SHAFIQUE AHMED vs THE STATE
The applicant, a bank manager, sought post-arrest bail in a case involving allegations of forgery, misappropriation of foreign exchange, and fraud under the Pakistan Penal Code 1860 and the Prevention of Corruption Act 1947. The prosecution alleged that the applicant, in connivance with other accused, facilitated the negotiation of forged documents related to a letter of credit. The core legal question was whether the applicant's actions in processing the letter of credit constituted criminal connivance or merely routine banking business, thereby entitling him to bail. The Court observed that the applicant had followed standard banking procedures, including seeking confirmation from the opening bank before releasing the full amount, and that the bank's manual did not explicitly require a manager to probe the underlying genuineness of shipment entries if documents appeared valid. The Court held that the applicant's role required further inquiry at trial and that he was entitled to bail. The principle laid down is that where an accused has exercised due diligence according to standard banking procedures, the question of criminal intent or connivance necessitates further inquiry, justifying the grant of bail.
- Does a bank manager's failure to detect forged documents in a letter of credit transaction automatically establish criminal connivance?
- Is a bank manager required to independently verify the physical shipment of goods when processing a letter of credit based on documents presented?
- Under what circumstances does the role of a bank official in processing a fraudulent transaction warrant the grant of bail pending further inquiry?
- Section 409, Pakistan Penal Code 1860
- Section 420, Pakistan Penal Code 1860
- Section 468, Pakistan Penal Code 1860
- Section 471, Pakistan Penal Code 1860
- Section 34, Pakistan Penal Code 1860
- Section 5(2), Prevention of Corruption Act 1947
ORDER
' WAHID BUX BROHI, J.--- Applicant Shafique Ahmed has been booked for an offence punishable under sections 409/420/468/471/34, P.P.C. Read with section 5(2) Act-II, P.C.A., 1947.
2. The case of prosecution is founded on the complaint of one Muqeet Ahmed Jamal, Manager of Messrs Southern Agencies (Pvt.) Limited, Karachi alleging that one Zahid Ali, Proprietor of Messrs Zubair Hosiery booked a consignment of cargo to Roterdam for their principal's vessel M.V. Emerald, but he failed to submit necessary customs documents, the containers, therefore, could not be loaded. Even then he fraudulently tampered with the bill of lading and got them fraudulently negotiated through Habib Bank Limited, Foreign Exchange Branch per Form "E" No,HBL-1148455, dated 21-5-1996. In this fraud he was assisted by his clearing agents Messrs Mushabbar Clearing Agency. Due to this fraud the principal of the complainant and the company of the complainant suffered huge claims from the consignments resulting heavy losses as he did not ship the goods.
Later on, accused Zahid Ali gave a written affidavit admitting that he indulged in the fraud and undertook to repay all the amounts. It was alleged that Zahid Ali, with the connivance of the Officers of Habib Bank Limited, Foreign Exchange Branch, fraudulently committed forgery and misappropriation of foreign exchange worth US $65,000 and also tried to claim rebate on forged document from Pakistan Customs.
3. On this complaint an inquiry was held and ultimately interim charge-sheet was submitted on 30-11-2002 showing the accused persons including Shafique Ahmed, the then Manager, Habib Bank Limited, SITE Branch, Karachi (presently posted in Dacca, Bangladesh in Overseas Branch) as absconder. Applicant Shafique Ahmed attempted to seek pre-arrest bail and was also extended benefit of protected bail by this Court, but the trial Court declined to grant him pre-arrest bail whereupon he was remanded to custody.
4. We have heard Mr. Sardar Shere Afzal Khan, learned counsel for applicant and Mr. Khursheed Hashmi, learned D.A.-G., who is assisted by the Investigating Officer.
5. Learned counsel for applicant submitted that the applicant being Manager of the Bank had processed the documents in accordance with normal procedure and rules and had initially allowed release of only 10% of the whole L.C. Amount and then after seeking requisite advice from the Bank of importer in Germany, the remaining account was released after receiving telex message on 8-7-1996 in tonfirmation. He argued that the Habib Bank Limited, SITE Branch, Karachi was only the negotiating Bank, the applicant being Manager of the Bank was not required to probe as to whether the goods had actually been shipped or not since such endorsement/stamp of shipment was available on the papers. Regarding the abscondence of applicant he submitted that the applicant was all along performing his duties at Dacca, Bangladesh and as soon as he came back he sought protective bail and then surrendered before the trial Court. Mr. Khursheed Hashmi, learned D.A.-G. Opposed the bail on the ground that due diligence was not exercised by the applicant in order to detect the fraud committed and in view of the evidence of P.W. Sardar Ali, the Custom Officer, connivance of applicant in releasing the L.C. Amount on forged documents cannot be ruled out.
6. We have considered all these contentions carefully. The "Procedure and Accounting Manual" indicates that on receiving the paper the following discrepancies were to be taken note of, on scrutiny of the papers:- "Type of discrepancies:
(i) Usual nature of discrepancies, which can be rectified: ' Number of credit does not appear on the draft.
' Draft not signed.
' Draft is not properly drawn.
' Calculation on Invoice incorrect.
' Invoice not consulrised.
' Bill of lading lacks "on board" notation, date or signature etc.
(ii) Discrepancies which cannot be rectified:
(i) Merchandise not shipped as per L/C.
(ii) Late Shipment.
(iii) L/C expired.
(iv) Late presentation.
(v) Country of origin differs.
(vi) Shipment schedule not followed etc."
7. In ordinary course of business the applicant seems to have believed the customer to have produced genuine documents carrying valid entries. It is rioted that the aforementioned provisions of the Manual do not call for making a probe for genuineness of the entry as to shipment. In a routine manner the shipment of goods was presumed on the basis of documents such as bill of lading. Yet, the applicant, by abundant caution, released only 10% of the L.C. Amount in the first instance. He sought confirmation from the Westdeutsche Landes Bank Griozentrale, Dortmund namely the German importing Bank/opening Bank and alter receiving confirmation on telex he released the balance. Mr. Khtjrsheed Hashmi, learned D.A.-G. Is correct in arguing that utmost care and caution was required in such matters, but the applicant failed to exercise a higher degree of precaution, but at least from the aforestated circumstances it appears that the applicant had, with due diligence, taken certain measures believing the entries in the document to be true and after receiving message from German importing Bank he released the amount. In such a state of affairs the role of applicant as to whether he connived in releasing the L.C. Amount on forged document, calls for further inquiry and as such he is entitled to grant of bail. Consequently, the application is allowed and bail is granted in the sum of Rs,2,400,000 to the satisfaction of the trial. Court.
8. These are the reasons for the short order passed earlier.