CRI/A/19/85
IN THE HIGH COURT OF LESOTHO
In the Appeal of
REX Appellant
V
SHALLAE SIMEON NTABEJANE Respondent
REASONS FOR JUDGMENT
Filed by the Hon Acting Mr Justice D S Levy on the 25th day of July, 1985.
The accused was charged with contravening Section 8(1) of the Financial Institution Act No 23 of 1973 (the Act) in that he unlawfully
transacted business as a Financial Institution, to wit, a Credit Institution by lending money out to the general public at a fixed
rate of interest of M1 50 for every M10.00 kept by the borrower for a period of one month thereby constituting himself into a Credit
Institution without being in possession of licence issued by the Commissioner of Financial Institutions in terms of the Act.
Put more succinctly, the accused, by carrying on the business of a money lender, is alleged to have thereby constituted himself into a Credit Institution and thereby contravened the Act
The Magistrate acquitted the accused and the Crown has appealed against that finding on a question of law
I dismissed the appeal for the following reasons
The question of law was 'whether the accused was aware that he was committing an offence, in short whether mens rea
is a necessary element of the offence created by Section 8(1) of the Act.
It is not necessary for me to deal with this question inasmuch as I am satisfied
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that the conduct of the accused in any event in no way constituted the carrying on of the business of a Credit Institution or Financial
Institution in terms of the Act
A statement of agreed facts was placed before the magistrate from which it is apparent that the business of the accused was simply
that of a moneylender, certainly at oppressive rates
of interest but nevertheless his business was that of a money lender even though usurious rates of merest
There was no evidence at all to suggest or indicate that the accused received any deposits from anybody or that he employed any money other than his own to make his usurious loans It is true that the borrowers sometimes delivered their salary cheques to the accused or authorised him to collect their salary cheques from their employers which cheques the accused deposited to his own account at the Lesotho Building Finance Company Ltd.
But the accused did so apparently in order to facilitate his recovery of his loans to these borrowers plus interest. It was not suggested in evidence that the collection and deposit of these salary cheques in any way amount to the deposit with the accused of such money by the payees of the cheques
An examination of the various definitions in the Act of a "banking business" a "financial institutions" and a "credit institution" shows that an integral part of the business of a credit institution must be the receipt of deposit.
In terms of Section 1 of the Act –
"Credit Institution" is defined to mean any financial institution other than a bank
"Financial Institution" means any person carrying on banking business.
"Banking Business" means the business of receiving funds from the public.
"Bank" means any financial institution whose
operations include the acceptance of
deposits subject to withdrawal of deposit by cheque
credit institution is therefore simply a financial institution which does not allow its depositors to withdraw their deposits by cheque,
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Since "financial institution" is defined to mean any person carrying on a banking business and since "banking business"
is defined as meaning the business of receiving funds from the public a main or substantial activity of a financial institution if it is to qualify as such, must be the receipt of funds from the public. As Trollip J A. put it in S. v. Rosenthal 1980 (1) 65 at 75A the fundamental postulate common to each of them is that it"carries on the business of accepting deposits."
If a credit institution is any financial institution other than a bank then it can only be such if, as with any financial institution, it receives funds from the public so long as it does not allow its customers to withdraw their funds by cheque as would a bank.
In the absence of proof that the accused receives funds from the public on deposit he cannot be considered to be anything more than a money-lender and he is accordingly not guilty of any offence under Section 8(1) of the Act.
D S LEVY
ACTING JUDGE
25th July, 1985
For Appellant Mr Kabatsi
For Respondent Mr. Maqutu