MUHAMMAD WAHEED KHAN, J. This single judgment shall dispose of this writ petition as well as W.P. Nos.9696, 8854, 8853, 8859, 8860, 8856, 8855 & 8857 of 2020, as common question of law is involved in the same.
2. By filing the above mentioned writ petitions in terms of Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, the petitioners have sought quashing of FIR Nos.442/2020, 444/2020, 441/2020 & 447/2020 registered at P.S. City Jalalpur Pirwala, Multan and FIR Nos.592/2020, 587/2020, 595/2020, 597/2020 & 599/2020 registered at P.S. Shah Shamas, Multan, all for offence u/s 406 PPC, against them on the applications of Muqaddams from respective companies, who had been appointed by the banks for protection of pledged material/goods.
3. At the very outset, learned counsel for respondent No.3 in W.P. No.8854/2020 submits that he has no objection if the said writ petition is allowed, as a consent decree has been passed against the petitioner by the learned Banking Court.
4. The crux of arguments of learned counsel for the petitioners was that in case of "Syed Mushahid Shah and others v. Federal Investment Agency and others" (2017 SCMR 1218 ), it has been held that the first information report ("FIR") under the Criminal Procedure Code cannot be registered against the customer of a bank in respect of matters, which are within the exclusive jurisdiction of Banking Courts set up under the Financial Institution (Recovery of Finances) Ordinance, 2001 (hereinafter referred as FIO). Though, the complainants were working and acting on behalf of their respective private companies but affairs of the said companies were directly linked with the bank, as to ensure safety of the stock, pledged by the said bank, was the responsibility of the said company , so, the dispute between the bank and its customer could be agitated within the confine s of the said Ordinance and the local police had no jurisdiction to register a criminal case on the application of the complainant.
5. On the other hand, learned law officer as well as learned counsel for the respondents have opposed the contention of learned counsel for the petitioners by arguing that since all the FIRs in question have been registered on behalf of the Muqaddams, who represent different companies, appointed to safeguard the pledged stock of the banks, so, the said company cannot be termed as companies within the meaning of the FIO, thus, no other remedy under the Banking Laws was available and there is no bar for the respondents to have recourse by lodging criminal cases. In support of their contention, learned law officer and learned counsel for the respondents relied upon the judgments rendered by this Court in case of "Ishfaq Rehmat v. Ex-Of ficio Justice of Peace (W.P.No.226097/2018) and "FAISAL FAROOQ and 3 others v . S.H.O and another" ( 2017 CLD 1 ).
6. I have heard learned counsel for the petitioners, learned law officer and learned counsel for the respondents and have perused the available record.
7. The case of the prosecution in all the FIRs under challenge in above said writ petitions is similar in nature, which were lodged mainly on the allegation that the pledged goods have been misappropriated/embezzled by the customers/mill owners etc., which were pledged against loan taken by the petition ers/mills and the complainants' companies were deputed by the concerned bank for security of the pledged stocks, meaning thereby that actual issue, therefore, was between the banks and the mills (customers). It is also admitted position that civil suits in almost all the cases had already been filed by the banks for recovery of amount of loan before the banking court. In such backdrop, it is to be seen whether registration of impugned FIRs were withou t jurisdiction and are liable to be quashed? The learned law officer assisted by learned counsel for the respondents apparently did not dispute the law settled down by the Hon'ble Supreme Court of Pakistan in Syed Mushahid Shah's case but stated that the facts and circumstances in the instant cases are different, as the security companies, of whom the Muqaddams were appointed, were independent entities, so, any report, action on their behalf do not fall within the ambit of section 20 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Section 20 of the FIO relates to provisions with regard to certain of fences, which reads as under:-
20. Provisions relating to certain of fences.-
(1) Whoever -
(a) dishonestly commits a breach of the terms of a letter of hypothecation, trust receipt or any other instrument or document executed by him whereby possession of the assets or properties offered as security for the re-payment of finance or fulfillment of any obligation are not with the financial institution but are retained by or entrusted to him for the purposes of dealing with the same in the ordinary course of business subject to the terms of the letter of hypothecation or trust receipt or other instrument or document or for the purpose of effecting their sale and depositing the sale proceeds with the financial institution; or
(b) makes fraudulent mis-representation or commits a breach of an obligation or representation made to a financial institution on the basis of which the financial institution has granted a finance; or
(c) subsequent to the creation of a mortg age in favour of a financial institution, dishonestly alienates or parts with the possession of the mortgaged property whether by creation of a lease or otherw ise contrary to the terms thereof, without the written permission of the financial institution; or
(d) subsequent to the passing of a decree under section 10 or 11, sells, transfers or otherwise alienates, or parts with possession of his assets or properties acquired after the grant of finance by the financial institution, including assets or properties acquired benami in the name of an ostensible owner shall, without prejudice to any other action which may be taken against him under this Ordinance or any other law for the time being in force, be punishable with imprisonment of either description for a term which may extend to three years and shall also be liable to a fine which may extend to the value of the property or security as decreed or the market value whichever is higher and shall be ordered by the Banking Court trying the offence to deliver up or refund to the financial institution, within a time to be fixed by the Banking Court, the property or the value of the property or security .
Explanation - Dishonesty may be presumed where a customer has not deposited the sale proceeds of the property with the financial institution in violation of the terms of the agreement betw een the financial institution and the customer .
(2) Whoever knowingly makes a stateme nt which is false in material respects in an application for finance and obtains a finance on the basis thereof, or applies the amount of the finance towar ds a purpose other than that for which the finance was obtained by him, or furnishes a false statement of stocks in violation of the terms of the agreement with the financial institution or falsely denies his signatures on any banking document before the Banking Court, shall be guilty of an offen ce punishable with imprisonment of either description for a term which may extend to three years, or with fine, or with both.
(3) Whoever resists or obstructs, either by himself or on behalf of the judgment debtor , through the use of force, the execution of a decree, shall be punishable with imprisonment, which may extend to one year, or with fine, or with both.
(4) Whoever dishonestly issues a cheque towards re-payment of a finance or fulfillment of an obligation which is dishonoured on presentation, shall be punishable with imprisonment which may extend to one year, 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.
(5) Where the person guilty of an offence under this Ordinance 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 the offence and shall be liable to be prosecuted against and punished accordingly .
[(6) All offences under this Ordinance shall be triable by a Banking Court in accorda nce with Section 7. All offences, except for the offence of willful default, shall be bailable, non-cognizable and compoundable.] (underline is provided for emphasis)
[(7) Notwithstanding anything to the contrary provided in any other law for the time being in force, action in respect of an offence of willful default shall be taken by an investigating agency , to be nominated in this behalf by the Federal Government, on a complaint in writing filed by an authorized officer of a financial institution after it has served a thirty days notice upon the borrower demanding payment of the loan, advance or financial assistance.
(8) An offence of willful default shall be cognizable, non-bailable and non-compoundable and punishable with imprisonment which may extent to seven years or fine not exceeding the amount of default or with both.
(9) Any person convicted of the offence of willful default by a Banking Court shall not be eligible to receive any loan, advance or finance from any financial institution for a period of ten years and shall not be permitted to contest any election as a member of the Majlis-e-Shoora (Parliament), and Provincial Assemb ly or a local body for a period of five years, after serving out a sentence after conviction.]
8. On going through the excerpts of the above provisions of law, particularly sub-section (6), one thing is very clear that all the offences under the Financial Institutions (Recovery of Finances) Ordinance, 2001 shall not only be triable by the banking court but such offences have been made bailable, non-cognizable and compoundable. The legislation has used the word "non-cognizable" therein, which means that no FIR in this regard can be registered, under section 154 Cr.P.C., as FIR can be registered regarding offences, which are cognizable in nature. Likewise, the provisions of section 4 of the FIO have given the ordinance overriding ef fect, which reads as under:- "4. Ordinance to override other laws.- The provisions of this Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force".
Sub-clause (c) of above referred sub-section (1) of section 20 of the FIO described that subsequent to the creation of a mortgage in favour of a Financial Institution, if the pledged goods have been dishonestly alienated, without written permission of the Financial Institu tion, that would also be an offence and since the overriding effect of this Ordinance has been provided under section 4, so, there is no cavil to the proposition that no FIR can be lodged against the customer against any other law, including the Pakistan Penal Code. Similarly , the banking courts have been given the jurisdiction to try the criminal case in section 7 of the FIO, in following terms, which reads 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 jurisdi ction, try offences punishable under this Ordinance and shall, for this purpose have the same powers as are vested in a Court of Sessions under the Code of Criminal Procedure, 1898 (Act V of 1898)".
So, the proviso attached with the section ibid makes the picture more clear that even the banking court shall not take cognizance of any offence punishable under this Ordinance, except upon complaint in writing, made by a person authorized in this behalf by the Financial Institution in respect of which the offence is committed. The top Court has already authoritatively concluded in Syed Mushahid Shah' s case as under:- "19. In conclusion, we find that the provisions of the Ordinance, 2001 are to have an overriding effect on anything inconsistent contained in any other law for the time being in force, including the ORBO, the Code (read with the P.P.C.) and the Act, 1974 (read with the Ordinance, 1962). In essence, whenever an offence is committed by a customer of a financial institution within the contemplation of the Ordinance, 2001, it could only be tried by the Banking Courts constituted thereunder and no other forum. The Special Courts under the ORBO, the ordinary criminal Courts under the Code and the Agency under the Act, 1974 read with the Ordinance, 1962 would have no jurisdiction in the matter . In the light where of, all these appeals are allowed, the petitions are converted into appeals and allowed and all the impugned judgments are set aside".
9. As far as the judgments relied upon by learned counsel for the respondents are concerned, in the judgment of the learned Division Bench of this Court in case of Faisal Farooq (supra) decided in May, 2016 I could not find any reference of Mushahid Shah' s case, as the judgment in Mushahid Shah' s case was pronounced in March, 2017. As far as the other case relied upon by the learned law officer titled "Ishfaq Rehmat v. Ex-Of ficio Justice of Peace, etc." (W.P. No.226097/2018) is concerned, I have perused the contents of the same and noted that the guidelines given by the Hon'ble Supreme Court of Pakistan in Mushahid Shah' s case had not been discussed therein. I have also noticed that the operation of the impu gned order passed in Ishfaq Rehmat' s case has been suspended by the learned Division Bench of this Court vide order dated 15.04.2019 passed in I.C.A. No.22321/2019, mainly on the ground that the principles settled down by the august Supreme Court of Pakistan in Mushahid Shah' s case have not been adhered to. So, under the circumstances no reliance can be placed on these two judgments.
10. Even otherwise, it is apprised by the learned counsel for the petitioners that in seven cases, in which quashing of FIRs has been sought, the respective complainants have already opted to file private complaints u/s 20 of the FIO, in which after recording the preliminary evidence, the learned Banking Court has already summoned the accused. It would not be out of place to mention here that after receiving a private complaint, the learned Banking Court while postponing issue of process, has the power to direct an inquiry or can get inquiry/investigation conducted from any agency , including the FIA, etc., as it needs fit under section 202 of the Cr.P.C. as in clause (b) of section 7(1) of the FIO, the Code of Criminal Procedure has been made applicable in Banking Courts while conducting trial in offences punishable under the Ordinance. As far as contention of learned counsel for the respondents regarding independent entity of Muqaddam is concerned, since the companies represented by the Muqaddams undertake to safeguard and protect the pledged goods, so, if any misappropriation, embezzlement or for that matter , the offence of theft has been committed regarding the pledged goods, the Muqaddam and the company cannot be absolved/relieved from the responsibility of the same and it is apprised to the Court, that in none of these cases, the Muqaddams had been held responsible on their failure to protect the pledged stock. The learned Division Bench of this Court in Faisal Farooq' s case (supra) has held that if Muqaddam appointed by banker is sought to be prosecuted, no prosecution can be brought against Muqaddam under the FIO and he can be prosecuted under the general law, since he is the independent entity , as having no concern in the agreement executed between the bank and the customer and on going through the facts of these cases, I noted that the Muqaddams had tried to shift their obligation/responsibility qua the lapse in security of the property to the accused, who are real owners in the present cases.
11. In a sequel to the above discussion, I am of the view that registration of impugned FIRs by the local police, was unwarranted and was lodged without having lawful authority , as if story narrated therein is presumed to be true for the sake of arguments, the provisions of PPC did not attract, as held by the Hon'ble Supreme Court of Pakistan in Mushahid Shah' s case, as the same covers the FIO and is exclusively triable by Banking Court, constituted therein.
More-over , by lodging the FIRs by the complainants, it seems that the Financial Institution in order to avoid the guidelines given by the Hon'ble Supreme Court of Pakistan, has made a belated attempt to manipulate the things.
Hence, by allowing these writ petitions, the impugned FIRs, mentioned above are hereby quashed.