Through this petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 the following prayer has been made: "It is therefore, most respectfully prayed that the impugned order dated 06.8.2018 passed by the learned Justice of Peace may very kindly be declared illegal, the same be set aside and inconseque nce of the same, the petition for registration of the case filed by Respondent No. 3 may very kindly , be dismissed, to meet with the ends of justice.
2. Learned counsel for the petitioner , inter-alia contends that the order passed by learned Ex-of ficio Justice of Peace, dated 06.8,2018 is based on wrong premises of law and facts; that the perusal of the application filed by the Respondent No. 3 does not reveal commission of any cognizable offence under Section 489-F , PPC; that the cheque in question was of dated 1.10.2016 and as per prevalent practice of the banks Respondent No. 3 could present it for encashment only within six months from the date of its issuance but the same was presented in the bank on 29.3.2018, as such, no criminal case could be registered against the petitioner on the basis of said cheque. Learned counsel lastly prayed that the impugned order is liable to be set aside.
3. Conversely , the Respondent No. 3 opposed the contentions of learned counsel for the petitioner . The learned Law Officer has submitted a report on behalf of the Respondent No. 2/Station House Officer Police Station City Lodhran.
4. Heard. Record perused.
5. The record evinces that Respondent No. 3 lodged an application under Sections 22-A and 22-B, Cr.P.C. before the learned Ex-Of ficio Justice of the Peace alleging therein that the petitioner borrowed an amount of Rs.
2,70,000/- from him and for repayment of said loan he issued cheque in question in his favour , which was bounced when presented in the bank for encashment. The report and parawise comments requisitioned by the learned Ex- Officio Justice of the Peace, Lodhran, are available on the file, wherein, the SHO concerned has reported that Respondent No. 3 has not joined the proceedings before him, however , the petitioner appeared and got his statement recorded that he has not issued any cheque in favour of Respondent No. 3.
6. Section 489-F , PPC criminalizes dishonest issuance of cheque. It reads as under: 489-F . Dishonestly issuing a cheque.-- Whoever dishonestly issues a cheque towards repayment of a loan or fulfillment of an obligation which is dishonoured on presentation shall be punishab le with imprisonment which may extend to three years, or with fine, or with both, unless he can establish for which the burden of proof shall rest on him, that he had 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."
Bare reading of above quoted section makes it crystal clear that it does not attract in every case where a cheque is dishonoured.
The foundational elements to constitute the of fence, under this 489-F are as under:
(i) the cheque was duly issued,
(ii) it was iss4d With dishonest intent;
(iii) was issued towards repayment of a loan or fulfillment of an obligation, and
(iv) it was dishonoured on presentation.
Absence of even one of these elements would take the case out of the ambit of Section 489-F , PPC. Section 489-F , PPC does not, stipulate any period within which the holder , must present the cheque to the bank for encashment.
However , Section 84(1) Of the Negotiable Instruments Act, 1881 (the "Act"), contem plates that, the cheque is to be produced for encashment within a reasonable time. Likewise, it is mentioned 84(2) of the same Act that in determining what is a reasonable time, regard shall be had to the nature of the instrument, the usage of trade and of bankers and, the facts of the particular case. A cheque presented for encashment before a bank, beyond period of six months of its, due date is generally regarded as a stale cheque . While looking for the "usage of trade and of bankers", within the meaning of Section 84(2) of Negotiable Instruments Act 1881, I have come across following material:
(i) In Sheldon's Practice and Law of Banking (10 Edition) it is mentioned that it is necessary to distinguish between cheques termed 'out of date' in Law for purposes of negotiation and those termed 'out of date by banker's custom. As regards the Latter most bankers return cheques presented six or more months after date marked "out of date", and require the drawer's confirmation before payment".
(ii) In Banking Laws and practice in India by M.L. Tannan (Fourteen Edition) , it is mentioned that "unless a cheque is presented within reasonable time after the ostensible date of its issue, it should not be honoured.
7. From above, it evince that a cheque or a negotiable instrument, presented after six Months of its due date is generally termed as stale and as per bank ing Practice, the Bank is not obliged to honour it unless instructed by the 'account holder . Reference may be usefu lly made to the Banking Glossary issued by the State Bank of Pakistan, which can be reckoned as an authentic reflection of the "usage of trade and of bankers" contemplated in Section 84(2) of the Act. It reads: "State Cheque " A stale cheque is cheque that has been outstanding for an unreasonable time. A cheque, may be outstanding for more than six months and a bank may under its discretion refuse to honour such a cheque. A bank is under no obligation to a customer to pay a cheque, other than a certified cheque, after more than six months of its date, but it can charge its customer's account for a payment made thereafter in good faith."
While dilating upon the issue of stale of dheque, the learned Single Bench of Sindh High Omit in the case of Habib Bank Limited v. Jamilur Rehman (1994 MLD 271) (After impounding upon the subject in detail observed that after the lapse of period of six months, the cheque becomes out of date or stale. Similarly , in the ease of Shafqat Hussain Hashmi v. The State ; (2012 MLD 1551 ), wherein learned Judge of Sindh High Court was; pleased to quash the proceedings arising out of a case registered wider Section 489-F , PPC, on the basis of a stale cheque.
As a necessary consequences of above discussion, it has become clear that on the basis of stale cheque no criminal proceedings can be initiated.
8. In passing, it may be pointed out that even on tail civil side in certain circumstances Courts have refused, to entertain claims based on stale cheques. In Kamran Akhter v. Jawed Ahmed Khan (2005 CLC 797), theth respondent filed a suit under Order XXXVII, CPC for recovery of money against cheque dated 7.12.2000 which was presented to the bank on 24.7.2001. The District Judge decreed the suit but the High Court set aside the judgment and decree in appeal and remanded the matter with a direction to treat it as an ordinary suit and decide the same according to the regular procedure prescribed by law (instead of a summary procedure under Order XXXVII, CPC).
9. Dishonour of, cheque is culpable in India under Section 138 of the (Indian) negotiable Instruments Act, 1881.
The said section, however , lays down certain conditions for the constitution of of fence. It reads:
138. Dishonour of cheques for insufficiency , etc., of funds in the account.--Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amoun t of money another person from out of that account for the discharge, in whole or in part, of any debt or other liability , is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insuf ficient to honour the cheques or .that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless-- a) the cheque has been presented to the bank within a period of six months from the 'date on which it is drawn or within the period of its validity , whichever is earlier; b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque; within fifteen days of the receipt of the said notice.
Explanation.-- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability .
10. No doubt Section 138 of the Indian Negotiable Instruments Act, 1881, is distinguishable from Section 489-F , PPC in many ways but it has two important aspects: first, it gives statutory recognition to the concept of stale cheque and, secondly , it emphasizes that the cheque must be valid at the time of presentation. In Rekha Rani Pyne u. Sambhunath Halder [2000 (4) ICC 228], the Calcutta High Court quashed legal proceedings initiated on an out of date cheque. The Court ruled in the fallowing manner: "... The validity period of the cheque has expired in the meantime. In that circumstances the proceeding is bad in law as at the material point of time there was no existence of valid cheque. The existence- of valid cheque is condition precedent under Section 138 of the Negotiable Instruments Act. That is absent in this case. That apart, I have already found that even if there was an order of granting liberty , it cannot override the specific provision of Negotiable Instruments Act. Taking all these facts into consideration I find that the proceeding was bad in law and cognizance was also not taken legally . Therefore, the entire proceeding is liable to be quashed."
11. Similarly , in Stanley Barros Pereira vs. Julieta Cota e Clemente and another [2006 (2) GOA L.R 287] the Bombay High Court ruled as under: "As stated by Shri Hadiga/PW -2 the subject cheque had become stale after the complainant was informed for the first time that the account was closed and therefore it could not have been promoted again. The second presentation of the cheque by the complainant was not within the validity period of the said cheque as per banking practice though otherwise it was within a period of six months as contemplated by clause (a) to the proviso below Section 138.... In this view of the matter , no fault could be found with the acquittal of the accused."
12. In Arunbhai Nilkanthrai Nanavati v . Jayaben Prahlad Bhai (2000 CriLJ 1 152), Gujrat High Court held: "For the aforesaid reasons, the cheque is required to be presented at the paying Bank i.e., drawee within the period of 6 months or the period of validity whichever is earlier for valid initiation of the criminal action i.e., lodging of the complaint against the drawer . When this is the only possible interpretation, it cannot be said that the faith of those dealing with others through Bank will be frustrated. It is also not open to contend that the payee will be helpless.
When in this case, the cheque is not presented at the paying Bank within six months, the application is required to be allowed, and the complaint being' not tenable for want of non-subsistence of cause of action, is not only required to be quailed, but the petitioner also deserves, discharge, allowing the applications Exhs. No. 8 & 10."
13. Reverting to the instant case, it is observed that Cheque in question is dated 01.10.2016. Respondent No. 3 presented it to the concerned bank on 29.3.2018, i.e. after one year, five months and 28 days. It was thus patently out of date. Respondent No 3 knew fully well that it would not be encashed yet he presented it merely to bring the case against the Petitioter under Section 489-F , PPG. In Shafqat Hussain Hashmi's case, supra the Court held this contrivance malicious.
14. In view of above, Respondent No. 3 did not approach the Court with clean hands and apparently had (sic) and concealed the material facts. Exposing a person to investigative process and face rigors of criminal prosecution is a no small measure; there must exist reasonable and tangible, material with evidential basis to set the law into motion so as to bring about an indictment. The insertion of Section 22-A(b)(iii) was (sic) to necessary allow every such application else the (sic) would not have used word 'may' in subsection (6) (sic) (word may) always speaks of 'discretion' by application of (sic).
15. For the above identified reasons, it is a fit case for interference and invalidation of the impugned order .
Therefore, by allowing this petition impug ned order dated 06.8.2018 passed by the learned Ex-Of ficio Justice of Peace, Lodhran is set-aside.