' The appellant has been convicted by the F. E. R. Tribunal for offence under section 12 (1) (2) read with 23 of the F. E. R. Act, 1947 and he has been sentenced to pay a fine of Rs, 5000 or in default to suffer R. I. For 3 months.
2. The appellant, proprietor United Hena Traders, exported hena powder of the invoice value Rs, 4,510 under G. R. P. 1 form No, 771118 from Karachi to Dubai on 20-3-1968 after signing an undertaking with the State Bank to repatriate sate proceeds within 4 months from the date of shipment. The appellant, however, failed to repatriate the sale proceeds and in reply to the show- cause-notice he explained that the consignee had failed to make the payment on various pretexts and he could not say whether the consignment had actually been sold or not. His explanation having been found unsatisfactory the case was referred to special police and the appellant was sent up in court.
3. The version of the appellant is that he had been informed by the consignee that the goods had reached Dubai in damaged condition. He was, therefore, not prepared to retire the documents but offered to dispose of the goods at the risk of the consignor. Thereafter letters had been sent to the consignee to repatriate the sale proceeds but he had failed to do so. The learned F. E. R. Tribunal found that there was a breach of the undertaking on the part of the appellant and there was no evidence to show that any serious efforts were made by the appellant to repatriate the amount.
The appellant was, therefore, found guilty and convicted as above.
4. It is, however, well settled by now that mere breach of the undertaking would not make the exporter criminally liable for offence under section 12/23, F. E. R. Act unless the mens rea or guilty intention of the exporter has been established. The initial burden is on the prosecution to make out a prima facie case showing guilty intention or collusion on the part of the exporter. It is then for the exporter who has the special means and knowledge of the transaction to affirmatively show that the sale proceeds could not be repatriated for reasons entirely beyond his control. That his conduct has throughout been above board and he has acted in a bona fide manner and tried to get back the sale proceeds through the authorised dealer in the manner prescribed under the rules. He can even show that the goods have perished in transit or that the goods could not be sold and the sale proceeds had not been remitted by the consignee.
5, In the present case the prosecution has merely shown a breach of the undertaking and nothing more. On the other hand the appellant has filed the original correspondence to show that instructions had been issued to the manager Habib Bank, Cloth Market Branch, Karachi for collection of draft for Rs, 4,420 drawn on M/s. Safdar Ali Khan it Co. Of Dubai on account of 56 bags hens powder and 18 cartons of the same powder shipped per s. s. Sirdhana on 3-4-1968. The collection was to be made within s0 days and the amount was to be repatriated. Thereafter there is letter dated 16th August, 1968 from Safdar Ali Khan that the Hena powder in bags and packets was found to have deteriorated and become colorless due to sea water during the course of shipment. He declined to retire the documents but offered to sell the consignment at the risk of the exporter. Then there is a letter from the exporter to M/s. Safdar Ali Khan and Company dated 21st February, 1972, that State Bank was pressing for the amount which had not been repatriated and early action might be taken. From the correspondence etc. There is no indication of any collusion between appellant and Safdar Ali Khan. On the other hand it is not known what became of the goods and whether the documents were retired in full by Safdar Ali Khan and whether the goods were actually sold. The amount of the invoice being rather small the exporter would not take the risk of a criminal prosecution by obtaining the payment of goods otherwise than in the prescribed manner.
6. The learned advocate on behalf of the appellant has cited State Bank v. Mehboobur Rahman (1).
In that case also there was nothing to show that the accused had intentionally caused any delay in sale of the exported goods or in realization of the sale proceeds or that he had directly received the value of the bills in Calcutta. The accused had so placed himself in relation to the bank that the bank was to receive foreign exchange proceeds directly without his intervention in normal way of trade. It was held that neither section 4 nor section 12 was attracted and no offence under the F. E.
R. Act had been made out; that the High Court was right in acquitting the accused.
7. Since in the present case the prosecution has failed to establish any intentional lapse on the part of the appellant, even prima facie, and the appellant has tried to show that he had instructed the bank to collect the sale proceeds in prescribed manner but the consignee had failed to make payment on the plea that the goods had been damaged by sea water the sale proceeds could not be repatriated due to circumstances beyond his control.
8. Under these circumstances the prosecution case against the appellant has not been established beyond doubt and an offence under the Foreign Exchange Regulation Act does not appear to have been committed by the appellant. The conviction and sentence passed against the appellant are accordingly set aside; he is acquitted of the offence and his appeal is accepted.
The fine, if any, paid may be refunded. {{FOOT NOTE}}
(1) 1971 SCMR 642 {{FOOT NOTE}}