ABID MAHMOOD MALIK vs S.H.O., P.S. MARGALLA, etc
The petitioner sought the quashment of an FIR registered under Section 489-F of the Pakistan Penal Code 1860 regarding a dishonoured cheque issued to a financial institution for the repayment of a loan. The core legal question was whether a financial institution can initiate criminal proceedings under the general provisions of the Pakistan Penal Code 1860 for a dishonoured cheque, or if it is restricted to the specific remedies provided under the Financial Institutions (Recovery of Finances) Ordinance 2001. The Court held that the Financial Institutions (Recovery of Finances) Ordinance 2001 is a special enactment that provides a complete code for banking disputes and has an overriding effect on ordinary law. Consequently, the Court ruled that banks cannot invoke Section 489-F of the Pakistan Penal Code 1860 for dishonoured cheques related to finance facilities. The key principle laid down is that financial institutions must exclusively pursue remedies through direct complaints under the special procedure established by the Financial Institutions (Recovery of Finances) Ordinance 2001, and proceeding under the Pakistan Penal Code 1860 constitutes an abuse of the court's process.
- Can a financial institution initiate criminal proceedings under Section 489-F of the Pakistan Penal Code 1860 for a dishonoured cheque issued for a finance facility?
- Does the Financial Institutions (Recovery of Finances) Ordinance 2001 have an overriding effect on the provisions of the Pakistan Penal Code 1860 regarding dishonoured cheques?
- Is the prosecution of a debtor under Section 489-F of the Pakistan Penal Code 1860 for a banking-related cheque considered an abuse of the process of the court?
- Section 489-F, Pakistan Penal Code 1860
- Section 20(4), Financial Institutions (Recovery of Finances) Ordinance 2001
- Section 7(1)(b), Financial Institutions (Recovery of Finances) Ordinance 2001
ORDER
The petitioner seeks quashment of FIR No, 588, dated 28.11.2012, under Section 489-F, PPC of P.S. Margalla Islamabad, on the ground that the cheque was issued in bona-fide good faith for repayment of the loan-amount to the Bank and since the dispute had arisen between Financial Institution & customer, the sole jurisdiction vests with the Banking Court under the Financial Institutions (Recovery of Finance) Ordinance 2001 [hereinafter to be referred as the Ordinance 2001] and under Section 7 of the Ordinance, learned Judge Banking Court in exercise of its criminal jurisdiction shall try offences punishable under the Ordinance.
2. It is further contended that the Banks are de-barred from taking advantage of Section 489-F, PPC through initiation of proceedings against the defaulter merely on the dishonouring of any cheque issued by the debtor, who had availed any finance facility.
3. In support of his submissions, learned counsel for petitioner placed reliance upon following case laws:--
(ii) 2009 P.Crl.L.J. 325 (D.B)
(iii) 2010 YLR 547
(iv) 2009 CLD 1422
(v) 2010 CLD 344
(vi) 2010 P.Crl. LJ 412
(vii) 2009 CLD 1149
(viii) 2011 CLD (Lahore) 1539
(ix) 2012 MLD (Sindh) 1551
(vii) 2012 P.Crl.LJ (Sindh) 1890.
3-A. The case laws are on the point that the Ordinance 2001 is a complete code providing procedure of the Banking Courts and in case of a financial dispute, a complaint in writing has to be filed before the Banking Courts.
4. Conversely, learned Standing Counsel assisted by learned counsel for the Respondent No, 3 complainant opposed the petition by stating that the cheque was issued for the payment of loan, which was dishonoured, and, therefore, the provisions of Section 489-F, PPC are attracted in the case and since it is a cognizable offence, the police rightly lodged the FIR.
5. It is further contended that the purpose of law is to bring the facts into light through investigation; while quashment of FIR at the earlier stage would be an attempt to burry the factual issues between the parties and such practice shall encourage the offenders. In this regard, reliance is placed upon case laws reported as 2006 CLD 625 and 2010 CLD 10.
6. Heard & record perused.
7. Admittedly, the Respondent No, 3 complainant is a financial institution and the dispute between the parties is a finance facility, which was granted in routine as a Bank Policy. The said cheque, if any, was regarding the re-payment of finance facility and the financial institutions have all the remedies available under the Financial Institutions (Recovery of Finances) Ordinance, 2001.
8. Section 20(4) of the Ordinance, 2001 provides that whoever dishonestly issues a cheque towards re-payment of a finance or fulfilment of an obligation which is dishonoured on presentation, shall be punishable with imprisonment which may extend to 1 year, or with fine or with both, unless he can establish, for which the burden of proof shall rest on him, that he made arrangements with his bank to ensure that the cheque would be honoured and that the bank was at fault in not honouring the cheque.
9. The Ordinance being special enactment has also an overriding effect on the ordinary law, therefore, in my view, petitioner cannot be proceeded with under the provision of Pakistan Penal Code and only remedy available for the Bank and financial institution is to invoke the provisions of Section 20 by filing a direct complaint under Section 7(1)(b) of the Ordinance and the prosecution of the petitioner under Section 489-F, PPC is abuse of process of the Court and without lawful authority.
10. The dictum laid down by the superior Courts is very exhaustive and very unambiguously states that the banks are debarred from taking advantage of Section 489-F, PPC.
11. In view of above, this petition is allowed and in consequence thereof FIR Bearing No, 588, dated 28.11.2012, under Section 489-F, PPC of P.S Margalla Islamabad is quashed. No orders as to costs.
12. Petition allowed. FIR quashed.