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Official Citation: 2026 LHC 2111
Court / Jurisdiction: Lahore High Court (Honorable Mr. Justice Muhammad Jawad Zafar)
Ruling Summary: This decision was rendered by the Lahore High Court (Honorable Mr. Justice Muhammad Jawad Zafar), officially reported as 2026 LHC 2111. In this matter between the Petitioner and the Respondent, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
COURT: Lahore High Court (Honorable Mr. Justice Muhammad Jawad Zafar) DECISION DATE: 21-01-2026 CASE DETAILS: Crl. Misc. 69461/25 ============================================================ Form No: HCJD/C-121 Order Sheet IN THE LAHORE HIGH COURT LAHORE JUDICIAL DEPARTMENT
Crl. Misc. No. 69461-B of 2025 (Muhammad Sarwar v. The State and another)
S.No. of order/ proceeding Date of order/ proceeding. Order with signatures of Judge, and that of parties or counsel, where necessary. 21.01.2026 Mr. Ch. Muhammad Ashraf Jalal, Advocate with the petitioner. Mr. Fakhar A bbas, Deputy Prosecutor General with Ashraf ASI and Saleem ASI. Mr. Muhammad Zubair Khalid Choudhary, Advocate for the complainant.
Muhammad Sarwar (“ petitioner” or “accused”) seeks grant of bail before arrest in terms of Section 498 of the Code of Criminal Procedure 1898 (“Code” or “ Cr.P.C”) in a crime report bearing FIR No. 1433 of 2025 dated 26.07.2025, for an offence under Section 406 of the Pakistan Penal Code 1860 (“PPC” or “ penal code ”), registered with Police Station Naseer Abad, Lahore (“ crime report ” or “FIR”). 2. Heard; perused. 3. Material available on record was tentatively scrutinized to ascertain whether any exceptional or extraordinary circumstances persist which reflect malice aforethought behind the intended arrest of the petitioner, warranting intervention of this Court as a means to come to the rescue of the accused to save him from humiliation and protect his honour, dignity, and reputation.1 It needs no reiteration that the grant of the extraordinary remedy of pre -arrest bail is essentially rooted in equity; and the judicial power to grant such
1 See “Ahtisham Ali v. The State ” (2023 SCMR 975); See “Muhammad Ismail v. The State ” (2023 SCMR 707); and, “Shahzada Qaiser Arfat alias Qaiser v. The State” (PLD 2021 Supreme Court 708). Crl. Misc. No. 69461-B of 2025 (Muhammad Sarwar v. The State and another) - 2 -
relief is to be exercised cautious ly, with a view to protecting the innocent from abuse of the process of law in prosecutions initiated for malafide purposes, and not to be extended in every run -of-the-mill criminal case based on bald denials and parallel narratives. For determining whether the principles governing the grant of bail before arrest were attracted, the crime report was perused, and it reveals that despite the occurrence having taken place on or before 14.07.2025, the crime report was not lodged until 26.07.2025, after an inordinate delay of twelve (12) days. No legal or plausible justification has been provided for such delay, thereby raising the possibility of fabrication, deliberation, consultation, and concoction of a false, frivolous, and vexatious narrative against the pet itioner, which cannot be ruled out at this stage.2 4. In addition thereto, for appreciating the averments made at the bar, this Court deems it appropriate to first deliberate on the criteria and parameters of overt acts constituting the offence of criminal breach of trust. The legislature has defined the offence in Section 405 of the PPC, whereas the penal consequences that follow any conduct squarely falling within the ambit of the aforementioned provision have been listed in the following provisions, i. e., Sections 406 to 409 of the penal code. It would also not be amiss to note herein that identical provision(s) exist in our neighbouring jurisdictions, e.g., Sections 405 till 409 of the Indian Penal Code 1860 (“ IPC”),3 while akin thereto, the erstwhile provision of Section 388 in
2 See “ Bashir Ahmed v. The State ” (2023 SCMR 748 ); “ Muhammad Aziz alias Mana v. The State ” (2023 SCMR 1773); “Aamir Bashir v. The State” (2017 SCMR 2060); and,”Khalid Javed Gillan v. The State ” (PLD 1978 Supreme Court 256). 3 Note: The IPC was repealed by the Bharatiya Nyaya Sanhita 2023 (“BNS”). Crl. Misc. No. 69461-B of 2025 (Muhammad Sarwar v. The State and another) - 3 -
Ceylon4 made breach of trust a criminal offence. 5 The highlighted provisions are, in essence, due to being scribed in the same terminology, if not verbatim, appear to be pari materia,6 and have been centered around the term “ent rustment”. Even in the United Kingdom (“UK”), the transaction is governed by Section 75 of the Larceny Act 1861 (“ Larceny Act ” or “ Act of 1861”), though contravention of the provision is treated as a misdemeanour. In our jurisdiction, the requisite rudimentary ingredients for sanctioning a person under Section 406 of the penal code are, infra: ‘(i) There should be an entrustment by a person who reposes confidence in the other, to whom property is entrusted. (ii) The person in whom the confidence is placed, dishonestly misappropriates or converts to his own use, the property entrusted. (iii) Dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged. (iv) Dishonestly uses or disposes of that property in violation of any legal contract express or implied which he has made touching the discharge of such trust’.7 Minute scrutiny of the law provides that the first and foremost condition, or to put it bluntly, key element, for an act to fall within the ambit of the definition clause of Section 405 of the penal code is that there should be “entrustment”. 8 The term, i.e., “entrustment”, though not defined in the penal code itself, has been subject to meticulous j udicial perusal and inspection, in Pakistan, and abroad. In English jurisprudence, the connotation of the expression “entrustment” imports, in all its general significance, is the possession for some purpose which may not imply
4 Present day Sri Lanka. 5 See “Mahumarakalage Edward Andrew Cooray v. The Queen” ([1953] WLR 1354). 6 See “The Intelligence Officer, Directorate of Intelligence and Investigation, FBR v. Abdul Karim” (2025 SCMR 969). 7 See “ Muhammad Ali v. Samina Qasim Tarar ” ( 2022 SCMR 2001 ); and, “ Ali Raza v. The State ” ( 2022 SCMR 1223). 8 See “Danish Riaz Dar v. The State” (2025 MLD 1374 Lahore). Crl. Misc. No. 69461-B of 2025 (Muhammad Sarwar v. The State and another) - 4 -
the conferring of any propri etary right at all. 9 The natural meaning of “entrusted”, written down as “intrusted” in Section 75 of the Larceny Act, involves that the assured should by some real and conscious volition have imposed on the person, to whom he delivers the goods, some spec ies of fiduciary duty. 10 In other words, the term “entrustment” implies that the person handing over any property, or on whose behalf it is handed over to another, continues to be its owner. Likewise, the person handing over property must have confidence in the person taking the property so as to create a fiduciary relationship between them. Similarly, in India, the expression “entrusted” is not a term of law, for want of statutory definition, but the same was examined by the Supreme Court of India, inter alia, in the judicial pronouncements of “ Jaswantrai Manilal v. State of Bombay ”,11 and again, in “ State of Gujarat v. Jaswantlal Nathalal ”.12 Perusal of the observations rendered in the quoted cases provides that the expression, “entrustment”, contemplates th e creation of a fiduciary relationship whereby the owner of property hands over the possession of the same to another for the purpose of either retaining the said property until a certain contingency arises, and when the agreed upon contingency arises, the property is either to be returned or to be disposed of by the person to whom it was handed over/“entrusted”. The reasoning rendered by the Courts of law in foreign jurisdictions is not distinct from the judicial reasoning adopted by the Honourable Supreme Court of Pakistan. In the case of “ Shahid
9 See opinion by Lord Haldane in “Lake v. Simmons” [(1927) AC 487]. 10 See the opinion rendered by Lord Sumner. 11 AIR 1956 Supreme Court 575. 12 AIR 1968 Supreme Court 700. Crl. Misc. No. 69461-B of 2025 (Muhammad Sarwar v. The State and another) - 5 -
Imran v. The State ”,13 the Honourable Court, while granting bail before arrest to the accused of the said case, opined that: ‘A perusal of the F.I.R. registered in this case clearly shows that the complainant had g iven the above mentioned sum of money to the petitioner by way of an investment in a business venture and not by way of entrustment. The law clearly recognizes a distinction between payment/investment of money and entrustment of money or property as in the former case the amount of money paid or invested is to be utilized for some purpose whereas in the latter case that sum of money or property is to be retained and preserved for its return to the giver and the same is never meant to be utilized for any oth er purpose. Recognition of this distinction stands clearly reflected in many cases decided by different courts in the Indo -Pak sub -continent and a reference in this respect may be to the cases of State of Gujarat v. Jaswantlal Nathalal (AIR 1968 SC 700), Punjab National Bank and others v. Surendra Prasad Sinha (1994 PSC (Crl) 768), Shaukat Ali Sagar v. Station House Officer, Police Station Batala Colony, Faisalabad and 5 others (2006 PCr.LJ 1900), Ghulam Ali v. Javid and another (1989 PCr.LJ 507), Nga Po Seik v. Emperor (1917 Indian Cases 824) and Kornai Lal Dutta v. The State (AIR 1951 Cal 206). These precedent cases clearly show that a mere breach of a promise, agreement or contract does not ipso facto attract the definition of criminal breach of trust contained in section 405, P.P.C. and such a breach is not synonymous with criminal breach of trust without there being a clear element of entrustment therein which entrustment has been violated. Looked at from this perspective the allegation levelled against the petitioner regarding commission of an offence under section 406, P.P.C. surely calls for further probe at this stage’. The case of “ Shahid Imran v. The State ” (supra) was cited with approval in “ Rafiq Haji Usman v. Chairman, NAB ”,14 wherein while placing reliance on the reasoning of the prior, it was amongst other things, held that: ‘In case of entrustment, the money/property received is to be retained for return to the giver at a later time as opposed to a promise or contract where investment is made or money is paid for the purposes of fulfillment of a specific agreed upon purpose/contract. In such a case where money/property has been entrusted to a person, using such amount/property for any other purpose would not attract the penal consequences of section 405 ibid’. Along the same lines, their lordships were of
13 2011 SCMR 1614. 14 2015 SCMR 1575. Crl. Misc. No. 69461-B of 2025 (Muhammad Sarwar v. The State and another) - 6 -
the view, in “ Abbas Haider Naqvi v. Federation of Pakistan”,15 that: ‘16. Although the "entrustment" of property within the meaning of Section 405, P.P.C. does not envisage the creation of a formal trust with all the technicalities of the law of trust, it does contemplate that to constitute entrustment the accused must have held the property in a fiduciary capacity. …The entrustment of property implies that the ownership of the entrusted property vests in a person other than the one who is entrusted with it. If the property belongs to and is owned by the accused in his own right, it cannot be said that he was entrusted with that property and that by using or disposing of that property he committed the offence of criminal breach of trust. "Entrustment" is an essential ingredient of the offence of criminal breach of trust as defined in Section 405, P.P.C.; therefore, where there is no entrustment of property, there can be no cri minal breach of trust’. The connotation of the expression of “entrustment” as utili zed in the provision of Section 405 of the penal code, was recently addressed by the honourable Supreme Court of Pakistan, in re: In “Muhammad Amjad Naeem v. The State ”,16 in which case, while granting relief of bail, it was authoritatively held by the Court that: ‘6. The term 'entrustment', as used in section 405 P.P.C., means that a property is given to a person as a trust (amanat), whereby, a confidence is reposed in the recipient person and he is obligated to return the same to person making the entrustment. The attachment of this obligation in the entrustment implies that the ownership of the property in question remains with the person who has given the property and has not been transferred, in any manner, to the person receiving the property, who is only temporarily given possession/custody of the entrusted property for a specific purpose and the same property is to be returned by the said person. The entrusted prop erty cannot be used by or disposed of in any other manner or for any purpose other than as was decided by the person making the entrustment. In this manner, entrustment creates a fiduciary relationship between the giver and receiver of the entrusted proper ty. However, this does not automatically imply that entrustment has to comply with the technicalities of trust law. This position has been affirmed in several judgments and reference in this respect may be made to the cases reported as Zahid Jameel v. S.H. O. and 2 others (2008 YLR 2695 Lahore), Shahid Imran v. The State and others (2011 SCMR 1614) and Muhammad Ali v. Samina Qasim Tarar and others (2022 SCMR
15 PLD 2022 Supreme Court 562. 16 2025 SCMR 1130. Crl. Misc. No. 69461-B of 2025 (Muhammad Sarwar v. The State and another) - 7 -
2001). 7. It is also trite law that the term 'entrustment' is used in a broad sense under section 405 P.P.C. and therefore, it encompasses a wide variety of contexts in which a property is handed over by an owner to a recipient person as trust (amanat). This is evident from the illustrations provided in section 405 P.P.C., which demonstrate various sit uations wherein the offence of criminal breach of trust can be committed. … 10. As a necessary implication of the above discussion, it is also well recognized that mere failure to pay profits, or a breach of promise, agreement or contract in the absence of clear entrustment of property, do not attract criminal breach of trust’. Simply put, per the said decisions, the person transferring possession of the property to the other retains, for all legal purposes, the ownership of the property handed over and the person in whose favour possession is so transferred merely gets dominion/custody over the property, which is to be kept or disposed of by him for the benefit of the first party, i.e., the one that is the owner and hands over possession of the property to the latter.17 5. With the above -illustrated and quoted principles taken in to consideration, the narration of the crime report, which is the cornerstone of any criminal case or proceedings, and material available on record were appraised tentatively. The crux of the allegations by Muhammad Nawaz (“ informant” or “ respondent No. 2 ”) against the petitioner is that the latter, due to close and cordial relations with the accused, agreed to invest various amounts into the business of automobile dealership and in lieu thereof, he was to receive profits from the transactions. When the nar ration is read in conjunction with the principles of law, as quoted and enunciated hereinabove, it follows that failure to pay profit or a breach of promise, agreement, or contract, in the absence of the rudimentary ingredient of “entrustment”, takes the c onduct of the petitioner
17 See “Ashoke Sadhya & Anr. v. State of West Bengal & Anr” (2015 SCC OnLine Cal 885) = (2015 (3) CHN (Cal) 755). Crl. Misc. No. 69461-B of 2025 (Muhammad Sarwar v. The State and another) - 8 -
outside the scope of Section 405 of the penal code, as a consequence of which, no offence in terms of Section 406 of the PPC is, prima facie, made out against him. 18 Reason being, and as alluded to earlier, the connotation of the ex pression “entrustment” carries with it the implication that the person handing over any property or on whose behalf that property is handed over retains ownership of the property handed over 19 and it is only that sum of money or property which is to be reta ined and preserved for its return to the giver and the same is never meant to be utilized for any other purpose. On the contrary, in this lis, the payment/investment was intended to be utili zed for some other purpose and as such, goes beyond the scope of the provision. 6. In view of the deliberation made hereinabove, for want of existence of the element of “entrustment” for constituting the offence in terms of Section 406 of the penal code, this Court is of the considered view that, prima facie , malafide, which can be inferred from the facts and circumstances of a case, 20 lurks behind the intended arrest of the petitioner, making this case fit for grant of bail before arrest, especially in view of the fact that it is the solemn duty of this Court to protect the liberty of a citizen because the rights of dignity and liberty are constitutionally protected cardinal right, which are on the same pedestal as the right to life. 7. As adumbrated thereto, this petition is allowed, and the ad-interim bail before arr est already granted to the petitioner, by this Court vide Order dated 21.11.2025, is confirmed, subject to his furnishing of
18 See “Muhammad Amjad Naeem v. The State ” (2025 SCMR 1130); “Rafiq Haji Usman v. Chairman, NAB ” (2015 SCMR 1575); and, “Shahid Imran v. The State” (2011 SCMR 1614). 19 See “Ashoke Sadhya & Anr. v. State of West Bengal & Anr” (2015 SCC OnLine Cal 885) = (2015 (3) CHN (Cal) 755). 20 See “ Shahzada Qaiser Arfat alias Qaiser v. The State ” ( PLD 2021 Supreme Court 708 ); and, “ Khalil Ahmed Soomro v The State” (PLD 2017 Supreme Court 730). Crl. Misc. No. 69461-B of 2025 (Muhammad Sarwar v. The State and another) - 9 -
bail bonds in the sum of PKR. 1,000,000/- (Rupees One Million Only) with one surety in the like amount to the satisfaction of the learned trial court. 8. Before parting ways with this order, it is clarified that the observations enumerated herein are absolutely tentative in nature and restricted only to the extent of this bail petition. The observations made in this order have no nexus or relevance with the trial, and the same shall be conducted independently and purely on merits by the learned trial court without being influenced by this order.
(MUHAMMAD JAWAD ZAFAR) JUDGE
Approved for Reporting
JUDGE
Ejaz/*