The charge against the accused is that he on or about 3rd July, 1988, 9th July, 1988, and 27th October, 1988, when called upon by the State Bank of Pakistan, under section 43-A of the Banking Companies Ordinance, 1962, to supply information regarding the business carried out by him for the purpose of determining whether he was doing any banking business in contravention of section 27(1), failed to supply the requisite information and to produce the relevant record, and thereby committed an offence punishable under section 83(1-C) of the Banking Companies Ordinance, 1962.
2. Accused Munawwar Ahmed is the sole proprietor of the business concern which he was carrying on. He made an advertisement in daily `Jang' Karachi, dated 19-4-1988, from which it appeared to the State Bank of Pakistan that he was transacting business of banking in contravention of the provisions of Banking Companies Ordinance, 1962, and consequently the State Bank of Pakistan, in exercise of powers under section 43-A of the Banking Companies Ordinance, 1962, issued notices/directives dated 3-7-1988 and 9-7-1988, calling upon him to furnish information/documents concerning his business. The accused sent a reply, dated 11-7-1988, which was not found satisfactory. The State Bank of Pakistan, therefore, published a notice in `Daily Morning News', dated 27-10-1988 asking the accused to comply with the directives, but with no result. On 23-5-1989 a complaint against the accused was filed 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, to which he pleaded not guilty.
4. The prosecution has examined Mr. S.M. Khursheed, Deputy Director (P.W.1), and Pervaiz Sultan Siddiqui, Inspecting Officer (P.W.2), and then closed the side.
5. In his statement recorded under section 342, Cr.P.C., the accused has denied the allegations made against him. He has admitted to have inserted the advertisement, but pleaded that no deposits of money were solicited.
6. The accused has examined himself on oath (D.W.1). He has also placed on record certain documents to lend support to his defence plea. He, however, did not examine any other witness in defence.
7. The points for my determination in this case are as follows:--
(i) Whether the State Bank of Pakistan had reason to believe that the accused was transacting illegal banking business?
(ii) Whether the accused when called upon by the State Bank of Pakistan to supply information/documents/records, respecting his business, has failed to do so?
8. My findings on the above points are as follows:
(i) Affirmative.
(ii) Negative.
REASONS
9. Point No.1 A bare perusal of section 43-A of the Banking Companies Ordinance, 1962, makes it clear that where it appears to the State Bank of Pakistan that a company, firm or any other person is transacting in any manner or form, whatsoever the business of banking in contravention of subsection (1) of section 27 or is receiving or has received deposits of money in contravention of section 27-A, the State Bank may issue directives calling upon the company, firm or the person, to supply requisite information or documents concerning that business. The advertisement (Exh.4) which was admittedly got inserted by the accused speaks of investment of money in the following words:--
10. According to S.M. Khursheed, Deputy Director (P.W.1), it appeared to him that the accused was transacting the business of banking in contravention of the provisions of the Banking Companies Ordinance, 1962, and consequently the State Bank of Pakistan had every reason to issue A directives to accused calling upon him to furnish the particulars of his business. The point No.1 is, therefore, answered in affirmative.
11. Point No.2 Both S.M. Khursheed, Deputy Director (P.W.1), and Pervaiz Sultan Siddiqui, Inspecting Officer (P.W.2) have testified about the issuance of directives to the accused. The reply given by the accused is also on record (Exh.7), which is self-explanatory and for the sake of convenience is reproduced below:-- "Before replying to your original questionnaire, I feel it worthy to explain briefly the position of my Company (MAC CORPORATION, still in making). I have got about 35 Acres of land near Kotri S.I.T.E.
Area and intended to start two businesses on the same viz. (i) A Housing Project on 9.3 Acres, and
(ii) A stone crushing plant on balance of the land. For this I sought necessary permissions from the Deputy Commissioner, Dadu, and the Director of Industries, Sindh, for utilization of this land for Residential/Industrial purposes. As I did not have funds with me for this purpose, so I tried for the loan from the Banks but I failed. So, I issued in the paper for funds (against solid security of my land) for the projects, with clear mind as the loan was against solid security of landed personal property. Anyhow, immediately on issue in the paper, some of my friends advised me that though I was clear, but there could be doubt like some other miscreants, so I left the idea and the present position is as under in seriatum of your questionnaire:--
(1) There is no business of the Firm/Company in hand nor there are any Memorandum and Articles of Association of the same as my proposed firm `MAC CORPORATION' has not yet started functioning.
(2) As explained in the opening paragraph of this letter. But no further efforts were made to collect any amount from the public.
(3) No deposit/investment collected from anybody.
(4) to (11). All Nil."
12. The accused had denied the allegations in spec terms. His reply to an earlier notice (Fach.12) issued by the Banking Control Department of the State Bank of Pakistan is also on the same lines which is duly supported by the documentary evidence (Exh.17). The accused wanted to instal a `Stone Crushing Plant' and to float a `Housing Project'. He tried his best to obtain loan from bank for the said purpose, but without success. The plea of the accused that he wanted finances for the said purpose through (Exh.4) to establish his lawful business is, therefore, fully borne out from the record. The following admissions made by Pervaiz Sultan Siddiqui, Inspecting Officer (P.W.2), further make this position clear:-- "The accused had mentioned that he was proposing to float a housing project, but he produced no recoil in proof thereof. The accused wanted to produce some documents but I did not see them as they were not concerning the business."
13. The accused had sent a detailed reply (Exh.7), reproduced above. He made it clear that no money was received by him and consequently he did not maintain any accounts. The record also shows that on the next day of the advertisement (Exh.4), the accused changed his mind and wanted to dispose of his property which is clear from the advertisement which appears in `Daily Jang', Karachi on 20-4-1988 (Exh.14). He had in fact placed all the cards before the officials of the State Bank of Pakistan to prove his good faith. Clause (b) of section 43-A of the Banking Companies Ordinance, 1962, empowers the State Bank of Pakistan to authorise any person to enter and search any premises and seize books, accounts or other documents or records respecting any business carried on by the company, firm or such person. Admittedly Pervaiz Sultan Siddiqui, Inspecting Officer (P.W.2), was authorised to inspect the record of the accused. No effort was, however, made by him to seize the record, if any. There is also nothing on record to show that the accused had resisted any such attempt of search of his premises. On the other hand there is clear indication on record to show that the accused had himself visited the office of State Bank of Pakistan to find out the progress of the case. He had all along pleaded that he had no such record as requisitioned by the State Bank of Pakistan.
14. Having regard to the above circumstances, I am clear in my mind that the accused had not contravened the provisions of section 43-A of the Banking Companies Ordinance, 1962. He is, therefore, found not guilty and is acquitted accordingly. The accused who is on bail is discharged from his bail bonds.