The charge against the accused is that they 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 Socieiets, invited deposits of money from the public through advertisement, in violation of section 27-A, and thereby committed an offence punishable under section 83(1-D) of the Banking Companies Ordinance, 1962.
2. Messrs East and West Thinkers Associates (Regd.), the accused No.1 is a partnership firm registered with the Registrar of Firms at Karachi, with accused Sartaj-ul-Mujahid and Shaikh Ahmed Ali as its partners. The accused No.1 inserted/got inserted advertisements in Daily `Jang'
Karachi, dated 20th, 27th and 30th December, 1987, inviting deposits of money from the public in contravention of the provisions of section 27-A of the Banking Companies Ordinance, 1962. They were served with a show-cause notice against the proposed action. The accused furnished explanation, which was not found satisfactory and consequently on 15-8-1988, a complaint for the said offence was filed against them, which was brought on regular file on 22-8-1988.
3. Charge under section 27-A, read with section 83(1-D) of the Banking Companies Oldinance, 1962, was framed against the accused and they were asked whether they plead guilty or claim a trial.
The accused pleaded not guilty and wanted to be tried.
4. At the trial the prosecution examined Muhammad Rafique Khan Banking Officer (P.W.1) and then closed the side.
5. The accused admitted the insertion of advertisements in Daily `Jang' Karachi, but pleaded that no deposit of money was invited and they simply wanted partners who could invest money in the business carried out by accused No.1.
6. The accused did not step into the witness box. They, however, examined Sadique Ali (D.W.1), and Raja Sultan (D.W.2) in their defence.
7.The points for my determination in this case are as follows:-
(i) Whether the accused inserted advertisements in Daily `Jang' Karachi, (Exhs.7, 8 and 9)?
(ii) Whether the accused invited deposits of money from public through (Exhs.7, 8 and 9), in contravention of the provisions of section 27-A of the Banking Companies Ordinance, 1962?
8. My findings on the above points are as follows:- REASONS
9. POINT NO.1: Muhammad Rafique Khan, anking Officer (P.W.1) has produced the newspapers in original (Exhs.7, 8 and 9). The accused have not disputed this position. There is, therefore, no difficulty in answering this point in affirmative,
10. POINT N0.2: Admittedly accused No.1 is a partnership firm. Accused Sartaj-ul--Mujahid and Shaikh Ahmed Ali have also to be its partners. They have also not disputed the insertion of advertisements (Exh5.7, 8 and 9). It is, however, their case that they did not invite deposits of money, but had in fact sought a partnership in business. The advertisements (Exhs.7, 8 and 9) lend support to the defence set up by the accused. The reply of accused sent to the Governor, y State Bank of Pakistan (Exh.11) is also on the same lines and the accused had made it clear that they wanted partners in the business.
Sadique Ali (D.W.1) and Raja Sultan (D.W.2), also support the defence set up by the accused.
11. It is now to be seen whether the accused by making advertisements (Exhs.7, 8 and 9) have contravened the provisions of section 27-A of the Banking Companies Ordinance, 1962. Admittedly accused No.1 is a partnership firm registered with the Registrar of Firms at Karachi. According to section 4 of the Partnership Act, 1932,A partnership is the relation between persons who have agreed to share the profits of business carried on by all or any of them acting for all. From the definition of `partnership' as contained in the above section the following are three essential elements in partnership:-
(i) there must be an agreement entered into between two or more persons;
(ii) such agreement must be to share the profits of a business;
(iii) such business must be carried on by all or any of them acting for all.
12. Section 27-A of the Banking Companies Ordinance, 1962, as it stood prior to amendment introduced by the Banking Companies (Amendment) Ordinance; 1988, published on 24th September, 1988 reads as under:- "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 Cooperative 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."
13. A bare perusal of this section makes it clear that it restricted on advertising for deposits of money. The deposit of money means entrustment of money which is quite distinct from investment in a firm as partners. The `deposit account' used in banking terminology means deposit of money with bankers withdrawable under the specified manner. The deposit of money with a bank is perhaps, the most important function of almost all modern banks, as it is largely by means of deposits that the bank prepares the basis for several other activities. The invitation to invest money as active partners or sleeping partners, however, cannot be equated with the invitation of deposits of money. 113 Again, to constitute a `partnership' it is not necessary that partners should agree to share the losses of the firm, though agreement to share profits is necessary.
14. Mr. Muhammad Shibli, learned counsel for complainant has invited my attention to the provisions of section 27-A of the Banking Companies Ordinance, 1962, as substituted by the Banking Companies (Amendment) Ordinance, 1988, which lays down:- "Prohibition of advertising for deposits and collection.----Notwithstanding anything contained in any other law for the time being in force, 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 or the Corporate Law Authority or the Registrar Cooperative Societies, shall solicit or invite deposits of money from the public through advertisements in the public media or by postal circulars, handbills, displays in public places or by any other means, or collect or receive any deposits of money in pursuance thereof.
Explanation.--- For the purpose of this section, `deposits of money' shall be deemed to include money called, invited or collected for the purpose, or' declared object, of investment or borrowing in any business carried on, or proposed to be carried on, by the 'company, firm or person by whom, or on whose behalf, such money is called, invited, collected or received, irrespective of the nature of the relationship, arrangement or terms offered or provided by such company, firm or person to the person making the investment, deposits of money or payment or of the basis or understanding on which the money is so called, invited, collected or received."
15. Admittedly this amendment came into force on 24-9-1988. The offence with which the accused are charged was allegedly committed much earlier. The question that directly arises whether the provisions of section 27-A of the Banking Companies Ordinance, 1962, providing an explanation to the words ---deposit of money--- which was added by the Banking Companies (Amendment)
Ordinance, 1988, have retrospective effect so as to cover the case of present accused, which otherwise did not fall within the mischief of section 27-A of the Banking Companies Ordinance, 1962. The case of Hafiz Abdul Karim v. The State, reported in PLD 1959 Lah. 883, may be referred, wherein it was observed:- "In accordance with the general principles the statutes which created new liabilities in connection with the past transactions should not be given a retrospective operation, that is to say, if an act when committed, is not an offence, then it should not be made punishable after it has been committed, but if a certain offence is an offence as the case here, then the punishment provided therefor can be altered and it can take effect in pending cases."
16. With respect to the learned Single Judge, I am unable to share the view taken by him. Article 12 of the Constitution of Islamic Republic of Pakistan, 1973, is relevant in this behalf. Every legislature has the power of enacting law both prospective as well as retrospective, but whenever a retrospective law is enacted, the law states so. But where its powers are subject to constitutional restrictions, it must act within those restrictions. Article 12 of I the Constitution of Islamic Republic of Pakistan, 1973, contains such restriction, viz., the legislature cannot punish an act that was not an offence when it was committed. Therefore, the `explanation' added by the Banking Companies (Amendment) Ordinance, 1988, which made the act of accused punishable, which was not punishable when committed, being in violation of, constitutional provisions referred to above, cannot be given retrospective effect.
17. Having regard to the above factual and legal position, I am of the view' that the accused did not contravene the provisions of section 27-A of the D Banking Companies Ordinance, 1962, as it stood earlier. The accused are thus entitled to acquittal and are acquitted accordingly.