' MAMOON KAZI, J.---This petition was allowed by us today by a short order the reasons for which are to be recorded separately. We now proceed to record the reasons therefor.
2. The petitioner in process of setting up a cotton yarn spinning unit in the Nooriabad Industrial Trading Estate was accorded permission by the Government of Pakistan, Investment Promotion Bureau, to import machinery under "Pay-as-You Earn" Scheme. Accordingly, the payment of loan was allowed on the basis of deferred instalments out of earnings of the mill.
3. The petitioner in pursuance of FE Circular No,76, dated 18-10-1984 issued by the respondent had applied on the 29th June, 1985 to the respondent through its bankers, United Bank Limited, for booking of the requisite foreign exchange as on the opening day of Letter of Credit for import of the said machinery. However, Circular No,60, dated 28-9-1986 was issued by the respondent applying the exchange risk coverage facility to the aforesaid Scheme in respect of contracts executed before the 29th May, 1986 but after the 16th May, 1982. FE Circular No,60 was subsequently followed by FE Circular No,7, dated 31-1-1987 and FE Circular No, 75, dated 27-11-1989. Thereafter the petitioner by letter, dated 25-10-1986, wrote to the respondent through its said bankers that it was exercising its option for exchange risk coverage in respect of the whole amount remaining payable as per the said Letter of Credit. While exercising option the petitioner referred to its letter, dated 29- 6-1985 and requested the respondent to register its request for exchange risk coverage effective from the date of opening of the Letter of Credit. The petitioner also filed with the respondent the requisite bank guarantee and it has been further pointed out that thereafter the respondent registered the petitioner's repayment schedule. However, when the petitioner lodged its claim based on FE Circular No,60 which was subsequently amended vide FE Circular No,7, dated 31-1- 1987, the respondent by its letter, dated 22-5-1988 declined to accept the same.
4. Being aggrieved by the respondent's refusal, the petitioner filed a Constitutional petition before this Court which was registered as CT. No,D-633/88 but the same was declined as it was found that the petitioner had not based its case on FE Circular No,7, dated 31-1-1987 under which relief was being sought by the petitioner before the Court and consequently it was left open to the respondent to consider the case of the petitioner on the basis of the said Circular. The petitioner thereafter filed petition for leave to appeal before the Hon'ble Supreme Court against the said judgment of the High Court but the same was also declined vide order passed by the Supreme Court on 24-5-1990. The petitioner, thereafter, submitted a repayment schedule in accordance with Circular No,7, dated 31-1-1987 but they were informed by their bankers that their request had been declined by the respondent.
5. In the present petition, the main contention of Mr. Umar Bandial, learned counsel for the petitioner has been that a vested right had been created in favour of the petitioner by FE Circular No,60 read with Circular No,7 respectively and the same could not be taken away with retrospective effect by FE Circular No,75 which purported to modify the earlier circulars. In Collector of Central Excise and Land Customs v. Azizuddin Industries Ltd. PLD 1970 SC 439 Yaqub Ali, J. While speaking for the Supreme Court had observed that: "It is a settled rule that an executive authority cannot in exercise of the rule-making power or the power to amend, vary or rescind an earlier order, take away the rights vested in the citizens by law."
' Consequently, it was held that exemption granted to the petitioner under section 12A of Act I of 1944 could not be subsequently withdrawn by the notification in question issued by the Federal Government. Mr. Bandial has further argued that in case FE Circular No,75 purported to amend or modify or further clarify FE Circular No,7, the same could not operate retrospectively in any case because although benefit could be conferred by a rule or notification retrospectively but the same cannot be taken away retrospectively if it has matured into a vested right. Reliance in this regard was placed on the case of Army Welfare Sugar Mills Ltd. v. Federation of Pakistan (1992 SCMR 1652).
In this case, the High Court had placed reliance on the general proposition that a notification cannot operate retrospectively without taking into consideration the fact that there is a marked distinction between a notification which purports to impair existing or vested rights or creates new liabilities or obligations retrospectively and a notification which purports to confer benefit retrospectively. The view taken by the High Court was not sustained by the Supreme Court. In Federation of Pakistan v. Ch. Muhammad Aslam (1986 SCMR 916) the Supreme Court while referring to the case of The Montgomery Flour and General Mills Ltd. v. The Director, Food Purchases, West Pakistan (PLD 1957 Lah. 914) observed: ' It should be remembered that no discretion vested in an executive officer is an absolute and arbitrary discretion. The discretion is vested in him for public purpose and must be exercised for the attainment of that purpose. Even though there be no express words in the relevant legal provision to that effect, the discretion is always circumscribed by the scope and the object of the law that creates it and has at the same time to be exercised justly, fairly and reasonably."
6. Mr. Mansoor-ul-Arfin, learned counsel for the respondent has firstly argued that the petitioner had not exercised its option as per FE Circular No,60 as it had failed to observe the procedure as provided in FE Circular No,76, dated 18-10-1984 and since the petitioner had failed to exercise option strictly in accordance with the said circular, it is not entitled to any cover either under the said circular or FE Circular No,7 or 75 respectively. His second argument in the alternative was that FE Circular No,7 does not modify Circular No,60 vis-a-vis the date of conversion of foreign currency into Pak currency in respect of disbursements already having fallen due on or before the date of the exercise of the option and consequently, the petition was liable to be dismissed.
7. So far as the first contention of Mr. Mansoor-ul-Arfin is concerned, learned counsel has placed reliance upon the earlier judgment of the Supreme Court in the case of the petitioner wherein at para. 6 of the judgment it was observed: "Mr. Rasheed Akhund has not been able to controvert the factum that the repayment schedule submitted by the petitioner was in fact based on the foreign exchange rate prevalent at the time of opening of L/C. In this view of the matter, it is evident that it had no point of time the petitioner had complied with the conditions of any of the circulars which could have been invoked by them."
8. Although it has been candidly conceded by Mr. Mansoor-ul-Arfin that the above observations nowhere indicate that the petitioner had failed to exercise its option in accordance with any of the relevant circulars but the learned counsel argues that the same can be implied from the above observations made by the Supreme Court. We would like to point out in this regard that although the above observations how were indicate that the question raised by Mr. Mansoor-ul-Arfin was directly or substantially in issue before the Hon'ble Supreme Court but vide para. No,3 of the counter-affidavit filed on behalf of the respondent it has been admitted that the petitioner vide its letter, dated 25-10-1986 had exercised its option under FE Circular No,60. Having already taken this position in the counter-affidavit, it would highly be unfair to require the learned counsel for the respondent to answer the first preliminary objection now taken by Mr. Mansoor-ul-Arfin which clearly runs contrary to the averments made on behalf of the respondent in the said counter- affidavit. It is also pertinent to point out that the plea raised by Mr. Mansoor-ul-Arfin is purely a factual one and the position having already been conceded by the respondent in its counter- affidavit the learned counsel should not be permitted to raise the said preliminary objection at the time of the arguments in this petition. However, nothing can be spelled out from the observations made by the Hon'ble Supreme Court to indicate that the question now raised by Mr. Mansoor-ul- Arfin had already been finally determined in the said judgment. For the aforesaid reasons, the preliminary objection raised by Mr. Mansoor-ul-Arfin is overruled.
9. Turning to the next contention of Mr. Mansoor-ul-Arfin, it may be pointed out that FE Circular No, 76 was issued by the respondent on 18-10-1984 which originally had excluded borrowers making benefit of "Pay-asYou Earn" Scheme from taking benefit thereunder. However, this facility was subsequently extended to loans covered by "Pay-as-You Earn" Scheme vide FE Circular Nos. 38, dated 24-6-1986. However, on the. 28th September, 1986 FE Circular No,60 was issued by the respondent which further extended the facility provided by the said circular to contracts signed between the 16th May, 1982 and the 29th May, 1986. It is pertinent to point out that the provisions of paragraphs 2 and 3 embodied in FE Circular No,76 were also made applicable to Circulars Nos.38 and 60 issued by the respondent respectively. It may further be pointed out that according to the said paragraphs in the said circulars, the crucial date for conversion of the foreign exchange into Pak currency was the date of "disbursement". The date of disbursement was defined by Circular No,76 to mean as "the date of issue of the relative bill of lading in the case of suppliers credits and date of release of the funds by the lenders in cases where loan accounts are disbursed in cash."
Consequently, there is no controversy on the point that in the present case the date of disbursement, would be the date of issue of the relative bill of lading. FE Circular No,60 contemplates that conversion of foreign exchange currency amounts of the instalment in Pakistan rupees, where the "disbursements have already been made at the time of exercise of the option, will be made according to the selling rate obtaining on the date of exercise of the option. However, after the date of exercise of the option the rate applicable would be the selling rate obtaining on the date of disbursement. Circular No,60 was followed by FE Circular No,7, dated 31-1-1987 as has already been pointed out earlier and it further clarified, how the applicable exchange rate would be determined in cases where there are more than one dates of disbursement, that is to say, where there have been partial shipments or where there has been drawal of cash loans in instalment. In such cases the foreign exchange amount of each disbursement of loan after deducting therefrom the proportionate amount of down payment if any, was to be converted into rupees at the authorised dealers T.T. And O.D. Selling rate prevailing on the date of disbursement as defined in FE Circular No,76 of 1984 and the aggregate of rupees so arrived at was to be divided by the total foreign currency amount of the loan to arrive at the applicable exchange rate. This circular was further modified by Circular No,75, dated 27-11-1989 and it was stated in the said circular that in cases covered by Circular No,60 the total amount of loan disbursed prior to exercise of option should be converetd at the rate of exchange prevailing on the date of exercise of the option and the amounts disbursed thereafter should be converted at the rate of exchange prevailing on each date of disbursement. The aggregate rupee amount so arrived at in respect of all the amounts of disbursement, whether prior to the exercise of option or thereafter, should be divided by the total foreign currency amount arrived at the applicable exchange rate . Mr. Bandial has pointed out that if effect is given to the last circular, dated 27-11-1989, the petitioner would sustain a very heavy loss.
The learned counsel has further pointed out that the said circular also purports to withdraw the benefit which was earlier granted by Circular No,7 read with Circular No,60 to which the petitioner had become earlier entitled.
10. The main thrust of the arguments of Mr. Mansoor-ul-Arfin has been that Circular No,7 has no nexus with Circular No,60 and what the petitioner at best could avail of is Circular No,60 and consequently, it cannot claim benefit under Circular No,7. Learned counsel has further argued that under Circular No,60, disbursements on either side of the option are clearly covered. It is pertinent to point out that in the present case, two shipments of the imported machineries took place on 31- 5-1986 and 19-6-1986 which were before the date of the said option exercised by the petitioner and the third shipment took place on 31-10-1986 which was after the said date. Therefore, if the contention raised by Mr. Mansoor-ul-Arfin is accepted, the conversion rate applicable in respect of the two shipments prior to the exercise of option would be that prevailing at the time of the option and the same in fespect of the third shipment would be that prevailing at the time of the said shipment. We, however, find that the contention of Mr. Mansoor-ul-Arfin is not correct. Circular No,60 contemplates a case where either all the disbursements have taken place prior to the exercise of the option or subsequent to such option. Circular No,60, in our opinion, does not cover a case where part of the shipments have taken place prior to the exercise of the option and part of the same subsequent thereto. Such a case, in our opinion, is covered by Circular No,7 which specifically refers to partial shipments. The said circular clearly refers to cases where there have been more than one dates of disbursement as in the present case. Such cases are to be governed in accordance with the formula provided in the said circular, reference to which has earlier been made in this judgment. Since Circular No,7 specifically governs the present case, in our opinion, the same is clearly applicable to the case of the petitioner and not Circular No,60 under which the present case is not covered specifically. The argument of Mr. Mansoor-ul-Arfin that Circular No,7 does not specifically refer to Circular No,60 in our opinion, is without merit because there is a clear reference to Circular No,76 which is the main circular applicable in the present case and Circular No,60 is to be read along therewith. Consequently, in our opinion, reference to Circular No,60 in Circular No,7 was not necessary and th petitioner's case is squarely covered by Circular No,7.
11. Having reached the above conclusion, we are clearly of the view that after option was exercised by the petitioner under Circular No,60 which was accepted by the respondent as pointed opt earlier, a vested right had accrued in favour of the petitioner to be governed under the. Said circular. No doubt, Circular No,7 was issued subsequently on 31-1-1987 when option had already been exercised, but it was purportedly issued as a clarification as to the question how the applicable foreign exchange rate could be determined in cases where there were more than one date of disbursement. The said circular, therefore, clearly purported to clarify the said position and therefore, in our opinion, it was to be read along with Circular No,60 under which option had already been exercised by the petitioner in the present case. Consequently, the respondent had no lawful authority to take away the benefit earlier granted in favour of the petitioner by the said circulars by Circular No,75. The law on the subject is well settled and no notification or circular can be issued to take away or abridge vested rights with retrospective effect.
12. In the result, this petition was allowed by a short order, dated 17-2-1993 and it was declared that the action taken by the respondent in the present case was without lawful authority as the petitioner had acquired a vested right to be governed by Circular No,7, dated 31-1-1987.