MUHAMMAD KHALID MEHMOOD KHAN, J.---Respondent No.2 filed a suit for recovery of Rs.3,55,40,785 against petitioners under the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as FIO) through the sale of mortgage property and other assets, before the Banking Court. The petitioners filed application for permission to defend the suit. During the pendency of suit respondent No.2 filed a complaint with respondent No.1 for registration of criminal case against the petitioners, consequently respondent No.1 registered F.I.R. No.231 of 2009 on 16-6- 2009 under section 406, P.P.C. With Police Station Sadar Khanewal.
2. The petitioners seek quashment of F.I.R. No.231 of 2009 dated 16-6-2009.
3. Learned counsel for petitioner submits that registration of F.I.R. In a pending matter is against law, local police has no jurisdiction to take cognizance of a dispute arisen under the FIO and as such act of respondent No.1 to register impugned F.I.R. Is void ab initio. He adds that under section 20 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 it is the Banking Court established under the F.I.O. Who is enjoying exclusive jurisdiction to take cognizance of alleged offence if any.
4. Learned standing counsel submits that once a cognizance is taken and F.I.R. Has been registered, the same will be processed under the procedure provided in Code of Criminal Procedure and as such petition is liable to be dismissed. He has relied on Industrial Development Bank of Pakistan and others v. Mian Asim Fareed and others (2006 SCMR 483).
5. Heard. Record perused.
6. It is an admitted fact that relationship between petitioner and IB respondent No.2 is of customer and banker. Respondent No.2 filed a suit for recovery of outstanding finance against petitioners and suit is pending disposal before Banking Court established under the F.I.O. As per Para No.13 of the plaint some pledged stocks were burnt and Insurance Company has paid the claim to respondent No.2 and they have adjusted the amount so received against the petitioner's liability.
Respondent No.2 on 16-6-2009 reported to respondent No.1 alleging that on 11-6-2009 when they were coming back after meeting their client, they saw, that petitioners, with the assistance of 10/15 workers are dismantling the factory building and machinery and are steeling and removing the assets under their charge. They further alleged that removed goods have been stored in Wajid Flour Mills The petitioners with the intention to defraud the bank have embezzled goods and as such case be registered against them along with unknown persons for recovering the removed assets. The respondent No.1 then registered the impugned F.I.R.
7. Argument of learned counsel for petitioner is that admittedly a suit is pending disposal before a competent court and respondent No.2 is claiming charge against the assets alleged to be removed. Under section 20 of the F.I.O. In these circumstances respondent No.2's complaint is triable by the Banking Court alone. Further contends that F.I.O. Is a special law enacted for resolution of dispute between the bank and customer and as such local police has no authority to take cognizance of any complaint by the bank against customer and as such the very act of respondent No.1 to register the F.I.R. Is without jurisdiction.
8. The perusal of F.I.O. Shows that it has been enacted for resolution of dispute arising out of finance both civil and criminal. The basic purpose for enacting special law is to provide machinery for ousting the jurisdiction of local police with reference to commercial dispute between the customer and bank. Respondent No.2's claim is that assets detailed in the plaint and in charge documents are encumbered in their favour for repayment of finance allowed to petitioners. The petitioners have allegedly removed the charged assets and as such they have committed an office under section 406, P.P.C.
9. F.I.O. Provides the complete procedure for redressal of respondent's grievance of criminal nature in addition to civil nature. Section 20 of the F.I.O. Is read as under:--- "20. Provisions relating to certain offences.---
6. All offences under this Ordinance shall be bailable, non-cognizable and compoundable.
10. Under section 20(a) of the F.I.O. The alleged offence committed by petitioners is covered.
Section 7 of the F.I.O. Provides as under:- "7. Powers of Banking Courts.---(1) Subject to the provisions of this Ordinance, a Banking Court shall-
(a) ................................................................ (b) In the exercise of its criminal jurisdiction, try offences punishable under this Ordinance and shall, for this purpose have the same powers as are vested in a Court of Session under the Code of Criminal Procedure, 1898 (Act V of 1898): Provided that a Banking Court shall not take cognizance of any offence punishable under this Ordinance except upon a complaint in writing made by a person authorised in this behalf by the financial institution in respect of which the offence was committed."
11. Perusal of section 7(b) shows that Banking Court is enjoying all powers which are vested in a Court of Session under Code of Criminal Procedure, 1898. However, these powers are subject to proviso of section 20 ibid which provides that Banking Court shall take cognizance only on a complaint in writing made by a person authorized in this behalf. The proviso of section 20 ibid shows that in case any offence is committed by the customer, the Banking Court is enjoying exclusive powers for redressal of said grievance provided the same is filed by an authorized person. Clog of authorization has specially been made part of statute only to curtail frivolous complaint against a customer of the bank. Relationship between the customer and bank is purely a commercial relation and for smooth working of commercial activities it has been made obligatory upon the officers of the financial institution first get the authority for proceeding against the customer for criminal proceedings
12. Section 7(4) of F.I.O. Provides as under:-
(7) .................................................
(1) .................................
(2) ............................................
(3) ......................................
(4) Subject to subsection (5), no Court other than Banking Court shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of Banking Court extends under this Ordinance, including a decision as to the exercise or otherwise of a finance and the execution of a decree passed by a Banking Court.
(5) Nothing in subsection (4) shalt be deemed to affect,--
(a) the right of a financial institution to seek any remedy before any Court or otherwise that may be available to it under the law by which the financial institution may have been established; Or
(b) the powers of the financial institution, or jurisdiction of any Court such as is referred to in clause (a); or Require the transfer to a Banking Court of any proceedings pending before any financial institution or such Court immediately before the coining into force of this Ordinance. "
Under section 7(4) of the F.I.O. No court other than Banking Court shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Banking Court extends under the Ordinance. This means the courts established under Criminal Procedure Code have no jurisdiction to take cognizance of the matter arising out of a finance advanced by the respondent No.2. The main objection for enacting special law i.e. F.I.O. Is that the customer or the bank should not be dealt under the ordinary civil or criminal law. The conjunctive study of section 20 read with section 7 of the F.I.O. Shows that offence with respect to section 20 will only be triable by the Banking court established under the. Financial Institutions (Recovery of Finances) Ordinance, 2001.
Offences committed under the F.I.O. Are no doubt covered under the P.P.C. But exception has been made under section 20(6) that all offences under the Ordinance were made bailable, non- cognizable and compoundable whereas offence under the P.P.C. Are cognizable, non- compoundable and non-bailable. This is the statutory ouster of P.P.C. Under the F.I.O. Regarding offences under section 20 ibid, F.I.O. Provides that offence committed by the customer although covered under P.P.C. Will be triable only by the Banking Court and the same will be cognizable, compoundable and bailable. In the present case commission of offence under section 406, P.P.C.
Has been claimed and in case same is dealt by the local police it will cognizable, non- compoundable and non-bailable but under the F.I.O. It is bailable, compoundable and non- cognizable that too the complaint could be filed by authorized person. The authority to make complaint is with the institution and not with every one, like any person as detailed in section 154 of Cr.P.C. F.I.O. Is a special law and it is an established principle of law that special law will prevail over the general law and as such local police is not having jurisdiction to take cognizance in the matter covered under the F.I.O. The jurisdiction under the general law F has been specially ousted and as such the entertainment of complaint on behalf of a person who himself is not claiming to be authorized officer under the F.I.O. Is patently against law. The reason for ousting the jurisdiction of local police has a wisdom as the Banking Court will be in a better position to adjudicate the matter as it is also enjoying power to decide matter for recovery of finances as well in comparison with a police officer who has no legal expertise about the commercial transactions. In case jurisdiction is distributed among two independent segments of law there may be a multiplicity of the issue. For example the financial institution lodged F.I.R. With the police for the removal of security/assets and the customer succeeds to prove that the offence is not made out against him and he is acquitted in the case, then in that case the financial institution will not be in a position to recover the finance which was allowed against those assets, removal of which has been disproved in criminal court of law. Hence this is the reason that, jurisdiction for recovery of finance as well as for punishing the customer for committing criminal offence has been conferred upon the Banking Court. The Banking Court in presence of recovery suit or recovery proceedings will be in a better position to proceed with the complaint properly and smoothly. This will show that respondent No.1 has no jurisdiction to take cognizance of the matter. Tobinstein in "Jurisdiction and Illegality" has defined as under:-- "The validity of a decision or order can be challenged either directly by way of proceedings specially designed by law for the purpose of having such a decision set aside, reversed or modified, or by way of collateral attack in which the Court is not asked to invalidate the disputed decision but in which the existence of this decision is relevant to the issue facing the Court. In such collateral impeachment the contention generally is that the impugned decision is a nullity in the eye of law and can be disregarded by the Court before which it is sought to be relied upon by one party or the other."
13. The argument of learned counsel for respondent that once F.I.R. Is registered it has to been finalized by the agency who registered the F.I.R., in the present case it is not applicable. The very registration of the F.I.R. Is void as the complainant was not authorized person to lodge the complaint, and the exclusive jurisdiction to decide the issue is with the Banking Court under the F.I.O. Further the offence allegedly committed by the customer are compoundable, non-cognizable and bailable whereas under the general law all the three concessions are not available to the alleged accused, thus the argument of learned counsel for respondent that offence allegedly committed by the customer under the P.P.C. Is triable by the local police as well as by the Banking Court is not tenable. Under special law offence, no doubt, alleged offence is covered under P.P.C.
But with a specific change that the offences are bailable, non-cognizable and compoundable the customer/accused can compound the offence without facing any trial in the Banking Court whereas under general law not. Main object of the banking company/financial institution is to promote the business and not to punish the customer for the alleged offence. Reliance is placed on Capt. (Retd) Nayyar Islam v. Senior Superintendent of Police and others (PLD 2001 Lahore 533) and Aamer Khurshid Mirza V. The State (2005 CLD 20).
14. The upshot of the above said discussion is that impugned F.I.R. Is bound to be quashed which is quashed accordingly. This petition is allowed.
15. There is no order as to costs.