The accused above named stand charged under section 27-A read with section 83 (1D) of the Banking Companies Ordinance, 1962 (hereinafter referred to as the Ordinance), to which they have pleaded not guilty.
2. Brief facts of the case are that accused No.1 M/s. Erasmus Osmund Interlinks (Pvt.) Limited is a registered Company, whereas accused Nos.2 to 5 are its Directors. Accused No.4 is the wife of accused No.2 and accused No.5 is the wife of accused No.3. Accused No.2 is the Chief Executive/Managing Director of the aforesaid Company, accused No.]. The accused Company is neither a Banking Company nor a Corporation, or authority established by the Federal Government of Pakistan or a Company duly authorised to invite deposits of money from public through advertisement in the public media. However, the aforesaid Company, accused No.1 inserted advertisement in Daily `JANG' dated 10-7-1,987 inviting deposits of money from the public in contravention of section 27-A of the Ordinance, which offence is punishable under section 83 (1D) of the Ordinance. Therefore, on 18-10-1987 Mr. Saeed Hyder Assistant Director, Banking Control Department, State Bank of Pakistan, Karachi filed a complaint in this Court and the Court issued process against the accused persons.
3. The prosecution has examined complainant Mr. Saeed Hyder, who has deposed the facts as related in the above prosecution story. He has produced the certificate of incorporation of accused No.1 M/s. Erasmus Osmund, Interlinks (Pvt.) Limited and copy of list of Directors as Exhs.3 and 4. He states, that the Company was not authorised to invite deposits from the public. He has produced a copy of Daily `JANG' containing the advertisement as Exh.5. He has also produced0 the copy of show-cause notice Exh.6 and copy of reply to show-cause notice Exh.7 and also complaint as Exh.8.
4. Accused No.2, Rao Muhammad Tariq A.I Khan in his statement under section 342, Cr.P.C. Has admitted that they did advertise in Daily `JANG' without authority from competent authority, but states that they did not invite deposits thereby. He has also admitted his signature on Exh.7, but denies to have admitted to have invited deposits through public media.
5. Accused Rafat A.I Khan admits to be the Director of accused No.1, but states that he was not aware of the publication, as the management was the sole responsibility of accused No.2 Rao Muhammad Tariq A.I Khan. Accused Mrs. Raisa Tariq A.I and Mrs. Rahila Rafat A.I Khan also state that they are not aware of the publication, as the management was the sole-responsibility of accused Rao Muhammad Tariq A.I Khan, but they admit that they are Directors of the Company.
6. Accused Rao Muhammad Tariq A.I Khan has examined himself under section 340 (2), Cr.P.C. On oath and states that he had sent advertisement in question for publication on 8-2-1987 and that on 9-7-1987 he came to know about section 27-A of the Ordinance. He further states, that through advertisement he did not ask for deposits but asked for loan, and that he had not obtained the consent or permission of other Directors before the publication of advertisement. In the cross- examination he states that on 9-7-1987 he contacted Daily JANG' people to withdraw the advertisement, but he was informed that the advertisement had been sent for publication.
Accused Rafat A.I Khan has also examined himself on oath and states that at the relevant time he was out of country and returned on 20th July, 1987. He states to have left for abroad on 7th May, 1987. He has produced photostat copy of the Passport as Exh.17. Accused Mrs. Rahila and Mrs. Raisa have stated that the advertisement in question was published without their knowledge or consent.
7. Now the points for determination are; (1) whether accused N6.1 namely M/s. Erasmus Osmund Interlinks (Pvt) Limited invited deposits of money from the public through advertisement in public media in contravention of section 27-A of the Ordinance and (2) whether accused No.2 to 4 as Directors of the said Company are guilty of the said offences.
8. My findings for the reasons recorded are as under:-- "(1) From the evidence of prosecution witnesses as well as the accused persons there remains no doubt that the accused Company did advertise in Daily `JANG'. Admittedly the accused Company is neither a Banking Company, nor did they obtain any permission for such advertisement from any competent authority. Accused No.2, namely Rao Muhammad Tariq A.I Khan, however, contends that they did not invite any deposits. The advertisement has. Been produced as Exh.5. Under this advertisement the public as asked to contact with full faith accused No-1, on the basis of 4 to 5% per month, who is described as developing institution which wanted to further increase and extend business. It is admitted by accused No.2 Rao Muhammad Tariq A.I Khan that in pursuance of this advertisment they did receive investments from the public. However, he was unable to say as to what amount was received by them, but states that it did not exceed Rs.5,00,000. Under show- cause notice Exh.6 the accused were informed that they had invited money from the public through advertisement in Daily `JANG', Karachi, dated 10-7-1987 in contravention of section 27-A. Of the Ordinance. In reply to the show-cause notice, which is produced. As Exh.7, which admittedly bears the signature of accused Rao Muhammad Tariq A.I Khan, he has stated that it was not denied that they had got published an advertisement in Daily `JANG' for financing and expending their business and not for advancing money to any other person, party or general public. However, it was contended that the provisions of section 27-A of the Ordinance were not attracted. It may be relevant to reproduce section 27-A of the Ordinance which reads as under:-- "27-A. Restriction on advertising for deposits:-- No company, firm or person, not being a banking company or a corporation or authority established by the Federal Government or a company duly authorised in this behalf by the Controller of Capital Issues and Corporate Law Authority or the Registrar Co-operative Societies, shall invite deposits of money from the public through advertisement in the public media or by postal circulars, handbills, displays in public places or by any other means."
(2)On reading the advertisement and admission of the accused themselves there can be no doubt that by this advertisement the accused had invited deposits of money from the public and offered 4 to 5% profit/interest per month and admittedly as a consequence of this advertisement, they did receive certain amount which according to accused Rao Muhammad Tariq A.I did not exceed Rs.5,00,000 (Rupees five lacs). Admittedly accused No.1, who is a company, is not a banking Company and has not obtained any prior permission from any authority for seeking such deposits through public media. As such my finding on point No.1 is in affirmative.
(3)It is submitted by Mr. Azhar A.I Siddiqui, learned counsel for the accused that except accused Rao Muhammad Tariq A.I, the other accused are not liable as the advertisement was published without their knowledge and consent and that accused Rafat A.I Khan was not even in the country at the relevant time. Admittedly the advertisement in question was published on behalf of the accused Company. Admittedly all the accused persons are Directors of the Company, though accused Rao Muhammad Tariq A.I Khan is the Managing Director. Section 83 (1D) of the Ordinance provides as under:-- "83 (1D). If any company, firm or person contravenes the provisions of section 27-A, the Chief Executive of the company and its directors, every member of the firm and such person shall be punishable with simple imprisonment for a term which may extend to six months, or with fine which may extend to one hundred thousand rupees or with both."
(4)Plain reading of this section shows that whenever the Company contravenes the provisions of section 27-A of the Ordinance, then all the Directors would be liable to be punished under this section irrespective of the fact, whether they were aware of the advertisement and whether they gave consent or not. By appointing accused Rao Muhammad Tariq, A.I as Managing Director, the other accused in fact delegated their powers to him to act on their behalf in the name of the Company. As D such they would also be equally liable for the offence. It is, however, submitted by Mr. Azhar A.I Siddiqui learned counsel for the accused, that as stated by accused No.2, he was not aware of the advertisement till 9-7-1987 and after which he contacted the Daily `JANG' people, but the advertisement had already gone for printing and therefore, it could not be withdrawn.
Therefore, this may be considered as mitigating circumstance while awarding punishment. It may be pointed that section 27-A of the Ordinance was inserted by the Finance Act, 1987 which was published in the Gazette of Pakistan (Extraordinary), dated, 30-6-1987. Ignorance of law is never considered as excuse for committing an offence. Furthermore even after coming to know of this advertisement, the accused did not return the amounts received-by them in consequence of the advertisement, which was published in contravention of section 27--A but accepted the same.
(5)It is further submitted by Mr. Azhar A.I Siddiqui learned counsel for the accused, that though by virtue of section 83(1D) of the Ordinance all the Directors of the company are liable, but the fact that the advertisement was published without their knowledge is a mitigating factor to be taken into consideration, while awarding sentence to accused Nos.3 to 5 (6)It is settled principle of administration of justice, that the Courts do not impart their own knowledge while deciding the cases. In my opinion this principle is applicable to the extent the question of guilt or otherwise of the accused is determined by the Court. However, while considering the question of the quantum of sentence, the Court cannot shut its eyes to the frequency of a particular crime in the Society and its effect. In this country, specially in Karachi since last 2 - 3 years there is a racket of defrauding the people of their hard-earned money by the establishment of so-called investment companies who induce the people to deposit with them money on the promise of higher returns. It is also a question of common knowledge that practically all these companies have vanished in `: the air taking away hundreds of millions of hard-earned money of public leaving them hot and dry. In this process even widows, old persons, pensioners and orphans have been deprived of their life's savings or holdings. In such offences the Court should not be too lenient in dealing with the offenders.
N.H-Q./S-387/K Complaint accepted