PAKISTAN through Secretary, Ministry of Commerce and 2 others vs

SHAFIUR RAHMAN, J.---Leave to appeal was granted in four matters coming up from a consolidated judgment of High Court of Sindh, dated 15-3-1982 to examine whether the writ petitioners/respondents had such a vested right in the matter of obtaining an import licence and in importing the machinery for which licence had already been issued notwithstanding a prohibitory notification issued under section 3 of the Imports and Exports (Control) Act, 1950.

2. The Government of Pakistan notified a Scheme of import of second-hand reconditioned machinery which came to be known as N.R.I. Scheme (Non-Repatriable Investment Scheme -- hereinafter referred to as the Scheme). Under the Scheme, Investment Promotion Bureau was to examine the applications and grant `No-Objection Certificates'. It was also provided in the Scheme that import of second-hand reconditioned machinery on reparable basis will not require permission of any Government Agency. The following further conditions, relevant to the cases under examination, were also made applicable to the Scheme:-- "(vii) Rupee gap in N.R.I. Projects, if any, can be filled through Bankers Equity Limited proposed to be established.

(viii) There would be no restriction on the sale of machinery imported on N.R.I. Basis after the plant has been set up.

(ix) Normal custom duty and exemptions would apply to machinery imported under N.R.I. In the same way as on machinery imported through sources other than N.R.I."

3. The respondents in all these cases applied for the No-Objection Certificates'. The Government of Pakistan in the Ministry of Industries, Investment Promotion Bureau (N.R.I. Cell) granted the 'No- Objection Certificate' in respect of machinery listed as hereunder (in CA. No,88 of 1982):- `LIST OF SECOND-HAND/RECONDITIONED MACHINERY AND EQUIPMENTS

(1) 400Pcs. Second- hand/reconditioned Diesel Engines Bedford 105 H.P., J-6 (Model), 1974 value.

(2) 650Pcs-Second-hand Gear Boxes Bedford20,000 330, J-6, (Model 1974) value.

(3) 1,000 Pcs-Second-hand Differential (Rear) for1,300 Bedford 330, J-6 (Model 1974) value.

(4) 300Pcs-Second-hand Crankshaft for Bedford2,000 330, J-6, (Model 1974) value.

(5) 200Pcs-Second-hand Front Axels Complete300 for Bedford 330, J-6 (Model 1974)

400 Total (C&F) Karachi24,600 [Equivalent to Pak. Rs,4,92,000 (approx.)] (Rupees four lacs and ninety-two thousand only)"

4. There were many conditions attaching to the 'No-Objection Certificate' but those material are reproduced hereunder and these are common to all the No-Objection Certificates' issued to the respondents in these appeals:-- "You should apply direct to the Chief Controller of Imports and Exports, Government of Pakistan, Karachi for issue of an import licence (without remittance facility) for the items and value mentioned in this No-objection letter/certificate under intimation to this office.

(4) This N.O.C. Will be valid for 12 months from the date of its issue.

(5) The N.O.C. Under no circumstances will be transferred or sold to any individual party or Organisation.

(6) A quarterly progress report should be sent as per pro forma progress report enclosed until such time as the machinery is imported, installed in your premises under your control and put into operation. The first progress report should be for the quarter ending 31-3-1979."

' Similar machinery was allowed to be imported under the Scheme by the other respondents. In all the cases except Civil Appeal No,90 of 1982 import licences were issued as a matter of course. The No-Objection Certificate' obtained by Mr. Muhammad Riasat, respondent in CA. No,90 of 1982 was dated 7th of December, 1978 and was valid for 12 months as were the others. On the 4th of February, 1979, the respondent Muhammad Riasat approached the Controller of Imports and Exports and asked for the licence mentioning as hereunder:- "To enable you to issue me the requisite import permit, I enclose herewith the following documents in original:

(1) No-Objection Letter No,IPW/NRI(1)(1292)/78, dated 7th December, 1978.

(2) Invoice from the suppliers, Messrs S&S Impex Ltd. I understand, I will have to pay fees for this permit. Kindly do let me know the same to enable me to have the same paid in time."

' He repeated his request on 11th of April, 1979 in the following words:-- "Please note that I have already contracted for the entire stocks and paid advance against the same. The goods are sustaining unnecessary demurrages at U.K. It is, therefore, imperative that the shipments commence immediately. However, if still the issuance of the required permit is to be delayed, kindly allow me to effect shipments and the required permit may be issued afterwards."

' Again, a reminder was addressed on 8th of May, 1979 in the following words:-- "I have been authorised to import some equipment from one department of the Government from my own hard-earned foreign exchange. I shall be doing a service to the country. It is really surprising that I am not being allowed to perform my national duty. In case there is any difficulty and/or hitch or any other formality has been left out by me or in case any additional document is needed from me, kindly do advise me. I am ready to fulfil any of your legal requirements. But, please do reply me. This delay has worried me enough already."

' Finally, another letter was addressed on 3rd of November, 1979, in the following words:-- "During my stay in Karachi I have met concerned officers of Investment Promotion Bureau and your office and enquired about the unprecedented delay caused in the issuance of import permit. Mr. A.

Ahad Khan, Director N.R.I. Has been pleased to issue me an attested copy of the N.O.C. As the N.O.C.

In original had been submitted in your office alongwith my letter of 4th February, 1979. I was told by your concerned officer that due to change in the Government Policy the issuance of import permits under N.R.I. Scheme had been practically suspended and even the clearance of the goods imported under the valid permits has been stopped by the order of the Chief Controller. However, I was promised that as soon as the policy is framed I will be granted import permit in terms of N.O.C.

I have already produced documents regarding the investment of my self-earned foreign exchange in purchase of goods under this N.O.C.

' Sir, as your office was unable to give me any definite time for grant of import permit and it is not possible for me to stay here for indefinite period, I have constituted my attorney is enclosed."

' Getting absolutely no response from the administrative department, Muhammad Riasat invoked the Constitutional jurisdiction of the High Court for an order directing the Chief Controller of Imports and Exports to issue the licence. In the Constitution petition, he mentioned how on the representation of the Government he had entered into valuable concluded contract and how it was thwarted by the administrative inaction. In para. 2 of the grounds of writ petition, he voiced discrimination as hereunder:-- "That similar consignments imported by the other Pakistanis have been released under the order of this Honourable Court or under the general order of respondent No,1, therefore, the respondent cannot discriminate in the case of the petitioner."

5. In the other cases, on the strength of the import licences issued to the respondents, they imported some of the machines for which 'No Objection Certificate' had been issued. On arrival at the Port and on receipt of Bill of Entry, the Customs authorities refused to release them without disclosing the reasons for the same. So, one of the respondents (respondent in C.A. No,88 of 1982) approached the High Court by a Constitution Petition No,1493 of 1979 for getting the goods released and got them released. This holding up of the goods which arrived delayed, the import of the residue of the machinery for which `No-Objection Certificate' had been granted. When the respondents asked for the extension of time for importing those machineries the delay having taken place on account of undisclosed refusal of the authorities to release the goods imported, it was declined by reference to prohibitory order dated 4th of February, 1980. Hence, the matter was brought before the High Court. The High Court by the impugned judgment directed that the concluded contracts should be allowed to be honoured by issuing the import licence where it had not been issued and by extending and renewing the licence which had already issued. This, the High Court did, in view of its previous decision in similar cases.

6. The Government of Pakistan and its functionaries have come up in appeal and the mainstay of their case before the High Court and before us is the prohibitory order of the Government dated 4- 2-1980, which is equated as a legislative instrument against which neither estoppel nor promissory estoppel nor fair and honest import made or concluded contracts can hold good. Reliance is mostly placed on the case of Government of Pakistan, through Secretary Ministry of Commerce and others v. Zamir Ahmad Khan PLD 1975 SC 667 to deny vested right in the matter.

7. At the hearing of these appeals, we were struck by two features in particular: The first is the total unresponsiveness of the functionaries at the apex of the executive limb of the State to the travails of victims of its own administrative inaction. The repeated representations made by Muhammad Riasat (respondent in C.A. No,90 of 1982) and others remained unattended. In the meantime those affected - Pakistanis living and earning abroad lured to stake their earnings--remained in breach of their commercial commitments, for no fault of theirs. They as nationals of Pakistan stood condemned in international business community and this happened because they trusted their own Government and its representations.

8. The second feature, and it is surfacing in other matters also, is an equal degree, if not more, of unresponsiveness to requirements of superior Courts' procedures and practices. Holding all the cards in its hands, the executive limb of the State made appearance in the High Court to contest the claim but filed no reply, rebutted no allegation of fact, offered no explanation of its unusual conduct. This, notwithstanding the fact that the accusations made against it were of adopting double standards, of discriminating between citizen and citizen equally placed, of acting arbitrarily and unreasonably. This should happen in a country established and continuing in the name of Islam, committed to and striving to establish and strengthen rule of law is all the more surprising.

Instead, the attitude has remained as one of 'Do-all and Destroy-all' under the umbrella of legislative empowerment in its favour under section 3 of Imports and Exports (Control) Act, 1950.

9. Not satisfied with the state of record and the quality of arguments addressed at the hearing, we requested the learned Deputy Attorney-General and the counsel for the respondents to submit in writing their contentions on the following aspects of the case:--

(1) Is there anything on record to show that there was no concluded contract?

(2) Whether concluded contracts could be disturbed?

(3) Whether doctrine of promissory estoppel cannot be applied to such cases?

(4) Whether public functionaries did or did not act in discriminatory manner?

10. In response to our request, the learned Deputy Attorney-General as well as the learned counsel for the respondents have made submissions in writing.

11. The learned Deputy Attorney General has tried to make out the following points:--

(1) The meaning and scope of the word "prohibit" as contained in the notification dated 4-2-1980, relying on Tool Metal Manufacturing Co., Ltd. v. Tungsten Electric Co., Ltd. (1955) 2 All. E.R. 657 at 665;

(2) No vested right to obtain an import licence or to get it renewed exists, relying on Government of Pakistan through Secretary, Ministry of Commerce and another v. Zamir Ahmad Khan PLD 1975 SC 667 and Zamir Ahmad Khan v. Government of Pakistan and another 1978 SCMR 327;

(3) Promissory estoppel cannot be availed of against actions which are legislative in character.

Reliance has been placed on Thakur Jagannath Bakhsh Singh v. United Provinces AIR 1943 Federal Court 29, Maharaj Umeg Singh and others v. State of Bombay and others AIR 1955 SC 540; Thakur Jagannath Bakhsh Singh and The United Provinces 73 Indian Appeals 123, Excise Commissioner U.P.

Allahabad etc. Etc. v. Ram Kumar etc., etc. AIR 1976 SC 2237; Messrs Jit Ram Shiv Kumar and others v. The State of Haryana and another AIR 1980 SC 1285 and Miss Preethi Srinath etc. v. The Selection Committee for admission to the First M.B.,B.S. Course, Government and Private Medical Colleges and others AIR 1981 Karnataka 58 at 61; and.

(4) Promissory estoppel is not available against a variable policy matter or for claiming rights against law. Reliance has been placed on Associated Cement Companies Ltd. v. The State of Rajasthan and another AIR 1981 Rajasthan 133 at 138; Dr. S.K. Juwarkar v. Dr. Ku. Maria D.P. De Rego and others AIR 1982 Goa, Daman and Diu 1, Vitthalrao Mahale v. State of Madhya Pradesh and others AIR 1984 Madhya Pradesh 70 and Beesly v. Hallwood Estates, Ltd. (1960) 2 All. E.R.

314.

12. In reply, Raja Haq Nawaz Khan, Advocate, the learned counsel for the respondents has submitted as hereunder:--

(1) There was no rebuttal at any stage or denial that concluded contracts had been entered into, pursuant to the No-Objection Certificate and that fact cannot be reopened by way of arguments.

Reliance has been placed on The Provitice of Punjab through Secretary to the Government of Punjab, Housing and Physical Planning Department and 2 others v. Ch. Zahoor Elahi and 3 others PLD 1981 Lah. 696, Begum Fatema Khatun v. The Province of East Pakistan and another PLD 1967 Dacca 565 and Syed Jamil-us-Hassan Mazloom v. District Magistrate, Gujranwala and 3 others PLD 1976 Lah. 183;

(2) Concluded contracts could not be disturbed after the contracts had been entered on account of representations made by the Government. Reliance has been placed on Mrs. Amna Bibi v.

Islamic Republic of Pakistan and 2 others PLD 1981 Kar. 690, Pakistan and another v. S. Hussain Ali Shah A. Fazlani PLD 1900 SC 310 and Messrs Shameem Textile Mills, Lahore v. The Republic of Pakistan through the Secretary, Ministry of Industries and another PLD 1972 Lah. 572;

(3) The cancellation, revocation, suspension or refusal to grant an import licence or to renew or extend one already granted, amounts to violation of vested right and reliance has been placed on R. v. City of London Licensing Justices. Ex parte Stewart and another (1954) 3 All. ER 270; Messrs Faridsons Ltd. Karachi and another v. Government of Pakistan through its Secretary, Ministry of Commerce, Karachi and another PLD 1961 Supreme Court 537 and Mian Rafi-ud-Din and 6 others v.

The Chief Settlement and Rehabilitation Commissioner and 2 others PLD 1971 SC 252;

(4) Vested right accrued in favour of respondent': on the grant of No-Objection Certificate' or import licence in the first instance followed by a concluded contract. Reliance has been placed on Messrs Firdous Spinning and Weaving Mills Ltd. And others v. Federation of Pakistan and 2 others PLD 1984 Kar. 522; Messrs Faridsons Ltd. Karachi and another v. Government of Pakistan and another PLD 1961 SC 537 at 541; Pakistan and another v. S. Hussain Ali Shah A. Fazlani PLD 1960 SC 310 at 312-B; Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd., Chittagong PLD 1970 SC 439; Al-Samrez Enterprise v. The Federation of Pakistan 1986 SCMR 1917; and

(5) The doctrine of promissory estoppel is established in Pakistan vide Federation of Pakistan and others v. Ch. Muhammad Aslam and others 1986 SCMR 916, in India vide Assistant Commissioner of Commercial Taxes (Asst.), Dharwar and others v. Dharmendra Trading Co., etc. Etc. AIR 1988 SC 1247 and in U.K., vide Central London Property Trust, Ltd. v. High Trecs House, Ltd. (1956) 1 All. E.R. 257 and Lyle-Meller v. A. Lewis & Co. (Westminster), Ltd. (1956) 1 All. E.R.

247.

' There was unexplained discrimination as would appear from the written submissions of the learned Deputy Attorney-General and as found established in Mrs. Amna Bibi v. Islamic Republic of Pakistan and 2 others PLD 1981 Kar.

690.

13. The Research and Reference Section of this Court has made available the following literature dealing with the controversy in these appeals:--

(1) AIR 1989 Journal 1 - Promissory estoppel in the context of legislative enactments and notifications; (2)(1988) Cambridge Law Journal 238 - The Provenance and Protection of legitimate expectations; (3)(1983) Columbia Law Review 627 - Judicial Review of Administrative Inaction; (4)(1983) Cambridge Law Journal 257 - From Representation to Expectation; Estoppel as a Cause of Action; (5)(1977) Law Quarterly Review 398 - Representations by Public Bodies; (6)(1953) Cambridge Law Review 374 - Should official advice be reliable? Proposals as to estoppel and related doctrines in administrative law; and (7)(1979) Columbia Law Review 551 - Equitable estoppel of Government.

14. In the written submissions, the learned Deputy Attorney-General has for the first time explained the alleged discrimination by making the following comments:-- "The advocate of the respondent contended that the appellant issued four licences to different parties after the notification, dated 4-2-1980.. It is pertinent to mention here that these licences were issued on the orders of the Sindh High Court, the details of which are reproduced herewith:-

(1) Import licence No,A-347777 in favour of Mr. Amjid Iqbal, Rawalpindi was issued as per Sindh High Court's order in Petition No,1841/79, dated 15-3-1980.

(2) Import licence NoA-317545, dated 17-3-1980 in favour of Mr. M. Zamarr, Karachi, was issued as per order of the Sindh High Court in Writ Petition No,D-1842/79, dated 13-3-1980.

(3) The record is not readily traceable. No comments can, therefore, be offered.

(4) Import licence in this case was also issued on the directives of the High Court of Sindh in the Petition No, 756 of 1980. "(para 16).

15. What distinguishes the appeals now before us is that it is not the case of the Government itself that the Non-Repatriable Investment Scheme was in any manner or to any extent beyond the competence of the Government of Pakistan or against the laws of the land. Therefore, the Scheme, the terms thereof and the inducement therein were in accord with law, were in advancement of public policy and had been presented by the competent authority inducing thereby Pakistanis, living and earning abroad to invest in machines of the required description. By providing that no sanction of any sort would be needed after a No-Objection Certificate' had been granted and the practice having been so observed, it cannot he said that in those cases where the No-Objection Certificate' had been granted any further impediment remained. Making of an application to the Chief Controller of Imports and Exports and getting an import licence from him was a consequential formal step and no discretion as such was involved where bona fide No-Objection Certificate was held by an applicant. The contention of the learned Deputy Attorney General that the doctrine of promissory estoppel does not extend to legislative, executive or sovereign functions of the State is correct to the extent that it does not indeed extend to legislative and sovereign functions, but executive actions are not excluded from the operation of the doctrine. The learned Deputy Attorney-General has basically relied for his contentions on the decision given in Ram Niwas Gupta and others v. State of Haryana through Secretary, Local Self-Government, Chandigarh and another AIR 1970 Punjab and Haryana 462 which was approved by the Indian Supreme Court in the case of Messrs Jit Ram Shiv Kumar and others AIR 1980 SC 1285, but both these decisions were overruled by the Indian Supreme Court itself in Union of India and others v. Godfrey Philips India Limited AIR 1986 SC 806, and the following observations were made in para. 12 of the judgment which are relevant:--- "12. There can therefore be no doubt that the doctrine of promissory estoppel is applicable against the Government in the exercise of its governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the.

Applicability of the doctrine of promissory estoppel. We must concede that the subsequent decision of this Court in Jeet Ram v. State of Haryana (1980) 3 SCR 689: AIR 1980 SC 1285 takes a slightly different view and holds that the doctrine of promissory estoppel is not available against the exercise of executive functions of the State and the State cannot be prevented from exercising its functions under the law. This decision also expresses its disagreement with the observations made in Motilal Sugar Mills' case AIR 1979 SC 621 that the doctrine of promissory estoppel cannot be defeated by invoking the defence of executive necessity, suggesting by necessary implication that the doctrine of executive necessity is available to the Government to escape its obligation under the doctrine of promissory estoppel. We find it difficult to understand how a Bench of two Judges in Jeet Ram's case could possibly overturn or disagree with what was said by another Bench of two Judges in Motilal Sugar Mills' case. If the Bench of two Judges in Jeet Ram's case found themselves unable to agree with law laid down in Motilal Sugar Mills' case, they could have referred Jeet Ram's case to a larger Bench, but we do not think it was right on their part to express their disagreement with the enunciation of the law by a co-ordinate Bench of the same Court in Motilal Sugar Mills."

' In our country, the doctrine of Promissory estoppel has found acceptance and enforcement in the case of Federation of Pakistan v. Ch. Muhammad Aslam 1986 SCMR 916.

16. A very appropriate case from the Indian jurisdiction is Union of India v. Messrs Anglo-Afghan Agencies AIR 1968 SC 718 wherein an export incentive Scheme had been notified to the public under the same section 3 of the Imports and Exports (Control) Act, 1947 by the Export Promotion Bureau of the Indian Government. After the party had acted on the inducement, satisfied the required conditions, there was an attempt to resile. The relief was granted in that case in terms of the representation as hereunder reflected in para. 23 of that judgment:-- "Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen. We agree with the High Court that the impugned order passed by the Textile Commissioner and confirmed by the Central Government imposing cut in the import entitlement by the respondents should be set aside and quashed and that the Textile Commissioner and the Joint Chief Controller of Imports and Exports be directed to issue to the respondents import certificates for the total amount equal to 100 per cent of the f.o.b. Value of the goods exported by them unless there is some decision which falls within Clause 10 of the Scheme in question."

17. The doctrine of Promissory estoppel is subject to the following limitations, none of which is attracted in these appeals before us:--

(1) The doctrine of Promissory estoppel cannot be invoked against the legislature or the laws framed by it because the legislature cannot make a representation;

(2) Promissory estoppel cannot be invoked for directing the doing of the thing which was against law when the representation was made or the promise held out;

(3) No agency or authority can be held bound by a promise or representation not lawfully extended or given;

(4) The doctrine of Promissory estoppel will not apply where no steps have been taken consequent to the representation or inducement so as to irrevocably commit the property or the reputation of the party invoking it; and

(5) The party which has indulged in fraud or collusion for obtaining some benefits under the representation cannot be rewarded by the enforcement of the promise.

18. After examining the facts of the cases before us, we find that none of the limitations specified attach to the cases that a clear case of having acted, invested and committed themselves on the basis of representations and No-Objection Certificates issued to them, was made out. Hence, they were entitled to all consequential steps that ought to have been taken under the representation.

We, therefore, dismiss all the appeals with costs throughout against the appellants. By an interim Order in CA. 90 of 1982 no relief pending the hearing of these appeals was granted to the party. If its original contract remains intact, and does not stand frustrated, the respondent shall be permitted to import machines, for which No-Objection Certificate had issued, within six months after the authority has satisfied itself of the subsistence of the original contract. If it stands frustrated, no further relief in these proceedings will be available to the party concerned.