1976 P Cr (PLP)

In the sale deed executed between the borrowing company and M/s. Modern Flour Mills, Rawalpindi in respect of the land of the Rawalpindi Unit, which was registered with the Joint Registrar, Rawalpindi, on 4‑11‑1971, the borrowing company had, however, declared:‑‑ "The aforementioned land is free from all sorts of encumbrance and there is no hitch or hinderance in selling the whole land. The Vendor Company.....hereby sells, conveys/transfers unto the vendee all that land described above measuring nineteen kanals and six marlas. To hold the same to the Vendee together with all its rights of easements as absolute owner free from encumbrance. The above sold land is not previously sold, mortgaged, encumbered, gifted, pledged or transferred to anyone else and there is no defect in title or interest." The deed further recites that for the aforesaid sale, the parties had already entered into an agreement of sale on 24‑5‑1971, whereby the borrow ing company had agreed to sell the land for Rs. 1,05,693 that the entire consideration amount had already been paid by "vendee to the vendor" and the "vendor company have received the full consideration" through the said agreement of sale, that delivery of possession of the land had been made over to the vendee at the spot and that the vendee was absolute owner in possession of the aforementioned sold land like the vendee and "is now entitled to transfer the aforementioned land by way of sale or let the land on lease or to construct building over the said land or to encumber or mortgage as he would like".

4. The contention of the petitioners is that no criminal case was made out upon the facts alleged and that their liability, if any, is only of civil nature. Their counsel, Mr. Asif Sajjad Jan, argued that as there had been no entrustment of property by the P. I. C.I. C. to the petitioners, no question of a breach of trust would arise. He contended that the said deed dated 4‑11‑1971, being a document subsequent in time to the transfer of the charge, which took place on 9‑9‑1971, was not relevant and that the agreement of sale which had been executed on a prior date i. e. 24‑5‑1971, could not by virtue of section 54 of the Transfer of Property Act, be said to affect the status of the property. This section 54 lays down, inter alia, that "a contract for the sale of immovable property, does not, of itself, create any interest in or charge on such property". Reliance in this connection was also placed on M. Ghulam Muhammad v. Custodian of Evacuee Property, Lahore (P L D 1966 Lah, 953) wherein it had been held that "an Agreement to sell does not create any right, title or interest in immovable property". On this assertion, it was submitted that the affidavit of Shujaat Hussain dated 9‑9‑1971 did not amount to any misrepresentation, dishonest inducement or deception. Counsel further argued that for an offence under section 420, P. P. C., it was necessary to show that some actual damage or harm had been caused or was likely to have been caused to the P. I. C. I. C. but that no such damage or harm had been asserted in the F. I. R. In this connection, he further urged that as a vendor cannot transfer to the vendee any better right in the property than what he himself possessed, it was clear that the charge on the property would remain unaffected in spite of the sale. He explained that the Directors in the two companies being the same persons, the liability of the petitioners to repay the loan would continue as before in spite of the said sale. Learned counsel, therefore, wanted this Court to hold that no offence under section 410, P. P. C., either, had been made out on the face of the allegations. For this, he relied on Ramkrishna Nandram v. Ganesh Narain (A I R 1934 Nag. 149). In this cited case N had executed a mortgage in favour of G and although M had suffered a decree creating a charge upon the property, it had been recited in the mortgage deed that the mortgage property was not under "mortagage or sale". It had been held that by suppressing the fact of the charge from G. M. could not be said to leave committed any deception leading to cheating as defined in sectipn.415 and that N was not bound to disclose the charge.

5. Mr. Aqil Mirza, learned Assistant Advocate‑General, Punjab appear ing for the State, opposed the petition. He submitted that the agreement of sale-dated 24‑5‑1971, in view of the peculiar facts of the case was of consequence to the property. In this regard, he pointed out that under the agreement, the entire consideration had been received by the borrowing company/vendor and it had also put the vendee in possession of the property and that the fact of the sale deed having been subsequently execut ed in pursuance of that agreement and the conduct of the petitioners were clearly demonstrative of their firm intention to have put the agreement into effect. In this regard be referred also to the conduct of the petitioners in not setting the necessary entry of the P. I. C. I. C s charge on the Rawalpindi property made a hurdle in their getting the sale deed executed. He further ' pointed out that "the petitioner had in the sale deed, completely omitted to mention the existence of the charge on the property and had instead declared that the vendee would hold the property as absolute owner free from encum brance and that the land was not previously sold, mortgaged, encumbered, gifted, pledged or transferred to anyone else and there is no defect in title or interest". Considered in these circumstances, he argued, the concealment of the prior existence of the agreement of sale, in Shujaat Hussain's affidavit dated 9‑9‑1971 amounted to deception. For this, he referred to the explana tion to section 415, P. P. C. which reads : Explanation.‑A dishonest concealment of facts is a deception within the meaning of this section." He also urged that but for this concealment, the P. I C.I.C. could not have consented to the transfer of its first charge and to the creation of the second charge in favour of National Bank of Pakistan on the Rawalpindi property. He further argued that fear the purpose of section 420, P. P. C. deception was not confined only to property but also relates to valuable 6curtty as defined under section 30, P. P. C. and that the document creating the charge on Rawalpindi property was such valuable security. He submitted that notwithstanding the provision in section 54 of the Transfer of Property Act to the effect that a contract of sale "does trot of itself create any interest in or charge on such property", the peculiar circumstance of the case was likely to jeopardise P.I. C. I. C.'s right to recover the loan on the strength of its charge on the Rawalpindi property, with reference to the authority in Ramkrishna Nandram v. Ganesh Narain he submitted that as held in Pandit Shivnath Sahibram Kaul v. Jathenand Noorijmal Bhegnari and others (A I R 1937 Sind 56) there was difference between more concealment or non disclosure and a false representation. In this latter, authority, Ramkrishna Nandram v. Ganesh Narain had been distinguished in the following words :‑‑ "It is true that so far as that part of the section (S. 415, P. P. C.), which relates to dishonest concealment of facts is concerned it must be read subject to the qualification that there is no duty on a seller to disclose defect in title in immovable property which the buyer with Ordinary care could discover; or in other words..." The learned Assistant Advocate‑General also cited a number of other authorities in support of his contentions. In Abdul Karim v. Fazal Muhammad Shah (P L D 1967 S C 411) it had been held:‑ "If the transaction amounts to a sale in fact then notwithstanding that it is not in the form prescribed by section 54 of the Transfer of Property Act the right of pre‑emption will come into operation. Such a transaction even under section 54 is not altogether void, for, the defect is curable by getting a document drawn up and registered to perfect the title of the vendee. The perfection can be insisted upon, for, there is at any rate an enforceable contract of sale even wader the Transfer of Property Act and even such an imperfect transaction will give rise to equities in favour of the buyer. If he has paid the price he will have a charge on the property for the amount paid." The purpose of citing the other authorities, with which it is not necessary to deal here, was to show that tide contract of sale, upon the facts of the case, was likely to attract the provision of section 53‑A of the Transfer of Property Act and that as such it could not be argued that damage had not been or was not even likely to have been caused to the P. I. C. I. C. He, therefore, urged that the P. I. C. I. C. should be allowed to prove, its case before the trial Court.

6. Mr. Ghulam Bari Saleemi, who appeared for the P. I. C. I. C. adopted the arguments of the learned Assistant Advocate‑General.

7. I do not consider it necessary to discuss the entire case‑law on the subject cited by the parties, for, I feel that in view of the facts brought out in the letter of the P. I. C. I. C. addressed to the Inspector‑General of Police a number of triable points arise, the determination of which is not proper a this stage by this Court. I am not convinced that on the face of the allega tions, no criminal case can lie against the petitioners. I, therefore, reject the petition. Petition rejected.