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Criminal Appeal No. 22 of 1974, decided on 11th June 1976.
----Ss. 12 & 23‑Criminal prosecution‑‑‑ Mere breach of under taking to repatriate sale proceeds of exported goods‑‑‑Would not make exporter criminally liable for offence under Ss. 12 & 23 of Act‑Guilty intention of exporter‑A condition precedent for criminal prosecution‑Prosecution failing to establish any intentional lapses on part of accused and on contrary accused explaining his position by proving his instructions to Bank to collect sale proceeds but consignee failing to make payment on plea of damage to goods by sea water‑Prosecution, held, failed to establish its case against accused beyond doubt, in Circumstances‑Conviction and sentence set aside.
State Bank v. Mehboobur Rehman 1971 S C M R 642 ref.
Dewan Bashir Ahmed for Appellant.
Usman Ghani, Asstt. A. G. for the State.
Date of hearing : 3rd June 1976.
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 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 alter signing an undertaking with the State Bank to repatriate sale proceeds within 4 mouths 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 lend 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 tide appellant is that he had been informed by the consignee that the goods bad reached Dubai in damaged condition. He was, therefore, not prepared to retire the documents but offered to dispose of the goods at tine rise 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 red or guilty intention of the ex porter 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 fern 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 in a breach of the undertaking and nothing more. On the other hand the appellant has filled the original correspondence to show that instruction had been issued to the manager Habib Bank, Colth Market Karachi for collection of the draft for Rs. 4, 420 drawn on M/s Saffdar Ali Khan & C. of Dubai on account of 56 bags hena powder and 18 cartons of the same power shipped per s. s. Sirdhana on 3‑4‑1968 The collection was to be made within 90 days and the amount was to be repatriated. Thereafter there is letter dated 16th August 1968 Safdar Ali Khan that the Hena powder in bags and packets was found to have deteriorated and become colourless 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 tank was pressing for the amount which had not bean 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 (1971 S C M R 642). 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 realisation 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 were 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 bad instructed the bank to collect the sale proceeds in prescribed manner but the consignee had failed to make pay ment 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.
Appeal allowed.
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