2007 Y L R 518

[Lahore]

Before Ijaz Ahmad Chaudhry, J

TAHIR RASHID---Petitioner

Versus

THE STATE and 4 others---Respondents

Writ Petition No.7443 of 2006, decided on 14th November, 2006.

Penal Code (XLV of 1860)---

----S. 489-F---Constitution of Pakistan (1973), Art. 199---Constitutional petition---

Quashing of orders---Investigation in the case had prima facie been conducted mala fide
and cancellation report of F.I.R. was prepared merely relying upon the version of
respondents/accused party that cheque in question was issued only as a guarantee for a
person who had dealing with complainant/petitioner---Cheque in dispute had been issued
by respondent in favour of petitioner, which was presented before the Bank, twice, but
same was dishonoured each time due to insufficiency of funds and prima facie offence
under S.489-F, P.P.C. was made out---Whether cheque in dispute had been issued as a
guarantor or towards repayment of a loan or fulfilment of an obligation required
recording of evidence and it was the function of the Court to decide whether there was
some element of dishonesty on the part of executant of the cheque---Magistrate had
agreed with the police report through impugned order in a mechanical manner and he
appeared to have not applied judicial mind to consider the facts of the case---Impugned
order though was an executive order, but Magistrate was to pass speaking order and he, in
no way, was bound by the police opinion to agree with the same---Police opinion was not
binding on the Court---Magistrate did not properly exercise jurisdiction vested in him,
which had rendered impugned order illegal and without jurisdiction---High Court being
competent to interfere therewith, constitutional petition was accepted and impugned order
was set aside, with direction to remand case to Magistrate, who would pass fresh orders
on cancellation report, submitted by the police within specified period.

Mian Shahzad Hassan for Petitioner.

Naeem Masood Asstt. A.-G. for Respondents Nos. 1 to 3.

Qamar Zaman Qureshi for Respondents Nos.4 to 5.

Farman Ali, S.-I. with record.

ORDER

IJAZ AHMAD CHAUDHRY, J.--Through this writ petition under Article 199 of the
Constitution of Islamic Republic of Pakistan 1973 the petitioner has challenged the order
dated 8-6-2006 passed by the learned Judicial Magistrate through which he has agreed
with the police report for cancellation of case F.I.R. No.159 of 2006 dated 20-4-2006
registered under section 489-F, P.P.C. at Police Station Gulshan-e-Ravi, Lahore. The
petitioner was the complainant of the said case.

2. The brief facts as alleged in the F.I.R. are that Saqib Javaid (respondent No.4) had
issued a cheque amounting to Rs.7,50,000 in favour of the petitioner which was to be
drawn at Allied Bank of Pakistan, Gulshan-e-Ravi Branch, Lahore. The cheque was
presented in the Bank, which was returned due to deficiency of funds. Then the petitioner
approached respondent No.4, who along with his father respondent No.5 asked for some
time to arrange the funds and the latter assured in the presence of Sajid Ali and Rao
Waheed Iqbal P.Ws. that if the second time the cheque is not encashed, he would be
responsible for its payment. The petitioner in view of this undertaking when for the
second time presented the cheque in the bank on 25-3-2006, the same was again dis-
honoured. Then the petitioner moved an application and the instant case was registered,
but after conducting the investigation, the police submitted report for cancellation of case
before the learned Judicial Magistrate, who agreed with the same and cancelled the case
vide his order dated 8-6-2006.

3. The learned counsel for the petitioner has contended that the mala fide of the police is
crystal clear that the investigation was transferred to Farman Ali, S.-I. at Police Station
Gulshan-e-Ravi, Lahore and on the same day he joined the respondents in the
investigation, but did not wait for the petitioner/complainant to come and submitted
report for cancellation of case, which was verified by Rana Shujat Ali, D.S.P., Islampura
Circle Lahore in an arbitrary manner and the learned Judicial Magistrate also agreed with
the same without applying the judicial mind; that prima facie the cognizable offence was
made out as the cheque was admittedly issued by respondent No.4, which on presentation
before the bank was dishonoured and no further evidence was required in the matter.

4. The learned counsel for respondents Nos.4 and 5 has opposed this petition on the
ground that respondent No.4 Saqib Javaid had only issued the cheque as a guarantor of
one Irfan Nizami, who had the dealing with the petitioner, but the respondents herein had
nothing to do with the amount in question and this factum was admitted by Irfan Nizami
during the investigation; that the investigation had been conducted on true lines and while
.finding the respondents-accused innocent in this case, the cancellation report was rightly
submitted before the learned Illaqa Magistrate, who has accepted the same and that the
impugned order is just and legal and may be maintained.

5. I have heard the arguments advanced by learned counsel for the parties and perused the
record with due care and caution.

6. The present case was registered on the application of the petitioner on 20-4-2006 and
record itself shows that for the first time the investigation was entrusted to Muhammad
Amin, S.-I., who on 20-4-2006 recorded first Zimni on the basis of statement of the
petitioner and started the investigation. The petitioner/complainant was directed to
produce the original cheque, which was dishonoured. The police file shows that on 26-4-
2006 both the parties were summoned for 27-4-2006. According to Zimni No.3 recorded
by Muhammad Amin, A.S.-I./I.O. on 27-4-2006, the petitioner did not appear, but only
Saqib Javaid and his father Muhammad Javaid (respondents Nos.4 and 5) appeared
before him and investigation was conducted. Then again on 14-5-2006, the accused party
had appeared and took the stand that in fact one Irfan Nizami (relative of the accused-
respondents) who deals in the business of cloth at Haiderabad, had to pay the amount to
the petitioner and respondent No.4 had issued cheque in the sum of Rs.7,50,000 as
guarantor only to the petitioner. On 15-5-2006 Farman Ali, S.-I. conducted the
investigation and declared the case false and submitted his report before D.S.P., who
recommended the same for cancellation and presented the same before the learned
Judicial Magistrate, .who agreeing with the same, cancelled the case vide impugned order
dated 8-6-2006. The mala fide of Farman Ali, S.-I./I.O. is crystal clear from the file,
which discloses that the petitioner, who was complainant of this case, was not summoned
by Farman Ali, S.-I./I.O. Even he was not joined in the investigation by the earlier I.O.
On the other hand the accused-respondents appeared before the I.O. who were not on bail
and it is also not mentioned in the police record that the accused-respondents had ever
moved any application for pre-arrest bail before the competent Court and they were
granted ad interim bail, but the police did not arrest them during the investigation without
any reason.

7. After perusal of the police file, it is straightaway noticed that the investigation in this
case had prima facie been conducted malafidely and cancellation report was prepared
merely relying upon the version of the respondents accused party that the cheque was
issued only as a guarantee for Irfan Nizami, who had been dealing with the
complainant/petitioner. However, it is an admitted position that the cheque had been
issued by respondent No.4 in favour of the petitioner, which was presented before the
Bank, twice, but the same was dishonoured each time due to insufficiency of funds and
prima facie the offence under section 489-F, P.P.C. was made out, which reads as under:-

"Whoever dishonestly issues a cheque towards re-payment of a loan or fulfilment

of an obligation which is dishonoured on presentation, shall be punishable with
imprisonment which may extend to three years, or with fine, or with both, unless
he can establish, for which the burden of proof shall rest on him, that he had made
arrangements with his bank to ensure that the cheque would be honoured and that
the bank was at fault in not honouring the cheque."

Whether the cheque had been issued as a guarantor or towards repayment of a loan or
fulfilment of an obligation required recording of evidence and it was the function of the
Court to decide whether there was some element of dishonesty on the part of the
executant of the cheque. The accused party was to only show that they had made
arrangement with the bank for payment of the amount, but the bank was at fault in not
honouring the cheque. In this regard no evidence had been collected during the
investigation, but the case was recommended for cancellation in an arbitrary mariner
relying upon the oral version of the accused party and no documentary evidence was
collected. On the other hand, the petitioner is in possession of the cheque admittedly
issued by respondent No.4, which has been dishonoured by the concerned bank.
8. The learned Magistrate has agreed with the police report through the impugned order
in a mechanical manner and he appears to have not applied the judicial mind to consider
the facts of the case. No doubt the impugned order is an executive order, but the learned
Illaqa Magistrate was to pass the speaking order and he in no way was bound by the
police opinion to agree with the same. It is settled law that the police opinion is not
binding on the Courts. I also disagree with the finding of the learned Magistrate in the
impugned order that there is no incriminating evidence available on the file against the'
accused persons as the complainant had brought on the record the copy of the
dishonoured cheque, the issuance of which was even admitted by the accused-
respondents during the investigation. The petitioner was not bound to produce any other
evidence, but it was the duty of the respondents to rebut the allegation. Thus, it is clear
that the learned Magistrate had not properly exercised the jurisdiction vested in it, which
has rendered the impugned order illegal and without jurisdiction and this Court is very
much competent to interfere therewith in writ jurisdiction.

9. Resultantly, this writ petition is accepted, the impugned order is set aside and the case
is remanded to the learned Magistrate, who shall pass fresh orders on the cancellation
report submitted by the police within a fortnight after receipt of this order.

10. Before parting from this order, I am constrained to refer this matter to the D.I.G.
(Investigation), Lahore, who is directed to entrust the investigation of this case to any
other honest Police Officer and the new Investigating Officer will finalize the same in
accordance with law after joining both the parties. The D.I.G. is also directed to hold an
inquiry into the conduct of Muhammad Amin, A.S.-I., Farman Ali, S.-I. and Rana Shujat
Ali, D.S.P., who appear to have conducted the investigation in an illegal manner as
pointed out above. If they are found guilty, strict disciplinary action shall be taken against
them. The report shall be submitted to this Court through Deputy Registrar (Judicial)
within two months. The police file has been retained in the Court and handed over to Mr.
Naeem Masood, Assistant Advocate General, who is directed to transmit the same in a
sealed cover to the D.I.G. (Investigation), Lahore for compliance.
H.B.T./T-39/L Petition accepted.
2006 C L D 1314

[Lahore]

Before Syed Shabbar Raza Rizvi, J

Manor (Retd.) JAVED INAYAT KHAN KIYANI---Petitioner

Versus

THE STATE---Respondent

Criminal Miscellaneous No. 3399-B of 2006, decided on 29th June, 2006.

(a) Penal Code (XLV of 1860)---

---S. 489-F [as added vide S.2 of Criminal Law (Amendment) Ordinance (LXXXV of
2002)]---Object of S. 489-F, P.P.C. was to curb the fraudulent or dishonest issuance of
cheques to cause dishonest gain or to cause dishonest loss---Before approaching
investigation agency or launching a criminal prosecution, it was necessary to establish,
prima facie, that cheque was issued dishonestly and with the intention to defraud---To
know the intention of a drawer a payee could give a notice to the drawer after dishonour
of cheque by the drewee and before approaching the police or the Court---Word
"dishonestly" employed in S.489-F, P.P.C. required conscious and serious examination.

2005 PCr.LJ 1462 and Mian Hussain Ahmad Hyder v. S.H.O. and others 2005 YLR 1565
ref.

(b) Penal Code (XLV of 1860)---

----S. 24---Word "dishonestly", defined and explained---Language of S.24, P.P.C. was

explicit and conveyed that to constitute an act "dishonestly", it was important that
something should be done with the intention of causing wrongful gain or wrongful loss---
Wrongful gain could not be attained by wrong doer for himself only, but wrong doer
could cause gain or loss to any other person also---Person could be said to have dishonest
intention if in taking property it was his intention to cause gain by unlawful means of the
property to which the person was so gaining, was not legally entitled or to cause loss .by
wrongful means of property to which the person so losing was legally entitled and it was
further clear from definition of "dishonestly" that the gain or loss contemplated need not
be a total acquisition or a total deprivation, but was enough, if it was temporary retention
of property by the person wrongfully gaining or temporary "keeping out" the property
from the person, legally entitled.

PLD 1957 SC (India) 317 at 324 ref.

(c) Words and phrases---

----Dishonestly' defined and explained.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 2(d)(iv), 7, 20 & 22---Penal Code (XLV of 1860), S.489-F [as added vide S.2 of
Criminal Law (Amendment) Ordinance (LXXXV Of 2002)]--Recovery of loan---
Procedure ---Object and reason for enacting Financial Institutions (Recovery of Finances)
Ordinance, 2001 and S.489-F, P.P.C., was to provide single forum to the Banks for the
recovery of their loans from their customers and like-wise to the customers to approach
the same Court if they had any grievance against the Banks---Word "loan" was
substituted in P.P.C. with word "finance", similarly, punishment of one year was
substituted with three years in P.P.C.---Objective to legislate S.20(4) of Financial
Institutions (Recovery of Finances) Ordinance, 2001, was different than objective to
legislate S.489-F, P.P.C., but S.489-F, P.P.C. had not been legislated/drafted differently--
Purpose of enacting said laws was to provide speedy measures for the recovers/of
outstanding loans and finances---Under S.7 of Financial Institutions (Recovery of
Finances) Ordinance, 2001, a Banking Court was conferred criminal jurisdiction to try
offences punishable under said Ordinance and for the purpose, same powers were vested
as were vested in the Court of Session in Code of Criminal Procedure, 1898---Banking
Court could take cognizance of any offence under Financial Institutions (Recovery of
Finances) Ordinance, 2001 upon a complaint in writing made by a person authorized in
that behalf by concerned Financial Institutions in respect of which offence was
committed---Whenever an offence was committed under S.20(4) of Financial Institutions
(Recovery of Finances) Ordinance, 2001, Banking Court would take cognizance on a
complaint filed by authorized person and the complaint would be tried by concerned
Banking Court --- Appeal was provided before two Judges of the High Court under S.22
of Financial Institutions (Recovery of Finances) Ordinance, 2001---Under S.489-F, P.P.C.,
an F.I.R. was lodged with a concerned police station and after submission of final report,
jurisdiction of trial was conferred upon Magistrate of the First Class and appeal could be
filed before concerned Sessions Judge---Section 489-F, P.P.C. would be attracted where an
individual would issue a cheque dishonestly in favour of another individual and the same
was dishonoured on presentation---Purpose of both enactments was different and the
procedure for prosecution was also different---Banking Laws relating to recovery,
expressly or impliedly, envisaged effect of issuance of cheque "dishonestly" or
"inadvertently".

MZ Corporation v. MS Sky Lines Printing Press 1993 MLD 1764; 1993 MLD 1766; 1995
MLD 12; PLD 1993 SC 341; PLD 1986 SC 240; PLD 2002 SC 460; Ocean Industries
Limited and another v. Industrial Development Bank PLD 1966 SC 738 and M. A. Hameed
Puri v. Federation of Pakistan PLD 1979 Lah. 252, ref.

(e) Criminal Procedure Code (V of 1898)---

----S. 498---Penal Code (XLV of 1860), S. 489-F---Pre-arrest bail, grant of --- F.I.R. had
shown that cheque in question was issued from joint account of accused and co-accused to
be encashed on specified date---Said cheque was signed by both of them, which had
indicated that they were partners and possibility of possession of cheques jointly signed by
them with co-accused could not be ruled out---Payment was made to complainant despite
letter of accused to the Bank that joint account be closed---Co-accused gave cheque to
complainant who got it encashed before accused could inform Batik not to encash any
cheque from the joint account---On the basis of said payment in favour of complainant,
Investigating Officer, found that actual payment was made to complainant from the joint
account and no wrongful loss was caused to him---Police record also indicated that
accused had informed the Bank that partnership between accused and his co-accused
ended and jointly signed cheques be not honoured---Opinion of the police though was not
binding, but it had a persuasive value in all criminal matters including bail before arrest---
Cheque in question either was not issued by accused at all or it was issued jointly by
accused and co-accused---No harm came to co-accused from complainant side---If said
cheque was issued dishonestly, then it was issued by both of them---Agreement to buy
machinery mentioned in F.I.R., might have existed between co-accused and complainant,
accused had no obligation or liability towards complainant which he failed to fulfil---
Accused also did not owe any loan to complainant---Element of mala fides on part of
complainant, could not be ruled out in circumstances-- Accused, who was a retired army
officer and a businessman, had been declared innocent by Investigating Officer---Interim
bail granted to accused was confirmed, in circumstances.

Sardar Khurram Latif Khan Khosa for Petitioner.

Imtiaz Ahmad Kaifi for the Complainant.

Ijaz Ahmad Bajwa for the State and S. Raza Hussain, S. -I.

ORDER

SYED SHABBAR RAZA RIZVI, J.---The petitioner filed the present bail application for
pre-arrest bail in F.I.R.No.300 of 2006, dated 20-3-2006. The said F.I.R. was registered at
Police Station Allama Iqbal Town, Lahore under section 489-F, P. P. C.

2. Briefly, complainant Rana Tauqeer Sarwar Khan reported to the S.H.O. that in August,
2005, the petitioner and another person camel to him and introduced themselves as partners
in Basit Paper Mills, Ferozepur Road, Lahore. They also showed interest in buying second-
hand machinery of a paper mill which complainant wanted to sell. The price of the
machinery was agreed between the parties Rs. 8,89,000. Half of the payment, Rs.4,44,500
was made to the complainant there and. then and for half payment a cheque, from the joint
account, bearing No.CD-4808906, to be drawn on Union Bank, Allama Iqbal Town
Branch, Lahore was handed over to the complainant/payee. The said cheque was to be
encashed on 20-9-2005. On the said date i.e. 20-9-2005, the complainant deposited the said
cheque in his account but he was informed by his bank that the cheque was dishonoured
by the drawee. The complainant contacted the petitioner and his partners Syed Zafar Ali
Shah. Said Syed Zafar Ali Shah informed complainant that partnership between petitioner
and him had ended. However, he paid half of the amount i.e. 2,66,700. When the
complainant demanded from petitioner payment of his share, the petitioner refused to
make the payment. The complainant alleged that the petitioner had dishonestly issued
cheque to cause complainant wrongful loss.

3. Before I discuss and decide the present case, I consider it expedient and appropriate to
examine scope of section 489-F, P.P.C. at some length.

4. Cases of frauds through issuance of cheques 'dishonestly' have been rampant in the
country; therefore, appropriate legislation became desirable. In view of that, Ordinance
LXXXV of 2002, was issued and promulgated by the President of Pakistan on 25-10-
2002. Validity of this legislation was also challenged before this Court. In some
judgments, the legislation i.e. 489-F PPC was declared invalid and in some it was found
valid. For example, in my own judgment I held section 489-F, a valid piece of legislation;
reference may be made to 2005 PCr.LJ 1462. In another judgment section 489-F was
found as invalid and non-existing legislation. In this regard, Mian Hussain Ahmad Hyder
v. S.H.O. and others 2005 YLR 1565 is referred to.

5. However, this legislation requires interpretation, and ascertainment of the real

intendment for which section 489-F was legislated. In my humble view, the real objective
was to curb the fraudulent or dishonest issuance of cheques to cause dishonest gain or to
cause dishonest loss. Therefore, before approaching the investigation agency or launching
a criminal prosecution, it is necessary to establish, prima facie, that the cheque was issued
dishonestly and with the intention to defraud. For example, some times it is possible that
a drawer may issue a cheque not knowing exactly the position of his account. Generally
people are not very careful to maintain record of their accounts when they have money in
one bank or more than one banks. In the business and trade community practice of joint
account in the banks is very common. Account-holders of such joint accounts keep with
themselves prepaid cheques duly signed by joint account-holders to ensure payments
from the banks even in absence of' one of the partners. At times, such cheques are
misused also. To know the intention of a drawer, a payee may give a notice to the drawer
after dishonourment of cheque by the drawee and before approaching the police or the
Court.

6. In this regard word "dishonestly" employed in section 489-F, P.P.C. requires conscious
and serious examination; Section 489-F starts with these words, "whoever dishonestly
issues a cheque". In this phrase, the word "dishonestly" is of crucial importance,
therefore, to arrive at the real conclusion, definition of "dishonestly" requires a deeper
consideration/analysis. In Pakistan Penal Code section 24 reads as under:--

"Dishonestly:--Whoever does anything with the intention of causing wrongful gain

to one person or wrongful loss to another person is said to do that thing
dishonestly."

7. The language is explicit and conveys that to constitute an act dishonestly, it is

important that something should be done with the intention of causing wrongful gain or
wrongful loss. This wrongful gain may not be attained by the wrong-doer for himself
only. The wrong doer may cause gain or loss to any other person also. "A person can be
said to have dishonest intention if in taking property it is his intention to cause gain, by
unlawful means of the property to which the person so gaining is not legally entitled or to
cause loss by wrongful means of property to which the person so losing is legally
entitled. It is further clear from the definition that the gain or loss contemplated need not
be a total acquisition or a total deprivation but is enough if it is temporary retention of
property by the person wrongfully gaining or temporary 'keeping out' of the property
from the person legally entitled". (PLD 1957 SC (India) 317 at 324).

In another case "dishonestly" was defined as below:

"Word "dishonestly" as defined in section 24 PPC means to do an act with

intention of causing wrongful gain to one and wrongful losses to the other." (K.
Raza v. State, 1986 MLD 2624).

8. In The Law Laxicon Edited by Justice Y.B. Chandrachud, at page 567 "dishonesty" is
defined as giving the ordinary meaning the word "dishonestly" means "dishonesty". It
further elaborates dishonesty as disposition to lie, cheat, deceive, or defraud;
untrustworthiness, lack of integrity. Lack of honesty, probity or integrity in principle; lack
of fairness and straightforwardness, disposition, to defraud, deceive or astray.

Like Pakistan Penal Code, in section 24 of Indian Penal Code "dishonestly" is defined in
the similar words:

"Whoever does anything with the intention of causing wrongful gain to one
person or wrongful loss to another person is said to do that thing dishonestly."

Section 24 is further elaborated on the same page as below:

The word dishonestly in section 24 Indian Penal Code has a technical meaning
which is at variance with its popular sense as employing deviation from probity. It
is used in connection with property and has nothing to do with probity. If a person
causes wrongful gain or wrongful loss by unlawful means in respect of property
to which he is not legally entitled, "he acts dishonestly within the meaning of
section 24, though he may act from laudable motives. The word dishonestly does
not necessarily imply wrongful gain to accused himself."

9. From the definition narrated above, from both Pakistan and Indian Penal Codes, it is
clear that issuance of cheque has to be clothed with dishonesty and as stated above
dishonestly means intention to cause wrongful gain or wrongful loss.

10. In my opinion, this can only be inferred from the actual act/acts of the
drawer/accused. In India to ascertain the intention or mala fide of the drawer, the payee in
event of dishonourment is required to give notice to the drawer that the cheque has been
dishonoured. Reply in response to the notice or no reply at all, helps to determine the
presence or absence of element of dishonestly. To further elaborate this point, it is
important to refer to the Indian law on the same subject. However, before considering law
on the subject from Indian jurisdiction, more discussion will be relevant from our own
jurisdiction.

11. My learned brother Ali Nawaz Chohan, J. (in Criminal Miscellaneous No.1632-
CB/2006, Rana Muhammad Ayub v. Rana Abdul Rehman and another) rightly held that
provisions of section 489-F, P.P.C. have been lifted. From the Financial Institutions
(Recovery and Finances) Ordinance, 2001. The relevant section is 20(4). For further
elaboration sub-section (4) of section 20 of the Financial Institutions (Recovery and
Finances) Ordinance, 2001 and provisions of section 489-F of P.P.C. are placed side by
side.

Section 489-F, P.P.C. Section 20(4) of FI(R&F) Ord.

Whoever dishonestly issues a cheque
towards repayment of a loan or fulfilment
of an obligation which is dishonoured on
presentation shall be punishable with
imprisonment which may extend to three
years or with fine or with both unless he
can establish for which the burden of proof
shall rest on him that he had made
arrangements with his bank to ensure that
the cheque would be honoured and that the
bank was at fault in not honouring the
cheque,
Whoever dishonestly issues a cheque
towards repayment of a finance or
fulfilment of an obligation which is
dishonoured on presentation shall be
punishable with imprisonment which may
extend to one year or with fine or with both
unless he can establish for which the
burden of proof shall rest on him that he
had made arrangements with his bank to
ensure that the cheque would be honoured
and that the bank was at fault in not
honouring the cheque.

12. The reading of above two provisions of the above mentioned enactments shows that
only two words have been changed in section 489-F. The word "loan" is substituted in the
P.P.C. with word "finance"; similarly, punishment of one year is substituted with three
years in P.P.C.

13. The rest of the language in both the enactments is verbatim. I have no doubt in my
mind that objective to legislate section 20(4) of the Financial Institutions (Recovery and
Finances) Ordinance, 2001 was different than objective to legislate section 489-F, P.P.C.,
but section 489-F, P.P.C. has not been legislated/ drafted differently.

14. The Financial Institutions (Recovery of Finances) Ordinance, 2001 came into
existence in 2001 (XLVI 2001). The said Ordinance was enacted to repeal, and, with
certain modifications, re-enact, the Banking Companies (Recovery of Loans, Advances,
Credits and Finances) Act, 1997.

15. From the above, it is evident that the object and reason for enacting the above laws
was to provide the single forum to the Banks for the recovery of' their loans from their
customers and likewise to the customers to approach the same Court if they have any
grievance against the banks. It also appears that the purpose of enacting the above
mentioned laws was to provide speedy measures for the recovery of outstanding loans
and finances. Under section 7 of the Financial Institutions (Recovery of Finances)
Ordinance, 2001, a Banking Court is conferred criminal jurisdiction to try offences
punishable under the said Ordinance, and for the purpose the same powers are vested as
are vested in the Court of Session in the Court of Criminal Procedure, 1898. The Banking
Court can take cognizance of any offence under the Ordinance upon a complaint in
writing made by a person authorized in this behalf by the concerned Financial Institutions
in respect of which the offence was committed. Therefore, whenever an offence is
committed under section 20(4) of the Financial Institutions (Recovery of Finances)
Ordinance, 2001, Banking Court shall take cognizance on a complaint filed by the
authorized person and the complaint shall be tried by the concerned Banking Court.
Appeal is provided before two Judges of the High Court under section 22 of the same
Ordinance 2001.

16. On the other hand, under section 489-F, an F.I.K. is lodged with a concerned Police
Station and after submission of final report, the jurisdiction of trial is conferred upon
Magistrate of the First Class and appeal can be filed before the concerned Sessions Judge.
Section 489-F, P.P.C. is attracted where an individual issues a cheque dishonestly in
favour of another individual and the same is dishonoured on presentation. Therefore, the
purpose of both enactments is different and the procedure for the prosecution is also
different. Banking laws relating to recovery, expressly or impliedly, envisage effect of
issuance of cheque "dishonestly" or "inadvertently". For example in MZ Corporation v.
Messrs Sky Lines Printing Press, 1993 MLD 1764, the appellant had purchased some
items of computer stationery from the respondent and issued a post-dated Cheque bearing
164673, dated 14-8-1998 drawn on Bank of Credit and Commerce International, for Rs.
14940, in favour of the respondent, thereafter, the date of the post-dated cheque was
further extended but when the cheque was presented by the respondent to the Bank, the
same was dishonoured with the remarks, "the payment stopped by drawer". The
respondent intimated the same to the appellant but the latter failed to make the payment
and under such circumstances, the suit was filed by the respondent against the appellants
before the learned trial Court. The trial Court as well as the Appellate Court refused to
accept the defence of the appellant as dishonesty on his part was established in the above
stated facts. (1993 MLD 1766). It may be pointed out that the above case/appeal was
filed under Banking Companies (Recovery of Loans) Ordinance, 1979 which was
substituted by the Banking Companies (Recovery of Loans, Advances, Credits and
Finances) Act, 1997 which was further substituted by existing enactment i.e. Financial
Institutions (Recovery of Finances) Ordinance, 2001. Therefore, the above mentioned
finding of his lordship Mamun Qazi, J. of Karachi High Court (as he then was) is relevant
and applicable to the interpretation of section 20(4) of the Financial Institution (Recovery
of Finances) Ordinance, 2001.

17. His lordship Abdul Majid Tiwana, J. in a case relating to recovery of Agricultural
Development Bank under the Agricultural Development Bank Ordinance, 1961 observed
as under:--

"No doubt, subsection (2) of section 25 supra, empowers the bank to recover all
sums due, which include the principal amount of loan and interest accruing
thereon, as arrears of land revenue but it cannot straightway resort to the coercive
measures of arrest and detention. (1995 MLD 12)."

18. The above mentioned two cases indicate that, "the drawer should be given an
opportunity to clear his liability or to ensure that the dishonoured cheque was issued
dishonestly". Other means should be resorted to, before application of coercive measures
including registration of an F.I.R. etc. Since the language of 489-F has been lifted from
the Banking Laws mentioned above, precautions, interpretations and considerations
provided and applied in the above laws should also be followed while dealing with cases
registered under section 489-F, P.P.C. Thus, the Court must apply its judicial mind to
consider whether the cheque was issued dishonestly, indeed, or whether the drawer was
provided opportunity to discharge his liability towards the payee or not?

19. In this regard as hinted at in para. 10, the prevalent law from the Indian jurisdiction
may also be considered.

20. It may be pointed out at the outset that Indian Legislature made dishonour of cheque
an offence under the Negotiable Instruments Act, 1881 instead of Indian Penal Code. In
this connection they added a new Chapter XVII in Negotiable Instruments Act, 1881. For
the purpose of benefit of all concerned, I hereby reproduce the statement of Objects and
Reasons of the Act which is as under:--

"Statement of Objects and Reasons.---The Negotiable Instruments Act, 1881 was

amended by the Banking, Public Financial Institutions and Negotiable
Instruments Laws (Amendment) Act, 1988 wherein a new Chapter XVII was
incorporated for penalties in case of dishonour of cheques due to insufficiency of
funds in the account of the drawer of the cheque. These provisions were
incorporated with a view to encourage the culture of use of cheques and
enhancing the credibility of the instrument. The existing provisions in the
Negotiable Instruments Act, 1881, namely, sections 138 to 142 in Chapter XVII
have been found deficient in dealing with dishonour of cheques. Not only the
punishment provided in the Act has proved to be inadequate, the procedure
prescribed for the Courts to deal with such matters has been found to be
cumbersome. The Courts are unable to dispose of such cases expeditiously in a
time bound manner in view of the procedure contained in the Act.

2. A large number of cases are reported to be pending under sections 138 to 142 of
the Negotiable Instruments Act in various courts in the country. Keeping in view
the large number of complaints under the said Act pending in various Courts, a
Working Group was constituted to review section 138 to the Negotiable
Instruments Act, 1881 and make recommendations as to what changes were
needed to effectively achieve the purpose of that section.

3. The recommendations of the Working Group along with other representations

from various institutions and organizations were examined by the Government in
consultation with the Reserve Bank of India and other legal experts, and a Bill,
namely, the Negotiable Instruments (Amendment) Bill, 2001 was introduced in
the Lok Sabha on 24th July, 2001. The Bill was referred to Standing Committee
on Finance which made certain recommendations in its report submitted to Lok
Sabha in November, 2001.

4. Keeping in view the recommendations of the Standing Committee on Finance

and other representations, it has been decided to bring out, inter alia, the following
amendments in the Negotiable Instruments Act, 1881, namely:--

(i) to increase the punishment as prescribed under the Act from one year to two
years;

(ii) to increase the period for issue of notice by the payee to the drawer from 15
days to 30 days;

(iii) to provide discretion to the Court to waive the period of one month, which
has been prescribed for taking cognizance of the case under the Act;

(iv) to prescribe procedure for dispensing with preliminary evidence of the

complainant;

(v) to prescribe procedure for servicing of summons to the accused or witness by

the Court through speed post or empanelled private couriers;

(vi) to provide for summary trial of the cases under the Act with a view to
speeding up disposal of cases;

(vii) to make the offences under the Act compoundable;

(viii) to exempt those directors from prosecution under section 141 of the Act
who are nominated as directors of a company by virtue of their holding any office
or employment in the Central Government or State Government or a financial
corporation owned or controlled by the Central Government, or the State
Government, as the case may be;

(ix) to provide that the Magistrate trying an offence shall have power to pass
sentence of imprisonment for a term exceeding one year and amount of fine
exceeding five thousand rupees;

(x) to make the Information Technology Act, 2000 applicable to the Negotiable
Instruments Act, 1881 in relation to electronic cheques and truncated cheques
subject to such modifications and amendments as the Central Government, in
consultation with the Reserve Bank of India, considers necessary for carrying out
the purpose of the Act, by notification in the Official Gazette; and

(xi) to amend definitions of "bankers' books" and "certified copy" given in the
Bankers' Books Evidence Act, 1891.

5. The proposed amendments in the Act are aimed at early disposal of cases
relating to dishonour of cheques, enhancing punishment for offenders, introducing
electronic image of a truncated cheque and a cheque in the electronic form as well
exempting an official nominee director from prosecution under the Negotiable
Instruments Act, 1881.

6. The Bill seeks to achieve the above objects."

21. Through the above amendment sections 138 to 147 were added in the Negotiable
Instruments Act 1881 which are also reproduced herein for benefit and convenience:--

"138. Dishonour of cheque for insufficiency, etc, of funds in the account.---Where

any cheque drawn by a person on an account maintained by him with a banker for
payment of any amount of money to another persons out of that account for the
discharge, in whole or in part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money standing to the credit of that
account is insufficient to honour the cheque or that it exceeds the amount arranged
to be paid from that account by an agreement made with that bank, such person
shall be deemed to have committed an offence and shall, without prejudice to any
other provision of this Act, be punished with imprisonment for a term which may
be extended to two years. Substituted by the Negotiable Instruments (Amendment
and Miscellaneous Provisions) Act, 2002 (55 of 2002), S. 7, for "a term which
may extend to one year" (w.e.f. 6-2-2003) or with fine which may extend to twice
the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless---

(a) the cheque has been presented to the bank within a period of six months from
the date on which it is drawn or within the period of its validity, whichever is
earlier;

(b) the payee or the holder in due course of the cheque, as the case may be makes
a demand for the payment of the said amount of money by giving a notice in
writing, to the drawer of the cheque (within thirty days) (Substituted by the
Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (55
of 2002), S.7, for "within fifteen days" (w.e.f. 6-2-2003), of the receipt of
information by him from the bank regarding the return of the cheque as unpaid:
and

(c) the drawer of such cheque fails to make the payment of the said amount of
money to the payee or as the case may be, to the holder in due course of the cheque
within fifteen days of the receipt of the said notice.

Explanation.-For the purposes of this section, "debt or other liability" means a

legally enforceable debt or other liability.

139. Presumption in favour of holder.---It shall be presumed, unless the contrary

is proved, that the holder of' a cheque received the cheque, of the nature referred
to in section 138, for the discharge, in whole or in part, of any debt or other
liability.

140. Defence which may not be allowed in any prosecution under section 138.-It
shall not be a defence in a prosecution for an offence under section 138 that the
drawer had no reason to believe when he issued the cheque that the cheque may
be dishonoured on presentment for the reason stated in that section.

141. Offences by companies.-(1) If the person committing an offence under

section 138 is a company, every person who, at the time the offence was
committed, was in charge of, and was responsible to the company for the conduct
of the business of the company, as well as the company, shall be deemed to be
guilty of the offence and shall be liable to be proceeded against and punished
accordingly:

Provided that nothing contained in this subsection shall render any person liable
to punishment if he proves that the offence was committed without his
knowledge, or that he had exercised all due diligence to prevent the commission
of such offence:

[Provided further that where a person is nominated as a Director of a company by

virtue of his holding any office or employment in the Central Government or
State Government or a financial corporation owned or controlled by the Central
Government of the State Government, as the case may be, he shall not be liable
for prosecution under this Chapter.]

(Inserted by the Negotiable Instruments (Amendment and Miscellaneous

Provisions) Act, 2002 (55 of 2002), S.8 (with effect from 6-2-2003).

(2) Notwithstanding anything contained in subsection (1), where any offence

under this Act has been committed by a company and it is proved that the offence
has been committed with the consent or connivance of, or is attributable to, any
neglect on the part of, any director, manager, secretary or other officer of the
company, such director, manager, secretary or other office shall also be deemed to
be guilty of that offence and shall be liable to be proceeded against and punished
accordingly.

Explanation.---Far the purposes of this section.---

(a) "Company" means anybody corporate and includes a firm or other, association
of individuals; and

(b) "director", in relations to a firm, means a partner in the firm.

142. Cognizance of offences.-Notwithstanding anything contained in the Code of

Criminal Procedure, 1973 (2 of 1974),--

(a) no Court shall take cognizance of any offence punishable under section 138
except upon a complaint, in writing, made by the payee or, as the case may be, the
holder in due course of the cheque;

(b) such complaint is made within one month of the date on which the cause of
action arises under clause (c) of the proviso to section 138:

(Provided that the cognizance of a complaint may be taken by the Court after the
prescribed period, if the complainant satisfies the Court that he had sufficient
cause for not making a complaint within such period;) [Inserted by the Negotiable
Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (55 of 2002),
S.9 (with effect from 6-2-2003).

(c) no Court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate

of the first class shall try any offence punishable under section 138.

143. Power of Court to try cases summarily.---(1) Notwithstanding anything

contained in the Code of Criminal Procedure, 1973 (2 of 1974), all offences under
this Chapter shall be tried by a Judicial Magistrate of the first class or by a
Metropolitan Magistrate and the provisions of sections 262 to 265 (both inclusive)
of the said Code shall, as far as may be, apply to such trials:

Provided that in the case of any conviction in a

Summary trial under this section, it shall be lawful for the Magistrate to pass a
sentence of imprisonment for a term not exceeding one year and an amount of
fine exceeding five thousand rupees:

Provided further that when at the commencement of, or in the course of, a
summary trial under this section, it appears to the Magistrate that the nature of the
case is such that a sentence of imprisonment for a term exceeding one year may
have to be passed or that it is, for any other reason, undesirable to try the case
summarily, the Magistrate shall after hearing the parties, record an order to that
effect and thereafter recall any witness who may have been examined and proceed
to hear or re-hear the case in the manner provided by the said Code.

2. The trial of a case under this section shall, so far as practicable , consistently
with the interests of justice, be continued from day to day until its conclusion,
unless the Court finds the adjournment of the trial beyond the following day to be
necessary for reasons to be recorded in writing.

3. Every trial under this section shall be conducted as expeditiously as possible

and an endeavour shall be made to conclude the trial within six months from the
date of filing of the complaint.

144. Mode of service' of summons.-(l) Notwithstanding anything contained in the

Code of Criminal Procedure, 1973 (2 to 1974), and for the purposes of this
Chapter, a Magistrate issuing a summons to an accused or a witness may direct a
copy of summons to be served at the place where such accused or witness
ordinarily resides or carries on business or personally works for gain, by speed
post or by such courier services as are approved by a Court of Session.
 (2) Where an acknowledgement purporting to be signed by the accused or the
witness or an endorsement purported to be made by any person authorized by the
postal department or the courier services that the accused or the witness refused to
take delivery of summons has been received, the Court issuing the summons may
declare that the summons has been duly served.

145. Evidence on affidavit.-(l) Notwithstanding anything contained in the Code of

Criminal Procedure, 1973 (2 of 1974), the evidence of the complainant may be
given by him on affidavit and may, subject to all just exceptions be read in
evidence in any enquiry, trial or other proceeding under the said Code.

(2) The Court may, if it thinks fit, and shall, on the application of the prosecution
or the accused, summon and examine any person giving evidence on affidavit as
to the facts contained therein.

146. Bank's slip prima facie evidence of certain facts.---The Court shall, in respect
of every proceeding under this Chapter, on production of bank's slip or memo.
having thereon the official mark denoting that the cheque has been dishonoured,
presume the fact of dishonour of such cheque, unless and until such fact is
disproved.

147. Offences to be compoundable.---Notwithstanding anything contained in the

Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under
this Act shall be compoundable."

22. As compared to above, we do not find any deliberations, discussions of any

Committee, etc., when Criminal Law (Amendment) Ordinance, 2002, was enacted to
amend the Pakistan Penal Code and the Code of Criminal Procedure through the above
Ordinance. In the said Ordinance, not only 489-F was inserted in the Pakistan Penal
Code, sections 32, 260, 261 and 345 along with Schedule II were also amended. As a
matter of fact, it appears as elaborated above language of section 489-F was lifted from
subsection (4) of section 20 of Financial Institutions (Recovery of Finances), Ordinance,
2001 without any serious thought or discussion. Thus, it is suggested to the concerned
Government that section 489-F, P.P.C. may be suitably amended; to ascertain whether the
cheque was dishonestly issued by the drawer? This Court cannot make such
recommendation to the Legislatur9, however, it is permissible under the Constitution and
it is also in the interest of people to make such suggestion to the Government to consider
and initiate amendment in section 489-F, P.P.C. Some earlier decision may be referred to
in this regard i.e. PLD 1993 SC 341, PLD 1986 SC 240 and PLD 2002 SC 460. In the
said judgments suggestions fbr enactment/amendment were made to the Government.

23. The word 'Loan' employed in section 489-F, P.P.C. is k' also very significant.
This word is not defined in the Pakistan Penal Code. However, it is defined in section
2(d)(iv) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and in view
of the background of enactment of section 489-F, P.P.C., as elaborated above, the
definition in the Financial Institutions (Recovery of Finances) Ordinance, 2001 would be
relevant for the present purpose. In the said Ordinance 'Loan' is not independently
defined. As a matter of fact, the word 'Finance' is defined in the above mentioned section
which also include 'Loan' and it means, Advance, Cash Credit, Over Draft, Packing
Credit, a bill discounted and purchased or any other financial accommodation provided
by a financial institution to a customer. Loan, according to Wharton's Law Lexicon is
anything lent or given to another on condition of return or payment. This lending or
giving on condition of return or payment could be by operation of law. Similar definition
was approved by their Lordships of the Supreme Court in Ocean Industries Limited and
another v. Industrial Development Bank PLD 1966 SC 738 + M.A. Hameed Puri v.
Federation of Pakistan PLD 1979 Lahore 252. In another interpretation, the essentials of
a 'loan' according to section 2(12) are, (1) an advance which may be in money or in kind
(2) the advance must carry the interest and (3) there must be condition of repayment. One
of the essential condition in the definition of 'loan' in the Bengal Money Lender Act is
repayment with interest. (The Law Lexicon edited by Justice Y.V. Chandrachud, page
1140). Another phrase used in section 489-F is also worth-consideration "or fulfilment of
obligation". The word 'obligation' is defined in Oxford Dictionary as 'the state of being
forced to do something because it is your duty, or because of law'. (Oxford Advance
Learner's Dictionary 7th Edition, page 1045). In accordance with Law Lexicon
'obligation' means a duty, the bond of legal necessity which binds together two or more
determinate individuals, an act which binds a person to some performance, a binding or
state of being bound in law; an act by which a person becomes bound to another or for
another, or to forbear something etc. (The Law Lexicon edited by Y.V. Chandrachud,
page 1335). According to Black's Law Dictionary, 'obligation' means a legal or moral
duty to do or not do something. The word has many wide and varied meanings. It may
refer to anything that a person is bound to do or forbear from doing, whether the duty is
imposed by a law, contract, promise, social relations, courtesy, kindness, or morality. A
formal binding agreement or acknowledgment of a liability to pay a certain amount or to
do certain thing for a particular person or set of persons, especially a duty arising by
contract.

24. After having discussed above the law on the subject, I revert to the arguments
of the learned counsel in the present case. The learned counsel for the petitioner
contended that there was no agreement or deal between the petitioner and complainant to
purchase any machinery, etc. The learned counsel further contended that there might be
some agreement between one Syed Zafar Ali Shah and complainant. In this regard, he
submitted a writing between Rana Tauqeer Khan (complainant) and Syed Zafar Ali Shah
dated 19-6-2005. The learned counsel for the petitioner further submitted that there was a
partnership between petitioner and said Syed Zafar All Shah which dissolved after some
time as serious disputes developed between both of them. In this regard, he referred to a
suit for dissolution of partnership filed on 20-8-2005. He further submitted that both
criminal and civil litigation is pending between the petitioner and said Syed Zafar Ali
Shah, the instant F.I.R. has been manoeuvred by said Zafar All Shah as a counterblast of
F.LRs. registered against him on applications of the petitioner. In this regard, he refers to
F.I.R. No.599 of 2005 and F.I.R.No.656 of 2005. He also submitted that Cheque No.CD-
4808906 shows that it was not issued by the petitioner, it was jointly signed by petitioner
and Zafar Ali Shah, that also proves that they were partners at one time. He further
submitted that Investigating Officer as well as D.S.P. Legal in his opinion declared
petitioner innocent and it was also observed by the I.O. that the complainant had received
the actual amount, therefore, no wrongful loss was caused to him.

25. The learned counsel for the complainant submitted that the petitioner and
Zafar All Shah had become partners on 25-6-2005 in Basit Paper Mills, Ferozepur Road,
Lahore. He further submitted that Cheque No.CD-4808906 was dishonestly issued by the
petitioner which was dishonoured. Said Zafar Ali Shah paid half of the amount but the
petitioner refused to make payment, therefore, the complainant was caused wrongful loss
by the petitioner. He further submitted that though the petitioner was declared innocent
by the police but opinion of the police is not binding on the Court.

26. The learned counsel for the State and I.O. present in the Court endorsed
submission of the learned counsel for the petitioner that after a thorough investigation,
the petitioner has been found innocent. The report of the I.O. was also verified by D.S.P.
Legal. The learned counsel for the State further submitted that no wrongful loss was
caused to the complainant.

27. I have heard all the there learned counsel. I have also examined the record of
this case myself. The F.I.R. shows that Cheque No.CD-4808906 was issued from joint
account of the petitioner and Zafar Ali Shah to be encashed on 20-9-2005. The cheque
was signed by both of them, therefore, it prima facie, indicates that they were partners
and possibility of possession, of cheques jointly signed by them, with Zafar Ali Shah
cannot be ruled out. Another point to note is a letter from the Operations Manager, Union
Bank Limited. A.I.T. Branch, Lahore which informed petitioner: "as per your request
dated 5-5-2006, it is hereby confirmed that an amount of Rs.4,44,500 vide Cheque
No.CD-4808905 has been debited on the same date from your joint account with Zafar
All Shah Account No.7409-187749-001. It may be pointed out that it is the same joint
account number which is mentioned above. The payment was made to the complainant
despite letter of the petitioner to the bank that joint account be closed. Zafar All Shah
gave Cheque No.CD-4808905 to the complainant who got it encashed before petitioner
could inform bank not to encash any cheque from the joint account. On the basis of this
payment in favour of the complainant, the I.O. held that actual payment was made to the
complainant from the joint account and no wrongful loss was caused to him. The mention
of these two Cheques i.e. CD-4808905 and CD-4808906 clearly strengthen the
contention of the learned counsel for the petitioner that said Zafar Ali Shah was in
possession of jointly signed cheques, he used one for payment to the complainant and one
to cause registration of the present F.I.R. The police record also indicates that the
petitioner had informed the bank that partnership between petitioner and said Zafar Ali
Shah ended and jointly signed cheques be not honoured. The complainant helped Zafar
All Shah by getting registered the present F.I.R. against petitioner as two F.I.Rs. already
stand registered against Zafar Ali Shah at instance of the petitioner. Copies of F.I.Rs. and
suits are also available on the record which is sufficient proof to indicate possibility of
mala fide on part of the complainant and said Zafar All Shah. The opinion of the police is
not binding however, it has a persuasive value in all criminal matters including bail
before arrest.
 28. The above facts lead to the inference that Cheque No.CD-4808906 was either
not issued by the petitioner at all or it was issued jointly by Zafar All Shah and petitioner.
No harm came to said Zafar Ali Shah from the complainant side. If the said cheque was
issued dishonestly, then it was issued by both of them. The record as well as opinion of
I.O. shows that amount of Rs.4,44,500 was actually debited from the joint Account
No.7409-1 87749-00 1 vide Cheuqe No.CD-4808905 in favour of the complainant, thus,
no wrongful loss has been caused to the complainant by dishonour of Cheque No.CD-
4808906.

29. The above discussion and police record also shows that agreement to buy the
machinery mentioned in the F.I.R. might have existed between Zafar Ali Shah and the
complainant nevertheless; the petitioner had no obligation or liability towards the
complainant which he failed to fulfil. Similarly, petitioner did not owe any loan to the
complainant. The foregoing discussion also leads to the belief that element of mala fide
on part of the .complainant, in the above J circumstances, cannot be ruled out. The
petitioner is a retired army officer and a businessman. The I.O. has also declared him
innocent. Therefore, in view of the reasons enumerated in the preceding paragraphs, this
bail application for pre-arrest bail is allowed subject to petitioner's furnishing fresh surety
bonds in the sum of Rs.100,000 with one surety in the like amount to the satisfaction of
the Deputy Registrar (J) of this Court. The interim bail granted to the petitioner vide
order of his Court dated 4-5-2006 is confirmed.
H.B.T./J-22/L Bail confirmed.
2006 Y L R 1852

[Lahore]

Before Ali Nawaz Chowhan, J

MUHAMMAD AYUB ---Petitioner

Versus

Rana ABDUL REHMAN and another---Respondents

Criminal Miscellaneous Nos.1632-CB, 1773-B, 3056-CB, 3084-CB, 3088-CB, 1110-

CB and 2699-B of 2006, heard on 25th April, 2006.

(a) Criminal Procedure Code (V of 1898)---

----S. 497(1)(5)--Penal Code (XLV of 1860), S. 489-F---Bail grant of---Section 489-F,

P.P.C. would only be relevant where in respect of a loan or non fulfilment of an
obligation, a cheque was issued and it got dishonoured in the way mentioned under said
section---Section 489-F, P.P.C. would not be attracted for any other purpose---Corollary
of that would be that cheques which were issued otherwise than for purpose of re-
payment of loans or fulfilment of obligation, would not be covered by definition of
S.489-F, P.P.C.---Applications asking for cancellation of bail, were dismissed because
none of those pertained to the purpose as defined---Application asking for grant of post-
arrest bail, was allowed, accordingly.

Major (R) Ijaz Ahmad Bhatti v. The State and 3 others 2005 PCr.LJ 1462 and Abdul
Rehman v. S.H.O. Police Station Kot Sumaba Rahim Yar Khan and another 2006
PCr.LJ 157 ref.

(b) Penal Code (XLV of 1860)---

----S. 489-F---Scope and application of S. 489-F, P.P.C.-Section 489-F, P.P.C. would only
be relevant where in respect of a loan or non fulfillment of an obligation, a cheque was
issued and it got dishonoured in the way mentioned under said section---Section 489-F,
P.P.C. would not be attracted for any other purpose---Corollary of that would be that
cheques which were issued otherwise than for purpose, of re-payment of loans or
fulfilment of obligation, would not be covered by definition of S.489-F, P.P. C.

Major (R) Ijaz Ahmad Bhatti v. The State and 3 others 2005 PCr.LJ 1462 and Abdul
Rehman v. S.H.O. Police Station Kot Sumaba Rahim Yar Khan and another 2006
PCr.LJ 157 ref.

Rana Muhammad Naeem Khan for Petitioner.

Muhammad Arif Bhindar, Addl. A.-G. for the State.

Rana Muhammad Arif and Imran Raza for Respondents.

Date of hearing: 25th April, 2006.

JUDGMENT

ALI NAWAZ CHOWHAN, J.--This judgment will dispose of the following

petitions:--

(1) Crl. Miscellaneous No.1632-CB of 2006 (Rana Muhammad Ayub v. Rana Abdul
Rehman and another);

(2) Crl. Miscellaneous No.1773-CB of 2006 (Muhammad Muslim Pervaiz v. Shahid

and another);

(3) Crl. Miscellaneous No.3056-CB of 2006 (Asif Shahzad v. The State and another );

(4) Crl. Miscellaneous No.3084-CB of 2006 (Muhammad Riaz Virk v. Abdul Khaliq
Shahid and another);

(5) Crl. Miscellaneous No.3088-CB of 2006 (Iqbal Butt v. Abdul Hakim Fakhri and 2
others);

(6) Crl. Miscellaneous No.1110-CB of 2006 (Haji Waheed Ahmad v. Abdul Rasheed
and another); and

(7) Crl. Miscellaneous No.2699-B of 2006 (Sohail Akram v. State);

2. All these cases involve a common question pertaining to section 489-F of the
Pakistan Penal Code.

3. Through Crl. Miscellaneous No.2699-B of 2006, petitioner Sohail Akram is asking

for his post-arrest bail, while through the rest of the Crl. Miscellaneous, the
petitioners are asking for cancellation of bail already granted to the respondents by
the Courts below.

4. In all these cases cheques were issued and these were dishonoured. The maximum
sentence involved in these cases does not fall under the prohibitory clause because it
is three years. There is no cavil with this.

5. The question which arises for determination is with respect to the scope of section
489-F of the Pakistan Penal Code. It has become extremely important to determine
this scope in view of the upsurge of cases relating to section 489-F of the Pakistan
Penal Code and the arising confusion. We have two judgments already on the subject.
One of which is given by my learned brother Syed Shabbar Raza Rizvi, J., in the case
of Major (R) Ijaz Ahmad Bhatti v. The State and 3 others 2005 PCr.LJ 1462. Here the
question was whether section 489-F of P.P.C. was on the statute book or not?. The
answer was given in the following words in paragraph Nos.9 to 11 of the judgment
and these read as follows: --

"9. Section 489-F, P.P.C. of Ordinance LXXXV, 2002 would remain protected by
Article 5(1) of Order 9 of 1999 dated 15-11-1999 and the Constitution (17th
Amendment) Act, 2003 which was gazetted on 31-12-2003. Under the said Act,
Constitution was further amended. Likewise, Article 270AA of the 17th Amendment
Act, the proclamation of emergency of the 14th of October, 1999 and all President
Orders including all other laws made between the 12th day of October, 1999 and the
date on which this Article comes into force (31-12-2003) are accordingly affirmed,
adopted and declared to have been validly made by the competent authority notwith -
standing anything contained in the constitution.

10. Even otherwise, the consistent view of the Superior Courts of the country is that
law should be saved rather than destroyed and Courts must lean in favour of
upholding the constitutionality of the legislation, Dr. Tariq Nawaz v. Government of
Pakistan 2000 SCMR 1956.

11. In view of the above discussion and constitutional position, both Writ Petition
No.3465 of 2005 (Major Retd. Ijaz Ahmad Bhatti v. State) and Writ Petition No.7261
of 2005 (Qureshi Abdur Raud v. D.P.O. etc.) are dismissed, the section 489-F, P.P.C. is
declared as valid and a living law."

6. A similar question as was dealt by my learned brother Syed Shabbar Raza Rizvi, J.,
was also before my learned brother Muhammad Farrukh Mahmud, J., and he also
decided likewise holding that section 489-F, P.P.C., was already on the statute book.
Reference in this connection may be made to the case of Abdul Rehman v. S.H.O.,
Police Station Kot Surnaba.

Rahim Yar Khan and another 2006 PCr.LJ 157.

7. Section 489-F of the Pakistan Penal Code reads as follows:

"Dishonesty issuing a cheque:-Whoever dishonestly issues cheque towards re-

payment of loan or fulfilment of an obligation which is dishonoured or presentation,
shall be punishable with imprisonment which may extend to three years, or with fine,
or with both, unless he can establish, for which the burden of proof shall rest on him,
that he had made arrangements with his bank to ensure that the cheque would be
honoured and that the bank was at fault in not honouring the cheque."

8. This was not previously on the statute book but was introduced through the
Criminal Law Reforms Ordinance of 25-10-2002.
9. This provision of law in fact was not the result of an original thought but was
borrowed from the Banking Companies (Recovery of Loans, Advances, Credits and
Finances) Act, 1997, which was subsequently repealed after the process of
Islamization by the new law which is called as the Recovery of Finances Ordinance,
2001.

10. If we advert to the previous law of 1997, we find a definition given of loan in its
section 2(f) which reads as follows:

"Loan means a loan, advance and credit under a system based on interest and
includes:---

(i) An advance, cash credit, overdraft, packing credit; a bill discounted and purchased
or any other financial accommodation. provided by a banking company to a borrower;

(ii) A guarantee, indemnity, letter of credit or any other financial engagement which a
banking company may give, issue or undertake on behalf of a borrower;

(iii) A benami loan, that is, a loan the real beneficiary or recipient whereof is a person
other than the person in whose name the loan is advanced or granted;

(iv) Any amount due from a borrower to a banking company under a decree passed by
a Civil Court or any award given by an arbitrator; and

(v) Any loan due from a borrower to a banking company which is the subject-matter
of any pending suit, appeal or revision before any Court."

And perhaps this is the only comprehensive definition of loan given in our finance
laws.

11. We may also advert to section 20(4) of the Recovery of Finances Ordinance, 2001.
It read as follows:--

"20(1) …………………..

"20(2) …………………….

"20(3) …………………..

"20(4) Whoever dishonestly issues a cheque towards repayment of a finance or

fulfilment of an obligation which is dishonoured on presentation, shall be punishable
with imprisonment which may extend to one year, or with fine or with both, unless he
can establish, for which the burden of proof shall rest on him, that he made
arrangements with his bank to ensure that the cheque would be honoured and that the
bank was at fault in not honouring the cheque."
12. Keeping section 489-F of the P.P.C. and section 20(4) of the Recovery of Finances
Ordinance, 2001, in juxtaposition, one finds that the provisions of section 489-F of
the P.P.C. in fact are borrowed from section 20(4) ibid.

13. Word "dishonestly" has been defined by section 24 of the Pakistan Penal Code
which reads as follows:--

"Dishonestly:--Whoever does anything with the intention of causing wrongful gain to

one person or wrongful loss to another person, is said to do that thing 'dishonestly'."

14. After the process of Islamization in view of the objections which were raised
against the Banking Companies (Recovery of Loans, Advances, Credits and Finances)
Act, 1997, there was need for redefining certain words and phrases and so the word
"finance" was defined in section 2(d) of the Financial Institutions (Recovery of
Finances) Ordinance, 2001, as follows:

(i) An accommodation or facility provided on the basis of participation in profit and

loss, mark-up or mark down in price, hire-purchase, equity support, lease, rent-
sharing licensing charge or fee of any kind, purchase and sale of any property
including commodities, patents, designs, trade marks and copy-rights, bills of
exchange, promissory notes or other instruments with or without buy-back
arrangement by a seller, participation term certificate, musharika. Moharaba,
musawama, istisnah or modaraba certificate, term finance certificate;

(ii) Facility of credit or change cards;

(iii) Facility of guarantees, indemnities, letters of credit or any other financial

engagement which a financial institution may give, issue or undertake on behalf of a
customer, with a corresponding obligation by the customer to the financial institution;

(iv) A loan, advance, cash credit, overdraft, packing credit, a bill discounted and
purchased or any other financial accommodation provided by a financial institution,
to a customer;

(v) A benami loan or facility that is, a loan or facility the real beneficiary or recipient
whereof is a person other than the person in whose name the loan or facility is
advanced or granted;

(vi) Any amount due from a customer to a financial institution under a decree passed
by a Civil Court or an award given by an arbitrator; any amount due from a customer
to a financial institution which is the subject-matter of any pending suit, appeal or
revision before any Court; any other facility availed by a customer from a financial
institution."

Whereas, the word "loan" was not redefined in the new law of 2001 and the word
"finance" was used in its place. However, no corresponding change was brought about
in section 489-F of the P.P.C. where the word "loan" continued to exist as in the past.

15. The word "obligation" is also defined by the Financial Institutions (Recovery of
Finances) Ordinance, 2001, in the following words:

(i) Any agreement for the repayment or extension of time in repayment of a finance or
for its restricting or renewal or for payment or extension of time in payment of any
other amounts relating to a finance or liquidated damages; and

(ii) Any and all representations, warranties and covenants made by or on behalf of the
customer to a financial institution at any stage, including representations, warranties
and covenants with regard to the ownership, mortgage, pledge, hypothecation or
assignment of; or other charge on assets or properties or repayment of a finance or
payment of any other amounts relating to a finance or performance of an undertaking
or fulfilment of a promise; and

(iii) All duties imposed on the customer under this Ordinance; and `rules' means rules
made under this Ordinance."

16. The word "loan" in the definition under definition of "finance" as reflected
inparagraph 2(d) of the Financial Institutions (Recovery of Finances) Ordinance,
2001, is to the following effect:

(iv) A loan, advance, cash credit, overdraft, packing credit, a bill discounted and
purchased or any other financial accommodation provided by a financial institution,
to a customer;

(v) A benami loan or facility that is, a loan or facility the real beneficiary or recipient
whereof is a person other than the person in whose name the loan or facility is
advanced or granted;

(vi) Any amount due from a customer to a financial institution under a decree passed
by a Civil Court or an award given by an arbitrator; any amount due from a customer
to a financial institution which is the subject-matter of any pending suit, appeal or
revision before any Court; any other facility availed by a customer from a financial
institution."

17. Consequently and after having visited the definitions of these important words and
phrases, the conclusion drawn is that section 489-F, P.P.C. would only be relevant
where in respect of a loan or non-fulfilment of an obligation as defined by the laws
mentioned above, a cheque is issued and it gets dishonoured in the way mentioned
under section 489-F of the Pakistan Penal Code. It shall not be attracted for any other
purpose.

18. The corollary of this would be that the cheques which were issued otherwise than
for purposes of repayment of loans or fulfillment of obligation will not be covered by
the definition of 489-F, P.P.C. and this is the sweep of section 489-F of the Pakistan
Penal Code.

19. As a result of this, all the petitions asking for cancellation of bail (Cris. Misc.
Nos.1632-CB, 1773-CB, 3056-CB, 3084-CB, 3088-CB and 1110-CB of 2006) are
dismissed because none of these pertain to the purpose which has already been
defined above.

20. And consequently, the petition asking for grant of post-arrest bail (Crl. Misc.
No.2699-B of 2006) is allowed provided the petitioner furnishes bail bond in the
sum of Rs.25,000 with a surety in the like amount to the satisfaction of the trial
Court.

H.B.T./M-234/L Order accordingly.

2006 Y L R 406

[Lahore]

Before Sh. Javaid Sarfraz, J

MAZHAR IQBAL---Petitioner

Versus

THE STATE---Respondent

Criminal Miscellaneous No.3225-B of 2005, decided on 28th November, 2005.

Criminal Procedure Code (V of 1898)---

----S. 498---Penal Code (XLV of 1860), S.489-F---Pre-arrest bail, grant of--Business

dealing existed between accused and complainant and due to said dealings cheque in
question was handed over to complainant---Amount of cheque in question, had already
been paid to complainant in due course of time and said cheque was not to be presented
to Bank for encashment---In order to attract S.489-F, P.P.C., element of dishonesty
should be shown, which element was absent in the present case as amount had already
been paid to the complainant---Dishonouring of cheque would not mean that criminal
case be registered forthwith, but purpose for which cheque was issued should be taken
into account before initiating criminal action---Accused, in circumstances had made out
a case of further inquiry into his guilt---Offence with which accused was charged being
punishable only with three years' R.1., would not fall within prohibitory clause of
S.497, Cr. P. C.---Grant of bail, in such-like cases, was a rule and its refusal an
exception--Pre-arrest bail already granted to accused, was confirmed in circumstances.

Major Anwar-ul-Haq v. The State PLD 2005 Lah.607; Tariq Bashir and 5 others v. The
State PLD 1995 SC 34 and Ali Murtaza v. The State 2005 PCr.LJ 1773 ref.

Ahmad Raza for Petitioner.

Muhammad Yosuaf Syed for the State with Jasel Khan Awan, S.I., P.S. Fateh Sher,
District Sahiwal.

ORDER

SH. JAVAID SARFRAZ, J.---The petitioner, Mazhar Iqbal, seeks pre-arrest bail in case
bearing F.I.R. No.80 of 2005, dated 6-4-2005, under section 489,-F, P.P.C. registered at
Polcie Station Fateh Sher, District Sahiwal.

2. According to the contents of the F.I.R., the petitioner-accused is alleged to have issued
a Cheque No.5037317, dated 30-12-2004 for Rs.50,000 drawn on PICIC Bank Limited in
the name of Zafar Iqbal, the complainant. This cheque was dishonoured on presentation
to the Bank. Accordingly, the case was registered against the present petitioner.

3. Learned counsel for the petitioner submits that there was a business dealing with the
petitioner and the complainant and it was due to these dealings that this cheque of
Rs.50,000 was handed over to the present complainant. It is further submitted that in due
course of time this amount has already been paid to the complainant and the cheque was
not to be presented to the Bank for encashment. Learned counsel for the petitioner further
submits that in order to prove his bona fide the petitioner has already deposited Rs.50,000
with the police and concludes that there was no element of dishonesty.

4. The learned State counsel has vehemently opposed this petition.

5. According to the petitioner, there was a business relationship between him and the
complainant, in which they used to purchase second hand cars and sell the same. In this
regard a cheque of Rs.50,000 had been given to the present complainant but this amount
has already been subsequently paid to him. In order to attract section 489-F, P.P.C.,
element of dishonesty should be shown and dishonouring of cheque does not mean that
criminal case be registered forthwith. The purpose for which the cheque is issued should
be taken into account before initiating criminal action. Major Anwar-ul-Haq v. The State
(PLD 2005 Lahore 607) is referred. The petitioner, under the circumstances, has made out
a case of further inquiry requiring further prove into his guilt.

6. The offence so charged is punishable only with three years' R.I. and it does not fall
within the prohibitory clause. As held by the Hon'ble Supreme Court of Pakistan in Tariq
Bashir and 5 others v. The State (PLD 1995 Supreme Court 34) that in such-like cases the
grant of bail is a rule and refusal thereto is an exception. While relying on Ali Murtaza v.
The State (2005 PCr.LJ 1773 [Lahore]); the pre-arrest bail already granted to the
petitioner, vide order dated 14-11-2005, is confirmed subject to his furnishing fresh bail
bonds in the sum of Rs.50,000 with one surety in the like amount to the satisfaction of
Illaqa Magistrate.

7. The Illaqa Magistrate is directed to deposit/invest Rs.50,000 lying with the

Investigating Officer of this case in any Government Profitable Scheme of National
Savings Centre. The party found entitled to this amount shall also take the profit accrued
thereupon.

8. With the above direction, this petition is allowed.

H.B.T./M-1448/L Bail confirmed.

2002 Y L R 713

[Lahore]

Before Asif Saeed Khan Khosa, J

Mst. MAQSOODAN BIBI---Appellant

Versus

AMAR JAVED and others---Respondent

Criminal Appeal No. 1288 of 2000, heard on 10th April, 2002.

Penal Code (XLV of 1860)---

----Ss. 309/310/324/334/452/148/149--Criminal Procedure Code (V of 1898)--Ss.417 &

345---Appeal against acquittal--Compromise with accused party---Judicial
record---Presumption of correctness ---Effect--Record had shown that appellants
complainant had sworn an affidavit before Judicial Magistrate wherein she had
categorically maintained that on account of intervention of respectables of the area
appellant had effected a compromise with accused party whom she had forgiven in the
name of Allah Almighty---Appellant had also sworn another affidavit before Trial Court
wherein she had maintained that she already entered into a compromise with accused
persons and that she had no objection to their admission to bail as well as
acquittal---Order passed by Judge Special Court had clearly stated that appellant was
present in person before Court and she had confirmed factum of compromise before
Court---Presumption of correctness was attached to judicial record and that presumption
remained un-rebutted---Once a compromise had been effected in a criminal case and
same had been acted upon then such a compromise could not be allowed by Court to be
resiled from---Acquittal order recorded by Trial Court on basis of compromise could not
be interfered with in appeal by High Court.

Kumarasami Chetty v. Kuppusami Chetty and others AIR 1919 Mad. 879; Ram Richpal
v. Mata Din and another AIR 1925 Lah. 159; Thangtoo Barai and another v. Emperor AIR
1930 All. 409; Mt. Rambai v. Mt. Chandra Kumari Devi AIR 1940 Nag. 181; Godfrey
Meeus v. Simon Dular AIR 1950 Nag. 191; Prithvi Bhagat and another v. Birju Sada AIR
1962 Pat. 316; Syed Sabir Hussain Shah and another v. Syed Iftikhar Hussain Shah and
another 1995 MLD 563; Syed Iftikhar Hussain Shah v. Syed Sabir Hussain Shah and 2
others 1998 SCMR 466 and Mukhtar Ahmad and 3 others v. The State 1999 PCr.LJ 1107
ref.

Shahid Hussain Kadri for Appellant.

Ch. Shahid Tabassam for Respondents Nos. 1 to 7.

Ishfaq Ahmad Chaudhry for the State.

Date of hearing: 10th April, 2002.

JUDGMENT

Through this appeal Mst. Maqsoodan Bibi appellant has called in question the order dated
31-7-2000 passed by the learned Judge, Special Court (Suppression of Terrorist
Activities), Gujranwala whereby respondents Nos. 1 to 7 were acquitted on the basis of a
compromise between the parties in case F.I.R. No.570 registered at Police Station Sadar,
Kamoke on 238-1998 for offences under sections 324/334/452/148/149, P.P.C. The
allegation against respondents Nos. 1 to 7 was that at flout 9-30 a.m. on 22-8-1998 they
had trespassed into the house of the present appellant after forming an unlawful assembly
and had launched a murderous assault upon the present appellant and had chopped the
appellant's nose off.

2. It is available on the record that on 8-10-1998 the present appellant had sworn an
affidavit before Chaudhry Muhammad Rafique, Judicial Magistrate, Gujranwala wherein
she had categorically maintained that on account of intervention of the respectables of the
area the appellant had affected a compromise with the accused party whom she had
forgiven in the name of Allah Almighty. She had further deposed in the said affidavit that
she was no longer interested in prosecuting the accused persons and she had no objection
to their admission to bail or acquittal. The record further shows that on 21-10-1998 the
learned Judge, Special Court (Suppression of Terrorist Activities), Gujranwala was seized
of a bail application of some of the accused persons and on that date the present appellant
as well as her brother Muhammad Ashraf complainant had both entered appearance
before the said Court in person and had stated that they had pardoned the accused
persons. On the said date the present appellant had sworn another affidavit before the said
learned Court confirming the factum of her compromise with the accused persons. The
order passed by the said Court on 21-10-1998 expressly referred to personal presence of
the present appellant before that Court on that date. Subsequently on 31-7-2000
respondents Nos. 1 to 7 herein submitted an application before the learned trial Court
seeking their acquittal on the basis of the compromise having been effected between the
parties. On the said date Muhammad Ashraf complainant was present before the learned
trial Court in person and the State was represented by an Assistant Public Prosecutor.
After giving notice to the State regarding the application submitted by respondents Nos.1
to 7 herein the learned trial court acquitted respondents. Nos. 1 to 7 in this case on the
basis of the compromise. That order passed by the learned trial Court has been assailed
by the present appellant (the injured victim) before this Court through the present appeal.
However, Muhammad Ashraf complainant (the appellant's brother) has not challenged
that offer.

3. In support of this appeal it has beer, argued by the learned counsel for the appellant
that the appellant had never entered into any compromise with the accused persons and,
therefore, the acquittal of the said accused persons recorded by the learned trial Court on
the basis of a compromise warrants setting aside by this Court. As against that the learned
counsel for respondents Nos. 1 to 7 has referred to various documents available on the
record to establish that on more than one occasion the present appellant had confirmed
the factum of her having entered into a compromise with the accused persons. He has
further maintained that once a compromise is effected between the parties the same
cannot be resiled from by them. The learned counsel for the State has maintained that the
State has felt satisfied with the acquittal of respondents Nos. 1 to 7 on the basis of a
compromise and this is why the State has not challenged their acquittal.

4. After hearing the learned counsel I for the parties and going through the record it has
emerged as an established fact that the present appellant had not only sworn an affidavit
before a Magistrate on 8-10-1998 but had also sworn another affidavit before the learned
trial Court on 21-10-1998 wherein she had maintained that she had already entered into a
compromise with the accused persons and she had no objection to their admission to bail
as well as acquittal. The order passed by the learned Judge, Special Court (Suppression of
Terrorist Activities), Gujranwala on 21-10-1998 clearly shows that the present appellant
was present in person before the said learned Court and she had confirmed the factum of
compromise before that Court on that date. Presumption of correctness is attached to
judicial record and the learned counsel for the appellants remained unable to dislodge or
rebut the said presumption through any material whatsoever.

5. It is settled law that once a compromise has been effected in a criminal case and the
same has been acted upon then such a compromise cannot be allowed by the Court to be
resiled from. A reference may be made in this regard to the cases of Kumarasami Chetty
v. Kuppusami Chetty and others (AIR 1919 Madras 879), Ram Richpal v. Mata Din and
another (AIR 1925 Lahore 159), Thangtoo Barai and another v. Emperor (AIR 1930
Allahabad 409), Mt. Rambai wife of Bahadursingh v. Mt. Chandra Kumari Devi (AIR
1940 Nagpur 181), Godfrey Meeus v. Simon Dular (AIR (37) 1950 Nagpur 91), Prithvi
Bhagat and another v. Birju Sada (AIR 1962 Patna 316), Syed Sabir Hussain Shah and
another v. Syed Iftikhar Hussain Shah and another (1995 MLD 563), Syed Iftikhar
Hussain Shah v. Syed Sabir Hussain Shah and 2 others (1998 SCMR 466) and Mukhtar
Ahmad and 3 others v. The State (1999 PCr.LJ 1107).

6. For what has been discussed above I have failed to find any occasion to interfere with
the acquittal of respondents Nos. 1 to 7 recorded by the learned trial Court and, therefore,
this appeal is hereby dismissed.

N.H.Q./M-1153/L Appeal dismissed.

1995 P Cr. L J 1257

[Lahore]

Before Ahmad Saeed Awan, J

Syed MAQBOOL HUSSAIN SHAH---Petitioner

Versus

Syed FAYYAZ MAHMOOD---Respondent

Criminal Miscellaneous No.312/Q of 1994, decided on 31stJanuary, 1995.

(a) Criminal Procedure Code (V of 1898)---

----S. 249-A--Magistrate can acquit the accused even before examining any witness if
from the material placed on record he is satisfied that the charge is groundless.

(b) Penal Code (XLV of 1860)---

----S. 406/506---Criminal Procedure Code (V of 1898), S.561-A---Quashing of

proceedings---Civil and criminal litigation going on between the parties had disclosed a
breach of contract which could not give rise to criminal prosecution---Amount could be
recovered through the suit pending adjudication before a competent Court of law---
Promise broken by the accused was not a criminal offence---Continuation of criminal
proceedings against the accused amounted to an abuse of the process of Court in
circumstances and the same were quashed accordingly.

Mirza Naseem Baig v. Muhammad Iqbal and another 1981 SCMR 315; Muhammad
Farooq and 2 others v. The State 1992 PCr.LJ 834; Tahir-ul-Islam v. The State and
another 1984 PCr.LJ 274; Khushi Muhammad and 4 others v. The State 1979 SCMR 94
and Sh. M. Taqi v. The State 1991 PCr.LJ 963 ref.

Mahfuz-ul-Haq Khan for Petitioner.

Mian Tariq Ahmad for Respondent.

Date of hearing: 30thJanuary, 1995.

JUDGMENT

The petitioner through. this petition under section 561-A, Cr.P.C. seeks quashment of
proceedings in the complaint case entitled as Syed Fayyaz Mahmood v. Syed Maqbool
Hussain Shah pending in the Court of Syed Munawar Hussain Shah, Magistrate 1 st Class,
Lahore, Gulberg area under section 406/506, P.P.C.
2. The learned counsel for the petitioner contends that the complaint prima facie is an
abuse of process of law, mala fide and has been filed for the purposes of harassment of
the petitioner. As the dispute is of civil nature and civil proceedings in this regard are
already pending between the parties before the Civil Court; issues have already been
framed and cases are fixed for evidence in respective Courts.

3. The learned counsel for the respondent has vehemently opposed this petition and
submitted that admittedly a suit for specific performance of an agreement filed by the
respondent is pending before the learned Civil Judge against the petitioner instituted on
18-7-1994 in which issues have been framed on 10-7-1994 and is fixed for evidence.
Further, contends that complaint filed by the respondent prima facie discloses a case
against the petitioner, therefore, the proceedings of complaint cannot be quashed as the
process has been issued by the learned trial Court after recording evidence; on the basis
that civil proceedings between the parties are pending and the matter is also sub judice;
there is no bar in law to the simultaneous initiation or progress of civil or criminal
proceedings.

4. I have heard the arguments of both learned counsel at length and have perused the
record with their-able assistance.

5. As per complaint, dated 7-5-1994; it is alleged that on 8-6-1991, the petitioner entered
into an agreement to sell Plot No.516 Nargis Block. Allama Iqbal Town, Lahore in favour
of the respondent for consideration of Rs.6,00,000; out of which the petitioner received
Rs.3,00,000 as earnest money and the balance of Rs.3,00,000 was to be paid by the
respondent to the petitioner at the time of execution of sale-deed to be registered by 31-
12-1993; ,the petitioner has changed his mind and has refused to get the sale-deed
registered as agreement to sell.

6. As per para. No.4 of the plaint it is alleged that on inquiry from Lahore Development
Authority regarding proprietary rights of the said plot, it transpired to the respondent that
the proprietary rights had not yet been passed to the petitioner; hence the petitioner
committed fraud with the respondent as well as with the Lahore Development Authority.

7. While according to the suit for specific performance filed on 18-41994; it is stated in
para. No 4. that the petitioner disclosed in the said agreement that there was dispute
between him and the Lahore Development Authority which would be probably resolved
within two years; in case, the dispute with Lahore Development Authority remains
unsettled; even then the petitioner would execute the sale-deed in favour of the
respondent. As the petitioner failed to resolve his dispute with LDA as stated in para.
No.5 of the suit; the parties further agreed to extend the period of execution of sale-deed
from 30-6-1993 to 31-12-1993; if the petitioner failed to complete his documents for
execution of sale-deed in favour of the respondent by the said date, the agreement to sell
would be deemed to have been cancelled and the petitioner would be bound to return the
money to the plaintiff.
8. As per suit, the respondent approached the petitioner in the 1st week of December,
1993 and requested either to execute the sale-deed or to return the money; further served
legal notice on the petitioner which was received by his daughter on 13-12-1993; in spite
of it the respondent did not receive any written intimation from the petitioner; hence the
suit was filed.

9. Let me now turn to examine the merits of the complaint; admittedly, the petitioner filed
his suit for permanent injunction against the complainant and the S.H.O. Allama Iqbal
Town, Lahore on 12-3-1994, apprehending mischief at their hands in which a stay order
was granted. The respondent made his appearance in the said suit on 16-3-1994 and the
case is now fixed for 26-2-1995 before the learned Civil Judge, Lahore.

10. The respondent filed as counter-blast his suit for specific performance of an
agreement against the petitioner on 19-4-1994; in which issues have been framed and is
pending for evidence in the Court of another learned Civil Judge at Lahore.

11. The complaint was filed by the respondent on 7-5-1994. It is alleged that on 3-4-1994
at about 11-00 a.m.; the petitioner as per promise to legal notice, dated 12-12-1993
visited the office of respondent to settle the matter; on the demand of repayment of the
amount of the respondent, the petitioner threatened him of dire consequences and gave
threat of murder to him; while in the declaratory suit filed on 19-4-1994; filed much prior
to the complaint, it is stated that in spite of notice, dated 12-12-1993 received by the
petitioner's daughter on 13-12-1993; the respondent did not receive any written
intimation from the petitioner; hence respondent was left with no alternative but to file
the suit for specific performance. If the occurrence would have taken place on 3-4-1994;
the respondent would have narrated this fact in the suit. It is evident from the plaint; that
contradictory plea has been taken in the complaint; which tantamounts to be tainted with
malice and in fact is an attempt to coerce the petitioner as argued by the petitioner's
counsel.

12. The question arises whether complaint can be stifled by quashment simply on the
basis that civil proceedings between the parties are also pending; needs consideration. As
observed in case Mirza Naseem Baig v. Muhammad Iqbal and another 1981 SCMR 315;
the principle laid down in this case is that the Court should examine the F.I.R./complaint
to see as to whether it makes out an offence and in doing this exercise it should not be
influenced by the extraneous material which is not germane to the issue. In case
Muhammad Farooq and 2 others v. The State 1992 PCr.LJ 834 it was held that if facts on
record prima facie connect the accused with the offence and it would be premature to pre-
judge the prosecution case by throttling the same at its very inception and petition for
quashing the proceedings was dismissed. In case Tahir-ul-Islam v. The State and another
1984 PCr1J 274 it was held "suffice it is to say that there is no bar in law to
simultaneously initiate civil and criminal actions. Respondent No.2 who was allegedly
defrauded has two-fold remedies for the redress of his grievance. First, through criminal
proceedings, and .secondly, through a civil suit. Each proceeding is independent of the
other and .is intended for a separate purpose".
13. The principles on which complaint can be quashed were laid down by their Lordships
of Supreme Court in case Mirza Naseem Baig v. Muhammad Iqbal and another 1981
SCMR 315 as under:--

"The principle upon which the complaint can be quashed is well-settled, namely,
that the High Court should examine the complaint to determine as to whether it
makes out an offence; and in doing this exercise it should not be influenced by
any extraneous material which is not germane to the issue. However, it may also
be stated here that the High Court is not denuded of its powers to quash the
proceedings if it is satisfied from other cogent material that the prosecution was
launched for improper motives, merely to harass the accused, or that its
continuance would be abuse of the process of the Court or for other reasons which
impell the Court to conclude that it would not be in the ends of justice to allow the
prosecution to continue."

14. The observation of the learned trial Magistrate that application under section 249-A,
Cr.P.C. is premature is misconceived. In cases like in hand, on the basis of private
complaint, when Magistrate has taken cognizance and issues process and no evidence is
recorded; and if the complainant persons are of the opinion, that issuance of the process
against them by the Magistrate, amounts to abuse of process of said Court, and if, from
the private complaint in question of the accused persons are able to show that the charge
against them cannot be maintained and complaint has been filed mala fide, in order to
harass the accused persons, in order to pressurise them to compromise civil suit between
the parties, for which civil proceedings in competent Civil Courts are pending between
the said parties; application under section 249-A, Cr.P.C. as held in case Khushi
Muhammad and 4 others v. The State 1979 SCMR 94 must be moved first before the trial
Court. Further, as laid down in case Sh. M. Taqi v. The State 1991 PCr.LJ 963. Section
249-A, Cr.P.C. relieves the Magistrate from the necessity of going on with the trial, if
from the evidence available on record, he is convinced that a criminal charge cannot be
sustained and there is no probability of the accused being convicted of any offence. The
language in which this section is couched makes it clear that the Magistrate has got
powers to acquit the accused even before any witness is examined, if from the material'
placed on record he is satisfied that the charge is groundless. If acting judiciously the
Magistrate comes to the conclusion that the allegations, even if admitted to be true, do
not constitute an offence or the allegations disclose a case of civil nature which is
deliberately turned into a criminal offence.

15. Under section 249-A, Cr.P.C. the trial Magistrate has powers to acquit an accused at
any stage of the case, if after giving notice of the said application to the counsel of- the
complainant or the complainant and after hearing the parties, he considers that the charge
is groundless or that there is no probability of the accused person being convicted of any
offence before him, while the High Court has power under section 561-A, Cr.P.C. to
quash cases where sending the accused to the trial Court would only perpetuate, if not
further exacerbate the abuse of injustice, rather than eliminate it. ,
16. As per prayer of the respondent in the suit, it is prayed "a decree in favour of the
plaintiff against the defendant for specific performance of agreement to sell, dated 8-6-
1991 may kindly be passed with costs, in the alternative, the defendant may graciously be
directed to pay double of the amount of Rs.3,45,000 which he received from the plaintiff'.

17. A perusal of the suit as well as of F.I.R. discloses a breach of contract; a mere breach
of contract cannot give rise to a criminal prosecution. The amount so secured is still
repayable and can be recovered through the suit pending for adjudication before a
competent Court of law. A broken promise by the petitioner is not a criminal offence as
all moral wrongs are not necessarily criminal offences.

18. I am of the view, the continuation of the criminal proceedings against the petitioner is
an abuse of process of Court and consequently the proceedings pending against the
petitioner in the trial Court under section 406/506 are quashed. The application under
section 561-A, Cr.P.C. is accordingly allowed with no order as to costs.

N.H.Q./M-2016/L
Proceedings quashed.