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Petitioner: FAISAL FAROOQ and 3 others VS Respondent: SHO and another
Court Name: Lahore High Court Judge(s): Abid Aziz Sheikh, Shahid Karim Title: FAISAL FAROOQ and 3 others vs SHO and another Case No.: W. P. No, 33423 of 2013 Date of Judgment:2016-05-26 Reported As: 2017 CLD 1 Result: Petitions dismissed
JUDGMENT
JUDGMENT SHAHID KARIM, J.---This judgment shall deal with two categories of cases. In the first category, we have been informed, fall petitions where matters are pending with the Federal Investigating Agency (FIA) which has yet to determine the course of action to be taken with respect to the complaints filed with FIA. The second category relates to the matters where first information reports (FIRs) have been registered under the various provisions of Pakistan. Penal Code (P.P.C.). In both these categories, the petitioners have prayed for setting aside of the proceedings and consequently the quashment thereof. This judgment shall decide the connected petitions listed in Appendix 'A' with this petition. 2. It is not necessary to lay out the facts in each case as we intend to focus our attention to the broad and vexed question of law which is a common thread in these petitions. The question of law which we have been invited to determine is whether there is a complete bar and prohibition on the initiation of any action or setting into motion proceedings before either the FIA or by registration of cases under the P.P.C. In view of the provisions of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (Ordinance, 2001). The precise submission of the learned counsel for the petitioners is that in view of the exclusionary provisions in the Ordinance, 2001 and the exclusivity of the Banking Court in taking cognizance of the offences, no other authority or court can take cognizance of the matters which are squarely covered by the provisions of the Ordinance, 2001 and any offences which are mentioned therein. In a nub, the learned counsel for the petitioners alleged that normal procedures stand ousted and the only course open is to file a complaint under the provisions of the Ordinance, 2001 to be tried by the Banking Court.
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3. The entire reliance of the learned counsel for the petitioners is on the provisions of section 7 of the Ordinance, 2001 and in particular the tenor and sweep of subsection (4). For facility, section 7 is reproduced as under:- 7. Powers of Banking Courts.- (1) Subject to the provisions of this Ordinance, a Banking Court shall: (a) in the exercise of its civil jurisdiction have all the powers vested in a civil Court under the Code of Civil Procedure, 1908 (Act V of 1908); (b) 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 authorized in this behalf by the financial institution in respect of which the offence was committed. (2) A Banking Court shall in all matters with respect to which the procedure has not been provided for in this Ordinance, follow the procedure laid down in the Code of Civil Procedure, 1908 (Act V of 1908), and the Code of Criminal Procedure, 1898 (Act V of 1898). (3) All proceedings before a Banking Court shall be deemed to be judicial proceedings within the meaning or sections 193 and 228 of the Pakistan Penal Code (Act XLV of 1860), and a Banking Court shall be deemed to be a Court for purposes of the Code of Criminal Procedure, 1898 (Act V of 1898). (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 the coming into force of this Ordinance. (6) All proceedings pending in any Banking Court constituted under the Banking Companies (Recovery of Loans, Advances, Credits or Finances) Act, 1997 (XV of 1997), including suits for recovery of "loans" as defined under that Act shall stand transferred to, or be deemed to be transferred to, and heard and disposed of by, the Banking Court having jurisdiction under this Ordinance. On transfer of proceedings under this subsection, the parties shall appear before the Banking Court concerned on the date previously fixed. (7) In respect of proceedings transferred to a Banking Court under subsection (6), the Banking Court shall proceed from the stage which the proceedings had reached immediately prior to the transfer and shall not be bound to recall and rehear any witness and may act on the evidence .Already recorded or produced before the Court from which the proceedings were transferred. 4. A dissection of section 7 would ineluctably bring forth that in the exercise of its criminal jurisdiction, a Banking Court shall try offences punishable under the Ordinance, 2001 and shall, for the purpose, have the same powers as are vested in a Court of Session under the Code of Criminal Procedure, 1898 (Cr.P.C.). Thus, what will be noticed in the first instance, is that the Banking Court will only try offences punishable "under this Ordinance". It follows indubitably that the Banking Court does not have power to try offences under any other law. The significance and import of this shall be adverted to in the later part of this judgment. By the proviso of clause (b) of subsection (1) to section 7, a Banking Court shall not take cognizance of any offence punisnable under the Ordinance, 2001 except upon a complaint in writing made by a person authorized in this behalf by the financial institution in respect of which the offence was committed. It follows, therefore, that the
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complaint can only be filed by a financial institution and that too by a person authorized by it. The necessary corollary is that no other person is authorized to file a complaint before the Banking Court in respect of any offence punishable under the Ordinance, 2001. This makes the exercise of criminal jurisdiction by the Banking Court as a limited jurisdiction and for the benefit of financial institutions only. It also follows from this that any person who is not a financial institution cannot bring a complaint to the Banking Court and, therefore, does not have the locus standi to file such a complaint. As a prefatory therefore it may be mentioned that in case the submission of the learned counsel for the petitioners is accepted, then any person apart from the financial institution will be left high and dry and without a remedy in respect of any criminal offence for which he seeks criminal prosecution. 5. Subsection (4) of section 7 is of a crucial nature and is at the heart of the controversy involved in these petitions. It has also the fulcrum around which the arguments of the learned counsel for the petitioners revolve. According to subsection (4), 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 the Ordinance, 2001. This includes the jurisdiction with respect to the exercise of criminal matters as well. Upon a reading of subsection (4) it becomes clear that subsection (4), confers exclusive jurisdiction on a Banking Court with respect to matters under the Ordinance, 2001 and perhaps there is no cavil with this proposition. However, subsection (4), does not place a prohibition on the setting into motion of criminal prosecution under the general law and of registration of cases under the A P.P.C. As that would be putting a clog on the right of a person to have a case registered if an offence is made out under any other law. This distinction has to be kept in mind while putting a construction on the exclusive jurisdiction clause contained in subsection (4). While there may not be a dispute regarding the proposition that with regard to the offences mentioned in the Ordinance, 2001, Banking Court will have exclusive jurisdiction yet it may be difficult to accept as a general proposition that subsection (4) by necessary intendment bars the taking of cognizance or registration of cases under the general law. It is important to bear in mind that the provisions of subsection (4) do not convey such a meaning. Nor can the intention of the legislature be culled out to convey the interpretation which is canvassed by the learned counsel for the petitioners. The provisions of subsection (4) can only be taken to mean what is enacted and nothing beyond that. Subsection (4) does not specifically says that proceedings under any other law are barred. It merely confers jurisdiction on the Banking Court with regard to offences mentioned in the Ordinance, 2001. 6. Subsection (5) of section 7 of the Ordinance, 2001 is a slight deviation from the exclusive jurisdiction conferred on the Banking Court under the Ordinance, 2001. It preserves and keeps intact the right of financial institution to seek any remedy before any Court that may be available to it under the law by which that financial institution may have been established. 7. The offence:, under the Ordinance, 2001 are encapsulated in section 20 of the Ordinance, 2001 subsection (1) of Section 20 reads as under: 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 re-payment of finance or fulfillment of any obligation are not with the 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;
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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 or 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 financial institution 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 re-payment 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) Where the person guilty of an offence under this Ordinance is a company or other body corporate, the chief executive by whatever name called, and any director or officer involved shall be deemed to be guilty of the offence and shall be liable to be prosecuted against and punished accordingly. (6) All offences under this Ordinance shall be bailable, non-cognizable and compoundable. 8. In these petitions, we are primarily concerned with the provisions of subsection (1) of section 20 and the petitions substantially and primarily relate to a challenge to the registration of FIRs under the P.P.C. Or initiation of complaints in respect of scheduled offences before Special Judge (Offences in Banks) on the ground that the exclusive jurisdiction lies with the Banking Court and the offences are those, which by their tenor and texture, are covered by ones mentioned in subsection (1) of section 20, and the jurisdiction of ordinary courts or that of any other court except the Banking Court is barred. 9. As adumbrated, the fundamental reliance of the petitioners in putting forth this submission is on the basis of subsection (4) of section 7 of the Ordinance, 1984 which has been referred to above. In this regard, it will be useful to notice subsection (5) of section 7 to complete the narrative in the context of exclusion being relied upon by the petitioners. Subsection (5) is itself an exception
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carved out of the exclusivity which is contained in subsection (4). By subsection (5) the power of the financial institution and its right to seek any remedy before any Court that may be available to it under the law by which the financial institution-has been established, has been retained. Subsection (5) further provides that nothing in subsection (4) was required the transfer to a Banking Court of a proceeding pending before any Court immediately before the coming into force of the Ordinance, 2001. Two aspects would starkly come out upon a reading of subsection (5). Firstly, a parallel remedy provided under the law by which a financial institution may have been established has been kept intact. Therefore, to that extent the jurisdiction of the Banking Court is not exclusive and runs parallel to the other remedy contemplated by subsection (5). Secondly, in case proceedings are already pending before any other Court upon the promulgation of the Ordinance, 2001, it will not require the transfer of those proceedings to the Banking Court. This is also an exception to the general rule that the change of forum is procedural in nature and would act retrospectively and in normal circumstances this will have entailed the transfer of all proceedings to the Banking Court. The issue which is sought to be flagged by the interpretation of subsection (5), is that the Ordinance, 2001 itself creates an exception to the exclusive jurisdiction of a Banking Court envisaged in subsection (4). This should put a dent in the arguments of the learned counsel for the petitioners that no other Court has the jurisdiction except the Banking Court. 10. We may now advert our attention to the ingredients that make up the offences in subsection (1) of section 20. We will also take the opportunity to undertake a comparison of subsection (1) of section 20 with sections 406 and 409 of P.P.C. In order to illustrate that the ingredients of these offences are materially different and there is an inherent flaw in the arguments of the learned counsel for the petitioners that no prosecution can be initiated under the general law. 11. In order to set into motion the proceedings under section 20 of the ordinance, 2001, a complaint by an authorized officer of the financial institution is a sine qua non. The offences under subsection (1) of section 20 relate to the breach of the terms of a letter of hypothecation, trust receipt or any other instrument or document executed by him (i.e, by the customer) and is for the repayment of finance or fulfillment of any other obligation. Therefore, the prosecution can only be through a complaint by the financial institution and no other person can initiate such a prosecution. The prosecution can only be against a customer of the bank who has executed a document mentioned in clause (a) of subsection (1) or has made a fraudulent misrepresentation in terms of clause (b) of subsection (1) or subsequent to the creation of a mortgaged in favour of financial institution dishonestly alienates or parts with the possession of the mortgaged property. All of these offences are directed against the customer of a bank and none else. Therefore, it follows by necessary intendment that prosecution against a person other than the customer cannot be brought before the Banking Court in terms of subsection (1) of section 20. 12. Sections 408 and 409, P.P.C. Deal with criminal breach of trust by clerk or servant and by public servant or by banker, merchant or agent respectively. These provisions are reproduced as under: "408. Criminal breach of trust by clerk or servant: Whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine. 409. Criminal breach of trust by public servant, or by banker, merchant or agent: Whoever being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with
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imprisonment for life or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine." 13. It can be seen that the provisions of sections 408 and 409, P.P.C. Are of a much wider import and encompass within themselves prosecution against certain individuals and persons other than the customers of the financial institutions who have executed certain documents with the financial institutions. Thus, in case the prosecution is sought to be launched against a clerk or a servant of a customer or it is sought to be included in the prosecution any of the bankers, agents, attorneys or brokers who have committed a criminal breach of trust in respect of property, that may only be brought in terms of sections 408 and 409, P.P.C. And not under the Ordinance, 2001. Further, if prosecution is sought to be initiated by any other person other than a financial institution, it can only be done under the general law and not under the Ordinance, 2001. In most cases, the Muqaddam appointed by banker is also sought to be prosecuted and it is clear that no prosecution can be brought against the Muqaddam under the Ordinance, 2001 and proceedings will necessarily have to be initiated under the general law. This begs the question; if the criminal complaint or FIR includes the name of accused other than customers then can it be said that the prosecution can only lie under section 20, of the Ordinance, 2001 and under no other law? To lay down such a proposition will be a fallacy and irrational and would be tantamount to a complete ouster of the general jurisdiction to register cases conferred upon the officers under the Cr.P.C. And taking of cognizance of such offences by the courts under the general law or under the special law relating to banks which can take cognizance of scheduled offences. 14. We will now take note of an important provision which in itself permits prosecution under any other law to take place and lays down an exception in itself. This exception is couched in the words "without prejudice to any other action that may be taken against him under this Ordinance or any other law for the time being in force" occurring after clause (d) of subsection (1) of section 20. While interpreting these words, we are guided by the rule of interpretation that if the intention of the legislature is clear then it must be given effect to without demur. It is not for the courts to supply meaning to provisions which clearly bring forth the intention of the legislature and in this matter we do not intend to give a different meaning to these words other than what was intended and what they convey. The intention of the legislature is clear. It does not place a bar on any other action which may be taken against the customer under any other law for the time being in force. This will include the law relating to criminal prosecution and enshrined in the Cr.P.C. And the P.P.C. In fact, by these words the legislature intended that both the actions can run parallel to each other and do not overlap and nullify each other. The purpose of enacting these words is clear to our mind. The legislature had in contemplation the varying nature of the criminal offences contained in the Ordinance, 2001 and other laws and purposefully did not bar the prosecution to be initiated in the respective spheres of different laws. These words in themselves are an exception to subsection (4) of section 7 and must be read in conjunction with each other. If the intention of the legislature was to completely oust the jurisdiction of any other forum or court with regard to criminal offences then the legislature could have omitted these words. These words on the other hand lend actuality to the analysis that we have called upon to undertake in these petitions. It will be well-nigh impossible for any authority or court to hold at the start of prosecution whether the offence falls under one or the other law. This question can only be determined after a prosecution has been set into motion. Be that as it may, we have no doubt in our mind that these words convey and convey ineluctably that criminal prosecution under any other law for the time being in force is permitted by the very terms of subsection (1) of section 20 with regard to offences mentioned in subsection (1). 15. The primary reliance of the learned counsel for the petitioners is upon a Division Bench judgment of this Court reported as Aamer Khurshid Mirza v. The State (2005 CLD 20). The provisions which came for interpretation in Aamir Khurshid Mirza were the provisions of Banking Tribunal
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Ordinance, 1984 and the challenge was to the prosecution of criminal offences before the special courts set up under the Offences in Respect of Banks (Special Courts) Ordinance, 1984. It, was held by the learned Bench that: "The wisdom of providing machinery for the recovery of money under the Banking Tribunals Ordinance, 1984 becomes evident by a joint reading of the sections reproduced above. The legislature is cognizant of the fact that in some of the cases there would be customers who would try to defeat the Bank's efforts for recovery of its money. This is why this offence has been created and the same forum which is involved in adjudication of the matter of recovery has been vested with the powers to punish. The legislature is, presumed to be cognizant of the existing law, therefore, we cannot lightly and easily ignore the expression of legislative will as has been manifestly expressed in the…
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