Summary: (a) Foreign Exchange Regulation Act, 1947 (FERA): ---Ss. 23(3), 23(6)--- Initiation of proceedings without requisite complaint by the State Bank of Pakistan---Quashing of proceedings--- The proceedings against the applicant were quashed as the mandatory requirement under Section 23(6) of FERA for a written complaint by an authorized officer of the State Bank of Pakistan was not fulfilled. Evidence revealed that the complaint was filed on the instructions of the FIA rather than independently by the State Bank, and the individual who filed the complaint was not authorized under the applicable law at the time. ----Cited Cases: State v. Imam Bakhsh (2018 SCMR 2039) Ikramullah v. The State (2015 SCMR 1002) (b) Criminal Procedure Code, 1898 (Cr.P.C.): ---S. 249-A--- Acquittal during trial on grounds of legal infirmities---Lack of evidence--- The applicant was acquitted under Section 249-A Cr.P.C. as the prosecution failed to provide any substantive evidence linking him to the alleged hawala transactions. The FIA admitted that it had no evidence connecting the applicant to the transactions beyond blanket allegations. (c) Double Jeopardy: ---Non-applicability of double jeopardy in subsequent proceedings by authorized agency--- While quashing the proceedings initiated by the FIA, the court clarified that the decision does not bar the State Bank of Pakistan from initiating fresh proceedings against the applicant, provided they comply with the mandatory provisions of FERA. Double jeopardy would not apply as the earlier proceedings lacked lawful authority. ----Cited Cases: Mst. Razia Sultana v. The State (2019 SCMR 1300) (d) Judicial Independence: ---Reprimands against judicial officers---Impact on judicial decision-making---** The court observed that reprimands against judicial officers for their decisions, where reasons are provided, adversely impact judicial independence and the dynamism of judges. Judicial officers at all levels deserve respect, and differences in opinion should not lead to undue criticism. -----Disposition: Application allowed. Proceedings arising out of FIR No. 51 of 2015 quashed for lack of lawful authority. The State Bank of Pakistan may initiate fresh proceedings if deemed necessary.

Summary: Foreign Exchange Regulation Act (VII of 1947)-------Ss. 12(1)(2) & 23, Appendix-I---Constitution of Pakistan, Art.199---Constitutionalpetition---Sale proceeds, delay in repatriation---Pending matter---Factual controversy---Petitioner exported goods to foreign country against E-Forms and had given undertaking inE-Forms that he would repatriate full amount of sale through Banks within six (06) monthsfrom the date of shipment/export---Authorities filed twelve (12) complaints against petitionerwith allegation that petitioner failed to repatriate full amount of sale proceed withinprescribed period and by delaying the same, petitioner contravened provision of S.12(1)(2) ofForeign Exchange Regulation Act, 1947---Validity---Proceedings in respect of complaintswere pending before adjudication officer and no orders were passed against petitioner bythen---Issues raised by petitioner pertained to factual controversy which could not beresolved in Constitutional jurisdiction---Petitioner had remedy of appellate forum---Petitioner could place all relevant documents in support of his contention before adjudicatingofficer who would consider the same in accordance with law for passing appropriate orders---Constitutional petition was disposed of accordingly.1988 SCMR 691; 2008 CLC 10; 1998 CLC 1684; 1996 CLC 293; 2005 PTD 1189 and 2000CLC 1783 distinguished.

Summary: [Comparison between, and application of, sec.122(5) and sec.111(1)(d) of the Income Tax Ordinance, 2001] The Court examined the interpretation and application of two provisions of the Income Tax Ordinance, namely Section 122(5) and Section 111(1)(d), in relation to the taxation of income that has escaped assessment. The Court raised concerns regarding the unfettered discretion granted to tax authorities and the potential violation of the principle of equality before the law. The Court referred to the leading case of Waris Meah v The State and another to establish the principle that laws conferring unguided power upon authorities, resulting in differential treatment of individuals within the same class, are in violation of the fundamental right to equality under the Constitution. The Court highlighted that the Waris Meah case involved different tribunals with varying powers and procedures for trying offenders under the Foreign Exchange Regulation Act, which lacked guidance on which cases should go before a court or a tribunal. The Court held that the exercise of such unguided discretion by authorities infringed upon the right to equal treatment. Applying the principles from Waris Meah, the Supreme Court concludes that the interpretation and application of the two provisions in the Income Tax Ordinance must be consistent with the established jurisprudence. The Court notes that the Department's interpretation, which grants tax authorities unfettered discretion in choosing between the two provisions, is impermissible and contrary to settled principles. It highlights the potential for different taxpayers or even the same taxpayer in different tax years to be treated differently under the two provisions, resulting in divergent tax liabilities. To address this inconsistency, the Court directs the Federal Board of Revenue (FBR) to issue appropriate guidance and standards to the tax authorities. The FBR is instructed to incorporate the following points in the guidelines: (a) if action is to be taken within the permissible time period under Section 122, it should be done under that section rather than Section 111(1)(d), and clear reasons must be given if the latter provision is chosen; and (b) if action is to be taken under Section 111(1)(d) beyond the time period stipulated under Section 122, the tax authorities must provide reasons for not taking action under Section 122 when the relevant information was or should have been known to them within the specified period.

Summary: (a) Foreign Exchange Regulation Act, 1947 (FERA) ----Ss. 4(1), 5, 23 & 19(3)---Hawala/Hundi—Registration of FIR without requisite authorization—Mandatory requirement of written complaint by authorized person—Accused acquitted under S. 265-K, Cr.P.C. for non-compliance with legal prerequisites—Prosecution failed to follow prescribed procedure under FERA, 1947—Registration of cases without prior authorization from the State Bank of Pakistan or Federal Government held to be illegal—Tribunal not competent to take cognizance without written complaint—Declaration of offences as cognizable and non-bailable under SRO 588(I)/2016 and Foreign Exchange Regulation (Amendment) Act, 2020 did not override mandatory procedural requirements—High Court upheld acquittal of accused on the basis of procedural lapses. (b) Criminal Procedure Code, 1898 (Cr.P.C.) ----S. 265-K—Acquittal before conclusion of trial—Requirement of legal authorization for prosecution—Prosecution’s failure to fulfill procedural requirements renders trial unsustainable—Accused discharged without recording defence evidence—Held, where law prescribes a particular procedure, deviation therefrom renders proceedings void—Registration of FIR without statutory authorization constitutes a fatal defect—High Court ruled that prosecution must follow mandatory legal procedures to ensure validity of criminal proceedings. (c) Constitutional Law & Fundamental Rights ----Right to fair trial—Due process—Requirement of legal authorization before prosecution—Deviation from prescribed procedure amounts to breach of fundamental rights—Illegal foreign exchange business causes financial losses to the public exchequer, yet law enforcement agencies must operate strictly within the framework of law—Protection of legal foreign exchange traders emphasized—Court reiterated principle that “justice must prevail, even if the heavens fall”—Acquittal of accused upheld as prosecution was initiated in violation of substantive law. Disposition: Appeals dismissed. Acquittal orders of trial courts upheld due to prosecution’s failure to comply with statutory requirements under FERA, 1947.

Summary: The petitioner, Muhammad Sohail Sheikh, challenged the legality of the letter and subsequent orders, contending that he is a legitimate businessman engaged in the export of footwear to Gulf countries. He argued that the freezing of his accounts would adversely affect his business operations and could lead to bankruptcy. The petitioner claimed that no evidence had been presented linking him to any criminal activity under the Foreign Exchange Regulation Act, 1947. The Lahore High Court, Multan Bench, examined the legal provisions governing the powers of the FIA, particularly Section 5(5) of the Federal Investigation Agency Act, 1974. This section allows FIA officials to issue written orders to freeze property during investigations if they believe it is likely to be removed or disposed of. However, the court noted that such powers must be exercised sparingly and in exceptional cases, with strict adherence to procedural requirements. The court found that the FIA's actions, including the issuance of the freezing letter and subsequent orders, were in violation of legal procedures. The Deputy Director of the FIA had not obtained the necessary authorization from the appropriate authority, as required by the Foreign Exchange Regulation Act, 1947. Additionally, the court found that the FIA had failed to provide sufficient justification for the freezing of the accounts. The court mentioned the case of Muhammad Muslim v. Federal Investigation Agency (PLD 1984 Karachi 71) to emphasize the importance of lawful procedures in seizing property during investigations. This case underscored the necessity of obtaining proper authorization from the appropriate authority before exercising seizure powers under Section 5(5) of the Federal Investigation Agency Act, 1974. Ultimately, the Lahore High Court set aside the impugned letter and orders, ruling in favor of the petitioner. The court's decision affirmed the principle that executive actions must be conducted within the bounds of the law and subject to judicial scrutiny when necessary to protect individual rights and uphold legal procedures.

Summary: (a) Foreign Exchange Regulation Act (VII of 1947)-------Ss. 4, 5 & 23---Penal Code (XLV of 1860), S.109---Indulging in business ofhundi/hawala---Issuance of a warrant by the court---Requirements---Before carrying out anyproceedings, a complaint in writing by a person authorized in that behalf by the FederalGovernment or by the State Bank of Pakistan supported by statement of that person on oathwas a mandatory requirement of law before issuance of a warrant by the court of competentjurisdiction.(b) Foreign Exchange Regulation Act (VII of 1947)-------Ss. 4, 5 & 23---Penal Code (XLV of 1860), S.109---Indulging in business ofhundi/hawala---Appreciation of evidence---Benefit of doubt---Accused was charged forcarrying out foreign exchange business in an unauthorized manner---Record showed thatFederal Investigation Agency (FIA) without adopting the required procedure and withoutseeking the permission of the concerned Magistrate had carried out all the proceedings i.e.conducted the raid, entered and searched the place of occurrence, collected the Pakistan andforeign currency, other articles and also arrested the accused persons---No search warrant,either from the Tribunal/Sessions Judge or from the concerned Magistrate was obtained inview of S.23 of the Foreign Exchange Regulation Act, 1947---Admittedly, no permissionswith regard to arrest of the accused and for search of their shop were sought or granted---Despite the fact that the raid was conducted on the basis of prior information, theInvestigating Officer had failed to associate any independent witness in the recoveryproceedings nor the local police, within whose jurisdiction the raid was carried out, wasassociated---Entire recovery proceedings carried out by the FIA appeared to be doubtful---Circumstances suggested that the FIA illegally and without any mandate of law raided theshop of the accused and thereby travelled beyond their authority as the required procedurewas not followed rather violated---Case of prosecution from its very inception was defective,not maintainable and the impugned order of conviction passed by the Trial Court liable to beset-aside, which was founded on violation of prescribed rules and laws---Appeal againstconviction was allowed, in circumstances. Alam Jan v. FIA Police Station, Gilgit and another 2017 PCr.LJ 69 and Ghani-urRehman v. The State 2015 MLD 1438 rel.(c) Administration of justice-------If law required a thing to be done in a particular manner it must be done in the samemanner as provided under the law---Deviating from the prescribed procedure amounted toviolation of law.(d) Administration of justice-------Mandatory requirements of law, which were pre-requisites, if not fulfilled, the entireproceedings, would be nullified in the eyes of law.

Summary: (a) Foreign Exchange Regulation Act (VII of 1947) – Ss. 4/23 ---Hundi/hawala business---Bail in non-prohibitory offenses---Petitioner was accused of engaging in illegal hundi/hawala business and was arrested during a raid conducted on the basis of an STR report received from the Financial Monitoring Unit (FMU), Karachi---Petitioner contended that he was falsely implicated, was not the owner of the business, and no independent witness was associated with the recovery memo, making the prosecution’s case doubtful---Held, maximum punishment under S.4/23, F.E.R. Act, 1947, is two years’ imprisonment, which falls under the non-prohibitory clause of S.497, Cr.P.C. (b) Criminal Procedure Code (V of 1898) – S. 497 ---Grant of bail in non-prohibitory clause cases---Petitioner was nominated in the FIR, but there was no direct evidence that he was the exclusive owner or in active control of the alleged illegal business---Held, where an offense does not fall within the prohibitory clause, bail should generally be granted unless exceptional circumstances exist---Reliance placed on Zafar Iqbal v. Muhammad Anwar (2009 SCMR 1488), which states that bail must be favorably considered in non-prohibitory offenses unless an exceptional case is made out---Prosecution failed to establish any such exception. (c) Constitutional Protection – Right to Bail in Cases Punishable with Fine ---Double jeopardy concerns---Held, where an offense is punishable with fine, imprisonment, or both, the accused is entitled to bail as a matter of right---If ultimately convicted and sentenced to a fine only, keeping the accused in pre-trial incarceration would amount to double jeopardy and unjust punishment before conviction. (d) Pre-Trial Detention and Principle of Justice ---Innocent until proven guilty---Held, pre-trial detention is not a punishment, and keeping the accused in custody for an indefinite period without trial is contrary to the principles of justice---Ultimate conviction can rectify an erroneous grant of bail, but no remedy can compensate an innocent accused for unjust pre-trial incarceration. Disposition: Bail granted; petitioner directed to be released on bail upon furnishing surety bonds of Rs.500,000 with two local and reliable sureties to the satisfaction of the trial court. Cited Case: Zafar Iqbal v. Muhammad Anwar (2009 SCMR 1488)

Summary: In the instant petition under section 497 Cr.P.C., Rafi Ullah seeked post-arrest bail in a case involving offenses under the Foreign Exchange Regulation Act and Anti Money Laundering Act, among others. The FIR alleges his involvement in hundi/hawala business. A raid resulted in the recovery of a substantial amount of Pakistani currency from Rafi Ullah. The court noted the absence of evidence linking the money to illegal activities, emphasizing the need for further inquiry. The judge highlighted that possession of local currency isn't a crime unless proven to be derived from illegal means. The prosecution failed to provide evidence of Hundi/Hawala business or the petitioner's previous criminal involvement. The court granted post-arrest bail, setting bail bonds at Rs.10,00,000, while emphasizing the tentative nature of any observations made in the order, which should not influence the trial court.

Summary: Applicability of Foreign Exchange Regulation Act 1947, to foreigner.

Summary: Anti-Money Laundering Act, 2010 (Petition dismiss)---The petitioner, an investigative journalist, challenged the proposed acquisition of 51% of the capital of Invest & Finance Securities Limited (IFSL) by EFG Hermes Frontier Holdings (LLC), Dubai, citing violations of the Foreign Exchange Regulation Act, 1947, and the Foreign Exchange Manual. The petitioner sought declarations that the transaction contravened these laws and requested regulatory authorities to investigate potential money laundering. However, the court, upon examination, found the petition lacked merit. It questioned the petitioner's standing in bringing a public interest litigation, noting that private transactions fall outside the purview of such litigation. The court emphasized the role of regulatory bodies in overseeing financial transactions and dismissed the petition, deeming it misconceived.