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Criminal Acquittal Appeal No. 339 of 1960, decided on 20th July 1962.
Disposal of imported goods in contravention of conditions of import licence‑Import and Export (Control) Act (XXXIX of 1950), Ss. 3, 5‑Misuse of licence‑Hoarding and Black Market Order (XIV of 1956), Ss. 2 (2) (ii) (v), 3 ---Dealing in black market‑Penalty‑Importer possessing sub -authorisation for import of goods entering into agreement with another allowing him to do "all" acts incidental to import of goods and to their subsequent disposal, and receiving beforehand an ascertained amount (representing profit)-- Guilty of misuse of licence‑Punished under S. 3 read with S.2 (2) (ii) (v), Hoarding and Black Market Order, 1956-- Defence plea of forward contract" or of "agreement of agency" to explain away agreement of sale, held, not sustainable (in circumstances of case).
"Sell"‑Hoarding and Black Market Order (XIV of 1956), S. 2 (2) (ii) ‑ "Selling"‑Both expressions used in "popular" sense and not in "technical" sense of S. 4, Sale of Goods Act (III of 1930)‑Completion of "sale" not dependent on obtaining "release order" from Controller‑General of Prices and supplies‑[Lambert v. Rowe (1914) 1 K B 38 ref.].
Agreement of sale‑Collateral agreement as to buyer's subsequent use or disposal of goods sold‑Not incompatible with agreement of sale‑Sale of Goods Act (III of 1930), S. 4----- [M Bain v. Wallace & Co. (1881) VI A C 588 ref.].
Dispose of"‑Carries wider meaning than "sell"---[Amrit Banaspati Co. Ltd. v. Emperor A I R 1947 Born. 306 ref.].
Charge under one offence, conviction under another‑Accused charged for using import sub‑authorisation against provisions of Import and Export (Control) Act (XXXIX of 1950), S. 3‑Revisional Court reversed charge (in absence of prejudice) and held accused guilty under S. 3, Hoarding and Black Market Order, 1956.
Khalid Ishaq, A. A. G. for Appellant.
A. K. Brohi for Respondent No. 1.
Tufailali Rehman for Respondent No. 2.
Dates of hearing : 24th, 25th and 26th April 1962.
.‑This is a Government Appeal against the order of acquittal passed by Mr. Kamberalibeg M. Mirza, the then Special Judge (Anti‑Corruption), Karachi, in Case No. 1 of 1958, dated the 24th of November 1959, acquitting the respondents for an offence alleged to have been committed by them under section 3 of the Hoarding and Black Market Order, 1956. This appeal arises in the following circumstances:
Respondent Mian Muhammad Latif is the Managing Director of Messrs Faridsons Limited and Friederike Limited, Karachi, which, besides doing other business, deal in the import of motor parts, trucks, pick‑ups and other motor vehicles and spare motor parts. At the material time respondent Nasrullah was the General Manager of the above‑mentioned business concerns, and respondent Hugh J. Lazern was their Sales Manager. The Government of Pakistan, on the 10th of May 1955, issued a Sub‑Authorization No. RM 000608 (Exh. 76) in favour of Messrs Friederike Limited, Karachi for the import of different categories of motor vehicles to the extent of rupees three lacs. 20% of this Sub‑Authorization was to be utilised for the import of motor spare parts. This Sub‑Authorization was issued by the Chief Controller of Imports and Exports under the provisions of the Imports and Exports (Control) Act, 1950.
The prosecution case is that the above‑mentioned import permit was not transferable except with the permission of the Chief Controller of Imports and Exports, and any commodities imported under it had to; be disposed of in the manner and in accordance with the conditions prescribed by Government. It is alleged that the respondents, in contravention of its conditions, entered into two agreements (Exhs. Nos. 3 and 4'7) dated the 26th of May 195,5, and the 28th of June 1955, and sold Sub‑Authorization (Exh. 76) of the C. & F. value of Rs. 45,000 to Messrs Western Motor Stores, Bunder Road, Karachi, and of the C. & F. value of Rs. 7,287 to Messrs Star Motor Works, Bunder Road, Karachi, respectively. The aforesaid buyers under these two agreements were authorised to, prepare and place indents, open letters of credit, pay bank bills and retire the documents of title in respect of all consign ments imported and were empowered to arrange clearance themselves from the Customs and Port Trust and take delivery of the goods so imported. Under these agreements the respondents received payment of Rs. 34,200 from Messrs Western Motor Stores by cheque (Exh. 18) and Rs. 5,852 from Messrs Star Motor Works by cheque (Exh, 49) as profit on the goods to be imported on their licence. In consideration of these payments the buyers were able to import motor spare parts of their choice and for their benefit and gain. They actually imported the said goods by using the Sub‑Authorization (Exh. 76) through their own banks and took delivery of the imported goods after getting them cleared., themselves through their own agents on .the payment of all expenses including Customs duty and sales‑tax.
In short, the prosecution case is that the respondents in this way have committed the offence of black‑marketing in allowing the use of the Sub‑Authorization in contravention of its terms and by selling or offering to sell the spare parts of mechanically propelled vehicles, scheduled articles, imported under the above‑mentioned Sub‑Authorization to Messrs Western Motor Stores and Messrs Star Motor Works on the 26th of May 1955, and 28th of June 19,55, respectively, in contravention of Article 6 of the Essential Commodities (Control of Distribu tion) Order, 1953, punishable under section 3 of the Hoarding and Black Market Order of 1956.
A complaint to this effect was filed under the signature of Mr. Mahmud Hussain, Deputy Secretary to the Government of Pakistan on the 2nd of January 1958. It may be mentioned that this complaint was the result of the first information report recorded by Mr. Mahmud Hussain, Deputy Secretary, S. P. E. on the 27th of April 1960, which is in the following terms :‑
"Information has been received through a reliable source that Messrs Faridsons Ltd., Karachi, sole importers of various makes of cars like HANSA BORGWARD, MERCEDES etc. spare parts and accessories thereof received import licences Nos. R.M. 001000, R.M. 000608, S. 004427 and D. 016363 in the year 1955, of a total value of Rs. 3,78,750 and sold them to other parties in the black‑market. These parties in their own turn did not import the spare parts specified in the licence but imported other parts which could fetch good profit in the market. It is alleged that this has peen committed with the connivance of the customs, resulting in non‑availability of the spares of the specified cars in the market.
The above information discloses the commission of an offence under section 3 of Act XXIX of 1948. A case is, therefore, registered and S. I. Syed Mamnoon Hussain is deputed to investigate."
The investigation was made by different officers, P. W. Saeed Ahmed, Inspector, C. P. E. was examined before the learned trial Court as a witness on behalf of the prosecution who took over the investigation from Shamsul Islam on the 27th of February 1957. Between the 27th of February 1957 and the 21st of May 1957, the Investigating Officer recorded the statements of a large number of witnesses. The investigation was completed and he submitted his report for sanction to prosecute the respondents on the 21st of May 1957. On the filing of the above‑mentioned complaint, Mr. Ghaznavi the then Special Judge (Anti‑Corruption) Karachi, on the 2nd of January 1958, issued bailable warrants against the respondents. The case was adjourned from time to time. On the 1st of January 1958, Mr. Kamberalibeg M. Mirza took over as Special Judge (Anti Corruption) Karachi and proceeded with, the matter.
The prosecution in support of their case examined five witnesses, namely (1) P. W. Muhammad Saeed Fikree (Exh. 1), (2) P. W. Hashmatullah (Exh. 46), (3) P. W. Mr. I. A. Khan, Controller of Imports and Exports (Exh. 75), (4) P. W. Muhammad Azam (Exh. 92) and (5) P. W. Saeed Ahmed, Investigating Officer (Exh. 96). On 22nd January 1959, the learned Special Judge framed a charge against the three respondents regarding an attempt to sell motor parts covered by Exh. 76 between 27th May 1955 and 28th June 1955, respectively by offering to sell the said motor parts and executing the agree ments Exhs. 3 and 47 in contravention of section 6 of Essential Commodities (Control of Distribution) Order, 1953, an offence of dealing in black market within the meaning of section 2 (2) (ii) punishable under section 3 of the Hoarding and Black Market Order, 1956. But this charge was amended on the application of the prosecution by an order dated the 15th August 1959. The amended charge (Exh. 109) reads as under:‑
"That you Mian Muhammad Latif Nasrullah and H. J. Lazarn, between 27‑5‑1955 and 28‑5‑1955, attempted to sell motor parts covered by Sub‑Authorization No. R. M. 000608 dated 10‑5‑1955, (Exh. 76) to Messrs Western Motor Stores, and Messrs Star Motor Works of Karachi on 27‑5‑1955, respectively:
(a) by offering; for sale the said motor parts ;
(b) dealt with and used Sub‑Authorization No. R.M.‑000608, dated 10‑5‑1955, (Exh. 76) in contravention of its conditions and the provisions of the law in Pakistan and towards that end executing agreements Exh. 3 and Exh. 47 and receiving Rs. 34,200 and Rs. 5,852 as profit in full from witnesses Mr. Fikree and Mr. Hashmatullah of said firms respectively in contravention of Pakistan Law viz., section 6 of Essential Commodities Distribution Order of 1953 and section 3 of Import and Export Control Act of 1950, thereby committed the offence of dealing in black market within the meaning of section 2 (2) (ii) and (v) thereby committed on offence punishable under section 3 of the Hoarding and Black Market Order 1956."
Respondents denied the commission of the alleged offence. Mian Muhammad Latif admitted that he was the Managing Director of Messrs Friederike Limited. Respondents Nasrullah and Lazern admitted that at the material time they were the General Manager and Sales Manager respectively of this business concern. Respondents Mian Latif and Nasrullah admitted that Sub‑Authorization (Exh. 76) was issued in favour of their firm. They further admitted that agreements (Exhs. 2, 3 and 47) were entered into by their firm with Messrs Western Motor Stores and Star Motor Works. The payment of the total amount of Rs. 52,287 by these firms as profit to their company was also admitted. It is also not denied by them that the buyers opened letters of credit, retired the documents of title from the bank, cleared the imported goods from the Customs and stored them in their godowns under their authority after meeting all charges and, other expenses towards this end.
Respondents Mian Muhammad Latif and Nasrullah's main defence is that the transactions in question are forward contracts, which are not prohibited under any Pakistan Law. These transactions were merely agreements to sell and were not sale transactions. The property 'in the goods had not passed to the buyer as the transactions were subject to the release orders issued by the Controller of Prices and Supplies. According to them the buyers before the completion were acting either as financiers or as their agents and the goods were stored with them as bailees and not as owners. They also denied the alleged sale of Sub‑Authorization or its misuse in contravention of any of its terms.
Respondent Lazern's defence is that the transactions in question were not entered with his knowledge. He denies all responsibility in that respect. He admitted to have forwarded the release orders but his explanation is that this was under the instructions of respondent Nasrullah, the General Manager, whose orders he was bound to carry out as an employee of the company. He acted only under the instructions of respondent Nasrullah. His main defence is that he was only a paid employee and had no knowledge about the transaction in dispute.
On the evidence produced before him the learned Special Judge came to the conclusion that there was no provision in the Imports and Exports (Control) Act, 1950, or the Essential Commodities (Control of Distribution) Order, 1951, under which forward contracts are forbidden. Under such contracts no offer or attempt to sell imported goods could be in contra vention of any Pakistan Law and fall within the definition of section 2 (2) of the Hoarding and Black Market Order, 1956. He is of the opinion that the importer' may use the finances of someone else' and the person who advances the finances has only lien on the goods kept with him and will be keeping such goods in his custody as an agent of the importers until they actually receive the release order and the sale becomes complete. According to the finding of the learned Special Judge, the agreements, referred to above, are in the nature of forward contracts, and the right in the property had not passed to the buyers as the sale was subject to the release orders. He further found that the Sub‑Authorization was not used in contraven tion of any Pakistan Law, and hence did not violate the provi sions of section 2 (2) (ii) of the Hoarding and Black Market Order, 1956. On these findings, the learned Special Judge (Anti-- Corruption) found that prosecution had failed to prove their case against the respondents on any of the charges, found them not guilty and acquitted them.
During the course of inspection of the Subordinate Courts, Constantine, J., after perusing the judgment of the trial Court prima facie was of the opinion that the learned Special Judge was misled by defence arguments into concluding that there had been no sale but merely a forward contract to sell. He, therefore, directed that the cases decided by him should be sent for by the High Court in revision to be placed before a Bench. Accordingly the matter was placed before a Division Bench of this Court consisting of Inamullah and Sajjad Ahmed Jan, JJ., who admitted it and issued notice to the parties in its revisional jurisdiction. It is in these circumstances that Cr. Miscel laneous Reference No. 163 of 1960, has come up for considera tion before this Court. But this reference is not of much importance because during the period of limitation, the Government also filed an appeal under section 417, Cr. P. Code, Criminal Acquittal Appeal No. 339 of 1960. In these circum stances, we will only proceed with the Criminal Acquittal Appeal, and will not take any action under our revisional jurisdic tion.
Mr. Khalid Ishaque, the learned Additional Advocate --General, has urged in this appeal that the evidence produced on the record establishes beyond doubt that the respondents in contravention of the provisions of section 6 of the Essential Commodities (Control of Distribution) Order, 1953 have been guilty of an attempt to sell or dispose of the motor parts, the selling, or disposing of which is controlled by a Pakistan Law and subject to restriction, which is an offence under section 2 (2) (ii) of the Hoarding and Black Market Order, 1956, punishable under section 3 of the said Order. The learned counsel further urged that the view of the learned Special Judge that the transactions in question are forward contracts is erroneous. According to him they have resulted in sale trans actions, which are clearly prohibited under the above‑mentioned provisions of law. He further challenged the finding of the learned Special Judge that the respondents have not dealt with the licence or permit granted to them otherwise than in accord ance with any Pakistan Law within the meaning of section 2 (2) (ii) of the Hoarding and Black Market Order, 1956, punishable under section 3 of that order. The learned Additional Advocate General has strongly urged before us that on the evidence produced on the record, the respondents should have been punished for dealing with controlled goods in black market and for misusing the licence granted to them.
Before we deal with the contentions raised on behalf of the Government it would be convenient to state those uncontro vertable facts which have been proved on the record from the evidence of the prosecution witnesses produced before the learned Special Judge. It is in evidence that, prior to the execution of the agreements (Exhs. 2, 3, and 47) negotiations to enter into these transactions started separately between P. W. Fikree and P. W. Hashmatullah with respondent Nasrullah. P. W. Fikree had also talks with respondent Mian Muhammad Latif. On the draft submitted by P. W. Fikree, respondent Nasrullah consulted not only respondent Mian Muhammad Latif, but also the Legal Advisors of the Company. Thereafter, respondent Nasrullah gave an amended draft to P. W. Fikree. The terms settled between the parties in these negotiations were embodied in the above‑mentioned agreements. We have examined these documents and, except some minor difference in respect of the C. F. value and the amount of profits, they practically contain identical terms. The material terms of these agreements are reproduced, which read as under :‑
"We, Messrs Friederike Limited hereinafter called the Sellers have this day agreed to sell to Messrs Western Motor Stores, Bunder Road, Karachi, hereinafter called the Buyers who have agreed to purchase the following :‑
Description.‑Spare parts for buses, trucks, pick‑ups, Vans and Station Wagons.
Value.‑C. & F. Rs. 45,000.
The articles have been listed in the annexure attached here with and duly attested by both the parties. The sale is subject to the following terms and conditions.
The auto spare parts listed in the annexure attached are being imported according to the instructions of the Buyers and under F. O. A. Sub‑Authorisation No. R. M. 000608.
All the indents referred to in the annexure have been prepared by the buyers and therefore in case any parts have been ordered, which are not covered by the description specified on the Sub‑Authorisation Permit No. R.M. 000608 and this results in the payment of any penalty and resultant demurrage charges, such costs will be borne by the buyers. However, in case any penalty is levied and demurrage charges incurred because the auto parts are for makes of trucks, buses and station wagons other than those implied in the Sub‑Authorisation permit, only then will the burden be borne by the sellers.
The sellers will not in any way be responsible for non‑shipments, partial shipments, shortages, damage or loss, in respect of the consignments.
The Buyers agree to pay immediately after signing of this agreement the, profit in full at the rate of 76% on the C & F value of Rs. 45,000 namely the sum of Rs. 34,200 and this by cheque No. 041721 dated 25th May 1955, on the National Bank of India Ltd., Saddar Branch, Karachi.
The opening of Letters of Credit will be arranged through the National Bank of India Ltd., Saddar Branch, Karachi. All charges payable in respect of the Letters of Credit will be paid by the Buyers.
The Sellers will instruct the National Bank of India Ltd., Saddar Branch, by means of letter addressed to the Bank to advise the buyers immediately on receipt of relative shipping documents. The Buyers guarantee to undertake the responsi bility to return the Bank's bills in respect of all consignments covered by this agreement and to arrange clearance themselves through the Customs and Port Trust. All penalties such as customs duties, Port Trust dues, demurrage charges and other incidentals will be borne by the Buyers.
The Sellers will have no objection whatsoever if the Buyers arrange with Messrs National Bank of India Ltd.; Saddar Branch, Karachi, whereby the latter will effect all payments such as Bank's bills, drafts and all incidental charges, will arrange clearance through Customs and Port Trust, arid pay all Customs dues, Port Trust charges, Clearing Agent's bills etc. and store the goods with them. In the event the aforesaid bank refusing or stopping such facilities .to the Buyers the Sellers may call upon the Buyers to arrange all payments demanded by the Bank within 30 days of the receipt of the Bank's (including interest involved at Bank's rate) notification indicating that they have withheld the grant of facilities referred to above. Should the Buyers fail to honour their obligations after the expiry of the 30 days grace, the Sellers will take over the goods from the Bankers, after paying all the Bank's dues, and will have the right to dispose of the goods at the cost and risk of the Buyers.
The Buyers shall after the clearance of the consignments immediately deliver all relative invoices, packing lists, bills of entry and other relative shipping, documents to the Sellers and obtain a written receipt from them.
Customs penalties or any other penalty payable as a result of contravention of import trade control regulations or any other regulation will be. borne by the Buyers and will be payable im mediately.
The Sellers shall do or cause to be done all such acts, deeds, and things as are necessary for the due completion of this sale.
In the event of the breach on the part of the Sellers the Seller shall refund to the purchasers the sum of Rs. 34,200 together with all other payments made by the buyers on these consign ments."
It is further established on the oral evidence that out of the 20 per cent provided for the spare parts under the above‑men tioned Sub‑Authorization, only 15 per cent of the spare parts had been given to the two firms, namely, Messrs Western Motor Stores and Star Motor Works. The balance of 5 per cent was imported by Messrs Frederike Limited themselves. The Sub Authorization in respect of the import of trucks, etc., was utiliz ed by Messrs Friederike Limited themselves and the above mentioned agreements have nothing to do with that portion of the Sub‑Authorization. The evidence further disclosed that P. W. 1 Muhammad Saeed Fikree (Exh. 1) entered into an agreement for the purchase of Motor car parts under Exh. 2, dated 26th May 1955, only of the C. F. value of Rs. 25,000. In respect, of this agreement he promised to pay Rs. 19,000 by way of profits to Messrs Frederike Limited. This amount was actually paid by cheques immediately on the execution of the agreement P. W. Fikree further entered into a second agreement for the purchase of spare motor parts under the agreement Exh. 3 The C. F. value of the goods undertaken to be supplied is Rs. 45,000. Under this agreement a sum of Rs. 34,200 was paid as profit to Messrs Frederike Ltd. under a cheque drawn on the National Bank of India, Saddar Branch (Exh. 18). P. W. Hashmatullah (Exh. 46) entered into an agreement for the supply of spare motor car parts of the C. F. value of Rs. 7,287 under the agreement (Exh. 47) dated 2_8th June 1955. He paid Rs. 5,832 as profit by cheque (Exh. 15) dated 28th June 1955, drawn on National Bank of India Ltd., Karachi. It is not disputed before us that the above‑mentioned amounts paid as profit to Messrs Frederike Limited were received by them. It is established on the evidence that these amounts were deposited in the account of Messrs Frederike Limited and the cheques were endorsed by respondent Mian Muhammad Latif.
The evidence of these witnesses further disclosed that in terms of the above‑mentioned agreements, indents were prepared by P. W. Fikree and P. W. Hashmatullah, and under these indents orders were placed with foreign principals for the supply of the goods under the above‑mentioned Sub‑Authorization. It is further clear _ that all the steps which are taken by the holder of an import licence were actually undertaken by Messrs Western Motor Stores and Messrs Star Motor Works through P. W. Fikree and P. W. Hashmatullah respectively. Under the Sub‑Authorization, the importers were to open letters of credit through Messrs National Bank of Pakistan. But, as provided in the terms of the agreement, the buyers opened the letter of credit through their own Bank, the National Bank of India. Messrs Frederike Limited further instructed the National Bank of India by documents Exhs. 18 to 20 to deliver all original documents in respect of the letters of credit opened on their behalf to Messrs Western Motor Stores against payment of their dues. They paid Rs. 46,280‑11‑3 towards the cost of the goods. They further paid Rs. 38,971‑13‑0 as Custom Duty and sales tax. They cleared from the Customs 16 consignments through their own Clearing Agents and kept them in their own godown and in the godown of one M. H. Khan Exh. 21, which refers to the entries (Exhs. 31‑45) of the stock book, shows that the goods received by them were entered in their stock book.
Similarly, Messrs Star Motor Works opened a letter of credit with their own bank, Messrs National Bank of India Limited under the letter of authority (Exh. 50) given by Messrs Frederike Limited. They received all the documents of title for the clearance of the goods from the Customs and Port Trust Authorities. They paid Rs. 4,165‑12‑0, the bank bills (Exhs. 51‑53) to the National Bank of India Limited towards the cost of the goods. They further paid a sum of Rs. 5,237‑12‑0 towards the customs duty and sales‑tax in respect of the bills (Exhs. (57‑62). They also cleared the goods from the Customs and Port Trust Autho rities through their own Clearing Agents and stored them and kept them in their own godowns.
It is thus perfectly clear on the above‑mentioned evidence that the buyers not only opened letters of credit in terms of the above‑mentioned Sub‑Authorization, but all the goods were imported on the basis of the indents prepared by them. The documents of title of the goods imported were also handed over to them. They paid the cost of the goods to respect of the bills prepared by the banks. They further paid the customs duty and sales‑tax and cleared the goods through their own Agents. After clearance, they stored the goods in their own godown and entered them in their stock books as belonging to them.
It is on this evidence that we have to decide about the nature of the transactions which was entered into between the respon dents Mian Muhammad Latif and Nasrullah on the one side and P. W. Fikree representing Messrs Western Motor Stores and P. W. Hashmatullah representing Messrs Star Motor Works on the other side. It must have been noticed that the first part of the charge deals with the offence to attempt to sell spare motor parts under agreements Exhs. 3 and 47 dated 27th May 1955 and 28th June 1955, covered by Sub‑Authorization No. R.M ‑000608 dated 10th May 1955, by offering them for sale to Messrs Western Motor Stores and Messrs Star Motor Works in contravention "'of section 2 (2) of the Hoarding and Black Market Order, 1956. The learned Special Judge came to the conclusion that these transactions were in the nature of forward contracts which were not prohibited by law and found that no offer, or attempt to sell could be in contravention of Pakistan Law and fall within the definition of section 2 (2) of the Hoarding and Black Market Order, 1956. He further found that there was a verbal agreement between the parties that the transactions entered into in the above‑mentioned agreements were subject to the release orders of the Controller‑General of Prices. The property in the goods had not passed to the buyers and passed to them only after the issue of the release orders. In effect his finding is that there being no completed sale in contemplation before the Release Order, the offer to sell the goods did not result in, an attempt to commit the offence of dealing in black market punishable under section; 3 of Hoarding and Black Market Order 1956.
The first question, therefore, for consideration is whether the view of the learned Special Judge can be supported on the penal provisions of law applicable to the facts of this case. Mr. Khalid Ishaque, the learned A. A.‑G. has referred us to the provisions of the Essential Commodities (Control of Distribution) Order, 1953. The object of this Order, is to control the distribution of essential commodities so that they may be available to the buyers in the market at reasonable prices and without any difficulty. There are three classes of businessmen, who are covered by it, viz., dealers, importers and producers. We are concerned in this case only with those persons who are covered by the definition of the term "importers". It is not disputed that the respondents are importers within the definition of "importers" under section 2 (c) of the above‑mentioned enactment. The scheme of the Order shows that the Controller‑General of Prices and Supplies was authorised to specify from time to time by notification in the official Gazette, in respect of any scheduled article, approved dealers for the purposes of the above‑mentioned enactment and thereupon no importer could, except with the prior permission in writing of the Controller‑General, sell or otherwise dispose of any such article to any person who is not such approved dealer. This section further authorised the Controller General to issue from time to time instructions to the importers to sell such quantities of scheduled articles to the approved dealers as may be specified in the order. It is admitted by the counsel for the parties that no approved; dealers were appointed by the. Controller General of Prices and Supplies, and therefore section 3 of the above‑mentioned enactment has no application to the facts of this case. Under section 4 of this Order the Controller‑General is further authorised to fix the maximum prices above which no importer, producer or dealer shall sell any scheduled article by notification in the official Gazette. Section 5 of this enactment is divided into two portions. Under subsection (1) every importer of scheduled articles must within one week from the date of his receiving intimation of 'despatch of the consignment from any place outside Pakistan furnish to the Controller‑General, amongst others, information in respect of the consignment containing a description and quantity of scheduled articles ; expected date and place of arrival of con signment in Pakistan ; and how the importer proposes to dispose of the scheduled articles on arrival giving relevant particulars. Under subsection (2) every importer of scheduled articles is enjoined within two weeks' of the arrival of the consignment in Pakistan, to furnish information to the Controller‑General in respect of the consignment, containing a description and quantity of scheduled articles and landed cost of the scheduled article showing C. I. F. value, Customs duty and other incidental charges, if any, separately. The object of section 5 apparently is that the Controller‑General on receiving the information referred to above may fix the maximum price above which the goods imported could not be sold and to issue directions about the disposal of the goods provided under section 6 of the above‑mentioned enactment, Section 6 of this enactment is the most important provision which is reproduced below:
"6. Disposal of imports.‑No importer shall sell or other wise dispose of any scheduled articles imported by him after the commencement of this Order except in accordance with such written instructions as may be given to him in that behalf under sub‑clause t2) of clause 3 . Provided that if no such instructions are given within twenty‑one days from the latest date on which any of the items of information required to be furnished under sub‑clause (1) or sub‑clause (2) of clause 5 is received in the office of the Controller‑General, the importer may, subject to other provisions of this Order, dispose of the articles."
It is quite clear that under this provision of law an importer of any scheduled article is prohibited to sell or otherwise dispose of any scheduled articles imported by him until instruc tions are received by him after he had furnished the information under sub‑clause (2) of clause 3 to the Controller General of Supplies. But he could sell these goods if no instructions are given to him within 21 days from the date on which the informa tion was furnished by him to the Controller General.
The respondents have not been prosecuted under this pro vision of law but under section 3 of the Hoarding and Black Market Order, 1956. Under this Order, the Legislature has defined what is meant by "dealing in the black market". The material portions of section 2 (2) applicable to this case are reproduced below :‑
"(2) Dealing in black market means‑
(a) otherwise than in accordance with any Pakistan law‑
(ii) supplying, distributing, selling, disposing of or parting with the possession or custody of, or offering to supply, distribute, sell, barter, exchange, dispose of or part with the possession or custody of or acquiring or taking into posses sion anything the supply, distribution, sale, barter, exchange, disposal, parting with the possession or custody, acquiring or taking into possession of which is by or under any such law prohibited or subject to any restrictions or conditions whether of price or otherwise ;
(v) using or dealing with any licence permit or ration document issued by or under any such law." .
In clause 3 of this Order it is provided that whoever is found guilty of the offence of hoarding or dealing in the black market shall, notwithstanding anything to the contrary in any other enactment for the time being in force be punishable by such sentences as are provided therein.
The learned Additional Advocate‑General has urged before us that under clause 2 (2) (ii) offering to sell anything, the sale of which is by or under any such law prohibited or subject to any restrictions or conditions whether of price or otherwise, amounts to dealing in the black market. On the other hand, Mr. Brohi, the learned counsel for the respondents, has urge that offering to sell will not be an offence of dealing in the black market unless it is otherwise than in accordance with any Pakistan law. On a reading of the above provisions of law it seems to us that the contention of Mr. Brohi is correct. The mere offer to sell goods will not amount to dealing in the black market unless it is otherwise than in accordance with any Pakistan law.
It will, therefore, be necessary for us to find out whether there is any Pakistan law under which offering to sell the goods in question is prohibited. The learned Additional Advocate- General has referred us to sections 3 and 5 of the Essential Commodities (Control of Distribution) Order, 1953. He con tended that under section 6 of the Hoarding and Black Market Order, 1956 any person who attempts to commit an offence under this Order, is deemed to have committed the offence of hoarding and black‑marketing. But this section does not make the offering to sell the goods by itself an offence. Under clause 6 of the Essential Commodities (Control of Distribution) Order, 1953, also mere offering of the goods for sale will not result in the contravention of that provision of law. But this does not dispose of the question whether the respondents have committed an offence of attempting to sell the goods in contraven tion of section 2 (2)(ii) of the Hoarding and Black Market Order, 1956 read with clause 6 of the Essential Commodities (Control of Distribution) Order, 1953.
It is quite true that the mere offer to sell the goods by itself will not amount to an offence of dealing in black market. But if the offer to sell is of such a nature that if consummated it will result in an o4ence under section 3 of the Hoarding and Black Market Act, 1956, it is perfectly clear to us that it will amount to an attempt to commit an offence of dealing in black market and will be punishable under section 3 of the aforesaid Order. It will be from this point of view that we shall have to consider the question whether the agreements (Exhs. 3 and 47) entered into by the respondents with Messrs Western Motor Works and Messrs Star Motor Works are of such a nature that if implemented they would have resulted in such an offence. The learned Special Judge has disposed of this question in favour of the respondents on the ground that the property, in the goods in dispute on the terms of the above‑mentioned agreements could not pass to the respondents unless and until a release order was issued by the Controller General of Prices and Supplies. In our opinion, the term "sell" in section 6 of the Essential Commodities (Control of Distribution) Order, 1953 and the term "selling" in section 2 (2) (ii) of the Hoarding and Black Market Order, 1956 are used in their popular sense and not in the technical sense as understood under the Sale of Goods Act. It seems to us that the prohibition of selling as provided in these provisions of law is used in the general sense as is understood by a common man and not in the technical sense. We are here dealing with a statutory order which provides that a scheduled article imported by an importer shall not be sold except in a particular way. There is nothing technical about it. If in its popular sense the transaction entered into is a sale or is likely to result in a sale in contravention of the prohibitory pro visions, there is little doubt in our mind that it would be an offence under the above‑mentioned provision of law. We are fortified in this view by a decision of the English Court of Appeal in Lambert v. Rowe ((1914) 1 K B 38). This decision, though not cited at the Bar, was noticed by us. The English Court of Appeal was construing in that case the word "sell" for the purpose of the Markets and Fairs Clauses Act, 1847. That Act prohibited the sale of any article liable to atoll in any place within the prescribed limits of a market except on payment of the toll. In that case a person carrying on business within the market made a contract for the purchase of pigs from a farmer outside the market. The contract was made outside the market limits where the pigs were to be killed and then delivered to and paid for by the vendor within the market. It was urged by the prosecution that they had been sold within the prescribed limits of the market by virtue of their having been delivered there, but the Court of Appeal repelled that contention and observed that the word "sell" was to be under stood in its popular sense and not in its strict legal sense and that the pigs were sold where the agreement was made, notwithstand ing that the property in them had not actually passed to the buyer. Ridley, J. in this connection observed as under:
"On those facts the justices found that the sale took place at Treble's shop, and not at the appellant's house. They were of opinion that a sale within section 13 meant a completed sale, one under which the property in the goods passes to the purchaser. But in our opinion that view is wrong. This question arises upon an Act of Parliament the use of the word sell' in which is, according to previous decisions, not to be construed with reference to the niceties of the law of contract of sale, or to the distinction between a sale and an agreement to sell, or to the question whether the property in the goods has passed, but is to be understood in a popular sense ; and although if a lawyer were asked where the sale of these pigs took place he might say that in the legal sense it took place at the butcher's shop because until they were delivered there and weighed the sale was not complete, any ordinary person, not a lawyer, who was asked the same question would unhesitatingly say that the sale took place on December 9 at the farmhouse."
Scrutton, J. in this connection observed at page 49 as under:
"For these reasons I think the justices in endeavouring to apply the law of the land have applied the wrong law, and that instead of reading the word sale' in the sense which it bears in the Sale of Goods Act they should have read it in the popular sense that it bears in the minds of farmers."
In the light of the above observations it is quite clear to us that the question whether the property in the goods in the legal sense passed to the buyers in the present case is not of much importance. Even if it is accepted that the agreements entered into between the respondents and the buyers were subject to the release orders to be issued by the Controller‑General of Prices and Supplies, it would not mean that if all conditions had been fulfilled namely that the profit had been taken and the goods had been delivered to the buyer in implementation of the agreements, the sale did not take place. On the evidence produced in the present case there is not the slightest doubt in our mind that if all the acts contemplated under it had been implemented, it would amount to an offence of selling of goods in contravention of section 6 of the Essential Com modities (Control of Distribution) Order, 1953 read with section 2 (2) (ii) of the Hoarding and Black Market Order, 1956. In these circumstances we are of the opinion that the learned Special Judge. had fallen into error in holding that the res pondents have not committed the offence of attempting to sell the goods in contravention of section 6 of the Essential Com modities (Control of Distribution) Order, 1953.
Even if there is any doubt in this connection, we are satisfied that on the evidence produced before the trial Court the respondents are guilty of an offence of selling the goods under section 6 of the Essential Commodities (Control of Distribution) Order, 1953 and of the offence of dealing in the black market within the four corners of section 2 (2) (ii) of the Hoarding and Black Market Order, 1956. A perusal of the agreements (Exhs. 3 and 47) will show that the respondents had not mentioned in these agreements that the goods offered by them were subject to the release orders to be issued by the Controller‑General of Prices and Supplies. The learned Special Judge has held that there was a verbal agreement in this respect. P. W. 1 Muhammad Saeed Fikree has made certain obliging state ments in this connection. In the beginning he stated that the transaction entered into by him was not subject to any such reservation, but in cross‑examination he admitted that the goods could not be sold by them unless and until a release order was issued by the competent authority. In our opinion, on the admissions made by the respondents in their statements under section 342, Cr. P. C. it is clear that the understanding between the parties was no more than this that the buyers will not sell.. the goods in open market unless orders are issued by the Controller‑General. Even if the verbal agreement between the parties to this effect is accepted, we do not consider that such a condition about the disposal of the goods subsequent to the sale effected by the respondents is of such a nature which should compel us to hold that the property in dispute did not pass to the buyers after the goods had been cleared and stored by them in their godown in pursuance of the terms of the agreement.
It appears to us that a distinct collateral contract between the parties to a sale agreement as to the buyer's subsequent use or disposal of the thing sold is not incompatible with a contract of sale. In M'Bain v. Wallace & Co. ((1881) VI A C 588) the House of Lords was considering a case of a party who by verbal com muning agreed to make advances to a ship‑builder on the security of a shop he had nearly completed building on his own account, provided he entered into an absolute contract of sale of the vessel. An unqualified contract of sale was completed by which the ship builder agreed to complete and deliver to the purchasers the vessel for a price to be paid in two instalments, with power to them, in the event of the ship builder failing to complete the contract, to enter into possession of the vessel and complete it or sell it. From the correspondence that passed between the parties it was found that the parties contemplated that the purchaser would release his ship by sale but that having gained in the transaction in a certain sense with a view to their own security, the purchaser would not, if the article is sold, fetch more than that amount and any interest, cost and so on would take any advantage which by letter of the contract they might possibly realise. The arrangement was that on the sale of the property any gain or profit over the purchase price would be for the benefit of the sellers namely the ship builders. It was urged before the House of Lords that in view of this arrangement the property in the goods had not passed to the buyers and there was no complete sale of the ship. Their Lordships repelled this contention. Lord Selborne in this respect observed as under at page 604 :‑
"My Lords, I cannot say that I find in this evidence any very clear or satisfactory proof of a positive agreement having been at any time made for that purpose, although I do find something sufficient to shew that there was a sense of moral obligation, at all events on the part of the purchasers, so to act, and that it was their apparent intention so to act. It may be that what happened between them may arise that, beyond moral obligation, into a legal or equitable obligation, which the Courts would enforce ; and that certainly, I think, appears to have been the opinion of the learned Judges in the Court below. I will assume, for the present purpose, that there might be sufficient grounds for that con clusion, but al the most it can come to nothing more than this‑that this being in intention expressly a contract of sale, there is a bye‑agreement, a collateral agreement, not in the form of a regular back bond, but of that nature, by reason of which, when the property purchased is realized by a subsequent sale, something will be done between the parties to adjust the mutual rights or equities which they have consented to establish between them. That appears to me not only not to destroy the sale as a sale, but really to proceed upon the contract as its foundation and basis, and to be something growing out of that contract which the parties, according to the hypothesis, agreed to do. Therefore, it appears to me that there is no ground whatever for treating this other wise than as a sale."
Lord Blackburn in this respect observed at page 612:
"But supposing there was this completed collateral contract not only an honorary contract, which I have no doubt that there was, but a binding, legal, and enforceable contract that this should be a security, I do not see the slightest ground for saying that that undoes the effect of the Mercantile Law Amendment Act, which says that goods having been sold (as these were, although with a motive no doubt to produce this effect) as far as regards the rights of creditors of the vendor to prevent delivery of the goods either by sequestration or poinding, they shall have none, but the matter shall stand as it would under the English Law. That, I think, is the point that will be decided here."
It would thus be seen that a collateral agreement of this nature does not affect the real nature of the transaction if the terms of the agreement indicate that what was intended between the parties was a completed sale.
It is in this light that we will examine the terms of the agreements entered into between the parties. As already indicated there is nothing in the agreements about this collateral agreement. The evidence on the record suggests that the pur chasers wanted to mention the obtaining of the release order as a condition for the performance of the contract, but this was deleted at the instance of the respondents. The contention of the respondents is that this was done at the instance of the purchasers. Whatever may be the position, the fact remains that, there is nothing in the contract itself about it and the completion of the contract was not dependent on obtaining a release order by the respondents from the Controller‑General of Prices and Supplies. On the other hand, the terms of the agreements suggest that the property in the goods purchased by Messrs Western Motor Stores and Messrs Star Motor Works had passed completely from the time they were shipped by the foreign principals, and if there was any shortage, damage or loss in respect of the imported consignment, it was solely the respon bility of the purchasers and not the responsibility of the sellers. Not only this, if the purchasers were unable to pay the bank bills, the agreement provided as follows:
"Should the buyers fail to honour their obligations after the expiry of the 30 days grace, the sellers will take over the goods from the bankers, after paying all the bank's dues, and will have the right to dispose of the goods at the cost and risk of the buyers."
From these terms, it is perfectly clear to us that the agree ments in question contemplated a complete sale transaction from the time the goods were shipped. In fact the respondents had reserved no right about the disposal of the goods or of dominion over them. We have already observed that every thing in connection with the consignment imported under these agreements was performed by the purchasers. They opened the letters of credit, cleared the bank bills, retired the documents of title, cleared the goods from the Customs Authorities and stored them in their godowns. In our opinion the terms of the agreements and the circumstances stated above leave no doubt that the parties contemplated a complete sale and it was perfected after the goods had been cleared and stored by the purchaser in their own godowns. It is thus obvious that the respondents had agreed to sell the goods in dispute without obtaining the release orders or prior permission of the Controller‑General of Supplies and any collateral agreement about the sale of goods in open market by the above‑mentioned purchasers would not make any material difference or affect the gravity of the offence commuted by them.
In our view entering into agreements of such a nature cannot be considered anything else but an attempt to sell the goods in contravention of section 6 of the Essential Commodities (Control of Distribution) Order, 1953.
It further appears to us that the learned Special Judge should have framed a charge against the respondents for selling; or disposing of the goods in contravention of section 6 of the Essential Commodities (Control of Distribution) Order, 1953. But the non‑framing of such a charge has not in the least prejudiced the respondents. The respondents throughout knew that they have been prosecuted for selling or disposing of the goods in contravention of the above‑mentioned order read with section 2 (2) (ii) of the Hoarding and Black Market Order, 1956. The evidence on the record fully establishes that the respondents have been guilty of those offences and have dealt with the goods imported by them under the Sub‑Authorization granted to them by the Government in contravention of the above‑men coned provisions of law. The learned Special Judge was misled by the arguments that this was a forward contract. It was not a forward contract, in the sense as it is understood in commercial circles. This was an agreement for sale of future goods. Under the provisions of Sale of Goods Act the sale of future goods becomes sales after they have been appropriated for the benefit of the buyers.
Apart from, this, even if it be assumed that there was no completed sale on the above‑mentioned terms of the agreement and the property in the goods had not passed to the buyers on the shipment of the goods or on the clearance of the goods from the Customs Authorities, it cannot be doubted that the' respondents have been guilty of disposing of the goods in contravention of section 6 of the Essential Commodities (Control of Distribution) Order, 1953. It will be noticed that in section 6 the prohibition is not only to sell the goods but also to dispose of the goods The term "dispose of" is used in an alternative sense that is to say something other than the sale of goods. This term was considered by the Bombay High Court in a case under the Defence of India Rules namely Amrit Banaspati Co. Ltd. v. Emperor (A I R 1947 Bom. 306). In that case what happened was that the appellant company which had large stocks of groundnuts, having got a permit to crush 3,200 bags of groundnuts, in fact crushed an additional 12,595 bags, and it was alleged by the prosecution that thereby they committed an offence under Rule 81 (2) of the Defence of India Rules, 1939. Under this rule the Bombay Government by notification directed that no person holding on his own account, or on account of, or t. in partnership with any other person, any stocks of groundnuts exceeding 5 Bengal maunds in quantity at any godown or other place of storage, shall remove from the said place or dispose of the said stocks or any portion thereof, without the written per mission of the Government of Bombay. It was urged that the expression "dispose of" meant to alienate or to sell or to transfer, but this contention was repelled. In this connection Stone, C. J., observed as under :‑
"Turning to that sub‑rule, it is to be found that the only sub‑heading under which it would have been made is that which provides for the making of orders and rules in order to maintain supplies essential to the life of the community, and so it must be presumed that that Was the intention in passing this notification. That being so, it lends support to the view that the words "dispose of" do not mean a technical transfer of the property in these stocks of groundnuts but mean their preservation from the point of view that they be not got rid of, and accordingly we give to the expression "dispose of" its secondary meaning, with the result that in our opinion an offence has been committed and the con viction must be upheld."
In our opinion the position in this case is much stronger than the Bombay case because here the expression "dispose of" is used in contradistinction to "sell". It cannot, therefore, be said that the expression "dispose of" here means the primary meaning that is to say to alienate, to sell or to transfer. In these circumstances the expression "dispose of" would only be taken to mean in its secondary sense that is to say, no importer shall get rid of any scheduled articles imported by him without the previous permission of the Controller General of Supplies. On the terms of the agreement we are satisfied that the respondents had completely got rid of the goods imported under the Sub‑Authorization without the previous permission of the Controller‑General of Supplies or before any direction could be issued to them within the period provided in section 6 of the Essential Commodities (Control of Distribution) Order, 1953.
It is quite correct that the learned Special Judge did not frame any charge against the respondents about the selling or the disposing of the goods, but under section 237 read with section 423 (1) (a) Cr. P. C. it is open to this Court, if it is found on the evidence that the accused persons have committed a different offence for which they might have been charged in respect of a single act or series of acts to convict them for that offence if no prejudice is caused to them. So far as the offence of selling or disposing of the goods in contravention of section 6 of the Essential Commodities (Control of Distribution) Order, 1953 read with section 2 (2) (ii) of the Hoarding and Black Market Order, 1956 is concerned, the parties are not likely to lead any other important evidence except that which is already on the record. The learned counsel for the respondents have failed to satisfy us that any prejudice would be caused to them if they are convicted of an offence which is found to have been committed by them on the evidence on the record. We would, therefore, in exercise of our powers under section 423 (1) (a) of the Cr. P. C. reverse the finding of the learned Special Judge and hold that respondents No. 1 and 2 are guilty of an offence under section 3 of the Hoarding and Black Market Order, 1956 for attempting to sell the goods in dispute or in the alternative for selling and disposing of the goods in dispute in contravention of the above‑mentioned pro hibitory laws.
This brings us to the last question whether the respondents can be held guilty of the second head of the charge framed by the learned Special Judge (Anti‑Corruption) Karachi. This part of the charge relates to the misuse of the above‑mentioned Sub‑Authorization by the respondents in contravention of the pro visions of the Import and Export Control Act, 1950. The Sub- Authorization referred to above was granted to Messrs Friederike Ltd., Karachi under section 3 of the Import and Export Control Act, 1950. This Sub‑Authorization (Exh. 76) was subject to the conditions prescribed in C. C. I. & E's public notice No. 7 (55)/1 dated 31st January 1955. The public notice referred to above was published in the Extraordinary Gazette of the Government of Pakistan dated the 4th of February 1955, (Exh. 77). In Annexure 2 of this public notice it is provided under the Heading "General" as under:
"This Sub‑Authorization is not transferable except with the permission of the Controller, Imports & Exports, or a person duly authorized by him."
It was urged by the learned Additional Advocate‑General that the above‑mentioned Sub‑Authorization was granted to Messrs Friederike Ltd., for personal use and although it was not actually endorsed by them in favour of the above‑men tioned firms or transferred to them in the literal sense, but the evidence produced on the record establishes that they had washed off their hands completely so far as the import of spare motor parts was concerned to the extent of 15% under the Sub‑Authorization. They had allowed Messrs Western Motor Stores and Messrs Star Motor Works not only to use this Sub‑Authorization for importing motor spare parts of their own choice but had further allowed them to open letters of credit on their behalf, to pay for the bank bills, to retire the documents from the banks and finally to clear the goods and store them in their own godowns. According to the learned counsel these steps are generally taken by an importer in importing the goods from a foreign country. The learned Additional Advocate‑General therefore argued that the respondents by allowing the above‑mentioned purchasers to use the licence in this manner have for all practical purposes transferred the Sub‑Authorization in contravention of one of its essential conditions.
Mr. Brohi on the other hand argued that under section 5 of the Import and Export (Control) Act only making use of the import or export licence otherwise than in accordance with the prohibitions imposed under that Act, is an offence and since the condition alleged to have been violated was not imposed under the Act, the respondents cannot be considered to have committed an offence under the Import and Export Act in order to convict them under section 2 (2) (v) of the Hoarding and Black Market Order, 1956. The contention of Mr. Brohi is without force. Under section 3 (2) of the Import and Export (Control) Act, 1950 it is clearly provided that‑----
"No goods of the specified description shall be imported or exported except in accordance with the conditions of a licence to be issued by the Chief Controller or any other officer authorised in this behalf by the Central Government."
Thus, any conditions incorporated in a licence issued by the Chief Controller will be conditions imposed under the Act. In these circumstances we are satisfied that the conditions imposed under the above‑mentioned public notification referred to in the Sub‑Authorization in question are in the nature of con ditions imposed under the above‑mentioned enactment and its violation will be an offence under section 5 of that Act.
According to the definition of "Import" in section 2 (c) of the Import and Export (Control) Act, 1950, it means bringing into the Provinces or the Capital of the Federation by sea, land or air. The word "transferable" is a word of the widest import and includes every means by which the property may be passed from one person to another. It cannot be disputed that the grant of import licence is personal to a licensee because a licensee is selected after taking into consideration various circumstances personal to himself like his previous experience, standing in the business etc. The object of the licence is to issue it to a person who is not only conversant with the business but is also a responsible businessman who will not indulge in black‑marketing and other anti‑social activities.
In order to import goods under a licence into Pakistan an importer has to take various steps. After obtaining an import licence he has first to place an order for the import of the goods and open letters of credit with the banks and on the shipment of the goods has to retire the bank bills and documents of title and clear the goods from the Customs Authorities. Now all these steps in the present case, instead of being taken by Messrs Friederike Limited were taken under the agreements (Exhs. 2, 3 and 47) by Messrs Western Motor Stores and Messrs Star Motor Works. The indent for the supply of the goods was prepared by them. They were autho rised to open a letter of credit through their own bankers, which they actually opened through the National Bank of India Ltd., their own bankers. They paid the bank bills and retired the documents of title from the National Bank of India. On obtaining the documents of title they got the goods cleared from the Customs Authorities through their own clearing agents. All the amounts and other expenses incurred for this purpose were also spent by them through their own pocket. The goods also which were brought into Pakistan did ‑not go to Messrs Friederike Ltd., but were kept and stored in the godowns of the above‑mentioned purchasers. They were also entered in their stock books. Even the Sub‑Authorization was parted with by the bankers of Messrs Friederike Limited under their instructions and was forwarded to Messrs National Bank of India Ltd. with the object of opening the letter of credit and for using it for other incidental purposes. This fact is borne out by an important document (Exh. 128) dated the 3rd of October 1955 addressed on behalf of the National Bank of Pakistan to the National Bank of India, Saddar Branch, Karachi, produced by the defence witness D. W. 3 Jack DeMello. It is in the following terms:
"Re: Exchange Control Copy of ICA Import Licence No. RM000608 favouring Messrs Friederike Ltd.
As per instructions from Messrs Friederike Ltd. we enclose herewith the Import Licence No. RM000608 for 90,000 and shall be glad if you will please return the licence direct to us when dealt with."
Thus it is perfectly clear that under the instructions of Messrs Friederike Limited, the above‑mentioned Sub‑Authorization was placed at the disposal of the bankers of the purchasers for the purpose of opening the letter of credit. Not only this but they also issued letters of authority (Exh. 18 to Exh. 30 and Exh. 50) in the name of the purchasers authorising the National Bank of India Ltd. to deliver the documents of title received from the foreign principals to them. It will be useful to reproduce one of these documents in order to appreciate their contents:
"The Manager,
National Bank of India Ltd.,
Saddar Branch, Bunder Road,
Karachi.
Dear Sir,
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| Sub | L/C | SBK | 93/309 | for | 30000 |
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| 93/310 |
| 1450.00 |
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| 93/311 |
| 1283.00 |
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| 93/313 |
| 397.00 |
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| 93/314 |
| 378.00 |
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| 93/315 |
| 1876.00 |
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| 93/318 |
| 1210.00 |
You are requested to kindly deliver all original docu ments in respect of the above Letters of Credit to Messrs Western Motor Stores, Bunder Road, Karachi against payment of all your dues."
These circumstances clearly indicate that the position of Messrs Friederike Ltd. after executing the agreements (Exhs. 2, 3 and 47) in favour of the above‑mentioned purchasers was reduce to that of a dummy. They not only lent their name but also placed the licence issued to them for their benefit at the disposal of the purchasers in consideration of payment of certain fixed amounts as profit to them. There is not the slightest doubt in our mind that although the letter of credit and the documents of title were opened and received in the name of Messrs Friederike Ltd., but for all intents and purposes these inured for the benefit of the purchasers. Thus it cannot be denied that the purchasers were permitted to use the respondent firm's name/and licence and import the goods under it in every way uncontrolled by the respondents as if they were the licensees themselves. It seems to us that on the facts of this case the agreements in question were a crude device to camouflage the real nature of the transaction. The respondents were conscious of this fact. It was for this reason that the following indemnity clause was incorporated in the agreement
"Customs penalty or any other penalty payable as a result of contravention of import trade control regulation or any other regulation will be borne by the buyers and will be payable immediately."
We have therefore arrived at the irresistible conclusion that the agreements in question coupled with the various steps taken by the purchasers cannot be described as anything else but amounting to transfer the use of the Sub‑Authorization without the permission of the Controller of Imports and Exports. In our opinion such use of the Sub‑Authorization is not permis sible under the Import and Export (Control) Act, 1950, and the respondents or such of them who have actually parti cipated in this manner must be held responsible and guilty for the offence of section 5 of the Import and Export (Control) Act, 1950.
It was urged by Mr. Brohi that if the view which we are taking of the matter is taken then the holders of import licences will not be able to do any business in the market. It was urged by him that it is open to an import licence‑holder to take financial assistance from outside agencies. Nobody can question this, but if the holder of the import licence besides obtaining financial assistance allows such party to import the goods and to have full dominion over them, it is quite clear to us that it would be nothing else but amount to transferring the licence for all intents and purposes in favour of the purchasers. This is clearly prohibited under the conditions of the above‑mentioned Sub‑Authorization. It is perfectly clear to us that the transaction in question was not entered into with the object of obtaining financial assistance. The contention of the respondents' counsel that the misuse of a portion of a licence cannot be an offence under the above enactment has also not impressed us. Partial misuse of the licence is as bad as that of the entire licence. In our opinion, therefore, respondents I and 2 who have acted in this manner are clearly guilty of an offence for misusing the licence issued to them in contravention of the provisions of the Import and Export (Control) Act, 1950.
On the view we have taken of this matter, our finding is that respondents 1 and 2, being the Managing Director and General Manager of Messrs Friederike Limited have not only committed an offence of an attempt to sell goods in contraven tion of section 6 of the Essential Commodities (Control of Distribution) Order, 1953 but have further been guilty of the offence of selling the goods in dispute and disposing them in contravention of the above‑mentioned provision of law. Our further finding is that respondents 1 and 2 as Managing Director and General Manager of Messrs Friederike Limited are guilty of the offence of misusing the licence in contravention of the provisions of the Import and Export (Control) Act, 1950. In our opinion, these offences are clearly acts of dealing in black marketing within the provisions of section 2 (2) (it) and (v) of the Hoarding and Black Market Order, 1956. These offences are punishable under section 3 of the Hoarding and Black Market Order, 1956, of which these two respondents are guilty.
The next question for consideration is what should be the sentence in the present case. Mr. Khalid Ishaque, the learned Additional Advocate‑General, has not pressed before us that this is a case in which the sentence of imprisonment should be given to respondents I and 2. In our opinion also, having regard to the fact that the first information report in this case was recorded as early as 1955 and respondents have been dragged in Criminal Courts from 1955 to 1962 it is not a fit case in which the maximum punishment provided in section 3 of the Hoarding and Black Market Order, 1956, namely of imprisonment should be awarded. In our opinion, it would meet the ends of justice if respondents l and 2 are sentenced to fine. Accordingly respondent No. 1 is sentenced to pay a fine of Rs. 5,000 and respondent 2 is sentenced to pay a fine of Rs. 1,000. The respondents, in default, will suffer simple imprisonment for six months. The respondents are permitted to pay the fine within a fortnight.
The case of respondent No. 3 stands on an entirely different footing. He did not participate in the actual transaction of sale that was entered into between Messrs Friederike Limited and Messrs Western Motor Stores and Messrs Star Motor Works. He was only the Sale Manager and the only act that he com mitted was that he gave information to the purchasers that release orders had been issued by the Controller‑General of Prices and Supplies. In our opinion, respondent No. 3 Cannot be held guilty of the above‑mentioned offence. Since this res pondent died during the pendency of the appeal and the appeal against him has abated, it is not necessary to record any formal finding of acquittal in his case.
A. H
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