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Criminal Appeal No. 38 of 1983, decided on 2nd October, 1986.

‑‑‑Ss. 12 & 23‑‑Evidence, appreciation of‑‑Accused exporting cotton goods after completing all formalities and handing over export documents to their Bankers, for onward transmission to their Agent in Importing Country and collecting sale‑proceeds‑‑Importer, however, refusing to take delivery of such goods and ultimately consignment auctioned by Importing Country's Port Authorities‑‑Accused making all‑out efforts and writing series of letters to Customs Authorities of Importing Country, State Bank of Pakistan, their own Bankers, Export Promotion Bureau as well as Commercial Secretary, Embassy of Pakistan, for the return of amount of sale proceeds of their goods, auctioned by Customs Authorities of the Importing Country but to no avail and sale proceeds not released to them‑‑Since sale proceeds, involved in case were never received by accused, question of its repatriation, held, would not arise‑‑Conviction and sentence set aside, in circumstances.

Abdul Sattar Pinjar for Appellants.

Hayat Qureshi for the State.

Date of hearing: 2nd October, 1986.

The appellants have been convicted under section 12/13 of the Foreign Exchange Regulation Act, 1947 by the Foreign Exchange Tribunal by his judgment date 28‑2‑1983 and sentenced each of the appellants to a fine of Rs.15,000 in default to undergo R.I. for six months.

2. According to the F.I.R. appellants 1 to 3 run partnership business by the name and title M.Y. Industries, Karachi and appellant No.4 is their attorney. The following charge was framed against the appellants:‑‑

"That you during the month of June, 1977 being the partners and Manager/attorney of the firm M.Y. Industries, Karachi exported cotton cloth to Jeddah against G . R . P . Form No. 0124287 valued U.S. Dollars 7 , 632 but wilfully failed to repatriate the sale proceeds and thereby committed the offence punishable under section 12 read with section 23 of Foreign Exchange Regulation Act, 1947 within cognizance of this Tribunal."

3. The facts in brief are that the appellants 'entered into a contract dated 5‑3‑1977 with one Messrs Muhammad Abdul Rehman Bajuned of Mecca for the export of Grey Shirting cloth measuring about 50,000 yards. The appellants shipped to Jeddah in August 1977, 28,800 yards Grey Shirting cloth out of 50,000 yards at U.S. Dollars 7,632. The shipment of the aforesaid goods took place under the scheme known as documents against payment (D.P.) under which the appellants were to receive payment from the importer only if he took delivery of the documents against payment comprising Invoice, Bill of Lading etc. The appellants had also complied with the State Bank formalities for the export/shipment of the aforesaid goods to Jeddah by filing necessary forms Central Realisation Proceeds Forms (GRP) under which the exporter is to submit the shipping documents comprising Invoice, Bill of Lading etc. to local bank at Karachi who forward the same to their branch in the foreign country and the importer after collecting the necessary documents from the Bank abroad secured the delivery of the exported goods. The appellants handed over the documents to Habib Bank Limited, Cloth Market Branch, Karachi who despatched the said documents to their agent namely National Commercial Bank at Jeddah. The goods arrived at Jeddah Port on or about 28th August, 1977, but the importer refused to take the delivery of the said goods. There was correspondence between the appellants and the Export Promotion Bureau but without any result. The State Bank of Pakistan instituted an enquiry against the appellants for non‑repatriation of the sale proceeds. The Inspector F.I.A. registered a case against the appellants and then they were sent up before the Tribunal to face the trial.

4. At the trial the prosecution examined two witnesses namely P.W.1 Muhammad Sharif, Exchange Control Officer, State Bank of Pakistan and P.W.2 Assistant Director F.I.A.

The appellants denied the charge and examined three witnesses in defence. D.W. 1 is S. Israr Alam, Export Officer. Cloth Market Habib Bank, D.W.2, Muhammad Ishaque, Exchange Control Officer. Export Section, State Bank of Pakistan and D.W. 3 Nasimuddin from the Export Promotion Bureau.

5. The learned Judge after recording the evidence framed the following points in the judgment:

(a) Whether the accused failed to repatriate the sale proceeds of the exported goods as per direction of the State Bank

(b) What offence, if any, is committed by the accused

The learned Judge by his judgment dated 28‑2‑1983 found the appellants guilty under section 12 of the Foreign Exchange Regulation Act, 1947 (hereinafter referred to as the Act) and convicted them as stated above.

6. I have heard learned counsel for the parties. It was contended by the learned counsel for the appellants that mere failure to repatriate sale proceeds of exported goods does not constitute criminal liability. It was argued that it was beyond the control of the appellants to realise the sale proceeds of the exported goods.

The Tribunal in convicting the appellants has relied upon the Notification issued by the Government in pursuance of section 12 of the Act "that if a foreign buyer refuses to accept the goods, the exporter should either make immediate arrangements for shipping the goods back to Pakistan or alternate buyer found with the approval of the State Bank". The learned Tribunal came to the conclusions; (i) that the accused did export the goods to Saudi Arabia as alleged by the prosecution; (ii) that the accused have failed to repatriate the amount of sale proceeds so far; (iii) that the accused did take efforts to pursuade the buyers to take delivery of the goods but they refused from the very beginning; (iv) that the accused did not take any step to act upon the advice of the State Bank to re‑import the goods and (v) that eventually the goods were auctioned by Jeddah Customs Authorities either in the end of 1979 or in the beginning of 1980 but auction sale proceeds have not yet been repatriated to Pakistan. The Tribunal further observed that material facts to be considered for the purpose of this case would be facts number (iv) and (v). The Tribunal has come to the conclusion that the goods were auctioned by Jeddah Customs Authority. Having decided this point; then the Tribunal proceeded further and held that only one attempt was made by the appellants for repatriation of the sale proceeds and no further attempt as directed in the circular was taken by the accused to get the sale proceeds repatriated.

In fact there is evidence on record that the goods of the appellants have been auctioned by the Customs Authorities of Jeddah Airport. The appellants made repeated attempts for the repatriation of the amount but they could not succeed. Under the law the sale proceeds had to be repatriated within four months but the State Bank of Pakistan had extended the period from time to time. Exhs. 14/2, 19, 20 and 20/9 clearly show that the State Bank of Pakistan had authorised the appellants to repatriate the amount within the extended period. The goods were exported in 1977 but the period had been extended upto 1979 therefore the contention of the appellants that they could not succeed in repatriation the amount has much force. The learned Tribunal has not considered the other documents on record, Exh. 14/12 is a letter written by Export Promotion Bureau Government of Pakistan to the Commercial Secretary Embassy of Pakistan, Jeddah regarding the complaint of the appellants with a request that Collector of Customs Jeddah be approached to resolve the problems of the local firm to obtain release of the auction proceeds. Exh.15 is a letter addressed by the Commercial Secretary to the President, Chamber of Commerce, Mecca wherein it is stated that the complaint of the appellants was referred to him for settlement but no reply was received Exh.16 is another letter by the Commercial Secretary to the President, Chamber of Commerce Mecca that their efforts towards early settlement of this long‑outstanding cases would be appreciated. The firm had written a letter Exh. 29/13 to the Collector of Customs, Port of Jeddah on 20‑9‑1980 requesting that the sale proceeds of the goods which were auctioned by the Jeddah Port Authorities for remitting the same to the appellants. Exh. 29/14 is another letter addressed to the Commercial Secretary, Embassy of Pakistan with the request that they have submitted shipping documents to the Customs Authorities in Jeddah and have claimed the net auction sale proceeds. The appellants have written series of letters to the Customs Authorities at Jeddah, State Bank of Pakistan, Habib Bank and the Export Promotion Bureau for the return of the amount of the sale proceeds auctioned by the Customs Authorities; but in spite of the best efforts the appellants could not have the same. It cannot, therefore, be urged that the appellants had not made any efforts to get the sale proceeds back to the country. The appellant have also produced the defence witnesses but their evidence had not been considered. D.W. Israr Alam Export Officer, Habid Bank had stated that they have not received the sale proceeds from the National Commercial Bank Jeddah as the buyer had not taken the delivery of the goods. The State Bank had entered into correspondence regarding repatriation of the sale proceeds. He has admitted that the export documents of the goods were sent back to them. It means that the sale proceeds were not received by the exporters. This witness has further stated that the documents which were sent to the National Commercial Bank Jeddah were sent back to the Bank. He has produced these documents as Exhs. 35 and 36 respectively and they informed about the return of documents to the accused. Exh.29/9 is circular which states that Saudi Customs Regulations do not permit release of blocked auctioned proceeds to persons other than the actual exporter or the consignee on production of original documents etc. after deduction of their dues. The Pakistan Embassy have in this context expressed their inability to approach the Saudi Customs Authorities on behalf of an individual exporter involved in such cases. It is, therefore, clear that without production of the original documents the Customs Authorities of Jeddah will not release the sale proceeds of the auctioned goods. In the present case the documents have been received by the Habib Bank, the bankers of the appellants. These documents have been exhibited and their authenticity had not been challenged. In the absence of the documents the sale proceeds could not be received by the appellants and as the sale proceeds have not been received the question of its repatriation do not arise. Evidence of D.W. Israr Alam and the documents referred to above have not been considered by the learned Tribunal.

7. The overall conclusion from the above facts is that the charge against the appellants has not been proved. The appeal is accepted and the conviction is set aside. Learned counsel for the appellants has stated that the fine imposed upon the appellants has been deposited by the appellants. Fine if deposited be returned to the appellants.

S.G.D Appeal allowed.

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