MUHAMMAD ALI vs STATE BANK OF PAKISTAN, KARACHI AND Another

1. SAMAD AHMED, J.-Muhammad Ali, the appellant herein, by special leave, was found guilty by the Foreign Exchange Tribunal (Session Judge, Karachi) under section 5 (1) (d), read with section 23 of the Foreign Exchange Regulations Act VII of 1947 (hereinafter called `the Act'), and was sentenced to imprisonment till the rising of the Court and a fine of Rs.33,000, or, in default of payment of fine, to undergo a period of six months' further R.I. On appeal, a learned Single Judge of the former West Pakistan High Court (Karachi Seat) has upheld the conviction and the sentence of the appellant.

2. The prosecution case against the appellant was that on or about the 3rd of June 1964, he had deposited a sum of Rs.22,000 in the Savings Bank Account No. 857 of one Irfanullah with the Habib Bank Limited, Ranchore Lines, Karachi. It was alleged that lrfanullah aforesaid was then staying in Glasgow (United Kingdom), and was, therefore, a person resident outside Pakistan in terms of the State Bank Notification No. E.E. 1/63-SB, dated the 14th of October 1963, and the appellant, by depositing the money into his account, had contravened section 5 (1) (a), (c) and (d) of the Act.

3. In August 1964, prior to his prosecution, the appellant was served with a notice by the State Bank of Pakistan to show cause why legal action should not be taken against him under section 23 of the Act for contravening the provisions of section 5 (1) (c) and (J) of the same Act. The appellant, in his reply dated the 4th of September 1964, admitted inter alia the fact that he had deposited Rs.22,000 in the account of lrfanullah, but submitted that it was in repayment of a loan given to him by Irfanullah prior to his departure to the United Kingdom. At the trial, he denied having made the payment, alleging that the admission to that effect made by him in reply to the show-cause notice men--tioned above, was as a result of the suggestion of the Controller of State Bank of Pakistan.

4. Both the Tribunal and the learned Single Judge in the High Court, on a careful appraisal of the evidence, have held that the appellant had in fact deposited the amount in question to the credit of Irfanullah, as alleged by the prosecution, and that his statement at the trial disowning that fact was false. However, the question which arises in this case is whether the offence alleged against the appellant has been brought home to him by the prosecution.

5. The relevant part of section 5 (1) (d) of the Act, for the contravention of which the appellant was prosecuted, reads as follows :- "5 (1) (d). No person in or resident in Pakistan shall place any sum to the credit of any person resident outside Pakistan."

6. Section 20 (1) (a) of the Act, which is relevant in this respect may also, be reproduced:- "20 (1) (a). Until the State Bank by general or special order otherwise directs, any person who has at any time after the commencement of this Act been resident in Pakistan, shall be treated as still being resident in Pakistan, and if such direc--tion is given in relation to any such person, the State Bank may, by the same or a subsequent direction, declare the territory in which he shall be treated as being resident."

7. In pursuance of these provisions, the State Bank of Pakistan issued a Notification No. FB. 1/63-S.B.

8. Dated the 14th of October 1963 to the following effect :- "In pursuance of clause (a) of subsection (1) of section 20 of tire foreign Exchange Regulations Act, 1947 (VII of 1947), and in partial modification of the State Bank of Pakistan Noti--fication No. F.E.

9. 13/48-S.B. Dated the 1st July 1948, the State Bank of Pakistan is pleased to direct that a person, other than a person holding any office in the service of Pakistan and re--siding outside Pakistan for the time being either on duty or on leave, being domiciled in, or a national of Pakistan, who is for the time being resident outside Pakistan, shall, unless otherwise authorised or exempted under the said Act, be treated for purposes of section 2 of the said Act, as a person resident outside Pakistan, for so long as he is so resident."

10. The point canvassed before us by the learned counsel for the appellant is that there was no proof in this case that Irfan--ullah to whose account the money was deposited by the appellant, was a person who was a resident outside Pakistan, as envisaged in clause 5 (1) (d) of the Act, nor if the notification of the State Bank of Pakistan dated the 14th of October 1963 is to be invoked in this behalf that he was domiciled in or was a national of Pakistan, who wa ; for the time being resident outside Pakistan. While the prosecution has proceeded on the assumption that Irfanullah was a national of Pakistan and a domicile of Pakistan, taking that fact to be for granted and, therefore, without adduc--ing any proof thereof. The only evidence brought on the record an the point of Irfanullah's residence outside Pakistail, is a letter written by him to the appellant on the 28th of May 1964 from Glasgow, which is as follows ~_ "Glassgow 28th May 1964.

11. My dear China, I have reached safe and sound. The job by Anis hag not been finalised and I have wired you already. One letter I am writing to you c/o Anis, Metropole Hotel. As soon as you get my letter; please deposit the amount in my bank and send the receipt to me. It will be so kind ofyou. My bank account No: is S. Frank.: A. No- 85?. Irfanullah, Habib Bank Ltd., Ranchore Lines Branch. Pay my compli--ments to every body.

12. Answer me by return of mail as soon as possible. I am O.K and will be writing to you every thing after.

13. Yours, Irfanullah Talib 655, Govan Road, 2-Up-Left, Glasgow, S.W. 1.

14. U.K."

15. The learned counsel for the appellant has submitted with great force that all that this letter shows is that a few days before the money was deposited to the credit of lrfanullah, the latter had come over to Glasgow from Pakistan, but the letter cannot be stretched further to prove that Irfanullah had taken up resi--dence there permanently or provisionally to bring him within the mischief of section 5 (I) (al) of the Act or of the notification issued by the State Bank of Pakistan in this behalf. It was con--tended that "residence in a place" means more than just a flying visit or a casual stay in that place. To constitute residence, there must be an animus maneidi, i.e., an intention to stay for a period, the length of the period depending upon the circumstances of each case.

16. On the other hand, the learned counsel for the State Bank of Pakistan has contended that the word "residence" in the context of section 5 must be read in tune with the object of the Act, as set out in the preamble, namely, to regulate payments, dealings in foreign exchange and securities, and that according to the directions and interpretations of the State Bank, even a casual or a flying visit to a place outside Pakistan would make a person resident outside Pakistan. We regret we cannot accept this con--tention because we are dealing here with a penal statute, the provisions of which must be interpreted strictly, and in case of any ambiguity or doubt arising from the construction, the benefit must go to the accused person. Any direction that the State Bank a has issued cannot exceed the Authority derived by it from the statute for making those directions. If such directions are found to be in conflict with the source of the power from which the emanate, they have to be struck down as illegal and ultra vires. In the present case, however, the prosecution must fail as it has taken no steps whatsoever to prove that Irfanullah was a resident of a place outside Pakistan, which fact must have been established by some proof that he had left Pakistan not just casually but with the intention of taking up an abode outside Pakistan how--soever temporary or provisional it may have been. Nor has the prosecution led any evidence to prove in satisfaction of the requirements of the notification issued by the State Bank that Irfanullah was a national or a domicile of Pakistan. It seems to us that in this matter the prosecution has proceeded merely on presumptions and assumptions taking them to be proved with--out taking the trouble of actually proving the several ingredients of the offence with which the appellant was charged, as required by law.

17. In this view of the matter, we are constrained to give the appellant benefit of doubt and acquit him.

18. The amount of fine, if paid by hire, shall be refunded,