Dishonoring of cheque

Complainant was advocate and accused was his client who paid professional charges in shape of cheque which was dishonoured on presentation

Held: If client failed to make full fee payment, the amount could be recovered through civil remedies

Initiation of criminal case against one's own client could only be considered in exceptional circumstances where no other remedy was available

Failure to pay for service, such as legal representation, does not necessarily result in penal consequences

State of consciousness that is culpable is the essential component of criminal liability

Dishonestly issuing a cheque is punishable with up to three years' imprisonment under section 489-F, P.P.C. and the offence necessitates rigorous examination

Alternative remedies were available under civil law, such as claim for compensation for loss or injury resulting from breach of contract under section 73 of Contract Act, 1872 and suit for recovery under Civil Procedure Code, 1908

Provision of section 489-F, P.P.C. is intended to function as a safeguard against fraud, rather than as a blade to enforce civil recovery

Mens rea (dishonest intent) must be established in order to incur penal consequences and criminal proceedings under 489-F, P.P.C. must not be used as a substitute for civil remedies

Bail was allowed.

Scope of Financial Institutions (Recovery of Finances) Ordinance, 2001 is fundamentally different from that of Microfinance Institution Ordinance, 2001

Provisions of Microfinance Institution Ordinance, 2001 are sector-specific, focused exclusively on microfinance institutions serving underprivileged and microenterprises segments

Provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001 are broad in coverage and apply to wide range of financial institutions falling within statutory definition of a "financial institution" under S. 2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Nature of respondent/complainant's business activities squarely fell within the ambit of the term "financial institution" under S. 2(a)(i) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Any obligations arising from financial accommodations extended by respondent/complainant fell within the jurisdiction of Banking Court under Financial Institutions (Recovery of Finances) Ordinance, 2001

First Information Report registered by respondent/complainant under S. 489-F, P.P.C. stated that petitioner/ accused obtained a "loan" from it and gave cheque in question for its repayment which was dishonoured on presentation

Parties acknowledged that petitioner/accused was covered under the definition of "customer" and the cheque was given for the repayment of "finance" and fulfilment of an "obligation" as defined in S. 2 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Respondent/ complainant was a financial institution within the meaning of S. 2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and cheque had been issued for the repayment of finance, the alleged offence fell exclusively under S. 20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and the provision of S. 489-F, P.P.C. did not apply

Banking Court had exclusive jurisdiction over such matters under S. 7 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Any prosecution against petitioner/accused had to be initiated through a complaint before Banking Court as prescribed under Financial Institutions (Recovery of Finances) Ordinance, 2001

High Court in exercise of Constitution jurisdiction quashed the FIR registered against petitioner/accused

High Court clarified that respondent/complainant was not precluded from filing a complaint under S. 7 of Financial Institutions (Recovery of Finances) Ordinance, 2001 before Banking Court for prosecution under S. 20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Constitutional petition was allowed, in circumstances.

Scope of Financial Institutions (Recovery of Finances) Ordinance, 2001 is fundamentally different from that of Microfinance Institutions Ordinance, 2001

Provisions of Microfinance Institution Ordinance, 2001 are sector-specific, focused exclusively on microfinance institutions serving underprivileged and microenterprises segments

Provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001 are broad in coverage and apply to wide range of financial institutions falling within statutory definition of a "financial institution" under S. 2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Nature of respondent/complainant's business activities squarely fell within the ambit of the term "financial institution" under S. 2(a)(i) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Any obligations arising from financial accommodations extended by respondent/complainant fell within the jurisdiction of Banking Court under Financial Institutions (Recovery of Finances) Ordinance, 2001

First Information Report registered by respondent/complainant under S. 489-F, P.P.C. stated that petitioner/ accused obtained a "loan" from it and gave cheque in question for its repayment which was dishonoured on presentation

Parties acknowledged that petitioner/accused was covered under the definition of "customer" and the cheque was given for the repayment of "finance" and fulfilment of an "obligation" as defined in S. 2 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Respondent/ complainant was a financial institution within the meaning of S. 2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and cheque had been issued for the repayment of finance, the alleged offence fell exclusively under S. 20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and the provision of S. 489-F, P.P.C. did not apply

Banking Court had exclusive jurisdiction over such matters under S. 7 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Any prosecution against petitioner/accused had to be initiated through a complaint before Banking Court as prescribed under Financial Institutions (Recovery of Finances) Ordinance, 2001

High Court in exercise of Constitution jurisdiction quashed the FIR registered against petitioner/accused

High Court clarified that respondent/complainant was not precluded from filing a complaint under S. 7 of Financial Institutions (Recovery of Finances) Ordinance, 2001 before Banking Court for prosecution under S. 20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Constitutional petition was allowed, in circumstances.

Applicant was nominated in the FIR however, it was registered with an inordinate delay of about 45 days, for which no plausible explanation has been furnished by the prosecution

Delay in criminal cases had always been deprecated

As far as the amount in question was concerned, the applicant had placed on record number of documents through his statement, which on perusal revealed that the parties had strained relations over business transactions hence, disputed the claim of each other

In view of earlier litigation between parties, the element of mala fide on the part of complainant could not be ruled out

Hence, the basic ingredients for grant of pre-arrest bail were very much attracted and applicable to the present case

Moreover, there were disputed facts which were to be thrashed out by the Trial Court after recording pro and contra evidence of the parties at trial; thus, the case against the applicant required further enquiry within the meaning of subsection (2) to S.497, Cr.P.C.

Consequently, bail application was allowed, in circumstances and interim pre-arrest bail was confirmed.

Allegedly on account of some transaction petitioner /accused applicant gave three cheques to the complainant and all three cheques were dishonored on presentation, however, the complainant registered (present) FIR against the petitioner/accused but only in respect of one dishonored cheque

Record revealed that, subsequent to registration of present FIR, the complainant had also registered one more FIR in respect of another cheque in which the petitioner/accused was arrested and was granted bail after 27 days

A civil suit, reportedly, between the parties on the same cause of action was also pending

Three cheques given by the petitioner/accused to the complainant were in respect of one and the same transaction

When the petitioner / accused was arrested in one FIR and was granted bail, the same principle would be applicable in the present case/FIR

It is not scheme of law to send a person to jail by dismissing his pre-arrest bail application and then granted him post arrest bail

Complainant instead of registering one FIR in respect of all dishonored cheques had chosen to register separate FIR sin respect of each cheque against the petitioner / accused after a few months hiatus

Said action of the complainant appears to be tainted with mala fide

Pre-arrest bail was granted to the petitioner / accused, in circumstances.

Petitioner/accused sought pre-arrest bail on the plea that cheque in question was stolen and FIR was registered by his brother

Validity

Question whether cheque was issued towards fulfilment of obligation within the meaning of section 489-F, P.P.C. was a question, which was to be determined by Trial Court after recording of evidence

Bail before arrest was an extraordinary relief which could not be granted unless person seeking it satisfied conditions specified under section 497(2), Cr.P.C. and had established existence of reasonable grounds leading to believe that there were in fact sufficient grounds warranting further inquiry

First Information Report was not found to be false after investigation

There was sufficient incriminating material available on record which prima facie connected petitioner/accused with alleged offence, disentitling him from extra-ordinary relief of pre-arrest bail

Supreme Court declined to interfere in order passed by High Court as the same had considered all aspects of the case, both legal and factual and was well-reasoned

Petitioner/accused approached Supreme Court with a delay of 35 days and application seeking condonation of delay did not disclose any cogent reason for such delay

Petition for leave to appeal was dismissed, leave was refused and consequently petitioner was refused pre-arrest bail.

Petitioner was aggrieved of order passed by Ex-officio Justice of Peace directing S.H.O. of police station concerned to register criminal case for issuing cheques which were dishonored on presentation

Validity

Ex-officio Justice of Peace does not have absolute duty to hear accused while deciding an application under S. 22-A(6), Cr.P.C.

Ex-officio Justice of Peace may afford accused audience only if circumstances demand and no hard and fast rule can be laid down in such respect

Ex-officio Justice of Peace cannot conduct a "mini-trial" while hearing a complaint regarding non-registration of criminal case

Any mandate to hold a detailed inquiry to ascertain veracity of allegations militates against very scheme of Cr.P.C.

Payment of two cheques was stopped by the drawer while the third was returned for the reason that the account was closed

"Stop payment" or "closure of account" does not, per se, take the case out of the ambit of S. 489-F, P.P.C.

Such circumstance made it imperative for Ex-officio Justice of Peace to hear the other side, therefore, petitioner had been prejudiced

High Court set aside order for registration of FIR and remanded the matter to Ex-officio Justice of Peace for decision afresh

Constitutional petition was allowed accordingly.

Appellant / bank was aggrieved of dismissal of private complaint by Banking Court filed against respondent / accused for dishonoring of cheque presented for repayment of finance

Validity

Requirement of S.20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, was different than gist of complaint filed by appellant / bank

Section 20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, only enabled the Banking Court to frame punishment if customer / whosever, breached the terms by "dishonestly issuing cheques" towards repayment of finances or fulfilment of such obligation which was / were dishonored

Prime consideration for Court was to see whether element of dishonesty was involved or not and the later part was only consequential

Burden to prove such element of dishonesty was upon complainant which was lacking in the present complaint

There was no evidence to demonstrate such "dishonest intention" of alleged accused, even if charge was to be altered

It was not a civil case of recovery under banking jurisdiction that preponderance or cumulative effect was to be given for recovery proceedings; the process in the present case was criminal intent which led to punishment where intent of dishonesty was inevitable

High Court declined to interfere in order passed by Banking Court

Appeal was dismissed, in circumstances.

Delay in registration of FIR is not always fatal for prosecution, more particularly in cases involving white collar crimes or where entire evidence is documentary

Court considers impact of delay in every case with reference to its peculiar facts and circumstances

In offence under S.489-F, P.P.C. delay is of little consequence as it is based on dishonor of a cheque.

Accused was arrested for issuing seven chequer during the course of business transactions which all cheques were dishonored

Validity

Foundational elements to constitute an offence under S.489-F, P.P.C. are: (a) cheque should be valid; (b) it should be issued with dishonest intent; (c) it should be for repayment of a loan or fulfillment of an obligation; and (d) it should have been dishonored

Term "dishonestly" has been defined in S.24, P.P.C. to mean doing anything with intention of causing wrongful gain to one person or wrongful loss to another person

Accused was authorized on behalf of a proprietary concern owned by his real brother, to operate his account and to issue cheques on his behalf

No material was available on file which could suggest that accused had issued any cheque dishonestly

Non-availability of incriminating material against accused or non-existence of sufficient ground, including a valid purpose, for making arrest of accused person in case by investigating officer, as a corollary was a ground for admitting accused to pre-arrest bail, and vice versa

Pre-arrest bail was allowed, in circumstances.

Accused raised the plea that the cheque relied upon by complainant was presented one year after it was issued and no case could be registered against him

Validity

Cheque that was presented beyond six months from the date of issuance was generally regarded as 'stale' or 'out of date'

Bank was not obliged to honour such cheque unless instructed by account holder otherwise

Glossary issued by State Bank of Pakistan in Banking could be reckoned as an authentic reflection of 'usage of trade and of bankers' contemplated in S.84(2) of Negotiable Instruments Act, 1881

Cheque was out of date and complainant knew that it would not be encashed even then he presented it merely to bring the case against accused under S.489-F, P.P.C.

Case against accused was one of further inquiry

Pre-arrest bail was confirmed, in circumstances.

Bank filed application before Ex-Officio Justice of Peace, who on basis of report filed by police directed Station House Officer to register FIR

Validity

Bank had filed a suit against petitioner for recovery of its dues in Banking Court which was still pending, therefore, report was rejected

Ex-Officio Justice of Peace could not lawfully make a direction for registration of FIR where petitioner allegedly had issued a bad cheque for repayment of finance or fulfilment of obligation towards financial institution

High Court set aside order passed by Ex-Officio Justice of Peace

Constitutional petition was allowed in circumstances.

Plea raised by defendant was that he had paid due amount to plaintiff through pay order as dishonouring of cheque was a Banking error

Validity

Plaintiff had to lead positive evidence in support of his claim according to Arts. 117 and 118 of Qanun-e-Shahadat, 1984

Subject cheque was issued for consideration and plaintiff was not compensated subsequently when the cheque was dishonored in which plaintiff failed

Plaintiff had already received amount of disputed cheque therefore, suit was filed with mala fide intention and was not maintainable

Overall conduct of plaintiff company from time of granting leave to defend application was not of a bona fide litigant

Suit was dismissed in circumstances.

If a party/defendant had issued cheques in favour of plaintiffs and those cheques upon presentation could not be encashed because of closure of account, then such conduct of defendant was a mala fide one and was done with dishonest intention to defraud plaintiffs

Act of defendant amounted to dishonoring of cheques hence consequences would follow

Plaintiffs were entitled to recover their money along with statutory interest of 6% in terms of S.79 of Negotiable Instruments Act, 1881 from date of institution of suit till realization of money

Suit was decreed accordingly.

When there was a remote possibility that an accused could not be awarded imprisonment of even one month then propriety demanded that discretion had to be exercised in his favour

Maximum punishment for offence provided was up to three years and same did not fall within prohibitory clause of S. 497(1), Cr.P.C.

Courts of law were required to remain within statutory provision and S. 489-F, P.P.C. did not prevent exercise of discretion in favour of accused

Accused was previously non-convict and there were no exceptional circumstances on basis of which request of bail of accused could be declined

Huge amount of cheque did not expand provision of law and brought changes in statute

Bail was allowed in circumstances.

Accused defrauded his brother-in-law and received a huge amount of Rs. 1,50,00,000 at the rate of 4% and 5% profit per month

Complainant got 10 FIRs under S.489-F, P.P.C., registered against accused and he had still with him 5 more cheques of Rs. 10,00,000 each allegedly issued by accused and bounced by Bank for identical reasons which had not been reported to police as yet

Accused remained as absconder for about one year and he was proceeded against under S.87, Cr.P.C., pending investigation on 21-6-2014

Effect

Accused could not claim that he had no knowledge about registration of case against him

Such was a situation wherein unexplained abscondence of accused would adversely affect his quest for bail

No extra importance could be given to the fact that offence was not covered by prohibitory clause of S. 497(1), Cr.P.C.

In a case not falling under prohibitory clause, accused could not claim bail as a matter of right, unless his case was open to further probe into the guilt within the scope of S.497(2), Cr.P.C., or no exceptionality was attached thereto

Case of accused neither fell within the ambit of further inquiry nor could it be so that it was sans any exceptional element

Details of occurrence revealed that each and every bit of it painted an exceptional situation, bringing it within the category of cases wherein bail could not readily be allowed

Bail was declined in circumstances.