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Petitioner: Chaudhry SHUJAT HUSSAIN VS Respondent: THE STATE
Court Name: Supreme Court of Pakistan Judge(s): Mir Hazar Khan Khoso, Saleem Akhter, Zia Mahmood Mirza Title: Chaudhry SHUJAT HUSSAIN vs THE STATE Case No.: Criminal Petition No 8 of 1995 Date of Judgment:1995-01-31 Reported As: 1995 SCMR 1249 Result: Bail granted
Judgment ORDER SALEEM AKHTAR, J.---The petitioner seeks leave to appeal against the order of learned Judges of the Division Bench of the Lahore High Court by which his bail application was dismissed. The Managing Director, Investment Corporation of Pakistan (ICP) addressed the following letter dated 10-12-1994 to the Director-General, Federal Investigating Agency, Islamabad which was registered as F.I.R. No, 11/94 on the same date:- "No, MD(PA) Law/1162/94 November 10, 1994 The Director-General, Federal Investigation Agency, ISLAMABAD. Dear Sir, RE: M/S. PHALIA SUGAR MILLS The Directors of M/s. Phalia Sugar Mills Limited having its registered office at 20-E/1-G, Gulberg-II, Lahore (hereinafter called accused) applied for a loan of Rs,300 million to ICP for the following purchase:-- (i) The accused in their earlier application dated 23-2-1991 stated that the loan of Rs,249 millions was needed for expansion of the existing sugarcane crushing capacity of their sugar mills. (ii) Then vide application dated 25-8-1991, the accused stated that the loan of Rs,300 million was needed to pay off its outstanding liabilities of NICFC. 2. The above request came out to be fraudulent in substance in view of the fact that M/s. Phalia Sugar Mills had already paid off Rs,200 million to M/s. NICFC on 2-9-1991 as is obvious from the Reconveyance Deed (certified copy enclosed) executed by NICFC in favour of M/s. Phalia Sugar Mills Limited which reads as under:--
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"Phalia Sugar Mills Limited having repaid the entire Debenture Loan of Rs,200 million to the NICFC, the receipt of which is acknowledged, the mortgagee hereby redeems/releases to M/s. Phalia Sugar Mills Limited, the Mortgagor Company, all the properties and assets detailed in the Mortgage Deed 6-7-1989." 3. In spite of the above Deed which was duly registered with Sub-Registrar Phalia, M/s. Phalia Sugar Mills, with fraudulent motives prevailed upon the ICP for a loan of Rs,300 million which had to be sanctioned and remitted by ICP to NICFC. M/s. Phalia Sugar Mills also executed a L.M.M. Financing Agreement with ICP on 5-9-1991 (certified copy enclosed) containing inter alia the following fraudulent statement:-- "The Company undertakes that the sale prices of Rs,195 million (Rupees one hundred ninety-five million) shall be utilised by it for repayment of loans of Rs,300 million (Rupees three hundred million) to the NICFC, which were obtained by the Company for setting up a Sugar Mill of 3000 TCP, at Phalia, District Gujrat." 4. The accused also obtained another amount of Rs,105 million as loan by creating a "Floating Charge" against all the present and future assets of the company in favour of ICP led consortium vide their registered deed dated 7-9-1991 (certified copy enclosed). 5. The NICFC also fraudulently received Rs,300 million knowing fully well that payment of Rs,200 million had already been made by M/s. Phalia Sugar Mills Ltd., and acknowledged earlier by it through the registered Re-conveyance Deed dated 2-9-1991. 6. The Directors of M/s. Phalia Sugar Mills Limited namely Ch. Shujaat Hussain, Ch. Parvaiz Ellahi, Ch. Manzoor Ellahi, Ch. Gulzar Muhammad, Ch. Wajahat Hussain and others in collusion with and with the connivance of the concerned officials of NICFC and by exerting undue pressure on concerned officials of ICP cheated and defrauded ICP of the amount of Rs,300 million. This constitutes a cognizable offence. 7. It is requested that a criminal case may kindly be registered against all the accused persons for further legal action. Yours faithfully (Sd.) (MUTIUR RAHMAN), MANAGING DIRECTOR." End: As above 2. The petitioner was charged of committing offence under sections 420, 468, 471, 477-A, 109, P.P.C. Read with section 5(2)/47 of Prevention of Corruption Act and arrested on 22-11-1994. Bail application was filed before the learned Judge Special Courts (Offences in Banks), Lahore who while admitting it issued notice to the State for 18-12-1994 and granted interim bail as follows:-- "As the petitioner, Ch. Shujat Hussain is required to attend Senate Session under orders of the Chairman Senate, I order that Ch. Shujat Hussain petitioner be released on interim bail till 18-12- 1994 on his furnishing of bail bonds in the sum of rupees ten lac with one surety in the like amount to the satisfaction of this Court. The petitioner is further directed to join investigation if so required and appear in Court on 18-12- 1994." 3. The respondent challenged this order by filing W.P. No, 14180/94 which was referred to Full Bench of five Hon'ble Judges who modified the said order and disposed of the petition by the following order dated 6-12-1994:- "It is well-settled that the point of jurisdiction has to be raised first of all before the forum where the matter is pending. Be that as it may, the petitioner, if so advised, may raise these points before the learned trial Judge. Nonetheless, the bail bond in the sum of Rupees ten lac appears to be inadequate keeping in view the huge amount of money, the subject of commission of alleged
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crime. To that extent, the objection of the learned Advocate-General appears to be justified. The final date fixed for hearing of the case is also shortened keeping in view the interest of law. The learned Judge shall, therefore, hear aid decide the bail petition alongwith the objections of the petitioner finally on or before 13-12-1994 instead of 18-12-1994. The parties shall appear before the learned Judge on 8-12-1994, alongwith their learned counsel. In other words, the impugned interim order dated 27-11-1994 is hereby modified by directing that in the meantime, the respondent No,1 shall furnish a fresh bail bond in the sum of Rs,2,00,00,000 (Rupees two crore) with two sureties each in the like amount to the satisfaction of learned trial Judge. With this modification in the impugned order, this petition is disposed of." 4. On 8-12-1994 the petitioner failed to appear before the Special Court when the case was called and the bail application was dismissed at 11-15 a.m. The petitioner alongwith his advocate appeared at 11-30 a.m. Who explained the delay and filed another application for bail which was dismissed by the following order dated 8-12-1994:- "Mr. Saqib Nisar and Mr. M.A. Zafar, Advocates with Ch. Shujat Hussain petitioner. An earlier application for bail (B.A. No, 178/94) was today dismissed for non-appearance at 11-15 a.m. Ch. Shujat Hussain petitioner alongwith his advocates today appeared in Court at 11-30 a.m. When the petition had already been dismissed for non-appearance. It is submitted by the petitioner that on account of bad weather he was unable to reach Court in time. The explanation offered is reasonable. I have heard the learned counsel for the petitioner on merits. I have also examined all the documents appended with the first bail application. Without expressing any opinion on merits, this petition is dismissed in limine." 5. The petitioner then filed application in the Lahore High Court seeking bail which was dismissed by the impugned judgment. The learned Judges of the Division Bench observed:-- "We have heard the learned counsel for the parties and gone through the record. There is some force in the contentions raised by the learned Law Officer that the accused have committed the offences as mentioned in the F.I.R., especially, keeping in view the following circumstances:-- Firstly, M/s. Phalia Sugar Mills Limited applied for the grant of Rs,300 million on loan to establish new Sugar Mills. It was sanctioned at the rate of 16% interest per annum, though at that stage the amount was not released; Secondly, they applied to NICFC and allegedly obtained a loan of Rs,300 million for the establishment of same Mills at Phalia at the rate of 18% interest per annum; Thirdly, they again applied to ICP for the sanction of loan on the basis of the earlier application for the expansion of the Mills at the rate of 8% instead of 16% per annum; Fourthly, on or after 5-9-1991 Phalia Sugar Mills Limited received two categories of loan, viz.: (a) Financial Assistance of LMM amounting to Rs,195 million; (b) Further financing amounting to Rs,105 million; Both these loans were obtained from ICP to pay off the outstanding loan to NICFC. In this case, they obtained this amount at the rate of 8% per annum whereas they were required to pay interest at the rate of 18% per annum on the loan which they had from NICFC; Fifthly, there is a Deed of Re-conveyance on the record which shows that M/s. Phalia Sugar Mills Limited made admission that on or before 29-1991, the total amount of loan obtained from NICFC was paid off by making payment of 200 million. It may be pointed out that M/s. Phalia Sugar Mills Limited have taken conflicting stands to the effect that on 2-9-1991 they cleared off the total outstanding loan of NICFC but in spite of that they obtained Rs,195 million and Rs,105 million from ICP to make payment of outstanding loan on 5-9- 1991. In view of the above, we hold that the prosecution has a prima facie case against the accused to proceed further."
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6. The learned Judges directed the Investigating Agency to complete the investigation of the case within fifteen days. The petitioner filed petition for special leave to appeal challenging this judgment. We have heard Mr. Ijaz Hussain Batalvi, learned Sr. ASC and Mr. Saqib Nisar, ASC for the petitioner, Mr. Farooq Naik, the learned Dy. Attorney-General and Mr. Shahzad Jahangir learned Sr. ASC for the State. 7. Mr. Ijaz Hussain Batalvi the learned Sr. ASC contended that in the F.I.R. The petitioner has been charged under sections 420, 468, 471, 477-A, 109, P.P.C. Read with section 5(2)/47 of the Prevention of Corruption Act and except section 468, P.P.C. All other offences under P.P.C. Are bailable. He further contended that section 5(2) is not applicable to the facts of the case. He further contended that section 468, P.P.C. Is non-bailable with a maximum punishment of 7 yearsR.I, therefore in view of the principle laid down in Tariq Bashir and 5 other v. State (PLD 1995 SC 34), bail should be granted. Mr. Farooq Naek, the learned Deputy Attorney-General contended that as the offences are scheduled offences in respect of Banks (Special Courts) Ordinance, 1984 (hereinafter referred to as the Ordinance) in view of section 5(6) of the Ordinance, bail cannot be granted if there appear reasonable grounds for believing that the accused has been guilty of a scheduled offence. There can hardly be any dispute that the petitioner is being charged of afore stated offences of P.P.C. Which have been included in the Schedule of the Ordinance as scheduled offences. The object, nature, procedure and the restrictions imposed by the Ordinance in applying general law namely, Code of Criminal Procedure, was considered in Allied Bank of Pakistan Ltd. v. Khalid Farooq (1991 SCM R 599). The Ordinance was promulgated for providing speedy trial of certain offences committed in relation to the Banks listed in the Schedule to the Ordinance. These offences have been made triable exclusively by the Special Court. Section 5 deals with procedure for trial of persons accused of scheduled offence by the Special Court. In respect of all scheduled offences under the Ordinance, grant of bail is regulated by section 5(6) of the Ordinance which reads as follows:-- "An accused person shall not be released on bail by a Special Court, or -by any other Court, if there appear reasonable grounds for believing that he has been guilty of a scheduled offence; nor shall an accused person be so released unless the prosecution has been given notice to show cause why he should not be so released." 8. A comparison with section 497, Cr.P.C. Will show that there is departure from the said provision. In his regard reference can be made to section 12 of the Ordinance which provides that the provisions of this Ordinance shall have effect notwithstanding anything contained in the Code or in any other law for the time being in force. Therefore, in cases of conflict between the provisions of the Ordinance and the provisions of the Code, the Ordinance will prevail. In Allied Bank's case, it was observed that "the Ordinance being a special law conferring special power and jurisdiction on the Special Court and providing a special forum and procedure relating to the trial of scheduled offences, the Code will not affect any provision dealing with such special power, jurisdiction or procedure". It may also be noted that section 5(6) is couched in a negative language. It is well- settled principle of interpretation of statute that where any provision couched in negative language requires as act to be done in a particular manner then it should be done in the manner as required by the statute otherwise such act will be illegal. In this regard the observations in the Allied Bank's case are relevant and further the learned Deputy Attorney-General has referred to certain passages from Maxwell's, Interpretation of Statute and Craise leading to the same conclusion. At this stage I may clarify that there is a misconception which is sometime expressed that if an act is provided to be done in a manner it should be done in that particular manner otherwise it will be illegal. This cannot be general rule for applying such provisions of law. There may be cases where directions contained in an enactment are directory and not prohibitory. But where the language used is in negative or mandatory term for performance of a particular act,
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only then it can be said that any act done or an order passed in breach of such negative or mandatory language will be illegal. Any act or order done in breach of affirmatie language expressed in directory manner may not lead to the same result but this will entirely depend upon the facts and circumstances of the case and the object and language of the statute. 9. The criterion for grant of bail as laid down by the Ordinance is not the quantum of sentence provided by P.P.C. The bailable or non-bailable nature of an offence on the basis of punishment is a, creation of Code of Criminal Procedure. This part of the provision of section 497 being in conflict with the provisions of the Ordinance, the bail can be granted only if section 5(6) of the Ordinance is satisfied. In Allied Bank's case, while considering sections 497 and 498, Cr.P.C. With reference to section 5(6) of the Ordinance, it was observed as follows:-- "In short, the difference appearing in section 5(6) of the Ordinance is the fetter on the Special Court's discretion to first find as a fact that there appear no reasonable grounds for believing that the accused is guilty of a scheduled offence, even where the punishment is not severe, such as death, imprisonment for life or imprisonment for ten years; leaving the condition contained in the second proviso to subsection (1) of section 497 of the Code. It was further observed: "It is, therefore, clear that section 5(6) of the Ordinance does not completely oust the applicability of section 497 of the Code in respect of bails and though the rule of subsection (1) of section 497 with a slight change and the exception to the said rule as contained in the second proviso of the same subsection have been introduced in subsection (6) of section 5 of the Ordinance, which is couched in negative language, no express or implied ouster of the remaining provisions of section 497 of the Code can be spelt out from subsection (6) of section 5 of the Ordinance." While dilating upon section 497, Cr.P.C. In Allied Bank's case, it was observed that:-- "Whilst the provisions of the first and third provisos to subsection (1) of section 497 of the Code may be treated as not available to the Special Court or the High Court, such a situation would not apply to subsections (2) to (5) of section 497 of the Code, as they do not affect the rule stated in subsection (6) of section 5 of the Ordinance. These provisions would not stand excluded whether expressly or by necessary intendment or implication. In the final analysis, it is not possible to subscribe to the view that section 5(6) of the Ordinance constitutes a complete Code for the grant of bail to persons accused of offences mentioned in the Schedule to the exclusion of all provisions in the Code relating to the same subject." 10. Section 5(6) though not a complete Code provides fetter on the power of the Special Court to grant bail but the principles enunciated in section 497, Cr.P.C. And judicial authorities interpreting these provisions which do not come in direct conflict with section 5(6) can be pressed in service for grant of bail. Comparative study of sections 5(6) and 497 will show that bail can be refused if there appear reasonable grounds for believing that accused has been guilty of the offence. This is one of the grounds in section 497 for grant of bail. Therefore, to that extent there does not seem to be any conflict in both the provisions. We will thus consider whether there appear reasonable grounds for believing that the petitioner has been guilty of a scheduled offence. 11. In order to appreciate and apply these provisions of law, it is necessary to look to the facts which have been relied upon by the parties. The case relates to financial transaction by which Phalia Sugar Mills Limited (hereinafter referred to as the Company) had obtained loan from ICP. The entire transaction is documented and is reflected in the letters, communications and resolutions. Therefore, it requires prima facie examination of these documents to resolve the query. 12. The history of this transaction at issue can be traced from 27-7-1988 when the Company applied for a loan to the Investment Corporation of Pakistan. It requested for the amount for assistance as follows:-- (a) Term Finance Certificate (Short- Term TECs) ....................... Rs,67.500 Million
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(b) TFCs (Long-T erm)............. Rs,36.870 Million (c) L.M.M ................................. Rs,190.500 Million It was to be applied for erection and installation of machinery with Annual Production Capacity of 3000 TCD. At that time the petitioner was neither a shareholder nor a Director of this Company. On 3-10-1988 the loan applied for was sanctioned by the Board of Directors of ICP and letter of sanction was issued on 27-11-1988 by which total loan of 249 million was granted. As this loan was not disbursed the Company filed Writ Petition No, 6005/90 in which comments were called and ICP maintained that the commitment made to the Company was never withdrawn or cancelled and that it was ready to honour its commitment provided the Federal Government clears the case and the, Company fulfils certain conditions mentioned therein. In view of this statement, the petition was withdrawn on 22-12-1990. The Company addressed a letter to the Managing Director, ICP on 23-2-1991 stating that as the ICP had backed out of its commitment, the petitioner procured funds to the tune of 145.149 million from its own sources and the balance amount was obtained at a much higher mark-up rate of 18% to complete the project in time. The mill was completed with a crushing capacity of 3000 M. Tons per day. Referring to ICP's willingness to disburse the fund to the project it was stated that in order to make it a viable unit, it has to be extended by adding crushing capacity of 7000 Tons per day. The Company submitted the completion cost of the mill with proposal to expand the crushing capacity by further 7000 TCD. The Company requested that the case may be processed at an early date. The ICP by lett& dated 26th May 1991 informed that the Board of Directors of ICP has approved for revalidation of financial assistance of 249 million by way of L.M.M. To be utilized for the expansion of capacity from 3000 TCD to 7000 TCD. The ICP also supplied the terms and conditions in detail for granting this assistance. This was accepted by the Company. However, the Company by letter dated 25th August 1991 informed the ICP that its lending agencies were pressing for repayment of their temporary loans, the details of which were given as follows:-- 1. Loan from NICFC (National Industrial Cooperative Finance Corporation). A.Loan against machinery Rs, in (000) (i) LMM(L/c opened on IFL) 210,000 (ii)Erection 8,000 (iii)Imported Machinery L/c on FSL)52,300 B.Short Term Loans: (i) Loan from NICFC 10,000 (ii)Loan from Citibank 20.000 Total: 300,300 Interest payable up to 31- 5-199144.500 344.800 13. According to the Company the NICFC by its letter dated 28-8-1991 while enclosing the title deed of the land mortgaged to it informed ICP that it (NICFC) was prepared to release the charge provided the amount of loan was directly remitted to it. The learned counsel for the petitioner referring to ICP's letter dated 31-8-1991 maintained that the Board of Directors of ICP in their meeting approved the refinancing scheme for the Company and agreed that on completion of formalities and creation of charge on all the assets of company Rs,300 Million would be disbursed to NICFC. It was further pointed out that the Registrar Cooperatives on NICFC's request granted no objection certificate on 2-9-1991 for execution/registration of deed of redemption in respect of the
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Company's land mortgaged for Rs,200 Million subject to the condition that Rs,300 Million loan taken from ICP would be credited directly in the account of N.I.C.F.C. The deed of redemption/reconveyance deed was executed and registered on 2-9-1991. While this process was on ICP by its letter dated 1-9-1991 advised the Company as follows:-- "We are pleased to inform you that ICP's Board of Directors in their meeting held on August 31, 1991 have approved your request for enhancement of financial assistance package from Rs,249 million sanctioned on 3-10-1988 to Rs,300 million. The financial assistance will be utilized to repay the outstanding loans of M/s. National Industrial Cooperative Finance Corporation Limited, Lahore which were obtained by you for setting up a new sugar mill of 3000 TCD capacity, at Phalia, District Gujrat, Punjab for which financial assistance of Rs,249 million was originally sanctioned by ICP consortium. The break-up of the enhanced assistance will be tentatively as under:-- L.M.M. Rs,195.000 Million. LONG-TERM TFCsRs,105.000 Million. TOTAL:- Rs,300.000 Million. The terms and conditions of this commitment were also stated in this letter and it concluded as follows:-- "This supersedes our earlier sanction letters No, PA&RP/3637/A1479 dated November 27, 1988 and No,OD/P/PHALIA SGR./91/A/3830 dated May 26, 1991." The ICP by letter dated 2nd September 1991 addressed to the Deputy Governor, State Bank of Pakistan informed that ICP's Board of Directors had approved refinancing of Rs,300 million under its consortium arrangement made up as follows:-- (i) Reimbursement for locally-manufactured machinery already purchased Rs,195 million. (ii) TFCs for other fixed capital expenditure already incurred Rs,105 million. A request was made to grant approval for reimbursement of 195 million incurred on purchase of locally manufactured machinery. The Company addressed a letter to ICP dated 3-9-1991 despatched through TCP enclosing the documents for comlying with the requirements necessary for grant of financial assistance and at S. No, 6 was photo copy of deed of redemption of mortgage registered with Sub-Registrar, Phalia. The Company requested to expedite the matter and release the payment through draft to NICFC. Thereafter on 5th September 1991, L.M.M. Financing Agreement between the Company and the ICP Consortium was executed. The agreement, inter alia, provided that the Company undertakes that the sale price of Rs,19,50,195 million shall be utilized by it for repayment of loans of Rs,300 million to NICFC which were obtained by the Company for setting up a sugar mill of 3000 TCD at Phalia, District Gujrat, Punjab. The ICP addresseda letter to State Bank of Pakistan dated 12th September 1991 informing that Phalia Sugar Mill had purchased locally manufactured machinery for Rs,210 million and the cost of project as assessed by NES PAK is higher than actually paid by the Company. The State Bank of Pakistan by letter dated 15th September 1991 addressed to ICP referring to the letters of 2nd September 1991 and 12th September 1991 granted approval stating as follows:-- "In view of the position explained by you, it has been decided to accept your request for refinance of Rs,195 million in respect of M/s. Phalia Sugar Mills Ltd., under the LMM-Scheme. You may please approach our Karachi Office for…
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