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Official Citation: 2017 SCMR 1218
Court / Jurisdiction: Supreme Court of Pakistan
Year of Decision: 2016
Decision Date: 2016-12-31
Parties: Syed MUSHAHID SHAH and others vs FEDERAL INVESTMENT AGENCY and JUDGMENT
This judicial decision was delivered by the Supreme Court of Pakistan on 2016-12-31. The matter involves proceedings between Syed MUSHAHID SHAH and others and FEDERAL INVESTMENT AGENCY and JUDGMENT, officially reported as 2017 SCMR 1218. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.
Case cited as 2017 SCMR 1218
Court Name: Supreme Court of Pakistan Judge(s): Mian Saqib Nisar, Umar Ata Bandial, Faisal Arab Title:Syed MUSHAHID SHAH and others vs FEDERAL INVESTMENT AGENCY and
JUDGMENT
Reported As: 2017 SC MR 1218 Result: Appeal allowed Judgment JUDGMENT ' MIAN SAQIB NISAR, C.J.---These appeals with the leave of the Court and petitions for leave to appeal (civil and criminal) are being disposed of together as they involve a common question of law: whether the Banking Courts constituted under the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance, 2001) have, exclusive jurisdiction to try the offences mentioned therein to the exclusion of the Special Courts constituted under the Offences in Respect of Banks (Special Courts) Ordinance, 1984 (the ORBO), the courts of ordinary criminal jurisdiction under the Code of Criminal Procedure, 1898 (the Code) read with the Pakistan Penal Code, 1860 (the P.P.C.) and from inquiry and investigation by the Federal Investigation Agency (the Agency) under the Federal Investigation Agency Act, 1974 (the Act, 1974). 2. The appellants/petitioners are customers of the respondents (financial institutions) who may be divided into two categories. In the first category, the customers are alleged to have committed offence(s) of either removing the hypothecated or pledged goods, disposing of the mortgaged properties and/or of breaching the terms of the finance agreement, instrument, etc. The fmancial institutions filed complaints against them before the Special Courts constituted under the ORBO and the Agency under the Act, 1974. In the second category, cheques issued by the customers to the financial institutions were dishonoured and cases (FIRs) were registered against the former under the provisions of section 489-F of the P.P.C. Aggrieved, the customers approached the
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learned High Court directly by filing either constitution or revision petitions, or under section 561-A of the Code, claiming that action could only be taken against them under the Ordinance, 2001 (in particular section 20 thereof) and no other law, and exclusive jurisdiction vests with the Banking Courts constituted under the said Ordinance. Through the impugned judgments, the learned High Court dismissed the matters holding that concurrent jurisdiction vests in the Banking Courts constituted under the Ordinance, 2001, the Special Courts constituted under the ORBO, the ordinary criminal courts and the Agency, and the jurisdiction of the latter two courts and the Agency would not be ousted on account of sections 4 and 20 of the Ordinance, 2001. Thereafter, the customers approached this Court and leave in the appeals was granted in the following terms:- "It is contended by the learned counsel for the Petitioners that by way of the impugned judgment dated 26.05.2016 passed in Writ Petition No,33423 of 2013, titled Faisal Farooq and 3 others v. SHO and another, the learned Lahore High Court has misinterpreted sectiodns 7(4) and 20 of the Financial Institutions (Recovery of Finances) Ordinance, 2001; to hold that the Banking Court did not have exclusive jurisdiction to try offences mentioned in the Ordinance of 2001 and that criminal proceedings can be launched independently in a forum, which is mentioned in the said Ordinance, 2001. It is further contended that the learned Lahore High Court has failed to take into consideration the dictum laid down by this Court in the judgment, reported as Waris Meal: v. The State and another (PLD 1957 Supreme Court (Pak.) 157) and the Articles 4, 10-A and 25 of the Constitution of Islamic Republic of Pakistan, 1973. 2. Leave is granted, inter alias to consider the aforesaid contentions of the learned counsel for the petitioners." ' The extensive arguments of the learned counsel for the parties are not recorded separately, but shall be reflected during the course of this opinion. 3. We begin with the concept of general and special law. General law is one that is unrestricted in terms of its applicability to all issues covered by its subject matter. In juxtaposition special law may be restricted to certain localities, persons or types of cases. Whether a law is general or special depends on the particular features of the statute in issue and is ultimately a question of relativity between two or more statutes on the common subject matter. The P.P.C. Is a comprehensive code for creating all criminal offences in Pakistan and applies throughout the country (Section 1). Every person is liable to punishment under the P.P.C. For every act or omission contrary to its provisions (Section 2). Accordingly, the P.P.C. Is undoubtedly a general law. Similarly, the Code is also a general law as it applies to the whole of Pakistan [Section 1(2)1 and deals with investigation, inquiry and trial etc. Of all offences under the P.P.C. [Section 5(1)1. 4. Initially, all criminal offences (barring a few) in Pakistan were tried by the courts of ordinary criminal jurisdiction under the Code and the P.P.C., i,e, the general law, and this included offences committed with respect to banks. Subsequently, the Banking Companies (Recovery of Loans) Ordinance, 1978 (the Ordinance, 1978) was promulgated to provide for a summary procedure for recovery of loans of banking companies and connected matters. Section 3 of the Ordinance, 1978 provided that "The provisions of this Ordinance shall be in addition to and, save as hereinafter expressly provided, not in derogation of any other law for the time being in force." According to this law, banking disputes pertaining to the recovery of loans by a banking company from a borrower were made subject to the jurisdiction (civil and criminal) of the Special Courts constituted thereunder, and no Court other than a Special Court was to possess or exercise any jurisdiction with respect to any matter to which the jurisdiction of such Court extended under the Ordinance, 1978 [Section 8(4)]. Banking offences, (and their punishments) were prescribed, all of which were bailable, non-cognizable and compoundable (Section 11). As is evident from its salient features, the Ordinance, 1978 was a special law. The Ordinance, 1978 was repealed and replaced with the
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Banking Companies (Recovery of Loans) Ordinance, 1979 (the Ordinance, 1979) which re-enacted the former with some modifications. 4(sic.) On 31.12.1984, the Banking Tribunals Ordinance,. 1984 (the Ordinance, 1984) was promulgated to provide a machinery for the recovery of finance provided by banking companies under a system of financing which is not based on interest (Preamble). This law closely followed the Ordinance, 1979 to quite an extent. One major difference was the phrase "without prejudice to any other action which may be taken against him under this Ordinance or any other law for the time being in force" which appeared in the provisions relating to offences (Section 7). In 1997, both the Ordinances of 1979 and 1984 were repealed and replaced by the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance, 1997 (the Ordinance, 1997) which eventually culminated into the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (the Act, 1997). The Act, 1997 essentially amalgamated the Ordinances of 1979 and 1984 creating one single statute for banking companies to recover loans or finances (interest based and interest-free) from borrowers or customers respectively. Like its predecessors, the Act, 1997 contained a non-derogation clause, and the 'without prejudice' clause in the provisions relating to offences (Section 19), akin to the one in the Ordinance, 1984. The Ordinances of 1984 and 1997 and the Act, 1997 were indubitably special laws, containing features similar to those of the Ordinances of 1978 and 1979. 6(sic.) The final link in the chain is the Ordinance, 2001. It repealed and re-enacted the Act, 1997, albeit with certain modifications. The Ordinance, 2001 established Banking Courts which deals with disputes (civil and criminal) between financial institutions and customers in respect of finances availed by the latter. Sections 4, 7 and 20 of the Ordinance, 2001 are important and read as follows:- 4. Ordinance to override other laws. The provisions of this Ordinance, shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. 7. Powers of Banking Courts.-(1) Subject to the provisions of this Ordinance, a Banking Court shall- (a) in the exercise of its criminal jurisdiction, try offences punishable under this Ordinance, and shall, for this purpose have the same powers as are vested in a Court of Session under the Code of Criminal Procedure 1898 (Act V of 1898): ' Provided that a Banking Court shall not take cognizance of any offence punishable under this Ordinance except upon a complaint in writing made by a person authorised in this behalf by the financial institution in respect of which the offence was committed. (4) Subject to subsection (5) no Court other than a Banking Court shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Banking Court extends under this Ordinance, including a decision as to the existence or otherwise of a finance and the execution of a decree passed by a Banking Court. (5) Nothing in subsection (4) shall be deemed to affect- (a) the right of a financial institution to seek any remedy before any court or otherwise that may be available to it under the law by which the financial institution may have been established; or (b) the powers of the financial institution, or jurisdiction of any Court such as is referred to in clause (a); or require the transfer to a Banking Court of any proceedings pending before any financial institution or such Court immediately before coming into force of this Ordinance. 20. Provisions relating to certain offences.- (1) Whoever- (a) dishonestly commits a breach of the terms of a letter of hypothecation, trust receipt or any other instrument or document executed by him whereby possession of the assets or!Properties offered as security for the repayment of finance or fulfillment of any obligation are not with the
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financial institution but are retained by or entrusted to 'him' for the purposes of dealing with the same in the ordinary course of business subject to the terms of the letter of hypothecation or trust receipt or other instrument or document or for the purpose of effecting their sale and depositing the sale proceeds with the financial institution; or (b) makes fraudulent mis-representation or commits a breach of an obligation or representation made to a financial institution on the basis of which the financial institution has granted a finance; or (c) subsequent to the creation of a mortgage in favour of a financial institution, dishonestly alienates or parts with the possession of the mortgaged property whether by creation of a lease or otherwise contrary to the terms thereof, without the written permission of the financial institution; or (d) subsequent to the passing of a decree under section 10 or 11, sells, transfers or otherwise alienates, or parts with possession of his assets of properties acquired after the grant of finance by the financial institution, including assets or properties acquired benami in the name of an ostensible owner shall, without prejudice to any other action which may be taken against him under this Ordinance or any other law for the time being in force, be punishable with imprisonment of either description for a term which may extend to three years and shall also be liable to a fine which may extend to the value of the property or security as decreed or the market value whichever is higher and shall be ordered by the Banking Court trying the offence to deliver up or refund to the financial institution, within a time to be fixed by the Banking Court, the property or the value of the property or security. ' Explanation. - Dishonesty may be presumed where a customer has not deposited the sale proceeds of the property with the banking company in violation of the terms of the agreement between the financial institution and the customer. (2) Whoever knowingly makes a statement which is false in material respects in an application for finance and obtains a finance on the basis thereof, or applies the amount of the finance towards a purpose other than that for which the finance was obtained by him, or furnishes a false statement of stocks in violation of the terms of the agreement with the financial institution or falsely denies his signatures on any banking document before the Banking Court, shall be guilty of an offence punishable with imprisonment of either description for a term which may extend to three years, or with fine, or with both. (3) Whoever resists or obstructs, either by himself or on behalf of the judgment debtor, through the use of force, the execution of a decree, shall be punishable with imprisonment, which may extend to one year, or with fine, or with both. (4) Whoever dishonestly issues a cheque towards repayment of a finance or fulfillment 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. (5) [(6) All offences under this Ordinance shall be triable by a Banking Court in accordance with section 7. All offences, except for the offence of willful default, shall be bailable, non-cognizable and compoundable.] [(7) Notwithstanding anything to the contrary provided in any other law for the time being in force, action in respect of an offence of willful default shall be taken by an investigating agency, to be nominated in this behalf by the Federal Government, on a complaint in writing filed by an authorized officer of a financial institution after it has served a thirty days (sic) notice upon the borrower demanding payment of the loan, advance or financial assistance ] 1 2
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(8) An offence of willful default shall be cognizable, non-bailable and non-compoundable and punishable with imprisonment which may extend to seven years or fine not exceeding the amount of default or with both. [Emphasis supplied] ' Like its predecessor statutes, the Ordinance, 2001 is also a special law as it created a special forum, i,e, Banking Courts, to deal with the recovery of finance by financial institutions from customers, and created certain offences in respect thereof which were also to be tried by such Courts. The Ordinance, 2001 basically carved out a portion of the jurisdiction of the ordinary courts, both civil and criminal. 7. A few months before the Ordinance, 1984 was enacted the ORBO was promulgated on 23.02.1984. It provides for the speedy trial of certain offences committed in respect of banks and for matters connected therewith or incidental thereto (Preamble). Special Courts were created (Section 3) to try 'scheduled offences' defined in section 2(d) to mean "an offence specified in the First Schedule and alleged to have been committed in respect, or in connection with the business, of a bank:" Clause (a) of the First Schedule provides "Any offence punishable under any of the following sections of the Pakistan Penal Code (Act XLV of 1860), namely:- Sections [201, 204, 217, 218, 380] , 403, 406, 408, 409, [419, 420] , 467, 468, 471, 472, 473, 475 and 477-A" (some of which are subject to certain modifications as set out in the Second Schedule of ORBO read with Section 6(2) thereof). Sections 4, 5 and 12 (relevant parts) of the ORBO read as under:- 4. Scheduled offence to be tried by Special Court.- (1) Notwithstanding anything contained in the Code, the scheduled offences shall be triable exclusively by a Special Court. 5. Procedure of a Special Court.---(1) A Special Court may take cognizance of any scheduled offence upon receiving a complaint of the facts which constitute such offence or upon a report in writing of such facts made by any police officer. 12. Ordinance to override other laws. 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. ' The ORBO created Special Courts which were given exclusive jurisdiction to try various offences (Section 4) stipulated in the P.P.C. But incorporated into the ORBO by way of legislative reference (scheduled offences) which were/are committed in respect of or in connection with the 'business of a bank'. Furthermore, no new offences specific to the ORBO were created by it: instead the existing offences in the P.P.C. Were incorporated through legislation by reference (note:- punishment was increased). It is patently clear that the ORBO is a special law in light of its aforementioned features, as it wrests some of the jurisdiction of the ordinary criminal courts. 8. As established, the Code and P.P.C. Are general laws whilst the ORBO and the Ordinance, 2001 are special laws. The appellants' case is that an offence committed in relation to a finance agreement inter se the ' financial institution and the customer, that falls within the orbit of the Ordinance, 2001 can only be tried by the Banking Courts constituted thereunder and that the Special Courts constituted under the ORBO or the ordinary criminal courts under the Code would have no jurisdiction. Equally the jurisdiction of the Agency under the Act, 1974 would also stand excluded by the criminal complaint procedure provided in section 20 of the Ordinance, 2001. In the above configuration of laws, does the Ordinance, 2001 have an overriding effect over the Code and the P.P.C., the ORBO and the Act, 1974? 9. Section 7(4) of the Ordinance, 2001 confers exclusive jurisdiction on the Banking Courts with respect to certain matters albeit subsection (5) creates an exception to the exclusive jurisdiction of the Banking Courts. This confers a right on the financial institution to seek any remedy before any court or otherwise which may be available to it under the law by which the financial institution may have been established [Section 7(5)(a)]. According to section 4 of the Ordinance, 2001 reproduced above, its provisions "shall have effect notwithstanding anything inconsistent therewith contained3 4
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in any other law for the time being in force. " This is essentially a non obstante clause which is defined as "A phrase used in documents to preclude any interpretation contrary to the stated object or purpose. Notwithstanding' means despite, in spite of or regardless of something. In this respect Justice G. P. Singh has aptly explained:- "A clause beginning with 'notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force', is sometimes appended to a section in the beginning, with a view to give the enacting part of the section in case of conflict an overriding effect over the provision or Act mentioned in the non obstante clause. It is equivalent to saying that in spite of the provision or Act mentioned in the non obstante clause, the enactment following it will have its full operation or that the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment." ' In the judgment reported as Packages Limited through its General Manager and others v. Muhammad Maqbool and others (PLD 1991 SC 258) this Court observed:- "In our opinion a 'non obstante' clause operates as an ouster of the earlier provisions only where there is a conflict and ' inconsistency between the earlier provisions and those contained in the later provision and, therefore, must be read in the context in which it is operating. Accordingly, a non obstante clause will operate as ouster only if an inconsistency between the two is found to exist." ' In the judgment reported as Muhammad Mohsin Ghiunan and others v. Government of Punjab through Home Secretary, Lahore and others (2013 SCMR 85), this Court cited with approval a passage from Interpretation of Statutes by N. S. Bindra which reads as under:- "It has to be read in the context of what the legislature conveys in the enacting part of the provision. It should first be ascertained what the enacting part of the section provides on a fair construction of words used according to their natural and ordinary meaning and the non obstante clause is to be understood as operating to set aside as no longer valid anything contained in relevant existing law which is inconsistent with the new enactment. The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously, for even apart from such clause a later law abrogates earlier laws clearly inconsistent with it. ' The proper way to construe a non obstante clause is first to ascertain the meaning of the enacting part on a fair construction of its words. The meaning of the enacting part ,which is so ascertained is then to be taken as overriding anything inconsistent to that meaning in the provisions mentioned in the non obstante clause. A non obstante clause is usually used in a provision to indicate that that provision should prevail despite anything to the contrary in the provision mentioned in such non obstante clause. In case there is any inconsistency between the non obstante clause and another provision one of the objects of such a clause is to indicate that it is the non obstante clause which would prevail over the other clauses. It does not, however, necessarily mean that there must be repugnancy between the two provisions in all such cases. The principle underlying non obstante clause may be invoked only in the case of 'irreconcilable conflict'," From the above it Is clear that the non obstante clause of section 4 of the Ordinance, 2001 has been used by the legislature to give the provisions of the said Ordinance an overriding effect over any other law for the time being in force which may be contrary thereto. The use of the word `notwithstanding' in section 4 ibid indicates the legislative intent to avoid the operation of conflicting provisions, by providing that in the event of such conflict, the provisions of the Ordinance, 2001 would take precedence over any such inconsistent law.5 6
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10. So, does the Ordinance, 2001 override the provisions of the Code and the P.P.C.? This question pertains to the second category of cases (identified in the second paragraph of this opinion) in which cheques issued by the customers to the financial institutions were dishonoured and FIRs were registered against the former under the provisions of section 489-F of the P.P.C. It is a settled canon of interpretation that where there is a conflict between a special law and a general law, the former will prevail over the latter. In Muhammad Mohsin Ghuman's case (supra) this Court observed that "special statute overtakes the operation of general statute". At this juncture, it is useful to point out certain relevant provisions of the Code and the P.P.C. Section 1(2) of the Code provides that "...In the absence of any specific provision to the contrary, nothing herein contained shall affect any special or local law now in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed, by any other law for the time being in force." According to section 5(1) of the Code, all offences under the P.P.C. "shall be investigated, inquired into, tried, and otherwise dealt with according to the provisions hereinafter contained", whereas subsection (2) thereof states that "All offences, under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences." Section 29(1) of the Code provides "Subject to the other provisions of this Code, any offence under any other law shall, when any Court is mentioned in this behalf in such law, be tried by such Court." While section 5 of the P.P.C. Stipulates that "Nothing in this Act [P.P.C.] is intended to repeal, vary, suspend or affect any of the provisions...Of any special or local law. " These provisions make it clear that not only do the Code and the P.P.C. Recognize special laws, but they F indicate that such general laws would cede to the special laws. The phrase 'for the time being in force' [in Section 1(2) of the Code] has been interpreted by a five member bench of this Court in the judgment , reported as (1) Mian Iftikhar-ud-Din, and (2) Arif…
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