P L D 2023 Balochistan 1
Before Naeem Akhtar Afghan, C.J. Sardar Ahmed Haleemi, J
JANAN KHAN ACHAKZAI ---Petitioner
Versus
The STATE BANK OF PAKISTAN BANKING SERVICES CORPORATION (BANK)
through Deputy Director of Adjudication Foreign Exchange and 2 others ---Respondents
Constitution Petition No. 572 of 2021, decided on 16th August, 2022.
Foreign Exchange Regulation Act (VII of 1947) ---
----Ss. 12(1)(2) & 23, Appendix- I---Constitution of Pakistan, Art.199--- Constitutional
petition ---Sale proceeds, delay in repatriation ---Pending matter ---Factual controversy ---
Petitioner exported goods to foreign country against E -Forms and had given undertaking in
E-Forms that he would repatriate full amount of sale through Banks within six (06) months
from the date of shipment/export ---Authorities filed twelve (12) complaints against petitioner
with allegation that petitioner failed to repatriate full amount of sale proceed within prescribed period and by delaying the same, petitioner contravened provision of S.12(1)(2) of
Foreign Exchange Regulation Act, 1947---Validity ---Proceedings in respect of complaints
were pending before adjudication officer and no orders were passed against petitioner by
then---Issues raised by petitioner pertained to factual controversy which c ould not be
resolved in Constitutional jurisdiction--- Petitioner had remedy of appellate forum ---
Petitioner could place all relevant documents in support of his contention before adjudicating
officer who would consider the same in accordance with law for passing appropriate orders --
-Constitutional petition was disposed of accordingly.
1988 SCMR 691; 2008 CLC 10; 1998 CLC 1684; 1996 CLC 293; 2005 PTD 1189 and 2000 CLC 1783 distinguished.
Mazhar Ali Khan for Petitioner.
Zahoor Ahmed Baloch, A.A.G. for Respondents Nos.1 and 2.
Date of hearing: 4th August, 2022.
JUDGMENT
SARDAR AHMED HALEEMI, J .---In the instant petition, the petitioner has sought
the following relief: -
"The petitioner is, therefore, to respectfully pray that this Honourable court may kindly be pleased to admit the petition and in view of the factual and legal position
explained above, may kindly be pleased to hold that there is no contributory
negligence on the part of the petitioner and accordingly direct the respondent No.1 not
to press into force such of the performance which is neither legally possible nor in the
control of the petitioner, in the interest of law and justice.
Any other relief which this Hon'ble Court may deem fit in the circumstances, may also kindly be awarded".
2. As per contents of the petition, the petitioner had been doing business of Exports of
indigenous goods to Iran via land route Taftan and in this regard he had been issued various E-Form, by Messrs Soneri Bank Pvt. Ltd., and MIB Bank Pvt. Ltd. (Banks) in ye ar 2010, the
Iranian buyers started issuing cheques of Cash Payments which were to be collected from Iranian Banks (i.e. from inside Iran), the same on presentation were dishonored by the
respective bank; the petitioner engaged a local lawyer of Iran for perusing the recovery of
money and the matter went under trial against different importers of Iran; on the other hand,
the respondent No.1 initiated proceedings for realization of E -Form and in this regard several
hearings were attended by the petitioner, h owever, the petitioner on local arrangements
managed to realize an amount of US$ 333,900/ - till 03.03.2020; despite the aforementioned
facts and full cooporation by the petitioner, the respondent No.1 was pressing for realization of the E -Form, which for t he petitioner was not possible due to certain hurdles.
3. Learned counsel for the petitioner contended that respondent No.1 has initiated
adjudicating proceedings against the petitioner for realization of E -Forms; the petitioner had
placed certain legal an d verifiable documents on record before respondent No.1, which have
not been made part of the proceedings for the reason that no such procedure for verification of documents existed; so the petitioner was supposed to make good the realization due as per E-Forms. It is further contended that the petitioner regularly attended the hearing fixed
before the adjudicating officer and in case the petitioner fails to realize the E -Forms from
Iran he will be imposed heavy penalty by the adjudicating authority.
Learn ed counsel for the petitioner further contended that in view of perspective
section 29 of the Chapter 12 captioned "Export" of Foreign Exchange Manual (FEM), it has been provided that in case of default by the foreigner buyer, legal proceedings were to be considered for recovery of export proceeds in consultation with State Bank of Pakistan (SBP) Banking Service Corporation, but in the case in hand, the petitioner alone had initiated legal proceedings for recovery of money in Iran; further contended that by placing verifiable
documents before adjudicating officer, the petitioner had shown his bona fide and matter pending before the adjudicating officer lacks the elements of mens rea and willful default; the matter sub judice did not fall in the parameters of section 23 of the APPENDIX -1 of
Foreign Exchange Regulation Act, 1974 (FERA, 1947) and further the manner in which the adjudicating officer is carrying the proceedings is a violation of Article 10- A of the
Constitution of Islamic Republic of Pakistan, 1973 (hereinafter "the Constitution").
Learned counsel for the petitioner has relied upon 1988 SCMR 691; 2008 CLC 10-
Pesh; 1998 CLC 1684; 1996 CLC 293; 2005 PTD 1189 [Lahore]; 2000 CLC 1783.
4. On the other hand, learned counsel for the respondent vehemently opposed the
arguments of the learned counsel for the petitioner and submitted that the SBP is a statutory
body established under the State Bank Act, 1965 (the Act) with the mandate to regulate the
monetary and credit system of Pakistan. The purpose of FER A, 1947 is to regulate certain
payments, dealings in Foreign Exchange and securities, and Import and Export of currency in bullions by bank's authorized dealers; further contended that in the instant matter factual controversy is involved, which cannot be determined under Article 199 of the constitution;
lastly stated that Twelve (12) complaints were initiated against the petitioner, out of which
four (4) have been decided/ resolved, whereas Eight (08) complaints bearing F.E.R case
Nos.381, 382, 383/ 2012, 355, 356, 358/2014, 851, 854/2015 are pending before adjudicating officer and the subject cases fall within the exclusive jurisdiction of Foreign Exchange Adjudication Court (FEAD Court) and in case of any decision, remedy is available to the petitioner under section 23- C(3) of FERA, 1947 before the appellate Board.
5. After hearing the learned counsel for the parties at length we have gone through the
available record.
6. It reveals from the record that respondent No. 1 had filed twelve (12) complaints
against the petitioner with the allegation that the petitioner exported rice to Iran against E -
Forms and had given undertaking in E -Forms that he shall repatriate the full amount of sale
proceeds through Banks within six (06) months from the date of shipment/ export; the
petitioner had failed to repatriate the full amount of sale proceed within the prescribed period and by delaying the same, the petitioner has contravened the provision of section 12(1)(2) of FERA, 1947 which reads as under:
"(1) The Federal Go vernment may, by notification in the official Gazette, prohibit the
export of any goods or class of goods specified in the notification from Pakistan
directly or indirectly to any place so specified unless a declaration supported by such evidence as may be prescribed or so specified, is furnished by the exporter to the
prescribed authority that the amount representing the full export value of the goods has been, or will within the prescribed period be, paid in the prescribed manner.
(2) Where any export of goods has been made to which a notification under
subsection (1) applies, no person entitled to sell, or procure the sale of, the said goods shall, except with the permission of the State Bank, do or refrain from doing any act with intent to secure that -
(a) the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade, or
(b) payment for the goods is made otherwise than in the prescribed manner or does not represent the full amount payable by the forei gn buyer in respect of the goods,
subject to such deductions, if any, as may be allowed by the State Bank, or is delayed to such extent as aforesaid:
Provided that no proceedings in respect of any contravention of this subsection shall be instituted unles s the prescribed period has expired and payment for the goods
representing the full amount as aforesaid has not been made in the prescribed manner.
7. The petitioner was issued show cause notices on 10.04.2007 and 04.02.2015 to
explain his position in respect of the above contravention and the same was replied by the
petitioner and he joined the proceedings. The petitioner submitted an undertaking by signing
E-Form that he will ensure the repatriation of export proceeds within the prescribed period.
The undertaking on E -Forms is reproduced as under: -
"We undertake to ensure that export proceeds against shipment on firm contract shall be received by us on the due date for payment or within six months from the date of shipment/posting, whichever is earlier, i n accordance with the State Bank's
Notification No.FE 3/2001- SB dated the 28th September 2001. In event of non-
compliance due to reasons beyond our control, we shall furnish to the State Bank of Pakistan a full Explanation as to the reasons and circumstances resulting in our inability to comply.
"We undertake that in the event of non -realization of export proceeds against
shipment on sale consignment sale within the stipulated period of six months, we shall obtain from the exporter(s) and furnish to the State Bank of Pakistan a full
Explanation as to the circumstances resulting in non- realization. We further undertake
that in the event of short realization, we shall obtain from the exporter(s) and furnish to the State Bank of Pakistan a fully documented a ccount sale certificate by the
Chamber of Commerce of the country of import."
8. As per the requirement undertaken in E -Form, it requires the exporters to comply with
the undertaking given in the E -Forms. It is relevant to mention here that in section 4 of
Adjudication Proceedings and Appeal Rules, 1988, procedure is provided for adjudicating Officer, which reads as under: -
"(1) For holding an inquiry for the purpose of determining whether a person has
contravened any of the provisions of sub- section (4), (5) or (6) of section 23B, the
Adjudicating Officer shall serve a notice on such person requiring him to show cause, within fifteen days of the date of the service of the notice on him, why the penalty proposed in the notice should not be imposed on him; ---
Provided that the said period of fifteen days may, upon sufficient cause being shown in an application in writing made by such person, be extended by the Adjudicating Officer so as not to exceed two months from the date of the service of the notice.
(2) Every notice under sub- rule (1) shall contain brief facts of the case, indicate the
nature or substance of the contravention or offence alleged to have been committed by him and the evidence on the basis of which the contravention or the offence is alleged to have been committed.
(3) The notice under sub- rule (1) shall be issued at the last known address of the
person and proof of service shall be kept on record.
(4) The person to whom notice under sub- rule (1) is issued shall invariably be asked
to sub mit his explanation in writing and whether, additionally, he desires to be heard
in person or through a duly authorised representative or an advocate.
(5) If after considering the cause, if any, shown by a person in his reply in writing to a notice under sub- rule (1), no case is made out, the notice shall be vacated by the
Adjudicating Officer by an order in writing. But, if the Adjudicating Officer is of the
opinion that adjudication proceedings be continued, he shall issue a notice fixing a
date for appe arance of that person either personally or through a counsel or any other
authorised representative.
(6) On the date fixed under sub- rule (5) the Adjudicating Officer shall explain to the
person proceeded against, or his counsel or representative, the contravention or the
offence alleged to have been committed by such person indicating the provision of the
Act or the rules, directions or orders made thereunder in respect of which the
contravention is alleged to have taken place. If s uch person pleads guilty the
Adjudicating Officer shall impose penalty authorised under the Act.
(7) In the event the person proceeded against does not plead guilty under sub- rule (6),
the proceedings under sub- rule (6) shall be summarized in an appropria te order by the
Adjudicating Officer, a copy of which shall be made available to such person, and shall frame the charge relating to the contravention or offence alleged against him.
(8) The Adjudicating Officer shall, after framing the charge under sub- rule (7) give
opportunity to such person to produce such documents or evidence as he may consider relevant to the inquiry and in respect whereof submits list of documents and witnesses forthwith and, if necessary, the hearing may be adjourned to a future da te
for production or the oral and documentary evidence, but thereafter the hearing shall proceed, as far as may be possible, from day to day.
(9) On the adjourned date, to which the adjudication proceedings are adjourned, the Adjudicating Officer shall ta ke such evidence as is found relevant. If evidence and
documents are not produced on the date fixed, the evidence may be closed and only that may be considered as is duly produced.
(10) If any person fails, neglects or refuses to appear before the Adjudic ating Officer,
as required under the Act or these rules, the Adjudicating Officer may proceed with the inquiry and proceedings in the absence of such person, after recording reasons for doing so, and may, if deemed necessary, proceed to give ex- parte decis ion in the light
of the available material before him.
(11) If upon consideration of the evidence produced before the Adjudicating Officer and having given hearing, he is satisfied that the person proceeded against"
(a) has not committed the contravention or the offence alleged, the notice shall be vacated and the person discharged; and
(b) has committed the contravention or the offence alleged the Adjudication Officer may, by order in writing, impose upon him such penalty as he thinks fit in accordance
with the provisions of subsections (4), (5) and (6) of section 23B.
(12) Personal appearance, at any stage of the inquiry or the proceedings, referred to in the above sub- rules, may, on the request in writing of the person concerned, be
waived or dispensed with, provided reasonable cause is shown in that behalf and such
person is duly represented by a counsel or by an authorised representative".
9. Section 23B of FERA, 1947 deals with the powers of adjudicating officer, which
reads as under: -
"(1) The Federal Government may, by notification in the official Gazette, authorise in
relation to any area specified in the notification any officer of the State Bank to act as the Director of Adjudication, an Additional Director of Adjudication, a Senior Deputy
Director of Adjudication, a Deputy Director of Adjudication and an Assistant Director of Adjudication (in this Act referred to as the Adjudicating Officer).
(2) Subject to such conditions and limitations as the Federal Government may impose, an Ad judicating Officer may exercise the powers and discharge the duties conferred
or imposed on him by this Act and shall also be competent to exercise the powers and discharge the duties conferred upon any Adjudicating Officer subordinate to him:
Provided that, notwithstanding anything contained in this Act or the rules made thereunder, the State Bank may, by general or special order, impose such conditions or limitations on the exercise of such powers or discharge of such duties as it thinks fit.
(3) The St ate Bank may, by notification in the official Gazette, and subject to such
limitations or conditions, if any, as may be specified therein, empower.
(a) any Senior Joint Director of Adjudication or Joint Director of Adjudication or Junior Joint Director of Adjudication or Assistant Director of Adjudication to exercise
the powers of the Director of Adjudication under this Act;
(b) any Joint Director of Adjudication or Junior Joint Director of Adjudication or Assistant Director of Adjudication to exercise an y of the powers of a Senior Joint
Director of Adjudication under this Act;
(c) any Junior Joint Director of Adjudication or Assistant Director of Adjudication to exercise any of the powers of a Joint Director of Adjudication under this Act; and
(d) any A ssistant Director of Adjudication to exercise the powers of a Junior Joint
Director of Adjudication under this Act.
(4) If any person contravenes or attempts to contravene or abets the contravention of the provisions of subsection (3) of section 4, sectio n 10, subsection (1) of section 12
or subsection (3) of section 20 or any rule, direction or order made thereunder, he shall be liable to such penalty not exceeding five times the amount or value involved in such contravention or five thousand rupees, whic hever is more, as may be adjudged
by the Director or Additional Director of Adjudication or any other Adjudicating Officer having jurisdiction under subsection (8) to take cognizance of such contravention, and, if he persists in such contravention, or wher e the contravention or
default is a continuing one, to a further penalty which may extend to two thousand rupees for every day during which the offence or, as the case may be, the contravention or default continues.
(7) For the purpose of this section, am ount or value shall mean.
(a) in the case of foreign exchange, the Pakistan rupee equivalent of the same calculated at the rate of exchange authorised by the State Bank as on the date on which an opportunity of making a representation is given under sub- section (9) or
where no such rate has been authorised, the rate determined by the State Bank on the
said date;
(b) in the case of goods, their value in rupees if declared in Pakistan currency or where it is expressed in foreign exchange Pakistan rupee equivalent of the same calculated in accordance with clause (a); and
(c) in case of any right to receive foreign exchange or to receive from any person resident outside Pakistan a payment in rupees or gold or silver or security or other property of any descript ion, the sale proceeds which, taking all circumstances into consideration,
such right, gold, silver, security or other property can, in the opinion of the Adjudicating Officer, fetch on the date referred to in clause (a).
(8) For imposing a penalty under s ubsection (4), the jurisdiction and powers of the
Adjudicating Officers shall be as follows: -
(a) the Director of Adjudication and a Senior Joint Director of Adjudication may deal with all cases without any limit on the amount or value involved in any contravention:
(b) a Joint Director of Adjudication and a Junior Joint Director of Adjudication may deal with a case where the amount or value involved in any contravention on the date referred to in clause (a) of subsection (7) does not exceed twenty thousa nd rupees;
and
(c) an Assistant Director of Adjudication may deal with a case where the amount or value involved in any contravention on the date referred to in clause (a) of subsection (7) does not exceed ten thousand rupees:
Provided that the State Ban k may, by notification in the official Gazette, reduce or
extend the jurisdiction and powers of any particular Adjudicating Officer or class of Adjudicating Officers.
(9) For the purpose of determining whether a person has contravened any of the provisions of subsection (4), the Adjudicating Officer shall hold an enquiry in the manner prescribed, if any, after giving such person a reasonable opportunity for making a representation in the matter and if, on such inquiry, he is satisfied that the person has committed any contravention, he may impose the penalty provided for in
this section.
(10) All doubts with regard to the jurisdiction of an Adjudicating Officer shall be referred to the Director of Adjudication and his decision thereon shall be fin al.
(11) The Director of Adjudication, on his own motion or on the application of any party to the adjudication proceedings and after notice to the State Bank and other parties, if any, and after hearing such of them as desire to be heard, may at any stage withdraw any adjudication proceedings pending before any Adjudicating Officer and adjudicate it either himself or transfer it to any other Adjudicating Officer subordinate to him and competent to dispose of the same or retransfer the same for adjudicatio n to
the Adjudicating Officer from whom it was withdrawn; and the Director of Adjudicating or, as the case may be, any other Adjudicating Officer or the Adjudicating Officer, or if the Adjudicating Officer who is seized of the matter as
aforesaid vacates o ffice for any reason and another person is authorised to act in his
stead such person, shall not, by reason of the said withdrawal or transfer or retransfer
or vacation of office, as the case may be, be bound to recall and re -hear any witness
who has given evidence before the withdrawal or transfer or re- transfer or vacation of
office and may act on the evidence already recorded by or produced before the
Adjudicating Officer from whom the proceedings are so transferred or re -transferred
or in whose stead he has been so authorised to act as Adjudicating Officer.
(12) Subject to provisions of appeal under ection 23C, no Court or other authority
shall call, or permit to be called, in question any proceeding or order of the Adjudicating Officer or the legality or propriety of anything done or intended to be done by the Adjudicating Officer under this Act.
11. Subsection (12) of section 23- B, reveals that the proceedings pending or order of the
adjudication officer cannot be challenged until and unless the aggrie ved person approaches
the appellate Board by way of filing appeal as per provision of section 23C of FERA, 1947, which reads as under:
"(1) The Federal Government may, by notification in official Gazette, constitute as many appellate boards, each to be called the Foreign Exchange Regulation Appellate
Board, as it may consider necessary, and where it establishes more than one Appellate
Board, shall specify in the notification the territorial limits within which each one of them shall exercise jurisdiction.
(2) An Appellate Board shall consist of a person who is, or has been or is qualified for appointment as a Judge of a High Court or a District Judge or an Additional District Judge.
(3) Any person aggrieved by any order of the Adjudicating Officer made under subsection (4) or subsection (5) or sub- section (6) of section 23B may, within thirty
days of such order, prefer an appeal to the Appellate Board within whose jurisdiction the order is passed:
Provided that no appeal shall lie from an interlocutory or der which does not dispose
of the entire case before the Adjudicating Officer:
Provided further that the Appellate Board may entertain an appeal after the expiry of the said period of thirty days but not later than sixty days from the date of the aforesai d order if it is satisfied that the appellant was prevented by sufficient cause
from filing the appeal in time.
Explanation.--For the purposes of this subsection, the expression "any person aggrieved" shall include the Federal Government and the State Bank.
(4) No appeal shall be admitted for hearing unless the appellant deposits in cash with the Appellate Board the amount of penalty or, at the discretion of the Appellate Board, furnishes security equal in value to such amount of penalty.
(5) The Appella te Board may make such inquiry as it may consider necessary, and
after giving the appellant an opportunity of being heard if he so desires, pass such order as it thinks fit, confirming, altering or annulling the order appealed against:
Provided that no or der enhancing any penalty shall be passed unless the person
affected thereby has been given an opportunity of showing cause against it and of
being heard in person or through a counsel:
Provided further, that if the sum deposited by way of penalty under subsection (3) exceeds the amount directed to be paid by the Appellate Board, the excess amount shall be refunded to the appellant.
(6) The decision of the Appellate Board shall be final and no court, tribunal or other authority shall call, or permit to be called, in question any proceedings or order of the Appellate Board or the legality or propriety of anything done or intended to be done by the Appellate Board under this Act. "
12. Admittedly, the proceedings in respect of complaints are pend ing before the
adjudication officer and no orders have been passed against the petitioner so far. Further, the issues raised by the petitioner pertain to factual controversy which cannot be resolved in constitutional jurisdiction. The petitioner also has t he remedy of appellate forum. In the case
of Patel Corporation v. Federation of Pakistan and others SBLR 2021 Sindh 780 it has been held as follows: -
"In the nutshell petitioner wants us to decide the matter that the petitioner was incapacitated for some reasons therefore could not comply with the provisions of law. He has also prayed for suspension of the Show Cause Notice which is not possible in the writ jurisdiction as no adverse orders have been passed against the petitioner so far, nor any illegality in the show cause notice shown to us but he was simply called
upon to explain his position".
The judgments relied upon by learned counsel for the petitioner are distinguishable
and same are not attracted in the facts and circumstances of the instant case.
The petitioner is at liberty to place all the relevant documents in his support of his contention before the adjudicating officer who shall consider the same in accordance with law for passing appropriate orders.
The petition is disposed of in the above terms.
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