(a) Protection of Economic Reforms Act (XII of 1992)---

---Ss. 5 & 9---Foreign currency accounts---Scope, extent of protection and immunity granted to such accounts by Protection of Economic Reforms Act, 1 992---Provisions of S.5, Protection of Economic Reforms Act, 1992, not only grant full immunity to holders of foreign currency accounts but also provide complete secrecy in respect of transactions in those accounts---While Cl. (1) of S.5 of the Act would grant immunity to holders of foreign currency accounts its Cl. (2) would exempt balance in foreign currency accounts and income arising therefrom from wealth tax and income-tax; its Cl. (3) ordains that complete secrecy in respect of foreign currency account would be maintained by the Banks; and its Cl. (4) prohibits State Bank and all other Banks from imposing any restriction on deposit in and withdrawal from foreign currency accounts---In addition thereto, restrictions if any, already in force, would stand withdrawn---Provisions of S. 5(1), Protection of Economic Reforms Act, 1992, thus, on the face of it, grants immunity to holders of foreign exchange from any inquiry by Taxation Authorities as to the source of financing of foreign currency accounts---Such immunity was not subject to any conditions imposed by S. 9 of the Act which applied to transactions other than those in foreign currency---Provision of S.5(3), Protection of Economic Reforms Act, 1992 specifically deals with question of secrecy so far as foreign currency accounts were concerned, while general provision in S. 9 was related to secrecy of Banking transactions and, thus, not applicable to foreign currency accounts---Protection granted by S.9 of the Act which was limited to bona fide Banking transactions was applicable to transactions other than in foreign currency accounts---Foreign currency accounts and holders thereof, would, thus, have complete immunity from inquiry and security and complete secrecy must be maintained in respect of those accounts which could not be violated by any agency or functionary.

Elahi Cotton Mills Ltd. v. Federation of Pakistan and others PLD 1997 SC 582 = 1997 PTD 1555; R.K. Garg v. Union of India and others (1982) 133 ITR 239; Ballentine's Law Dictionary, 3rd Edn., p.584; Ex parte Levy 43 Ark 42; Hammer v. State 173 Ind. 199, 89 NE 850; Black's Law Dictionary, Sixth Edn., pp.285, 751; Corpus Juris Secundum, Vol.15-A, p.118 and Words and Phrases, Permanent Edn. 8, p. 386 ref.

(b) Interpretation of statutes---

---- While interpreting any law relating to economic matters, Court should, so far as possible, adopt that interpretation which would further the object for which the same had been promulgated.

(c) Protection of Economic Reforms Act (XII of 1992)---

---Ss. 5, 4 & 3---Provision of S. 5, Protection of Economic Reforms Act, 1992---Interpretation---While interpreting S. 5, Protection of Economic Reforms Act, 1992, provision of S. 4 of the Act could not be lost sight of, which provides complete freedom to all citizens of Pakistan and all other persons to bring, hold, sell and take out foreign currency in any form---No person would be required to have any foreign currency declared at any stage and that no person would be questioned in regard to the same---No inquiry either into the source or holding of foreign currency could be initiated or made by any agency especially when non obstante clause in S. 3 of the Act provides that the Act would override all other laws.

A.K. Dogar for Appellant.

Kh. Saeed-uz-Zafar, Dy. A.-G. assisted by Muzammal Akhtar Shabbir for Respondents.

Date of hearing: 15th July, 1997.

JUDGMENT

MALIK MUHAMMAD QAYYUM, J.--This appeal under section 3 of the Law Reforms Ordinance, 1972 calls in question the judgment and order of a learned single Judge of this Court passed on 19-12-1994 whereby Writ Petition No.14532 of 1994 tiled by the appellant was dismissed. Earlier this Intra-Court Appeal. was being heard by a Full Bench comprising of 3 learned Judges of this Court but keeping in view the nature of the controversy and the importance of the issues involved, the Hon'ble Chief Justice, on 17-5-1997 was pleased to enlarge the Bench which now comprises of five Judges.

2. The only question which falls for determination in this appeal is as to the scope and extent of protection and immunity granted to the foreign currency accounts by the Protection of Economic Reforms Act, 1992(Act XII of 1992).

3. Though the controversy before us is limited in nature but in order to appreciate the same it is necessary to refer certain facts.

4. Hudabiya Engineering (Pvt.) Ltd. is a Company incorporated under the Companies Ordinance, 1984. On 10-11-1994, a letter was addressed by Mr. Saad Ullah Khan, Commissioner of Income Tax, Company Zone-I, Lahore to the Regional Commissioner of Income Tax, Central Region, Lahore stating shat on information gathered from reliable sources he had learnt that two Benami bank accounts have beer, opened with M/s. Habib Bank A.-G. Zurich Branch, Lahore in a dubious manner to whiten the black money by taking advantage of Dollar Bearer Certificates and certain traveller cheques to the benefit and advantage of the appellant and matter may be referred to the Federal Investigation Agency to detect evasion of tax. The Regional Commissioner of Income Tax on the same day forwarded a copy of that letter to the Director General, F.I.A. Islamabad for necessary action. Pursuant to these two letters, on the same day, i.e. 10-I1-1994, F.I.R. No.12 of 1994 was registered at Police Station FIA/SIU, Islamabad under sections 419/420/468/471 and 109, P.P.C. read with section 5(2) of the Prevention of Corruption Act, 1947 and Article 3 of the Holders of Representative Office (Punishment of Misconduct) Order, 1977 against Mukhtar Hussain and 4 others Directors of the appellant, on the allegation that the Company in collaboration with the officials of Habib Bank Ltd. Zurich Lahore and Bank of America Lahore under the influence exerted by Mian Muhammad Nawaz Sharif, who was then the leader of opposition, had dishonestly and fraudulently managed to open two foreign currency, accounts which were fake and Benami in the names of certain individuals and later on obtained loans.

5. On 8-11-1994 the appellant filed the Constitutional petition (W.P. No.14532/94) seeking a direction to the Federal Investigation Agency to refrain from taking any proceedings under the F.I.R. This petition was dismissed by the learned single Judge on 19-12-1994 who was of the view that immunity and protection granted by section 5 of the Protection of Economic Reforms Act, 1992 only extended to those transactions in foreign currency accounts which were bona fide. It was observed that sections 5 and 9 of the Act have to be read together and as section 9 protects only bona fide banking transactions the immunity granted by section 5 of the Act was not pervasive but limited to transactions which are bona fide and not otherwise

6. During the pendency of this appeal, certain developments took place of which notice must be taken. After investigation of the case, Federal Investigation Agency had submitted challan to the Special Court constituted under the Offences in respect of Banks (Special Courts) Ordinance, 1984 under section 419/420/468/471 read with section 109, P.P.C. The other offences mentioned in the F.I.R. namely section 5 of the Prevention of Corruption Act, 1947 and Article 3 of the Presidential Order 16 or 1977 were dropped. Two writ petitions bearing No. 12172 of 1997 and 12173 of 1997 seeking quashment of the challans submitted to the Special Court were filed by Mukhtar Hussain and Hatnza Shahbaz. A Full Bench of this Court has since allowed these two petitions holding that the case had been registered by the F.I.A. without.any lawful authority and even on merits no case was made out on the face of record and the continuous prosecution would be an abuse of the process of the Court. However, while disposing of those Constitutional petitions, the question as to the effect and scope of Protection of Economic Reforms Act, 1992 war; not gone into by that Bench and was left to be determined in this appeal by observing that: ---

"As regards the Intra-Court Appeal presently pending, his submission is that it would be pressed only to the extent of the decision of the learned single Judge with regard to the interpretation placed by him on the relevant law, regarding the immunity available to the foreign exchange accounts under Economic Reforms Act XII of 1992."

7. We have heard the learned counsel for the appellant and Kh. Saeed?-uz-Zafar, learned Deputy Attorney-General for Pakistan.

8. The main contention raised by the learned counsel for the appellant is that the foreign currency accounts in Pakistan have been granted complete immunity from scrutiny especially in respect of source of financing by section 5 of the Protection of Economic Reforms Act, 1992 and no law enforcing Agency or any other Authority of the Government has any jurisdiction to probe into those accounts for any purpose whatsoever. It was argued that section 5 and section 9 of the Protection of Economic Reforms Act, 1992 are not complementary and have different scope inasmuch as section 5 of the Act applies to banking transactions in the foreign currency accounts while section 9 applies to other banking transactions.

9. The learned Deputy Attorney-General has, on the other hand, taken up the position that immunity granted under section 5 of Act XII of 1992 was limited in nature and has to be read with section 9 of the Act which provides for secrecy of only bona fide banking transactions.

10. Before proceeding any further it appears to be convenient to reproduce the two provisions under consideration namely sections 5 and 9 of the Protection of Economic Reforms Act, 1992 which read as under:---

"5. Immunity to foregn currency accounts.---(1) All citizens of Pakistan residing in Pakistan or outside Pakistan who hold foreign currency accounts in Pakistan and all other persons who hold such accounts, shall continue to enjoy immunity against any enquiry from the Income Tax Department or any other taxation authority as to the source of financing of the foreign currency accounts.

(2) The balance in the foreign currency accounts and income therefrom shall continue to remain exempted from the levy of wealth tax and income tax and compulsory deduction of Zakat at source.

(3) The banks shall maintain complete secrecy in respect of transactions in the foreign currency accounts.

(4) The State Bank of Pakistan or other banks shall not impose any restrictions, on deposits in and withdrawals from the foreign currency accounts and restrictions, if any, shall stand withdrawn forthwith.

"9. Secrecy of Banking Transaction. ---Secretary of bona fide banking transactions shall be strictly observed by all banks and financial institutions; by whosoever owned, controlled or managed."

11. The same contention was also raised before the learned single Judge but was repelled by him by observing in paragraphs 13 and 14 that:---

" 13. Notwithstanding the provisions of sections 3, 4 and 5 of Act XII of 1992 (supra) there is section 9 to the said Act which reads as under: ---

"9 ??????????????????????????."

Act XII of 1992 supra is not sub-divided in Part and or Chapters. The Act contains. in all, 11 sections and while codifying section 9 of Act (supra), word 'bona fide' was used in relation to banking transactions. It was in the wisdom of Legislature that they inserted the word 'bona fide' in the said section while providing blanket of secrecy to the banking transactions.

14. Banking transactions, when qualified as bona fide in the section, shows the clear intent of the Legislature, Banking transactions, other than bona fide, were not provided any immunity, or secrecy. In view of the above section the provisions of sections 4 and 5 are to be regulated and are to be read and applied subject to limitation of 'bona fide' as imposed by section 9 of the Act XII (,supra). The words "take out foreign exchange within or out of Pakistan in any form" is subject to the same condition of 'bona fide' as mentioned in section 9 of the Act. Similarly the blanket of secrecy proved under subsection (3) of/section 5 is subject to the same qualification. "

12. Having heard the learned counsel for the parties and considered various aspects of the matter we regret our inability to agree with the interpretation placed by the learned single Judge on the Protection of Economic Reforms Act, 1992 particularly section 5 thereof which is neither borne out by the language of the Statute nor the purpose of which the Act was promulgated. In our opinion, on its plain reading, section 5 not only grants full immunity to the holders of foreign currency accounts but also provides that complete secrecy be maintained in respect of the transactions in these accounts. We are also of the view that sections 5 and 9 of the Act have different scope and operate in different fields and are, therefore, not complementary to each other. While section 5 of the Act in itself provides complete code so far as foreign currency accounts are concerned, section 9 applies to transactions other than those in foreign currency. There may be no cavil with the principle of interpretation relied upon by the learned single Judge that various provisions in the Act must be read together and the Act should be construed as a whole but that principle has no application in the present case. Be that as it may, all principles of interpretation of Statutes are nothing but tools which the Courts employ to find true legislative intent which cannot be defeated by relying upon some abstract principle.

13. At this stage it would be advantageous to state that prior to 1990 there were various legal provisions in the field including Foreign Exchange Regulations Act, 1947 and Customs Act, 1969 which prohibited import and export of foreign currency by persons or citizens of Pakistan and also made it an offence to retain any foreign exchange or to open any foreign currency account. It was realised that these measures hampered development and led to close door of economy resulting in its stagnation and shying away foreign capital.

14. It was in realisation of this economic reality that various measures were taken in the year 1990 by the Federal Government by introducing economic reforms in order to liberalise the economy and provide incentives to the investors and encourage remittance of foreign exchange from road. In addition to other steps, almost all restrictions on import and export of foreign exchange and opening of foreign currency accounts and their operations were removed by the Government and the protection and immunity was granted to these accounts. On 12-2-1991, the State Bank of Pakistan issued a circular permitting Pakistani nationals residing in Pakistan to open and maintain foreign currency accounts with Banks in Pakistan. It was, inter alia, provided that no question shall be asked by any Authority in Pakistan about the source of acquisitions of such foreign exchange. Another circular was issued on. 14-2-1991 to remove certain restrictions which have been placed in the earlier circular.

15. It need not be emphasised that with rapid developments in the field of trade, commerce and communication and with modern technology the world itself has become a global village and no country can prosper in isolation of others. Presently there is an on going fierce competition Among various developed countries to attract foreign investment for the purpose of development. In such a situation the importance of creating a liberal environment to encourage inflow of foreign currency cannot be under stated.

16. The background in which the Protection of Economic Reforms Act, 1992 was promulgated having been noticed, now the various provisions of the Act be examined. According to its preamble the object in enacting the said Act was to create liberal environment for savings and investments and to provide for legal measures by the Government with a view to create confidence in the establishment and continuity of the liberal economical environment. "Economic reforms" have been defined in subsection 2(b) as Economic policies and programs, laws and regulations announced, promulgated or implemented by the Government on and after 7th day of November, 1990 relating to privatisation of public-sector, enterprises and nationalised banks, promotion of savings and investments, introduction of fiscal incentives for industrialisation and deregulation of investment, Banking, finance exchange and payments systems holding and transfer of currencies (underling is ours). By section 3, the Act has been given over-riding effect not only over Foreign Exchange Regulations Act, 1947. Income-Tax ordinance, 1979 but over any other law for the time being in force. Section 4 of the Act is important for the present purposes. It provides that all citizens of Pakistan, residing in Pakistan or outside Pakistan and all other persons shall be entitled and free to bring, hold, sell, transfer and take out foreign exchange within or out of Pakistan in any form and shall not' be required to make a foreign currency declaration at any stage nor shall anyone be questioned in regard to the same. Section 5 which has been reproduced above again deals with the foreign currency. Section 6 relates to another subject and provides protection to fiscal incentives for setting up of industries. Sections 7 and 8 grant protection against compulsory acquisition and nationalisation. Section 9 provides for secrecy of bona ride banking transactions of all banks and Financial Institutions. Section 10 of the Act protects the financial obligation incurred under any instrument or contract made by or on behalf of the Government.

17. It will be seen from the above that Protection of Economic Reforms Act, 1992 was promulgated pursuant to the Policy of the Federal Government to protect various economic reforms undertaken by it in order to provide incentives to investors and to encourage inflow of foreign currency into Pakistan. While interpreting such a law relating to economic matters the Court should, so far as possible, adopt that interpretation which furthers the object for which the same has been promulgated.

18. In the recent case of Elahi Cotton Mills, Ltd. v. Federation of Pakistan and others PLD 1997 SC 582 = 1997 PTD 1555 the Supreme Court of Pakistan was pleased to cite with approval the following observations of the Indian Supreme Court in R.K. Gang v. Union of India and others (1982) 133 ITR 239).

"Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than law touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J., that the Legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in the case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with greater play in the joints has to be allowed to the Legislature. The Court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation, than in other areas where fundamental human rights are involved."

19. Section 5 of the Act, which mainly falls for interpretation in the present case has four parts. While subsection (1) grants immunity to the II holders of foreign currency accounts; subsection (2) exempts the balance in the foreign currency accounts and income arising therefrom, from wealth tax and income tax; subsection (3) ordains that complete secrecy in respect of foreign currency accounts shall be maintained by the Banks; subsection (4) prohibits State Bank and all other Banks from imposing any restriction on deposits in and withdrawals from the foreign currency accounts; further provides that restrictions, if any, already in force, shall stand withdrawn.

20. Section 5(1) on the face of it grants immunity to holders of foreign exchange from any inquiry by taxation Authorities as to the source of financing of the foreign currency accounts. This immunity is not subject to any condition as none has been laid down in the provision under consideration.

21. In Ballentine's Law Dictionary (3rd Edition) the following definition of "immunity" appears at page 584:---

"A personal favour granted by law, contrary to the general rule. Ex parte Levy, 43 Ark 42. A privilege or special privilege; a favour granted, an affirmative act of selection of special subjects of favour not enjoyed in general by citizens tnder constitution, statute, or laws, Hathmer v. State, 173 Ind. 199, 89 NE 850. A right in the negative form of freedom from action or restraint which otherwise might be taken against or imposed upon a person such as the right of a witness to be free from arrest while attending Court."

According to Black's Law Dictionary (Sixth Edition) at page 751 "immunity" means "exemption, as from serving in an office, or performing duties which the law generally requires other citizens to perform e.g. exemption from paying taxes. Freedom from duty or penalty. Special privilege. See also exemption; Judicial immunity; Legislative immunity; Parent-child immunity; privilege; Sovereign immunity.

22. The grant of immunity to the foreign exchange accounts is not something new or unique. In the past, the Government time and again introduced various schemes with a view to attract investment particularly in foreign currency in the country. These include the issuance of foreign exchange bearer certificates, foreign currency bearer certificates and foreign deposit bearer certificates. All these measures are part of fiscal policies, which a Government is entitled to lay down keeping in view the national and economic interest.

23. It follows from the above that in a sense, immunity is a negative form of right of freedom from action of restraint which otherwise might be taken or imposed upon a person.

24. On proper analysis, the conclusion, which follows is that sub-section (1) of section 5 bars the Authorities from taking any action against the person on the basis of transactions in the foreign currency accounts.

25. It will also be seen that subsection (3) of section 5 of the Protection of Economic Reforms Act, 1992 requires the Banks to maintain complete secrecy in respect of transactions in foreign currency accounts unlike section 9 of the Act under which secrecy has to be maintained only in respect of bona fide banking transactions. It is unfortunate that subsection (3) of section 5 was not brought to the notice of the learned single Judge with the result that he fell into error in observing that sections 5 and 9 of the Act have to be read together. It is true that generally all provisions of the Act are to be read together but as section 5(3) specifically deals with the question of secrecy so far as foreign currency accounts were concerned, the general provision in section 9 about secrecy of banking transactions was clearly not applicable to the foreign currency accounts. The protection granted by section 9 which was limited to bona fide banking transactions was applicable to transactions other than in foreign currency accounts. The difference in the language employed in subsection (3) of section 5 and section 9 of the Act is completely destructive of the argument that both these provisions must be read together or complementary to each other.

26. The use of word "complete" in subsection (3) of section 5 of the Act instead of "bona fide" as in section 9 clearly brings into bold relief the difference in the extent of protection and between the foreign currency accounts and other banking transaction.

27. According to Black's Law Dictionary (Sixth Edition) at page 285, complete as adjective means "full, entire; including every item or element of the thing spoken of, without omissions or deficiencies; as, a "complete", copy, record, schedule, or transcript, perfect, consummate; not lacking in any element or particular; as in the case of "complete legal title" to land, which includes the possession, the right of possession, and the right of property.

28. In Corpus Juris Secundum, Volume 15-A at page 118, "complete" has been defined as "absolutely finished; completed or concluded; consummate, entire, filled up; free from deficiency, perfect, including every item or element of the thing spoken of, without omissions or deficiencies, whole; lacking nothing, with no part, item, or element lacking; having all needing or normal parts, elements or details.

29. Similarly in Words and Phrases, permanent Edition 8, at page 386, while defining "complete" it is stated that the word "complete" means filled up; with no part, item or element lacking, free from deficiency; entire, perfect, consummate.

30. It will thus to be seen that the use of word "complete" negates the argument that the secrecy required to be maintained was only partial and not all pervasive.

31. It is also to be seen that as sections 4 and 5 the Act, both deal with foreign currency, while interpreting section 5, section 4 of the Act cannot be lost sight of. It provides complete freedom to all citizens of Pakistan and all other persons to bring, hold, sell and take out foreign currency in any form. 1t specifically provides that no person shall be required to make any foreign currency declared at any stage and also ordains that no one shall be questioned in regard to the same. This clearly brings out the legislative intent that no question can be asked from the person holding any foreign currency in respect of the same. That being so, no inquiry either into the source or the holding of the foreign currency can be initiated or made by any agency especially when non-abstante clause in section 3 of the Act provides that the Act shall over ride all other laws.

32. On consideration of various provisions of the Protection of Economic Reforms Act, 1992, we have reached the conclusion that so far as foreign currency accounts are concerned, the holders thereof, have complete immunity from inquiry and scrutiny and complete secrecy must be maintained in respect of those accounts which cannot be violated by any agency or functionary. That being so, neither the Income Tax Authorities nor Federal Investigation Agency had any jurisdiction to hold any inquiry in respect of the transactions in the foreign currency accounts nor could the same be made basis of criminal prosecution.

As a result of above, this Intra-Court Appeal is allowed and the impugned judgment of the learned single Judge is set aside and the Constitutional petition of the appellant is allowed with no order as to costs.

A.A./H-35/L??????????????????????????????????????????????????????????????????????????? Appeal accepted.