STATE BANK OF PAKISTAN Versus PAKISTAN SERVICE INTERNATIONAL INDUSTRIES (PVT.) LTD.
The charge against the accused is that they alongwith accused Shahid Pervez Hashmi (since dead), being the Directors of M/s. Pakistan Service International Industries (Pvt.) Ltd. having its office at Karachi, on or about 17th December, 1989, anal 9th April, 1990, failed to produce the required statements and documents in relation to the business carried out by the said company, viz. accused No.1, for the purpose of determining whether the said company 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. Pakistan Service International Industries (Pvt.) Ltd. having its office at 121, Business Arcade, opposite Sabzi Mandi, Main University Road, Karachi, the accused No.1, is a private limited company, with accused S.K.A. Rashedi, M.M. Munir, Nadeem‑ul‑Quraish, M.Wakil Ahmad and Shahid Pervez Hashmi (since dead) as its Directors. As it appeared to the State Bank of Pakistan that the accused were transacting business of banking in contravention of the provisions of Banking Companies Ordinance, 1962, the State Bank of Pakistan, in exercise of the powers under section 43‑A of the said Ordinance issued directive dated 17th December, 1989, calling upon them to furnish/produce to the authorised representatives of the State Bank of Pakistan documents/records/information contained therein, but the said directive could not be served as the office of accused No.1 was found closed. Consequently the State Bank of Pakistan directed the accused, by a notice published in Daily `Dawn' Karachi, dated 9th April, 1990, to make available, nor later than seven days from the publication thereof, all books and records concerning their business for inspection by the State Bank of Pakistan, but with no result. The accused, by their conduct, refused to co‑operate with the State Bank of Pakistan and did not comply with the order/directive contained in the aforesaid directives. Accordingly a complaint for the offence under section 43‑A, punishable under section 83(1‑C) of the Banking Companies Ordinance, 1962, was filed against the accused, which was brought on record on 14‑10‑1990. Accused Shahid Pervez Hashmi was reportedly dead and consequently the case proceeded against the present accused.
3. Charge under section 43‑A, read with section' 83(1‑C) of the Banking Companies Ordinance, 1962, was framed against the accused, 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 Pervaiz Sultan Siddiqui, 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. According to them the directives were not served upon then; Accused S.K.A. Rashedi has produced certain documents to show that previously also such notices were served, which were replied to the satisfaction of the officials of State Bank of Pakistan. The accused did not examine themselves on oath, They also led no defence.
5. The points for my determination are as follows:‑‑
(i) Whether the State Bank of Pakistan had reason to believe that accused No.1 were indulging in illegal banking business?
(ii) Whether the accused No.1 had failed to produce/supply relevant record/information when called upon to do so by the State Bank of Pakistan?
(iii) What offence, if any, is committed by accused?
6. My findings on the above points are as follows:‑‑
(i) Affirmative.
(ii) Not proved.
(iii) No offence.
REASONS.
7. POINT NO. 1.
Mr. S.M. Khursheed, Deputy Director (P.W.1) has produced the advertisement made by accused No.1 (Exh.5) inviting deposits of money from public. The accused have admitted to have inserted the advertisement (Exh.5), but they made it clear that it was not meant for inviting deposits of money. On the face of this advertisement (Exh.5), 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 stage there should be prima facie material before the State Bank of Pakistan to indicate that the illegal business of banking complained of was likely to have been committed. Point No.1 is, therefore, answered in affirmative.
8. POINTS NOS. 2 AND 3.
Both these points are ,interconnected, hence for the sake of convenience they are being discussed together.
9. The service of directive (Exh.6) upon accused No.1 is disputed. Mr. S.M. Khursheed, Deputy Director (P.W.1) has admitted in clear terms that this directive was not served upon the accused as the office of accused No.1 was found closed. Pervaiz Sultan Siddiqui, Inspecting Officer (P.W.2) who had gone to serve the directive upon accused No.1 has also stated so. Admittedly the addresses of all the accused persons were available in the office of State Bank of Pakistan, but still no effort was made to serve the accused persons at their residential addresses. Mr. S.M. Khursheed, Deputy Director (P.W 1), when asked about it stated as follows:‑‑
"It is correct that in Exh.4 the residential addresses of the accused are also mentioned. Our officers had not visited the house of the accused as we do not visit the houses of any accused person, but we visit the offices only. No notice was served upon the accused at their residential addresses, but we had issued only directive at their business address."
10. Pervaiz Sultan Siddiqui, Inspecting Officer (P.W.2), also admitted about this fact in the following terms:‑‑
"I had not visited the residential premises of the accused persons. No notice was issued to accused at their residential address:"
11. The perusal of the record further reveals that the accused No.1 was also served with notice (Exh.13) about the alleged violation of section 27‑A of s( the Banking Companies Ordinance, 1962, which was replied by them vide (Exh.14), in which they had stated as follow:‑‑
"This is to inform you that we have started the business of supplying household items to general public on the basis of instalments. The start of business needed additional amounts. Efforts were made to generate the amounts calling for business partners which were not successful, therefore, the project was dropped.
To avoid the inconvenience to general public we had made an advertisement in Daily "AMAN". Clipping is enclosed for your perusal:"
12. Not only this but the accused had also intimated the Joint Registrar, Corporate Law Authority, Karachi about this position vide (Exh.15). The accused had also stopped their business activities and. such intimation was also sent to the Joint Registrar, Corporate Law Authority vide (Exh.16). While giving reply to Governor. State Bank of Pakistan vide. (Exh.14). the accused had stated as follows:‑‑
"It is further submitted that we will welcome any investigating official from your department to ascertain the above facts:"
13. Having regard to the past conduct of the accused which is evident from the documents placed on record, it is clear that the accused had stopped the business and it was for this reason that their office was found closed. There is nothing on record to even suggest that the accused had avoided the service of directive. The substituted service by means of publication in newspaper is permissible only where it is found that the accused were keeping out of the way to avoid service through ordinary means or that for any other reason service of notice could not be effected in the ordinary way. No such situation existed in this case and in fact no effort was made to serve the accused at their residential addresses, after their place of business was found closed. The accused were thus prosecuted before affording them an opportunity to explain their position.
They had received notice when their office was functioning and had also replied the same. Since they had closed their office the directive (Exh.6) could not be served upon them and, therefore, they cannot be held responsible for it.
14. In view of the above discussion, it is clear that the accused were not served properly and since they had not received the directives they cannot be punished for their non‑compliance. Accordingly the accused are found not guilty and are acquitted. The accused who are on bail are discharged from their bail bonds.
N.H.Q./S‑870/K Accused acquitted.