KEDAI PAJAK SHIN NGIEN SDN BHD v PENDAKWA RAYA [2023] 7 AMR 549

KEDAI PAJAK SHIN NGIEN SDN BHD v PENDAKWA RAYA [2023] 7 AMR 549

Court of Appeal

Criminal law – pawnbroking business – disposal of unredeemed pledges

Facts

1.      The Appellant, Kedai Pajak Shin Ngien Sdn Bhd was charged for the offence of selling unredeemed pledges in its pawnshop under Section 16(3) of the Pawnbrokers Act 1972 (‘Act 81’).

 

2.      During the pawnshop inspection, the raiding officer discovered gold items prominently displayed alongside their respective price tags and weights.

 

3.      There was no dispute that the gold sold on the Appellant’s premises consisted of unredeemed items acquired by the Appellant, either through auction or direct ownership.

 

4.      The learned Magistrate found the Appellant guilty as charge and imposed a fine of RM9,000.00.

 

5.      The Appellant then appealed to the High Court and the conviction against the Appellant was upheld but the fine was reduced to RM5,000.00.

 

6.      Aggrieved by the decision of the High Court, the Appellant appealed to the Court of Appeal.

Issues

Whether the act of selling unredeemed pledges at the business premises constituted part of the pawnbroking business and whether it was considered as an offence under Section 16(3) of the Act 81.

 

Ratios

Whether the act of selling unredeemed pledges at the business premises constituted part of the pawnbroking business and whether it was considered as an offence under Section 16(3) of the Act 81.

 

1.      According to Section 16(3) of the Act 81, conducting or completing any type of business other than “pawnbroking” is forbidden for pawnbrokers.  The law provides that –

 

“16. (3) No licensee shall use the licensed premises for the conduct or transaction of any business other than that of pawnbroking.”

 

2.      In determining what constitutes pawnbroking under Section 16(3) of the Act 81, reference is made to Section 2 which stated as following :

 

“2. “pawnbroking business” includes the business of taking articles in pawn;

 

3.      The main purpose of pawnbroking is to provide loans by taking articles in pawn as security. It is the finding of the Court that the pawnbroking transaction concludes when the item becomes the possession of the pawnbroker following the failure of the pawner to redeem it.

 

4.      The unredeemed pledges will automatically become the pawnbroker’s possession if it is valued below RM200.00 but if the value is above RM200.00, it must be auctioned by a licensed auctioneer as provided in Section 23(1) of the Act 81 as follows :

 

“23. (1) If any pledge shall not have been redeemed before the expiration of six months from the date of pawning, or of such longer period as may have been agreed between a pawnbroker and the pawner, or as may have been required in accordance with Section 19, the pledge –

 

(a) if pawned for a sum not exceeding two hundred ringgit shall become the property of the pawnbroker; or

 

(b) if pawned for a sum exceeding two hundred ringgit shall when disposed of by the pawnbroker be disposed of by sale by auction to be conducted by a licensed auctioneer.”

 

5.      Based on the above provisions, it isclear that the selling of unredeemed pledges ie gold in the business premises of the pawnbroker cannot be included as part of pawnbroking business due to the fact that it represents a distinct and separate business transaction such as the sale of second-hand goods.

 

6.      Therefore, it was held that engaging in such activity of selling unredeemed pledges in the business premise of the pawnbroker tantamount to an offence under Sectio 16(3) of the Act 81.

 

Decision

The Appellant’s appeal dismissed. The Court of Appeal upheld the conviction and sentence imposed by the High Court.

 

Key Take Away

1.      In pawnbroking business, the pawnbroker is entitled to hold the pledge until the pledge is redeemed or repurchased by the pawner for a maximum period of six (6) months. Although the unredeemed pledges will automatically be in the possession of the pawnbroker in the event of the failure of pawner to redeem the pledges, it does not give the right to the pawnbroker to freely sell the unredeemed pledges in their premises.

 

2.      In fact, Section 23 (1) of the Act 81 clearly provides guideline on the disposal of unredeemed pledges in which it must be disposed by way of auction conducted by a licensed auctioneer if the pledge was pawned for a sum exceeding RM200.00.

 

3.      Hence, the pawnshop must put the valuables up for auction to recover money that was previously loaned to the customer.

 

4.      One of the reason pawnbrokers are prohibited from engaging in any other business activities other than pawnbroking is none other than to ensure that the business operates in transparent, secure and lawful manner. Therefore, the underlying aim of the Act 81 is not confined to solely safeguarding the interest of pawner but also includes the protection and security of the items that are pledged as collateral.

 

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