STATE BANK OF PAKISTAN Versus PERFECT ENTERPRISES ,

JUDGMENT`

The charge against the accused is that they on or about 25‑6‑1988, 3‑7‑1988 and 27‑10‑1988, as partners of M/s. Perfect Enterprises, Karachi, the accused No.1, failed to produce the required statements and documents in relation to the business carried out by the said firm for the purpose of determining whether the said firm was doing any banking business in contravention of section 27(1) of the Banking Companies Ordinance, 1962, and thereby committed an offence punishable under section 43‑A read with section 83(1‑C) of the Banking Companies Ordinance, 1962.

2. M/s. Perfect ‑Enterprises, Karachi, is a partnership firm with accused Shabbir Ahmad Mehar, Mrs. Sughra, Ch. Muhammad Akram, Muhammad Bilal Khan and Ch. Muhammad Arshad as its partners. As it appeared to .the State Bank of Pakistan that the accused were transacting the business of banking in contravention of the provisions of Banking Companies Ordinance, 1962 the State Bank of Pakistan, in exercise of its powers under section 43‑A of the said Ordinance issued directives, dated 25th June, 1988, and the 3rd July, 1988, calling upon accused No.1 to produce the required statements and documents in relation to the business carried out by the said firm for the purpose of determining whether the said: firm was doing illegal banking business. The accused replied to these directives but the explanation furnished by them was not found satisfactory. In order to give one more chance a directive, dated 27th October, 1988 was published in Daily `Morning News', Karachi, calling upon accused No.1, to produce within seven days all the books and records concerning its business for inspection by the State Bank of Pakistan, but with no result. Consequently on 25‑9‑1990 a complaint for the said offence was filed against the accused before this Court, which was brought on record on 7‑10‑1990.

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 as to whether they plead guilty or have any defence to make, to which they pleaded not guilty and claimed a trial. At the trial the prosecution examined Mr. S.M. Khursheed, Deputy Director (P.W.1), and Muhammad Rafique, Inspecting Officer (P.W.2).

4. In their statements recorded under section 342, Cr.P.C. the accused have denied the case of the prosecution. Accused Shabbir Ahmad Mehar, who is the main accused has come out with the following defence:‑

"It is not correct that Perfect Enterprises or anyone of its partners ever transacted the business of banking. For a short time, the firm advertised to attract capital., The firm offered partnership on fixed profit. These advertisements did not attract any person and the firm contented to transact their own private business. The units of the firm Perfect Enterprises were (1) Ghazi Cotton Ginning Factory, (2) Mehar Rice Mills and (3) M.M. Industries. All these units are situated at Punjab. It is submitted that the firm or its partners did not transact any business of banking. Only on the basis of few advertisements, the S.B.P. filed Crl. Org. Misc. No.48/90 and the partners in order to finish the cases pleased guilty, thinking that mere advertisement was illegal and the Court was pleased to impose fine which was paid by the accused persons on 29‑5‑1988."

5. Accused Shabbir Ahmed Mehar (D.W.1) also examined himself on oath. I4e produced all the relevant record by stating that the directives issued by the. State Bank of Pakistan were complied with. No other witness was, however examined in defence.

6. The points for my determination are as follows:

(i) Whether the State Bank of Pakistan had reason to believe that the accused were indulging in illegal business of banking?

(ii) Whether the accused No.1 when required by the State Bank of Pakistan to produce relevant statement and documents in relation to the business carried out by it for the purpose of determining whether accused No.1 was doing any banking business in contravention of section 27(1) of the Banking Companies Ordinance, failed to do so?

(iii) What offence if any, is committed by the accused or any one of them?

7. My findings on the above points are as follows:‑

(i) Affirmative.

(ii) Not proved.

(iii) No offence.

REASONS :

Mr. S.M. Khursheed, Deputy Director (P.W.1) has produced the advertisement (Exh.6) made by the accused by which Shirakatnars were invited to invest money. This fact is admitted by the accused in their written reply submitted before this Court on 13‑3‑1991 in the following words:‑

"It was admitted that at that time, under the influence of a flood of advertisements, the accused also inserted advertisements but as the accused had no acumen or tact, they did not attract any money from the public. At that time when the State Bank of Pakistan took up the enquiry, the accused had already stopped inserting advertisements. 1n the above statement (Annexure `A') the accused undertook not to advertise for any finance from public. In the above statement, it was submitted that the accused had never transacted any banking business, or acted as a Bank in any manner?

9. It may be added that prior to this case the accused were also prosecuted for the offence under section 27‑A, read with section 83(1‑D) of the Banking Companies Ordinance, 1962, and were convicted on their own plea o guilt vide judgment, dated 23‑5‑1988. On the face of this admitted position the State Bank of Pakistan had reason to believe that the accused were indulging in illegal business of banking. The word "appears" used in section 43‑A of the Banking Companies Ordinance, 1962, simply means that at the present stag there should be prima facie material before the State Bank of Pakistan indicate that the illegal business of banking complained of is likely to have bee committed. Point No.1 is, therefore, answered in affirmative.

10. POINTS NOS.2 and 3 .

Both these points are interconnected, hence for the sake of convenience they are being discussed together.

11. The receipts of directives (Exh.7) and (Exh.9) by the accused are not disputed. Muhammad Rafique, Inspecting Officer (P.W.2), has testified that these directives were served upon Fateh Muhammad Khan, Manager of accused No.1. The accused had sent replies to these directives vide (Exh.8) and (Exh.10) respectively. In the former reply it was made clear that the record of accused No.1 was already checked and examined by G.M. Ghazali, Inspecting Officer, State Bank of Pakistan. The reply sent by accused on 9th July, 1988 (Exh.10) is; however, material and for the sake of convenience is reproduced below:‑

"Your above letter was delivered personally by Mr. Qureshi and Pervez today. The required information is furnished hereunder inter alia.

(1) Copy of Partnership deed attached.

(2) NA.

(3) NA.

(4) NA.

(5) NA.

(6) Photo copy of our current bank a/c is attached.

(7) Not prepared as financial year has not yet been ended.

(8) No Branch in operation.

(9) It may be noted that M/s. Perfect Enterprises is a partnership firm duly ‑ registered by Registrar of firms and they have three manufacturing units in Muzaffargarh Distt. The units are Ghazi Cotton Ginning Factory, Mehar Rice Mills and M.M. Industries.

(10) NA.

(11) As per partnership deed.

During 1987 capital was invited on partnership basis but no response was received from the public. The business is being conducted on normal business lines. M/s. Perfect Enterprises (Regd.) do not indulge in the business of Banking in Pakistan.

We hope the above information/explanation will meet your requirements.

Kindly withdraw your notice in light of the above explanations."

12. The above reply is self‑explanatory. The accused had furnished all available information. Admittedly the Inspecting Officer had the powers to search and seize books of accounts, documents or other record relevant to the business of accused No.1, but no effort was made to seize the same, if the authorised officers of the State Bank of Pakistan were not satisfied with the replies of accused (Exh.8) and (Exh.10).

13. In criminal cases the onus is on the prosecution to prove beyond all reasonable doubt the guilt of the accused. The mens rea or a guilty mind is an essential ingredient of a criminal offence and it is a sound rule of construction to read this element in the statutory provisions unless the statute expressly by necessary implications excluded it. If any authorities are needed on t subject the cases of Pakistan and others v. Hardcastle Sond (Pakistan) Limited Karachi, reported in PLD 1967 SC 1, Jahanara Khatoon and others v. The State reported in PLD 1967 Dacca 704 and Syed Abul Aala Moududi v. The State Bank of Pakistan and another reported in PLD 1969 Lah. 908, may be cited with advantage. In the first cited case Hamoodur Rahman, J, observed as follows:‑

"Even in a case of statutory offence the presumption is that mens rea is an essential ingredient unless the statute creating the offence by express terms or by necessary implications rules it out. The mere omission of the word "knowingly" or "intentionally" is not sufficient to rebut this presumption for all that such words do is to say expressly that is normally implied."

14. The perusal of the record shows that the accused had not concealed the information called for by the State Bank of Pakistan. They had co‑operated with the authorised officers of the Bank by sending the partnership deed, and statement of Bank Account alongwith their reply (Exh.10). Accused Shabbir Ahmad Mehar, when examined on oath produced the journal (Exh.18), ledger (Exh.19) and cash book (Exh:20) before the Court. An offer was also made to the Advocate for complainant to examine the original record, if so desired.

15. All these factors when combined together show that the accused had not violated the provisions of section 43‑A of the Banking Companies Ordinance, 1962, and they are entitled to an acquittal. Accordingly they are acquitted and are discharged from their bail bonds.

N.H.Q./S‑868/E Accused acquitted.