HE ARNE J.—Karim v. Ahamed Lebbe & Company.
1938Present: Hearne J. and Wijeyewardene A.J.
KARIM v. AHAMED LEBBE & COMPANY134—D. C. Colombo, 5,451.
Ceylon Importation of Textiles IQuotas) Order in Council, 1934, Arts.'9 and 10—Transfer of portion of quota under licence—Allocation to transfereeon goods actually imported by him—Claim by transferor—Noconstructive trust.
The defendant obtained for valuable consideration the right to importa portion of the quota of textile goods allocated to the plaintiff underthe licence issued to him for the year 1935, and the Custom’s documentsfor clearing the goods described the defendant as importer of that quota.
On this statement the Collector of Customs gave the defendant for thefollowing year a certain allocation based'on the actual amount of goodsimported by him in 1935.
Held, that the defendant as transferee of the licence was not bound tohold the licence, to the extent of the quota transferred to him, in trust forthe plaintiff.
^^PPEAL from a judgment of the District Judge of Colombo.
A. Hayley, K.C. (with him N. K. Choksy), for plaintiff, appellant.
H. V. Perera, K.C. (with him S. J. V. Chelva.naya.gam), for defendantsrespondents.
Cur. adv. vult.
October 5, 1938. Hearne J.—
This appeal involves a consideration, not of a dispute in regard to factsbut of the significance of admitted facts.
> 15 N. L. if- 453.
HE ARNE J.—Karim v. Ahamed Lebbe & Company.
The plaintiff received from the Principal Collector of Customs a licenceto import into Ceylon from Japan, 121,510 yards of printed cotton piece-goods during the year 1935.
The yardage which traders' were authorized to import under theirlicences had been calculated on their previous imports during any one,at their own option, of the five years 1929-1933, and the licence issued tothe plaintiff had been based upon his imports during the year 1933.
One of the regulations governing the use of licences issued is that “ Anylicence may on application made in that behalf be transferred by theCollector to any person designated by the licensee, and the transfereeshall be entitled to import the quantity specified therein exclusive of suchquantity or quantities as may already have been imported by the originallicensee and endorsed on the licence by the Collector
Whether this regulation contemplated a traffic in licences as merchant-able commodities it is unnecessary to speculate. The plaintiff certainlytook advantage of its provisions, “ He gave his licence (in part) ” to usehis own words “ to others at the rate of five cents a- yard for importinggoods in particular he transferred for valuable consideration to thedefendants the right or benefit he held under his licence to the extent of,50,000 yards of cotton fabrics or nearly 50 per cent, of his quota.
It was not anticipated at the time that the Principal Collector wouldvary the method of estimating the quota to which each individual traderwould be entitled and those who had chosen their peak year as their,basic year were no doubt congratulating themselves. The Collector,however, decided to relate the yardage covered by licences to be issued inrespect of the year 1936, not as previously to importations during aselected year but to the estimated probable requirements of tradersduring 1936 as indicated by their importations during the previous year.It is this decision that brought the plaintiff and the defendants intoconflict.
In 1935 the defendants under the plaintiff’s licence “ cleared ” as theyclaim in their answer “ 50,000 yards of their goods which were lying inthe Customs ”. In the official view this is not strictly correct. Inrespect of 23,130 yards the clearance was effected by the defendantsthemselves while in respect of 26,870 yards the Customs duty was passedin the name of the plaintiff. The Customs Department regarded thedefendants as being the importers of the 23,130 yards cleared by themand the plaintiff of the 26,870 yards cleared by him. When, therefore,the defendants included the former in the return made to the Collector oftheir imports during 1935, they not only acted correctly but they suppliedthe Collector with information which was expressly required by him forthe purpose of making allocations for 1936.
In these circumstances the plea of the plaintiff that a cause ot actionhad accrued to him by reason of breach of contract or of wrongful repre-sentation is one which ignores the plain facts of the case.
On appeal this plea was properly abandoned and the plaintiff’s casewas made to rest on a “ constructive trust ” (paragraph 7 (c) of amendedplaint). It was argued that the yardage specified in the defendants’licence for 1936 included 18,000 yards in consequence of the return made
296 WIJEYEWARDENE A.J.—Karim v. Akamed Lebbe & Company. •
by them of 23,130 yards imported in 1935 under the plaintiff’s licence,and that the defendants, therefore, held the benefit of importing 18,000yards to the use of the plaintiff.
In my opinion the basis adopted by the Collector for the purpose ofissuing licences in 1936 makes this argument untenable. The issue of -alicence to the plaintiff in 1935 did not entitle him to the issue of a licencein his favour in 1936, which would necessarily bear a relation to thelicence of 1935 unless the Principal Collector so decided and this he didnot do. The licences issued for the year 1936 designedly, as it appearsto me, were made personal to the holders in the sense that they weredefinitely related .to the current requirements, so far as they could beascertained of the persons in whose favour licences were issued. Licenseeswere permitted to import certain quantities of cotton goods not on thebasis Of importations in the relatively distant past—a basis which mightgive individual traders a margin beyond their needs capable of conversioninto easily earned money—but on the basis of their actual importationsduring the preceding year, whether such importations or “ Customsclearances ” were under their own licences or the licences of others. Itfollows that the licence issued to the defendants was free from any trustand in my opinion the plaintiff’s action was misconceived.
I would dismiss the appeal with costs.
This is an appeal arising out of a transaction in respect of a licence issuedby the Principal Collector of Customs under certain regulations made bythe Governor under Articles Nos. 9 and 10 of the Ceylon Importationof Textiles (Quotas) Order in Council, 1934.
This Order in Council was passed in order to regulate the importationinto Ceylon of certain textile goods from foreign countries. It came intooperation oh July 31, 1934; Article 9 of the order empowered the Governorto prescribe that no person shall import any regulated textiles exceptunder a licence issued by the Principal Collector of Customs and Article 10authorized the Governor to make the necessary regulations for carryingthe order into effect. In the exercise of his powers, the Governor madecertain regulations which are published in the Government Gazette No.8,078 of September 11, 1934. Regulation. 3 prohibits the importation intoCeylon of any regulated textiles except under a licence in conformity withthe regulations. Regulation 4 provides for applications for licences to bemade to the Collector of Customs on or before a date to be fixed andnotified by him for each quota period. Regulation 5 enables the Collectorof Customs to consider all such applications received by him and issue tothe applicants approved by him licences for such quantities as may bedetermined by him on a basis adopted by him with the sanction of theFinancial Secretary. According to Regulations Nos. 6 and 7 licences areto be issued for a definite quota period to be mentioned in the licences.Regulation No. 8 empowers the Collector to revoke any licence obtainedby any person by means of any incorrect or false statement or by anymisrepresentation. Regulation No. 9 requires the Collector to endorse onevery licence the several quantities imported thereunder and cancel thelicence when the full quantity authorized by it has been imported.
WIJEYEWARDENE A.J.—Karim, v. Ahamed Lebbe & Company. 297
-The Principal Collector of Customs issued to the plaintiff Licence No. 17for the first half-year of 1935 and Licence No. 767 for the second half-yearof 1935 under each of which the plaintiff was authorized to import 60,755yards of printed cotton goods from Japan. The defendant himselfobtained licences for 1935 to import printed cotton goods from Japan.He found that the amount allowed him by the Collector fell short of hisrequirements and therefore an agreement was reached between him andthe plaintiff that in consideration of a payment of Rs. 2,500 to the plaintiff,the defendant should be allowed to pass through the Customs 50,000 yardsof Japanese cotton goods under the plaintiff’s licence. In accordancewith this agreement the defendant cleared 50,000 yards under theplaintiff’s licence—23,130 yards on one occasion and 26,870 yards later.The Eastern Agency Company which acts as agents for a number ofimporters, including the plaintiff and the defendant, presented the neces- .sary documents for clearing these two instalments of Japanese cottongoods through the Customs. The documents with regard to the firstinstalment gave the defendant as the consignee and declared the consigneeto be the importer of goods. The documents in respect of the secondinstalment gave the consignee and importer as plaintiff.
It is not suggested by the plaintiff that the defendant has acted in badfaith in respect of the documents for the first instalment of goods whereinhe is described as consignee and importer. In fact the description givenin these documents is in consonance with the true facts. The Customsauthorities made entries in the Customs Register showing the names ofthe importers who cleared various consignments of goods. The data forsuch entries are obtained from the documents presented for clearing thegoods. Accordingly the Customs Register showed the defendant as theimporter of the first instalment of 23,130 yards of Japanese cotton.
It may be noted at this stage that in making the allocation of licencesfor the year 1935, the Collector of Customs allowed himself to be guidedby the information given by the applicants in their applications showingthe maximum amount of cotton goods imported by them from Japan inany one of the five years from 1929 to 1933. When he came to consider in1935, the allocation for the year 1936, he adopted as his basis the amountof Japanese cotton goods actually imported by each applicant during theyear 1935. He called upon each applicant to furnish him with a statementshowing the amount of cotton goods imported by him in 1935 and checkedsuch statement by the entries made in the Customs Register. In thisstatement, the defendant very correctly included the first instalment of23,130 yards, while the plaintiff gave in his statement both the instalmentsas imported by him. The Collector of Customs who must have checkedthese statements by the entries in the Customs Register must havenaturally determined his allocation to the plaintiff and the defendant for.1936 on the footing that the defendant was the importer of the firstinstalment of 23,130 yards. This no doubt accounts in some measure forthe reduction of the plaintiff’s allocation from 121,510 yards in 1935 to.91,580 yards in 1936. The plaintiff who was-aggrieved by this reductionappears to have thought that he had a cause of action against the defend-ant as this reduction was due to the defendant clearing through theCustoms in 1935 the first instalment of 23,130 yards under the plaintiff’s
Tambiah v. Casipillai.
licence on documents showing himself to be the importer of the goods.The plaintiff thereafter filed the present action against the defendantasking inter alia for a decree declaring that the defendant holds for theuse and benefit of the plaintiff and in trust the licences issued to him for1936, and subsequent years to the extent of 23,130 yards for each year.The plaintiff has sought to justify this claim by pleading variousalternative causes of action.
The learned Counsel who appeared for the plaintiff in appeal concededthat he could not sustain his claim for relief on the ground that thedefendant has committed a breach of an agreement as pleaded in para-graph 6 of the plaint in obtaining his licence for 1936 on the footing thathe was the importer of the first instalment of 23,130 yards.
It was however argued that the defendant became by virtue of the factsmentioned by me earlier a constructive trustee for the plaintiff and wastherefore bound to hold the licences issued to him in trust for the plaintiffto the extent of 23,130 yards for each year. I am unable to see how anyquestion of trust could arise in this case. The defendant obtained for amoney consideration the consent of the plaintiff to clear from the Customs23,130 yards of Japanese cotton goods under the plaintiff’s licence for1935. The defendant cleared the goods according to the agreement.The documents for clearing gave a correct description of defendant asthe importer; moreover there was no agreement either express or impliedthat -the defendant should not be described in these documents as theimporter. When the Collector of Customs requested the defendant tosend a statement of goods imported by him in 1935, the defendant senta true and correct statement. On that staterfient as verified by his ownbooks the Principal Collector of Customs who has authority under theregulations gave him a certain allocation for 1936. It is, no doubt, truethat the plaintiff’s allocation has been reduced for 1936. But such areduction would have taken place even if plaintiff did not agree to permitthe defendant to clear 23,130 yards under his licence, because the alloca-tion given to plaintiff in 1936 would have been in any event based on theactual goods imported by him in 1936. I affirm the judgment of thelearned District Judge dismissing the plaintiff’s action with costs and-dismiss the appeal with costs.
KARIM v. AHAMED LEBBE & COMPANY