Dishonouring of Cheque in Financial Transaction and Lodging of F.I.R.

DISHONOURING OF CHEQUE IN FINANCIAL TRANSACTION AND LODGING OF F <!--[if gte mso 10]> DISHONOURING OF CHEQUE IN FINANCIAL TRANSACTION AND LODGING OF F.I.R. By Zahoor Ali Nasir Tagha, Advocate, High Court Lahore, While enacting Financial Institutions (Recovery of Finances) Ordinance, 2001, the intention of legislature was to provide single forum for settling all the disputes between the Financial Institution and Customer. A recent intricate phenomenon has erupted while the Financial Institutions have started lodging of F.I.Rs. under section 489-F, P.P.C. upon dishonouring of cheques given to them by the Customer normally as collateral. In this writing I will try to discuss the legal position in such-like cases. As a matter of fact the provisions of section 489-F would be attracted only when an individual would issue a cheque dishonestly in favour of another individual and the same was dishonoured on presentation. In case where a cheque was given to the Financial Institution in course of Finance, the penal provisions are section 20 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Reliance is placed upon 2006 CLD 1314. As per section 4 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the provisions of the same have overriding effect upon all the other laws for time being in force, therefore, the registration of F.I.R. and consequent cognizance of the matter by the Police Authorities are in sheer violation of the provision mentioned hereinabove. In terms of section 7(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the Banking Courts shall have exclusive jurisdiction with respect to all matters which fell within the domain of Ordinance ibid. So registration of F.I.R. under section 489-F, P.P.C. in the matter under discussion would amount to usurp the jurisdiction of Honourable Banking Court. Another complicate issue will be that as per section 7(1) (a) and (b), the Honourable Banking Court has been conferred all the powers vested in Civil Courts under Code of Civil Procedure, 1908 and in Court of Session under Criminal Procedure-Code, 1898 but the Banking Court does not have the jurisdiction to adjudicate the offences under Pakistan Penal Code, 1860, therefore, in such-like situation neither the Banking Court nor the General Criminal Court may assume the jurisdiction of the matter. As per section 7(1)(b), the Banking Court cannot take the cognizance of any offence punishable under Financial Institutions (Recovery of Finances) Ordinance, 2001 except upon a complaint in writing made by an authorized person, therefore, the lodging of F.I.R. would be in blatant negation of law i.e. if law mandates to do a thing in a particular manner that has to be done in that manner and not otherwise at all. Reliance is placed upon 2006 MLD 78. The intention of law makers to make offence falling under the domain of section 20 (4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 a distinct one which falls under section 489-F, P.P.C. is crystal clear from the fact that the loan has been in section 489-F and word Finance has been used in section 20(4) ibid. The word Finance has no where been defined except in Financial Institutions (Recovery of Finances) Ordinance, 2001 and the essentials of loan are (1) an advance (2) the advance must carry the interest (3) there must be condition of repayment. Now the position is that the interest has been abolished from the banking system of Pakistan vide BCD Circular No.13, 1984 issued by the State Bank of Pakistan, therefore, the provisions of section 489-F could not be attracted in issue in hand. Normally the cheques given, during course of financial transaction, the subject-matter of this essay, to the Financial Institutions are given as collateral. The said cheques do not fall within the ambit of Negotiable Instrument, hence cannot be termed as cheques at all being conditional and without consideration and hit by sections 6 and 43 of the Negotiable Instrument Act, 1881. The lodging of F.I.R. upon dishonouring of instrument which is not cheque is totally unwarranted in the eyes of law. As per provisions of section 20(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the dishonouring of cheque given to Financial Institution of a non-cognizable and consequence of registration of F.I.R. would be that the Police will take the cognizance of a non-cognizable offence. Even if a non-cognizable offence is reported to the Police, the concerned officer instead of registration of F.I.R. under section 154, Cr.P.C. will be under a legal obligation to resort to the provisions of section 155, Cr.P.C. meaning thereby the Police Authorities could not be allowed to take cognizance of a non-cognizable offence. Reliance is placed upon 1996 PCr.LJ 735. While taking into consideration all the legal question detailed and explained supra, I am of the view that registration of F.I.R. upon dishonouring of cheques given to Financial Institutions during course of Finance is totally in derogation of law of land.