STATE BANK OF PAKISTAN Versus PERVAIZ ALAM

The charge against the accused is that he being the sole proprietor of a firm known as 'Alam Traders', carrying on business at B-225, Bazar-e-Faisal, Karimabad, Karachi, on or about 25th June, 1988, 3rd July, 1988, and 19th October, 1988, failed to produce the required statements and documents in relation to the business carried out by him for the purpose of determining whether he 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, 1902.

2. Accused Pervaiz Alam is the sole proprietor of the firm known as `Alam Traders'. As it appeared to the State Bank of Pakistan that the accused was 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 directives dated 25th June, 1988, and the 3rd July, 1988 calling upon him to produce the required statements and documents in relation to the business carried out by him for the purpose of determining whether he was doing illegal banking business. The accused sent a reply which was, however, not found satisfactory. In order to give one more chance a directive, dated 19th October, 1988 was published in Daily `Dawn', Karachi, calling upon the accused to produce within seven days all the books and records concerning his business for inspection by the State Bank of Pakistan, but with no result. Consequently on 23-5-1989 a complaint for the said offence was filed against the accused before this Court which was brought on record on 28-5-1989.

3. Charge under section 43-A, read with section 83(1-C) of the Banking Companies Ordinance, 1962, was framed against the accused and he was asked as to whether he pleads guilty or has any defence to make, to which he pleaded not guilty and claimed a trial. At the trial the prosecution examined Mr. S.M. Khursheed, Deputy Director (P.W.1), and Muhammad Rafiique, Inspecting Officer (P.W.2).

4. In his statement recorded under section 342, Cr.P.C. the accused has denied the case of the prosecution. His defence as unfolded by him in his written statement (Exh.8) is as follows:--

"I say that through classified advertisement I have invited partner in business of construction-company titled 'Alam Traders' to construct houses for sale on easy instalments. But till this date I have not received any amount, share, investment or deposit from any party or individual. This fact I have time and again conveyed to the concerned officers of the State Bank of Pakistan. I say that I am being an Assessee in Income Tax Department being assessed under SO& Assessment Scheme. My N.T.N. is 15-25-3403140. I do nut maintain any book of accounts, or any other record, as Messrs 'Alam Traders' is a Proprietorship Company. This Income Tax Assessment Order I had submitted to the Senior Deputy, Director of State Bank of Pakistan vide my application dated 11-7-1988 filed as Exh.4 /5. I say that in a previous case filed by the State Bank of Pakistan under sections 27(a) and 83 of the Banking Companies Ordinance which was numbered as Cr. Org. No.58 of 1988 I in my statement under section 342, Cr.P.C. had clearly stated that I have not received any deposits from any body, and this statement was never contested by the State Bank of Pakistan. Similar question was also put to the witness of State Bank of Pakistan in that case namely Mr. Saeed Haider Bhatti son of Allah Ditta Bhatti, Deputy Director, who has stated `I do not know if any deposit was received by the accused in response; to this advertisement .... it is correct that in reply Exh.9 and Affidavit Exh.10 the accused had stated that no deposit was received by him."

In view of the above stated facts, this Honourable Court has taken a lenient view while passing judgment in Cr. Org. Misc. No.58 of 1988 and I was sentenced to fine of Rs.15,000 only.

I am filing herewith copies of the deposition of P.W. Saeed Haider Bhatti son of Allah Ditta Bhatti in Cr. Org. No.58 of 1988 and the judgment dated 22-11-1989 passed by this Honourable Court in the said case as Annexures 'A' and 'B' respectively.

I say that I have never denied, refused or neglected to show, produce, submit any books of accounts, financial statement, Bank Statement and other relevant records to the State Bank as directed or authorised by them.

I say that I am absolutely innocent and had not committed any offence as alleged or charged and have already undergone conviction in the previous case and I pray for mercy and acquittal."

5. The accused- did not step into the witness-box. He also led no defence.

6. The points for any determination are as follows:--

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

(ii) Whether the accused when required by the State Bank of Pakistan to produce relevant statements and documents in relation to the business carried out by him for the purpose of determining whether he was doing any banking business in contravention of section 27(1) of the Banking Companies Ordinance, 1962, failed to do so?

(iii) What offence, if any, is committed by the accused?

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

(i) Affirmative.

(ii) Not proved.

(iii) No offence.

REASONS

8. Point No.1.

Mr. S.M. Khursheed, Deputy Director (P.W.1) has produced the advertisement (Exh.1/2) made by the accused by which Shirakatdars were invited to invest money. This fact is admitted by the accused in his reply (Exh.l/5): It is also an admitted position that prior to this case the accused was prosecuted for the offence under section 27-A, read with section 83(1-D) of the Banking Companies Ordinance, 1902, and was convicted on his-own plea of guilt vide judgment dated 22-1-1989, available on record. On the face of this admitted position the State Bank of Pakistan had reason to believe that the accused was 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 is likely to have been committed. Point No.1 is, therefore, answered in affirmative.

9. Points Nos.2 and 3.

It would be convenient to discuss both the points together as the evidence is common.

10. The receipt of directives (Exh.1/3) and (Exh.1/4) is not disputed by the accused who has sent his reply (Exh.1/5) in the following words:--

"Please refer to your letter bearing NO.BID(INSP) 1642/604-A-88, dated 3rd July, 1988. In reply to the same I would like to inform you as follows:--

(1) That the name of the Firm is Alam Traders. It is a sole proprietorship firm.

(2) The investment was invited for the purpose of construction business.

(3) No investment or deposit was ever received either by the undersigned or by any other person on behalf of Alam Traders, Karachi.

(4) Since no investment or deposit was received as such no investment was made to any Avenue.

(5) In view of the above submission no profit was earned.

(6) Same as above.

(7) I am riling my income-tax returns under self assessment scheme under no-account as such we are not maintaining any balance sheet, profit and loss accounts, etc. etc. However, I am annexing herewith photo copies of assessment orders. (8) We have no branches.

(8) We gave no branches.

(9) We have no allied concerns.

(10) No advances were made to anybody.

(11) Since Alam Traders, Karachi is a proprietorship firm as such question of partners/directors does not arise.

I hope the above facts will satisfy your good-self and further proceedings will be dropped."

11. The above reply is self-explanatory which is supported by the assessment of income-tax. The accused had all along pleaded that he had not received any investment and, therefore, no accounts were maintained. Admittedly the Inspecting Officers had the powers to search and seize books of accounts, documents or other record relevant to the business of accused but no effort was made to seize the same, if the authorised officers of the State Bank of Pakistan were not satisfied with the reply of accused (Exh.l/5).

12. In criminal cases the opus 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 constitution to read this element in the statutory provisions unless the, statute expressly or by necessary implications excluded it. If any case-law is needed on this subject, the cases of Pakistan and others v. Hardcaste Waud (Pakistan) Ltd. Karachi reported in P L D 1967 SC 1, Jahanara Khatoon and others v. The State reported in P L D 1967 Dacca 704 and Syed Abul Aala Maududi v. The State Bank of Pakistan and another reported in P L D 1969 Lah. 908, may be cited with advantage. In the first cited case Hameed-ur-Rehman, 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 alt that such words do is to say expressly that is normally implied."

13. The perusal of the record shows that the accused had not concealed information when called upon by the State Bank of Pakistan to furnish the p same. No case for non-compliance of the directives issued under section 43-A of the Banking Companies Ordinance, 1902, is made out and the accused is accordingly acquitted. He is on bail and is discharged from his bail bond.

N.H.O./S-896/K

Accused acquitted.