The facts necessary for the disposal of the present petition are relatively straightforward. The Federal Government/respondent No,1 promulgated the Import Trade and Procedure Order, 2000 (the "Order") in exercise of powers conferred on it under section 3(1) of the Imports and Exports (Control) Act, 1950 (the "Act"). Article 6(3) of the Order provides, inter alia, that imports of goods from India shall not be allowed except for items mentioned in Appendix B of the Order. Vide S.R:O.
No,613(I)/2000 dated 30-8-2000, the Federal Government included sugar as Item No,63-A in Appendix B to the Order and as a result it became possible for persons in Pakistan to import sugar from India.
2. The petitioner entered into contracts with Indian exporters for the import of sugar. For this purpose, two Letters of Credit, which are subject-matter of the present petition, were established by the petitioner through Askari Commercial Bank Ltd., in favour of the Indian counter party. Both L.Cs.
Were established on 31-1-2001. On 8-3-2001, vide S.R.O. No,145(I)/01, the Federal Government omitted sugar from Appendix B to the Order and as a result it was no longer remained permissible to import sugar from India. Consequent upon the said S.R.O.No,145(I)/01, the State Bank of Pakistan issued a Circular .Dated 16-3-2001. By means of the said Circular, Banks were directed not to establish Letters of Credit in respect of import of sugar from India. They were also directed not to extend Letters of Credit already established by them in this regard.
3. For reasons, which are not fully explained in the petition, it appears that the Indian parties were unable to ship the sugar contracted by the petitioner, within the shipping period stipulated in the two Letters of Credit established in their favour. The petitioner, therefore, on 6-4-2001 applied for amendment of the L.Cs. To seek extension of the shipping dates specified therein. Askari Commercial Bank refused the extension citing the above-referred State Bank Circular dated 16-3- 2001.
4. It is, in these circumstances, that the petitioner has assailed the said State Bank Circular. It was contended by learned counsel for the petitioner that because the petitioner had established the Letters of Credit at a time when import of sugar from India was permissible, the petitioner was also entitled to amendment in the Letters of Credit for extension of the shipping date. He contended that the second notification of the Federal Government (S.R.O. No,145(0/01) could not be applied retrospectively to Letters of Credit established earlier in time. He, therefore, contended that the State Bank had travelled beyond the scope of the said notification by prohibiting Banks from extending the validity of Letters of Credit which stood established prior to the date of the said notification.
5. In support of his contentions, learned counsel for the petitioner cited the case titled A. Razzaq & Co. v. Government of Pakistan etc. 2000 PCTLR 309. The facts of the said precedent, however, are distinguishable and do not advance the case of the petitioner. In the said case, a Pakistani exporter had agreed to export certain goods against a Letter of Credit established in his favour. The Government imposed a ban on such exports. It was, in these circumstances, that the Court held, while deciding the precedent case, that the exporter was entitled to meet his contractual commitments under the Letter of Credit, which had been established in his favour prior to the ban imposed by the Government. In the cited case, there was no issue of any extension in the shipping period subsequent to the date of the export ban imposed by the Federal Government. Another point of distinction is that the cited case related to exports, which are subject to considerations materially different from those prevailing in the case of imports.
6. In the present case, it is to be seen that the State Bank did not impose any restriction in respect of Letters of Credit which had been established prior to its Circular or even to extensions which had been granted prior to the date of its Circular. At this juncture, it is relevant to note that the petitioner had itself sought and had been allowed extension in the shipping dates of its Letters of Credit. Such extension was allowed subsequent to Notification S.R.O. No,145(I)/01 but prior to 16-3-2001 when the State Bank Circular was issued. The Indian exporters were unable to meet the original shipping date and also the extended shipping date. Subsequent to 16-3-2001, the petitioner's desire to accommodate the requirements of the Indian exporters could not be allowed by Banks because of the State Bank Circular.
7. The aforesaid Circular is eminently reasonable as it enables Pakistani importers to meet their contractual obligations and it also allows banks to adhere to their existing obligations under Letters of Credit opened by them. Importers and their Banks were merely prevented from assuming new commitments by modifying the terms of agreements between contracting parties extending the dates of shipment in Letters of Credit.
8. The State Bank Circular specifies a rational cutoff date which is in consonance with Government Policy as set out in the Order and also ensures that Pakistani importers are not prejudiced or put at a disadvantage in their dealings with Indian exporters. The circular, as such, cannot be faulted.
9. There is another reason why the contention of learned counsel for the petitioner cannot be accepted. If it is held that existing Letters of Credit can be extended subsequent to the State Bank Circular, it would become possible for Pakistani importers to defeat the Import Policy of the Federal Government set out in the Order by agreeing to extensions of L.Cs. For prolonged periods.
Government Policy cannot be allowed to be circumvented in this manner.
10. Finally, learned counsel referred to paragraph 35 of Chapter 13 of the State Bank's Foreign Exchange Manual to argue that the State Bank Circular of 16-3-2000 was contradictory to the aforesaid provisions of the Foreign Exchange Manual. The said manual is merely an abridged compendium of various State Bank Circulars. Its provisions, as such, cannot override the express contents of the Circular dated 16-3-2000.
11. For the foregoing reasons, I find no merit in this petition, which is, therefore, dismissed.