1998 PLP 34 (PTD)

(4) The State Bank of Pakistan or other banks shall not impose any restrictions, on deposits in and withdrawals from the foreign currency accounts and restrictions, if any, shall stand withdrawn forthwith. "

9. Secrecy of Banking Transaction.

Secretary of bona fide banking transactions shall be strictly observed by all banks and financial institutions; by whosoever owned, controlled or managed."

11. The same contention was also raised before the learned single Judge but was repelled by him by observing in paragraphs 13 and 14 that:

"

13. Notwithstanding the provisions of sections 3, 4 and 5 of Act XII of 1992 (supra) there is section 9 to the said Act which reads as under:

"9 ??????????????????????????." Act XII of 1992 supra is not sub-divided in Part and or Chapters. The Act contains. in all, 11 sections and while codifying section 9 of Act (supra), word 'bona fide' was used in relation to banking transactions. It was in the wisdom of Legislature that they inserted the word 'bona fide' in the said section while providing blanket of secrecy to the banking transactions.

14. Banking transactions, when qualified as bona fide in the section, shows the clear intent of the Legislature, Banking transactions, other than bona fide, were not provided any immunity, or secrecy. In view of the above section the provisions of sections 4 and 5 are to be regulated and are to be read and applied subject to limitation of 'bona fide' as imposed by section 9 of the Act XII (,supra). The words "take out foreign exchange within or out of Pakistan in any form" is subject to the same condition of 'bona fide' as mentioned in section 9 of the Act. Similarly the blanket of secrecy proved under subsection (3) of/section 5 is subject to the same qualification. "

12. Having heard the learned counsel for the parties and considered various aspects of the matter we regret our inability to agree with the interpretation placed by the learned single Judge on the Protection of Economic Reforms Act, 1992 particularly section 5 thereof which is neither borne out by the language of the Statute nor the purpose of which the Act was promulgated. In our opinion, on its plain reading, section 5 not only grants full immunity to the holders of foreign currency accounts but also provides that complete secrecy be maintained in respect of the transactions in these accounts. We are also of the view that sections 5 and 9 of the Act have different scope and operate in different fields and are, therefore, not complementary to each other. While section 5 of the Act in itself provides complete code so far as foreign currency accounts are concerned, section 9 applies to transactions other than those in foreign currency. There may be no cavil with the principle of interpretation relied upon by the learned single Judge that various provisions in the Act must be read together and the Act should be construed as a whole but that principle has no application in the present case. Be that as it may, all principles of interpretation of Statutes are nothing but tools which the Courts employ to find true legislative intent which cannot be defeated by relying upon some abstract principle.

13. At this stage it would be advantageous to state that prior to 1990 there were various legal provisions in the field including Foreign Exchange Regulations Act, 1947 and Customs Act, 1969 which prohibited import and export of foreign currency by persons or citizens of Pakistan and also made it an offence to retain any foreign exchange or to open any foreign currency account. It was realised that these measures hampered development and led to close door of economy resulting in its stagnation and shying away foreign capital.

14. It was in realisation of this economic reality that various measures were taken in the year 1990 by the Federal Government by introducing economic reforms in order to liberalise the economy and provide incentives to the investors and encourage remittance of foreign exchange from road. In addition to other steps, almost all restrictions on import and export of foreign exchange and opening of foreign currency accounts and their operations were removed by the Government and the protection and immunity was granted to these accounts. On 12-2-1991, the State Bank of Pakistan issued a circular permitting Pakistani nationals residing in Pakistan to open and maintain foreign currency accounts with Banks in Pakistan. It was, inter alia, provided that no question shall be asked by any Authority in Pakistan about the source of acquisitions of such foreign exchange. Another circular was issued on. 14-2-1991 to remove certain restrictions which have been placed in the earlier circular.

15. It need not be emphasised that with rapid developments in the field of trade, commerce and communication and with modern technology the world itself has become a global village and no country can prosper in isolation of others. Presently there is an on going fierce competition Among various developed countries to attract foreign investment for the purpose of development. In such a situation the importance of creating a liberal environment to encourage inflow of foreign currency cannot be under stated.

16. The background in which the Protection of Economic Reforms Act, 1992 was promulgated having been noticed, now the various provisions of the Act be examined. According to its preamble the object in enacting the said Act was to create liberal environment for savings and investments and to provide for legal measures by the Government with a view to create confidence in the establishment and continuity of the liberal economical environment. "Economic reforms" have been defined in subsection 2(b) as Economic policies and programs, laws and regulations announced, promulgated or implemented by the Government on and after 7th day of November, 1990 relating to privatisation of public-sector, enterprises and nationalised banks, promotion of savings and investments, introduction of fiscal incentives for industrialisation and deregulation of investment, Banking, finance exchange and payments systems holding and transfer of currencies (underling is ours). By section 3, the Act has been given over-riding effect not only over Foreign Exchange Regulations Act, 1947. Income-Tax ordinance, 1979 but over any other law for the time being in force. Section 4 of the Act is important for the present purposes. It provides that all citizens of Pakistan, residing in Pakistan or outside Pakistan and all other persons shall be entitled and free to bring, hold, sell, transfer and take out foreign exchange within or out of Pakistan in any form and shall not' be required to make a foreign currency declaration at any stage nor shall anyone be questioned in regard to the same. Section 5 which has been reproduced above again deals with the foreign currency. Section 6 relates to another subject and provides protection to fiscal incentives for setting up of industries. Sections 7 and 8 grant protection against compulsory acquisition and nationalisation. Section 9 provides for secrecy of bona ride banking transactions of all banks and Financial Institutions. Section 10 of the Act protects the financial obligation incurred under any instrument or contract made by or on behalf of the Government.

17. It will be seen from the above that Protection of Economic Reforms Act, 1992 was promulgated pursuant to the Policy of the Federal Government to protect various economic reforms undertaken by it in order to provide incentives to investors and to encourage inflow of foreign currency into Pakistan. While interpreting such a law relating to economic matters the Court should, so far as possible, adopt that interpretation which furthers the object for which the same has been promulgated.

18. In the recent case of Elahi Cotton Mills, Ltd. v. Federation of Pakistan and others PLD 1997 SC 582 = 1997 PTD 1555 the Supreme Court of Pakistan was pleased to cite with approval the following observations of the Indian Supreme Court in R.K. Gang v. Union of India and others (1982) 133 ITR 239). "Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than law touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J., that the Legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in the case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with greater play in the joints has to be allowed to the Legislature. The Court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation, than in other areas where fundamental human rights are involved."

19. Section 5 of the Act, which mainly falls for interpretation in the present case has four parts. While subsection (1) grants immunity to the II holders of foreign currency accounts; subsection (2) exempts the balance in the foreign currency accounts and income arising therefrom, from wealth tax and income tax; subsection (3) ordains that complete secrecy in respect of foreign currency accounts shall be maintained by the Banks; subsection (4) prohibits State Bank and all other Banks from imposing any restriction on deposits in and withdrawals from the foreign currency accounts; further provides that restrictions, if any, already in force, shall stand withdrawn.

20. Section 5(1) on the face of it grants immunity to holders of foreign exchange from any inquiry by taxation Authorities as to the source of financing of the foreign currency accounts. This immunity is not subject to any condition as none has been laid down in the provision under consideration.

21. In Ballentine's Law Dictionary (3rd Edition) the following definition of "immunity" appears at page 584:

"A personal favour granted by law, contrary to the general rule. Ex parte Levy, 43 Ark

42. A privilege or special privilege; a favour granted, an affirmative act of selection of special subjects of favour not enjoyed in general by citizens tnder constitution, statute, or laws, Hathmer v. State, 173 Ind. 199, 89 NE

850. A right in the negative form of freedom from action or restraint which otherwise might be taken against or imposed upon a person such as the right of a witness to be free from arrest while attending Court." According to Black's Law Dictionary (Sixth Edition) at page 751 "immunity" means "exemption, as from serving in an office, or performing duties which the law generally requires other citizens to perform e.g. exemption from paying taxes. Freedom from duty or penalty. Special privilege. See also exemption; Judicial immunity; Legislative immunity; Parent-child immunity; privilege; Sovereign immunity.

22. The grant of immunity to the foreign exchange accounts is not something new or unique. In the past, the Government time and again introduced various schemes with a view to attract investment particularly in foreign currency in the country. These include the issuance of foreign exchange bearer certificates, foreign currency bearer certificates and foreign deposit bearer certificates. All these measures are part of fiscal policies, which a Government is entitled to lay down keeping in view the national and economic interest.

23. It follows from the above that in a sense, immunity is a negative form of right of freedom from action of restraint which otherwise might be taken or imposed upon a person.

24. On proper analysis, the conclusion, which follows is that sub-section (1) of section 5 bars the Authorities from taking any action against the person on the basis of transactions in the foreign currency accounts.

25. It will also be seen that subsection (3) of section 5 of the Protection of Economic Reforms Act, 1992 requires the Banks to maintain complete secrecy in respect of transactions in foreign currency accounts unlike section 9 of the Act under which secrecy has to be maintained only in respect of bona fide banking transactions. It is unfortunate that subsection (3) of section 5 was not brought to the notice of the learned single Judge with the result that he fell into error in observing that sections 5 and 9 of the Act have to be read together. It is true that generally all provisions of the Act are to be read together but as section 5(3) specifically deals with the question of secrecy so far as foreign currency accounts were concerned, the general provision in section 9 about secrecy of banking transactions was clearly not applicable to the foreign currency accounts. The protection granted by section 9 which was limited to bona fide banking transactions was applicable to transactions other than in foreign currency accounts. The difference in the language employed in subsection (3) of section 5 and section 9 of the Act is completely destructive of the argument that both these provisions must be read together or complementary to each other.

26. The use of word "complete" in subsection (3) of section 5 of the Act instead of "bona fide" as in section 9 clearly brings into bold relief the difference in the extent of protection and between the foreign currency accounts and other banking transaction.

27. According to Black's Law Dictionary (Sixth Edition) at page 285, complete as adjective means "full, entire; including every item or element of the thing spoken of, without omissions or deficiencies; as, a "complete", copy, record, schedule, or transcript, perfect, consummate; not lacking in any element or particular; as in the case of "complete legal title" to land, which includes the possession, the right of possession, and the right of property.

28. In Corpus Juris Secundum, Volume 15-A at page 118, "complete" has been defined as "absolutely finished; completed or concluded; consummate, entire, filled up; free from deficiency, perfect, including every item or element of the thing spoken of, without omissions or deficiencies, whole; lacking nothing, with no part, item, or element lacking; having all needing or normal parts, elements or details.

29. Similarly in Words and Phrases, permanent Edition 8, at page 386, while defining "complete" it is stated that the word "complete" means filled up; with no part, item or element lacking, free from deficiency; entire, perfect, consummate.

30. It will thus to be seen that the use of word "complete" negates the argument that the secrecy required to be maintained was only partial and not all pervasive.

31. It is also to be seen that as sections 4 and 5 the Act, both deal with foreign currency, while interpreting section 5, section 4 of the Act cannot be lost sight of. It provides complete freedom to all citizens of Pakistan and all other persons to bring, hold, sell and take out foreign currency in any form. 1t specifically provides that no person shall be required to make any foreign currency declared at any stage and also ordains that no one shall be questioned in regard to the same. This clearly brings out the legislative intent that no question can be asked from the person holding any foreign currency in respect of the same. That being so, no inquiry either into the source or the holding of the foreign currency can be initiated or made by any agency especially when non-abstante clause in section 3 of the Act provides that the Act shall over ride all other laws.

32. On consideration of various provisions of the Protection of Economic Reforms Act, 1992, we have reached the conclusion that so far as foreign currency accounts are concerned, the holders thereof, have complete immunity from inquiry and scrutiny and complete secrecy must be maintained in respect of those accounts which cannot be violated by any agency or functionary. That being so, neither the Income Tax Authorities nor Federal Investigation Agency had any jurisdiction to hold any inquiry in respect of the transactions in the foreign currency accounts nor could the same be made basis of criminal prosecution. As a result of above, this Intra-Court Appeal is allowed and the impugned judgment of the learned single Judge is set aside and the Constitutional petition of the appellant is allowed with no order as to costs. A.A./H-35/L??????????????????????????????????????????????????????????????????????????? Appeal accepted.