P L D 2006 Lahore 752

Before Syed Shabbar Raza Rizvi, J

Maj. (Rtd.) 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 drawee 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 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 likewise 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 recovery 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".

M. Z. 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 Bank 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 Kalil for the Complainant.

Ijaz Ahmad Bajwa for the State.

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, Lahord 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 came 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 cheuque 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 partner 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. Rs.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, P.P.C. 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, sometimes 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, P.P.C. 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" 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 India 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 subsection
(4) of section 20 of the Financial Institutions (Recovery and Finances) Ordinance, 2001 and
provisions of section 489-F of PPC are placed side by side.
Section 489-F, P.P.C.

Section 20(4) of FI(R&F) Ord.

Whoever dishonestly issued 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 of 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 Code 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.R. 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 M.Z. Corporation v. M.S. 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 Mamoon Qazi, J. of Karachi High Court (as he then was) is relevant ad
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, 1981 instead of Indian Penal Code. In this
connection they added a new Chapter XVII in Negotiable Instruments Act 1981. 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 harm 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
Instrument 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" (with effect
from 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 her 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 hot 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.---For 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 reasons, 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 rehear 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.-(1) Notwithstanding anything contained in the Code of

Criminal Procedure, 1973 (2 to 1974), and for the purposes of this Chapter, a Magistrate
issuing a summon 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.-(1) Notwithstanding anything contained in the Code of Criminal

Procedure, 1973 (2 of 1974), the evidence of the complainant any 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 2 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
Institution (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 Legislature, 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 for enactment/amendment were made to the
Government.
23. The word `Loan' employed in section 489-F, P.P.C. is 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 Lah. 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 Ali 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
maneuvered by said Zafar Ali Shah as a counterblast of F.I.Rs 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
Investigating Officer 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 Ali Shah
had become partners on 25-6-2005 in Basil 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 Investigating Officer 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 Investigating Officer 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 three 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 Ali 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 Ali 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 Investigating Officer
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 Ali 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 Ali 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 Ali 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 Investigating
Officer shows that amount of Rs.4,44,500 was actually debited from the joint Account
No.7409-187749-001 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 fulfill. 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 circumstances, cannot be ruled out. The petitioner is a retired army officer and a
businessman. The Investigating Officer 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.