SC defines terms for conviction over default on payment

ISLAMABAD:

The Supreme Court has ruled that indefinite confinement over default on payments is in violation of articles 9, 10 and 14 of the Constitution.

In his seven-page judgment on a case pertaining to eight-year imprisonment of a person over default, Justice Aminuddin Khan said that the “law does not call for indefinite incarceration in case of default [o]n payment”.

He noted that in the circumstances of the case, the indefinite confinement was found to be in violation of the Constitution. “Therefore, we set aside the condition of refund of compensation amount for the release of the petitioner,” the judgment added.

Lina Bomba of MIs Jaed Textile Proprietary Limited from Sydney, Australia lodged a complaint against Muhammad Iqbal, the owner of Mis Craft Textile Industries, Karachi, for failing to timely ship an order of bath towels, seeking legal action against him through the Trade Development Authority of Pakistan (TDAP).

Iqbal expressed his willingness towards amicable settlement, but could not comply with his commitment of returning the amount claimed by Lina in two installments.

Iqbal was thus charged by the Special Court (Commercial), Karachi under Section 5 of the Imports and Exports (Control) Act, 1950, read with Section 4(a) of the Export (Quality Control) Order, 1974, and was later convicted under these for nine months of rigorous imprisonment, alongside the condition of refunding USD 87,671.21 according to the existing dollar rate.

Later, Iqbal approached the Sindh High Court (SHC) against the trial court’s order, but in 2014, the high court maintained his conviction, but reduced his sentence to the period already served.

The court, however, stated that Iqbal had to return the amount in accordance with the exchange rate at the time of conviction to be released from jail.

After the condonation of 762 days’ delay, Iqbal then filed a jail petition against the high court’s order.

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A division bench of the apex court led by Justice Khan, in its judgement, recently noted that his release order could not be issued because of the condition imposed by the high court.

“The petitioner is in prison for more than eight years only because he could not pay the compensation amount,” the order highlighted.

The top court, while referring to the provisions of the Imports and Exports (Control) Act, 1950, said that the commercial court is empowered to direct the exporter/seller to refund or pay a certain amount with or without damages to the complainant.

In case of failure to pay, it shall be recoverable as an arrear of land revenue along with interest at the prevailing bank rate for the period following the expiration of the time within that amount was payable, and it shall thus be credited to the Revolving Fund, it added.

It further stated that the commercial court “may direct the payment of such compensation from the Revolving Fund set up by the federal government”.

SC noted that the commercial court and high court failed to correctly apply the law in this regard.

It pointed out that while the judicial system plays an important role in national economic life, even a United States court had observed that international trade cannot be on one’s exclusive terms and laws. It mentioned that trust of foreign buyers must be improved.

Therefore, it added, the commercial court could have issued refund to the buyer from the Revolving Fund, and if the exporter failed to pay it within the stipulated time, it could have been recovered as an arrear of land revenue.

Two months ago, in its short order, the apex court had directed the federal government to pay the buyer along with interest at the prevailing bank rate from the date of trial court’s judgement till the date of payment from the Revolving Fund. However, if the Revolving Fund has not been established, Federal Consolidated Fund can also be used, it added.

It also sought a compliance report from the secretary of the Ministry of Finance within a fortnight.