Fakhruddin H. Shaikh, J.-1. The petitioner is a registered industrial firm engaged in the manufacture and export of footwear. On 18-10-1971 it -was granted an import licence for a sum of Rs. 2 lacs under Raw Material Replenishment Scheme (R. M. R. S.) during July-December, 1971 Import Policy.
This was an advance licence against bank guarantee for export commitment and was issued to the petitioner after surrendering Bonus Vouchers for Rs. 1 lac.
2. In terms of the licence the petitioner imported goods worth Rs. 1,83,893, leaving balance of Rs.
16,107 unutilized. The petitioner had also furnished a bank guarantee for performing its commitment of exporting manufactured goods worth Rs. 5,72,000 under the 1971-Import Policy. In pursuance of the said commitment and under the bank guarantee the petitioner exported goods worth Rs.
5,53,451 by 31st December, 1976. The petitioner further exported goods worth Rs. 1,07,766 through Jinnah House. These exports were adjusted by respondents No. 1 and 3 against the export commitment of the petitioner under the bank guarantee. Thus the total value of the goods exported within the period which was extended from time to time by respondent No. 1, was admittedly Rs. 7,48,943. The petitioner claimed that it had also exported goods worth Rs. 7,86,301 through Messrs Pakistan Vinyl Corporation. However, the respondent did not adjust this amount against the export commitment of the petitioner.
3. The Government of Pakistan devalued Pakistan currency by 131 per cent on 14-5-1972 and also abolished the Bonus Scheme. On 19th August, 1975, respondent No. 1 suo motu revised the export liability of the petitioner from Rs. 5,72,000 to Rs. 13,21,310 on the ground that the Pakistan currency had been devalued. The grievance of the petitioner is that its commitment was to export goods worth Rs. 5,72,000 only in Pakistan currency within the extended period and that within this period it had already exported goods of the value of more than the above amount. The further grievance of the petitioner is that the export which was made through Messrs Vinyl Corporation to the extent of Rs. 7,86,310 has wrongly been excluded from being adjusted towards the export liability and if this amount is taken into consideration, then the petitioner shall be deemed to have exported goods worth even more than the enhanced liability calculated on the basis of devalued currency, but this point is not pressed at the hearing of the petition.
4. The petitioner made several representations to respondents Nos. 1, 2 and 3 that its export liability should be limited to Rs. 5,72,000 only for which guarantee was furnished through Muslim Commercial Bank Ltd. (respondent No 4). The representations were not only rejected, on the contrary respondent No. 3 also encashed the guarantee on the ground that the petitioner had failed to fulfil its export liability. The petitioner, therefore, filed this petition in which following reliefs have been sought:-
(i) That it may be declared that the action of the respondent No. 1 in increasing the amount mentioned in the Bank Guarantee furnished by the petitioner for a specific sum of Rs. 5,72,000 arbitrarily to Rs. 13,21,310 vide Annexure P. l2, and claim of Rs. 3,35,916 lodged by the respondent No. 1 against the petitioner as a result thereof, vide Annexure P. 8, was illegal without jurisdiction void and inoperative, and quash the decisions taken by the respondent No. 3, as communicated by the Respondent No. 4 vide Annexure P. 11.
(ii) That in the event it is held, otherwise, it may be declared that the action of respondents Nos. 1 and 2 in refusing to adjust the proceeds of the exported goods worth Rs. 7,86,310 through Pakistan Vinyl Corporation, as communicated by them, vide Annexures P. 6 and P. 9 was illegal and without lawful authority and was of no consequence, and a direction be issued, as is considered appropriate by this Hon'ble Court, to so adjust the amount against the increased liability of the petitioner which was permissible as communicated by the respondent No. 2 in his communication of 19th February, 1977, vide Annexure P. 7.
(iii) That in case the respondents Nos. 1 and 2 are held to be justified in their actions assailed in Paras, (i) and (ii) above, they may be directed to issue an import licence to the petitioner for a sum of Rs. 2,60,000 in addition to the import licence of Rs. 2,00,000 already given to the petitioner, to make up 35% of the increased amount of Bank Guarantee to which licence the petitioner is entitled under the relevant Import Policy July-December, 1971, as per Annexure IX, appended to the Import Policy.
(iv) Issue a direction or appropriate order to the Respondent No. 3 to pay compensation to the petitioner for the Bonus Vouchers surrendered by the petitioner for Rs. 1,00,000 at the time of obtaining the Import Licence, in case the impugned actions of Respondent No. 1 in increasing the amount of the Bank Guarantee to Rs. 13,21,310 is held as justified.
(v) To issue an appropriate direction or order to the Respondent No. I to proportionately decrease the liability of the petitioner as against the unutilised portion of the import licence granted to the petitioner which unutilised sum was Rs. 16,107.
(vi) Issue an appropriate prohibitory order restraining the Respondents Nos. 3 and 4 from recovering any sum from the petitioner as communicated vide Annexure P. 11.
(vii) Any other appropriate, proper or ancillary relief in addition to or as a substitute which is available to the petitioner in the circumstances of the case.
5. The case of respondent No. 1 is that the advance Import Licence dated 18-10-1971 for Rs. 2,00,000 for import of banned/non-permissible type of raw material items was granted to the petitioner for the purpose of manufacturing and exporting footwear made of weather with rubber sole subject to export worth F.O.B, value of Rs. 5,72,000. In this connection the petitioner had also produced bank guarantee dated 10th August, 1981, whereby the petitioner had undertaken that in case of default in fulfilment of their export commitment of the value stated above, the petitioner will surrender to President of Pakistan Rs. 4 lacs in foreign exchange equivalent to double the value of advance import licence in the shape of Bonus Vouchers. The time limit for fulfilment of export commitment was initially fixed as six months but it was extended from time to time. It is further alleged that on 12-5-1972 the Government of Pakistan devalued Pak. Currency by 131 per cent as a result of which all credits and loans involving foreign exchange were also enhanced by 131 per cent. It is, therefore, pleaded that the export commitment of the petitioner was also enhanced by 131 per cent i.e. From Rs. 5,72,000 to Rs. 13,21,320. It is admitted that the petitioner fulfilled their export commitment to the extent of Rs. 5,89,912 which included an amount of Rs. 1,07,766 pursuant to exports effected by Messrs Jinnah House Karachi, which exports were accepted as a special case because Jinnah House was the sister concern of petitioner. It is further stated that the Ministry of Commerce (Islamabad vide their letter dated 3rd July, 1976 extended the period upto 31st December, 1976 within which the petitioner was to fulfil its export commitment upto the enhanced value. According to respondent No. 1, the petitioner failed to fulfil its commitment, therefore, it was liable to pay Rs.
3,35,916 to the Government. This amount was arrived at, according to respondent No. 1, in the following manner
(a) Original Export liability against Messrs Rs.
Chaman Shoe Co. Karachi in respect of advance Import Licence No. 006234 dated 18th October, 1971 for Rs, 2,00,000 issued against Bank Guarantee ... 5,72,000 (b) Export liability enhanced @ 13% due to devaluation of Pak. Currency on 12-5-72 ... 13,21,320 (c) Export adjusted against export liability ... 7,48,941 (d) Balance export liability ... 5,72,377 (a) Balance export liability at "D" above converted to pre-devaluation rate @ 131%.
(/) Value of licence worked out @ 35% of the f. o. b. Value of exports, the rate on which licence was issued, and, for which the export commitment has not been fulfilled.
(g) Double the face of balance value licensed as per conditions of the Bank Guarantee.
Ch) Value of Bonus Vouchers at the rate prescribed by the State Bank of Pakistan, i.e. Rs. 100-Rs.
193.67 (Rs. 1,73,448x193.67). {{Data misarragned}}
6. The plea of respondent No. 3 is that the Advance Import Licence to the extent of Rs. 2,00,000 dated 18-10-1971 was issued to the petition subject to the condition that the petitioner would export goods worth Rs. 5,72,000 only within the stipulated period and that the petitioner was bound by the bank guarantee dated 18-7-1971 furnished by their banker Muslim Commercial Bank Ltd. Karachi to surrender foreign exchange worth Rs. 4,00,000 equivalent to double the value of import licence in the share of Bonus Vouchers within a month after the expiry of the stipulated period. It was further alleged that if the petitioner failed to honour its commitment, the guarantee was liable to be encashed without notice to the petitioner. Respondent No. 3 further stated that on the instructions from respondent No 1, an amount of Rs. 3,35,916 which fell short of the export commitment of the petitioner, were recovered by having recourse to the bank guarantee through Muslim Commercial Bank Ltd. Main Branch, Karachi.
3. The contention of Mr Khurshid Anwar Shaikh learned counsel for the petitioner is that respondents Nos. 1, 2 and 3 were not entitled to increase unilaterally the export liability of the petitioner from Rs 5,72,000 to Rs. 13,21,310. It is also stated that the total value of the goods exported by the petitioner by 13-5-1976 was Rs. 6,18,981 and thus it had fulfilled as obligation under the bank guarantee and that the respondents had no jurisdiction to enhance the amount of bank guarantee to Rs. 13,21,310.
4. From perusal of the bank guarantee which is Annexure "P. 2" with the petition, it would transpire that the petitioner was liable to export goods worth Rs. 5,72,000 only within the stipulated period of six months from the date of issue of import licence or within the period extended from time to time.
It further appears from the bank guarantee that in case of failure of the petitioner to export goods to the extent of the above amount, it shall surrender to the President of Pakistan foreign exchange worth Rs. 4,00,000, equivalent to double the value of the import licence in the shape of Bonus Vouchers within a month after the expiry of the stipulated period without any notice.
5. From the terms of the guarantee it is quite clear that the liability of the petitioner was to export goods worth Rs. 5,72,000 in Pakistan currency within the stipulated or the extended period. There is nothing in the guarantee to suggest that the value of the export commitment of the petitioner was to be calculated in terms of foreign currency. Learned counsel for the respondents have failed to point out any provisions in the Import Policy of 1971 or any other law to support their claim that they were entitled to enhance the export liability of the petitioner from Rs. 5,72,000 to Rs. 13,21,310. We have, therefore, no hesitation in holding that the action of the respondents in enhancing the liability of the petitioner to the above amount is arbitrary, illegal and without jurisdiction.
6. Respondent No. 1 has alleged that as a result of devaluation of Pak. Currency by 131 percent all credits and loans involving foreign exchange were also enhanced by 131 per cent and consequently the export liability of the petitioner was also enhanced in the same proportion. This plea has no substance. No credit or loan in foreign exchange was involved in the present case. The petitioner had not obtained any loan from the Government, nor the liability of the petitioner to export goods of the value stated in the bank guarantee was to be determined in terms of foreign! Exchange.
From the plain reading of the bank guarantee it would transpire! That all that the petitioner was required to do, in consideration of the! Import licence, was to export goods of the value of Rs.
5,72,000 within the' stipulated or the extended period This liability has been more than- fulfilled by the petitioner within the extended period.
7. Consequently we allow this petition and declare that the demand! Of the respondents that the petitioner should have exported goods worth'-, Rs. 13,21,310 as against their original commitment of goods worth0 Rs. 5,72,000 is illegal, without jurisdiction and lawful authority. There will be no order as to costs.