1992 PLP 569 (MLD)

The charge against accused Nos.2 and 3 is that they being the Directors of Messrs Bright Impex (Pvt.) Ltd., Karachi, the accused No.l, on or about 17th March, 1988 and 31st May, 1988, when called upon by the State Bank of Pakistan, under section 43‑A of the Banking Companies Ordinance, 1962, to supply the information/produce the relevant record regarding the business carried out by them for the purpose of determining whether they were doing any banking business in contravention of section 27(1), failed to supply the requisite information and produce the relevant record, and thereby committed an offence punishable under section 83(1‑C) of the Banking Companies Ordinance, 1962. .

2. Messrs Bright Impex (Pvt.) Ltd., a company registered under the Companies Ordinance, 1984, with accused Muhammad Qasim and Ishtiaq Ahmed, as its Directors, made an advertisement in Daily `Jang' Karachi, dated 17‑1‑1988 soliciting deposits of money from public. As it appeared to the State Bank of Pakistan that the accused were transacting business of banking in contravention of the provisions of the Banking Companies Ordinance, 1962, the State Bank of Pakistan, in exercise of the powers under section 43‑A of the said Ordinance issued a notice/directive, dated 17th March, 1988, requiring the accused to furnish/produce to the authorised representatives of State Bank of Pakistan documents/record/information mentioned therein and to let the said authorised representatives do and exercise the acts and the powers mentioned therein. The accused sent a reply which was not found satisfactory. Consequently the State Bank of Pakistan required the accused, by a directive published in Daily `Morning News', Karachi, dated 31st May, 1988 to make available, not later than seven days from the publication thereof, all books and records concerning their business for inspection by the State Bank of Pakistan. Since the said directives were not complied with, a complaint for the offence under section 43‑A, read with Section 83(1‑C) of the Banking Companies Ordinance, 1962, was filed against the accused which was brought on regular file on 8‑2‑1989.

3. Charge under section 43‑A, read with section 83(1‑C) of the Banking Companies Ordinance, 1962 was framed against the accused and they were asked whether they plead guilty or have any defence to make. The accused pleaded not guilty and claimed a trial. At the trial the prosecution examined Mr. Khurshid A. Majeed, Deputy Director (P.W.1) and Mr. Muhammad Rafique, Inspecting Officer (P.W.2), and then closed the side.

4. In their statements recorded under section 342, Cr.P.C., the accused admitted to have inserted the advertisement. The defence of accused Muhammad Qasim which is adopted by accused Ishtiaq Ahmed in his own words is as follows: ‑‑ "We had started business on 2‑1‑1988 of the company for partnership. On 25‑1‑1988 we had closed our office as the circumstances were not favourable. No business was done by us. No bank account was opened and no account books were maintained. We did not receive any amount from any body and we had sent such reply and also to Registrar." The accused persons did not step into the witness‑box for recording their statements under section 340(2), Cr.P.C. They also did not examine any witness in defence.

5. The points for my determination in this case are as follows:‑‑ (i) Whether the State Bank of Pakistan had reason to believe that the accused were transacting illegal banking business? (ii) Whether the accused when called upon by the State Bank of Pakistan to supply information, documents and record respecting their business failed to do so?

6. My findings on the points are as follows:‑‑‑ (i) Affirmative. (ii) Not proved, REASONS

7. Point No.1. A bare perusal of section 43‑A of the Banking Companies Ordinance, 1962, makes it clear that where it appeared to the State Bank of Pakistan that a company, firm or any other person is transacting in any manner or from whatsoever the business of banking in contravention of subsection (1) of section 27 or is receiving or has received deposits of money in contravention of section 27‑A, the State Bank may issue directives calling upon the company, firm or the person to supply requisite information or documents concerning business. The word `appears' used in section 43‑A denotes that there should be prima facie material before the State Bank of Pakistan to indicate that a company, firm or a person was transacting, in any manner or form, the business of banking in contravention of law. The advertisement (Exh.6), which was admittedly got inserted by the accused no doubt speaks of SHIRAKATDARI (partnership), but according to Mr. Khursheed A. Majeed, Deputy Director (P.W.1) it gave an impression to the State Bank of Pakistan that the accused were transacting the business of banking in contravention of the provisions of the Banking Companies Ordinance, 1962. Therefore, the State Bank of Pakistan had every reason to issue directives to accused calling upon them to furnish particulars of their business. The point No.l is, therefore, answered in affirmative.

8. Point No.2.? '" Mr. Khurhseed A. Majeed, Deputy Director, (P.W.1) has testified the fact a leading .to the issuance of directives (Exh.7 and Exh.9) to accused. The? directive (Exh.7) was served by Mr. Muhammad Rafique, Inspecting Officer (P.W.2) upon accused Ishtiaque Ahmed, one of the directors of the company. The accused have also not disputed this position and they quite admittedly replied this directive through (Exh.8) in the following words: ‑‑ "With reference to your letter mentioned hereinabove dated 17‑3‑1988 which was received on 22‑3‑1988 it is submitted that Messrs Bright Impex (Pvt.) Ltd. was started on 2‑1‑1988. The Company run till 25‑1‑1988. Due to some unavoidable circumstances the same was closed on 25‑1‑1988. Neither any book of accounts was being maintained by us nor open account in any Bank. It is further submitted that in response to the Press Adds appearing in the daily local newspapers on various dates no response was received from any party and we have not entered into any deal with anyone. As such the Company concerned did not deal with any person. Therefore, the required things by yourself were never prepared as it was closed on its very initial stage."

9. Both the accused persons adhered to t[ii4defence in their statements recorded under section

342. Cr.P.C. According to them their office was closed after few days of the advertisement (Exh.6) as, the circumstances were not favourable. This fact gets support from both. Khursheed A. Majeed, Deputy Director (P.W.1) and Mr. Muhammad Shafique, Inspecting Officer (P.W.2), who have admitted in clear terms that the office of accused was found closed after the service of first directive (Exh.7).

10. Section 43‑A of the Banking Companies Ordinance, 1962, empowers the State Bank of Pakistan to authorise any person to enter and search any premises and seize book. accounts or other documents or records respecting any business carried on by the Company, firm or such other person as may be in or under the possession, custody or control of the company, firm or such other person. No such attempt to seize the record was made by breaking open the lock of the office of the accused which was found closed. In this view of the matter the version of the accused that they had no record could be held to be true or that it in any appreciable measure rendered the story of the Bank Officers such which it might not be safe to accept in order to base the conviction on it.

11. Mr. Ainuddin Khan, learned counsel for the complainant has contended with force that accused No.l was incorporated in the year 1987 and it was, therefore, unbelievable that it had no records. A company becomes a legal entity after it is incorporated, and it may be wound up in the manner as provided under the Companies Ordinance, 1984. These questions are, however, not relevant to the point in issue. The accused stated that they had no records at the very outset and if the Inspecting Officers were not satisfied with this statement they had sufficient powers to search the premises and seize the records, if any. No such attempt was made and in such a situation there is no justification for this Court to hold that the accused had contravened the provisions of section 43‑A of the Banking Companies Ordinance, 1962. It may be noted that there is only one standard of proof for all charges, and that is that the prosecution must prove the charge beyond all reasonable doubts. A conviction is certainly not to be based on the weakness of defence.

12. For all these reasons, I am satisfied that the prosecution has failed to' prove the charge against the accused beyond any reasonable doubt. They are accordingly acquitted. The accused who are on bail are discharged from their bail bonds. N.H.Q./S‑791/K????????????????????????????????????????????????????????????????????? Accused acquitted.