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Petitioner: Major (Rtd.) JAVED INAYAT KHAN KIYANI VS Respondent: THE STATE
Court Name: Lahore High Court Judge(s): Syed Shabbar Raza Rizvi Title: Major (Rtd.) JAVED INAYAT KHAN KIYANI vs THE STATE Case No.: Criminal Miscellaneous No, 3399-B of 2006 Date of Judgment:2006-06-29 Reported As: 2006 CLD 1314 Result: Bail confirmed
Judgment ORDER ' SYED SHABBAR RAZA RIZVI, J.---The petitioner filed the present bail application for pre-arrest bail in F.I.R.No,300 of 2006, dated 20-3-2006. The said F.I.R. Was registered at Police Station Allama Iqbal Town, Lahore under section 489-F, P. P. C . 2. Briefly, complainant Rana Tauqeer Sarwar Khan reported to the S.H.O. That in August, 2005, the petitioner and another person 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 cheque in his account but he was informed by his bank that the cheque was dishonoured by the drawee. The complainant contacted the petitioner and his partners Syed Zafar All Shah. Said Syed Zafar Ali Shah informed complainant that partnership between petitioner and him had ended. However, he paid half of the amount i,e, 2,66,700. When the complainant demanded from petitioner payment of his share, the petitioner refused to make the payment. The complainant alleged that the petitioner had dishonestly issued cheque to cause complainant wrongful loss. 3. Before I discuss and decide the present case, I consider it expedient and appropriate to examine scope of section 489-F, P.P.C. At some length.
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4. Cases of frauds through issuance of cheques 'dishonestly' have been rampant in the country; therefore, appropriate legislation became desirable. In view of that, Ordinance LXXXV of 2002, was issued and promulgated by the President of Pakistan on 25-10-2002. Validity of this legislation was also challenged before this Court. In some judgments, the legislation i,e, 489-F PPC was declared invalid and in some it was found valid. For example, in my own judgment I held section 489-F, a valid piece of legislation; reference may be made to 2005 PCr.LJ 1462. In another judgment section 489-F was found as invalid and non-existing legislation. In this regard, Mian Hussain Ahmad Hyder v. S.H.O. And others 2005 YLR 1565 is referred to. 5. However, this legislation requires interpretation, and ascertainment of the real intendment for which section 489-F was legislated. In my humble view, the real objective was to curb the fraudulent or dishonest issuance of cheques to cause dishonest gain or to cause dishonest loss. Therefore, before approaching the investigation agency or launching a criminal prosecution, it is necessary to establish, prima facie, that the cheque was issued dishonestly and with the intention to defraud. For example, 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. Accountholders 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 B 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 "Dishonestly:--Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person is said to do that thing dishonestly." 7. The language is explicit and conveys that to constitute an act dishonestly, it is important that something should be done with the intention of causing wrongful gain or wrongful loss. This wrongful gain may not be attained by the wrong-doer for himself only. The wrong doer may cause gain or loss to any other person also. "A person can be said to have dishonest intention if in taking property it is his intention to cause gain, by unlawful means of the property to which the person so gaining is not legally entitled or to cause loss by wrongful means of property to which the person so losing is legally entitled. It is further clear from the definition that the gain or loss contemplated need not be a total acquisition or a total deprivation but is enough if it is temporary retention of property by the person wrongfully gaining or temporary 'keeping out' of the property from the person legally entitled". (PLD 1957 SC (India) 317 at 324). ' In another case "dishonestly" was defined as below: "Word "dishonestly" as defined in section 24 PPC means to do an act with intention of causing wrongful gain to one and wrongful losses to the other." (K. Raza v. State, 1986 MLD 2624). 8. In The Law Laxicon Edited by Justice Y.B. Chandrachud, at page 567 "dishonesty" is defined as giving the ordinary meaning the word "dishonestly" means "dishonesty". It further elaborates dishonesty as disposition to lie, cheat, deceive, or defraud; untrustworthiness, lack of integrity. Lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness, disposition, to defraud, deceive or astray. Like Pakistan Penal Code, in section 24 of Indian penal Code "dishonestly" is defined in the similar words: "Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person is said to do that thing dishonestly." ' Section 24 is further elaborated on the same page as below:
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'The word dishonestly in section 24 Indian Penal Code has a technical meaning which is at variance with its popular sense as employing deviation from probity. It is used in connection with property and has nothing to do with probity. If a person causes wrongful gain or wrongful loss by unlawful means in respect of property to which he is not legally entitled, "he acts dishonestly within the meaning of section 24, though he may act from laudable motives. The word dishonestly does not necessarily imply wrongful gain to accused himself." 9. From the definition narrated above, from both Pakistan and Indian Penal Codes, it is clear that issuance of cheque has to be clothed with dishonesty and as stated above dishonestly means intention to cause wrongful gain or wrongful loss. 10. In my opinion, this can only be inferred from the actual act/acts of the drawer/accused. In India to ascertain the intention or mala fide of the drawer, the payee in event of dishonourment is required to give notice to the drawer that the cheque has been dishonoured. Reply in response to the notice or no reply at all, helps to determine the presence or absence of element of dishonestly. To further elaborate this point, it is important to refer to the Indian law on the same subject. However, before considering law on the subject from Indian jurisdiction, more discussion will be relevant from our own jurisdiction. 11. My learned brother Ali Nawaz Chohan, J. (in Criminal Miscellaneous No,1632-CB/2006, Rana Muhammad Ayub v. Rana Abdul Rehman and another) rightly held that provisions of section 489-F, P.P.C. Have been lifted. From the Financial Institutions (Recovery and Finances) Ordinance, 2001.The relevant section is 20(4). For further elaboration sub- ection (4) of section 20 of the Financial Institutions (Recovery and Finances) Ordinance, 2001 and provisions of section 489-F of P.P.C. Are placed side by side. Section 489-F, P.P.C. Section 20(4) of FI(R&F) Ord. Whoever dishonestly issues a cheque towards repayment of a loan or fulfilment of an obligation which is dishonoured on presentation shall be punishable with imprisonment which may extend to three years or with fine or with both unless he can establish for which the burden of proof shall rest on him that he had made arrangements with his bank to ensure that the cheque would be honoured and that the bank was at fault in not honouring the chequeWhoever dishonestly issues a cheque towards repayment of a finance or fulfilment of an obligation which is dishonoured on presentation shall be punishable with imprisonment which may extend to one year or with fine or with both unless he can establish for which the burden of proof shall rest on him that he had made arrangements with his bank to ensure that the cheque would be honoured and that the bank was at fault in not honouring the cheque. 12. The reading of above two provisions of the above mentioned enactments shows that only two words have been changed in section 489-F. The word "loan" is substituted in the P.P.C. With word "finance"; similarly, punishment of one year is substituted with three years in P.P.C. 13. The rest of the language in both the enactments is verbatim. I have no doubt in my mind that objective to legislate section 20(4) of the Financial Institutions (Recovery and Finances) Ordinance, 2001 was different than objective to legislate section 489-F, P.P.C., but section 489-F, P.P.C. Has not been legislated/drafted differently. 14. The Financial Institutions (Recovery of Finances) Ordinance, 2001 came into existence in 2001 (XLVI 2001). The said Ordinance was enacted to repeal, and, with certain modifications, re-enact, the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997. 15. From the above, it is evident that the object and reason for enacting the above laws was to provide the single forum to the Banks for the recovery of their loans from their customers and likewise to the customers to approach the same Court if they have any grievance against the
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banks. It also appears that the purpose of enacting the above mentioned laws was to provide speedy measures for the recovery of outstanding loans and finances. Under section 7 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, a Banking Court is conferred criminal jurisdiction to try offences punishable under the said Ordinance, and for the purpose the same powers are vested as are vested in the Court of Session in the Court of Criminal Procedure, 1898. The Banking Court can take cognizance of. Any offence under the Ordinance upon a complaint in writing made by a person authorized in this behalf by the concerned Financial Institutions in respect of which the offence was committed. Therefore, whenever an offence is committed under section 20(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, Banking Court shall take cognizance on a complaint filed by the authorized person and the complaint shall be tried by the concerned Banking Court. Appeal is provided before two Judges of the High Court under section 22 of the same Ordinance 2001. 16. On the other hand, under section 489-F, an F.I.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 MZ Corporation v. Messrs Sky Lines Printing Press, 1993 MLD 1764, the appellant had purchased some items of computer stationery from the respondent and issued a postdated Cheque bearing 164673, dated 14-8-1998 drawn on Bank of Credit and Commerce International, for Rs,14940, in favour of the respondent, thereafter, the date of the post-dated cheque was further extended but when the cheque was presented by the respondent to the Bank, the same was dishonoured with the remarks, "the payment stopped by drawer". The respondent intimated the same to the appellant but the latter failed to make the payment and under such circumstances, the suit was filed by the respondent against the appellants before the learned trial Court. The trial Court as well as the Appellate Court refused to accept the defence of the appellant as dishonesty on his part was established in the above stated facts. (1993 MLD 1766). It may be pointed out that the above case/appeal was filed under Banking Companies (Recovery of Loans) Ordinance, 1979 which was substituted by the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 which was further substituted by existing enactment i,e, Financial Institutions (Recovery of Finances) Ordinance, 2001. Therefore, the above mentioned finding of his lordship Mamun Qazi, J. Of Karachi High Court (as he then was) is relevant and applicable to the interpretation of section 20(4) of the Financial Institution (Recovery of Finances) Ordinance, 2001. 17. His lordship Abdul Majid Tiwana, J. In a case relating to recovery of Agricultural Development Bank under the Agricultural Development Bank Ordinance, 1961 observed as under:-- "No doubt, subsection (2) of section 25 supra, empowers the bank to recover all sums due, which include the principal amount of loan and interest accruing thereon, as arrears of land revenue but it cannot straightway resort to the coercive measures of arrest and detention. (1995 MLD 12)." 18. The above mentioned two cases indicate that; "the drawer should be given an opportunity to clear his liability or to ensure that the dishonoured cheque was issued dishonestly". Other means should be resorted to, before application of coercive measures including registration of an F.I.R. Etc. Since the language of 489-F has been lifted from the Banking Laws mentioned above, precautions, interpretations and considerations provided and applied in the above laws should also be followed while dealing with cases registered under section 489-F, P.P.C. Thus, the Court must apply its judicial mind to consider whether the cheque was issued dishonestly, indeed, or whether the drawer was provided opportunity to discharge his liability towards the payee or not?
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19. In this regard as hinted at in para.10, the prevalent law from the Indian jurisdiction may also be considered. 20. It may be pointed out at the outset that Indian Legislature made dishonour of cheque an offence under the Negotiable Instruments Act, 1881 instead of Indian Penal Code. In this connection they added a new Chapter XVII in Negotiable Instruments Act, 1881. For the purpose of benefit of all concerned, I hereby reproduce the statement of Objects and Reasons of the Act which is as under:- - "Statement of Objects and Reasons.---The Negotiable Instruments Act, 1881 was amended by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 wherein a new Chapter XVII was incorporated for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque. These provisions were incorporated with a view to encourage the culture of use of cheques and enhancing the credibility of the instrument. The existing provisions in the Ni gotiable Instruments Act, 1881, namely, sections 138 to 142 in Chapter XVII have been found deficient in dealing with dishonour of cheques. Not only the punishment provided in the Act has proved to be inadequate, the procedure prescribed for the Courts to deal with such matters has been found to be cumbersome. The Courts are unable to dispose of such cases expeditiously in a time bound manner in view of the procedure contained in the Act. 2. A large number of cases are reported to be pending under sections 138 to 142 of the Negotiable Instruments Act in various courts in the country. Keeping in view the large number of complaints under the said Act pending in various Courts, a Working Group was constituted to review section 138 to the Negotiable Instruments Act, 1881 and make recommendations as to what changes were needed to effectively achieve the purpose of that section. 3. The recommendations of the Working Group along with other representations from various institutions and organizations were examined by the Government in consultation with the Reserve Bank of India and other legal experts, and a Bill, namely, the Negotiable Instruments (Amendment) Bill, 2001 was introduced in the Lok Sabha on 24th July, 2001. The Bill was referred to Standing Committee on Finance which made certain recommendations in its report submitted to Lok Sabha in November, 2001. 4. Keeping in view the recommendations of the Standing Committee on Finance and other representations, it has been decided to bring out, inter alia, the following amendments in the Negotiable Instruments Act, 1881, namely:- (i) to increase the punishment as prescribed under the Act from one year to two years; (ii) to increase the period for issue of notice by the payee to the drawer from 15 days to 30 days; (iii) to provide discretion to the Court to waive the period of one month, which has been prescribed for taking cognizance of the case under the Act; (iv) to prescribe procedure for dispensing with preliminary evidence of the complainant; (v) to prescribe procedure for servicing of summons to the accused or witness by the Court through speed post or empanelled private couriers; (vi) to provide for summary trial of the cases under the Act with a view to speeding up disposal of cases; (vii) to make the offences under the Act compoundable; (viii) to exempt those directors from prosecution under section 141 of the Act who are nominated as directors of a company by virtue of their holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government, or the State Government, as the case may be; (ix) to provide that the Magistrate trying an offence shall have power to pass sentence of imprisonment for a term exceeding one year and amount of fine exceeding five thousand rupees;
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(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 N otiable Instruments Act, 1851. 6. The Bill seeks to achieve the above objects." 21. Through the above amendment sections 138 to 147 were added in the Negotiable Instruments Act 1881 which are also reproduced herein for benefit and convenience:-- "138. Dishonour of cheque for insufficiency, etc of funds in the account.---Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another persons out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years. Substituted by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (55 of 2002), S. 7, for "a term which may extend to one year" (w,e,f, 6-2-2003) or with fine which may extend to twice the amount of the cheque, or with both: ' Provided that nothing contained in this section shall apply unless--- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque (within thirty days) (Substituted by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (55 of 2002), S.7, for "within fifteen days" (w,e,f, 6-2-2003), of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as 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
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company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: ' Provided that nothing contained in this subsection shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: ' [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government of the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] ' (Inserted by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (55 of 2002), S.8 (with effect from 6-2-2003). (2) Notwiths Landing 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 par 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 clau ie (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;)…
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