, 3 for and on behalf of defendant No, 1 under protest and without prejudice to their legal rights ?
(9) Whether the plaintiffs are estopped from claiming the amount in suit for by their conduct of surrendering bonus vouchers of the face value of Rs, 40,893 00.
(10) Whether the impugned Circulars SPA No, 8 and SPA No, 149 dated 26th December, 1968 were published and/or were not within the knowledge of the plaintiffs and/or whether the defendant No, I informed the plaintiffs of the said Circular ?
(11) What should the decree be ?"
' Before taking up the above issues, it may be pertinent to observe that Mr. Mohsin Tayabali, the learned counsel for the plaintiffs in view of the DW. 1 Exh. 6 Abdul Sattar's statement that the defendant No, 1 was not credited with any amount on account of the surrender of the bonus voucher in question did not press his suit against the defendant No, 1 and therefore the suit against the defendant No, 1 stands dismissed as withdrawn.
' My findings on the above issues are as under :-
6. Issues Nos. 1 and 2. -It has been conceded by the learned counsel fdr the plaintiffs that the suit is not maintainable against the defendant No, 2 as he could not have been sued personally in respect of his official acts. My finding on these issues is in the affirmative and I hold that the suit is not competent against the defendant No, 2.
7. Issue No, 3-Mr. Abdul Hamid Khan learned counsel for the defendants Nos. 2 and 3 has urged that since the plaintiffs were challenging the vires of the Circulars, they should have impleaded the Federal Government as a party to the suit. The circulars in question have been issued by the Defendant No, 3 and even if it is to be held that the same were issued under the direction of the Federal Government, in my view the Federal Government, does not become a necessary or proper party to the suit on that account. My finding on the issue is in the affirmative.
8. Issue No, 4. -Mr. Abdul Hamid Khan has urged that there was no agreement between the plaintiffs and the defendant No, 1 to the effect that the freight would only be paid in Pakistani currency. It was further urged by him that the plaintiffs were required to pay freight in accordance with law in force in Pakistan at the relevant time. It was also urged that as by virtue of the circulars the plaintiffs were obliged to obtain an unconditional 'P' form against the surrender of the bonus voucher to the extent of 30% of the freight. On the other hand Mr. Mohsin Tayabali has urged that there was no agreement between the plaintiffs and the defendant No, 1 with regard to the surrender of the bonus vouchers. It may be pertinent to mention that the bill of lading Ex. 10 contains the following words in respect of the payment of freight "on board" "freight to pay". It may also be observed that nothing has been provided in the bill of lading which may lend support to the learned counsel for the plaintiffs' contention that the plaintiffs were obliged to pay nothing more than the freight in Pakistani rupee. If it is to be held that the circulars providing the surrender of bonus vouchers equivalent to 30% of the freight were legal, in that event in my view there was no need of providing any express condition in the bill of lading to that effect. My finding on this issue is that the plaintiffs were obliged to pay freight in Pakistani currency, but they were also liable to surrender the bonus vouchers to the extent of 30%.
9. (a) Issues Nos. 6 and 7.-These are the main issues. The learned counsel for the defendants Nos. 2 and 3 has relied upon P. E. Circular No, 149 dated 26th December, 1968 addressed to the authorised dealers in foreign exchange Ex. 9 and circular No, 8 of the same date addressed to the airlines, shipping companies, travelling agents Exh.
8. The learned counsel has also relied upon sections 20 (3) and 25 of the Act in support of the above two circulars. On the other hand Mr. Mohsin Tayabali has urged that the above two circulars were issued on the basis of the alleged direction given by the Federal Government under section 25 of the Act and that as the above direction is ultra vires to the aforesaid section, the circulars are not legal and enforceable. His alternate plea was that even if it is to be held that the direction given under section 25 was intra vires, the circulars being in conflict with the above direction are not legal and enforceable.
(b) In order to appreciate the above contentions, it may be advantageous to reproduce section 25 as well as section 20 (3) of the Act, which read as follows :Sec. 20(1)
(2)
(3) The State Bank may give directions in regard to the making of payments and the doing of other acts by bankers, authorised dealers, travel agents, carriers, whether common or private stock brokers and other persons who are authorised by the State Bank to do anything in pursuance of this Act in the course of their business, as appear to it to be necessary or expedient for the purpose of securing compliance with the provisions of this Act and any rules, orders or directions made thereunder."
"(25) For the purpose of this Act the Central Government may from time to time give to the State Bank such general or special directions as it thinks fit, and the State Bank shall, in the exercise of its functions under this Act, comply with any such directions."
' It may be noticed that section 25 provides that for the purpose of the Act, the Central Government may from time to time give to the State Bank such general or special direction as it thinks fit and that the State Bank shall in the exercise of its functions under this Act comply with any such direction. Whereas section 20(3) of the Act authorises the State Bank to issue any order/direction etc. In furtherance of the object of the Act.
(c) It may be observed that the vires of the above two notifications were the subject-matter of a case namely, Messrs Jaffer Ibrahim & Co. v. Deputy Controller (Exchange Control Deptt.), State Bank of Pakistan and 3 B others (1) wherein it was held by a Division Bench comprising of Ghulam
(1) PLD 1971 Kar. 10 ' Safdar Shah and Mohammad Haleem, JJ. (as then their Lordships were) that the above circulars were intra vires and were in consonance with the provisions of the Act. In view of the above ruling I cannot take a different view. Mr. Mohsin Tayabali has relied upon a decision dated 30th July,1970 of a Division Bench of the Dacca High Court reported in 1971 D L C i26. Since the latter book is not available either in the Judges' Library or in the Bar Library Mr. Mohsin Tayabali has submitted a photostat copy of the above judgment. It is true that the aforesaid Dacca case had dissented from the above Karachi case, and held that the two circulars relied upon by the State Bank were not intra vires, but since the Karachi case is a decision of a Division Bench which is binding on me I can comment upon the correctness of the view, found favour with their Lordships of the aforesaid Division Bench.
(d) Reverting to the alternate contention of Mr. Mohsin Tyabali that the two circulars are in conflict with the direction of the Central Government, it may again be observed that in the aforesaid Karachi case both the circulars were held intra vires as mentioned by me earlier but Mr. Mohsin Tayabali has submitted that tht present case is distinguishable from the above case of 1971 inasmuch as in the present case that State Bank has produced relevant correspondence culminating in the issuing of the two circulars. It was urged by the learned counsel for the plaintiffs on the basis of the above correspondence that this Court is competent to give a finding to the effect that the two circulars are in conflict with the direction given by the Central Government. In this regard it may be pertinent to refer to the Assistant Controller, Sate Bank of Pakistan, Mr. Muhammad Younus Bhatti's note dated 29th November, 1968 Exh. 6/1 containing a proposal which was sent to the Ministry of Finance Government of Pakistan, and the Section Officer, Government of the Pakistan, Ministry of Finance (External Finance Wing's) letter dated 7th December, 1968 containing the approval of the Central Government in reply to the above .Note Ex. 6/2. It will be advantageous to reproduce hereinbelow the contents of the above two exhibits, which will be helpful in understanding the arguments. Advanced by the learned counsel for the plaintiffs, which read as follows : ' State. Bank of Pakistan Exchange Control Department Central Directorate, Karachi ' Payment of Freight-Private Sectors.-Ministry of Finance are aware that under the existing.Arrangement C. & F. Licences issued against Industrial Development Bank of Pakistan and PICIC Loans may be utilised on F. O. B. Basis for their full value and freight paid in Pak, rupees provided the shipments are made on Pak. Flagged vessel and the shipping company. Concerned foregoes bonus entitlement on such freight collections. In case of import under U.S. AID Loan, C. & F.
Sub authorisations issued there against may also be utilised on F.O.B. Basis for the full value of the subauthorisations, provided the cargo is shipped on Pak. Flagg vessel. However, in such case the Pak. Shipping companies are entitled to bonus on their rupee freight collections. In this connection a reference is invited to Public Notice No, 78 (6)/Imp-R (Import Trade Control) dated the 24th September, 1960 issued by the Chief Controller of Imports and Exports and our F.E. Circular No, 50 of 1961, copies of which are enclosed.
2. It will by observed from the above that at present there is some inconsistency with regard to import of machinery under Industrial Development Bank of Pakistan and PICIC Loans and imports under U. S. AID. In the former case, freight collection on F.
0. B. Imports do not qualify for bonus and the importers have to surrender bonus vouchers directly to the shipping companies in case shipping companies decide not to forego their bonus entitlement, while in the latter case bonus vouchers are issued to the shipping companies on their freight collection in Pak. Rupees.
3 With a view to avoiding the anomalous position as above it is proposed that the existing facility of utilizing C. & F. Sub-authorisation or licences on F.
0. B. Basis for the full value under "U.S. AID. Loans or any other Loans or Credit should also be subject to the condition that shipping companies will forego their bonus entitlement on such freight earnings. These arrangements will not of course, debar the shipping companies from receiving bonus vouchers direct from the parties concerned.
4. Ministry of Finance are requested to consider the above proposal alongwith these referred to them in our U.O. Note No, 2409/ECP. 2 (99)68 dated the 12th November, 1968 and favour us with their view at an early date. Encls. Two.
Sd/.
(M. YUNUS BUTT), ASSISTANT CONTROLLER, 29-11-1968.
' Ministry of Finance (Mr. Zaffar Iqbal, C.S.P.) "Government Pakistan, Islamabad.
S.B.P., C,D E.C.D., U.O. Note No, 2584/ECP. 2 (99) of dt.
"GOVERNMENT OF PAKISTAN MINISTRY OF FINANCE (EXTERNAL FINANCE WING)
Sub-Payment of Freight-Private Sector.
' Will the State Bank of Pakistan please refer to their U.O. No, 2584/ ECP. 2 (99)-68. Dated the 29th November, 1968 on the above subject. We have no objection to the arrangement proposed in para. 3 of their letter referred to above. Sd/- (M.A. Alam), Section Gfficer Tele : 21169 ' State Bank of Pakistan (Mr. M. Younns Butt) LCD., Karachi.
' Min. Finance, 0.0 No, 3009-EF (UII)/68 dated 7th December, 1968.'.
(e) It may be noticed that at the time of the submission of the proposal contained in the aforesaid note dated 29th November 1968 by the Assistant Controller, the arrangement was that C. & F.
Licences issued against the Industrial Development Bank of Pakistan and PICIC Loans could be utilised on FOB basis for their full value and the freight could be paid in Pak. Rupees provided the shipments were made on Pak. Flag vessel and provided the shipping company 'concerned would forego bonus entitlement on such freight collection but whereas in the case of imports under U. S. Loans sub-authorisation issued there against could have been utilised on F.O.B. Basis on the full value of the sub-authorisation provided the cargo was on Pak. Flag vessel. However, in the latter case the Pakistan Shipping Companies were entitled to bonus on their rupee freight collection on the basis of the Bonus Vouchers Scheme. With a view to avoid the anomalous position it was suggested by the Assistant Controller in his aforesaid note that the imports against the U.S. Aid loans and other loans or credits should be put at par with the imports against the PICIC and the Industrial Development Bank and that the shipping companies would forego their bonus entitlement on such freight earning. But this was not to debar the shipping companies from receiving bonus vouchers directly from the parties concerned. In other words through the above note, it was suggested that the shipping companies should directly deal with the consignees in respect of their entitlement to bonus vouchers instead of claiming the same from the Government/State Bank against the freight earned by them pertaining to consignments imported against the U.S. Aid or other loans or credits. The above proposal was accepted by the Ministry of Finance, Government of Pakistan through its aforesaid letter dated 7th December, 1968 Exh.
6. Without any addition or modification. A reference to the Circulars Nos.
1.9 and 8 Exhs. 9 and 8 respectively indicate that these circulars are clearly in conflict with the suggestion contained in the aforesaid note dated 29th November, 1968 Exh. 6/1 inasmuch as instead of leaving the shipping companies to deal directly with the consignees about their entitlement to bonus vouchers, the State Bank had introduced a procedure, whereby a consignee was required to obtain a P. Form from the State Bank against the surrender of bonus vouchers to the extent of 30% of the freight. I called upon the learned counsel for the State Bank to explain' the above inconsistency whereupon, he has candidly conceded that the above two circulars are in conflict with the proposal contained in the aforesaid note and the sanction of the Federal Government thereto, referred to hereinabove Exhs. 6/1 and 6/2, but his argument was that even if it is to be held that the above circulars are in conflict with the proposal contained in the aforesaid note an-d the sanction thereto, this will not make any difference since under section 20 (3) of the Act, the State Bank of Pakistan is competent to issue circulars of the nature in question without any reference to the Federal Government. It was also urged that circular No, 8 addressed to all the airlines, shipping companies and travelling agents was in fact issued under section 20 (3) of the Act and the same has been held as legal by the Division Bench of the erstwhile High Court of West Pakistan in the aforesaid case already referred by me earlier. In this behalf he has referred to paras.
4 and 6 of the above judgment at pages 11 and 12 of PLD 1971 Karachi which read as follows :- "4. "The case of respondents 1, 2 and 3, as set out in their parawise comments, on the other hand is that respondent No, 4 is entitled to claim from the petitioners' part of the freight at the bonus voucher rate in terms of the two impugned circulars which according to them are completely legal.
In this respect their case is that F.F. Circular No, 149 was issued by the State Bank of Pakistan, Exchange Control Department under section 25 of the Foreign Exchange Regulation Act, 1947 (hereinafter called the Act) with the approval of the Ministry of Finance Government of Pakistan and S.P.A. Circular No, 8 was issued in exercise of the power under section 20 (3) of the Act. In order to appreciate the stand of the respondents these provisions of the Act may be reproduced :- {{TABLE}} ".20 (l) ..
(2) ... . ..
61. 1/ 041
(5) From the language of these sections it is clear that the two impugned circulars, by which the petitioners were obliged to import their goods on Board a Pakistani vessel and to pay to the shipping company a part of the freight at the bonus voucher rate, were relatable to the power of the State Bank of Pakistan in the discharge of its duties under the Act which in the language of its preamble were meant to secure "the economic and financial interest of Pakistan". In this view stand taken by respondents 1, 2 and 3 appears to be valid that the impugned circulars have been issued under the authority of the Act."
' It may be noticed that their Lordships were pleased to hold that the two impugned circulars by which the petitioners were obliged to import their goods on board a Pakistani vessel and to pay to the shipping companies part of the freight at the bonus voucher rate were relatable to the power of State Bank in the discharge of its duties. In view of the above ruling, the above conflict between the circulars and the proposal contained in the aforesaid Assistant Controller's note and the sanction of the Government accorded to it will not make any material difference. It may be observed that in the instant case it has been specifically pleaded that the aforesaid circular No, 8 Exh. 8, was issued under section 20 (3) of the Act, My finding on issue No, 6 is in the affirmative and whereas on issue No, 7 is in the negative.
10. Issue No,
8. Since. There is no controversy between the parties on this issue, my finding on the above issue is in the affirmative.
11. Issue No,
9. Mr. Abdul Hamid Khan has urged that since the plaintiffs had applied to the State Bank of Pakistan for an unconditional P. Form without any reservation and as the State Bank had issued P. Form on the basis of the plaintiff's unconditional application, the plaintiffs are estopped by their conduct from claiming the amount in suit. Whereas Mr. Mohsin Tayabali has invited my attention to the correspondence commencing from the defendant No, l's letter dated 13th December, 1969 Exh. 11, whereby the aforesaid defendant had asked the plaintiffs to apply for a P.
Form. The plaintiffs' reply dated 20th December, 1969 thereto Exh.12 objecting to the demand of the bonus vouchers and their other letters Exhs. 13, 14, 15 and 17, in order to show that the plaintiffs did not accept their liability to surrender bonus vouchers. In my view the above correspondence clearly indicates that the plaintiffs never accepted the position ' that they were in fact legally liable to surrender any bonus vouchers. In view of the above fact no estoppel can be pleaded against the plaintiffs. My finding on this issue is in the negative.
12. Issue No,
10. The learned counsel for the parties have conceded that nothing will turn on the above issue. Both the learned counsel have not pressed the above issue, therefore, the above issue does not require any discussion.
13. Issue No,
11. In view of my findings on Issues Nos. 6 and 7 referred to hereinabove in para. (9) (e), I hold that the plaintiffs are not entitled to any reliefs and therefore, the suit is dismissed, but in the circumstances of the case, there, will be no order as to costs.