OM AR SIAL, J. Shoaib Ahmed Shaikh, as the Chief Executive Officer of Axact (Private) Limited, is accused of transferring approximately Rs. 170.17 million rupees abroad through the informal and unregulated channel of hawala (also interchangeably referred to as hundi). It is alleged that this illegal activity was carried out by Shaikh through Chanda Exchange Company (Private) Limited, with the active connivance and assistance of Mohammad Younus and Mohammad Junaid (who were a Director and Branch Manager of Chanda respectively). First Information Report No. 51 of 2015 under sections 5, 8, 22 and 23 of the Foreign Exchange Regulations Act, 1947 read with sections 109 and 34 P.P.C. was registered at the F.I.A.'s Corporate Banking Circle on 14.10.2015.
2. Shaikh moved an application seeking his acquittal under section 249-A Cr.P.C. which was allowed by the learned 5th Additional Sessions Judge, Karachi South on 24.08.2016. The acquittal order was challenged before this Court, which set it aside on 26.02.2018 and directed that the trial against Shaikh and the other two gentlemen continues and should be decided within 3 months.
The case was not decided within 3 months and in fact very little or no progress took plate for a period of nearly 5 years. Shaikh again moved an application seeking his acquittal pursuant to section 249-A Cr.P.C. before the learned 8th Additional Sessions Judge, Karachi South, however, this time the learned trial court dismissed the application vide order dated 28.03.2023. It is this order which has been called in question in this Court through the current proceedings.
3. I have heard the learned counsel for the applicant as well as the learned Assistant Attorney General. The respective arguments of the counsel are not being reproduced for the sake of brevity, however, are reflected in my observations and findings below.
4. Mr. Khan, learned counsel representing Shaikh, has argued extensively that the case initiated against Shaikh and the others did not comply with the conditions specified in FERA and hence the proceedings ought to be quashed. Mr. Ahmed, the learned Assistant Attorney General categorically agreed that the case had indeed been initiated by the F.I.A. without the requisite procedure for its initiation prescribed under the FERA having been satisfied. Mr. Khan, upon a query as to why it has taken Shaikh 8 years to raise this issue, replied that each time an application Seeking acquittal on this ground was filed. Shaikh's counsel has stressed on this aspect of the case however none of the courts addressed it or gave a finding on the same in the previous orders (except the order of the learned 5th Additional Sessions Judge, Karachi South dated 24.08.2016) and in fact the order impugned also did not address it. A perusal of the orders passed appears to reflect that Mr. Khan is correct in his assertion.
5. It is an admitted position that Chanda is a company duly licensed and authorized by the State Bank of Pakistan to conduct foreign exchange transactions within the ambit of the prevailing law, rules and regulations. The accusation of the State was that Chanda effected the hawala transactions on the instructions of Shaikh and that an equivalent amount in US dollars was used in Dubai to pay 3 different persons. These 3 persons were named Zaki Shawi, Wajid and Ismail Dousary, who were said to be vendors of Axact, the company Shaikh ran.
6. The learned Sessions Court while dealing with the case was acting in its capacity as a Tribunal pursuant to section 23-A of the FERA. According to section 23(1), a contravention of the FERA and any rules, directions or orders made thereunder other than the provisions of section 3, section 3A, section 3AA, section 3B, subsections (2) and (3) of section 4, section 10. subsection (1) of section 12 and clause of subsection (1) and subsection (3) of section 20 or any rule, direction or order made thereunder shall notwithstanding anything contained in the Code of Criminal Procedure, 1898, be tried by a Tribunal constituted by Section 23-A FERA. The current case, being for offences under sections 5, 8 and 22 FERA, would therefore not be impacted by the exclusions mentioned in section 23(1).
7. Section 23(6) of the FERA provides that a Tribunal shall not take cognizance of any offence punishable under the FERA except upon a complaint in writing made by a person authorized by the State Bank of Pakistan in this regard. The proviso to this section 23(6) states that where any such offence is the contravention of any of the provisions of the FERA or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence, has been given an opportunity of showing that he had such permission. It is important to point out that the law as it currently stands currently includes another proviso which stipulates that if a person, not authorized under section 3, 3A or 3AA, is found involved in illegal foreign exchange business, the complaint as required in section 23(6) shall not be required. This proviso was added by Act X of 2020. Sections 3, 3A and 3AA are applicable to authorized exchange companies. Chanda, the vehicle through which Shaikh allegedly effected the hawala transactions, was an authorized dealer, hence the complaint required pursuant to section 23(6) was essential for the Tribunal to take cognizance. Even otherwise, if it is argued that no complaint from the State Bank of Pakistan was required as far as the case against Shaikh is concerned as he was not an authorized exchange company, may be correct since the date the law was amended in the year 2020. Prior to 2020 i.e. 2015, when his case was registered, a complaint of the State Bank of Pakistan was mandatory in all cases before the Tribunal could take cognizance.
8. As mentioned above, the learned Assistant Attorney General in no uncertain words admitted that cognizance in the case was taken without any complaint having been made by State Bank of Pakistan. Although, when the State admits that the requisite complaint was not made, due weight must be given to its submission and hence very little is left in the matter to be decided, yet in order to be satisfied, I have examined the record closely from this perspective.
9. The record reflects that instead of the State Bank of Pakistan making a complaint, it was the FIA that directed the State Bank to file a complaint under section 23. Adil Jan, Deputy Director of the State Bank, and working in its Exchange Police Department, at trial testified that State Bank had received complaints that Axact was involved in transferring money through hawala and that on 27.08.2015, the FIA had asked the State Bank to make a complaint in this regard. He admitted that it is correct that I received a letter on 27.08.2015 [sic] the subject inquiry No. 42 of 2015 issued by Altaf Hussain. Additional Director, (sic] is correct and that it was the first information regarding this crime tome." He further went on to categorically admit that "it is correct that I filed the complaint at Ex-3A on the request of the F.I.A. made by letter dated 27.08.2015." The "complaint" that Adil Jan referred to was Letter No. EPD/18983-24(83) EC-2015 dated 28.08.2015. This letter was written by Adil Jan to the FIA in which he refers to the letter written by FIA on 27.08.2015 and request that the FIA take necessary action against Chanda and other persons involved in the bus mess of hawala.
10. Even if was claimed by the State, which it is not as it transpired during the hearing, that the letter dated 27.08.2015 is the complaint required by the FERA, even then, the complaint has been made by Adil Jan in his capacity as a Deputy Director at the State Bank of Pakistan. At trial, Adil Jan has admitted that he had no evidence that he was authorized by the State Bank of Pakistan to make a complaint, however, went on to justify that he derived his authorization from his designation by virtue of a notification. Adil Jan however expressed his inability at trial to produce such a notification. Some research by this Court reveals that on 27.03.2018, the Governor of the State Bank of Pakistan vide Notification No. F.E.1/2018-SB, authorized the following officers of Exchange Policy Department of the State Bank and Foreign Exchange Operations Department of the SBP Banking Services Corporation to make complaints of offences punishable under section 23 of the Foreign Exchange Regulation Act, 1947 (VII of 1947): (i) Director (ii) Additional Director (iii) Senior Joint Director (iv) Joint Director (v) Deputy Director and (vi) Assistant Director. This however was not the position prior to 2018 i.e. 2015 when the complaint is said to have been made by Adil Jan. At that time Notification No. F.E.1/2001-SB dated 15.08.2001 was in effect which did not authorize a Deputy Director to make a complaint pursuant to section 23 FERA. The category of officers who could have made a complaint at that time were (i) Director (ii) Senior Joint Director (iii) Joint Director (iv)
Junior Joint Director (v) Assistant Director (vi) Foreign Exchange Officer (vii) Assistant Foreign Exchange Director. Adil Jan, as Deputy Director, was not authorized by State Bank of Pakistan to make any complaint on its behalf.
11. The origins of the Pakistan rupees which were allegedly given to Chanda by Shaikh so that US dollars could be credited to Axact's vendors accounts in Dubai is an enigma. It has been argued by the learned Assistant Attorney General that Shaikh received US dollars into his account from Dubai, which US dollars were converted to Pakistan rupees in Pakistan and those Pakistani rupees were then given to Chanda to be re-converted into dollars and sent back to Dubai. It is not denied by the State that the Pakistan rupees that Shaikh had was "clean" money. In this situation it eludes me as to why Shaikh would enter into such a lengthy transaction if the purpose of which a transaction was paying his vendors in Dubai. It may have been easier for him to transfer the US dollars from his account in Dubai to the account of his vendors in Dubai rather than adopt a convoluted and financially adverse procedure as alleged. Perhaps there was a reason, however, the record and the learned Assistant Attorney General do not have an explanation.
12. The learned Assistant Attorney General agreed that apart from a blanket allegation by the FIA, no other evidence was collected to substantiate the allegation against Shaikh. The 3 vendors of Axact, into whose accounts the money is said to have landed were not questioned in the investigation nor were there statements recorded. No documentary evidence is on record to establish the transfer of money. What suggests sheer mala fide on the part of the FIA is that even though primarily it was Chanda who should have been made the target of the allegation, the FIA seems to have its guns pointed towards Shaikh. Chanda's business was admittedly not impacted nor was its license suspended for even a day. The company carries on its business to date.
13. In view of the above, it is my opinion that the action, against Shaikh was spearheaded by the FIA without any valid complaint having been made by the State Bank of Pakistan. Section 23(3) of FERA was not complied with. Further, in view of the categorical admission of the State that a complaint by the State Bank of Pakistan had not been made to the Tribunal and that no evidence was collected during investigation to establish a nexus of Shaikh with the allegation of doing hawala transactions, the impugned order is set aside and the proceedings arising out of FIR No. 51 of 2015 are quashed, as having been initiated without lawful authority. This order shall however not restrict the State Bank of Pakistan in any manner whatsoever to initiate fresh proceedings against Shaikh or any other person in accordance with law, if the State Bank is of the view that an offence pursuant to the FERA has been committed. Double jeopardy shall not apply as far as the State Bank of Pakistan is concerned.
14. I would have failed in my duties as a Judge if I did not make a brief mention to a stricture passed against the learned 5th Additional Sessions Judge, Karachi South dated 24.08.2016 by this Court in its order dated 26.02.2018. I am most saddened to notice the same. The learned Additional Sessions Judge had very ably dealt with the matter and in fact has been the only judge in the history of these proceedings who addressed and gave his findings on whether section 23(3) FERA had been complied with. The learned judge had held that it had not been. This was not an easy answer to give as the above commentary also reveals. He had stated his reasons for his opinion. A difference of opinion can very well occur between a court lower in hierarchy with one that is above.
Obviously, the opinion of the court higher in hierarchy would hold the field. Yet, if reasons for a decision are given by the lower court for its conclusion, there should be no reason to reprimand the lower court for its decision. Such reprimands and strictures adversely impact the dynamism of a judge and may prevent him from concluding, what in his opinion would be the correct decision.
Such reprimands also have the impact that a court lower in hierarchy would simply thereafter follow the view given by the court higher in hierarchy without applying its own mind to the matter in order to save itself of the embarrassment of strictures. All courts of law, irrespective of where they are placed in the hierarchy, deserve equal respect. Application allowed.