SAEED AHMAD MUGHAL vs The STATE and others
This petition for pre-arrest bail arises from an F.I.R. registered under Section 489-F of the Pakistan Penal Code 1860, concerning the dishonour of fourteen cheques issued by the petitioner to a bank for a house building finance facility. The core legal question is whether criminal proceedings under Section 489-F, Pakistan Penal Code 1860 are maintainable against a borrower when the underlying transaction involves a finance facility governed by the Financial Institutions (Recovery of Finances) Ordinance, 2001, and whether the police have jurisdiction to register such an F.I.R. The Court held that the petitioner’s act of providing cheques at the time of securing the loan, alongside a mortgage deed, lacked the requisite dishonest intention essential for an offence under Section 489-F. Furthermore, the Court ruled that the Financial Institutions (Recovery of Finances) Ordinance, 2001, constitutes a complete code, and the police lack jurisdiction to register an F.I.R. regarding finance facility defaults, which must instead be addressed by the banking company through a complaint before the Banking Court. Consequently, the pre-arrest bail was confirmed.
- Does the issuance of cheques at the time of securing a finance facility, alongside a mortgage deed, satisfy the requirement of dishonest intention under Section 489-F of the Pakistan Penal Code 1860?
- Does the police have the jurisdiction to register an F.I.R. against a borrower for the non-liquidation of a finance facility provided by a banking company?
- Is the Financial Institutions (Recovery of Finances) Ordinance, 2001, considered a complete code for addressing defaults by borrowers in finance facilities?
- Section 489-F, Pakistan Penal Code 1860
- Section 7, Financial Institutions (Recovery of Finances) Ordinance, 2001
- Section 20, Financial Institutions (Recovery of Finances) Ordinance, 2001
ORDER
' SYED MUHAMMAD KAZIM RAZA SHAMSI, J.---Saeed Ahmad Mughal petitioner seeks anticipatory bail in case F.I.R. No,823, dated 29-5-2007 registered at Police Station Defence Area, Lahore under section 489-F, P.P.C.
2. Briefly stated the allegations against the petitioner are that he while securing house building finance facility in 2005 from the respondent/complainant PICIC Bank had issued 14 cheques for liquidating his liability, which cheques were drawn on Faisal Bank Limited. Financial institution when presented the cheques, issued by the petitioner, for encashment the same were dishonoured.
Accordingly aforesaid F.I.R. Has been lodged against the petitioner.
3. Parties heard and record perused.
4. As per the documents available on the file while securing house building finance facility from the respondent/complainant the petitioner had also executed a mortgage deed in favour of the respondent-bank undertaking that in case he failed to liquidate his liability the same can be satisfied through foreclosure or by selling the mortgaged property. At the time of execution of that mortgage deed in one sitting the respondent/complainant had also taken 14 cheques from the petitioner/borrower for the liquidation of the liability. The issuance of the cheques at one time does not indicate the dishonest intention of the petitioner to avoid his liability particularly when his property also stood mortgaged with the bank. It is mandatory as per provisions of section 489-F, P.P.C. That a cheque must have been issued with dishonest intention but in case in hand this dishonest intention is not apparent from the signing of the cheques by a person at the time of availing any finance facility. Even otherwise the bank has sufficient security with it in the form of mortgage deed for the repayment of the loan taken by the petitioner. Furthermore, Financial Institutions (Recovery of Finances), Ordinance, 2001 is a complete code in itself and provides procedure for any misdeed done by a defaulting borrower including the criminal acts performed by him and section 7 of the Ordinance (ibid) covers it squarely which covers both civil and criminal acts of defaulting party by providing prosecution under section 20 of the Ordinance, 2001. The local Police in this manner has no jurisdiction to register even an F.I.R. In case relating to finance facility availed by the borrower by a banking company, rather it is the banking company, which may move a learned Banking Court with a complaint about the default committed by the borrower. So it can be said now that the Police in these circumstances has no authority to book a borrower in a case in which a complaint is lodged by a banking company in respect of non-liquidating of finance facility by its borrower. In the instant case since the petitioner is a borrower and he has also mortgaged his property with the banking company, therefore, lodging the case with the local police by the Banking company against the petitioner is without lawful authority and also speaks a lot about the mala fide of the banking company, which in order to get its money back has adopted a shortcut and also attempted to short circuit the procedure. The Courts in these circumstances usually come to the rescue of a person as in case of refusal to confirm pre-arrest bail of the petitioner he may not only suffer humiliation at the hands of the banking company rather would also be bound to suffer harassm ent.
5. In view of the above, this petition is allowed and ad interim pre-arrest bail already granted to the petitioner Saeed Ahmad Mughal is confirmed on furnishing of bail bonds in the sum of Rs,10,00,000 (Rupees One Million only) with two sureties in the like amount to the satisfaction of learned trial Court.