AJMAL MIAN, J.---This is an appeal with the leave of this Court against the judgment dated 17-2- 1993 passed by a Division Bench of the High Court of Sind in Constitution Petition No.D-153 of 1990, filed by the respondents, allowing the same for the following reasons: "11. Having reached the above conclusions, 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 out 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 alongwith 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 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. "
2. The brief facts are that the respondents set up an industry of cotton yarn spinning at Nooriabad Industrial Trading Estate, situated in Dadu District, after obtaining permission from the Government of Sind. The machinery' for the same was imported after obtaining requisite permission from the Investment Promotion Bureau under Pay-as-You Earn Scheme, hereinafter referred to as the Paye Scheme. It seems -that for the import of the above machinery the respondents on 29-6-1985 established a letter of credit in favour of the foreign suppliers through the United Bank Limited, Bombay Bazar, Karachi. It appears that 85 % of the contract amount under the aforesaid letter of credit was to become payable in 10 bi-annual instalments commencing after the grace period of 18 months from the arrival of the major shipment.
3. It may be pertinent to mention that the appellant's F.E. Circular No.68, dated 19-9-1984 provided standard terms for obtaining foreign private loans and suppliers' credit by amending F. E. Circular No. 107 of 1983. It also contained the terms relating to Paye Scheme. Substituted para. 22(ii) containing in Chapter XIX envisaged as under:-- "(ii) Authorised Dealers may, however, issue guarantees in favour of foreign suppliers/lenders to cover repayment of loan and payment of interest under Foreign Private Loan/Suppliers Credit including credits under Paye Scheme in accordance with the terms and conditions of the agreement as registered by State Bank, under intimation to Investment Division, Exchange Control Department, State Bank of Pakistan, Central Directorate, Karachi."
It may further be stated that under F.E. Circular No.76 dated 18-10-1984, the appellant notified to all the authorised dealers in foreign exchange that the exchange risk cover normally provided in foreign currency loans contracted by the Federal Government or guaranteed by it at a fee of 3 % per annum was extended to apply to private sector direct borrowing inclusive of suppliers credit.
However, sub-para. (i.e) of para. 2 of it expressly provided that "the above facility is not available for credits contracted under "Pay-as-You Earn" Scheme." It may also be stated that the appellant through its F.E. Circular No.38 dated 24-6-1986 notified to all the authorised dealers in foreign exchange that it was decided by the Government of Pakistan to extend the exchange risk coverage facility to the foreign currency loans contracted on or after 29-5-1986 under Paye Scheme. It was further stated that paragraph 2 of Circular No.76 may accordingly be amended. The borrowers of the foreign currency loans under Paye Scheme were given the option to get the exchange risk underwritten by the Government within 30 days from the date of issue of the above Circular or within 30 days of the relative contract, whichever is later. It was also provided that all other terms and conditions and procedure laid down in F..E. Circular No.76 of 1984 would apply to Paye cases.
4. It appears that the scope of above F.E. Circular No.38 was enlarged through F.E. Circular No.60, dated 28-9-1986 by providing that exchange risk coverage facility would be available to those Paye contracts as well which were signed prior to 29-5-1986 but on or after 16-5-1982. In this Circular also, the borrowers of foreign currency loans under Paye Scheme were given option to get the exchange risk underwritten by the Government within 30 days of the issue of the above Circular or within 30 days of the final approval of the relative contract by the Investment Promotion Bureau, Government of Pakistan, whichever was later. The above Circular provided the method of conversion of foreign currency amounts of the instalments as under:-- "Conversion of foreign currency amounts of the instalments (where disbursements have already been made at the the of exercise of the option) will be made at the Authorised Dealers' T.T. And O.D.
Selling rate obtaining on the date of exercise of the option. Exchange risk coverage fee in such cases will be charged with effect from the date of exercise of the option. However, in cases where disbursements take place after the date of exercise of option, Authorised Dealers' T.T. And O.D.
Selling rate obtaining on he date of disbursement would apply and exchange risk coverage fee will be charged with effect from the date of disbursement. "
It may also be stated that para. 3 of the above Circular envisaged that all other terms and conditions and procedure laid down in F.E. Circular No.76 of 1974 would apply to the cases covered by the said Circular.
It may be mentioned that the above F.E. Circular No.60 was followed by F.E. Circular No.7 dated 31-1- 1987 providing the method of calculating the amount of the instalments for payment of loans to the foreign loaners/suppliers in cases of partial shipments or drawal of cash loan instalments as under:-- "A question has arisen as to how the applicable exchange rate would be determined in cases where there are more than one dates of disbursement i.e. (partial shipments or drawal of cash loan instalments). 'It is clarified that in such cases the foreign currency amounts of each disbursement of loan (after deducting therefrom the proportionate amount of down payment, if any) will be converted into rupee at the Authorised Dealers' T.T. And O.D. Selling rate prevailing on the date of disbursement as defined in F.E. Circular 76 of 1984. The aggregate of rupees so arrived at will be divided by the total foreign currency amount of the loan to arrive at the applicable exchange rate."
The above Circular was followed by F.E. Circular No.75 dated 27-11-1989 purporting to clarify the aforesaid F.E. Circular No.7 as under:-- "Attention of Authority Dealers is invited to F.E. Circular No.7, dated the 31st January, 1987 in terms of which the exchange rate at which cover is provided with reference to the date of disbursement, is to be calculated on average basis where more than one dates of disbursement are involved. A query has been made as to how the average rate is to be worked out where a part of the foreign currency amounts is eligible for cover at the rate of exchange prevailing on the date of exercise of option and the balance amount is eligible for cover at the exchange rate prevailing on the date of disbursement subsequent to the exercise of option, as laid down in F.E. Circular No.60, dated 28-9- 1986. It is clarified that in such cases the total amount of loan disbursed prior to exercise of option should be converted at the rate of exchange prevailing on the date of exercise of the option and the amounts disbursed thereafter, should be converted at the rates of exchange prevailing on each date of disbursement. The aggregate rupee amounts so arrived at in respect of all the amounts disbursed, whether prior to the exercise of option or thereafter, should be divided by the total foreign currency amount to arrive at the applicable exchange rate."
5. It appears that the respondents through their letter dated 25-10-1986 sought the coverage of the foreign exchange under aforesaid F.E. Circular No.60, which fact has been admitted by the appellant in para. 3 of their counter-affidavit to the aforementioned Constitution petition. It further appears that they submitted repayment schedule after the issuance of above F,E. Circular No.7, dated 31-1-1987 and got it registered with the appellant under Registration No.P-76 of 1988, dated 12-3-1988, which is evident from the documents at pages 85 to 90 of the paper book (Part-I), which inter alia include verification of the schedule at page 86 by the appellant and registration of the same under the above registration number and the appellant's P. Director's letter dated 12-3-1988 addressed to the Manager, United Bank Limited, Bombay Bazar, Karachi Branch.
6. It seem a dispute arose between the appellant and the respondents as to the extent of the risk covered when the respondents lodged claim with the appellant for the difference between the exchange rate current on the date of remittance of the first instalment on 30-4-1988 and the rate as registered by, the appellant and refusal of the appellant through their letter dated 26-5-1988 to entertain the above claim, which resulted in filing of Constitutional Petition No.D-633 of 1988. In the above Constitutional petition, the respondents attempted. To rely upon F.E. Circular No.7, but the High Court, while dismissing the aforesaid Constitutional petition. Through the judgment dated 12- -10-1989, refrained from making any comments upon the applicability of above F.E. Circular No.7 by observing that the same would be considered by the appellant. Since the respondents did not get any redress from the appellant, they filed above Constitutional Petition No.D-153 of 1990, which was allowed for the above-quoted reasons. Thereupon, the appellant filed a petition for leave to appeal, which was. Granted to consider the question, as to whether F.E. Circular No.7, dated 31-1- 1987 can be read into or be deemed to affect the provisions of F.E. Circular No.60, dated 28-9-1986 and whether it is applicable to the respondents. As regards the stay of the impugned judgment, the following order was passed:-- "The petitioner has applied for stay of the impugned judgment which requires it to refund the amount to the respondent. The petitioner shall keep the amount deposited with it, but in case the appeal fails, it shall be refunded alongwith mark-up at the rate of 14 % per annum from 17-2-1993 till payment."
7. Mr. Mansoor Ahmad Khan, learned Senior Advocate Supreme Court in support of the above appeal, has appeared for the appellant; whereas Mr. Faizanul Haq, learned Advocate-on-Record has appeared for the respondents. , Mr. Mansoor Ahmad Khan's first submission was that sub--clause (vi) of para. 2 of F.E. Circular No.76 which provides that "The date of disbursement referred to in sub-paras. (iv) and (v) above will mean the date of issue of the relative Bill of Lading in the case of suppliers credits and date of release of funds by.The lenders in cases where loan amounts are disbursed in cash". Was not applicable to the foreign exchange risk covered under F.E. Circular No.60 as the above sub-clause
(vi) expressly provides that it is applicable to sub-paras. (iv) and (v) of aforesaid para. 2 of F.E.
Circular No.76. His further submission was that in this view of the matter, the definition of the term "disbursement" given in above sub-para. (vi) of para. 2 cannot be pressed into service in the case in hand, but we will have to construe the above term "disbursement" with reference to its ordinary meanings.
The above contention seems to be devoid of any force as para. 3 of F.E. Circular No.60 clearly provided that all other terms and conditions and procedure laid down in F.E. Circular No.76 of 1988 would apply to the cases covered by F.E. Circular No.60, meaning thereby, that even aforesaid sub- -paras. (iv) and (v) of para. 2 of F.E. Circular No.76 were also applicable.
8. Then it was urged by Mr. Mansoor Ahmad Khan that disbursment of loan was made by the foreign suppliers on execution of loan agreement and, therefore, the date of issue of the relative Bill of Lading referred to in above sub-para. (vi) of para. 2 of F.E. Circular No.76 has no relevance. , The above contention appears to be also untenable. In this behalf reference may be made to the respondents' letter dated 17-10-1989 addressed to the Director, Investment Division, Exchange Control Department of the appellant, wherein the respondents have stated as to the dates of shipments as under with reference to above sub-para. (vi) of para. 2 of F.E. Circular No.76:-- "As you know, shipments of our machinery have been made by foreign suppliers on the following three different dates: 31-5-1986 19-6-1986 31-10-1986."
It may be pertinent to mention that the above dates have not been refuted by the appellant through any document or counter-affidavit.
Since we have held that sub-clause (vi) of para. 2 of F.E. Circular No.76 defining the date of disbursment, as means the date of issue of the relative Bill of Lading in the case of suppliers credits and date of release of funds by the lenders in cases where loan amounts are disbursed in cash, is applicable to F.E. Circular No.60, the above dates of shipments if we were to examine in juxtaposition with the aforesaid schedule of repayment of loan through instalments approved by the appellant on 12-3-1988 (at page 86 of the paper book part I), it becomes evident that there are more than one dates of disbursement because of partial shipments. In this view of the matter, F.E.
Circular No.70 is very much applicable as has been held by the High Court, the contract in question being a supplier's credit contract in terms of sub-para. (vi) of para. 2 of F.E. Circular No.76.
9. It was next contended by Mr. Mansoor Ahmad Khan, learned Senior Advocate Supreme Court that F.E. Circular No.60 was itself a complete code covering the cases mentioned therein and, therefore, reference cannot be made to F.E. Circular No.7, dated 31-1-1987.
The above submission also appears to be not sustainable, firstly, as pointed out hereinabove that para. 3 of F.E. Circular No.60 itself provides that all other terms and conditions and procedure laid down in F.E. Circular No.76 of 1984 would apply to the cases covered by the said Circular and, therefore, it cannot be urged that F.E. Circular No.60 itself is a complete code. Secondly, above F.E.
Circular No.60 in fact extended the scope of F.E. Circular No.38, dated 24-6-1984, whereby first the the Government of Pakistan extended the exchange risk coverage facility to the foreign currency loans contracted on or after 29-5-1986 under Paye Scheme by extending the period from 16-5- 1982 to 29-5-1986 and, therefore, it is wrong to urge that above F.E. Circular No.60 is itself a complete code.
10. Then,' it was urged by Mr. Mansoor Ahmad Khan that since F.E. Circular No.7 does not refer to F.E.
Circular No.60, the same cannot be read into F.E. Circular No.60. .
This contention also appears to run counter to the factual position. It may again be pointed out that F.E. Circular No.38, dated 24-6-1986 and F.E. Circular No.60, dated 28-9-1986 relating to the coverage of foreign exchange risk pertaining to Paye Scheme contained amendment of F.E.
Circular No.76, both are to be read with F.E. Circular No.76 of 1984. It may further be observed- that para. 1 of F.E. Circular No.7 refers to F.E. Circulars Nos.68 and 76, dated 29-9-1984 and 18-10-1984, respectively, and therefore the clarification contained in above F.E. Circular No.7 is relatable to inter alia FE Circular No.76. As a corollary, it must follow that FE Circular No.7 can be read with FE Circular.
No. 60.
11. It was also contended by Mr. Mansoor Ahmad Khan that above FE Circular No. 7 cannot be made applicable retrospectively. In support of his above submission, he has relied upon the following cases: --
(i) Gondicalo , Hypolito Constancio Noronha v. Damji Devji and others (PLD 1954 Privy Council 22);
(ii) Adrian Afzal v. Capt. Sher Afzal (PLD 1969 SC 187); (i.e) Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd., Chittagong. (PLD 1970 SC 439);
(iv) Mian Rafi-ud-Din and 6 others v. The Chief Settlement and Rehabilitation Commissioner and 2 others (PLD 1971 SC 252);
(v) Mahmood Shah and others v. Additional Settlement Commissioner, Revenue and others (PLD 1979 Lahore 709); wherein inter alia it has been held that a notification operates prospectively. There cannot be any cavil with the above legal proposition. However, it may be stated that the above cases have no relevant to the point in issue for the reasons, firstly, that in fact F.E. Circular No.7 was a clarification of inter alia F.E. Circular No.76. Secondly, as held by this Court in the case of Army Welfare Sugar Mills Ltd. v. Federation of Pakistan (1992 SCM R 1652) that there is a marked distinction between a notification which purports to impair existing or vested rights or `creates new liabilities or obligation retrospectively and a notification which purports to confer benefit retrospectively. The former is not legally permissible, whereas there is no legal bar as to the latter.
12. Then it was lastly contended by Mr. Mansoor Ahmad Khan that as F.E. Circular No.7 was a clarification of F.E. Circular No.76, the appellant through F.E. Circular No.75 removed the ambiguity which occurred on account of F.E. Circular No.7 as to the scope Of the exchange risk coverage in respect of Paye Scheme under F.E. Circulars 38 and 60 and, therefore, no reliance can be placed on F.E. Circular No.7 and the respondents' rights and obligations were to be regulated as per F.E.
Circular No.75.
In this regard, it may be pertinent to point out that after the issuance of F.E. Circular No.7 on 31-7- 1987, the appellant approved the schedule of repayment submitted by the respondents on 12-3- 1988 as per F.E. Circular No.7, whereas F.E. Circular No.75 was issued nearly after three years from the issuance of F.E. Circular No.7. The appellant could not have made the above F.E. Circular No.75 applicable retrospectively as a right accrued to the respondents on account of F.E. Circular No.7 read with F.E. Circular No.60, which could not have been divested through the above purported clarification through F.E. Circular No.75. The High Court has rightly relied upon the judgment of this Court on the above point in the case of Collector of Central Excise and Land Customs v. Azizuddin Industries Ltd. (supra), wherein inter alia it has been held that an executive authority cannot in exercise of its rule-making power or power to amend, vary or rescind earlier order, take away the right vested in a citizen by law and that the person acquiring vested right of exemption from levy of excise duty on all goods for a period of four years under notification dated 30-6-1961 could not be deprived of the above right by a subsequent notification dated 28-2-1964.
13. In this view of the matter, the above contention is also not sustainable.
The upshot of the above discussion is that the reasons found favour by the High Court for allowing the respondents' aforesaid Constitution petition reproduced hereinabove are unexceptionable and, therefore, the above appeal fails. It is, therefore, dismissed but there will be no order as to costs. The appellant will refund the amount to the respondents as per above interlocutory order dated 31-5- 1993.
(Sd.).
Ajmal Mian, J.
(Sd.)
Suleem Akhtar, J.
I agree and I have appended my note.
(Sd.)
Saiduzzaman Siddiqui, J.
SAIDUZZAMAN SIDDIQUI, J.---I have gone through the judgment proposed to be delivered by my learned brother Ajmal Mian, J. In the above appeal. While I am in respectful agreement with the reasoning and conclusion of my learned brother, I would like to supplement the judgment by adding the following concurring note of my own.
2. The facts of the case need not be repeated here as they are succinctly stated in the proposed judgment of my learned brother. The main question falling for determination in the case is whether F.E. Circular No.7, dated 31-1-1987 could be read into or deemed to have affected the provisions of F.E. Circular No.60, dated 28-9-1996; which admittedly applied to the case of the appellant.
3. Foreign Private Loans and Suppliers Credit including credit under Pay---As-You-Earn (Paye)
Scheme, for financing foreign currency cost of projects, covered by the Government of Pakistan Industrial Policy Statement of June 1'984 and which conform to the standard terms set out in Annexure II of the said policy, became qualified for automatic approval and registration by the State Bank of Pakistan as a result of issuance of F.E. Circular No.68, dated 19-9-1984, issued by the State Bank of Pakistan. The detailed procedure for availing this new concession and the consequent amendments made in the Exchange Control manual were set out in the said circular However, under writing of exchange risk cover by the Government until then was available only in respect of foreign currency loans contracted by the Federal Government and relent to private sector. Through F.E. Circular No.76, dated 18-10-1984, the facility for exchange risk cover was extended also in respect of private sector direct borrowing inclusive of suppliers credit/loans guaranteed by the Federal Government contracted on or after 16-5-1982 either with the approval of Government or under general concession made available through F.E. Circular No.68. However, exchange risk cover facility extended under F.E. Circular No.76 of 1984 did not apply to credits contracted under Paye Scheme. Through F.E. Circular No.38, dated 23rd June, 1986, the Government decided to extend the exchange risk coverage facility to foreign currency loans contracted on or after 29-5-1986 under Paye Scheme also. The borrowers who became entitled to avail of the facility of exchange risk coverage under F.E. Circular No.38 of 1986, were required to exercise their option and get the risk under written by the Government within 30 days from the date of issue of F.E.
Circular No.38 of 1986 or within 30 days of the relative contract whichever was later. Though exchange risk covers facility was also extended in respect of private foreign currency loans contracted under Paye Scheme under F.E. Circular No.38 of 1986 but this facility was not available in respect of loans contracted before 29-5-1986. The Government, therefore, through F.E. Circular No.60, dated 28-9-1986 extended the facility of exchange risk coverage to those foreign currency loans also under Paye Scheme which were signed between the period from 16-5-1982 to 29-5-1986 on the condition that the option was exercised by the entrepreneur concerned within 30 days of the issue of the -circular or within 30 days of the final approval of the relative contract by the Investment Promotion Bureau, Government of Pakistan, Karachi. The conversion of foreign currency amounts of instalments of loan into Pak rupees in such cases was to be done according to authorised dealers T.T. And O.D. Selling rates obtaining on the date of exercise of option where disbursement of loan had already taken place and exchange risk coverage fee was to be charged from the date of exercise of option. However, in cases where disbursemnt of loan took place after the date of exercise of option, the conversion rate of foreign currency was to be done on the basis of authorised dealer's T.T. And O.D. Selling rate obtaining 'on the date of disbursement and exchange risk coverage fee was to be charged with effect from the date of disbursment. It may be mentioned at this stage that both F.E. Circulars Nos.38 and 60 of 1986 made reference to F.E.
Circular No.76 of 1984 and made all other terms and conditions including the procedure contained therein applicable to the cases falling within the purview of F.E. Circulars Nos.38 and 60 of 1986.
4. Sub-paragraphs (i) to (vii) of para. 2 and sub-paragraphs (i) to (vii) of para. 3 of F.E. Circular No.76 of 1984 contained terms and conditions 'and procedural details respective!,,- for availing of the facility of exchange risk coverage in respect of private sector direct borrowings inclusive of suppliers' credit/loans, guaranteed by the Federal Government, contracted on or after 16th May, 1982, either with the approval of Government or under general permission given under F.E. Circular No.68 of 1984. These terms and conditions and procedural details contained in F.E. Circular No.76 of 1984, in so far they were not inconsistent with the provisions of F.E. Circulars 38 and 60 of 1986 were made applicable to the cases covered by F.E. Circulars Nos.38 and 60 of 1986, as provided in these circulars. F.E. Circular No.7 issued on 31-1-1987 had the effect of clarifying and amending the method of calculation of foreign currency component of a loan into Pak rupees with reference to repayment schedule to be drawn by the borrower in terms of paragraph 2 (vii) of F.E. Circular No.76 of 1984. Since F.E. Circulars 38 and 60 of 1986 did not contain any provision parallel to paragraph 2(vii) of F.E. Circular No.76 of 1984 and there being no conflict between F.E. Circulars 38 and 60 of 1986 and paragraph 2(vii) of F.E. Circular No.76 of 1984, the provision of paragraph 2(vii) was applicable to the cases covered by F.E. Circular Nos.38 and 60 of 1986 and any amendment or clarification issued by the State Bank of Pakistan with reference to paragraph 2(vii) ibid, was equally applicable to the cases falling within the purview of F.E. Circulars 60 of 1986.
5. Mr. Mansoor Ahmad Khan, the learned Senior Advocate Supreme Court for the appellant however, contended that F.E. Circular No.60 of 1986 is a self-contained scheme which provided for every detail for disposal of cases falling within its perview and, therefore, F.E. Circular No.7 of 1987 which made no reference to F.E. Circular No.60 of 1986 and only made clarification or amendment of F.E. Circular No.76 of 1984 could not extend to cases governed under F.E. Circular No.60 of 1986.
The contention does not appear to be correct. Both F.E. Circulars Nos.38 and 60 of 1986 made specific reference to F.E. Circular No.76 of 1984 and unequivocally mentioned that all other terms and conditions and procedural details mentioned in F.E. Circular No.76 of 1984 would apply to cases falling within the perview of F.E. Circular No.60 of 1986. In these circumstances, all terms and conditions and procedural details contained in F.E. Circular No.76 of 1984 to the extent they were not inconsistent with F.E. Circulars 38 and 60 of 1986 applied to the cases within the purview of F.E.
Circulars Nos.38 and 60 of 1986 and therefore, any amendment made in the provisions of F.E.
Circular No.76 of 1984 which were applicable to such cases, were equally applicable.
6. I, therefore, agree with the conclusion of my learned brother and dismiss the appeal with no order as to costs.