1988 PLP 354 (MLD)

2. The prosecution case is that Zeb & Co. had obtained a contract from Water and Sanitation Agency, Lahore Development Authority, Lahore. According to the terms of the contract the said company was to be given a mobilisation advance of Rs. 2,24,700 against bank guarantee. Muhammad Iqbal Chatha appellant in his capacity as Manager of the National Bank of Pakistan, Emmabad Mor Branch, Gujranwala dishonestly and fraudulently prepared a fake and fictitious bank guarantee Exh. CW.1/1 on 26‑6‑1976 valid till 28‑2‑1978 in favour of the said company in the sum of Rs. 2,24,700 without receiving any margin amount or security from it. On the failure of the Zeb & Co. to fulfil the conditions of the contract the Bank had to pay a sum of Rs. 1,59,036.80 to WASA. Accordingly complaint Exh. PW. 2/B dated 8‑1‑1979 was lodged with the police by Muhammad Salim PW.

1. In the course of investigation Muhammad lqbal S.I. PW.3 took into possession bank guarantee Exh. CW. 1/l, statement of account of Zeb & Co. Exh. P.2 and partnership deed of Zeb & Co. through memo Exh. PA. He also took into possession CW 1/3, original pay order for a sum of Rs. 1,59,030.80 issued by National Bank of Pakistan, Eminabad Mor Branch in favour of WASA, Lahore in pursuance of letter dated 19‑12‑1978 issued by the Zonal Office, Gujranwala issued to the Manager, N.B.P., Eminabad Mor Branch, District Gujranwala, directing the Branch to pay the said sum to WASA in full and final settlement of their claim under the guarantee in question. He also took into possession schedule of powers Exhs. CW. 1 /5 to

9. To prove its case, the prosecution examined three witnesses Muhammad Salim, PW. 1., who had succeeded the appellant as Manager of the concerned Branch of the Bank, stated that the appellant had issued Bank guarantee in the sum of Rs. 2,24,700 without taking or receiving any amount of security or any margin, in favour of WASA, L.D.A. on behalf of Zeb & Co. and that he had not entered the said guarantee in the relevant register. According to him the appellant had no authority to issue the guarantee without permission of the Zonal Office. Zeb & Co. did not, carry out the work and on that account the Bank had to suffer a loss of Rs. 1,59,036.80 as it had to pay the said amount to WASA as per terms of the guarantee. Ghulam Hussain CW. 1 proved the signature of the appellant on bank guarantee Exh. CW. 1./1. He added that the appellant had issued the bank guarantee without complying with the instructions of the Bank of securing hundred per cent margin of the face value of the guarantee. According to him the Branch Manager of Grade‑III had no power at all to issue any inland guarantee.

3. The appellant admitted having issued bank guarantee Exh. CW. 1/1 but denied that it was a fake document. He also denied that he had not entered it in the record of the Bank and stated that it was entered in the Kacha register of the Branch. He professed ignorance about his powers to issue the bank guarantee and stated that he had issued it in good faith because Zeb & Col was a valuable client of the Branch dealing with rice, the partners of which had obtained cash credit facility to the extent of Rs. 10,00,000/‑ on the basis of hypothecation/pledge of rice and there was a good amount of money available in their account. He denied knowledge about the enforcement of guarantee by the WASA. He denied that a loss of Rs. 1,59,036.80 was suffered by the Bank due to his wrongful act. Elaborating it, he stated that three cheque's of Zeb & Co. had wrongly been credited by his successor in the account of Dawn Associates and if the said cheques had been credited in the account of Zeb & Co. the Bank would not have suffered any loss for the amount paid by it. He did not call any oral evidence in defence but produced a copy of the plaint of the suit filed by Zeb & Co. against National Bank of Pakistan, Eminabad Mor Branch and written statement Exh. D.2 filed by the Bank.

4. It is argued on behalf of the appellant that the ingredients of offence under section 409 P.P.C. are not made out because there was no dishonest misappropriation on the part of the appellant. It is next argued that no record of Bank guarantees issued by the Bank was produced by the prosecution to show that the guarantee issued by the appellant was not mentioned therein. Oral evidence could not be led to prove the contents of a document, he added. It is also contended that the guarantee in question was not encashed during his period of his posting but it was got encashed after he had relinquished the charge of the said post. It is further contended that no inquiry was made by the Bank before making payment to WASA on the basis of the said guarantee and the payment was made only to oblige WASA which was maintaining a big account with the National Bank of Pakistan.

5. The charge against the appellant was of having dishonesty and fraudulently prepared a fake and fictitious bank guarantee and utilizing it in collusion with Zeb & Co. and thus misappropriating the amount of the guarantee.

6. In the present case the appellant has not denied the issuance of the guarantee in favour of Zeb & Co. According to him he was not aware of any precondition of securing hundred per cent margin before its issuance and that he had acted in good faith because of the financial soundness and business dealings of Zeb & Co. with the bank. It was enchased under the orders of the Zonal Office because they did not want to displease WASA as it was a big customer of the Bank. It may be an imprudent act on the part of the appellant without giving rise to the inference that he had any dishonest intention of misappropriating the Bank s money and could have been easily discovered by the Auditors while auditing the Bank account and record. There is absolutely no evidence on record to show that the appellant had derived any illegal gain or advantage from the alleged act. No circumstance indicates that he had any business connection with Zeb & Co. or had derived any pecuniary advantage by the issuance of bank guarantee in question. He might have been liable for any departmental action or civil action but certainly not for any criminal action of the present nature. There is another important factor which would absolve the appellant from the charge. The Bank guarantee Exh. CW. 1/ 1 issued by the appellant was valid up to 28-2-1978 only but it was encashed on 19-12-1978 when he was no longer working as Manager of the said branch. Furthermore, as already observed above, it was honored just to please WASA being a big customer of the Bank and nobody cared to note that due to lapse of time it was unenforceable. It was held in Shakir Hussain v. The State PLD 1956 SC (Pak). 417, that to establish a charge of criminal breach of trust the prosecution was not to prove only entrustment or dominion over property but also that the accused either dishonestly misappropriated, converted, used or disposed of that property himself or that he willfully suffered some other person to do so. The irregularity committed by the appellant in issuing the bank guarantee without securing hundred per cent margin amount could not have made him criminally liable unless it had been proved that he knew that the amount of the Bank guarantee was to be misappropriated. Since the essential ingredients of criminal breach of trust are lacking the conviction of the appellant under section 409m, P.P.C is not legally sustainable. Accordingly we accept his appeal , set aside his conviction and sentence and acquit him of the charge. He shall be set at liberty forthwith if not required in any other case. M.Y.H./M-551/L Appeal allowed.