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High Court Appeal No.55 of 1979, decided on 10th December, 1986.

---Fifth Sched., Federal List, Item No. 4--Constitution of Pakistan (1962), Third Sched., Federal List, Item No.5--West Pakistan Foodstuffs (Control) Act (XX of 1958), S.3(1)--Essential Commodities Act (III of 1957), S.3(1)--Trade and commerce within the provinces- Issuance of notifications, regulating trade and business within provinces whether within ambit of Federal Government--Trade and commerce between provinces and with foreign countries, import and export across customs frontiers, being within the Federal list of the Constitutions of 1956 and 1962, Federal Government had authority to issue notifications in respect of securing the essential commodities and equitable distribution thereof.

---S.3--Notification No. S.F. (Sugar) S(59) 67, dated 21-10-1968- Phrases "which have been imported", "which have arrived" and "which may arrive thereafter" mentioned in the notification--Connotation of- Owner of imported goods, held, could not keep the goods in stock unless custom duty had been paid, therefor--Official purchaser of such imported goods had to pay the profits not only on the actual cost of the goods but also what importer had 'to pay for release of goods.

Riaz and Kandwalla Ltd., Karachi v. Trading Corporation of Pakistan, Karachi P L D 1979 Kar. 300 rel.

---S.115--West Pakistan Foodstuffs (Control) Act (XX of 1958), S.3- Notification No. S. F. (Sugar) S(59)67, dated 21-10-1968- "Representation"--All stocks of sugar imported by private importers to be sold to Trading Corporation--Such sale being a statutory sale, importer had no choice but to sell the commodity to official Corporation at the offered price--Plea of estoppel would not be maintainable against importer as he had not made any representation of a nature to induce official Corporation to alter its position to its disadvantage, nor such Corporation on basis thereof had altered its position--Letters exchanged between importer and the Corporation would not constitute representation within meaning of S.115, Evidence Act, 1872.

---S.3--Sale of imported goods--Extent of authority to order- Functionaries exercising powers under S.3 have no authority to issue order requiring an importer to sell imported goods before they were received and held by him in stock.

--- Statutory sale by importer of sugar to official Corporation-- Entitlement of plaintiff /appellant to specified amount claimed as a result of illegal computation of price--Where plaintiff had established wrongful loss to him due to illegal computation of value of imported consignment, High Court in exercise of appellate jurisdiction decreed his suit.

Khalid M. Ishaq and A.H. Mirza for Appellant.

A.I. Chundrigar and Wajihuddin Ahmed for Respondents.

Dates of hearing: 14th and 15th October, 1986.

--This appeal is directed against the judgment, dated 20-5-1979 by which the suit of the plaintiff was dismissed.

2. The facts in brief are that the plaintiff imported a total quantity of 27848 tons of white crystal sugar from foreign sellers. The total C & F Karachi value was Rs.76,77,002. In addition the plaintiff also purchased Bonus Vouchers of the total value of Rs.1,30,36,833 and opened the Letters of Credit in favour of the sellers. The said Quantity was shipped in six separate consignments which reached Karachi on different dates. On 17-10-1968 the Government of Pakistan, Ministry of Agriculture and Works (Food and Agriculture Division) issued Notification No. S.R.O. 185(R)/68 to the following effect:-

"In exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1957 (III of 1957) the Central Government is pleased to direct that all persons who have booked orders for the Importation of Sugar into West Pakistan from abroad shall sell the entire quantity of sugar so ordered arrived at Karachi after the 17th day of October, 1968, to the Trading Corporation of Pakistan, Karachi immediately upon its clearance from Customs for home consumption at a price not exceeding the aggregate of the landed cost, the usual incidental expenses and 6 per cent margin of profit."

This notification was however, subsequently rescinded by Notification, dated 1-11-1968. The Government of West Pakistan issued another Notification No. S.F. (Sugar) 5(59) 67, dated 21-10-1968 under section 3 of the West Pakistan Foodstuffs (Control) Act, 1958 to the following effect:-

"In exercise of the powers conferred by section 3 of the West Pakistan Foodstuffs (Control) Act, 1958, (West Pakistan Act XX of 1958), the Governor of West Pakistan is pleased to order that all stocks of sugar imported by Private Importers which have arrived at Karachi on 17th October, 1968; or which may arrive thereafter shall be sold to the Trading Corporation of Pakistan Limited at the cost price plus 6% profit thereon."

The appellant had written a letter to the defendant with a view to make payment as expeditiously as possible as the plaintiff's huge investment of over rupees three Crores were involved in these imports. As a result of the illegal computation by the defendant in all consignments the appellant had been deprived of total sum of Rs.14,64,569 thus a decree for the aforesaid amount was claimed by the plaintiff in the suit. The suit was contested by the defendants. Defendant No.1 in the written statement pleaded that defendant No.2 should have been impleaded as the defendant but not as a pro forma defendant. The assertions made in the plaint were denied. It was stated that the Central Government had no power to issue gazette notification, dated 17-10-1968 and that it was still open to the defendant No.1 to negotiate the terms on which the defendant No.1 would lift the sugar being imported by the various parties including the plaintiff. According to the notification issued by the Government of West Pakistan the defendant No.1 could purchase the sugar at cost plus 6% profit on it. It was further averred that the defendant No.1 was free to negotiate any contract with the Plaintiffs. The defendant No.2 in the written statement had averred that the suit was liable to be dismissed against this defendant as no relief was sought against him. The defendant No.3 also filed a separate written statement and denied the liability to pay any damages. The pleadings of the parties gave rise to the following issues:

(1) Is the suit maintainable in the present form

(2) Is the suit barred by principles of estoppel, waiver and acquiescence

(3) Was not defendant No.1 justified in law in excluding customs duty, wharfage, stevedoring charges, clearing charges, octroi etc., while computing the cost of the sugar

(4) What price is the Plaintiff entitled to for the sale of sugar imported by the plaintiff to the defendant No.1

(5) To what relief is the Plaintiff entitled

(6) Costs.

Issue No.1 was not pressed. The other issues were decided against the appellant, hence the present appeal.

3. The first question that requires consideration is whether the Central Government had the authority to issue the Notification. Learned Counsel for the respondents has stated that the Central Government could not issue the Notification under the Essential Commodities Act, 1957 because under the Constitution of 1956 the trade and commerce within the Province was a provincial subject. This contention has no force because trade and commerce between the provinces, and with foreign countries; import and export across customs frontiers we within the Federal List (Item 4 of the Federal List Fifth Schedule). Similar provision is contained in 1962 Constitution. Item 5 of the Third schedule provides a trade and commerce between the provinces, and with other countries including import and export across customs frontiers was within the legislative powers of the Central Government therefore the Central Government had the authority to issue the Notification, dated 17-10-1968. The intents and purposes of the two Acts, namely West Pakistan Foodstuffs (Control) Act, 1958 (XX of 1958) and the Essential Commodities Act, 1957, (III of 1957) are identical and both have the powers in respect of securing the essential commodities and its equitable distribution. Sub-section (1) of Section 3 of Act III of 1957 reads as under:

"The appropriate Government, so far as it appears to it to be necessary or expedient for securing the equitable distribution of an essential commodity between the Provinces or between different areas in a Province and availability at fair prices or for promoting export thereof, may, by notified order, provide for regulating the movement, transport and sale of the essential commodity between the provinces or between different areas in a province and for the prices to be charged or paid for it at any stage of transaction therein.

Section 3(1) of Act XX of 1958 reads as under:

"The Government, so far as it appears to it to be necessary or expedient for maintaining .supplies of any foodstuffs or for securing its equitable distribution and availability at fair prices, may, by notified order, provide for regulating or prohibiting the keeping, storage, movement, transport, supply, distribution, disposal, acquisition, use or consumption thereof and trade and commerce therein."

The Provincial Government could acquire the goods under Section 3 of Act of 1958 only after the goods have crossed the customs barrier. For clearance of goods certain formalities have to be observed. The goods cannot be cleared unless customs duty under the law has been paid by the importer. The owner of the goods could not acquire physical possession of the same before making payment of the customs duty. The words "which have been imported" and "which have arrived and "which may arrive thereafter" mentioned in the notification are significant. The owner cannot keep the goods in stock unless the custom duty has been paid by him. The Provincial Government was obliged to make all payments which the consignees have paid legally under the law. The cumulative effect of the two Notifications would be that the respondents had to pay the profit not only on the actual cost of the goods but what the Plaintiff had to pay for the release of the goods. The learned Single Judge has accepted the plea of the defendants/ respondents that the appellant/ plaintiff was estopped by their conduct and representation to claim six per cent profit on the amount of the custom duty etc. In this respect reference has been made to Exs.9, 10, 11 and 11/1. Ex.9 is, dated 22-10-1968, and Ex.8 is a letter written by the appellant to the defendants wherein customs duty and other incidental charges were also claimed. Die respondent No.1 in Ex.9, dated 22-10-1968 stated that they have purchased 1000 metric tons of sugar on C.I.F. basis ex-Karachi Port at the cost indicated therein. The respondent No.1 addressed another letter Ex.10 stating therein that in addition to the C.I.F price the plaintiff would be paid a profit of 6% on costs. The appellants through their letter Ex.11 stated that the terms mentioned by the defendant No.1 in their letters Ex.9 and 10 were acceptable to the Plaintiffs. The plaintiffs also forwarded documents duly endorsed in favour of the defendants. Ex.11/1 is another letter addressed to the defendant No. 1 by the appellants wherein the cost of 1000 tons of imported sugar has been mentioned as under:

The learned Single Judge after considering these documents came to the conclusion that the Plaintiff had made a representation to the defendants through their letter Ex.11 and 11/1 that they are ready and willing to deliver the sugar in question on the basis of the break up contained in Ex.9. Above representation was acted upon by the defendant No.1 to their detriment as they admittedly paid Rs. 2, 32, 40, 824.79 towards the customs duty, sales tax etc. It was further observed that in the instant case it was open to the Plaintiff to agree upon a basis for the purpose of determining the cost price. The appellant/ plaintiff had cited P L D 1979 Kar. 300 before the learned Single Judge but the case was distinguished on the ground that it is not clear as to whether the documentary evidence in the aforesaid case was identical with the evidence of the instant case. In the same context it was observed that in the Karachi case there was an admission on the material point of the defendant No.1's witness, which is lacking in the instant case. With respect, we are of the view that the accepted principle of law is that there is no estoppel against statute. The parties had not entered into a contract. The terms of contract were not reduced into writing. The consignment of sugar was acquired by the respondents through a Notification. It was a statutory sale. The appellant had no choice but to offer the consignment to the defendant. The documents on which reliance has been placed by the learned trial Judge cannot be considered to non suit the plaintiff as the settled law is that no estoppel could be pleaded against the rights accruing under the law. According to Section 115 of the Evidence Act when one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative to deny the truth of that thing. The plea of estoppel was not- maintainable against the appellant as the appellant did not make any representation of a nature to induce the respondent No.1 to alter its position to its disadvantage, nor the respondent No.1 on the basis of such representation as alleged in Ex.11 and 11/1 altered its position. These letters did not constitute a representation within the meaning of Section 115 of the Evidence Act.

4. The dispute between the parties has to be resolved on correct interpretation of Notification and correspondence between the parties are extraneous documents. These documents cannot be considered for the purpose of resolving the dispute. Had there been a contract between the parties they may deviate from the terms of contract. But the appellant had no choice to offer the consignment in open market to any other customer. The appellants were obliged to deliver the consignment to the Trading Corporation under a Notification issued by the competent authority.

In the first notification issued by the Central Government the words "immediately upon its clearance from customs for home consumption at a price not exceeding the aggregate of the landed cost, the usual incidental expenses and 6% margin of profit" have been used. In the Notification issued by the West Pakistan Government it has been written that all stocks of sugar imported by private importers which have arrived at Karachi on 17th October, 1968 or which may arrive thereafter shall be sold to the Trading Corporation of Pakistan Limited. Though the language used in the two Notifications is not similar but the import of the two notifications would be that the goods would be offered to the Trading Corporation of Pakistan after the same had crossed the customs frontiers. In the West Pakistan notification it has been specifically stated that all stocks of sugar "imported" by private importers. As stated above, unless the sugar is cleared by the customs authorities the plaintiff could not hold the stock of the sugar. Thus the notification of the West Pakistan Government is to be read alongwith the Notification issued by the Central Government. As such the appellants were entitled to profit on customs duty etc. Another reason which prevailed with the learned Single Judge is that the customs duty etc. was paid by the defendant/respondent No.1 and the plaintiff without making any investment wanted to recover the profit on this amount. The question of investment in this case would not arise, because if the defendant had paid the customs duty on behalf of the appellants that does not mean that the appellants were not entitled to the profit on such amount. The defendant had to pay the customs duty even if the same had been paid by the defendants. In case the appellants had paid the customs duty after taking loan from a bank then naturally they would have claimed not only the actual duty paid but interest on such loan which would have resulted into disputes and litigation. The defendants in order to get the delivery without loss of time had paid the customs duty. It does not mean that appellants were not entitled to claim profit on this amount. The authorities cited before the learned Single Judge were distinguished by him but we are of the opinion that the cited case Riaz and Kandwalla Ltd. Karachi v. Trading Corporation of Pakistan, Karachi (P L D 1979 Kar. 300) applies on all fours to the facts of the present case. Not only the facts are identical but the two Notifications were also the same. In this case also the defendants paid the amount towards the customs duty and paid the charges. The case of the Plaintiff was that this amount was paid on behalf of the plaintiff and would include cost price of the goods. It has been observed that the power was intended to be exercised in regard to stocks which are already for sale, which in the case of imported goods would obviously be related to stocks which have been already cleared from the customs and are held by the importer. In other words the functionaries exercising the power have no authority to issue an order requiring a person to sell the goods before they are received by the importer and held by him in stock. It was further observed that the documents were not handed over to the defendants under the terms of a contract but were obviously handed over in pursuance of the supposed statutory obligation of the Plaintiff under the Notification.

5. For the aforesaid reasons we accept this appeal, set aside the judgment and decree of the learned Single Judge and decree the Suit in the sum of Rs.14, 64, 569. 10 but in the circumstances of the case we do not pass any order as to costs.

A.A./A-51/K Appeal accepted.

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