MUMTAZ GHANI TEXTILE (PVT.) LTD. vs FEDERATION OF PAKISTAN through Secretary, Ministry of Finance Ss

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MUMTAZ GHANI TEXTILE (PVT.) LTD. VS FEDERATION OF PAKISTAN through Secretary, Ministry of Finance Ss. 3, 12(1), 12(3), 23B & 23J---Constitution of Pakistan, Arts. 9, 10A, 14 & 18---Adjudicating Proceedings and Appeal Rules, 1988---State Bank Notification No.F.E.I/2002 dated 05.01.2022---Foreign Exchange Circular No.1 dated 13.02.2023---Foreign Exchange Circular No.2 dated 31.03.2023---Payment of exported goods---Delayed realization of export proceeds---Issuance of show cause notice by State Bank of Pakistan (SBP)---Lien on export proceeds---Adjudication process---Due process of law, violation of---Assumption of role of Adjudicating Officer by the SBP---Legality---Claim of the petitioner was that Circular No.2 of 2023 issued by SBP amending Foreign Exchange Manual by adding paragraph 33A was ultra vires and impinged on their rights to deal with their funds---Plea of the SBP was that as per Ss. 3, 12(3) & 20(3) of the Foreign Exchange Regulation Act, 1947 (Act) powers were vested with SBP to issue the circular---Validity---Section 20(3) of the Act merely grants power to SBP to give directions qua making of payment and doing of other acts, inter alia, by authorized dealers in the course of their business and these directions may be given as appears to SBP to be necessary or expedient for the purpose of securing compliance with the provisions of the Act---State Bank of Pakistan was not at all empowered to add anything or impose stricter conditions to the conditions already prescribed by Adjudication Proceedings and Appeal Rules, 1988 (Rules), and power to do so vested in the Adjudicating Officer upon a complaint being filed to him and that too at the conclusion of the hearing after following due process of law---State Bank of Pakistan had arrogated to itself the power vested in the Adjudicating Officer by virtue of S. 23J of Act regarding the recovery of sums due to the Government in execution of the orders passed by him---Circular No.2 condemned the authorized dealer unheard and was a pre-emptive order issued by use of SBP's dominant position as a regulator---Such act of SBP not only offended the provisions of the Act but also the constitutional rights enshrined in Arts. 9, 10A, 14 & 18 of the Constitution---SBP could have issued a notification for the purpose of securing compliance with the provisions of S. 23B of the Act but could not have imposed conditions in the form of paragraph 33A of Circular No.2 to usurp the powers of Adjudicating Officers under S. 23B of the Act---Intent of the legislature in enacting S. 23B of the Act read with Rules, 1988, could not be nullified or circumvented by an administrative order to mark a lien on export proceeds realized by the exporters, which would tantamount to adjudication by SBP prior to an adjudication process for which the law empowers specific officers of SBP to undertake the enquiry---Constitutional petitions were allowed, in circumstances and show cause notices based on Circular No.2 were struck down with a direction to SBP to proceed with the matter in accordance with law by referring the matter to the Adjudicating Officer. Citation Name: 2025 CLD 689 LAHORE-HIGH-COURT-LAHOREBookmark this Case MUMTAZ GHANI TEXTILE (PVT.) LTD. VS FEDERATION OF PAKISTAN through Secretary, Ministry of Finance art. 10-a---Fair trial---Due process of law---Determination of civil rights---Scope---Constitutional right recognized by art. 10a of the Constitution is a fundamental right inhering in a person to fair trial and due process for the determination of his civil rights.

MUMTAZ GHANI TEXTILE (PVT.) LTD. vs FEDERATION OF PAKISTAN through Secretary, Ministry of Finance Ss — 2025 CLD 689 LAHORE-HIGH-COURT-LAHORE

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