2016 PLP 906 (CLD)

MUHAMMAD IQBAL KALHORO, J.--Respondent No.2/FIA registered an FIR No.6/2015 Police Station FIA-CBC, Karachi dated 26.01.2015 against the petitioners at the instance of respondent No.4/Bank of Punjab Limited for the offences under sections 406, 420, 468, 471 and 109, P.P.C., 1860 on the allegations of misappropriation in hypothecated stock. The petitioners have impugned the said FIR and have prayed, inter alia, for its quashment.

2. The relevant facts in brief are that the petitioners 1 to 6 are directors of the petitioner 7/Al-Abid Silk Mills Limited, AASMIL. The petitioner 7 and the respondent 4 are "customer" and financial institution" within the meaning of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (For short, the Ordinance, 2001). The respondent No.4 has filed a Civil Suit No.B-95/2013 for recovery of Rs.434,399,948/- under the Ordinance, 2001 before this Court on original side against the petitioners. In the suit the respondent No. 4 has based his claim inter alia on letters of hypothecation dated 15.12.2010 and 5.7.2012 and has stated to hold a pari passu charge over the petitioners' present and future goods, merchandise, products, stocks, stocks in trade, raw material, tools and spares, work-in-progress, finished and unfinished goods called hypothecated stock. The respondent No.4 based on Evaluator's report has alleged misappropriation by the petitioners in the above-hypothecated stock and has prayed for recovery of the previously mentioned finance. The petitioners have filed leave to defend application in the said suit denying therein the claim of the respondent No. 4 and taking the plea that if the complete statement of account is perused, the claim of the respondent No.4 would not exceed more than Rs.314,141/-. Notwithstanding the pendency of said suit, the respondent No.4 has registered the impugned FIR alleging that Mr.Azim and the petitioners 1 to 6 in the capacity of directors have misappropriated stock hypothecated by them. Meanwhile one of the directors of the company namely Mr. Azim Ahmed has been arrested by the FIA. It is further case of the petitioners that the offences alleged in the impugned FIR squarely fall under section 20(1) of the Ordinance, 2001 of which only the Banking Court can take cognizance and hold trial against the petitioners after a complaint in writing is made to it in this regard. The impugned FIR registered with the PS FIA for the offences under Pakistan Penal Code, 1860 is completely without jurisdiction. All the offences under the Ordinance, 2001 are bailable, non-cognizable and compoundable and the maximum punishment, besides fine and delivering up or refunding the property or the value of the property or security to the financial institution, may extend to a term of 3 years. Whereas for the same acts/offences the punishment provided under sections 406, 420, 468, 471 and 109, P.P.C., 1860 is severe and harsher that goes against the spirit of Article 10-A of the Constitution which enjoins that when an accused is found guilty of offences punishable under two different penal laws, he shall be booked under the law carrying lesser punishment. The impugned FIR, in view of such fact is devoid of any legal merits and the consequent cognizance by the Special Court for Offences in Banks is without jurisdiction.

4. Respondents Nos. 1 to 3 have filed a statement in rebuttal stating therein that on the complaint of Respondent No.4 the impugned FIR has been registered under the offences which being scheduled offences are punishable under the provisions of Offences in Respect of Banks (Special Courts) Ordinance, 1984. (For short, the Ordinance, 1984)

5. Respondent No. 4 has also filed objections in the shape of counter affidavit raising a preliminary question over the maintainability of the petition. Regarding legal quarries propounded by the petitioners, what has been mainly stated by respondent No. 4 is that the petitioners have committed acts punishable under P.P.C., 1860 and they being Scheduled Offences in terms of provisions of the Ordinance, 1984 are triable by the Special Court for Offences in Banks. Section 20 (1) of the Ordinance, 2001 does not envisage any bar on an action which is taken by the aggrieved party against the accused under any other penal laws either in addition to it or independent of it. The said suit is filed for recovery of finances and for remedies provided under the Ordinance, 2001 while the complaint/FIR is based upon, inter alia, the audited financial accounts, 2013 of the company/petitioner 7 wherein the company itself has admitted to have paid local creditors from the sale of inventories without taking its consent and in fact further have defrauded it through misappropriation of the inventories.

6. Learned counsel for the parties argued pro and contra to their respective claims reproduced above; Mr. Adnan Iqbal Choudhry Advocate for the petitioners relied upon case laws reported in 2009 PCr.LJ 325, 2010 YLR 547, 2005 PCr.LJ 1228, 2005 CLD 20 and 2013 CLD 2133, while Mr. Jamshed Malik, Advocatel for respondent No.4 relied upon cases reported in 2002 YLR 3847, PLD 2002 SC 610 and 2006 SCMR 483 in support of their arguments. Mr. Ashfaq Rafiq Janjua, Standing Counsel adopted the arguments of learned counsel for the respondent No.4.

7. We have considered their contentions along with the material available on record as well as have perused the relevant law and the case laws cited at bar. The essence of petitioner's case is that in presence of a particular mechanism provided under section 20 of Ordinance, 2001 specifically dealing with the breach of terms of a letter of hypothecation, trust receipt, or any other instrument or document executed by a person/company whereby possession of assets or properties offered as security for the repayment of finance or fulfillment of any obligation are not with the financial institution but are retained by him/company availing financial facility, the FIR cannot be lodged under any other penal laws and the proceedings emanating from such FIR before the Special Court for Offences in Banks would be coram non judice and incompetent; the Special Court cannot take cognizance of such offence and hold trial against the petitioners. We have attended to the provisions of section 20 of the Ordinance, 2001 and the argument stressed emphatically by the learned counsel for the petitioner in this regard. A brief summary of sections 20 ibid would not be out of place here. Subsection (1) thereof starts with the words "Provisions relating to certain offences" and has four clauses i.e. a, b, c, d which mainly deal with the one who commits offences concerning breach in terms of letter of hypothecation or document etc, executed by him; makes fraudulent misrepresentation or commits a breach of an obligation or representation made to avail financial facility; dishonestly alienates or parts with the mortgaged property without consent of financial institution after creation of mortgage in its favour and 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. It further provides that he 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 punished with imprisonment for a term which may extend to three years and fine which could be up 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 the property or the value of property or security, within fixed time. Subsection (2) deals with the person who makes a false statement in an application moved by him for finance and obtains a finance on the basis thereof or applies the finance towards a purpose other than that for which it was obtained or furnishes a false statement regarding stocks in breach of the agreement with the financial institution or denies falsely his signature on any banking document before the Banking Court. It prescribes punishment for a term, which may extend to three years or fine or with both. Subsection (3) is in respect of a person who resists by using force, either by himself or on behalf of the judgment-debtor, the execution of decree and it prescribes punishment up to one year or fine or both for him. Subsection (4) commands punishment up to one year or fine or both for the one who dishonestly issues a cheque towards fulfillment of an obligation or repayment of finance. Subsection (5) deems the chief executive by whatever name he is called, and any director or officer involved responsible and guilty of the offence, where the person guilty of an offence under the Ordinance, 2001 is a company or other body corporate. According to subsection (6) all offences under the Ordinance, 2001 are bailable, non-cognizable and compoundable. Because the offences are non-cognizable, the Banking Court in terms of section 7 of the Ordinance, 2001 can take cognizance of an offence only upon a complaint in writing made by a person authorized in this behalf by the financial institution in respect of which the offence is said to have been committed. Such scheme of law may be providing a procedure to the financial institution to seek remedy against the shenanigans/acts enumerated above in subsections (1) to (5) to section 20 ibid. However, the same cannot be read to infringe the right of a financial institution to resort to other remedies available under any other law. The said procedure in no words can be termed an all-encompassing piece of legislation answering to all situations coming about in the wake of a breach in terms of an agreement regarding hypothecation of stock by the person whereby the mortgaged goods are being surreptitiously alienated or sold by him without consent of the financial institution with an ostensible object to avoid fraudulently repayment of finance and to defraud the financial institution. If such acts constitute a cognizable offence punishable under the penal provisions of other laws, besides being actionable under the provisions of the Ordinance 2001, the recourse to the FIR cannot be declared illegal. The words "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" occurring in section 20 of the Ordinance, 2001 amply establish that registration of an FIR in case of commissioning of a cognizable offence by a person is not barred altogether. The mode of taking cognizance by the Banking Court provided under section 7 of the Ordinance, 2001 is a separate and independent concept under the criminal law which cannot overtake or equate the right of a person to register an FIR in the face of a cognizable offence. The import and meaning which is not apparent and understandable from a bare reading of a provision of certain law cannot be farfetched to nullify obvious object or scheme of sister laws. We are afraid that learned counsel has not been able to bring up any interpretation of subject law putting prohibition over lodging the FIR or permitting its quashment without any evidence of its being malicious or false.

8. The impugned FIR has been lodged under section 406/420/468/ 471/109, P.P.C. The offences are cognizable in nature, and are scheduled offences according to provisions of the Ordinance, 1984. A perusal of the First Schedule contained in section 2(d) read with subsection (2) to section 6 of the Ordinance, 1984, provides that all (ibid) offences if are alleged to have been committed in respect, or in connection with the business of a Bank are cognizable and non-bailable. Section 6(2) lays down that for the purpose of this Ordinance, the provisions of P.P.C., 1860 specified in the Second Schedule, subject to modifications therein whereby these penal provisions have been made more stringent, shall have effect, meaning thereby that if the offences are cognizable and non-bailable under P.P.C., 1860, they shall be treated so for the purpose of this Ordinance. Under section 3, the Special Court is established and in terms of section 4 of the Ordinance, 1984, the scheduled offences shall be triable exclusively by a Special Court, notwithstanding anything contained in the Code. The impugned FIR and the subsequent cognizance taken by the Special Court, seen in above context, do not appear to be illegal or coram non judice. On similar grounds so urged by the petitioner here, the Lahore High Court in the case of Mian Asim Fareed and others v. Industrial Development Bank of Pakistan reported in 2005 CLD 436 quashed the FIR lodged almost under same offences by holding it to have been registered in violation of section 7(4) of Ordinance, 2001. The matter went in appeal before the Honorable Supreme Court and is reported in 2006 SCMR

483. In para No. 2 of the judgment the Honorable apex Court stated as under: "

2. In the absence of any finding that the above mentioned offences mentioned in the FIR were false and malicious and in the absence of a finding that if a particular forum or mode had been prescribed with respect to the taking of cognizance of an offence then the same also implied prohibition regarding the registration of an FIR, no such order could be passed nor the same could be approved. Needless to add that the registration of an FIR and taking of cognizance of cases were two distinct and independent concepts under the criminal law; that if the intention of the law-maker was to put any clog on the registration of an FIR then the Legislature would have said so specifically and that if the law put a condition only on the taking of cognizance then it can never be read to imply prohibition on registration of FIRs." While discussing as above, the Honorable Supreme Court was pleased to set aside the order of Lahore High Court whereby the FIR was quashed. In the case in hand it is not alleged that the impugned FIR has been maliciously lodged against the petitioners or it contains allegations which ex facie are not tenable in the eyes of law or registration of impugned FIR is nothing but abuse of process of law, which shall be checked in its inception. In absence of any cogent and legal ground; merely on the pleas taken by the petitioners the impugned FIR cannot be quashed. We also do not subscribe to the view of learned counsel that the petitioners are not being afforded a fair trial in terms of Article 10-A of the Constitution as the respondent No.4 has not adopted the mode prescribed under the Ordinance, 2001 for alleviating its grievances against the petitioners. Consequently the instant petition is found without any merits and is dismissed with no order as to costs. HBT/N-16/Sindh Petition dismissed.