Selling unredeemed pledges does not constitute pawnbroking business under the Pawnbrokers Act 1972, as defined by statutory provisions that restrict pawnbrokers to specific functions.

Introduction

[1] Kedai Pajak Shin Ngien Sdn Bhd, the appellant in this case, was charged under s 16(3) of the Pawnbrokers Act 1972 in the Magistrates' Court for selling unredeemed pledges in its business premises. The charge reads as follows:

"Bahawa kamu pada 1 Mac 2017 jam lebih kurang 11.30 pagi bertempat di premis Kedai Pajak Shin Ngien Sdn Bhd yang beralamat di No 631, Jalan Satu, Seri Setia, Sungai Way, 47300 Petaling Jaya, Selangor telah didapati sebagai pemegang lesen pemegang pajak gadai telah menjalankan perniagaan emas selain daripada perniagaan pajak gadai. Oleh demikian kamu telah melakukan satu kesalahan di bawah s 16(3) Akta Pemegang Pajak Gadai 1972 (Akta 81) dan boleh dihukum di bawah s 41A Akta yang sama."

[2] The appellant pleaded not guilty to the charge. At the trial, incontrovertible evidence was adduced to establish that the appellant is a registered pawnshop with a valid licence from the Ministry of Housing and Local Government (KPKT). The raiding officer, SP1, during inspection at the pawnshop, found that there were gold items being displayed together with their price tags and weight at the pawnshop. It was not disputed that the gold sold in the appellant's premises were unredeemed items which were acquired by the appellant either through an auction or direct ownership under s 23(1) of Pawnbrokers Act 1972 (" PA 1972" or "the Act").

[3] Hence, the only question of law that needed to be determined is whether the act of the appellant selling unredeemed gold in its premises is an offence under s 16(3) of PA 1972.

Decision Of The Learned Magistrate

[4] At the end of the case for the defence, the learned Magistrate convicted the appellant as charged and imposed a fine of RM9,000.00.

[5] On the issue of whether selling unredeemed gold can be considered as part of pawnbroking business, the Magistrate held that selling unredeemed gold cannot be included in the definition of pawnbroking business based on the following:

a) After analyzing the relevant provisions of the PA 1972, the Magistrate concluded that the Act provides a specific definition of pawnbroking business, which includes taking articles in pawn without further reference to the selling of unredeemed gold on the premises for the purpose of debt recovery. However, s 23(1)(b) of the Act does not provide for the selling of unredeemed items on the premises. Instead, it requires such items to be auctioned by a licensed auctioneer. This interpretation is in line with the statutory provisions and ensures that the interests of all parties involved in the transaction are protected;

b) In interpreting the definition of pawnbroking business, the Magistrate referred to the Pawnbrokers Regulation (Control and Licensing) 2004. The regulations do not mention whether the selling of gold is allowed or not. However, when read as a whole, it is clear that the main objective of pawnbroking is to provide loans by taking an article as security. This reinforces the Magistrate's conclusion that the selling of gold is not part of the pawnbroking business;

c) The Magistrate also consulted the KPKT's website and found that the transaction report form required by KPKT only contains details on the value of the pawn, the individual's details, and the redeemed and unredeemed articles involving an auction. There is no mention of reports on selling gold or the number of customers buying such gold. This further supports the conclusion that the selling of gold is not part of the pawnbroking business;

d) The Magistrate also considered the entire process of pawning at a pawns