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Criminal Appeal No. 38 of 1985, decided on 25th January, 1987.

‑‑‑Ss. 12 & 23‑‑Export‑‑Non‑realization of export proceeds‑‑Accused exported readymade garments but failed to realise export proceeds‑‑No attempt was made by accused to realise amount and facts on record establishing that he had even no intention to repatriate amount of sale proceeds‑‑Notices issued to accused not replied by him and after exporting goods he did not request State Bank for extension of time and failed to show that delivery of goods was not received by consignee abroad‑‑Accused had no explanation worth consideration and material on record fully substantiating case against him‑‑Conviction maintained.

Messrs M.Y. Industries and 4 others v. The State 1987 P Cr. L J 26; State Bank of Pakistan, Dacca v. Shaikh Mahboobar Rahman and another 1971 S C M R 642; Muhammad Mushtaq v. The State 1980 P Cr. L J 1111 and State Bank of Pakistan v. Ismail Usman and others 1968 PCr.LJ 1053 ref.

The State Bank of Pakistan v. Abdus Sattar and another 1968 PCr.LJ 611 and Abdul Rashid Mir v. The State 1968 P Cr. L J 830 rel.

‑‑‑S. 23‑‑Conviction‑‑Requirements for conviction‑‑Immunity how claimed‑‑Conviction under S. 23 of Act, held, could only be based upon finding that non‑repatriation of export proceeds was intentional and deliberate‑‑Conviction could not be ordered under S. 23 if exporter was unable to repatriate sale proceeds for reasons beyond his control which postulated honest attempt on his part to honour undertaking‑‑Immunity could not be available to him if his conduct was mala fide.

Tawhid Ali Safdar v. The State P L D 1969 Dacca 395 ref.

Dewan Bashir Ahmad for Appellant.

Niaz Ahmad Khan for the State.

Date of hearing: 18th January, 1987.

Muhammad Sharif Director Exchange Control Department, State Bank of Pakistan lodged a report on 5‑4‑1984 alleging therein that in August 1981 Messrs Alyan Corporation Limited have made exports on firm contract/consignment sale basis and exported readymade garments worth 30,893.50 U.S. Dollars. Under the rules they were required to realize the sale proceeds within a period of four months from the date of shipment. They have however, failed to realize the full sale proceeds and the full amount is still outstanding against them. A show‑cause notice, dated 18‑10‑1982 was issued to the firm in respect of the non‑realization of export proceeds. Their explanation had not been received. On the receipt of the report a case under section 12 of the Foreign Exchange Regulation Act read with section 23 of the said Act was registered under the orders of Deputy Director, F.I.A., State Bank of Pakistan. After usual investigation the case was challaned against the appellant and two co‑accused. The accused did not plead guilty to the charge.

2. The prosecution examined P.Ws. Muhammad Sharif, Abul Khair, Abdul Hussain and Muqtada Hussain. In their statements under section 342, Cr.P.C. the accused denied the prosecution allegations. The appellant in his statement stated that he tried his best to realize the sale proceeds within the time but as the documents were delivered late to the customer by the Bank, therefore, there was delay. He realized only 4,200 U.S. Dollars and the same was repatriated. The appellant stated that no show- cause notice was issued to him. The learned Tribunal acquitted co- accused Hameeduddin and Mrs. Shahnaz Qureshi and convicted the appellant under section 12/23 of the Foreign Exchange Regulations and sentenced him to suffer simple imprisonment for three months and to pay a fine of Rs.50,000 in default of payment of fine to suffer further simple imprisonment for one year.

3. It is an acknowledged fact that the appellant had exported to Saudi Arabia the readymade garments of the value of 30,893.50 U.S. Dollars. This fact has been proved by P.W. 1 Muhammad Sharif, Exchange Controller, State Bank of Pakistan. The accused has also admitted in his statement under section 342 that he has exported the readmade garments.

P.W. 2 Abul Khair, Assistant Manager, Dubai Bank Limited Karachi has deposed that Messrs Alyan Corporation Ltd. opened an account in their Bank and the appellant was operating the account.

P.W. 3 Abdul Hussain, Assistant Manager, Dubai Bank stated that the appellant had exported to Saudi Arabia readymade garments and the sale proceeds of the exported goods have not been realized. This witness has further deposed that on 20‑11‑1984 the bank has received an amount of 4,200 U.S. Dollars for credit in account of Messrs Alyan Corporation. The remaining amount of the exported goods has not so far been repatriated.

P.W. 4 Muqtada Hussain, Sub‑Inspector, F.I.A. investigated the case and submitted the charge‑sheet against the appellant. The appellant did not lead any evidence in defence.

4. Learned counsel for the appellant has submitted that the appellant had delivered the documents to Dubai Bank and the Branch of this Bank had delivered the documents to the customers at the Saudi Arabia but never realized the amount as it was the duty of the bank to have realized the amount which the bank has failed to realize, therefore, the appellant cannot lie punished for the offence. The learned counsel has referred to Exh.7 which is a declaration which was furnished by the exporter pursuant to section l2(1) of the Foreign Exchange Regulation Act. The learned counsel has specifically referred to the certificate of authorised dealer wherein it is stated that the Bank undertakes that in the event of non‑realization of export proceeds against shipment on consignments sale within stipulated period of four months they shall obtain from the exporters and furnish to the State Bank of Pakistan a full explanation as to the circumstances resulting in non‑realization. The bank further undertook that in the event of short realization they will obtain from the exporters and furnish to the State Bank of Pakistan a fully documented account. On the basis of this certificate it has been contended that the appellant had passed on the documents to the Bank and, therefore, it was for the bank to have realized the amount from the importers after receiving the amount. This contention has no force. This certificate merely stipulates that the bank would repatriate the sale proceeds if the same was realized and deposited in bank. The bank had not undertaken that the amount would be realized by the bank from the consignee. It was the liability of the appellant to realize the sale proceeds and then deposit the same in the bank. If he could not realize the export proceeds then he should have given his explanation to the bank but this has not been done.

Learned counsel for the appellant has submitted that the appellant could not be saddled with the liability simply because he could not realize the sale proceeds of the exporting goods. He has referred to the case of Messrs M.Y. Industries and 4 others v. The State 1987 PCr.LJ 26 but the facts are not identical. In this case the appellant had been able to show that the consignee had not taken the delivery of the goods and the goods had been auctioned by the Customs Authorities of Jeddah Airport. The appellant in this case made repeated efforts to realize the amount but could not succeed.

He has next cited the case of the State Bank of Pakistan Dacca v. Shaikh Mahboobar Rahman and another 1971 S C M R 642. In this case the bank issued a certificate as under:‑

"Proceeds not realized. Bills returned unpaid as the drawees could not pay and documents were outstanding for a long time in Calcutta:"

No complaint was made against the accused that he had intentionally caused any delay in the sale of exported goods or in the realization of the sale proceeds. As the bills returned unpaid and there was no mens rea on the part of the accused, therefore, the appeal was dismissed by the Supreme Court.

He has also referred to the case of Muhammad Mushtaq v. The State 1980 P Cr. L J 1111. This case also does not help the appellant. In this case the accused made repeated attempts by approaching various authorities for getting the value of the goods exported repatriated and it was his case at the time he replied to the notice that the consignee was a cheat and was not taking any action on his representation for repatriating the value of goods exported. The accused also approached London Chamber of Commerce and Industry, the British Ambassador, in Pakistan and other functionary to show that he had made genuine efforts. In these circumstances it was observed that mere failure to repatriate sale proceeds of exported goods does not constitute criminal liability.

The next case on the subject cited by the learned counsel is State Bank of Pakistan v. Ismail Usman and others 1968 P Cr. L J 1053. In this case it has been observed that before such payment can be made the full export value of the goods in question or their sale proceeds outside Pakistan must first be realised and obtained by the exporter and unless and until this had happened there is no export value or sale proceeds for him to repatriate or pay back in the prescribed manner.

5. In the present case the appellant has absolutely failed to show that the goods exported to Saudi Arabia were not received by the consignee or for that matter the appellant had failed to realise the amount. On the other hand certain facts would clearly establish that the appellant had no intention to repatriate the amount of sale proceeds. Date of export is 24‑ 8‑ 1981. Show‑cause notice was issued to the appellant on 18‑ 10‑ 1982 but he did not care to reply that notice.

P.W. 3 has stated that he had sent the notice to the appellant on the given address but the appellants were not available on the given address. The State Bank of Pakistan also issued notice to the appellant on 18‑10 -1982 but the appellant failed to give any reply to the said notice. During all this period the appellant did not make any attempt to realize the amount of the exported goods. If really the consignee has not received the delivery or had not made any payment then it was the obligation of the appellant to have contacted the State Bank of Pakistan or the Embassy Staff of Pakistan for seeking their assistance. There is not an iota of evidence to show that the appellant made any attempt in this behalf. In fact after exporting the goods the appellant remained silent. He did not request the State Bank of Pakistan for extension of time. If the delivery of the goods had not been received by the consignee then the appellant could have made all efforts to reimport the goods. The appellant after the registration of the case sent a letter to Dubai Bank on 11‑11‑1984 with a request to sort out the matter with the customer bank and in fact acknowledged the receipt of the documents in September. The bank gave the reply on 15‑9‑1984 calling upon the appellant to provide documentary evidence from the buyer in respect of the schedule of repayments which was promised by the appellant for settlement of over due export bill. The appellant had taken all these measures after the case was registered. It may also be noted that 4,200 U.S. Dollars were repatriated by the appellant on 20‑11‑1984 that is after the registration of the case. All these facts would prove the repulsive act of the appellant. In such circumstances it cannot be urged that mere non‑repatriation of the amount does not amount to an offence under section 12 of the Foreign Exchange Regulation Act. It was the legal duty of the appellant as required under section 12 to repatriate the amount of the goods exported by an exporter. As the appellant has failed to repatriate the amount and there is no explanation worth consideration, therefore, he was rightly convicted by the learned Tribunal.

6. In this respect I may refer to the case of Tawhid Ali Sardar v. The State P L D 1969 Dacca 395 that conviction under section 23 of the Foreign Exchange Regulation Act can only be based upon a finding that the non -repatriation of the export proceeds was intentional and deliberate. There cannot be any conviction under section 23 if the exporter was unable to repatriate the sale proceeds for reasons and circumstances beyond his control. This postulates honest attempts on his part to honour the undertaking. The immunity will not be available to him if his conduct is mala fide.

In the case of The State Bank of Pakistan v. Abdus Sattar and another 1968 P Cr. L J 611 the conviction was maintained where the appellant failed to repatriate the proceeds within the prescribed time on bare excuse that bills of entry had not been issued by Indian authorities without approaching for assistance Pakistani Bank acting on his behalf.

Similar view was taken in Abdul Rashid Mir v. The State 1968 P Cr. L J 830.

7. The material on record fully substantiates the case against the appellant. I see no force in this appeal, the same is dismissed but the sentence of imprisonment is reduced to one month simple imprisonment with fine of Rs.50,000 in default of payment of fine to suffer further simple imprisonment for three months. With this modification in sentence the appeal is dismissed. The accused is on bail, he should surrender to undergo the sentence.

M.Y.H./M‑73/K Appeal dismissed.

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