' SHAH KHAWAR, J.---Brief facts of the case are that Dehi Taraqiati Committee being Non- Government Organization is working in different projects including literacy, health, population and vocational welfare etc. Mumtaz Akhtar Rana petitioner is the President of the said Non-Government Organization.
2. Respondent No,2 is Additional Director, F & R, Punjab Health Foundation Lahore, an organization which came into being on the strength of the Punjab Health Ordinance, 1994 (hereinafter called as Act, 1992). The said Act was promulgated on 10th of November, 1992 for the establishment of the Punjab Health Foundation to promote and finance the development of the health sector in the Province of the Punjab. Section 10 of the Act, 1992 deals with the functions of the Foundation and section 10(1)(e) provides to give loans to health institutions. The health institutions also cover the institutions established under the Non-Government Organizations.
3. The petitioner's NGO applied for loan of Rs,12,00,000 from respondent No,2 for construction of hospital over land measuring 9-kanals 11-marlas situated at 'Mauza Hajrai Khurd Tehsil Pattoki District Kasur, which was accordingly allowed to the said NGO against an agreement executed between the petitioner and respondent No,2. Respondent No,2, at the time of execution of loan agreement, obtained sixteen cheques as security of loan from the petitioner @ Rs,75,000 each with the promise that on deposit of each instalment, respective cheques would be given back to her.
4. The contention of the petitioner is that she has been paying the instalments but respondent No,2 submitted an application before respondent No,3 with the allegation that three cheques bearing Nos.630379061, 63037908 and 63037911 were dishonoured on their presentation. Further that on the application of respondent No,2, respondent No,1, Inspector General of Police, Punjab directed CCPO, Lahore to take necessary legal action against the petitioner by way of lodging an F.I.R. The said letter has been impugned by the petitioner in the instant writ petition by contending that the loan is secured by mortgaging the precious land of the petitioner; that respondent No,2 can only invoke jurisdiction of the competent Court to determine the liability of the petitioner and then proceed in accordance with law. Further that the police has no lawful authority to interfere into the matter which purely is of civil nature. It is further contended that the cheques were given to respondent No,2 as security and the same were not issued against any obligation.
5. The learned Assistant Advocate General, Punjab entered appearance on behalf of the respondents and submitted before this Court brief history of the case pertaining to the loan given by the Punjab Health Foundation to the petitioner. After perusal of the same, it transpired that recovery of loan is to be made in sixteen instalments @ Rs,75,000 each as mentioned in the brief history, whereby the loanee has to pay the 6th instalment on the due date. Show cause notices were issued to the loanee for the deposit of instalments but in vain. As the advance cheques were dishonoured, therefore, the police department was approached for lodging the F.I.R. Against the loanee considering the dishonour of cheques as a criminal act on her part. Subsequent to the show cause notices, the loanee approached the foundation and promised to pay the forthcoming instalment on due date. Learned Assistant Advocate General Punjab has further contended that the loanee has paid 12th instalment on 12-2-2014 and still she is defaulter of 7 to 11 instalments and surcharge @ 4% per month.
6. The petitioner has also provided a copy of loan agreement executed between her and respondent No,2 and has drawn the attention of this Court towards clauses 3, 9 and 12 of the agreement, which are reproduced below:-- Clause (3). before the release of land the borrower shall execute a registered mortgage deed of immoveable property on prescribed format or provide bank guarantee or Government security to the satisfaction of the Foundation.
Clause (9) if the loan is not repaid according to the repayment schedule, the borrower will be liable to pay a penalty of 4% per month on the defaulted amount.
Clause (12) . If the borrower commits a breach of any clause of this agreement the creditor may issue show cause notice to the borrower to pay the loan immediately along with penalty.
' The creditor is also at liberty to take any legal action to recover the loan and penalty, if any, which may include legal notice, publication in newspaper and sale of the mortgaged property OR invoke the Bank Guarantee OR as arrears of land revenue under the Revenue Recovery Act, 1890
7. 1 have heard the arguments of learned counsel for the petitioner as well as learned Assistant Advocate General and have gone through the material available on the record.
8. The criminal action proposed entails the punishment contained in section 489-F of the Pakistan Penal Code, 1860 for dishonestly issuing a cheque and maximum punishment whereof is three years. This section was introduced and inserted by Ordinance LXXXV of 2002 dated 25-10-2002. The said Section was inserted in the Pakistan Penal Code, 1860 to punish the delinquents having dishonestly issued a cheque towards repayment of loan or fulfillment of an obligation which is dishonoured on its presentation. This Section could only be invoked where the cheque has been deliberately issued with an intention to defraud the payee with criminal intention.
9. Now adverting to the terms and conditions of the loan agreement referred to above, it transpires that other than deposit of cheque as security, the loan was secured by way of mortgage deed dated 24-3-2007 executed by the petitioner in favour of respondent No,2 before the Sub-Registrar Pattoki, District Kasur against land measuring 9-Kanals 11- Marlas bearing Khewat No,738, Khetoni Nos.2143 to 2145, Qita No,3 situated at Mauza Hanjrai Khurd Tehsil Pattoki District Kasur.
10. The assertion of learned Assistant Advocate General Punjab that police department was approached for lodging of F.I.R. Against the loanee considering the dishonour of cheque as a criminal act on her part, is not correct. When a loan has been granted and same is secured by way of mortgage deed against valuable immoveable property and that too in the presence of clause
(12) of above referred agreement, same cannot be recovered by way of exercising coercive measures as mentioned in the loan agreement. There is a procedure provided in the said clause that the recovery of loan could be effected by resorting to the provisions of the Revenue Recovery Act, 1890.
11. This is an admitted fact that the Punjab Health Foundation does not come within the purview of financial institution as provided in the Financial Institutions (Recovery of Finances Ordinance), 2001 but being an organization empowered to extend loans could be equated with the status of financial institution which is creation of statute i,e, Punjab Health Foundation Act, 1992, being a special law, having empowered (PHF) to grant loans.
12. Although I could not find any case-law in this particular situation but inference could be drawn on the basis of judgments of the superior courts having dealt with such like matters. Reliance is placed on the judgment passed in case reported as "Khalid Javed v. State and others" (PLJ 2014 Cr.C, (Lahore) 481) and Muhammad Asif Nawaz v. Additional Sessions Judge/Justice of Peace Multan and 2 others (2014 CLD 45) in which it is held that any provision of Section 489-F of the Pakistan Penal Code, 1860 could not be attracted where loans were protected by mortgage, warranties and covenants with regard to ownership, mortgage, pledge, hypothecation or in terms of other purchase on assets of property and the financial institutions could recover the amount by adopting a proper process under any of such mode. Reliance is placed on a case reported as Tariq Mehmood v. Askari Leasing Ltd. (PLD 2009 (Lahore) 629).
13. In the instant case the loan issued by respondent No,2 in favour of petitioner has been secured through a mortgage deed No, 398 dated 24-3-2007 registered with Sub-Registrar, Pattoki District Kasur. In case of default, a mode has been provided under clause (12) of the agreement whereby, respondent No,2 may issue show cause notice to the borrower to pay the loan immediately along with penalty which may be in the shape of sale of mortgaged property and recovery of arrears of land revenue under Revenue Recovery, Act, 1890.
14. In presence of these clauses in the agreement, I am of the considered view that respondent No,2 is not competent to resort to the provision of section 489-F of the Pakistan Penal Code, 1860 and any such action will be nullity in the eyes of law as held in the renowned pronouncements made by the superior Courts.
15. For what has been discussed above, I allow the instant writ petition and set aside the impugned letter dated 10-7-2012 which has recommended registration of an F.I.R. Against the petitioner under Section 489-F of the Pakistan Penal Code, 1860.