1. This is a direct complaint filed by the State Bank of Pakistan against the respondents under section 43-A read with section 83(1-C) of the Banking Companies Ordinance, 1962, on the allegation that the accused/respondents Nos.2, 3 and 4 were Directors of Messrs Debnum (Pvt) Ltd., and they were carrying on banking business in contravention of Banking Companies ordinance, 1962. The State Bank of Pakistan through its subordinates issued notices/directives, dated 23rd April, 1988, and 26th April, 1988, requiring the accused to furnish documents/records/information mentioned therein, and to allow the Authorised Officers of the State Bank of Pakistan to inspect the same. The accused/respondents were further directed by notice published in Daily Dawn, dated 20th July, 1988, to make available all books and record concerning their business for inspection by the State Bank of Pakistan within seven days. Even the Authorised Officers' of the State Bank paid several visits to the place of business of the accused but the accused did not comply with the directions and have refused to cooperate with the State Bank. Thus, they contravened the provisions of section 43-A of the said Ordinance, and are liable to be punished. It was further alleged that the accused are continuing with the commission of the offence every day.
2. On receipt of the above complainant, process was issued against the accused to appear before this Court.
3. The formal charge was framed against the accused on 25-2-1990 but they pleaded not guilty, However, during the proceedings of the trial, Mrs. Perveen Akhtar respondent No.3 died.
4. At the trial, complainant examined Mr. S.M. Khurshid A. Majeed, Deputy Director, P.W.1, who has produced notification authorising him to institute proceedings as Exh.3, he has produced photostat copy of the Memorandum and Articles of Association as Exh.4, photostate copy of certificate of incorporation, issued by Registrar, Joint Stock Companies as Exh.5, showing that the accused were Directors of Messrs Debnum (Pvt.) Limited, cuttings from daily newspaper `Jang' dated 25-12-1987, published by accused No.1 soliciting deposits of money from general public as Exh.b, directive dated 23-4-1988, as Exh.27, reply of the accused as Exh.8, directive dated 26-4-1988 produced as Exh.9, and its acknowledgment and the reply by accused No.], as Exh.10, the directive issued by the Bank through newspaper daily `Dawn', dated 20th July, 1988, calling upon the accused to furnish requisite information and to produce the relevant record as Exh.11. He has also produced the complaint filed by the Bank in the Court as Exh.12. In cross--examination, he has deposed that the accused have stated in Exh.8 that they accepted deposits from two persons only, and when they came to know that it was not legal they returned the amount to the shareholders. The accused did not allow any opportunity to inspect the record and, therefore, he could not say whether they had received contribution from others or not. He has denied the suggestion that the accused had informed' them that they were not maintaining any record, it was mentioned in Exh.10 that the company was dormant.
5. Muhammad Rafique, Assistant Director, State Bank of Pakistan, P.W.2, has deposed that he was working as Assistant Director State Bank of Pakistan, Inspection Department on 24th April, 1988 and 30th April, 1988. He had visited the office of accused No.1, and demanded the record for inspection but the same was not shown to him. Accused Shaikh Wasimul Haq had informed him that they are sending reply after consulting a legal adviser. No record was produced before him. In cross- examination he has denied that accused had informed them that they were not maintaining any account and they had received deposit from two persons only which were returned by them. He has also denied that accused had informed him that the company had ceased to function after they came to know that it violated the provisions of Banking Companies Ordinance, 1962.
6. After close of the prosecution case, the statements of the accused were recorded in which the accused have admitted that they were Directors of Messrs Debnum (Pvt.) Limited, and that they published advertisement soliciting deposits. They have also admitted that they had received directive from the State Bank. However, as soon as they received the first directive they stopped the business and sent such reply to the Bank. They had not received the second notice. They had received one deposit which they had returned to the depositors immediately. It was further stated that they had supplied requisite information to the State Bank of Pakistan.
7. The accused have examined themselves on oath, and have repeated their contentions. Accused Shakil Anwar has stated in his statement on oath that although he was one of the Directors of the company concerned, he never participated in the same nor he used to sit at the shop. There was one transaction only in which some amount was deposited which was returned back by them after receipt of notice of State Bank of Pakistan and thereafter they closed their business.
8. The points for determination in this case are:--
(1) Whether the accused had failed to produce documents/account books before the subordinates of the State Bank as directed?
(2) What offence if any was committed by the accused?
9. My findings are as under:-- Point No.1. In the affirmative.
10. Point No.2. Accused/respondent Wasimul Haq is guilty under section 83(1-C) of the Banking Companies Ordinance, 1962.
11. Point No.1.
12. On this point, the complainant has examined Mr. S.M. Khurshid P.W.1, who has produced the documents as Exh.3 to Exh.12 as mentioned in the earlier part of this judgment, and Muhammad Rafiq, Assistant Director P.W.2, their evidence has not been seriously challenged by the accused.
13. It was contended by Mr. Khawaja Naved Ahmed, learned counsel appearing for the accused that the reply Exh.8 clearly shows that the accused had received deposits only from two persons and when they came to know that their action was against the provisions of Banking Companies Ordinance, they stopped their business and returned the amount to the shareholders. In this connection he has further relied upon letter Exh.10, sent by the accused to Senior Deputy Director, State Bank of Pakistan showing that they had sent some of the documents to the Bank and remaining documents required by the Bank were not available with them.
14. However, it cannot be believed that the accused who are businessmen would not maintain any account, specially when they had taken two more persons as their partners as admitted by them.
15. The accused have not denied that they had not received deposits but their case was that they, did receive deposits from two persons, and the said amount was returned by them after receipt of the directive from the State Bank of Pakistan. Be that as it may, it cannot be expected from private limited company to run business without keeping accounts. The evidence produced by the complainant was not seriously challenged and, therefore, I. Am of the considered view that the complainant has proved its case against the accused that Messrs Debnum (Pvt.) Limited had failed to produce the documents/accounts as directed, therefore, this point is answered in affirmative.
16. Point No.2.
17. As far as accused Shaikh Wasimul Haq is concerned, he has admitted the receipt of directive and the correspondence carried on between the Bank and the Company. As far as Shaikh Shakil Anwar is concerned, he has stated In statement on oath that of course he was one of the Directors of the company concerned, but he never participated in the affairs of the same nor he used to sit at the shop. There was one transaction only in which some amount was deposited which was returned back by them after receipt of the notice from the bank, and thereafter, they closed their business.
18. This statement of accused Shakil that he never participated in the business nor he used to sit at the shop and there was only one transaction was not challenged in cross-examination, therefore, I find accused Wasimul Haq guilty under section 83(1-C) of the Banking Companies Ordinance. However, looking to the circumstances and the facts that they had stopped the business immediately, returned the amount/deposits to the co-sharers, and keeping in view their replies, I take a lenient view and convict and sentence him till rising of the Court and to pay fine of Rs.10,000 (Rupees Ten Thousand) in default whereof he shall suffer S.I. For two months.
19. As far as accused Shaikh Shakil Anwar is concerned, he is acquitted, of the charge.
20. The fine shall be paid within seven, days. If the fine is paid Rs.2,500 (Rupees Two Thousand Five Hundred) shall be paid to the State Bank of Pakistan as compensation and damages.
21. I had decided the above matter on 15-9-1991 by a short order and these are the reasons for the same.