MALIK MOHAMMAD QAYYUM, J.- This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 has been filed by M/s Sandal Fibres Limited, a company incorporated under the Companies Ordinance, 1984 against the Government of Pakistan, United Bank Limited and its officers praying for the grant of following relief:- "It is, therefore, respectfully prayed that this writ petition may kindly be accepted and respondents bank may kindly be directed to process the case of petitioner and to extend the L.C.No. 213/KB/1970/90 (under Supplier Credit Scheme) for Pak Rs: 144. 707 Million favouring M/s Toyo Kaisha Limited and respondents bank may also kindly be directed to hand over the import license for the import of aforesaid machinery to the petitioner and on its presentation, Controller/Deputy Controller of Import & Export be directed to extend the same in accordance with the latest import policy without charging further fee as no fee is chargeable on the extention of the same.
In view of aforesaid instructions contained in letters dated 25.9.91, 16.10.911 & 19.10.91 (ANNEXURES 'A', 'C', & 'D', respectively), the existence/pendency of the said F.I.R. No.4 of 1990 may kindly be declared not to be treated a bar for the extention of L.C. And respondents bank and its functionaries be also restrained and prohibited from demanding from petitioner to get the bank officials involved in the said F.I.R, discharged from the said case.
Any other relief as deem fit in the interest of justice and circumstances of the case may kindly be allowed".
2. The facts forming back ground of the dispute are that the petitioner company entered into an agreement with M/s Toyo Menka Kaisha Ltd., Hongkong for the purchase of textile machinery/spinning unit, consisting of 14400 spindles on 12th February 1990. With a view to import machinery, M/s United Bank Limited, respondent No.2 herein, at the request of the petitioner, opened a letter of credit on 10th of May, 1990, for six months in favour of the foreign supplieron the receipt of the commission.
3. I Consequently, the petitioner applied for extension of the period of letter of credit but it appears that the said application was not being given due consideration by the respondents. The petitioner there upon filed a constitutional petition (W.P.No.183/91) against the respondents in this Court. On 23rd October 1991, it was stated by. Mr. Ehsan Jan, the learned counsel for the respondents, that if the petitioner fulfills the requisite formalities, the respondents shall process the application in accordance with the instructions of the Federal Government, if possible, before 30th October, 1991.
In view of this statement of the learned counsel for the respondents, the constitutional petition was not pressed by the .Petitioner.
4. According to the petitioner, notwithstanding the aforesaid statement of the learned counsel for the respondents and the order passed by this Court on 23rd October, 1991, the respondents were not deciding the application of the petitioner. He consequently instituted this constitutional petition.
5. When this petition came up for hearing on 4th of November, 1991, respondent No. 7 was directed to appear along with the record. An objection was raised by the learned counsel for the respondents No. 2 to 7 that as the petitioner- company was involved in a criminal case, the respondents have been advised by the Accountability Cell set up by the Government of Pakistan to await clearance from the said Cell. In these circumstances, Mr. Aftab Iqbal Chaudhry, Deputy Attorney General for Pakistan, was asked to enter appearance after obtaining instructions from the Accountability Cell. On 13th November, 1991, the learned Deputy Attorney General stated before this Court that he had established contacts with the Finance Division and Cabinet Division of the Federal Government which have no objection to the request of the petitioner being processed and decided by the Bank. The letters of Finance Division as also Cabinet Division to the same effect were placed on record. Respondent No. 1 was consequently directed to decide the application of the petitioner immediately without any delay.
6. On 26th of November, 1991, learned counsel for respondents No. 2 to 7 stated that the request of the petitioner for the extension of period of letter of credit has been refused by the respondent- bank. A copy of order was placed on record on lst of December, 1991. This petition was admitted to regular hearing on 3rd of December, 1991, to consider the question inter alia as to whether the refusal of the respondent-bank to extend the letter of credit is arbitrary being malafide.
7. Mr. Muhammad Akram Sheikh, the learned counsel for the petitioner has submitted that the letter of credit was opened by the respondent-bank on the basis of the agreement arrived at between the petitioner and foreign supplier on 14th February, 1990, in which the period of shipment was mentioned as two years and, therefore, it was clearly understood between the parties that the letter 6f credit was to remain valid for two years and the period mentioned in the letter of credit was not of much significance. It was emphasized by the learned counsel that as per established Banking practice, the period mentioned in all letters of credit is initially sue months, but between the bank and its customers, it is clearly understood that the letter of credit shall remain valid during the currency of period of agreement with the foreign supplier and the validity of letter of credit shall be extended from time to time.
8. The learned counsel has argued that the respondent-bank having been nationalized by the Federal Government under the Banks Nationalization Act, 1974, is an instrumentality of the State and is bound to act in a fair, unbiased and judicious manner and no decision taken by it can be whimsical, arbitrary and capricious. It was emphasized that the respondent-bank has been giving different reasons at different times for refusing to extend the letter of credit. In the last, the learned counsel for the petitioner has submitted that the impugned action is also against the principles of natural justice and the petitioner has been condemned unheard.
9. This petition has been opposed by respondents No. 2 to 7 by filing a written statement in which various objections as to maintainability of this petition have been raised. The learned counsel for the respondent No. 2 has contended that the respondent-bank is not a person performing functions in connection with the affairs of the Federation or the Province and as such, no petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, is maintainable. Again, it was objected that the rights claimed by the petitioner are based upon a contract and a constitutional petition cannot be maintained for enforcement of such rights. Another objection raised by the learned counsel was that in the petition, the petitioner who failed to challenged the order passed by the Executive Board, therefore, the petition was not maintainable.
10. On merits, the plea taken up by the learned counsel for the respondents is that the letter of credit was valid for six months as has been stipulated in the letter of credit itself and the respondents are under no legal obligation to renew the letter of credit, especially in view of the change of composition in the Board of Directors of the petitioner-company and passage of time due to which project is no more viable.
11. So far the objection of respondent No.2 that no constitutional petition can be maintained against respondent No.2, there is no merit in it. Although it is correct that respondent No. 2 was originally incorporated as a public limited company but it was nationalized by virtue of the Banks Nationalization Act, 1974, section 5 whereof provided that the ownership, management and control of Banks shall stand transferred to and vest in the Federal Government on the commencing day.
Similarly, according to subsection (2) of section 4, all capital of a Bank held by a person other than Federal Government, Provincial Government, a Corporation owned or controlled by the Federal Government or State Bank shall stand transferred to and vest in the Federal Government. Under section 8 (1) of the Act, all persons holding offices in a Bank as Chairman, Director etc. Ceased to hold office and the Board of Directors stood dissolved by virtue of sub-section (4) and instead, an Executive Committee was set up under section 11 comprising of a Chairman and Directors to be appointed by the Federal Government. Although under section 5 (S), the corporate status of respondent No.2 has been kept alive but this fact is not conclusive. As already observed, by virtue of the Banks Nationalization Act, 1974 not only the entire share holding of the Bank vests in the Federal Government but it has the exclusive right to manage and control it. The Executive Body is appointed by the Government. That being so, it is difficult to accept the argument of the respondents that no constitutional petition can be maintained against respondent No.2. Reference in this connection may be made to Javed Iqbal & 2 others vs FIA & 3 others (PLD 1986 Lahore 424), Aray Hasia etc. Vs. Khalid Mujib Soherwardi & others (AIR 19&L S.C. 487), Central Inland Water Transport Corporation Ltd and another, vs. Brojo Nath Ganguly and another (AIR 1986 S.C. 571), and The Gujrat State Financial Corporation vs. M/S Lotus Hotels (Private) Ltd (AIR 1983 S.C. 848).
12. However, {ie other objection raised by the leamed counsel for the respondent as to the maintainability of the petition namely that the rights which the petitioner seeks to enforce by filing the present petition are contractual in nature which cannot be^ enforced by constitutional petition, is well taken. According to own showing of the [petitioner, the letter of credit was opened by the respondent-bank in pursuance- to a contract between the parties. A copy of this document has been placed; by the respondent-bank on the file of this Court. Similarly, a perusal of letter of credit opened by respondent-bank itself shows that it was established in pursuance to an agreement between the parties. There is no violation of either any statute or .of statutory rule and as such, it is difficult to see as to how this petition can he maintained. In this context, the learned counsel for the respondents has relied* upon the following passage appearing in Letters of Credit. The Law and Current Practice (Second Edition) by Lazar Sarna:- " The modern commercial credit transaction has developed without the assistance of specific legislative provision defining, qualifying or otherwise identifying the letter of credit as a unique contract. The letter of credit is not a creature of the law in the same sense as land registration or the corporation".
The extent of the obligations and rights of the parties to the transaction and the duration of those rights must be determined".
The relationship between the customer and the issuing bank involves a loan or credit contract".
" In order to obtain the issuance of a letter of c^dit, the customer usually fills out an application or agreement in standard form setting out the details which will ultimately appear on the face of the letter of credit, as well as the mutual rights and obligations of the customer and the bank.
The customer requests the bank to issue an irrevocable letter of credit in favour of an identified party available by draft drawn on a specific branch in a specific amount covering the cost, in the event of an underlying agreement of sale, of certain objects basically described, 1 indicating the place of shipment and destination, as well as details of the documents to accompany the drafts.
The bank is further requested to notify the beneficiary of the credit by cable, mail or other means of transmission. Finally, an expiry date is set with or without the possibility of extension".
Similarly, in Halsbury's Laws of England, Vol.3 (fourth) Edition, it is stated at page 101 (para 133) as under:- "133. Commercial Letters of credit relationship. The contractual relationship between the issuing banker and the buyer is defined by the terms of the agreement between them under which the letter opening the credit is issued; an as between the seller and the banker, the issue of the credit duly notified to the seller creates a new contractual nexus and renders the .Banker directly liable to the seller to pay the purchase price or to accept the bill of exchange upon tender of the documents".
Reference may also be made to Paget's Law of Banking 9th Edition, wherein it is opined at page 531 that: "The law governing commercial letters of credit is largely the law of contract and agency".
To the same effect is the view of Chitty in his famous book on Contracts, 24th Edition (Vol II), wherein the learned author has stated at Monogram 2613 that: "Pursuant to the contract of sale the buyer, in order to procure the issue of the credit, applies to a local banker setting out his requirements. This is usually made upon a standard "application form" provided by the banker and if accepted the details there recorded represent the limits of his authority. The buyer should specify whether the credit is to be opened by air mail, surface mail or cable; the duration, extent and revocability or irrevocability of the credit; details of the manner in which shipment and insurance is to be effected; an exact description of the goods; a list of the documents against which the banker is to make payment and the name of the person to whom or to whose order the bill of lading should be addressed".
" The relations between the buyer and the issuing banker depend solely on the terms of the contract between them and are not affected by rights or obligations which either of them has against or owes to other parties".
13. There cannot be any doubt that a constitutional petition cannot be maintained to enforce contractual rights unless it is shown that there has been some violation of any statute or rules having force of law. No such question arises in the present case. This petition is, therefore, not maintainable.
14. In view of the above finding, a detailed discussion on the merits of the case is not called for but it may be stated that on the basis of material on the record, it is evident that the petitioner has not been treated fairly, equitably and justly. Although technically speaking, the letter of credit was valid for a period of 6 months as provided in the document itself but that document makes reference to the contract between the petitioner and the foreign supplier in which the shipment period has been mentioned as two years. The learned counsel for the petitioner has taken up the position that renewal of letter of credit during the currency of the period stipulated in the agreement for purchase of goods is a matter of routine as per Banking practice. A challenge was thrown by the learned counsel to the respondent-Bank to point out any other case where the respondent-Bank or for that matter any other Bank has ever refused to extend the period of letter of credit on the ground that the time mentioned therein has expired. However, no such instance was pointed out by the respondents.
15. It may also be stated that the petitioner submitted two applications (C.M. No. 1 and 2 of 1992) in which similar statement was made but in the reply filed by the respondents, although it was disputed that the extension is a matter of routine but no instance where such a refusal has been made by the respondent- Bank was pointed out. Similarly, the learned counsel for the petitioner is correct in stating that different reasons for extension in letter of credit have been given at different times. When this petition came up for hearing before this Court on 11th of November, 1991, the reason given for not proceeding with the application of the petitioner was that the petitioner was involved in a criminal case, which was under active consideration of the Accountability Cell of Pakistan. However, when the Accountability Cell indicated its no objection to the extension of time, the reasons for not granting the relief to the petitioner were differently stated. It may also be noticed that one of the grounds on which the respondents have refused to extend the letter of credit is that due to passage of time the Textile Industry has gone in recession and it was not economically feasible to finance Spinning Units. This fact is, however, belied by the reply filed by the respondents to C.M.No. 2 of 1992 in which it has been admitted that two letters of credit were opened by the respondents-bank on 4th of December, 1991, and 16th of December, 1991, at the request of Nayab Spinning & Weaving Mills Ltd and Mehar Dastgir Spinning Mills Ltd. Copies of these two letters of credit have also been filed. The other grievance of the learned counsel for the petitioner that the Executive Committee, while refusing the application of the petitioner, should have granted hearing also appears to be justified, especially when the credit worthiness of the new management was being considered by it. However, as this petition has already been held to be not maintainable, this aspect of the matter need not be dialated upon. The petitioner may, if so advised, apply to the respondents for reconsideration of the matter.
For the aforesaid reasons, this petition is dismissed, as being not maintainable, with no order as to costs.