NASIR A. ZAHID, J.~ Petitioner, the proprietor of M/s. Mall Overseas Corporation, is a registered exporter of textile goods and has been carrying on the business of export of textile goods.
Respondent No. 1 is Government of Pakistan, Ministry of Commerce, and respondent No. 2 is the Export Promotion Bureau.
2. For export of specified textile goods to USA, E.E.C. (European Economic Community) countries and other countries, system of quota allocation has been in vogue for a number of years under which system on exporter can export quota goods to specified countries only on the basis of allocation of quota. SRO No. 949(l)/87 dated 8.12.1987 was issued by the Ministry of Commerce, Government of Pakistan, in exercise of the powers conferred by section 3(1) of the Imports and Exports (Control)
Act, 1950, prescribing the procedure for management and allocation of textile quotas for the period from 1.1.1988 to 31.12.1991. Although this Notification appears to be restricted to the management and allocation of textile quotas, a perusal of its provisions shows that some of its provisions also relate to non-quota textile goods i.e. Textile items falling outside the purview of the quota restrictions.Clause (1) of the Notification dated 8.12.1987 enumerates the following objectives of the textile quota management policy :-
(a) Fulfilment of Pakistan's obligation under bilateral textile agreements with importing countries;
(b) Maximisation of foreign exchange earnings through improvement in quality;
(c) Encouragement of value addition;(d) Promotion of ethical business practices; and ,
(e) Prevention of misuse of quota allocations.
Clause (2) of the said Notification provides that the management of textile quotas shall be the responsibility of the Export Promotion Bureau and that all Pakistani Export Associations in the field of textiles will be associated with the management of textile quotas. Basis of entitlement and allocation of quota is provided in clauses (3) and (4) of the Notification. Clause (5), inter alia, provides that quotas allocation will be transferable. Clause (6) relates to export visas/licences and it reads as follows :- "Export of Visas/Certificate will be issued by the EPB on the basis of shipment made. In (case where advance licensing is required by importing country, the EPB will issue pre-shipment export visa/licence".
Clause (13) I elates to the contravention of the quota management policy and it, inter alia, provides that cases of shipment in contravention of the said Notification and other malpractices such as excess shipment over the allocated quantity, misdeclaration of weight and category, shall lead to cancellation of quota and/or the penalty provided for in the Imports and Exports (Control) Act, 1950.Clause (15) of the said Notification is as follows :- "15(1) Export of handloom and traditional textile items will fall outside the purview of the quota restriction.
(2) Necessary certificates as prescribed in the agreements (with importing countries) will be issued by the Bureau. Whether or not an item is handloom and traditional textile product is determined by the customs authorities of the importing countries. Exporters will, therefore, make shipment of such items at their own risk."
From the examination of the Notification dated 8.12.1987, it follows that most of the provisions of the Notification relate to quota items. In clause 15(1) it has been made clear that export of handloom and traditional textile items will fall outside the purview of the quota restriction. Subclause (2) of clause 15, however, provides that necessary certificates as prescribed in the aqgreements with importing countries will be issued by the Export Promotion Bureau.
3. According to the petitioner, on 2.2.1991 his firm shipped to France, on E.E.C. Country, 120 cartons of cotton hosiery goods worth Rs. 5,00,000/- under Bill-of-Lading and Invoice dated 2.2.1991 and letter-of-credit dated 2.1.1991. The said goods are non-quota goods. The letter-of-credit, inter alia, required the petitioner to produce the "certificate of origin" and "GSP certificate" issued by Pakistani Authorities i.e. The Export Promotion Bureau. Photo-stat copies of the specimen certificates have been annexed to the memo of the petition marked as 'P-5' and 'P-6'. According to specimen of the certificate of origin, Export Promotion Bureau is required to make the following certification :- "I, the undersigned, certify that the goods described above are originating in the country shown in box No. 6, in accordance with the provisions in force in the European Economic Community."
The specimen of the generalized system of preferences (GSP) certificate shows that after specifying the type, quantity, specification, weight and other relevant description of goods, the exporter is required to make the following dcclaration:-
12. Declaration bv exporterThe undersigned hereby declares that the above details and statements are correct, that all the goods were produced in Pakistan and that they comply with the origin requirements specified for those goods in the (Generalised System of Preferences for goods exported to France."
The competent authority in Pakistan under the agreement between Pakistan and E.E.C. Is the Export Promotion Bureau and on the said GSP Certificates it has to make the following certification :- "It is hereby certified on the basis of control carried out, that the declaration by the exporter is correct."
4. As observed, according to the petitioner, he had shipped the aforesaid non-quota textile goods to France early this year, but on 20.2.1991, when the petitioner approached its Association i.e. M/s. Pakistan Knitwear and Sweaters Exporters Association, for issue and processing of the aforesaid two certificates, he was informed that the Export Promotion Bureau had suspended all services to the petitioner and certification of the two certificates had been refused. The petitioner was informed that this was done by order dated 19.2.1991 on the ground that the petitioner had earlier in 1989 made shipment to U.S.A, against a fake and forged export visa. The order dated 19.2.1991 of the Export Promotion Bureau addressed to the various Textile Associations states that the Export Promotion Bureau having found the petitioner's firm and 9 other firms indulging in the shipments to USA during 1989 against fake/forged visas, the quota servicing by the Export Promotion Bureau of the said exporters had been suspended in the first instance. Prior to that, a show cause notice dated 14.2.1989 had been issued by the Export Promotion Bureau to the petitioner informing him that reconciliation of visa documents in respect of visas under various U.SA. Categories furnished by U.S.A Customs revealed that Visa No..9 PK007032 under Category No. 338 for 5000 dozen items of the value of U.S.$ 60,000/- presented by the petitioner to the U.S. Customs was not issued by the Export Promotion Bureau although the said goods were exported under the said forged visa by the petitioner and this Contravened the provisions of SRO 948(l)/87 dated 8.12.1987 and also the Imports and Exports Control Act, 1950. The petitioner was required to explain his position within 14 days and, during the pendency of the proceedings initiated on the basis of the said show cause notice, the Export Promotion Bureau suspended its services to the petitioner in respect of exports.
The petitioner replied by his letter dated 21.2.1991 denying the allegations in the show cause notice but then stated that it had shipped a non-quota consignment on 2.2.1991 to France and that another consignment of similar type of non-quota goods was ready to be shipped to the same country and the Export Promotion Bureau was requested to grant permission for the two shipments to France i.e. One already made and the other which was expected to be made shortly. The petitioner also replied in detail to the show cause notice by his letter dated 27.2.1991 in which the allegations were denied as false and baseless. It was pleaded that the visa in question in respect of shipment of quota goods to U.SA. Was acquired by the petitioner on rental basis through a broker in 1989 and in the following year the visa was returned to the party and that the said broker was doing business in the market for a long time and transactions through him were also being made by various other exporters in the city. It was also mentioned that the said visa was presented to an officer of Export Promotion Bureau, who signed and stamped the same and as such there was no reason to believe that the visa was fake. It was further informed that visa transactions of sale, purchase and rent in respect of the quota in the market were done through the brokers who did not disclose the names and particulars of the parties and only when the Export Promotion Bureau's staff certified the visa that the transaction was finalised or unless the visa was rejected by the staff of the Export Promotion Bureau there was no way to ascertain the genuineness of the visa. It was also emphasised that the petitioner had been exporting goods for over 17 years.
5. As noted above, during the pendency of the proceedings initiated on the issuance of the said show cause notice dated 14.2.1991 in respect of shipment of a quota consignment in 1989 by the petitioner on the basis of an allegedly fake visa, the Export Promoton Bureau stopped all services to the petitioner and did not issue the certificates for the shipment of the said non-quota textile goods earlier this year. In the circumstances, the petitioner approached this Court by filing this constitutional Petition on 9.3.1991 seeking the following reliefs :
(a) Declaration that the order of the Export Promotion Bureau dated 19.2.1991 is malafide, without lawful authority and of no legal effect and that petitioner's firm is entitled to all services including certificates in respect of non-quota goods; and
(b) An injunction against the Export Promotion Bureau from suspending or withholding the services, namely, issue of G.S.P. Certificates and non quota certificates in respect of non-quota goods already shipped by the petitioner and also for other non-quota goods that may be shipped by the petitioner's firm from time to time ;
6. Comments were called for from the Export Promotion Bureau before the petition was admitted to regular hearing. Comments were filed. Petition was then admitted to regular hearing. Counter affidavit was filed and then rejoinder affidavit was also filed by the petitioner. The petition has been contested by the Export Promotion Bureau. We have heard at length the arguuments of Mr. J. H.
Rahimtoola, learned counsel for the petitioner and Mr. Khalid Anwar, learned counsel who appeared on behalf of Export Promotion Bureau.
7. The first contention of Mr. J. H. Rahimtoola was that under the aforesaid Notification dated 8.12.1987, the Export Promotion Bureau has no role to play in respect of non-quota goods except that it is under obligation to issue the two certificates (certificate of origin and GSP certificate) as and when any Pakistani exporter approaches the Export Promotion Bureau on shipment of nonquota textile goods. According to the counsel for the petitioner, the control and surveillance that is exrecised under the aforesaid Notification dated 8.12.1987 by Export Promotion Bureau is restricted in respect of export of guota goods. We have found it difficult to accept this contention raised on behalf of the petitioner. As noticed earlier, certification by Export Promotion Bureau is required under the agreement between the E.E.C. And Pakistan also for non-quota goods. These certificates are not issued as a matter of course. In the certificate of origin, Export Promotion Bureau is required to certify about the origin of the goods described in the certificate in accordance with the provisions in force in the European Economic Community. If the Export Promotion Bureau has reasons to believe that the said goods do not originate in Pakistan (or some other country as described) in accordance with the concerned provisions in force in E.E.C., it can validly refuse to grant the certificate of origin. As regards GSP Certificate, it has been noticed that the certification requires from the Export Promotion Bureau is that "on the basis of control carried out, the declaration by the exporter in the Certificate is correct." The wording of this certificate makes it clear that certification is not to be done as a matter of course or automatically on presentation of the certificate by the exporter but there is an element of control or surveillance involved by the Export Promotion Bureau as it has to certify that the declaration made in the GSP certificate about the description, specification, weight, quantity and other details is correct according to the control carried out by the Export Promotion Bureau.
We are accordingly of the view that, in respect of non-quota goods the two certificates, namely, the certificate of origin and the GSP certificate are required to be issued by the Export Promotion Bureau on the basis of control or surveillance by the Export Promotion Bureau on the exporters as well as in respect of the shipment of the non-qota goods. The contention that as and when these certificates are presented for certification, Export Promotion Bureau is under an obligation to issue these certificates as a matter of course, has no merit. However, we may clarifgy that the required certification cannot be refused arbitrarily or without any reason. Export Promotion Bureau is a part of the Government and all Government functionaries, while dealing with public, in their official capacities, are required to act justly and fairly and not in an arbitrary fashion.
8. In the instant case, Export Promotion Bureau has refused to provide any service to the petitioner since February, 1991 on the ground that in respect of a shipment of quota goods to USA in 1989, the petitioner has used a fake and forged visa and an enquiry in this connection against the petitioner initiated on the basis of a show cause notice dated 14.2.1991 is pending and till the enquiry is completed the Export Promotion Bureau will not issue any certificates in favour of the petitioner even in respect of non-quota goods. According to Mr. J.H.Rahimtoola, there is no nexus between the enquiry that has been commenced against the petitioner in respect of the shipment of quota goods to USA in 1989 and the present shipment in 1991 of non-quota goods to France and in any case the enquiry is still pending and, during the pendency of the enquiry, petitioner's exports/cannot be allowed to be jeopardized on account of non-issuance of certificates in respect of other consignments. According to Mr. J,H.Rahimtoola, there is no valid reason available with the Export Promotion Bureau for refusing to issue the two certificates required for the shipment of non- quota goods to France.
Mr.Khalid Anwar on the other hand submitted that in respect of export of textile goods there is a very serious charge against the petitioner and that is the use of a fake/forged export visa and till such time the enquiry is completed, Export Promotion Bureau is justified in not issuing any certificate as in respect of any goods shipped by the petitioner. It has been pointed out by the learned counsel for the Export Promotion Bureau that no doubt export quota is transferable from one exporter to another exporter, in which case requisite entries are made in the export passports of the two exports, but export visa/licence is not transferable and it is issued to the exporter against his entitlement reflected in his export passport. According to Mr.Khalid Anwar, in connection with the export of the consignment made by the petitioner in 1989 to USA, the case of the Export Promotion Bureau is that a valid export visa had been issued under the licence number in question by the Export Promotion Bureau to another party and later, under the same licence number, the petitioner using a fake/forged visa made out in the name of his firm exported the said consignment to U.S A. And this came to light on information given by U.S. Customs. According to the learned counsel, the petitioner is prima-facie involved in this fraud inasmuch as fake/forged visa under which the petitioner made the export to U.SA. In 1989 is shown to have been issued in the name of the petitioner's firm.
10. For developing countries like Pakistan exports are vital for their economic development. Foreign exchange earned through exports from Pakistan is utilized inter-alia for imports of plant, machinery, oil and other items essential for our industries and agriculture.
11. Export is a very sensitive and competitive field. On account of poor quality of goods, delays in shipment, and violations of international agreements between Pakistan and other importing countries restricting export of certain types of goods, can adversely affect exports from Pakistan.
For instance, if quota restrictions are contravened on the basis of forged or fake export visas, the importing country may reduce or even cancel the overall quota of imports from Pakistan. If complaints are received from importing countries about the use of fake or forged visas, Pakistani authorities are justified in making enquiries to determine whether in fact fake/forged visas have been used in connection with export of goods from Pakistan in violation of the International agreement with the importing country and in case the concerned exporter in Pakistan is found to be involved in such illegal activities, it is expected that requisite action, criminal and otherwise is taken against the exporter.
12. In our view there is a nexus between the shipment of the said quota consignment in 1989 on an allegedly fake/forged visa and further exports by the same party. If during the pendency of the enquiry, Export Promotion Bureau has refused to provide any services to the petitioner in respect of other exports by him i. e. By refusing to issue certificates under the Agreement between E.E.C. And Pakistan even in respect of non-quota goods, such action cannot be termed as arbitrary or illegal.
In our view, in the circumstances of this case, where, on the basis of definite information received from U.S. Customs Authorities, an enquiry has been commenced against the petitioner in respect of a shipment by the petitioner in 1989 of quota goods to U.SA. On the basis of a forged/fake visa, the Export Promotion Bureau could validly decline to issue any certificates in respect of other exports by the petitioner. We are accordingly of the view that the decision of Export Promotion Bureau in suspending services to the petitioner pending the aforesaid enquiry is neither illegal nor malafide.
13. This petition is accordingly dismissed with costs in favour of respondent No.2. However, the Export Promotion Bureau is directed to finalize the enquiry against the petitioner in respect of the use of fake/forged visa in 1989 within one month from today. The petitioner is free to produce any witness during the enquiry and rely on any documentary or other evidence that he may like to produce in his defence.
14. There is one other matter which requires consideration. In this petition on the application for interim relief (CMA.No.624/91), the following order was passed:- "With the consent of the learned counsel for the parties, it is ordered that respondent No.2 (i.e. The Export Promotion Bureau) shall issue a Certificate of Origin and Non-quota Certificate as provided in SRO No.948 (l)/87 dated 8-12-1987 whereupon the petitioner shall deposit all the amounts received from abroad in the State Bank of Pakistan and will assign the Letter-of-Credit in favour of the State Bank of Pakistan which will remain there till further orders. This will be without prejudice to the respective contentions of the parties. Accordingly CMA. No.624/91 stands disposed of."
15. Pursuant to the aforesaid order on the application for interim relief, the Certificate of Origin and GSP Certificate in respect of the consignment shipped to France were issued by the Export Promotion Bureau, and the amounts received in respect of the consignment shipped to France by the petitioner are lying deposited with the State Bank of Pakistan. Mr. J.H.Rahimtoola had submitted that in case this petition were allowed, there would be no difficulty about the disposal of the amounts lying with State Bank of Pakistan, as the petitioner would then be entitled to withdraw the same. It was then submitted that even if the petition were dismissed, as the goods had been shipped by the petitioner to France, he was entitled to its proceeds. On the other hand, submission of Mr. Khalid Anwar, learned counsel for the Export Promotion Bureau, was that in case this petition Were dismissed, petitioner would not be entitled to withdraw the amount, as Certificate of Origin and GSP Certificate had been issued by the Export Promotion Bureau subject to the deposit of the proceeds of the exported goods with State Bank of Pakistan and that Export Promotion Bureau would not otherwise have issued the said Certificates.
16. This petition has been dismissed, as it has been held by us that the Export Promotion Bureau had not acted in an illegal and arbitrary manner by refusing to provide any services to the petitioner on account of initiation of the proceedings against the petitioner for the alleged use of a vague/forged export visa. The enquiry is still pending and in case in the enquiry it is found that the petitioner was involved in the aforesaid illegal activities, appropriate action can be commenced against the petitioner in which proceedings, if he is found guilty, he can also be fined.
17. In Case the petitioner is cleared in the enquiry being conducted by the Export Promotion Bureau, the amount lying with the State Bank of Pakistan will be released forthwith to him. In case, however, he is not cleared and found to be involved in the aforesaid illegal activities in the enquiry being conducted by the Export Promotion Bureau, it is directed that the amount in question will remain deposited with the State Bank of Pakistan for a period of four months from today. In case any fine is imposed on the petitioner on being found guilty in proceedings initiated against him pursuant to the result of the enquiry being conducted by the Export Promotion Bureau, the amount lying with the State Bank of Pakistan, can be attached and utilised for payment of the fine under appropriate orders passed by the concerned Court or Authority. In case attachment of the said amount is not made by any competent Court or Authority or no order is received by the State Bank of Pakistan for payment of the said amount or any part thereof towards any fine imposed on the petitioner within four months from today, the amount lying with the State Bank will be released to the petitioner.