2002 PLP 3847 (YLR)

Rashdeen Nawaz for Respondent No.

3. Date of hearing: 4th March, 2002. This order will dispose of Writ Petition No.7998 of 1999 also as the questions of law and fact involved in the two cases are common.

2. In both the writ petitions quashment of F.I.R. No.C/63/98/FIA/S.B.C/L, dated 15‑10‑1998 registered at F.I.A C.B.C. Circle, Lahore, under sections 420/406/109 and 34 of the Pakistan Penal Code has been sought. The aforesaid case was registered on the written complaint, dated 29‑7‑1998 of the Vice‑President/Chief Manager of United Bank Ltd. According to this complaint a finance facility in the sum of Rs.30 Millions was granted to Messrs Agro (Pvt.) Ltd. or which the petitioners as Directors of the aforesaid company were directly and actively involved in the management of the affairs of the company. In order to secure the facility granted by the complainant‑bank the petitioners executed letter of hypothecation, trust receipts the stock reports. However, the two petitioners dishonestly and fraudulently misappropriated the security valued at Rs. 31 Millions, by virtue of the security documents executed by the two petitioners the hypothecated property vested in the complainant‑bank and could not have been disposed of by them in any manner without the consent of the complainant‑bank.

3. The said case was under investigation when the two petitioners approached this Court and vide order, dated 6‑5‑1999 further proceedings in the matter were stayed.

4. The learned counsel for the petitioners contends that the liability incurred by the two petitioners a civil liability and even if the contents of the F.I.R. were accepted as correct, no offence was disclosed because title to the property, notwithstanding hypothecation of goods, continued to west in the company. The letter of hypothecation, at the most, created a notional/equitable charge. Reliance was placed on the observations made in the case of Ramaswamy Nadar v. The State of Madras (AIR 1958 Supreme Court 56 (V. 45 C. 8) to contend that a person cannot be guilty of misappropriation or criminal breach of trust of his own property. It was next contended that according to section 19 of the Banking Companies (Recovery of Loans Advances Credits and Finances) Act No. XV of 1997 breach of the terms of the letter by hypothecation has been constituted as an offence but it is not cognizable.

5. On the other hand, the learned counsel for the respondent‑bank contends that by virtue of the letter of hypothecation and the trust receipts executed by the two petitioners, the goods were held in trust by the petitioner on behalf of the bank and disposal of the said goods without the consent of the bank clearly amounted to criminal mis appropriation as well as criminal breach of trust and, therefore, no case is made out for interference.

6. The submissions made by the learned counsel for the parties have been considered. Hypothecation is, in fact, a right which creator has over a thing belonging to another and carries with it the power to cause the hypothecated property sold in order to settle his claim. Although, the goods hypothecated remains in the possession of the debtor, yet these cannot be disposed of or transferred to a third party without the express consent of the creditor. Prima facie, the contents of the F.I.R. disclose commission of a cognizable offence. Merely, because the petitioners may have incurred civil liability, it does not relieve them of the criminal liability if it is established as a result of investigation of the case. Accordingly, I find no merit in these petitions which are dismissed. H.B.T./A‑639/L Petition dismissed.