SARMAD JALAL OSMANY, J.---This criminal revision application impugns the order dated 17-5- 2004 whereby the learned trial Court directed the registration of a private complaint against the applicants under section 20 of the Financial Institutions (Recovery of Finance) Ordinance, 2001.
2. Briefly stated the.case of the prosecution per the private complaint is that Messrs Spectrum Fisheries Limited had obtained finance in the amount of Rs.55 Million from a consortium of banks comprising of Bank Al-Falah (Complainant), PIC1C Commercial Bank and Saudi-Pak Commercial Bank on the strength of various collaterals and securities including financing agreement, pledge. hypothecation. simple mortgage, director's guarantees etc. However, the Company could not repay the finance in accordance with the terms and conditions of the aforesaid agreement with the Consortium. Similarly. as per the terms of the letter of hypothecation executed by the Company it was to maintain stocks up to the amount of Rs.219,999,999 and in that connection was to submit reports and returns to the complainant-Bank which it failed to do after February. 2003. Similarly, the Directors of the Company/Accused had leased out the factory premises and parted with its possession contrary to the terms of the memorandum of deposit of title deeds creating a simple mortgage on said premises in favour of the consortium. Hence offences under section 20(1)(a) and
(c) of the Ordinance, 2001. were committed by the directors/accused which were cognizable by the learned trial Court.
3. As observed above, the learned trial Court registered the complaint after hearing the parties and hence this application.
4. In support of the application, Mr. Ahmed Hassan Rana has firstly submitted that the present applicants/accused had not signed the letter of hypothecation but other directors had done so; hence no offence had been made out against them under section 20(1) (a) of the Ordinance which provides that only the executant of the document in question would be deemed to be guilty of the offence. Furthermore, under section 20(5) where the Company is an accused only the Chief Executive and any Director or officer thereof found to be involved is deemed to be so guilty. 'In support of this submission, learned counsel has relied upon Tehmina Bashir v. Abdul Rauf 1995 CLC
973. Furthermore, the applicants had resigned from the directorship of the Company on 15-4-2002 consequently they could never be held, liable for the crime per the complaint which took place with effect from 28-2-2003. Finally learned counsel has submitted that the proper procedure under section 200, Cr.P.C.. Has not been followed by ' the learned Banking Court in taking cognizance of the private complaint and issuing the Warrants of Arrest against the applicants.
5. Mr. Muhammad Rasheed Khan appearing for the respondent-Bank has on the other hand, submitted that up to 1999 the relationship between the Company and the consortium was quite smooth but thereafter upon renewal of the finance limits the hypothecated stocks (fish) were removed without the permission of the Bank in violation of the letter of hypothecation.
Consequently the private complaint was filed against the Company as well as the Directors.
Secondly per learned counsel as the letter of hypothecation has been signed on behalf of the Company by authority of the Board of Directors, all such Directors are therefore, liable under it including the applicants. As regards the procedure to be followed by the learned trial Court, learned counsel has submitted that per section 7 of the Ordinance the said Court is of Session and hence section 200, Cr.P.C. regarding private complaints would not apply. Nevertheless, per learned counsel the complainant has been examined on oath by the learned trial Court, per the procedure prescribed in section 200, Cr.P.C. In support of his submission learned counsel has relied upon Taj Muhammad v. The State PLD 1979 Quetta 176 and Muhammad Ibrahim v. Muhammad Hanif 1983 PCr. 1051.
6. We have heard both the learned counsel and our conclusions are as follows:--
7. It would be seen that section 20 (1) (a) of the Ordinance, which creates the offence in question provides that whoever dishonestly commits a breach of the terms of a letter of hypothecation, a trust receipt or any other instrument or document executed by him as security of repayment of finance, shall be punished with imprisonment of either description with imprisonment. Similarly, section 20(1)(c) provides that whoever subsequent to the creation of a mortgage in favour of a Financial Institution dishonestly alienates or parts with the possession of the mortgaged property without permission of the Financial Institution shall also be similarly punished. In the present case, it would be seen that admittedly the applicants had resigned as Directors of the Company on 15-4- 2002 much before the alleged offences under section 20(1)(a) of the Ordinance were committed after February, 2003 per the private complaint. Similarly it would be seen that section 20(5) of the Ordinance clearly stipulates that where the person guilty of an offence is a Company or other body corporate, the Chief Executive by whatever name called and any director or officer involved shall be deemed to be guilty of such offence and shall be liable to be prosecuted and punished accordingly. Hence in our opinion, before any prosecution can be launched against the applicants, it would have to be shown that they were involved in the offence in question viz. violation of the letter of hypothecation etc. and leasing out of the mortgaged properties. Needless to say it would further have to be shown that the applicants with a guilty mind had indulged in such offence. There is nothing on the record to establish as much and indeed when the applicants had already resigned as Directors of the Company before the offence in question was committed, in our pinion, they could hardly be implicated in the same.
8. For all the foregoing facts and reasons, we would allow this application and quash the proceedings under the private complaint against the applicants. Order accordingly.